WADE 5th Intl Conference, 2004

Recycling Energy with CHP and Decentralized Energy

A Bridge to the Future

Thomas R. CastenChairman WADE

World Alliance for Decentralized Energy

World Energy SituationWorld Energy Situation

Growing energy demand is driving up Growing energy demand is driving up fossil fuel prices fossil fuel prices

132 nations increased energy use faster than 132 nations increased energy use faster than USA last decade, including China and IndiaUSA last decade, including China and India

““Hubbert’s Peak” says world oil production Hubbert’s Peak” says world oil production will peak in the 2003 to 2005, then declinewill peak in the 2003 to 2005, then decline

Oil purchases are a massive wealth transfer, Oil purchases are a massive wealth transfer, propping up dictators, religious zealots, and propping up dictators, religious zealots, and those supporting global terrorismthose supporting global terrorism

Fossil Use is Changing ClimateFossil Use is Changing Climate

Increasing atmospheric COIncreasing atmospheric CO22 is warming the is warming the

globe, causing:globe, causing: Increased frequency and severity of stormsIncreased frequency and severity of storms Rising seal level could flood low countries, Rising seal level could flood low countries,

such as Bangladeshsuch as Bangladesh More rapid species extinction & disease spreadMore rapid species extinction & disease spread

Failure to recycle energy, and over reliance Failure to recycle energy, and over reliance on central generation adds needless costs on central generation adds needless costs and COand CO22 emissions to every country emissions to every country

Cost of Work Drives Income per Cost of Work Drives Income per CapitaCapita

Changes in the real cost of work explain Changes in the real cost of work explain 80% of past per/capita income growth 80% of past per/capita income growth

““Work” is useful changes – moving people, Work” is useful changes – moving people, transforming materials, lighting, etctransforming materials, lighting, etc Cost of work function of: 1) fuel prices, 2) Cost of work function of: 1) fuel prices, 2)

conversion efficiencies, 3) transmission conversion efficiencies, 3) transmission losses, 4) appliance and vehicle conversion losses, 4) appliance and vehicle conversion efficiency; 5) other steps from fuel to useful efficiency; 5) other steps from fuel to useful work.work.

Policy ImplicationsPolicy Implications To promote improved standard of living, To promote improved standard of living,

reduce real cost of work, by:reduce real cost of work, by: Increasing energy conversion efficiency in all Increasing energy conversion efficiency in all

sectors – heat and power generation, sectors – heat and power generation, appliances, manufacturingappliances, manufacturing

Reducing losses and costs of transmitting Reducing losses and costs of transmitting energyenergy

Recycling energy Recycling energy

Widespread efficiency and energy Widespread efficiency and energy conservation policies would reduce conservation policies would reduce demand for fossil fuel, reducing energy demand for fossil fuel, reducing energy prices and thus reducing the cost of workprices and thus reducing the cost of work

Cost of Work Rising, WorldwideCost of Work Rising, Worldwide Real fuel prices are increasingReal fuel prices are increasing

Central electric generation efficiency has been Central electric generation efficiency has been frozen for 40 years at 33%frozen for 40 years at 33%

Electric T&D losses rising, due to grid Electric T&D losses rising, due to grid congestion, remote generationcongestion, remote generation

Appliance efficiency gains are slowingAppliance efficiency gains are slowing Mandated growth of renewable energy will Mandated growth of renewable energy will

raise electric prices raise electric prices

These trends hurt per capita incomesThese trends hurt per capita incomes

Energy Myths Lead to Bad Energy Myths Lead to Bad Policy ChoicesPolicy Choices

Myth #1: It is cheaper to move electricity Myth #1: It is cheaper to move electricity than to move fuel – build mine mouth than to move fuel – build mine mouth power stationspower stations

Myth #2: Central generation has economies Myth #2: Central generation has economies of scale, costs less capital than smaller of scale, costs less capital than smaller decentralized generationdecentralized generation

Myth #3: Energy can only be used onceMyth #3: Energy can only be used once Myth #4: Heat and power generation are Myth #4: Heat and power generation are

optimal, given current technologyoptimal, given current technology

The Rule of SevensThe Rule of SevensFacts Versus Myth #1Facts Versus Myth #1

Moving fuel (coal, gas, or oil) takes 7 times Moving fuel (coal, gas, or oil) takes 7 times lessless energy than moving electricity energy than moving electricity

Moving thermal energy takes 7 times Moving thermal energy takes 7 times moremore energy moving electricityenergy moving electricity

Thus, moving thermal energy takes 49 Thus, moving thermal energy takes 49 times times moremore energy than moving fuel. energy than moving fuel.

Implication: Burn fuel near thermal users in Implication: Burn fuel near thermal users in CHP plants to provide local heat and powerCHP plants to provide local heat and power

Asking the Right QuestionAsking the Right QuestionChallenges Myth #2Challenges Myth #2

Single large power plants are cheaper per Single large power plants are cheaper per kW than smaller plants, but:kW than smaller plants, but: Central power requires 1.1 to 1.25 kW new Central power requires 1.1 to 1.25 kW new

generation and new T&D wires to deliver 1 generation and new T&D wires to deliver 1 kilowatt of new power to users kilowatt of new power to users

Local power requires 1 kW new generation plus Local power requires 1 kW new generation plus 10% of new T&D to deliver 1 kW to users10% of new T&D to deliver 1 kW to users

Total capital cost for central power 1.8 Total capital cost for central power 1.8 times cost of DG (US$2,500 versus $1,400) times cost of DG (US$2,500 versus $1,400)

Energy Can be RecycledEnergy Can be RecycledChallenging Myth #3Challenging Myth #3

What Energy Can Be Recycled?What Energy Can Be Recycled? Fuel and electricity is typically used only one Fuel and electricity is typically used only one

time, with all waste discardedtime, with all waste discarded Power plants burn fuel and then discard 2/3’s as heatPower plants burn fuel and then discard 2/3’s as heat Industry transforms raw materials to finished goods Industry transforms raw materials to finished goods

and then vents heat, pressure, & waste fuelsand then vents heat, pressure, & waste fuels

Local power generation of heat and power Local power generation of heat and power recycles normally wasted heat recycles normally wasted heat

Industrial waste energy can be recycled to heat & Industrial waste energy can be recycled to heat & power without extra fuel or pollution. power without extra fuel or pollution.

Use blast furnace gas, carbon black gas, hot exhaust, Use blast furnace gas, carbon black gas, hot exhaust, pressure drop, combustible wastes, agricultural wastespressure drop, combustible wastes, agricultural wastes

Combined Heat and Power (CHP)Combined Heat and Power (CHP)

Fuel

100% Steam

Electricity

Chilled Water

90%

10% Waste Heat, no T&D loss

Pollution

(At or near thermal users)

CHP Plants

Recycled Energy Recycled Energy ((At user sites)

Waste Energy

100%

10% Waste Heat

Steam Generator

70%

Steam

25% Electricity

BP Turbine Generator

No Added Pollution

Capital costs similar to other CHP or DG plants

Recycled Energy Case Study: Recycled Energy Case Study: Primary EnergyPrimary Energy

We invested We invested $360$360 million in six projects to million in six projects to recycle blast furnace gas and coke oven recycle blast furnace gas and coke oven exhaust in four steel plants.exhaust in four steel plants. 440 MW electric and 460 MW steam capacity. 440 MW electric and 460 MW steam capacity.

Return on assets exceeds 15% Return on assets exceeds 15%

Steel mills save over Steel mills save over $100$100 million per year million per year and avoid significant air pollution and avoid significant air pollution

Reduced COReduced CO22 equals uptake of one million equals uptake of one million

acres of new trees.acres of new trees.

90 MW Recycled from Coke Production90 MW Recycled from Coke ProductionChicago in BackgroundChicago in Background

DG, Using Conventional DG, Using Conventional Technology, Saves 40% versus Technology, Saves 40% versus

Central GenerationCentral Generation

WADE model challengesWADE model challenges

Myth #4Myth #4

WADE Model DescriptionWADE Model Description Model database has all generation choices; Model database has all generation choices;

calculates costs to meet 20 year load calculates costs to meet 20 year load growth with CG or DGgrowth with CG or DG Central generation scenarios are user specified Central generation scenarios are user specified

mix of electric-only plants mix of electric-only plants DG scenarios include good CHP (4,000 Btu DG scenarios include good CHP (4,000 Btu

heat recovery per kWh electric,) industrial heat recovery per kWh electric,) industrial recycled energy, and renewable DGrecycled energy, and renewable DG

Model works for any country with local data Model works for any country with local data on existing generation, load growth, T&D on existing generation, load growth, T&D losseslosses

US Results, CG versus DG, for Next 20 years (Billion Dollars)

ItemItem All CG All DG Savings % Saved

Capacity + T&D $831 $504 $326 39%

Power CostPower Cost $145 $92 $53 36%36%

Tons NOxTons NOx 288288 122122 166166 58%58%

Tons SOTons SO22 333333 1919 314314 94%94%

MM Tonnes COMM Tonnes CO22 776776 394394 381381 49%49%

Extrapolating US Analysis the WorldExtrapolating US Analysis the World

We do not have sufficient data to run We do not have sufficient data to run WADE model for the world, but:WADE model for the world, but: We believe US numbers are directionally We believe US numbers are directionally

correct for CG versus DGcorrect for CG versus DG

We analyzed conventional approach of IEA We analyzed conventional approach of IEA Reference Case versus optimal solutions Reference Case versus optimal solutions with DG using US valueswith DG using US values

Worldwide CG for 2030 Load GrowthWorldwide CG for 2030 Load Growth

Fuel

100%

33% delivered electricityPower Plant

T&D and Transformers

Pollution

67% Total Waste

Line Losses 9%

Generation:$890 / kW4,800 GW worldwide

$4.2 trillion

Transmission:$1,380 / kW4,800 GW

$6.6trillion

Totals:$2,495 / kW4,368 GW

$10.8 trillion

Worldwide DG for 2030 Load GrowthWorldwide DG for 2030 Load Growth

Fuel

100% Steam

Electricity

Chilled Water

90%

10% Waste Heat, no T&D loss

Pollution

(At or near thermal users)

CHP Plants

Generation:$1,200/kW 4,368 GWWorld Cost: $5.2 trillion

DG vs. CG: ($1.0 trillion)

Transmission: $138/kW (10% Cap.) 0.44 GW DG$600 billion

$6.0 trillion

Totals:$1,338/kW 4,368 GW$5.8 trillion

$5.0 trillion

Worldwide Benefits of Meeting 2030 Worldwide Benefits of Meeting 2030 Load Growth with Decentralized EnergyLoad Growth with Decentralized Energy

Consume 122 billion fewer barrels of oil Consume 122 billion fewer barrels of oil equivalent (½ Saudi reserves)equivalent (½ Saudi reserves)

$2.8 trillion less fossil fuel purchases $2.8 trillion less fossil fuel purchases

Reduced illness from air pollution Reduced illness from air pollution

Much easier to supply electric services to Much easier to supply electric services to entire population entire population

Global warming might slow downGlobal warming might slow down

Potential Savings for ChinaPotential Savings for China

WADE model has been run with Chinese WADE model has been run with Chinese datadata

Tomorrow morning we will present resultsTomorrow morning we will present results

Summary and ImplicationsSummary and Implications

Worldwide energy policies, based on four Worldwide energy policies, based on four energy myths, promote excessive energy energy myths, promote excessive energy use and costuse and cost

The current energy trends hurt per capita The current energy trends hurt per capita income in all countriesincome in all countries

By promoting energy recycling, By promoting energy recycling, governments can lower the real cost of governments can lower the real cost of work, enhance income growth, work, enhance income growth, andand lessen lessen environmental damage environmental damage

Conference GoalsConference Goals

Help delegates, government officials, and Help delegates, government officials, and media move beyond today’s energy mythsmedia move beyond today’s energy myths

Offer a vision of the future based on DG Offer a vision of the future based on DG that recycles energy that recycles energy

Provide analytical tools and experiences to Provide analytical tools and experiences to illustrate value of needed policy changes illustrate value of needed policy changes

Encourage the widest possible dialogue Encourage the widest possible dialogue between top energy policy and application between top energy policy and application specialists from all over the worldspecialists from all over the world

The Coming DG RevolutionThe Coming DG Revolution

The DG revolution is as important as the The DG revolution is as important as the Green Revolution of 30 years agoGreen Revolution of 30 years ago

In time, the DG revolution will spread to all In time, the DG revolution will spread to all countries, but first movers will have countries, but first movers will have advantagesadvantages

We tip our hats to our enlightened hosts We tip our hats to our enlightened hosts who seek to foster a DG revolution in the who seek to foster a DG revolution in the world’s largest nationworld’s largest nation

Thank you for listening!