iv b proposal

7/29/2019 IV b Proposal

1/47

____________________________________________________________

ApplicationofWasteHeatRecoveryGeneration

at

GreatRiverEnergys

CoalCreekStation

Applicant:CalnetixInc.

PrincipalInvestigator:ShamimImani

(DirectorofEngineering,Calnetix,Inc)

Date:April1,2009

AmountRequested:

StepOne:$80,000

StepTwo:$250,000

______________________________________________________________________


2/47

1

TableofContents

1. Abstract

2. Projectsummary

3.

Projectdescription

4. Standardsofsuccess

5. Background

6. Qualifications

7. ValuetoNorthDakota

8. Management

9.

Timetable

10. Budget

11. Matchingfunds

12. TaxLiabilityAffidavit

13. ConfidentialInformation


3/47

2

1.Abstract

Improvingpowerplantefficiencythroughrecoveryofwasteheatisnotanewconcept,butrecentpolicyand

regulatoryshifts(efficiencyandemissionsmandates,renewableportfoliostandards,carbontrading)and

technologicalimprovementsaretrendingtoimprovetheeconomicsofrecoveringthisheat.

Calnetix,Incmanufacturesa100110kWewasteheatrecoverygenerator(WHG100)thatprovidessuperior

conversionofwasteheattoelectricity(16%netvs.competitorsat812%)duetoitshighspeedgeneratorandnon

contactmagneticbearings.Itsmodulardesignallowsrepetitivemanufacturing,andacostthattypicallyprovides

ROIoflessthanthreeyears.CalnetixintendstouseitscurrenttechnologytoscaleuptheWHG100unitto1

2MWe.Itbelievesthatdeployingthislargerunitatlignitepowerplantscouldprovideaneconomicalwayof

improvingplantefficiency,therebyhelpingtokeeplignitecoaleconomicalandcompetitiveasafuelintothefuture.

CalnetixiscurrentlyworkingtoobtainDepartmentofEnergy(DOE)fundingforamultiphaseprogram,locatedin

NorthDakota,todevelopandcommercializethislargerunit.CalnetixseeksthesupportoftheLigniteResearch

Council(LRC)fortheinitialvalidationphaseofthisprogramasfollows:

Objective:Identifyusablewasteheatsourceswithinalignitepowerplant,validatetheyaresufficienttopower

multiple12MWeunits,anddemonstratethetechnicalviabilityofgeneratingelectricityfromonesuchsource

usingCalnetixscurrentWHG100unit.

ExpectedResults:ValidationofwasteheatsourcesatGREsCoalCreekplantwhichcouldsupportmultiple1

2MWeunits,andsuccessfuldemonstrationof100kWeelectricitygenerationfromonesuchwasteheatsource.

Duration:22months.

Totalprojectcost:Spreadovertwosteps:

Studytoidentifyandquantifyheatsources,andvalidatetheviabilityofconnectingtheCalnetixunitto

thesesources.Totalcostis$161,250ofwhichCalnetixseeks$80,000(50%)fromtheLRC.

InstallandruntheCalnetixWHG100demounitforproofofconcept.Totalcostisestimatedat$735,495of

whichCalnetixseeksamaximumof$250,000fromtheLRC.LRCfundingofthisstepisconditionalupon

StepOnevalidationbeingsuccessful,anduponfundingbeingmadeavailablefromtheDOE.

Participants:Calnetix,GreatRiverEnergyandHDREngineering.


4/47

2.ProjectSummary

Overview

Calnetixisseekingtodevelopandwithin36monthscommercializea12MWewasteheatrecovery

generator,for

application

to

low

temperature

heat

sources

at

thermal

power

plants

and

industrial

facilities.

Calnetixbelievesthatawasteheatrecoverygeneratorofthispowerrangewouldhavevaluetothe

ligniteindustry.Giventhelowerthermaloutputoflignitecoal,itismorechallengingforlignite

powerplantstomeetincreasinglystringentemissionsrequirementsandthecostofvariouscarbon

limitationor

pricing

mandates.

To

the

extent

that

waste

heat

recovery

can

reduce

the

emissions

per

MWhfromlignitepowerplants,atanattractiveinstalledcapitalcost,thiswillkeeplignite

competitive,economicalandmaintainitsrelevanceaspartofthenationsenergyneeds.

ThislargerunitwillbebaseduponCalnetixsexistingWHG100organicrankinecycleproductionunit,

andisintendedtosharethesmallerunitsmodular,standardized,andfactorymanufactured

approach.Calnetix

believes

this

approach

will

allow

it

to

keep

the

installed

cost

of

the

unit

at

an

estimated$2,500/kW,lowerthanthecustombuiltsolutionsthatarecurrentlytheindustrystandard.

Calnetixbelievesthislowcostapproachwillprovideincreasingvalueasthepriceforemittingcarbon

dioxideandfittingnewpollutioncontrolstoplantsincrease(seefollowingillustration):

3

Value

Breakeven

point

Increasingcostovertime

WasteHeat

Generator

CapitalCost

Combined

-Fuel price increases

-Emissions regulations

-RPS

-CO2 costs

Value/Payback


5/47

CalnetixiscurrentlyworkingtoobtainDepartmentofEnergy(DOE)fundingforamultiphase

program,basedinNorthDakota,todevelopandcommercializea12MWeunit.Thiswillbe

approximatelya36monthprocessfrominitialdesignworktocommercialmanufacture,andbesplit

intothe

following

phases:

1. TechnicalvalidationandWHG100proofofconceptdemonstration.

2. Largeunitdevelopmentandlabtesting.

3. Largeunitfieldtesting.

4. Commercializationandmanufacture.

TheendgoalofthisprogramistovolumeproducethislargerwasteheatrecoveryunitinNorth

Dakota.Althoughtheunitwilllikelybesoldandappliednationallyandinternationally,itisexpected

thatthedemonstrationtestingandinitialcommercialinstallationswillbeintheNorthDakotaregion,

includingonlignitepowerplants.

Calnetixseeks

the

support

of

the

Lignite

Research

Council

for

Phase

One

of

this

overall

program,

i.e.

initialtechnicalvalidationandWHG100proofofconceptdemonstration.Thisisavitalfirstphasein

theoverallfourphasecommercializationplan.

Objective

TheobjectivesoftheprojectforwhichCalnetixseeksLRCsupport(i.e.PhaseOneoftheoverallfour

phaseDOE

program)

are:

StepOne:togetherwithGreatRiverEnergyandHDREngineering, toidentifyusablelow

temperaturewasteheatsourceswithinalignitepowerplant,andtheoreticallyvalidatethat

4


6/47

sufficientusablewasteheatexists,andcanbeeconomicallyaccessed,fromoneormoreof

thesesourcestopowermultipleCalnetix12MWeunits;

StepTwo:

install

acurrent

Calnetix

WHG100

unit

at

one

such

heat

source,

and

demonstrate

the

technicalviabilityofgeneratingelectricityfromit.

StepOnewilltaketheformofaformalstudyandwrittenreportledbyHDREngineering(Lead:Dave

Schmitz),withsupportfromGreatRiverEnergy(lead:CharlieBullinger)andCalnetixengineers.The

anticipatedcontentsofthestudyareexplainedinfurtherdetailinSection3 ofthisApplication

(ProjectDescription).

The

total

cost

of

Step

One

is

estimated

at

$161,250,

of

which

Calnetix

is

seeking$80,000(50%)fromtheLRC.CalnetixhasmadeaninitialsitevisittoGREsCoalCreekStation,

andidentifiedfourlowtemperaturewasteheatstreams(sootblowerdrain,fluegas,flyashand

scrubbersludge)aspotentiallyviablesourcesforelectricitygeneration.ThisStepOnestudyaimsto

confirmtheseinitialfindings,determinetheamountofpotentialwasteheat,available,assessthe

technicalviabilityofgeneratingpowerfromthesesourcesandmakeanestimateoftheamountof

electricalpower

potentially

available.

StepTwowillinvolvedetailedsiteandinstallationanalysis,engineeringandconstructionworkto

installtheCalnetixwasteheatunitonsite,andongoingmonitoringandresultsanalysis.Thetotal

costofthisstepisestimatedat$735,500.

PartofthescopeofStepOneistounderstandthehighlevelcostsforthisinstallation,including

equipmentmodifications.ThecostsofStepTwomayneedtoberevisedfollowingthecompletionof

theStepOnestudy.However,Calnetixseeksamaximumof$250,000fromtheLRCforStepTwoasa

nottoexceedamount,evenifthetotalcostsofthisstependupbeinghigher.

5


7/47

CalnetixalsorequeststhatfundingofStepTwobemadeconditionaluponCalnetixreceivingDOE

fundingforthecompletedevelopmentofthelargerunitoverthefourphasesoutlineabove.

AlthoughCalnetix

seeks

the

LRCs

conditional

approval

for

funding

Step

Two,

if

DOE

funding

is

not

received,Calnetixwillnotrequestordrawdownthesefunds.

FurtherProjectBackground

Calnetix(www.calnetix.com)istheworldleaderinthedevelopmentandmanufactureofhighspeed,

highefficiencypermanentmagnetmotorsandgenerators,withassociatedmagneticbearingsand

highfrequency

power

electronics.

Its

products

and

capabilities

range

from

2kW

to

10MW,

and

it

has

aparticularspecialtyindistributedpowergenerationfromwasteenergy,suchaswasteheat,waste

gasesandunusedkineticenergy(e.g.shipturbochargershafts).

Calnetixproducesa125kWegross/100110kWenetwasteheatrecoverygenerator(WHG100)that

utilizesaclosedlooporganicrankinecycle.Thisinvolvesutilizingheataslowas250Ftogasifyalow

boilingpoint

refrigerant,

passing

the

gas

across

aturbine

wheel

attached

to

agenerator

to

produce

electricity,reliquefyingthegasusingacondenser,andpumpingittotheheatsourceagainto

completethecycle,asshowninthefollowingdiagram:

6

Expander

Evaporator

Receiver

HeatSourceMin2.8MBTU/H

Generates

125kw

Economizer

EvaporativeCondenser
http://www.calnetix.com/http://www.calnetix.com/


8/47

Typicalapplicationsincludeexhaustheatfromgasturbinesandinternalcombustionengines,

industrialboilers,andflarestacks.CalnetixsWHG100canutilizeapproximately625700kWofheat

inputtogenerate100110kWenetelectricity(outputvariesbasedonenvironmentalconditionsand

wasteheat

extraction

schemes).

The

unit

is

factory

built

and

pre

packaged

as

aplug

and

play

solutionrequiringonlytheinstallationofaheatexchangerandcondensingsource,andconnection

totheelectricalgrid.Thisisincontrasttoothercommerciallyavailablewasteheatrecoveryunits,

whicharecustomdesignedandengineeredforeachsite.Thecurrentunitispicturedbelow:

TheWHG100issuitableforsmallerindustrialanddistributedgenerationapplications,andinstalled

costistypicallyinthe$2500/kWrange.

However,Calnetixbelievesthatasignificantopportunityexiststorecoverlowgradewasteheatfrom

largerapplicationssuchasthermalpowerplantsandlargeindustrialfacilities.Asignificantamount

ofwasteheatisemittedbytheselargefacilitiesatlowertemperatureswhereitisnotfeasibleto

installsteamturbines.ThesetemperaturesareideallysuitedforrefrigerantbasedOrganicRankine

7


9/47

Cyclegenerators,andcouldprovidesubstantialadditionalpowerwithoutusinganyadditionalfuelor

creatinganyadditionalemissions.

Estimated Annual US Industrial Heat Output (MW) by Temperature

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000

1800-1900

1700-1800

1600-1700

1500-1600

1400-1500

1300-1400

1200-1300

1100-1200

1000-1100

900-1000

800-900

700-800

600-700

500-600

400-500

300-400

200-300

100-200


10/47

Calnetixhasfullownershipofthisgeneratortechnologyforwasteheatrecovery,andintendstouse

theFrame2generatorasthebasistoscaleupitsWHG100unitto12MW.Itwillapplythesame

technicalapproachandmodularmanufacturingphilosophy,suchthatthelargerunitcanalsooffera

standardizedplug

and

play

approach

in

order

to

reduce

the

on

site

engineering

cost

and

lead

time

necessaryforapplyingittothevariouswasteheatsources.ThisisincontrastwithotherORCunitsof

thissizewhicharecustombuiltforeachjob.

CalnetixthereforeaimstocreatesomethingthatcanberolledouttotheindustryatacostperkW

comparabletoitsWHG100unit,anddeployedinscalequickly.Forthelignitepowerindustry,this

couldprovide

aviable

approach

to

reducing

its

net

emissions,

improving

efficiency

in

acost

effective

manner.

9


11/47

3.ProjectDescription

Whyistheprojectneeded?

Calnetixbelievesthatthecombinedcostsoffuturecarbontaxes(cap&trade),pollutioncompliance

costsand

renewable

portfolio

standards

will

either

increase

the

cost

of

power

generation

using

lignite,ordecreasetherelativeattractivenessoflignitegenerationvs.otherrenewablealternatives.

Acosteffectivewasteheatrecoveryoption,whichimprovestheefficiencyoflignitegenerationand

hasthepotentialtogeneratecarboncreditsand/orelectricitythatqualifiesunderrenewable

portfoliostandards,shouldthereforebebeneficialandattractiveforlignitepowerproducers.

Thereare

six

Lignite

Coal

power

plants

in

North

Dakota1

with

anet

summer

generation

capacity

of

3920MWe.2Accordingtoa2004studypublishedbytheCommissionforEnvironmentalCooperation,

theseplantsgenerateapproximately29.6mMWhofelectricityannually.3Assumingthefollowing:

anaverageplantefficiencyof33%;

oftheremaining67%ofwastedenergy,10%ofthisisintheformofrecoverablewaste

heat;4

anetheattoelectricityconversion16%(thecurrentefficiencyofCalnetixsWHG100which

Calnetixbelievescanbereplicatedinthelargerunit),

couldgenerateanextra915,000MWhofelectricityfromthewasteheatattheseplantswithout

additionalfuelcostsoremissionspenalties.5

1TakenfromTheStoryofLignite,publishedbytheLigniteEnergyCouncil.

22006datasuppliedbytheEnergyInformationAdministration.

3NorthAmericanPowerPlantAirEmissions,CommissionforEnvironmentalCooperation,2004.

4DerivedbyCalnetixfollowingitstourofCoalCreekPowerPlantNovember2008.

5Seetableatpage26belowforfurtherdetail.

10


12/47

Awasteheatrecoveryunitmayalsocontributetothegoalsof2007NorthDakotalegislationH.B.

1506,whichestablishesanobjectivethat10%ofallretailelectricitysoldinthestatebeobtained

fromrenewableenergyandrecycledenergy(includingwasteheat)by2015.Totheextentthatthe

equipmentreduces

carbon

dioxide

emissions

per

MWh,

it

should

also

provide

acost

saving

to

utilities(intheformoflowercarboncostsperMWh)undertherecentlyproposedObama

Administrationcapandtradeprogram. Atanestimatedcostof$13.70/tonofCO2,6utilizationof

wasteheatrecoveryonlignitepowerplantsinNorthDakotacouldprovideasavingofapproximately

$16m/year.7

Objective

Theobjectivesoftheprojectare:

StepOne:togetherwithGreatRiverEnergyandHDREngineering,toidentifyusablelow

temperaturewasteheatsourceswithinalignitepowerplant,andtheoreticallyvalidatethat

sufficientusablewasteheatexists,andcanbeaccessed,fromoneormoreofthesesourcesto

powermultiple

Calnetixs

planned

12MWe

units;

StepTwo:installacurrentCalnetixWHG100atonesuchheatsource,anddemonstratethe

technicalviabilityofgeneratingelectricityfromit.

Methodology

StepOneinvolvesidentifyingallpossibleheatsourceswithinalignitepowerplantincluding

identifyingheatsourcesthatindirectlyaffecttheoperationoftheplant(e.g.,lignitedrying,

6PriceestimatedbyPointCarbon(industryanalystseewww.pointcarbon,com)astheassumedcost/tonof

CO2emissionsallowancesunderthebudgetsubmittedtoCongressFeb26,2009.7Seetablebelowatpage27.

11
http://www.pointcarbon%2Ccom/http://www.pointcarbon%2Ccom/


13/47

limestoneproduction,scrubberequipmentandprocesses).TheCoalCreekplantwillbeusedforthis

purpose.ThisStepalsoinvolves:

validating,using

Calnetixs

assumed

net

heat

to

electricity

conversion

of

16%,

that

the

temperatureandflowofthewasteheatattheidentifiedsourcesissufficienttopower

multiple12MWeunits;

identifyingifthereareanysignificanttechnicalissuesthatwouldeitherprecludeinstallation

ofwasteheatrecoveryatanyofthesourcesormakeaninstallationuneconomic;

studyingtheeffectsofremovingtheheatfromtheperspectiveofcomponentandoverall

powerplant

energy

balance/performance;

identifyinganypotentialsafetyissuesthatwouldneedaddressingwithinthecontextof

installingandrunningawasteheatrecoveryunitatthevarioussites.

AsitespecificanalysiswillbeconductedbyconstructinganEPCbudgettoincludenecessaryitems

andaccessoriesforalargeunitinstallation,suchasspecifyingtheheatexchangers,condensersand

pipingthatwouldberequiredtocompleteaninstallationatthemostpromisingofthewasteheat

sources.

CalnetixwillcommissionHDREngineeringtoundertakemuchofthisanalysistogetherwith

engineersfromCalnetixandGRE.ThespecificHDRdeliverablesunderthiscommissionareas

follows:

Sitevisittoobtaindata,reviewconceptsandreviewexistingplantequipmentforpotential

utilization. ThiswillinvolveHDRpersonnelonsitetoreviewlocationofheatsourcesand

12


14/47

PerformancemodelingoftheexistingfacilitybeforeandaftertheadditionoftheWHG

installation(including

potential

parasitic

loads

required

to

support

the

installation).

Discussionswithapplicableindustryvendorstoassesstechnicalsuitabilityandcostofthe

proposedplantmodifications.

Identificationofpotentialtechnicalandenvironmentalrisksandriskmitigationstrategies.

Developmentofprocessflowdiagramstoidentifybalanceofsystem.

Developmentofhighlevelcostestimatefortotalinstallation,includingequipment

modificationsandgeneratorpricingaspredictedbyCalnetix.

Developmentofafeasibilitystudyreportdescribingthepotentialfortheproposed

installationandincludingtheresultsofalloftheaboveactivities.

InStepTwo,thevalidityofCalnetixtechnologyforlignitepowerplantswillbedemonstratedby

installingandrunningaCalnetixWHG100wasteheatrecoverygeneratoratGREsCoalCreekStation

for12months.Thequantityofelectricitygeneratedwillbetrackedwithrespecttoruntime,

maintenance,andotherfactorsinordertoestimatetheanticipatedreturnoninvestmentfromthe

largerunit.ThisstepwillallowCalnetixtoassesstheperformance,costandbenefitsoftheunit

relativetotheidentifiedwasteheatsources,andobtainreallifetechnicaldatawhichwillbe

relevanttothedevelopmentofthelargerunit. Throughaninternetconnection,Calnetixwillalso

havethecapabilitytomonitorremotelyfromitsFloridafacility.

Followingcompletionofthedemonstration(i.e.after12months),CalnetixandGRE,inconsultation

withtheLRC,willmakeadeterminationoftheongoinguseoftheunit.Thiscouldincludecontinued

demonstrationoftheunitatCoalCreek,makingtheunitavailableforinstallationanddemonstration

13


15/47

atafacilityoperatedbyanotherLRCmember,orsaleoftheunitinordertomakeapartialrefundto

theLRCofgrantmonies.

Anticipatedresults

ItisanticipatedthatcompletionofStepOne(initialvalidation)willprovidehighlevelandconceptual

confirmationoftheviabilityofinstallinglargerwasteheatgeneratorsatlignitepowerplants.Should

thestudyresultsindicateotherwise,theStepTwo(demonstration)willnotbepursued,minimizing

theLRCsfinancialexposure.

Assumingthat

Step

Two

proceeds,

it

is

anticipated

to

demonstrate

the

technical

viability

of

generatingelectricityfromwasteheatsourcesatalignitepowerplant,highlightanytechnicaland

practicalissueswithinstallationandrunningthatmaynothavebeenanticipatedatthefeasibility

stage,andprovideareallifedemonstrationtoattracttheinterestandsupportofotherparticipants

intheligniteindustry.

Facilities,resources,

and

techniques

to

be

used

GreatRiverEnergyhasbeenverygenerousinallowingCalnetixtouseitsCoalCreekStationasa

demonstrationsite,andtheuseandservicesofitsengineersandotherpersonnel.CharlieBullinger

willactasleadcontactatGRE.

CalnetixwillalsousetheservicesofHDREngineeringasengineeringconsultantsonissuesrelatingto

wasteheat

capture

from

the

plant

and

general

installation

issues.

Dave

Schmitz

will

act

as

lead

contactatHDR.

14


16/47

Calnetixwillalsouseitsowninternalengineersandbusinessdevelopmentpersonneltoworkwith

GREandHDRontheproject.CalnetixpersonnelGordonFoster(BusinessDevelopmentManager),

ShamimImani(DirectorofEngineering)andChuckTaylor(PresidentofApplicationEngineering)will

actas

leads

from

Calnetix.

Environmentalandeconomicimpactsoftheprojectwhiletheprojectisunderway

Anytieinswillbeoptimallyplannedtobedoneduringplannedplantshutdownssothatimpactto

plantoperationswillbeminimal. Therewillbenodisruptionoftheplantoperationsduringthe

feasibilitystudyanddemonstrationsteps.

Ultimatetechnologicalandeconomicimpacts

BasedonthepreliminaryinvestigationconductedatCoalCreek,thereisanticipatedtobeatleast

200MWofextractablewasteheatavailableforconversiontoelectricityattheCoalCreekStation.

AssumingthenetheattoelectricityconversionrateofCalnetixscurrentWHG100of16%,anextra

32MWofelectricitycouldtheoreticallybegeneratedatCoalCreek.Thiswouldimprovetheoverall

efficiencyof

the

plant

by

approximately

2.5%.

Asnotedabove,8therearesixLigniteCoalpowerplantsinNorthDakotathatgenerate

approximately29.6mMWhofelectricityannually.Calnetixbelievesthatusingitssystem,anextra

915,000MWhofelectricitycouldbegeneratedfromthewasteheatattheseplantswithout

additionalfuelcostsoremissionspenalties.AwasteheatrecoveryunitmayalsocontributetoNorth

DakotasRPS

goals,

and

could

also

provide

value

(in

the

form

of

lower

carbon

costs

per

MWh)

to

utilitiesundertherecentlyproposedObamaAdministrationcapandtradeprogram.

8Seepage10above.

15


17/47

Onanationalscale,thepotentialbenefitsoflowtemperaturewasteheatrecoveryaresignificant.

AccordingtotheDOE,thereisapproximately26Quadsor8.5millionGWhofrecoverablewasteheat

peryearavailableintheUnitedStatesfromthermalpowerplantsandindustrialprocesses.9The

wasteheat

from

thermal

power

plants

exceeds

the

energy

annually

consumed

by

the

U.S.

transportationsector.10

Assuming20%ofthiswasteheatwasaccessedatanetconversionrateof

16%wouldimplygenerationofapproximately272,000GWhofelectricityfromrecoveryofthis

wasteheat,equaltoapproximately7%ofUSgridcapacity.11

WasteHeatbySector:DOEThermallyActivatedTechnologies,TechnologyRoadmap;May2003

ProducingsufficientCalnetixunitstosupply10%ofthispotentialmarket(2501.5MWeunitsper

yearfor10years)isestimatedtocreateaNorthDakotabasedbusinessgeneratingrevenuesofover

$950mperannumandemployinginexcessof500workers.12

9DOEThermallyActivatedTechnologies,TechnologyRoadmap;May2003.

10DOEThermallyActivatedTechnologies,TechnologyRoadmap;May2003.

11USGridcapacityequaltoapproximately4.16mGWh;EnergyInformationAdministrationElectricPower

Monthly,December2008.12

CalnetixestimatesbasedoncurrentWHG100costsandproductionstaffing.

16


18/47

4.StandardsofSuccess

StepOne

Validatingthatthereisabasictechnicalandeconomicfeasibility/justificationforusingwasteheat

fromalignite

power

plant,

and

sufficient

quantities

of

waste

heat

exist,

to

generate

electricity

using

multipleCalnetix12MWeorganicrankinecyclewasteheatrecoverygenerators.Sufficientevidence

thatCalnetixshouldproceedwithStepTwo(sitedemonstration).

StepTwo

GenerationofreliableandconsistentpowerfromawasteheatsourceatGREsCoalCreekStation

withno

fundamental

technical

issues.

Basic

economic

validation

of

the

application.

Sufficient

evidencethatCalnetixshouldcontinuewithdevelopmentofa12MWeunit.

17


19/47

5.Background.

Priorworkrelatedtotheprojectconductedbytheapplicantandotherparticipantsincludes:

(a) developmentoftheCalnetixWHG100wasteheatgenerator;

(b) studyand

conceptual

design

of

a1.5MWe

waste

heat

generator

suitable

for

power

plant

applications;

(c) internalCalnetixstudyontheapplicationofwasteheatrecoverytolignitepowerplantsto

assessmarketsizingandindustryviability;and

(d) November2008sitevisittoGreatRiverEnergysCoalCreekStation.

Developmentof

Calnetix

Waste

Heat

Generator:

CalnetixsWHG100wasteheatgeneratorwasdevelopedasanefficientmeansofconvertingwaste

heataslowas200Fintoelectricity.Figure1illustratestheworkingsoftheunit(numberscorrespond

tothedescriptionsbelow):

1. TheunitemploysanorganicrankinecycleclosedloopinwhichR245fa(nonflammable,

biodegradablerefrigerant

manufactured

by

Honeywell)

is

exposed

to

the

waste

heat

source

andchangesfromliquidtosuperheatedgas.

2. Thispressurizedgasisusedtospinaturbinewheelcoupledtoahighspeedgenerator

spinningbetween20,00030,000rpm,producingelectricity.

3. Afterexitingtheturbine,thegasispassedthroughaneconomizerwhereaportionofits

heatisstrippedoutandusedtopreheattheliquidrefrigerantatanotherpointofthecycle

(seestep

5below).

4. Thegasisroutedthroughacondensertoloweritstemperatureandreturnittoitsliquid

state.

18


20/47

5. Toincreasesystemefficiency,theliquidrefrigerantisroutedtoaneconomizer(exposingit

tothegasifiedrefrigerantexitingtheturbine),increasingitstemperaturebeforereexposing

ittothewasteheatsource,regasifyingitandrepeatingthecycle.

Expander

Receiver

Evaporator

HeatSourceMin2.8MBTU/H

Generates

125kw

Economizer

EvaporativeCondenser

(1)

(2)

(4)

(3)

(5)

Figure1:CalnetixWHG100Cycle

Understandardconditions,theWHG100canutilize625700kWofheatinputtogenerate100

110kWenetelectricity.Thisnetoutputtypicallyvariesinthisrangebasedonenvironmental

conditionsandinstallationconfiguration.

TheheartoftheCalnetixunitistheintegratedexpander/generatormodule. Themoduleis

comprisedof

aturbo

expander,

high

speed

permanent

magnet

generator,

magnetic

bearing

system,

andhousingwithturbonozzlecone. Figure2belowshowsacutawayofthemodule.Themoduleis

designedsotherefrigerantflowsthroughtheunit(fromrighttoleftinthefigure).Therefrigerant

flowsaroundtheturbonozzleconeandisexpandedovertheturbineimpeller,whichtogetherwith

19


21/47

theresultingpressuredropthroughtheexpander,causestheturbineanddirectlycoupledgenerator

tospinupto30,000rpm.Thegeneratorisdirectlyexposedtotheexpandedrefrigerantforcooling

beforeitexitsthroughtheoutlet.Thebenefitofthisdesignisthatthegeneratordoesnotrequireits

owncooling

system

with

apump

to

circulate

coolant,

thereby

optimizing

the

efficiency

of

the

system.

Themagneticbearingsalsocontributetosystemefficiencyasthereisnocontactandthusnofriction

betweentherotatingcomponentandthebearings.Atsuchhighrotationalspeed,conventional

bearingswouldrequirefrequentmaintenanceandreplacementduetocontactwear.

Figure2 CalnetixIntegratedExpander/GeneratorModule

Calnetixutilizesasmarthighswitchingfrequencyrectifierandinvertersystemtoconverttheenergy

ofthe

generator

to

grid

voltage

and

frequency.

The

Calnetix

smart

rectifier/inverter

system

is

able

to

compensateforthevariedspeedofthegeneratorbasedonvaryingwasteheatloadconditions,thus

alwaysenablingthesystemtorunatitsmostefficientpoint.Competitorproductscanonlyrunata

20


22/47

fixedspeedandemployagearboxbetweentheturbineandgenerator,resultinginalessefficient

systemduetothelackofspeedoptimizationcapabilityandthelossesofthegearbox.

Figure3shows

the

WHG100

as

manufactured

at

the

Calnetix

production

facility.

The

unit

includes

all

functionalitynecessaryoutsideoftheheatexchangerandcondenser.

Figure3CalnetixWHG100

Figure4showsastandardpackagedunit(i.e.20ftcontainerintowhichtheWHG100hasbeen

fitted)inatypicalapplication. Here,methanefromawastewatertreatmentfacilityisbeing

combustedand

the

heat

energy

is

converted

to

electricity.

On

top

of

the

container

is

the

combustor

alongwiththeheatexchangerthatexchangesthecombustedexhaustgaswiththerefrigerant.

Behindthecontainer(totherightinthebottomphoto)istheevaporativecondenser.

21


23/47

Figure4ApplicationofCalnetixWHG100wasteheatrecoverygenerator

22


24/47

ThepackagedunitpicturedaboveisthesametypeofunitthatwouldbeinstalledatCoalCreekfor

theStepTwodemonstration,andtheCoalCreekinstallationwouldlikelyhaveasimilarconfiguration

andlayout.

TheprimaryadvantageoftheWHG100,andCalnetixsdesignandmanufacturingapproach,isits

modulardesignandfactorybasedproduction.Thisallowsastandardizedproductwithresultant

costandqualityadvantages,aswellasprepackagedasaplugandplayunitrequiringonlythe

installationofheatexchangerandcondensingsource,andconnectiontothegrid. Other

commerciallyavailablewasteheatrecoveryunitsarecustomdesignedforeachinstallation,which

involvesconsiderable

time

and

costs

related

to

custom

engineering.

TheWHG100hasalsobeendesignedtobematchedtovaryingapplicationsincludingdifferentheat

sources(liquidorgaseous),ordifferentcondensersmanufacturedbythirdparties(airorwater

cooled).Combiningastandardizedproducttoexistingthirdpartcomponentsalsoallowsforoverall

reductionininstallationcostsandleadtimes.

StudyandConceptualDesignofaLargerUnit

ThecurrentCalnetixunitcanbeinstalledinparallel(i.e.unitspackagedtogetherusingcommon

pipingandcontrolsandutilizingasingleheatexchangerandcondenser)toextractheatsourcesthat

areoverthecapacityofoneunit. However,duetospaceandotherfactorssuchaspressuredrop

withinpiping,itisnotfeasibletoparallelmorethanaboutfiveunits.Inaddition,manyheatsources

frompower

plants

and

large

industrial

facilities

would

support

multi

MW

installations.

Inordertoextractlargerwasteheatsourceswithinpowerplantsandlargerindustrialapplications

moreefficiently,aswellasaddresslargerindustrialandutilitywasteheatsourceswithoutparalleling

23


25/47

dozensofsmallerunits,Calnetixbelievesitisoptimaltodevelopalargerunitinthe1to2MWe

range.

Thecurrent

low

temperature

ORC

solutions

in

this

power

range

are

all

custom

built

and

installed

usingfixedspeedorgearedgenerators,whichresultsinlarge,expensiveandrelativelyinefficient

installations.Calnetixbelievesthatatthislargerpowerrange,thereissignificantadvantagein

keepingthesamehighspeed,modular,factorybuiltplugandplaydesignphilosophyasthecurrent

WHG100productionunit,inordertoreducetheengineeringcostandleadtimenecessaryforonsite

applicationtothevariouswasteheatsources.

Calnetixhasundertakenconceptualdesignandengineeringworkonthislargerunit,including

preliminaryanalysisof:

ORCcycleanalysisandrefrigerant

Usabletemperatureranges

Poweroutput

Expanderandgeneratordesignandspecification

Heatexchangerandcondenserspecifications

Developmenttimeline

Cost+ROI/Payback

Aschematicoftheconceptualdesignfromthisworkissetforthbelow.Thisdesignwouldbeusedas

thebasisforthephysicaldevelopmentofthelargeunit,forwhichCalnetixisseekingfundingfrom

theDOE.

24


26/47

28ft20ft

17ft

Figure5.ConceptualDesignof1.5MWCalnetixWasteHeatRecoveryUnit

InternalCalnetixStudyOnTheApplicationOfWasteHeatRecoveryToLignitePowerPlants

CalnetixestimatesthatlignitepowerplantsinNorthDakotacouldpotentiallygenerateanadditional

915GWhofemissionsfreeelectricitybyrecoveringlowgradewasteheat.Thistranslatesintoa3%

improvementinoverallefficiency.Thisfigureassumesthattheaveragelignitepowerplantis33%

efficientandthatoftheremaining67%wastedenergy,10%ofthisisrecoverablewasteheatwhich

canbeconvertedintoelectricityat16%netefficiency.Thetablebelowliststhemajorligniteplants

intheNorthDakota,alongwithestimatedoutput,efficiency,andrecoverablewasteheat.Amore

detailedstudywillberequiredtorefinetheseestimates.

25


27/47

Potential Waste Heat at North Dakota Lignit e Coal Plants

Net Waste ORC

Generation Assumed % Energy Extractable Waste Heat Potential

Power Plant (MWh) (1) Efficiency (MWh) % of waste energy MWh (MWh) (2)

Antelope Valley Station 6,317,269 33% 12,825,970 10% 1,282,597 205,216

Coyote Station 3,060,200 33% 6,213,133 10% 621,313 99,410

Leland Olds Station 4,576,988 33% 9,292,673 10% 929,267 148,683

Milton R. Young Station 5,117,272 33% 10,389,613 10% 1,038,961 166,234

Coal Creek Station 8,559,089 33% 17,377,544 10% 1,737,754 278,041

Heskett Station 523,027 33% 1,061,903 10% 106,190 16,990

Total 28,153,845 57,160,837 5,716,084 914,573

(1) CEC, North American Power Plant Air Emissions, 2004

(2) Assumes 16% ORC efficiency

Theimprovement

in

efficiency

would

have

both

economic

and

environmental

benefits.

Generation

ofelectricityfromwasteheat,andthenetefficiencygainsfromit,couldbeusedtogeneratethe

sameamountofelectricityusinglessfuel,ormoreelectricityforthesamefuelinput.Eitherway,

therewouldbeaneconomicandemissionsbenefitfromusinglessfueltogenerateagivenamount

ofelectricity.Calnetixestimatesthatusingwasteheatgeneration,andmaintainingcurrentpower

output,ligniteplantsinNorthDakotacouldcollectivelyreduceCO2emissionsby1,200,000tonsper

yearas

well

as

meaningfully

reduce

emissions

of

SO2,

NOx,

and

Mercury.

The

table

below

lists

the

emissionsprofileofeachligniteplantandthepotentialemissionsbenefitofwasteheatrecoveryat

currentpoweroutputs.

Potential Emissions Savings f rom Waste Heat Recovery

ORC

Potential Emissions (lbs/MWh) (1) Annual Savings (tons)

Power Plant (MWh) CO2 SO2 Nox Mercury CO2 SO2 Nox Mercury

Antelope Valley Station 205,216 2,447.2 4.1 4.1 63.7 251,100 419 425 6,535

Coyote Station 99,410 2,572.1 8.1 7.9 98.5 127,845 401 395 4,895

Leland Olds Station 148,683 2,462.9 20.5 4.8 70.6 183,094 1,524 359 5,248

Mil ton R. Young Station 166,234 2,411.8 11.1 9.0 98.1 200,463 919 750 8,153

Coal Creek Station 278,041 2,640.5 7.6 3.0 98.6 367,083 1,062 413 13,705

Heskett Station 16,990 2,500.0 5.0 5.0 90.0 21,238 42 42 765

Total 914,573 2,505.7 9.4 5.7 86.6 1,150,823 4,368 2,384 39,300

(1) Emissions data from EPA emissions tracking system; Calnetix estimates used for Heskeet Station

26


28/47

Therearetwomaineconomicbenefits.Thefirstbenefitrelatestocostsavingsfromlowercoalusage,

withsavingsestimatedat$20/MWh.Thisrepresentstheestimatedmarginalcostofpower

generation(i.e.,

before

distribution

and

transmission

costs).

The

second

benefit

relates

to

potential

costsavingsfromafuturecarboncredittradingsystem.TheObamaAdministrationisproposinga

planthatwouldrequireUSindustriestobuyacarboncredit(equaltoonetonofCO2emitted)for

everytonofemissions.PointCarbon,anindustryresearchgroup,hasestimatedthattheObamaplan

wouldcover80%ofUSbusinessesandresultinapriceof$13$20pertonofCO2.13

Forpowerplant

operatorsinNorthDakota,thiswouldtranslateintohundredsofmillionsofdollarsofadditionalcost.

Calnetixestimatesthatthroughutilizingwasteheatrecovery,NorthDakotasligniteplantscould

savecloseto$35millionperyearfromlowercoalusageandlowercarbonemissions.Thisis

estimatedonfuelsavingsaloneanddoesnottakeintoaccounttheavoidedcapitalcostfrom

creatingnewcoalfiredcapacityatapotentiallyhighercostperkWhthanawasteheatsolution.The

analysisisshowninthetablebelow.

Potential Economic Benefit

ORC

Potential Efficiency Gains CO2 Savings Total

Power Plant (MWh) Cost/kWh Savings/yr ($) $/Carbon credit Emission (tons) Savings/yr ($) Savings ($)

Antelope Valley Station 205,216 0.020 4,104,311 13.70 251,100 3,440,074 7,544,385

Coyote Station 99,410 0.020 1,988,203 13.70 127,845 1,751,470 3,739,672

Leland Olds Station 148,683 0.020 2,973,655 13.70 183,094 2,508,383 5,482,038

Milton R. Young Station 166,234 0.020 3,324,676 13.70 200,463 2,746,342 6,071,018

Coal Creek Station 278,041 0.020 5,560,814 13.70 367,083 5,029,043 10,589,858

Heskett Station 16,990 0.020 339,809 13.70 21,238 290,962 630,771

Total 914,573 18,291,468 1,150,823 15,766,273 34,057,741

13Forabovepurposes,Calnetixhasused$13.70/ton,thepriceassumedbyPointCarbonasthecostpertonof

CO2emissionsin2012undertheObamaAdministrationFebruary2009capandtradeproposal.

27


29/47

SiteVisittoGREsCoalCreekStation

SetoutbelowisasummaryofthetourtakenofCoalCreekStationinUnderwood,NorthDakota,mid

November2008,

by

representatives

of

Calnetix.

Calnetix

was

hosted

by

Charlie

Bullinger

from

GRE.

CoalCreekwascommissionedin197980andisownedandoperatedbyGreatRiverEnergy.The

planthasatotalgenerationcapacityof1,200MWandconsumesapproximately22,000tonsoflignite

coalperday.Setoutbelowarethesummaryfindingsfromthevisitastheyapplytoapotential

wasteheatrecoveryapplication.

1. Sootblowerdrain: Steamtocleantheliningoftheboilersystemismoreimportantto

ligniteplantsversusothercoalplantsandsignificantsteamdrainisavailableatover400F

withabout15,000lb/hrfor600MWplant.Thiscouldbeconvertedtoelectricpower.

2. Fluegas: Assumingpowerplantefficiencyofaround30%,30%oftheinputenergyis

dissipatedthrough

the

chimney.

The

flue

gas

temperature

is

around

350F

with

aflow

of

about1.8Macfm. Thiswasteheatisbeingcooleddowninawetscrubbersystemto170F.

AtCoalCreek,aCalnetixwasteheatrecoverysystemcouldpotentiallycaptureabout60MW

ofelectricpowerfromthisheatsource. Acloserstudywillbeconductedtoidentifythe

challengesofinstallingheatexchangerstothisheatsource.

3. Flyash:Flyashiscollectedafterthehightemperaturefiringpointintheboilerandmixed

withsometypeofliquidtotransfer.Thetemperatureoftheflyashisabove300F.This

couldbeagreatheatsourceforaCalnetixwasteheatgenerator.

28


30/47

4. Other: Scrubbersludgehasalsobeenidentifiedasapossiblesourceofheat.Althoughthe

temperatureisaround200Forlower,thisheatcanbeutilizedasaprewarmerofthe

organicfluid.

29


31/47

6.Qualifications

Calnetix

Establishedin1998,CalnetixInc(www.calnetix.com) designs,manufactures,andmarketsinnovative

powergeneration

products

that

help

customers

save

energy

and

money.

Calnetix

is

headquartered

inSouthernCaliforniawithmanufacturingfacilitiesinCaliforniaandFlorida. Calnetixhasaglobal

OEMcustomerbaseincludingShell,Honeywell,BritishPetroleumandMitsubishiHeavyIndustries.

Calnetixscoretechnologiesincludehighspeedpermanentmagnetmotorsandgenerators,magnetic

bearings,powerelectronics,turbinesandexpandersusedtodevelopsolutionsforcustomers

includingend

use

solutions

such

as

microturbines

and

waste

heat

recovery

units.

Calnetix

has

an

experiencedmanagementteamwithover100yearsofcombinedexperiencerelevanttowasteheat

andgasopportunities.Calnetixowns100%ofitskeyIP,includingtradesecrets,manufacturing

processes,and12patents.

ApplicantRepresentative:GordonFoster(BusinessDevelopmentManager)

Gordonhas

over

eight

years

experience

in

business

development

related

to

the

energy

and

alternativeenergyindustry. HeholdsaMastersofBusinessAdministrationdegreefromthe

AndersonSchoolofManagement(UCLA)andaMastersofScienceaswellasBachelorsofScience

degreeinMechanicalEngineeringfromTexasTechUniversityinLubbock,Texas.

PrincipalInvestigator:ShamimImani(DirectorofEngineering)

Shamimhas

over

10

years

of

experience

in

the

industry

developing

energy

related

products.

He

has

workedextensivelywithandledmanydevelopmentsincludingflywheelsystems,turbochargers

(automotiveandmarine),expanders,compressorsandmicroturbines.HeholdsaMastersofScience

inElectricalEngineeringfromUniversityofCalifornia,LosAngeles(UCLA)andaBachelorsofScience

30
http://www.calnetix.com/http://www.calnetix.com/


32/47

degreeinElectricalEngineeringfromCaliforniaStatePolytechnicUniversity,Pomona(CalPoly,

Pomona)andhaspublishednumeroustechnicalpapers.

ChuckTaylor(PresidentofApplicationEngineering)

Chuckhasover30yearsexperienceinIndustrialRefrigerationbothonthecontractingsideand

ontheengineeringside.HehasaBachelorsDegreeinMechanicalEngineering,aMasters

DegreeinBusinessAdministrationandislicensedasaprofessionalengineerin38states.

PriortojoiningCalnetix,ChuckfoundedandranhisownrefrigerationengineeringfirmCRT

Design.PriortoCRT,hespent20yearswithTheStellarGroupinJacksonville,Florida,Under

Chucksleadership,Stellarrefrigerationdoubledinsizetobecomethelargestindustrial

refrigerationDesign/BuildfirmintheU.S.

GreatRiverEnergy

Great

River

Energy

(www.greatriverenergy.com)

is

a

generation

and

transmission

(G&T)

cooperative

thatprovideswholesaleelectricserviceto28distributioncoopsthatservemorethan620,000

members.Itownsmorethan4,500milesoftransmissionpowerlinesandownsorcoownsmore

than100transmissionsubstationsinMinnesota,NorthDakotaandWisconsin.

CharlieBullinger(SeniorPrincipalEngineer)

CharliehasbeenwithGreatRiverEnergysince1977,currentlyholdingthepositionofSenior

PrincipalEngineerinDryFining,Marketing,andEPRIR&D. HeisaProfessionalEngineerregisteredin

boththeStateofNorthDakotaaswellastheStateofMinnesota. CharlieholdsaBachelorsof

SciencedegreeinMechanicalEngineeringfromtheNorthDakotaStateUniversity.

31
http://www.greatriverenergy.com/http://www.greatriverenergy.com/


33/47

RichardGarmin(EngineeringProjectManager)

RichpossesseseighteenyearsofUtilityExperience. HeiscurrentlyEngineeringProjectMangerfor

approximately$500MinprojectscenteredinCentralNorthDakota,currentlyfocusedona$150M

Scrubberinstallation

project

as

well

as

a$150M

turbine

generator

project

at

the

Stanton

Station.

PriortoGRE,RichworkedatPacifiCorpsWyodakplantasaLeadMaintenanceEngineer.Heholdsa

MastersofBusinessAdministrationandProjectManagementdegreefromtheUniversityofMary,

andaBachelorsofSciencedegreeinMechanicalEngineeringfromtheSouthDakotaSchoolofMines

&Technology.

HDR

HDR(www.hdrinc.com)isanemployeeownedarchitectural,engineeringandconsultingfirmthat

helpsclientsmanagecomplexprojectsandmakesounddecisions.HDRhasmorethan900staff

dedicatedtoPowerandenergyprojects.HDRhashelpeddesignandconstructefficientand

economicalpowerplantsformorethan90years.Asaleaderinrenewablepowerindustry,HDRhas

beeninvolvedwiththedevelopmentofmorethan16,000MWofwindenergy.

RogerW.Nagel,P.E.

Rogerpossessesoverseventeenyearsofexperienceinthedevelopmentanddesignofpower

generationandcogenerationprojects.Hehasbeeninvolvedwiththedesignofcombinedcycleand

conventionalsteamplantsfueledwithgas,gasifiedLNG,oil,coal,pondfines,landfillgasand

petroleumcoke.Experienceincludesinvolvementwithfeasibilitystudies,proformaanalyses,

thermalcycle

design,

system

design,

equipment

specification

and

technical

equipment

contract

administration.

32
http://www.hdrinc.com/http://www.hdrinc.com/


34/47

DavidP.Schmitz,P.E.RegionalPowerProgramManager

Davidhasover35yearsofexperiencewithBasinElectricPowerCooperativewherehisrolesincluded

plantengineer,

project

engineer,

project

coordinator,

project

manager,

manager

of

engineering,

and

VPofengineeringandconstruction.Experienceincludesoperations,engineeringandconstructionof

largeligniteandPRBfueledpowerplants,engineeringandconstructionofhighvoltagetransmission

linesandsubstations,andcombustionturbineunits,planningandexpansionofmicrowaveandfiber

optictelecommunicationssystemsandkeyrolesinacquisitionandsubsequentmodificationstothe

GreatPlainsSynfuelsplant.Hismostrecentprojectwasworkingonthedevelopmentofanewlarge

baseload

power

plant

with

primary

emphasis

on

site

and

technology

selection

(especially

IGCC

vs

SCPCandcarboncapture)anddevelopmentofapermittingstrategy.

33


35/47

7.ValuetoNorthDakota.

Assumingtheprojectisfullyfunded,Calnetixanticipatesthattheresultsofthedemonstrationwill

showtechnicalviabilityof,andmarketopportunityfor,lowtemperaturewasteheatrecoveryat

lignitepower

plants.

These

results

will

be

vital

in

allowing

Calnetix

to

further

develop

and

commercializeitslargerunit.Theycouldalsobeusedbytheligniteindustrytoshowaneconomically

feasiblewayofimprovingplantefficiencyanddecreasingnetemissions.

BasedonthepreliminaryinvestigationconductedatCoalCreek,Calnetixestimatesthatatleast

200MWofextractablewasteheatisavailableforconversiontoelectricityattheplant.Assumingthe

samenet

heat

to

electricity

conversion

rate

of

16%

of

Calnetixs

current

100kWe

unit,

which

should

beabletobereplicatedinthelargerunit,anextra32MWofelectricitycouldpotentiallybe

generatedatCoalCreekbyinstallingthelargerwasteheatunits.Thiswouldimprovetheoverall

efficiencyoftheplantbyapproximately2.5%.

Assetoutabove,therearesixLigniteCoalpowerplantsinNorthDakota,whichCalnetixestimates

couldderive

an

additional

915,000

MWh

of

electricity

from

installation

of

waste

heat

units

without

additionalfuelcostsoremissionspenalties.14

AwasteheatrecoveryunitmayalsocontributetotheNorthDakotaRPSobjectives,andprovide

potentialcostsavingsundertheObamaAdministrationsrecentlyintroducedcarboncapandtrade

proposal. Atanestimatedcostof$13.70/tonofCO2,utilizationofwasteheatrecoveryonlignite

powerplants

in

North

Dakota

could

provide

asaving

of

approximately

$16m/year

under

this

proposal.15

14Seepage10above.

15Seepage10above.

34


36/47

Calnetixbelievestheaboveefficiencyandsavingsbenefitscouldassistinkeepinglignitecoal

economicalandcompetitiveasafuelsourceintothefuture.

Calnetixalso

intends

to

produce

the

larger

waste

heat

unit

in

North

Dakota,

and

estimates

that

(subjecttofunding)initialcommercialproductionunitsshouldbecommerciallyavailablewithin36

months.Asnotedabove,Calnetixcalculatesthatapproximately272,000GWhcouldbegenerated

annuallyfromwasteheatsourcesfromthermalpowerplantsandindustrialprocessesintheUS

alone.16

ProducingsufficientCalnetixunitstosupply10%ofthispotentialmarket(2501.5MWeunits

peryearfor10years)isestimatedtocreateaNorthDakotabasedbusinessgeneratingrevenuesof

over$950m

per

annum

and

employing

in

excess

of

500

workers.17

16Seepage16above.

17CalnetixestimatesbasedoncurrentWHG100costsandproductionstaffing.

35


37/47

8.Management.

Calnetixwillassignaprojectmanagertoensurethattasksarecarriedoutonschedule,andthatthe

objectivessetforthhereinwillbemetwithinthe22monthsallotted.Thisprojectmanagerwill

coordinateactivities

by

HDR

Engineering,

Great

River

Energy,

as

well

as

those

activities

internal

to

Calnetix. Theprojectmanagerwillalsomonitorthebudgetfortheprogramtoensureagainst

overruns.

AsdetailedinSection3(ProjectDescription),StepOneentailsasixteenweekprocesstoidentifyand

quantifyheatsources,andvalidatethetechnicalviabilityofconnectingtheCalnetixunittothese

sources.This

step

primarily

involves

the

project

manager

coordinating

with

HDR

Engineering

to

ensureexecutiononthespecifictasksasoutlinedbelow.

Sitevisittoobtaindata,reviewconceptsandreviewexistingplantequipmentforpotential

utilization.

PerformancemodelingoftheexistingfacilitybeforeandaftertheadditionoftheWHG

installationassuming1to2MW.

Identificationoftechnicalrisksandriskmitigationstrategies.

Developmentofcostestimatefortotalinstallation,includingallequipmentmodifications

andgeneratorpricingaspredictedbyCalnetix.

Developmentofahighlevelconceptualonelinediagramtorepresenttherequirementsfor

theelectricaltieinfornewgeneration.

Developmentofafeasibilitystudyreportdescribingtheproposedinstallationandincluding

theresultsofalloftheaboveactivities.

WithinStepOne,therearefourevaluationpoints(monthlyreviewmeetingstotrackprogress).

Thesewillbeledbytheprojectmanagerwhoshallensurethatappropriatemilestonesarebeingmet.

Duringthesereviews,anynecessaryadjustmentswillbemadetothetasks,especiallyasthetasks

36


38/47

identifiedmaynotoccursequentially. Itwillalsobethetaskoftheprojectmanagertoensurethe

feasibilitystudyreportisissuedontimeasthereportwillbethebasisofproceedingwithStepTwo.

StepTwoinvolvesinstallingandrunningthe100kWeCalnetixdemounitforproofofconcept.This

willinvolvecoordinatingtheinstallationoftheunitonsite,followedbycontinuedmonitoringofthe

unitonceoperational.

Regardinginstallation,theCalnetixprojectmanagerwillcoordinatewithHDR,GREandinternal

Calnetixengineerstodevelopaninstallationandsiteconstructionplanandschedule.Appointment

ofsubcontractorsshallbemadeinconsultationwithGREanditisanticipatedthatinstallation

progresswillbemonitoredbyGREwithfrequentsitevisitsbyCalnetixpersonnelduringthisperiod.

Duringthetestingphase,theunitwillbecontinuouslymonitoredinrealtimebyCalnetixfromits

facilityinFlorida(theunitwillhaveitsownIPaddressandcandownloaddatainrealtimeonsite).

ThisinformationwillalsobeavailabletoGREandHDR.Ifnecessary,reviewmeetingswillbecalled.

37


39/47

MaintenanceontheunitduringthetestingphasewillbecarriedoutbyCalnetixoroneofits

authorizeddistributorsinaccordancewiththeprescribedmaintenanceschedulesfortheWHG100.

Quarterlyreports

on

unit

performance,

as

well

as

the

final

report,

will

be

prepared

by

Calnetix

and

distributedamongthepartiesincludingtheLRCaccordingtothechecklistandtimetablebelow.

38


40/47

9.Timetable.

Theproposedtimelinefortheprojectissetforthbelow. Theprojectisdividedintotwostepsandis

basedontheassumptionthatLRCfundingwillbemadeavailablebytheendofMay2009inorderto

commencethe

project

by

June

1.

StepOneinvolvestheidentificationandvalidationofwasteheatsources. Thedetailsregardingthe

stepscanbefoundintheProjectDescriptionsectionabove. Theprojectedtimelineis16weeks

therebyplacingthecompletiondateattheendofSeptember.

Twomonths

into

Step

One,

areport

will

be

submitted

to

track

the

progress

of

the

study

including

an

updateonanyforeseeablechangesinthefuturetimeline. AttheendofStepOne,aninterimreport

willbesubmittedwiththestudyresultsand,shouldstudyresultssupportproceedingtothenext

phase,arequesttofundStepTwo.Shouldthestudyresultsnotsupportproceedingwiththedemo,

thereportsubmittedattheendofSeptemberwillbethefinalreport.

Step

Two

involves

the

demonstration

of

the

Calnetix

WHG100

demo

unit.

The

unit

will

be

run

for

12

monthscontinuouslyinordertovalidatetheconcept.Thescheduleisbasedontheassumptionthat

fundsfromtheDOEwillbemadeavailablebyNovember1,allowingCalnetixtostartontheactivity.

Oncefundingisavailable,equipmentwillbepurchasedwithanexpectedleadtimeoftwomonths

forreceipt.Oncetheequipmentisreceived,itisanticipatedtheinstallationprocesswilltakeanother

39


41/47

twomonths.Basedonthistimeline,thedemonstrationcanstartfunctioningbythebeginningof

March2010.Duringthe12monthdemonstrationperiod,eachquarteraprogressreportwillbe

submitted,followedbyafinalreportthatwillbegeneratedbasedonthedatagatheredthroughout

thosetwelve

months.

Followingcompletionofthedemonstration(i.e.after12months),CalnetixandGRE,inconsultation

withtheLRC,willmakeadeterminationoftheongoinguseoftheunit.Thiscouldincludecontinued

demonstrationoftheunitatCoalCreek,makingtheunitavailableforinstallationanddemonstration

atafacilityoperatedbyanotherLRCmember,orsaleoftheunitinordertomakeapartialrefundto

theLRC

of

grant

monies.

40


42/47

10.Budget

ThebudgetforStepOneisacombinationofanottoexceedestimateof$80,000forengineering

consultingservicesprovidedtoCalnetixbyHDREngineering,directcostsincurredbyCalnetixin

supportingthe

project

and

providing

engineering

services

for

design

and

installation

of

apotential

largeunit,andinkindcontributionsfromGREofsalariedpersonnelwhowillbespendingtimeand

resourcesontheproject.Thebudgetusesastandardengineeringhourlyrateof$165/hourfor

CalnetixandGREresources.

AbreakdownofthesecostsinrelationtoStepOneisasfollows:

WasteHeat

Recovery

for

Lignite

Power

Plants

Step

One

Identification

&

Validation

Direct

2009 Responsibility Resource Hours Inkind Cost Duration

Kickoffmeeting Calnetix 2 10 $1,650 1day

GRE 2 10 $1,650

HDR fixed

SitevisittoCoalCreektoobtaindata Calnetix 3 20 $3,300 2days

GRE 2 20 $3,300

HDR fixed

Reviewmeetings Calnetix 2 20 $3,300 1dayea.

GRE 2 20 $3,300

HDR fixed

FacilityandWHRPerformanceModeling Calnetix 50 $8,250 1to2mo

HDR fixed

RiskIdentification HDR fixed 2weeks

ProcessFlowdiagrams HDR fixed 1to2mo

CostEstimate Calnetix 50 $8,250 1to2mo

HDR fixed

ProgressReport Calnetix 20 $3,300 7Aug

HDR fixed

Interim

Report

(to

wrap

up

Step

1) Calnetix 30 $4,950 16

Oct

Administration(includingtraveletc) Calnetix $20,000

GRE $20,000

HDR fixed

Totalinkind 50 $28,250

TotalDirect(includesHDRnottoexceed$80,000) $133,000

GrandTotal $161,250

41


43/47

ThebudgetforSteptwoisacombinationofhardware/equipmentcosts,onsiteinstallationcostsand

additionalengineeringfromHDRandcontributionsfromCalnetixandGRE,usingthesame

assumptionsregardingCalnetixandGREhourlycostsasStepOne.

AbreakdownofStepTwocostsisasfollows:

WasteHeatRecoveryforLigniteCoalFiredPlantsStepTwo Demonstration

Direct

Responsibility Hours Inkind Cost Duration

Step2 Demonstration

Install100kWunit,heatexchangersonsite Calnetix $501,195 4mo

Testperiodfor12months GRE 520 $85,800

Monitor2

hoursper

day

Calnetix 520 $85,800

Monitor2

hoursper

day

Interimreports Calnetix 80 $13,200 4reports

FinalReport Calnetix 40 $6,600 29Apr

Administration Calnetix 100 $16,500

GRE 160 $26,400

Totalinkind $112,200

TotalDirectCost $623,295

GrandTotal $735,495

TherequestedStepOnegrantof$80,000willprimarilysupportthecostsofHDREngineering,and

CalnetixandGREwillmeettheirowncosts.TherequestedStepTwograntof(nottoexceed)

$250,000willpayaportionofthecapitalequipmentcostsrelatedtothedemonstrationalongside

matchingfundsfromtheDepartmentofEnergy.

42


44/47

ThefundingrequestedisnecessarytoachievetheprojectsobjectivesaswithoutLRCsupport,itis

unlikelythatCalnetixwouldseektoundertakeperformancemodelingofitsunit,orundertake

demonstrationtesting,atalignitepowerplant.Inaddition,withoutLRCsupport,Calnetixanticipates

thatcommercialization

of

the

larger

unit

would

be

delayed

and

may

potentially

not

be

designed

in

a

formsuitableforinstallationatthermalpowerplants.

43


45/47

11.Matchingfunds

AtStepOne,Calnetixhasobtainedanottoexceedquoteof$80,000fromHDREngineeringaspart

ofan

overall

estimated

cost

of

$161,250.

The

remaining

funds

will

be

provided

by

the

direct

resourcesofCalnetix(engineeringandadministration), andinkindresourcesofGRE(engineering,

plantaccessandadministration)whoshallbeinvolvedintheprojectonadaytodaybasis.Assigning

thesepersonneltothisprojectrepresentsoutofpocketandopportunitycostsforCalnetixandGRE.

If,foranyreason,theoverallcostsoftheproject(includingexpensesofHDREngineering)aregreater

thantheestimated$161,250setforthinthisapplication,Calnetixwillpaythedifferencedirectlyin

orderto

ensure

that

this

step

is

completed.

AtStepTwo,matchingfundswillbeprovidedbytheDOEfundingcurrentlybeingsoughtbyCalnetix,

aswellasfurtherdirectresourcesprovidedbyCalnetixandinkindcontributionsfromGRE.In

addition,CalnetixshallapplymostfavorednationpricingtotheWHG100demonstrationunittobe

installedonsite,suchthatiftheunitisbeingsuppliedtoanothercustomerofCalnetixatapriceless

thanthat

set

forth

in

this

application

such

price

shall

also

be

applied

when

supplying

that

unit

to

the

project.

44


46/47

12.TaxLiabilityAffidavit

45


47/47

13.ConfidentialInformation.

N/A

iv b proposal

Documents