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Vermont System Planning Committee

Vermont CHP and Customer Sited Generation Potential Study Summary Presentation to the Vermont System Planning Committee. Presented by : John Athas, Patty Richards La Capra Associates, Inc . Presented to :. Vermont System Planning Committee. December 8, 2010. AGENDA.

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Vermont System Planning Committee

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  1. Vermont CHP and Customer Sited Generation Potential Study Summary Presentation to the Vermont System Planning Committee Presented by:John Athas, Patty Richards La Capra Associates, Inc. Presented to: Vermont System Planning Committee December 8, 2010

  2. AGENDA • 1. Introduction to the Project and La Capra Associates Team • 2. Study Scope and Objectives • 3. Study Approach • 4. Results • 5. Study Conclusions • 6. Q&A

  3. 1. Introduction to the Project and La Capra Associates Team • Section 1:

  4. 1. Introduction to the Project and Team • VSPC issued an RFP to perform a study of the potential in Vermont for Electricity Generation from Combined Heat and Power and Customer-Sited Generation. • La Capra Associates and Stantec Consulting Services teamed up to perform the Study. • La Capra Associates performed modeling and estimates of potential. • Stantec Consulting Services provided combined heat and power (CHP) cost and technical assumptions. • Team members included: • La Capra Associates: Dick Hahn, John Athas, Patty Richards, Barb Stoddard, Melissa Whitten, Mary Neal, Zach Myer, and Jeff Bower • Stantec Consulting Services: Jim Stone, Dan Kelley

  5. 2. Study and Scope Objectives • Section 1:

  6. 2. Study Scope and Objectives • Identify and learn from existing CHP installations in Vermont. • Identify CSG most likely to be available to Vermont consumers. • Identify technical and economically achievable potential of CSG. • Identify barriers to the deployment of CHP and suggest how to overcome those barriers. • Scope Definition: Customer-Sited Generation (CSG) • Customer-sited renewable energy generation (CREG) • Backup- or peak reducing generation (PRG) • Combined heat and power (CHP) • Customer-Sited Generation is also defined for this study as being limited to the size of the peak demand of the specific customer.

  7. Vermont Load Zone Map • 2. Study Scope and Objectives

  8. 2. Study Scope and Objectives The Executive Summary • Peak Reducing Generation (PRG) is the least expensive Customer-Sited Generation option to avoid or delay transmission projects. • Societal and customer economics of CHP are poor without natural gas available to fuel the CHP equipment, marginal in some applications with natural gas. • Existing CHP is not being utilized by the host customer in many cases. • Customer-Sited Renewable Energy Generation resulted in limited potential assuming existing level of incentives continue. • CSG potential did not uncover significant resources that would likely have better economics than transmission projects. • CHP and renewable energy are site-specific; more detailed studies would be required to identify specific candidates.

  9. 2. Study Scope and Objectives Study Key Objectives • Estimate the potential and the cost of customer- sited generation (CSG) resources in Vermont. • Technical Potential • Economic Potential • Economics will be examined using the three forms of resource planning tests as well as customer economics. • Societal Cost • Total Resource Cost • Utility Cost • Provide information to be used to assist the state and electric utilities in assessing whether Combined Heat and Power (CHP) and customer-sited generation may be viable alternatives to transmission projects (NTAs). • Supply Curves by Zone

  10. 3. Study Approach • Section 1:

  11. 3. Study Approach Overall Approach CSG studied from two perspectives: • CSG Customer Economics • Payback • Internal Rate of Return • Net Present Value 2. CSG Potential as an Electric System Resource • Societal Cost Basis • Net Cost to Reduce Peak Demand

  12. 3. Study Approach Customer-Sited Generation Technologies Combined Heat and Power (CHP) Reciprocating Steam turbine generators (STGs) Combustion turbine generators (CTGs) Microturbines Fuel Cells Renewable Energy Generation • Wind turbine generators • Solar photovoltaic (PV) • Farm methane

  13. 3. Study Approach CSG Installed Cost Comparison Figure 5: Installed Cost of CHP and PRG CSG Technologies

  14. 3. Study Approach • CSG Installed Net Cost of Electricity Comparison Figure 6: Levelized Cost of CHP and Renewable CSG Technologies

  15. 4. Results: Existing CSG • Section 1:

  16. 4. Results: Existing CSG • Existing CHP in Vermont Observations • A number of the 26 units are no longer operating. • Developed and conducted a telephone survey. Eight customers contacted and six returned our call. Of the six CHP customers participating only two were actually operating their units. • For offline units, respondents most-often cited economics (too expensive) and equipment reliability issues as the reasons for shutting down the CHP units. Table 5: State of Vermont Existing Combined Heat and Power Plants

  17. 4. Results: Existing CSG • Existing CHP – Feedback Non-Operating Facilities • Economics • Equipment Reliability • Staffing Requirements • Thermal Demand • Natural Gas Access • Non-economic factors can play a role in keeping CHP going: • Lack of reliability of electric grid • Social Mission

  18. 4. Results: Existing CSG • Existing Customer-Sited Renewable Energy Generation in VT Table 6: State of Vermont Existing Customer-Sited Renewable Energy Generation Table 7: State of Vermont Existing Customer-Sited Renewable Energy Generation

  19. 4. Results: Overall Projections for CSG • Section 1:

  20. 4. Results: Overall Projections for CSG • Study Definition Of Technical Potential Technical Potential PRG Equal to the commercial and industrial peak demand within a zone.   CREG Renewable-based technical potential is defined by the population of customers for which the technology could be installed without regard to cost.  CHP Defined in this study as the sum of the optimum-sized CHP units for each customer defined sub-segment. Economic Potential PRG Amount of PRG technical potential estimated to have lower total net costs than CHP and peak load greater than 10 kW. CREG Developed using historic rates of implementation of projects in Vermont and we therefore, refine the definition to being market potential in the study. CHP Economic potential cut-off comes when the Net Cost to Reduce Peak for CHP equals the cost of PRG.

  21. 4. Results: Overall Projections for CSG • Study Overall Conclusions Conclusions • There are limited customer-sited generation options which have net benefits under the societal test and therefore the potential to avoid significant transmission projects is limited. • The results of our analysis show significant technical potential but low levels of economic potential for CHP and CREG. There are approximately 62 MW of CHP and between 14 MW and 28 MW of CREG economic potential. • The customer-sited PRG has the best chance for significant development to reduce peak load if its costs compete favorably relative to transmission alternatives and other non-transmission alternatives.

  22. 4. Results: Overall Projections for CSG • From Table 8

  23. 4. Results: CREG • Section 1:

  24. 4. Results: CREG • Conclusions – Customer-Sited Renewable Energy Generations Farm Methane Conclusions and Limitations • Technical Potential: 176 farms and 15 MW • Market Potential between 22 and 44 farms for a total of 1.9 MW to 3.7 MW over 20 years • Did not include discount for lack of three phase distribution. • Did not take into account economic pressures in the dairy industry and the reduction of dairy farms into the future. • Used past rates of installation as indicator for future rate of development. • Based on past financial incentives; future incentives could be higher or lower.

  25. 4. Results: CREG • Conclusions – Customer-Sited Renewable Energy Generations Solar Photovoltaics Conclusions & Limitations • Technical Potential: 292 MW • Market Potential between 9.1 MW and 18.2 MW over 20 years which would be installed at over 1,619 to 3,236 customer sites, respectively. • Projection of market potential is a generalized estimate; data has a number of limitations. • Assumed past rate of development will continue into the future at an equal pace, however the past installation rate is uncertain. • Incentives and funding sources may not be the same as in the past. • Did not consider technology advances or lower future costs of solar on an installation basis. • Actual effectiveness of intermittent solar generation resources for use in transmission planning analyses could be as low as zero depending upon the timing of the peak load reduction required.

  26. 4. Results: CREG • Conclusions – Customer-Sited Renewable Energy Generations Wind Conclusions and Limitations • Technical Potential: 22 MW over 20 years • Market Potential between 2.8 MW and 5.6 MW over 20 years which would be installed over 294 to 588 customer sites, respectively. • Additional data and study would be needed in order to refine the estimate of the number of customers living in a location with sufficient wind to provide better results. • Wind classes are not uniformly distributed across the landscape and people tend to live away from high wind locations. • Did not consider technology advances or lower future costs of small wind on an installation basis. • Actual effectiveness of intermittent wind generation resources for use in transmission planning analyses could be as low as zero depending upon the timing of the peak load reduction required.

  27. 4. Results: PRG • Section 1:

  28. 4. Results: PRG • Study Conclusions – PRG Conclusions • Peak reducing generation has widespread technical potential in Vermont. • In most customer locations peak reducing generation has a lower net cost than CHP. • Peak reducing generation must be compared to utility or system -scale peaking generation to determine if it is the most economic way to alleviate transmission planning identified needs. • Current markets for demand response program capacity do not provide enough economic benefits to make it economic for customers to install PRG unless an acute reliability concern exists for the customer.

  29. 4. Results: PRG • Peak Reducing Customer-Sited Generation • Technologies • Reciprocating Engines • Microturbines • Fuel Cells • Technical Potential • Observations based on Customer Size Distributions in each zone • Economic Potential • Metrics determined ‘similar’ to CHP • Peak Reduction costs = Installed cost minus NPV (Avoided Capacity Costs minus required annual O&M if required) • Supply Curve • A function of technology and size

  30. 4. Results: PRG • Vermont State-wide Supply Curve for PRG Figure11: State of Vermont – Supply Curve for Customer-Sited Peaking Units

  31. 4. Results: CHP • Section 1:

  32. 4. Results: CHP • Study Conclusions – CHP • CHP is likely to have an extremely limited role in NTA analysis. • CHP has widespread technical potential in Vermont, although in most instances the costs far exceed conventional and PRG alternatives. • CHP in zones with natural gas has reasonable, although marginal, economic potential measured as a percent of technical potential. • In most customer locations CHP generation would have an optimum size that is a significant portion of customer’s peak demand. • CHP, if natural gas supply is not available at the customers location, is a higher cost choice than peak reducing generation as a means to alleviate transmission planning identified needs. • Customer economics for installing CHP are poor even with large percentage of installation costs being provided by incentives, making incentive-induced customer-initiated installations minimum at best and close to zero over the next 10 years. • The economic potential of CHP could approach zero if the customers within a load zone have poor thermal match characteristics, despite reasonably high customer thermal consumption.

  33. 4. Results: CHP • CHP State of Vermont Supply Curves Figure 7: State of Vermont Cumulative Supply Curve for CHP in Vermont: Net Cost to Provide Electricity

  34. 4. Results: CHP • State of Vermont Supply Curve Figure 8: Illustration of CHP with Technical and Economic Potential

  35. 4. Results: CHP • CHP Host Customer Economics The returns and paybacks of CHP, even with incentives would not provide sufficient stimulus to implement CHP. Figure 9: State of Vermont: Effect of Utility Incentives on Customer Economics of CHP

  36. 4. Results: CHP • Technology Make-up of CHP Technical Potential Figure 10: Base Case: Technology Composition of CHP Technical Potential

  37. 4. Results: CHP • CHP Sensitivity Analysis Naturally, the economics of CHP are very sensitive to the thermal characteristics of the customer including not only how much, but also when the thermal loads occur. From Table 10

  38. 5. Study Conclusions • Section 1:

  39. 5. Study Conclusions • Recap of Major Take-Aways • Peak Reducing Generation (PRG) is the least expensive Customer-Sited Generation option to avoid or delay transmission projects; • Societal and customer economics of CHP are poor without natural gas available to fuel the CHP equipment, marginal in some applications with natural gas; • Existing CHP is not being utilized by the host customer in many cases; • Customer-Sited Renewable Energy Generation resulted in limited potential assuming existing level of incentives continue • CSG potential did not uncover significant resources that would likely have better economics than transmission projects; and • CHP and renewable energy are site-specific; more detailed studies would be required to identify specific candidates.

  40. 6. Q & A • Section 1:

  41. 6. Q&A

  42. End of Presentation    Thanks! Contact Information: One Washington Mall 9th Floor Boston, MA 02108 www.lacapra.com 617-778-5515 277 Blair Park Suite 210 Williston, VT 05495 www.lacapra.com 802-861-1617 John Athas Patty Richards jathas@lacapra.com prichards@lacapra.com

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