mchp current status & future opportunities 9/20/18micro-chp (mchp) appliances are cogeneration...
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© 2018 Energy Solutions Center Inc. – All Rights Reserved
mCHP Current Status & Future Opportunities9/20/18
Eric BurgisEnergy Solutions Center610-796-1946eburgis@escenter.org
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▪ What is mCHP
▪ Why mCHP?
▪ Best Locations for mCHP
▪ CHP Technologies
▪ Current and Future mCHP Products
▪ Federal tax Incentive & Bonus
Depreciation
▪ Case Studies
Presentation Outline
https://www.michigan.gov
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What is mCHP?
Combined Heat and Power (CHP) by definition is the generation of two forms of energy from one common source of fuel also known as Cogeneration.
ElectricityFuel Prime Mover & Generator
Waste Heat Recovered
Heat & Hot Water
Micro-CHP (mCHP) appliances are cogeneration systems less than or equal to 50kW in size, larger systems are CHP.
The difference between CHP and mCHP is that most large commercial & industrial CHP applications are Electricity-led where electricity is the main output and heat is a byproduct. Micro-CHP systems in residences or smaller commercial applications are more often Heat-led. Heat is the main output and electricity is the byproduct
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How it works
▪ Micro Combined Heat & Power systems provide power independence with around 80% overall system efficiency
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Varies by region but may include one or more of the following:
▪ Economics – saving money
▪ Greenhouse Gas Emissions Reductions
▪ Improve Grid Stability
▪ Reducing congestion and constraints
▪ Dispactable power to help meet peak demands
mCHP Driving Forces
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Why Micro CHP?
*EIA data. Uses 1032 BTU/CF Natural Gas and 3412 BTU/KWH Electric. (2017 & 2018 are from EIA STEO)
$-
$5.00
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
$40.00
$45.00
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Average Retail U.S. Residential and Commercial Energy Prices including Short Term EIA Outlook ($/MMBTU)
Residential Natural Gas Residential Electric Commercial Electric Commercial Natural Gas
Residential Gas = $10.75
Residential Electric = $38.63
Commercial Gas = $8.05
Commercial Electric = $31.18
2018 Retail Forecast ($/MMBTU)
Electric costs more than 3 X the cost of Natural Gas in the U.S
Natural Gas
Electricity
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Source to Site Efficiency
Reduce Generation Losses and T&D Line Losses with CHPAGA Policy Handbook
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mCHP is Efficient
Fuel Furnace/Boiler
80% Efficient
Conventional
Heating & Electric
Fuel
125
units
100
units
56
units
Power Plant
32% EfficientmCHP
85%
EfficiencyFuel
Heat
Electricity
45
units
40
units
Micro-CHP
System
System
Efficiency ~85%
System
Efficiency ~47%
Compared to purchasing electric from the grid and producing heat with a furnace or boiler for the home or business, mCHP is much more efficient.
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North American Natural Gas Production
Source: www.eia.gov/oiaf/aeo/tablebrowser/#release=IEO2011&subject=0-IEO2011&table=6-IEO2011®ion=0-0&cases=Reference-0504a_1630
0
5
10
15
20
25
30
35
40
2005 2010 2015 2020 2025 2030 2035
Vo
lum
es
(Tc
f) Mexico
Canada
UnitedStates
Historic Projected
The Time is Right for mCHP?
From wide range of sources -Gas prices are stable.Plenty of gas for the future. Good Signs for success of CHP !
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▪Why Combined Heat & Power?
▪ Help Stabilize the Grid
▪ Economical
▪ Efficient
▪ Quality Power
▪ Environmentally Sound
▪ PA’s Act 129
Conventional Power Generationvs. Combined Heat & Power
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▪ CHP is good for business - Economical
▪ Improves overall energy efficiency and fuel utilization - thereby lowering electric and overall energy costs
▪ Offers reliability during outages – less downtime
▪ Enhances power quality
▪ Equipment to meet virtually every need – size to fit your need
Combined Heat & Power
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Best Locations for CHP
The leading criteria to evaluate the ‘best’ location for micro-CHP are:
1. Spark spread
2. Interconnection standards
3. Net metering
4. Special gas rates
5. Local Incentives
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Best Locations for CHP
Spark Spread > 3Interconnection PoliciesNet Metering for all CHPCHP Tariff RateState or Local Incentives
KEYDC
VTNHRICT
The ‘Best’ locations for CHP have at least
3 of the following attributes:
Pennsylvania:• PA Spark Spread = 3
• Philly ~ 4.5• Interconnection policies up to
5MW• Net metering: <50 kW
Residential, <3 MW for Non-residential
• CHP Tariff from PGW• Local Incentives
• PGW offers CHP Incentives• PECO offers a CHP tiered
capacity up to 50% of project cost, $2M max
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mCHP Technologies
Prime Movers:▪ Engine Drives, Internal Combustion (IC)
▪ Microturbines▪ Fuel Cells
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Engine Driven mCHP
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▪ Reciprocating engines are available for power generation applications in sizes ranging from a ~1 kW to several MW
▪ All current mCHP IC Engines are spark ignition engines
▪ Low first cost
▪ Fast start-up
▪ Proven reliability when properly maintained
▪ Excellent load-following characteristics
▪ Significant heat recovery potential
Engine Drives – Facts
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Engine Heat
Exhaust GasHeat Exchanger
Jacket WaterHeat Exchanger
Lube OilHeat Exchanger
ColdWater
Steam /Hot
Water Exhaust
Air
Generator
AC ElectricityPiston
ExhaustValve
IntakeValve
IgnitionSource
Crankshaft
Natural Gas
Turbocharger
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▪ Black-Start (not available on all units)
▪ The use of a permanent magnet generator and inverter together can provide the CHP unit with added “black-start” capability to come on line when the utility grid is down
▪ Generator units without “black-start” capability can only operate when the electric utility is on line.
▪ Provides the facility with “supplemental/stand-by” generation during utility outages
Black Start Capability
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▪ Microturbines – 30 kW (available)
▪ Run at high speeds
▪ Used in power-only generation or in combined heat and power (CHP) systems
▪ Able to operate on a variety of fuels, including natural gas, sour gases (high sulfur, low Btu content), and liquid fuels such as gasoline, kerosene, and diesel fuel/distillate heating oil
Microturbines
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Schematic of Microturbine System
20
Fuel Compressor(if necessary)
Generator
AC Electricity
Recuperator(most units)
InverterRectifier
TurbineCompressor
Combustor
Natural Gas
Low TemperatureWater / Air
Heat to User
Exhaust
Air inlet
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▪ Fuel cell systems are composed of three primary subsystems:
▪ Fuel cell stack that generates direct current electricity
▪ Many include a Fuel processor that converts the natural gas into a hydrogen rich feed stream
▪ The power conditioner that processes the electric energy into alternating current or regulated direct current
▪ Fuel cells produce power electrochemically from hydrogen delivered to the negative pole (anode) of the cell and oxygen delivered to the positive pole (cathode)
Fuel Cells
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Schematic of Fuel Cell System
Fuel Processor
Fuel Cell Stack
Hydrogen
Gas
ExhaustCO2 & N2
Cooling Loop
CustomerLoad
H
E
A
T
Heat
Exchanger
-
+
DCInverter
AC
93%CH4
Air
Water
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Current and Future mCHP Products
50 kW IC Engine,
Tedom 35 kW IC Engine
23.5 kW IC Engine 4.4 kW IC Engine
1.5 kW IC Engine 5& 10 kW IC Engine, plus cooling
30 kW Micro turbine 5, 10, & 35 kW IC Engine
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mCHP – Working on Commercialization
1.4-15KW steamturbine1KW Rankine Steam cycle
20-25 kW IC Engine
1 kW Stirling Engine
2-4 kW Thermal Acoustic 1.5 kW Solid Oxide Fuel Cell
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Future mCHP Products – Coming Soon
MTT - 3 kW Micro Turbine
25 kW Fuel Cell
Micro CHP Combi Boiler(1kW Stirling - eVita)
1 kW Fuel Cell (U.S.)Working on residential product
1-8 kW Engine (U.S.)Opposing Piston Engine
6 kW Engine(Canada)
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Help with funding CHP
This Photo by Unknown Author is licensed under CC BY-ND
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CHP Tax CreditConstruction begins after
Construction begins before
Investment tax Credit (ITC)
12/31/2008 1/1/2022 10%
Bipartisan Budget Act of 2018 (Page 211-214):
https://www.appropriations.senate.gov/imo/media/doc/Bipartisan%20Budget%20Act%20of%202018.pdf
• A 10% investment tax credit for CHP property, applicable to only the first 15MW of CHP property & systems must be less than 50MW.
• CHP system must be 60 percent efficient (on a lower heating value basis), producing at least 20% of its useful energy as electricity and at least another 20% as useful thermal energy.
• Construction must begin by 1/1/2022
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Micro-Turbine Tax CreditConstruction begins after
Construction begins before
Investment tax Credit (ITC)
12/31/2008 1/1/2022 10%
Bipartisan Budget Act of 2018 (Page 211-214):
https://www.appropriations.senate.gov/imo/media/doc/Bipartisan%20Budget%20Act%20of%202018.pdf
• Credits are for 10% of the cost, up to $200 per kW of power that can be produced.
• To qualify, systems must have an efficiency of at least 26% and must have a capacity of less than 2,000 kW.
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Fuel Cell Tax CreditConstruction begins after
Construction begins before
Investment tax Credit (ITC)
12/31/2008 1/1/2020 30%
12/31/19 1/1/2021 26%
12/31/20 1/1/2022 22%
Bipartisan Budget Act of 2018 (Page 211-214):
https://www.appropriations.senate.gov/imo/media/doc/Bipartisan%20Budget%20Act%20of%202018.pdf
• Credits are for 30% of the cost, up to $3,000 per kW of power that can be produced (Legislation states $1,500 max per .5kW)
• To qualify systems must have an efficiency of at least 30% and must have a capacity of at least 0.5 kW.
• Must be placed in service before 1/1/2024 or 0% incentive
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▪ Section 178 of the Tax code allows for 100% depreciation in the 1st year of capital expenses.
▪ Most businesses pay around 21% federal tax.
▪ Assuming the business earns more than the cost of the CHP system, the entire cost of the system can be written off against income the first year and the net effect is you get 21% of the cost back.▪ Add to that the 10% ITC for CHP the business gets
31% of the cost returned in the first year.
Bonus Depreciation
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▪ CHP System costs $200K installed. Assume 21% tax rate.
▪ Under a 20 year depreciation, the business writes off $200K/20 years = $10K/Year which is worth $2,100 per year.
▪ Under Section 179 rules of the tax code, the business writes off $200K in year 1, and at 21% tax rate, this is $42K.▪ This assumes the business earns more than the $200K CHP system cost.
▪ Add to either scenario a 10% Tax Credit for CHP which is worth $20K and the business receives $62K of the $200Kexpense back the first year.
▪ Total returned from bonus depreciation & ITC = 31% of the installed cost of the CHP system.
Bonus Depreciation Example
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ESC’s CHP Consortiumwww.UnderstandingCHP.com
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Case Studies
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▪ Large residence –13,000 sq ft.
▪ Goal - reduce the electric bill, heat
the pool/tub, and provide backup
power.
▪ 10 kW mCHP provides 85% of the
power for the residence as well as
the hot water for domestic use.
▪ The swimming pool (8 months/year)
and hot tub (all year) are heated by
the mCHP.
▪ Average operation time per month is
694 hours.
▪ Average power usage: 6.9 kW/mo.
▪ Annual energy savings: $14,000 and
offering a 3 year payback.
Micro-CHP in Greenwich, Conn
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Micro-CHP in Greenwich, Conn
▪ 9,000 sq.ft.
▪ Full in-floor radiant heating
system in the house. Sept to
May.
▪ 28,000 gallon pool @ 85°F
(Grandkids) May - Sept
▪ Geothermal system as
backup.
▪ In 20 months of mCHP
usage -- generated 40 Mwh
of electricity @ $0.23/Kw
savings of $9,000
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SportSchloss Velen Hotel (Velen, Germany)
Fuel Type: Natural Gas CHP Application: Pool Heating and hot water Size: 50 Kw
-102 Rooms and Suites, 19 event rooms, and 2 restaurants-Estimated Savings of $4,000 per month
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Newspaper Printer (Essen, Germany)
Fuel Type: Natural Gas CHP Application: Hot water Size: 50 Kw
-Prints varies newspapers daily
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Soccer Stadium (Apeldoorn, The Netherlands)
Fuel Type: Natural Gas CHP Application: Hot water Size: 50 Kw
-Hot water is used for turf heating (when needed) and domestic hot water
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Eric BurgisEnergy Solutions Center610-796-1946eburgis@escenter.org
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