CHP Project Costs Screening Public Utility Commission of Ohio Public Utility Commission of Ohio Combined Heat and Power: Financial Tools Workshop Columbus, OH August 2, 2012 Cliff Haefke

o CHP project development process o Qualifying a CHP system o CEAC technical assistance Outline 2

o U.S. DOE Midwest Clean Application Center originally established in 2001 by U.S. DOE and ORNL to support DOE CHP Challenge o Today the 8 Centers promote the use of CHP, District Energy, and Waste Heat Recovery Technologies o Strategy: provide a technology outreach program to end users, policy, utility, and industry stakeholders focused on: –Market analysis & evaluation –Education & outreach –Technical assistance o Midwest Website: US DOE Regional Clean Energy Application Centers (CEACs) 3

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5 Advantages & Benefits of CHP o Remember… CHP does not make sense in every application, but when it does, it can provide the following benefits –Lower energy costs –Reduced energy consumption –Increased electric reliability –Standby power –Improved environmental quality –Good public relations –And more…

o All buildings and market sectors are not identical in terms of –Energy consumption –Energy demands –Operating schedules –Size of facilities –Geographic location –Electric and natural gas utilities –Environmental concerns o Therefore… it’s important to evaluate facilities individually! 6 Evaluating Facilities on an Individual Basis

CHP Process Development Steps 12 Site Request CHP Qualification Feasibility Study Investment Grade Analysis Procurement Installation Operation

o Do you pay more than $.06/kWh on average for electricity (including generation, transmission and distribution)? o Are you concerned about the impact of current or future energy costs on your business? o Are you concerned about power reliability? Is there a substantial financial impact to your business if the power goes out for 1 hour? For 5 minutes? CHP Qualification Questions 8

o Does your facility operate for more than 5000 hours per year? o Do you have thermal loads throughout the year (including steam, hot water, chilled water, hot air, etc.)? o Does your facility have an existing central plant? CHP Qualification Questions (2) 9

o Do you expect to replace, upgrade, or retrofit central plant equipment within the next 3-5 years? o Do you anticipate a facility expansion or new construction project within the next 3-5 years? o Have you already implemented energy efficiency measures and still have high energy costs? CHP Qualification Questions (3) 10

o Are you interested in reducing your facility's impact on the environment? o Do you have access to on-site or nearby biomass resources (i.e. landfill gas, farm manure, food processing waste, etc.? CHP Qualification Questions (4) 11

Attractive CHP Markets Industrial o Chemical manufacturing o Ethanol o Food processing o Natural gas pipelines o Petrochemicals o Pharmaceuticals o Pulp and paper o Refining o Rubber and plastics Commercial o Data centers o Hotels and casinos o Multi-family housing o Laundries o Apartments o Office buildings o Refrigerated warehouses o Restaurants o Supermarkets o Green buildings Institutional o Hospitals o Landfills o Universities & colleges o Wastewater treatment o Residential confinement Agricultural o Concentrated animal feeding operations o Dairies o Wood waste (biomass)

o Facility data and industry information o Facility motivation for CHP o Electric/thermal loads, needs, and costs o Major HVAC, electric, and thermal (heating & cooling) equipment Collecting Site Information for a CHP Evaluation 13

Example Screening Calculation Loads & Assumptions 14 Site CharacteristicsValue Facility TypeHospital Annual Hours of Operation, hrs8,520 Average Power Demand, MW10.4 Average Thermal Demand, MMBtu/hr50.0 Thermal Fuel Costs, $/MMBtu6.00 CHP Fuel Costs, $/MMBtu6.00 Average Electricity Costs, $/kWh0.08 Percent Electric Price Avoided*90% * Typically 70-95%

Example Screening Calculation (2) CHP System Assumptions 15 CHP SystemValues Net CHP Power, MW (based on thermal match)10.2 CHP Electric Efficiency, % (HHV)29.1% CHP Thermal Output, Btu/kWh4,922 CHP Availability, %96% Incremental O&M Costs, $/kWh0.009 Displaced Thermal Efficiency, %80.0% CHP Thermal Utilization100.0%

Example Screening Calculation (3) Annual Energy Results 16 Base CaseCHP Case Purchased Electricity, kWh88,250,1605,534,150 Generated Electricity, kWh082,716,010 On-Site Thermal, MMBtu426,00018,872 CHP Thermal, MMBtu0407,128 Boiler Fuel, MMBtu532,50023,590 CHP Fuel, MMBtu0969,845 Total Fuel, MMBtu532,500993,435

Example Screening Calculation (4) Annual Operating Costs & Simple Payback 17 Annual Operating CostsBase CaseCHP Case Purchased Electricity, $$7,060,013$1,104,460 On-Site Thermal Fuel, $$3,195,000$141,539 CHP Fuel, $$0$5,819,071 Incremental O&M, $$0$744,444 Total Operating Costs, $$10,255,013$7,809,514 Simple Payback Calculations Annual Operating Savings, $$2,445,499 Total Installed Costs, $/kW$1,400 Total Installed Costs, $$14,221,861 Simple Payback, Years5.8

CHP Market Development – Emerging Drivers o Growing recognition of CHP benefits by state and federal policymakers o Emissions regulations impacting non-utility boilers o Upward pressure on electricity prices o Favorable natural gas outlook 18 OH Governor Kasich signing energy Senate Bill 315 Source: Akron Beacon Journal Online, 07/2012

CHP Market Development – Emerging Drivers o Growing recognition of CHP benefits by state and federal policymakers o Emissions regulations impacting non-utility boilers o Upward pressure on electricity prices o Favorable natural gas outlook 19

CHP Market Development – Emerging Drivers o Growing recognition of CHP benefits by state and federal policymakers o Emissions regulations impacting non-utility boilers o Upward pressure on electricity prices o Favorable natural gas outlook GW of Coal Fired Utility Power Plants impacted by EPA regulations Upward Pressure on Electricity Prices Source: ICF International

CHP Market Development – Emerging Drivers o Growing recognition of CHP benefits by state and federal policymakers o Emissions regulations impacting non-utility boilers o Upward pressure on electricity prices o Favorable natural gas outlook 21 Henry Hub Gas Prices Will Average Projected Between $5 and $6 per MMBtu Favorable Natural Gas Outlook Gas Prices at Henry Hub (2010$/MMBtu) Source: ICF International

CHP Assistance from CEACs 12 Site Request CHP Qualification Feasibility Study Investment Grade Analysis Procurement Installation Operation CEAC Project Support Over 225 assessments & 700 tech support activities Represents over 1.5 GW installed or in development CEAC Capabilities Qualification thru Feasibility Analysis Consulting Expertise thru all Steps Bringing customers and CHP engineering community together

Thank You Cliff Haefke (312) A program at A program sponsored by