Transcript Turning Down the Heat

Captive Power Plants, 2004
Recycling Energy
A Bridge to the Future
Thomas R. Casten
Chairman WADE
World Alliance for Decentralized Energy
World Energy Situation

Growing energy demand is driving up
fossil fuel prices

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132 nations increased energy use faster than
USA last decade, including India and China
“Hubbert’s Peak” says world oil production
will peak in the 2003 to 2005, then decline
Oil purchases are a massive wealth transfer,
propping up dictators, religious zealots, and
those supporting global terrorism
Fossil Use is Changing Climate
 Increasing atmospheric CO2 is warming the
globe, causing:


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Increased frequency and severity of storms
Threatens to flood low countries, such as
Bangladesh
More rapid species extinction & disease spread
 Developing countries can save money by
reducing generation and transmission
losses, and also reduce CO2 emissions
Cost of Work Drives Income per
Capita
 Recent economic analysis attributes 80%
of per/capita income growth to changes in
the real cost of work

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Physicists “work” is useful changes – moving
people, transforming product, illuminating, etc
Cost of work effected by: 1) fuel prices, 2)
conversion efficiencies, 3) transmission
losses, 4) appliance and vehicle conversion
efficiency; 5) any other steps from fuel to
useful work.
But Cost of Work Is Rising
 Real fuel prices are increasing
 Central electric generation efficiency has
been frozen for 40 years at 33%
 T&D losses are rising, due to grid
congestion
 Appliance efficiency gains are slowing
 Mandated growth of renewable energy will
raise electric prices
 Without efficiency improvement, per capita
incomes could begin shrinking.
Transporting Energy
Rule of Sevens
 One key to saving energy is choice of
energy transmission, following rule of 7’s

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Moving fuel (coal, gas, or oil) takes 7 times less
energy than moving electricity, in best T&D
(larger penalty with undersized T&D wires)
Moving thermal energy takes 7 times more
energy moving electricity
Thus, moving thermal energy takes 49 times
more energy than moving fuel.
Diseconomies of Scale
 Large central power plants cost less to
build than smaller local power plants, but:


One new KW delivered from central power
plants requires 1.5 kW new plant (55,500
Rupees) and 1.5 KW new T&D, (87,000
Rupees); total of 142,000 Rupees
One new kW delivered from DG requires 1 kW
new generation (50,000 Rupees) plus 0.1 kW
new T&D (3,700 Rupees); total of 53,700
Rupees per delivered kW.
Local Generation Enables Energy
Recycling
What is Recycled Energy?
 Most fuel and electricity is used once, with all
waste discarded
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Power plants burn fuel and then discard 2/3’s as heat
Industry transforms raw materials to finished goods
and then vents heat, pressure, & waste fuels
 Captive power plants combine heat and power
generation to recycle normally wasted heat
 Recycling industrial waste energy produces clean
power; no extra fossil fuel or pollution.

Can recycled power from bagasse, blast furnace gas,
carbon black gas, hot exhaust, pressure drop
Recycled Energy (At user sites)
No Added Pollution
10% Waste Heat
25%
Electricity
Waste Energy
100%
70%
Steam
Steam Generator
BP Turbine
Generator
Capital costs similar to other CHP or DG plants
Recycled Energy Case Study:
Primary Energy
 We invested $360 million in six projects to
recycle blast furnace gas and coke oven
exhaust in four steel plants.

440 MW electric and 460 MW steam capacity.
 Return on assets exceeds 15%
 Steel mills save over $100 million per year
and avoid significant air pollution
 Reduced CO2 equals uptake of one million
acres of new trees.
90 MW Recycled from Coke Production
Chicago in Background
What is Optimal Way to Meet
Electric Load Growth; with CG
or DG?
Central Versus Distributed Generation
 WADE model includes all generation
choices; calculates costs to meet 20 year
expected load growth with CG or DG
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DG scenarios include good CHP (4,000 Btu
heat recovery per kWh electric,) industrial
recycled energy, and renewable DG
Central generation scenario is user specified
mix of electric-only plants, including renewable
Can model any country; need local data on
existing generation, load growth, T&D losses
US Results, CG versus DG, for
Next 20 years (Billion Dollars)
Item
All CG
All DG Savings %
Saved
Capacity + T&D
$831
$504
$326
39%
Power Cost
$145
$92
$53
36%
Tons NOx
288
122
166
58%
Tons SO2
333
19
314
94%
MM Tonnes CO2
776
394
381
49%
Extrapolating US Analysis the World
 Insufficient data to run WADE model for the
world
 We believe US numbers are directionally
correct for CG versus DG
 We analyzed conventional approach of IEA
Reference Case versus optimal solutions
with DG using US values
Conventional Central Generation
Pollution
67% Total
Waste
Line Losses
9%
Fuel
100%
33%
delivered
electricity
Power Plant
Generation:
$890 / kW
4,800 GW worldwide
Transmission:
$1,380 / kW
4,800 GW
$4.2 trillion
$6.6trillion
T&D and
Transformers
To end users:
$2,495 / kW
4,368 GW
$10.8 trillion
Combined Heat and Power (CHP)
Pollution
10% Waste Heat, no T&D loss
Electricity
Fuel
100%
CHP Plants
90%
Steam
Chilled
Water
(At or near thermal users)
Generation:
$1,200/kW
4,368 GW
World Cost: $5.2 trillion
Transmission
$138/kW (10% Cap.)
0.44 GW DG
$600 billion
DG vs. CG: ($1.0 trillion) $6.0 trillion
To End Users
$1,338/kW
4,368 GW
$5.8 trillion
$5.0 trillion
What is Lost if World Opts for DG?
 World will consume 122 billion fewer
barrels of oil equivalent (½ Saudi reserves)
 Fossil fuel sales down $2.8 trillion
 Medical revenues from air pollution related
illnesses may drop precipitously
 Governments might spend much of the
savings to supply electric services to
entire population
 Global warming might slow down
Potential Indian Savings
 No one has yet run WADE model for India
 We believe Indian analysis will show similar
savings and support a future built on
distributed generation that recycles
normally wasted energy, avoids T&D capital
and T&D losses
Part II A Case Study
Indian DG Miracle
India’s Potential Future
 The Indian economy has many elements in
place for rapid economic growth

900 million person common market

Many well educated people

Solid basic industry
 However, inadequate access to electricity and
frequent outages block progress.
 Until 1994, Indian policy absolutely favored
central generation – like every other country
The Indian Power System
 India has 100,000 megawatts of mostly
central generation
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Only 60% of generated power reaches paying
end users, due to line losses and theft
Many people lack access to, or only receive
power a few hours per day
Government goal is to double delivered power
in next decade.
 What has DG contributed?
Central Power Historically Favored
 State Electricity Boards were given monopoly
rights to generate and distribute power
 Federal government focused on new central
generation, assumed all generation equal, but:

1 kWh generated locally replaces 1.5 to 1.8 kWh
generated centrally and avoids T&D capital costs
 Historically, state grids refused to purchase or
offered a fraction of the value of local power
 These policies isolated wasteful monopolies,
blocked innovation and efficiency, hurt industry
Sugar Cane DG Success Story
 Sugar cane converts sunlight efficiently
to hydrocarbons
 Indian has 457 sugar cane mills
 Bagasse is incinerated at sugar mills
 40% of bagasse can satisfy mill’s thermal
and electric needs, rest could provide
power for local area
Policies Changed
 In 1994, Ministry for Unconventional Energy
encouraged SEB’s to pay full value, pay half of
interconnection costs and offer 13 year power
purchase contracts with inflation adjustment
 Most states in cane producing areas agreed and
encouraged sugar industry to invest in modern
power plants, selling surplus power to grid
 The results are historic, not seen in any other
country!
A DG Miracle is Underway!
 In 5 years, 87 projects with 710 megawatts
capacity have been built or are under contract

Adds 1% to Indian generation, but no line losses, so
adds 2% to delivered power
 This new clean energy is five times the power
that will be generated worldwide by solar PV
 Total potential from Indian bagasse is 5,000
megawatts – a sevenfold increase is possible
Economics of Bagasse based DG
Item
Local bagasse
Central power
Delivered MW
710
710
Delivered MW
710
1,183
Capital Cost
2.15 B Rupees
7.18 B Rupees
Fuel per kWh (del.)
0
1.08 Rupees
Capital Amortization
N/A
3.30 Rupees
Total Cost/kWh
2.92 Rupees
4.9 Rupees
Total Cost/year
12.3 B Rupees
20.7 B Rupees
Incremental Carbon
Dioxide
Nil
7 MM tons
Inc. Sulfur Dioxide
Nil
40,000 tons
Savings w/ Full Deployment
 Add 5,000 megawatts local power, avoids 8,330
MW of new central power and T&D
 Will reduce power costs by 39 billion Rupees/year
 Will reduce carbon dioxide by 50 million metric
tons per year
 Will cut sulfur dioxide emissions by 310,000
metric tons per year
 Can provide 12.5% addition to delivered power in
India, without new government investment
Lessons and Observations
 Policy changes have induced renewable energy
development on a vast scale, exceeding every
other country and;
 Indian society already saving 5.6 billion Rupees
per year, could rise to 39 billion savings/year
 Next step: recycle industrial waste including blast
furnace gas, carbon black gas, exhaust heat,
refinery off-gas to generate 20 to 30,000 added
local megawatts with no incremental pollution
Implications
 Current trends hurt per capita income in all
countries
 India has started to reduce real cost of
work by inducing captive power plants that
recycle sugar mill waste, avoid T&D capital
and losses
 More regulatory changes are needed to
induce recycling of all industrial waste
energy and to induce all other new
generation to recycle waste heat.
Implications for CII
 Revenues and cost avoidance from
recycled energy essential to remaining
competitive
 Growth of generation near users is the
least costly way to end energy poverty
 Changing Indian policy to favor all DG that
recycles energy is key to economic growth
 Electricity is too important to be left to
central planning and regulated monopolies
Importance of DG Revolution
 The DG revolution may, in time, match
importance of the Green Revolution
 We hope the DG revolution spreads beyond
India, perhaps even to the US some day
 We tip our hats to the enlightened
government officials in India who have
fostered a DG revolution
 We encourage CII to help open energy
industry to competition
Thank you for listening!