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Integrated Home Energy & Sludge to Fuel Additional Business Cases and Development Plan Tom Horgan and Noa Simons February 26, 2009.

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Presentation on theme: "Integrated Home Energy & Sludge to Fuel Additional Business Cases and Development Plan Tom Horgan and Noa Simons February 26, 2009."— Presentation transcript:

1 Integrated Home Energy & Sludge to Fuel Additional Business Cases and Development Plan Tom Horgan and Noa Simons February 26, 2009

2 Outline Executive Summary Sludge to Fuel Integrated Home Energy System Wrap Up

3 Executive Summary Sludge to Fuel –Sufficient dewatered, undigested sludge is available in NYS for conversion to energy (~ 15% of total) –FT based conversion of sludge to diesel is not a realistic path to profitability given excessively high capital and processing costs and low conversion efficiencies for either thermal (17%) or catalytic (24%) gasification –Biogas Electricity generation via either anaerobic digestion or catalytic gasification is a realistic path to profitability. –At 15%, estimated annual profits $14M/$17M per year –Catalytic gasification is more efficient than AD in fuel gas synthesis and has more potential for improvement

4 Executive Summary Integrated Home Energy Systems –NG based Micro-CHP and standalone wood-gas generators are not viable for prime power for various reasons. –The IHES provides efficient prime power and heat with grid support. Grid provides surge protection and IHES can operate independently in a grid outage. –With high renewable fraction, payback is about 3 years at 5 kW and $5,000 installed cost. –Larger system (>10kW) will generate revenue in grid buyback states (NY, MA, CT, others) however wood demand is excessive –Wood pellets are readily available from Home Depot at costs comparable to chord wood and coal

5 Sludge to Fuel Sludge Availability and Tipping Fees –Per NYS DEC data, approximately 15% of sludge is aerated, dewatered and hauled for secondary processing –Plant Interviews Guilderland, Normans Kill (216), 456-2745, Keith Edwards –Aerates, dewaters to 24/25% solids, hauled away –$85/Wet Ton, 2/4 yr contract Herkimer (228), 866-0150, –Aerates, dewaters, 20/30% solids, hauls away –$72.15/wet ton, 2 yr contract Hudson (241), 828-1020, Paul Lossi –Aerates, dewaters to 22% solids, hauled away –$84/ wet ton, 2/4 yr contract –Average Tipping Fee = $0.09/kg

6 Sludge to Fuel Upper bound for FT diesel… –Use NYS Data. Assume all sludge is available. Ignore efficiency, production, transportation and capital costs. –Assume a $0.09/kg tipping fee and a diesel price of $0.016/MJ (2/2/09) Profit: $216M/yr Upper bound for Biogas Electricity… –Same assumptions. –Electricity price $0.043/MJ Profit: $416M/yr

7 Sludge to Fuel Thermal Gasification of Dewatered Sludge –Using data from - manufacturers of gasifier/generator systems designed for dried sewage sludge –Overall 27% efficient on dry sludge, 4% efficient on dewatered sludge. Assume generator efficiency of 17% on Syngas. –Gasification Efficiency on dewatered sludge ~ 22% –Assume FT Efficiency on clean syngas ~ 80% –Overall Thermal Efficiency to FT Diesel ~ 17% Catalytic Gasification of Dewatered Sludge –Using data from “Catalytic Wet Gasification of Municipal and Animal Waste”, Elliot, et al, 2006 –Low quality fuel gas (half CH4, half CO2) with 90% recovery of high energy input. Conversion Efficiency to Fuel Gas ~36%. –Fuel gas to Syngas by Steam reforming ~ 83% –Overall Thermal Efficiency to FT Diesel ~ 24%

8 Sludge to Fuel Issues w/ Fischer Tropsch –Excessively high capital and production costs particularly on biomass due to gas purity requirements –Added contamination issues associated with sludge –Exxon Mobil, Shell, Choren, Sasol, Syntroleum all researching heavily in FT with few improvements demonstrated Biogas Electricity Generation –Using data from –Biogas from Sludge via Anerobic Digestion ~ 35% Catalytic Gasification –Biogas from Sludge via Catalytic Gasification ~ 36% –Large scale biogas generator efficiency ~ 22%/45% –Overall Thermal Efficiency to Electricity ~ 12%

9 Sludge to Fuel Financial Analysis Ignoring Capital & Production Costs Though conversion efficiency is lower, fuel value is higher resulting in higher profit potentialThough conversion efficiency is lower, fuel value is higher resulting in higher profit potential

10 Financial Analysis with Capital & Production Costs –* Prod and Cap costs for FT estimated at 1% of Syntroleum Capital costs 50x lower for AD. Assume 25x for CG.Capital costs 50x lower for AD. Assume 25x for CG. Sludge to Fuel

11 Catalytic Gasifiaction Process * * Elliot, et al,, “Catalytic Wet Gasification of Municipal and Animal Waste”, American Chemical Society, 2006 Sludge

12 Sludge to Fuel IP Opportunities in Catalytic Gasification –Catalyst Cleaning/Regeneration: Doug Elliot listed this as the primary downside of the process. Research would focus on cleaning methods and alternative disposable) catalyst types –Efficiency Improvement: Continued research in processing conditions and pretreatment methods to increase CH4 synthesis (minimize CO2) –Desulphurization: Development of economical means of desulphurizing feed to minimize catalyst damage –Reactor Component Lifetime: Severe operating conditions accelerate both catalyst and equipment degradation. Research into new materials and methods is warranted.

13 Sludge to Fuel Next Steps –Conduct phone interviews/plant visits with engineers & scientists working in catalytic gasification –Plan and cost out pilot facility for catalytic gasification –Investigate potential IP opportunities in anaerobic digestion and biogas efficiency improvement –Investigate higher efficiency generators and applicability of non-PEM based fuel cells –Research and quantify sludge availability, transportation costs, etc in other states & countries –Contact/interview sludge handlers (New England Organic) for assessment of actual handling costs, regulatory requirements etc

14 Net metering by State –States that offer NEG Reimbursement (up to full amount) Massachusetts, Minnesota, Nebraska, New Mexico, North Dakota, Pennsylvania, Connecticut, Colorado, New Jersey, New York, Ohio, Wyoming, Washington, Illinois –States that offer Net Metering for Biomass, CHP & MSW Maine, Massachusetts, Minnesota, Nebraska, New Mexico, North Dakota, Oklahoma, Pennsylvania, Wisconsin –States that offer Net Metering for Biomass & CHP District of Columbia, Vermont –States that offer Net Metering for Biomass & MSW Connecticut, Iowa, Michigan, Texas, Virginia –States that offer Net Metering for Biomass Colorado, Delaware, Hawaii, Idaho, Louisiana, Maryland, Nevada, New Jersey, New York, North Carolina, Ohio Oregon, South Carolina, West Virginia, Wyoming 6 States offer net metering and grid buyback for IHES product. 5 more probable. Integrated Home Energy

15 Net metering by State Integrated Home Energy

16 Net metering interview with Rex Bradford –Installed Solar Panels in Ipswitch, Ma –Had issues with LOCAL utility who can claim exemption from state law. Ultimate got local laws changed to allow for net metering. –System is not grid independent (would need battery bank w/ controls) –Solar covers half of electricity on annual basis –Installed cost, $26,000 less $2,000 in incentives Massachusetts - National Grid Website - 220 CMR 11.04 c ) Net Metering. A Customer of a Distribution Company with an on-site Generation Facility of 60 kilowatts or less in size has the option to run the meter backward and may choose to receive a credit from the Distribution Company equal to the average monthly market price of generation per kilowatthour, as determined by the Department, in any month during which there was a positive net difference between kilowatthours generated and consumed. Such credit shall appear on the following month's bill. Distribution Companies shall be prohibited from imposing special fees on net metering Customers, such as backup charges and demand charges, or additional controls, or liability insurance, as long as the Generation Facility meets the Interconnection Standards and all relevant safety and power quality standards. Integrated Home Energy

17 Federal Incentives (available for Biomass) –Tax Credit: 30% up to $1500 –Various loan programs State Incentives (available for Biomass) –Massachusetts 100% Tax Deduction. Grant money available from Renewable Energy Trust Fund and LORI. –New York Property Tax Exemption. Grant money available from NYSERA (Micro CHP) –Connecticut Property Tax Exemption. Grant money available from Connecticut Clean Energy Fund

18 IHES Model –Conversion efficiencies, electricity/NG prices and usage conditions interact counter intuitively at times to effect economics of IHES –Spreadsheet model built to evaluate economics of microCHP, wood gas generators and IHES –Includes state by state electricity and NG prices ( –Includes state by state net metering policies and utility reimbursement for states offering it ( –Total energy usage determined by home size. Distribution between NG and Electricity determined by location Note: Used commercial price for NG calcs in previous IHES analysis discussion. This made residential stand alone Micro CHP seem more viable than it actually is. Integrated Home Energy

19 Competitive Markets –Standalone Micro CHP (Freewatt, Marathon Engine) Installation costs range from $14K to $35K with 30 year payback under best case conditions. Long or no payback in many states due to high NG prices and low efficiency. Requires efficiencies of 40% for reasonable payback –Standalone Woodgas Generator (ECO -5, 5kW ) Wood pellets. System Cost - $9,495 Sufficient for backup and supplemental power but not for prime power (reliability, fuel handling) Not CHP. Overall Electrical Efficiency ~ 10% Long payback though not as long as Micro CHP. Integrated Home Energy

20 In Door NG Micro CHP Unit OutdoorGasifier -Under 3 yr payback w/out net metering in LF mode -Faster payback with grid buyback on systems over 10 kW (very high wood requirement) -NG can be used to fire gasifier and or dry feed -User controls renewables use - Wood chips ($0.05/kg) or wood pellets ($0.06/kg) -Pellets available by the ton at Home Depot Integrated Home Energy System –5/25 kW Grid Parallel/Grid Backup System, $5,000 –Fuel: NG/LPG and Renewables –Benefits…. Integrated Home Energy

21 Case 1: Heating System replacement/upgrade, 2400 sq ft house, 25%/17% Electrical, 63% Thermal, 80% Renewables, $5,000 Installed Cost 10 kW system shows annual revenue in MA however wood demand is excessive – 9 fifty pound bags of pellets /day Note: 3% improvement in Syngas Electric Efficiency triples revenue and decreases wood demand by 12% Integrated Home Energy 5 kW 10 kW

22 Analysis: –Heating System for 2400 sq ft house, $5K (no deferred cost) Diminishing returns from Max Generation as Renewable fraction increased above %70. Integrated Home Energy

23 Analysis: –Heating System for 2400 sq ft house, $5K (no deferred cost) Improved Syngas Electrical Efficiency results in heat deficit (NG must be purchased from utility) Integrated Home Energy

24 Development Plan –Proof of Concept (6 months). Assemble prototype from retrofit commercial NG generator, gasifier and CHP Downselect and purchase gasifier, gas generator, chipper, etc Research/validate wood gasification (mc, wood type, etc). Assemble/test and develop heat rejection, gas cleaning Research/development/test CHP functionalit y –Cost Estimates Hardware: 2 gasifiers, 2 NG generators (~ $20 to 305K) –Misc tools/test equipment ($1 to $3K) –One Computer - ($1K) –Additional Hardware for BOP ($3 to 5K) Contract Services: $20/$25K Salaries: 2 x $90K * 0.5 = $90K Rental: $1 to $1.5K /per month = $6 to $9K Total: ~ $150,000

25 Integrated Home Energy Development Plan –Prototype Demonstration (6 months). Integrate advanced gasification, generator and CHP loop into homogeneous unit Validate CHP functionality/software & controls Develop detail drawings, design system layout & enclosure Assemble and test prototypes –Cost Estimate Hardware: –Custom designed gasifier & system components ($100 to $150K) –NG Generator ($3K) –Shift reactor, software & controls ($15K) Contract Services: $20/25K Software: Solid Works ($10K) Salaries: 2 x $90K * 0.5 = $90K Rental: $1 to $1.5K /per month = $6 to $9K Total: ~ $250/300K

26 Summary Sludge to Electricity via either anaerobic digestion or catalytic gasification has high profit potential Additional research and IP opportunities in catalyst formulations, regeneration techniques and pretreatments IHES System can payback in two to three years in some states and generate revenue after that through grid buy back Larger systems are required and wood requirements are excessive due to low efficiency Small improvement in Syngas Electrical Efficiency mitigates problem and increases revenue

27 Backup Slides

28 Integrated Home Energy Lessons learned from model analysis… –Under two year payback possible with high renewables usage but wood requirement excessive –Small improvement in syngas electrical efficiency result in large payback improvements (research area) –MSW does not impact payback appreciably (later add-on) –Straight NG Micro CHP does not really pay for itself even at low cost. Efficiency too low/NG cost too high –Improving electrical efficiency on syngas is good to a point in LF mode (NY/Ma) More electricity means less heat and more NG that must be purchased from grid. Always good in MG mode. More efficiency means more money and your making excess heat anyway –Renewables are cheap but overall electrical efficiency is about 10%. Still a very good deal.

29 Standalone Micro CHP Players –Climate Energy “Freewatt” – $14K Heat following 1.2kW system using Honda MCHP generator w/ integrated furnace/boiler 20% electric, 85% overall System produces about 50% of electricity needs Not grid independent. Annual savings - ~$1K –Marathon Engine Systems – up to $35K Electric load following 2 to 4.7kW, supplemental heat required Up to 27% electric, 92% overall 2000 systems in Europe Can be Grid Independent Uses heat from generator Integrated Home Energy

30 Climate Energy “Freewatt” – $14K At $2500 installed cost, payback is still 6 yrs Integrated Home Energy

31 Marathon Engine Systems – ~$35K Payback WORSE with Maximum Electricity Generation – Need %40 Efficiency for grid buyback Integrated Home Energy

32 ECO -5, 5kW Wood Pellet gasifier/generator - $9,495 Max Gen w/ Grid Reimbursement up to four fold improvment Integrated Home Energy

33 Sludge to Fuel Sludge Analysis Source data –FT Synthesis Capital Costs Data – er2008FINAL.pdf er2008FINAL.pdf –Capital cost of $50M for a 9,000 kg/d plant Production Cost Data –Processing costs back calculated from Choren data, overall efficiency of 60%, given input biomass and output diesel fuel, adjusted for water removal in sludge at 1.6 MJ/kg. All input energy assumed from NG. –Maint & OP Costs – estimated from Biopetrol data (low) and includes tarsnportation cost estimate –Anerobic Digestion All data from the document ‘Anerobic Digestion’ published, 2007 by Contains, economic and processing data/costs –Catalytic Gasification All data from the paper “Catalytic Wet Gasification of Municipal and Sewage Sludge”, American Chemical Society, 12/2006 Capital cost estimate from Elliot compilation paper

34 IHES Model Model assumptions –All electricity and heat not provided by IHES purchased from grid –Unit has separate peak heater so heat demands always met. –No recovered heat from gasifier –MSW = 4.6 lbs/person/day (EPA Website) –All heating is NG. For heat following mode fraction renewable is on thermal –For maximum gen/electric load following mode fraction renewable is on electricity –Electricity measured at meter - no efficiency loss. –Use average heating unit efficiency of 83% to calculate actual energy needs from purchased NG.

35 Energy Demographics Warmer states use more electrical energy, colder states use more thermal energy Total Energy use somewhat correlated to region Total Energy use highly correlated to house size Number of occupants less correlated to house size Ideal State: Low Average Electrical Demand with NEG Reimbursement

36 State of NG & LPG NG Demand

37 State of NG & LPG Available Reserves

38 State of NG & LPG Grants

39 State of NG & LPG Microturbines –DOE has program for microturbine development (> 100kW) –Program Goals: High efficiency — Fuel-to-electricity conversion efficiency of at least 40% Environment — NOx <7 ppm (natural gas) Durability — 11,000 hours of reliable operations between major overhauls and a service life of at least 45,000 hours Cost of power — System costs <$500/kW, costs of electricity that are competitive with alternatives (including grid) for market applications Fuel flexibility — Options for using multiple fuels including diesel, ethanol, landfill gas, and biofuels. –Program Partners Capstone (PDF 61 KB)PDF 61 KB GE (PDF 57 KB)PDF 57 KB Ingersoll-Rand (PDF 82 KB)PDF 82 KB Solar Turbines (PDF 52 KB)PDF 52 KB UTC (PDF 71 KB).PDF 71 KB

40 Conclusions

41 Case 1: Same conditions, except…. Integrated Home Energy 5 kW 10 kW 15 kW 5 kW 10 kW 15 kW

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