Transcript Document
TOWARDS THE BIOREFINERY Recycling Energy Waste in Dry Mills to Generate Electricity and Enhance Plant Profitability Presented to the Fuel Ethanol Workshop and Tradeshow Madison, WI June 24, 2004 Sean Casten Chief Executive Officer 161 Industrial Blvd. Turners Falls, MA 01376 www.turbosteam.com Creating Value from Steam Pressure The biorefinery • The economics of petroleum refining are contingent on a broad product slate to hedge market risk against volatile feedstock prices – Gasoline, kerosene, carbon black, organic chemicals, etc. • The economics of wet mills are contingent on a broad product slate to hedge market risk against volatile feedstock prices – Ethanol, animal feeds, corn syrup, ascorbic acid, etc. • What does this suggest about the future of dry mills that limit their product slate to ethanol and (sometimes) DDGs? – Wouldn’t you like to have a hedge against the “crunch” imposed by low ethanol prices and high corn prices? The best short-term opportunities for product diversification lie in upgrading waste to higher value products. • Economic theory says $20 bills are never on the ground – experience says otherwise • Conventional dry mill design leaves $ on the table by failing to convert energy waste into high-value electricity. • • • • • Potential to generate zero or near-zero-cost electricity in most mills. Reduce mill operating costs / boost mill profitability Can be used to enhance reliability of mill electric supply Turns pollution control technology into revenue-generation technology Reduces environmental impact of mill operations (eligible for $support from CO2 offsets in some cases). Understanding 75% of US power generation in 30 seconds or less… The Rankine Power Plant Fuel (Coal, oil, nuclear, gas, etc.) Boiler High Pressure Water Steam Turbine Generator Electricity to Grid High Pressure Steam Low Pressure Steam Low Pressure Water Heat to atmosphere Cooling Tower Pump Understanding dry mill energy plants in 30 seconds or less… Ethanol Dry Mill Energy Plant VOCs + Gas High Pressure Water Therma l Oxidize r/ Boiler Low Pressure Water Boiler Pump Pressure Reduction Valve High Pressure Steam Low Pressure Steam Evaporators + Other LP loads Heat to process The opportunity Steam Turbine Generator VOCs + Gas Therma l Oxidize r/ Boiler Electricity to Plant Bus Isolation Valve Evaporators + Other LP loads Boiler Pump Isolation Valve Heat to process Several non-intuitive benefits of this approach. • The presence of the LP steam load makes this generation ~ 3X as efficient as the central power it displaces. • • • • Since 75% of the power plant is already built, the capital costs per kW installed are much less than central stations, despite the relative diseconomies of scale. • • • Average Rankine plant converts only 33% of fuel into useful energy – 2/3rds goes to cooling tower. Use of heat in mill eliminates this efficiency penalty Ensures that marginal generation cost is always less than utility kWh. 1,000 MW Rankine plant typical capital costs ~ $1 billion ($1,000/kW) 1 MW steam turbine generator integrated into existing dry mill typical capital costs ~ $500,000 ($500/kW) Similar logic applies to non-fuel operating costs • • Rankine power plant typical O&M costs ~ 1 c/kWh Long term Turbosteam service contract on 1 MW unit ~ 0.1 c/kWh Other design possibilities • If TO produces more thermal energy than is needed in process, can make economic sense to reduce pressure of some or all steam further in a condensing turbine-generator to make more lbs/kW Condensing (C) Configuration HP Steam Electricity LLP Steam to condenser Backpressure/Condensing (BP+C) Configuration HP Steam LP Steam to process Electricity LLP Steam to condenser • Value can be enhanced by boosting boiler pressure and/or reducing process pressure to increase kW production per lb of steam. (Often possible without modifying existing equipment simply by easing back on operating pressure margins built into existing designs) • Generator can be designed to provide ancillary benefits in addition to kWh savings (e.g., enhanced reliability) • Can displace need for backup generation in plant capital outlay Turbosteam has installed 102 systems in the U.S., and 167 worldwide since 1986. Non-U.S. >10,000 kW 5001 – 10000 kW 1001 – 5000 kW 501 – 1000 kW 1 – 500 kW • 17 countries • 66 installations • 36,488 kW The size of the opportunity going “down the PRV” is a substantial fraction of the total plant load in most dry mills. Technical Potential in Mill with 350 psig TO 4,000 Power Gen Opportunity (kW) Power Gen Opportunity (kW) Technical Potential in Mill with 150 psig TO 15 psig process 30 psig process 50 psig process 3,500 3,000 2,500 2,000 1,500 1,000 500 0 0 20 40 60 80 Steam Flow (1000 lbs/hr) 100 120 4,000 15 psig process 30 psig process 50 psig process 3,500 3,000 2,500 2,000 1,500 1,000 500 0 0 20 40 60 80 Steam Flow (1000 lbs/hr) 100 120 By displacing purchased power, these systems increase operating profits by 0.5 – 4.0 c/gallon. Net increase in operating profits (c/gal) Economic Potential in 40 MMGal/yr Mill 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1 MW Gen 2 MW Gen 3 MW Gen 2.0 4.0 6.0 8.0 Retail Electric Rate (c/kWh) 10.0 Further, the expanded product slate makes mill operations less dependent on price fluctuations in any single commodity. Conventional Dry Mill* 1 bushel Corn 2.63 gallons Ethanol Dry Mill With Energy Recycling 1 bushel Corn 17.87 lbs DDGs 46,930 Btu Natural Gas 1.07 kWh Electricity 2.63 gallons Ethanol 17.87 lbs DDGs 46,930 Btu Natural Gas .5 kWh Electricity .57 kWh Electricity * Source: Grabaowski, Dr. Michael S., “Fossil Energy Use in the Manufacture of Corn Ethanol”, Prepared for National Corn Growers Association, August 2002. On the web at: http://www.ncga.com/ethanol/pdfs/energy_balance_report_final_R1.PDF These conversion ratios and historic feedstock prices show the dramatic value that a few c/gallon can have on operating profits. Production cost, $/gallon Energy Input Contribution to Ethanol Production Price $1.80 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 Electric Contribution NG Contribution 1996 1997 1998 1999 Year Sources: Reductions in feedstock costs fall straight to bottom line. Corn Contribution 2000 2001 2002 2 c/gallon red’n in 40 MMGal plant = $800,000 increase in profits (comparable to $1.10 red’n in natural gas price) Corn – Illinois Average Farm Price http://www.farmdoc.uiuc.edu/manage/pricehistory/PriceHistory.asp Natural Gas – U.S. DOE/EIA Average U.S. Industrial Price Electricity – U.S. DOE/EIA, Average US Retail Price Ethanol – Minnesota Development Authority, http://www.mda.state.mn.us/ethanol/economicimpact.pdf A final observation on system design: the key to a successful project is to customize equipment for specific site objectives. Example: Midwest Steel Mill (Now in design stage) PRV reduces 900 psig steam down to 150 psig for plant-wide distribution 350 820 800 o 760 740 200 720 150 700 680 100 Steam Flow 660 Steam Temperature 12/1/2003 11/1/2003 10/1/2003 9/1/2003 8/1/2003 7/1/2003 6/1/2003 5/1/2003 4/1/2003 3/1/2003 640 2/1/2003 50 Inlet Steam Temp, 250 1/1/2003 Steam Flow, mlbs/hr 780 F 300 Design for Peak flow? • 11.9 MW rated power • 43.3 million kWh/yr • $1.4 million annual savings • 3 year simple payback Design for baseload? • 2.4 MW rated power • 21.0 million kWh/yr • $672 K annual savings • 2.7 year simple payback Our approach is to identify and design to customer-specific financial objectives. 1.Identify Design with Most Rapid Capital Recovery • Below this flow, incremental gains in turndown efficiency are offset by sacrificed peak power and higher $/kW costs • 180,000 lbs/hr design flow • 6.5 MW rated power output • $1.44 million/year annual savings • 2.2 year simple payback (46% ROA) 2. Identify Design with Highest Annual Energy Cost Savings • Above this flow, incremental gains in peak power production are offset by sacrificed low-end efficiency • 275,000 lbs/hr design flow • 10 MW rated power output • $1.59 million/year annual savings • 2.5 year simple payback (40% ROA) 15-year ROA These points bound the financial opportunity, but do not identify the optimum financial design. 50% 45% 6.5 MW 40% $1.44 million/year savings 10 MW 35% $1.59 million/year savings 30% 25% 20% 15% Gross ROA 10% Marginal ROA 5% 0% 150 200 250 Design Steam Flow (mlbs/hr) Optimal system is designed here to balance desires for rapid capital recovery, high annual cash generation AND effective use of free cash. 300 The final design selected is customized for to balance technical, financial and operational constraints. Final Design • 7.8 MW • 216,000 lbs/hr design flow • 900 psig / 825 inlet 150 psig exhaust Financial Performance • 45.6 million kWh/year generation • $1.5 million/year annual energy savings • 45% gross ROA • 21% marginal ROA Key points • Good CHP plants are necessarily custom-designed • Optimum design must factor in variable thermal loads, energy rates, financial objectives, turndown curves and subcomponentvendors product limitations / “sweet spots” • Designing strictly for a payback or cash generation runs the risk of leaving money on the table OR making poor use of final capital dollars. • Similar logic applies to “power-first” CHP plants. • Find a partner who has the ability to help you work through these design constraints. So is there an opportunity in your mill? Typical Values Extreme Values Target Financial Return <2 years simple payback from energy savings Above-market returns and/or Non-financial drivers Inlet Steam Pressure >150 psig 15 psig Pressure drop across turbine-generator >100 psig 15 psig Steam flow >10,000 lbs/hr 2,500 lbs/hr Annual steam load factor >6 months/year 3 months/year Local electricity rate >4 c/kWh >1.7 c/kWh