Transcript Tenth Annual Midwest Energy Conference March 7, 2007 How Best Satisfy Midwest Electric Load Growth? Thomas R.

Tenth Annual Midwest Energy Conference
March 7, 2007
How Best Satisfy Midwest
Electric Load Growth?
Thomas R. Casten
Chairman
Recycled Energy Development
Four Questions
 Where are electricity prices headed
over next five to ten years?
 What is optimal new generation?
 What blocks optimal generation
choices?
 What changes would induce better
choices?
Electricity Prices Likely to Double in
Five to Ten Years
 Emission rules force coal plants to invest $300$800/kW and lower efficiency, or to retire plants
 Long-term fuel contracts below spot market
 Massive investment in T&D will raise rates
 Carbon credits inevitable, $20/ton adds 2
cents/kWh to Midwest delivered power costs
 New coal plants require 10 to 12 cents per
delivered kWh, plus carbon permit costs
 These factors will add 6 to 8 cents/kWh to
average retail rates.
Midwestern Plant Closing Risk
Operational MW over 40
MW of
years old
Generation
Great Lakes 178,887
36,237
Percent
over 40
years old
20.3%
Midwest
72,753
12,718
17.5%
Total
Region
251,565
48,955
19.5%
How Best Satisfy Electric Load
Growth and Plant Retirement?
 Lowest delivered cost per kilowatt-hour?
 Least criteria pollutant emissions?
 Least greenhouse gas (GHG) emissions?
 Least requirement for system redundancy?
 Lowest line losses?
 Best power quality?
 Least grid vulnerability?
Future Generation Options
20
Renewable Energy
Options
Central
Generation
Options
Coal Gas with CO2
Sequestration
Cents / kWh
15
10
No incremental
fossil fuel line
New Combined Cycle
Gas Turbine
New Coal
Coal Gassification CCGT
Remote Wind
Avg. Retail Power Price
8.1¢ / kWh
Recycled Energy
Options
Avg. Industrial Power
Price 5.5¢ / kWh
5
Recycled Industrial
Energy
Balanced CHP
Existing Coal Fossil Plant
- No new T&D
0
3
(33% efficiency)
2
1
(50% efficiency)
(100% efficiency)
0
-1
(net fossil savings)
Average Fossil Heat Rate (Units of fossil fuel per unit of delivered electricity)
Costs per Delivered MWh
Fuel
Emissions
Other Ops
Amortization
$140
$120
$100
Lowest Cost
Central Option
$80
$60
$40
$20
.
H
ea
t
R
ec
.
B
T
CG
C
P
CH
Tu
rb
P
ga
s
T
CG
T
G
G
IC
C
oa
l
C
on
v.
($20)
co
al
$0
C
$ per delivered MWH
Local Options that
Recycle Energy
Central Gen Options
Conventional Central Generation
Pollution
67% Total
Waste
Line Losses
9%
Fuel
100%
33%
delivered
electricity
Power Plant
T&D and
Transformers
Generation:
$1200-$2500/kW
Transmission:
$1,400/kW
End user: .91 kW:
$2,900-$4,100/peak kW
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:
Transmission
End users: .98 kW
$1,200 -$1,600/kW $140/kW (10% CG) $1,400 -$1,800/kW
DG vs. CG:
Saves $1,100-$1,700/kW
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
90 MW Recycled from Coke Production
Chicago in Background
Potential to Recycle Energy
 Convert industrial waste energy into heat and power with
on-site energy recycling plants

95,000 megawatts potential , 9,900 MW in service
 Build Combined Heat and Power (CHP) near thermal
users to recycle waste thermal energy

Potential for up to ½ of all US generated power with CHP plants
Best New Generation: Recycle Industrial
Energy
 Wasted energy streams in nineteen industries could
generate 19% of US electricity
Recycled Energy in the US
9,900 MW
Recycled Energy
in Service
95,000 MW
Identified
Opportunities
Source:USEPA 2004 Study
US Industrial Recycled Energy
Potential
.
 Gas compressor stations:
16,200
GWh
148,000
GWh
78,000
GWh
 Estimated exhaust heat:
300,000
GWh
 Total Potential:
492,000
GWh
 Flare & stack gas:
 Steam pressure drop:
 Est. Recycled Energy Cap.
95,000
MW
 For all remaining thermal load, install CHP plants,
fueled with gas, coal, and biomass
CO2 Emissions Per Delivered MWH
By Generation Type
Tons CO2 per delivered MWH
1.4
Tons CO2 per Delivered MWh
Central Generation Options
Local Generation Options
1.2
1
0.8
0.6
0.4
0.2
0
Conv. Coal
IGCC Coal
CCGT gas
CCGT CHP
BP Turbine
Power Generation Approach
Recycled Energy
Cost and CO2 per Delivered MWh
Delivered Cost per MWh
Tons CO2 per delivered MWH
$140
1.4
Central Plants
$120
1.2
Local Plants that
Recycle Energy
$100
1.0
$80
0.8
$60
0.6
$40
0.4
$20
0.2
$0
0.0
Conv. Coal
IGCC Coal
CCGT gas
CCGT CHP
BP Turbine
Recycled
Energy
Unique Midwest Option for
Load Growth
Induce CHP at every ethanol plant
50 MW each plant, 90% efficient, avoids
transmission investments, less GHG,
AND
Slashes cost of ethanol
Ethanol Hosted CHP
Local Boiler,
Central
ICGCC
645
50 MW Gas
CHP local
generation
412
Local
savings
versus CG
36%
Tons CO2 per
year
467,000
213,000
54%
Fossil BTUs/
Gallon Ethanol
34,600
200
98%
Cost/delivered
kWh
$0.11
$0.07
36%
Fossil
MMBTU/hr
CO2/Year from 55 Million Gallon
Ethanol Plant & 50 MW Electricity/hr
M Tons CO2/year
500
450
400
350
300
250
200
150
100
50
0
Boiler, central ICGCC
CCGT Gas Turbine CHP
What Blocks Optimal Local
Generation?
 Conventional wisdom is biased to CG

CG easier to plan and control
 Decisions based on cost at generation plant,
instead of on cost of delivered kWh
 Monopoly protection creates barriers to local gen
 Local gen not paid for values it creates, including
T&D capital savings, line loss avoidance, CO2
reduction, and health savings
 Central gen and associated T&D guaranteed by
rate payers, local gen not guaranteed
What Would Induce Optimal
Generation Choices?
 Long-term contracts for best delivered kWh
 Pay local generation plants for grid support
 Factor in health and environmental costs in
generation decisions
 Insure new industrial energy recycling
plants against risk of host ceasing to
supply waste heat
 Monetize carbon emissions
Summary
 Power prices will likely double in 5-10 years
 Best option for new generation is local
generation that recycles waste energy.
 CHP at ethanol plants saves 36% to 54%
versus new central coal plant generation,
and makes ethanol competitive
 Barriers and denial of benefits blocks good
generation choices
 Regulators can fix the bias and induce best
new generation.
Thank you for listening!