President's Message 1st Quarter 2012

By Robert Thornton posted 06-16-2017 20:06


From District Energy Magazine, First Quarter, 2012

Juan Ontiveros
Rob Thornton

With all this talk of a smart grid, why are we still so dumb when it comes to wasting surplus heat from power generation? The average efficiency of U.S. coal-fired electricity generating stations today is still just 32.4 percent. In other words, over two-thirds of the fuel used to make power is simply wasted as heat that is being exhausted to oceans, rivers, lakes and atmosphere. How smart is that?

In Sept. 2011, the U.S. DOE published the Inaugural Quadrennial Technology Review. On Page VI of the executive summary, a large thermal image of a power plant features the caption "...for the average coal plant, only 32 percent of the energy is converted to electricity; the rest is lost as heat." One could argue that this heat is not really lost, but is being intentionally discarded, thrown away in local waterways and exhausted through cooling towers into the atmosphere. Yet this heat has tremendous economic and environmental value and can be used in a variety of productive ways, including driving turbines to make chilled water for district cooling systems or distributed through district heating networks to provide heating to cities, towns and clusters of buildings in communities. Yet reading through the balance of the Review, limited attention is paid to the issue of inefficient central station power generation. If the inefficiency of U.S. electricity generation is really the elephant in the room, why do we continue to ignore it?

We have spent billions on meters and monitoring of electricity in pursuit of the so-called "smart grid," but the lowest-hanging fruit economically and environmentally is tackling primary energy use at central generating stations. It's true that our aging power grid merits investment for greater interoperability in order to support newer renewable, intermittent power resources in a more distributed power model. But recovering and reusing surplus heat can immediately increase energy security, reduce pollution and strengthen local economies. District energy is a known, proven and shovel-ready strategy that can leverage local energy resources, strengthen energy independence and invigorate urban infrastructure renewal. Thermal energy networks are essential infrastructure for a truly sustainable community.

The May 2011 International Energy Agency (IEA) report, Cogeneration and Renewables, notes that 47 percent of end-use energy is for heat (37 percent in OECD countries). When you consider that heat consumes more energy than transportation (27 percent) and electricity (17 percent) combined, it would logically follow that policy makers would consider heat in drafting energy policies. Yet, here in the U.S., energy and environmental policies focus almost exclusively on electricity. Even in states with renewable energy and energy efficiency portfolio standards, the primary emphasis is on electricity production. IDEA believes that state and local governments need to consider thermal energy mapping when developing zoning and planning schemes. Toward that end, we are updating and revising the 2010 Community Energy Development Guide for the U.S. market with the assistance of U.K. author Michael King and a number of key industry sponsors. Scheduled for release at our 103rd Annual Conference and Trade Show in Chicago in June 2012, the Guide will be an instructive tool for community planners and leaders to work through the stages of analysis to identify economically viable district energy opportunities. Some notable state programs that already recognize thermal energy include the Green Communities Act in Massachusetts that provides alternative energy credits for both heat and power from CHP and the Renewable Portfolio Standard in Michigan that considers waste-to-energy as eligible for renewable energy credits.

As we go to press, another enlightened state policy has been introduced in the State Senate of Ohio. S.B. 242 would include thermal energy as qualifying in a Renewable Portfolio Standard (RPS), noting that "Renewable energy resources do not have to be converted to electricity for purposes of receiving renewable energy credits. The rules shall specify the quantity of energy derived from a renewable energy resource that is equal to one megawatt-hour of electricity, including that one megawatt-hour equals 3,412,142 British thermal units...." IDEA has long argued that renewable energy need not be confined to electricity to achieve environmental benefits. Consider the lake source cooling systems at Cornell University or Enwave in Toronto that displace multiple megawatts of peak power demand from the grid from wholly renewable cold lake water. Under electric-only portfolio standards, neither system is treated as renewable because they displace power but do not create it. This is an absurd policy gap on its face. A dose of common sense such as S.B. 242 will treat thermal energy equivalent to electricity and therefore unleash real opportunities for community-scale investments to enhance energy security through economically competitive and environmentally sound district energy systems.

When you consider that waste heat from power plants has already incurred emissions and that recycling that heat effectively offsets other forms of fuel combustion, what is needed are more enlightened policies that value surplus heat and regulations that more effectively reward generation efficiency. The old approach to rewarding utility additions to rate base, irrespective of efficiency or reliability, seems as old-fashioned as the rotary phone. To unleash infrastructure investment and galvanize public-private partnerships, attaching value to waste heat through emissions allowances or portfolio standards will be a very effective energy policy.

Many countries have recognized the opportunities in recovering waste heat and have implemented policies to deploy district energy and CHP. We are well-acquainted with Denmark's 40 years of successful national and municipal policies that drove robust investment in district energy. Today, Denmark is widely acknowledged as a global leader in clean energy and - with its extensive district heating backbones - is positioned to achieve a carbon-neutral economy by 2050. In 2009, Germany passed a CHP law to emphasize recovery of surplus heat, to favor CHP generation in the power market and to convert CHP facilities to lower-carbon sources such as biomass, geothermal and wood waste. The citizens of Germany have soundly voted to discontinue reliance on nuclear energy, choosing instead to invest in cleaner local resources like district energy and CHP to meet up to 25 percent of national electricity needs by 2030. Germany currently has over 100,000 km of district heating piping networks and in 2010 implemented a renewable energy heat law that favors investment in community-scale biomass and biogas. The German Bundestag recognizes that district energy will be a critical resource and the industry is gearing up to double its market share over the next 12 years.

From my perspective, the ripest low-hanging fruit in the U.S. is the potential to add CHP (cogeneration) to existing thermal-only district energy systems. By aggregating the thermal requirements of multiple (or even hundreds of) buildings totaling millions of square feet, district energy systems deliver economies of thermal scale that make CHP highly efficient and cost-effective. There are hundreds of district energy networks in all 50 states that are ready for such updating. Two recent cases in Texas demonstrate the outstanding economics of coupling CHP with mature district heating and cooling networks. In 2010, Thermal Energy Corp. (TECO) in Houston installed 48 MW of cogeneration capacity to enhance reliability, increase efficiency and expand capacity for the Texas Medical Center, the largest healthcare campus in the world. In August 2011, after one full year of CHP operations, TECO had realized even better-than-expected operational efficiency, resulting in savings to customers of over $9 million for steam and chilled water services. Texas A&M University installed a 50 MW CHP unit that commenced operations in August 2011 during a period of record summer heat waves and exorbitant ERCOT peak power prices. In the first week alone, Texas A&M saved over $250,000; for the month of August, the savings exceeded $1 million. Combined, these two CHP investments are projected to save over $400 million for their customers over the next 15 years. Now we're talking about smart grids.

In most cases, the roadblocks to implementing highly efficient combined heat and power are policy or regulatory impediments such as incumbent investor-owned utilities citing "stranded cost" arguments or point source emissions regulations that fail to consider the reduction in emissions across the regional power grid. As an industry, we need to better educate regulators on the unintended consequences that hinder true generation efficiency and provide case studies demonstrating the benefits of district energy systems in balancing local distribution grids. We need to focus attention on the big game of primary energy efficiency and cultivate legislative champions who will inject more common sense into policy discussions. In an era of tightening capital and shrinking budgets, re-capturing wasted energy for beneficial economic gain would not only be timely, it would be smart.

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