Analyzing & Developing CHP

Projects June 27, 2017

usa.siemens.com Dr. Jay Balasubramanian, Operations Manager, Distributed Energy Systems

Agenda

Qualifying A CHP Project

CHP Development Pathway

Analyzing & Developing Opportunities

Economic Value and Considerations

Siemens Products & Services for CHP Applications

Q & A

Economics, Thermal Loads & Site Conditions Primary

Considerations For Qualifying Cogen Opportunities

Electricity and Fuel Costs

• Do they pay more than $0.07/kWh for

electricity and/or less than $6/MMBtu?

• Are they located in a de-regulated

electricity market?

• If not, obtain utility rate sheet and

understand “stand-by” rates.

• What incentives are available for

cogeneration in your area?

Thermal and Electrical Load

• Do they have a consistent thermal

(steam/hot /chilled water) load

throughout the year?

• Does the facility operate for more than

5000 hours per year?

• Is the electric load constant

throughout the day or does it have

high variability?

Site Specific Conditions

• Is the customer concerned with power

reliability and/or power quality?

• Does the customer have a central

plant and do they expect to expand

replace, retrofit plant equipment within

the next 5 years?

• Is sustainability / impact to

environment important to customer?

CHP Development Cycle Starts With Conceptual Design

and Concludes With Construction and Commissioning

Financial Structuring

Detailed Engineering Management

Equipment / EPC Negotiation

Execute Commercial Agreements

Preliminary Design

Budgetary Capital Estimates

Fuel Supply, Interconnection & Emissions Assessment

Stakeholder Identification

Commercial Structuring

Financial Pro Forma Model Dev

Conceptual Design

Technology Selection

Fatal Flaw Analysis

Load Assessment

Screening Level Operational / Financial Model

Vendor Oversight

Owners Engineering

Commissioning Review

Detailed Design and Project Closing

Project Feasibility/ Business Model Definition

Concept and Screening

NTP, Construction and Commissioning

Service and Performance Assurance

Quality / Performance Assurance

Measurement and Verification

Monitor Service Agreements

High Project Risk Low

First Step In Analyzing CHP Is Load Analysis

Data Gathering &

Load Analysis

• Electric Loads from interval Data

• Thermal Loads

Technology Selection

• Set of Engine/Turbine options matching thermal/electric load

System Design &

Performance

• Prelim/Conceptual CHP plant design • Thermodynamic & Electrical Performance

• Electrical Interconnection & Fuel Supply Evaluation

• Emissions Requirements/Control Evaluation

Financial Evaluation &

Risk Assessment

•Capital & Operating Cost Estimates

•Financing Options & Structures

•Financial Pro Forma (Including Rate Analyses)

•Comprehensive project risk assessment

Base, Peak and Average Electrical Loads Key Determinants

of Sizing Options

Power (Not Energy) is key to determining electric loads : Power (kW) = Energy(kWh) / Time(h)

• Generate load duration curves and frequency distributions

from 15 minute interval data to get

• An idea of load variability

• Peak and average loads for system sizing

Thermal Load Analysis – Understanding Load Variation is

Critical

Interval Data is usually difficult to obtain

Steam/Hot Water Conditions

Natural Gas Consumption

• No substitute

• If not available, work around it

• Mass Flow (lbs/hr)

• Pressure (psi)

• Temperature (F)

• Volumes consumed

• At least monthly detail

• Diurnal load variation is difficult to deal with – but there are options

• Seasonal variation can sometimes be mitigated through absorption or steam turbine driven chilling

Modeling A Cogen System – System Sizing & Performance

GT PRO 23.0 localuse

2414 10-22-2013 17:49:53 file=

Net Power 643595 kWLHV Heat Rate 6288 BTU/kWh

p[psia], T [F], M[lb/s], Steam Properties: IFC-67

1X GE 7F 5-series

(Curve Fit OEM Data Model #435)

2 X GT

185768 kW

14.28 p

91 T

75 %RH

1027.9 m

800 ft elev.

14.13 p

91 T

1027.9 m

Natural gas 23.94 m

77 TLHV 1715182 kBTU/h

1051.9 m

14.84 p 1138 T 2103.7 M

72.44 %N2 12.04 %O2 3.796 %CO2 10.85 %H2O 0.8708 %Ar

1136 T 2103.7 M

41.01 ft^3/lb86280 ft^3/s

1400 1368 1331 1278 1147 955 693 692 570 570 567 397 372 324 324 308 308

193 T 2112.3 M

17.5 ft^3/lb36963 ft^3/s

293266 kW

0.67 M

FW

1.719 p 121 T 432 M

121 T

Natural gas 8.608MLHV 616623 kBTU/h

53.24 p

265 T

433.1 M

LTE

121 T 433.1 M

265 T 53.24 p 285 T

9.6 M

53.24 p

285 T

9.6 M

LPB

9.6 M

433.1 M 135.9 p 285 T

132 p

344 T

433.1 M

IPE2

132 p

348 T

15.69 M

IPB

130.2 p

523 T

15.69 M

IPS1

129.4 p

610 T

15.69 M

IPS2

2596.9 p 354 T

2553.3 p

558 T

417.4 M

HPE2

2521.3 p

665 T

417.4 M

HPE3

2521.3 p

669 T

417.4 M

HPB1

2462.8 p

873 T

417.4 M

HPS0

2446.1 p

981 T

417.4 M

HPS1

2436 p

1053 T

417.4 M

HPS3

2400 p 1050 T 417.4 M

2436 p 1053 T

405.8 M

400 p 584 T

366.9 p

944 T

405.8 M

RH1

361.2 p

1052 T

405.8 M

RH3

405.8 M

349 p 1050 T

15.69 M

125 p 607 T

Includes DB, SCR, CO cat.

Conceptual Thermodynamics & Design

Simulation to predict plant

performance under load

variations/ambient conditions

Detailed Cost Estimates

Financial Pro Forma & Utility Rate Analyses Critical to

Determining Economic Value

Results Summary

Project IRRs Performance Metrics Capital Costs

Inputs

Operational

Financial

Capital Costs Tax Impacts & Incentives

Income & Cash Flow Stmts

EBITDA

Net Income

Free Cash Flow

IRR

Price Forecasts

Delivered Fuel

Electricity Rates

Standby Rates

Inflation

Operations

Revenues

Operating Costs

Depreciation

Book Basis

Accelerated

Deferred Taxes

Financing

IDC

Debt Schedule

Pro Forma Analyzes Long Term Economic Feasibility of Project

Set up to allow dynamic functioning such

that changes to key parameters and

impact on results can be quickly and

easily observed.

CHP Can Provide Robust Self-Regulating Hedge Against

Rising Energy Prices, Lead to Significant Savings

► Key Assumptions

• Potential ESA Payments

• All in O&M Costs

• 15 Year project life

• 94% availability

• NYMEX forward curve

natural gas during liquid

period + fundamentals

based long term forecast.

• Forecast of electric rate

structure and

standby/backup power

supply charges

** Note All numbers are indicative

Economics of Cogen - Example

Inputs Net Installed Capacity ekW 3950 Chiller Efficiency kW/TR 0.70 Average Heat rate Btu/kWh 8,026

Demand Calcs Annual Generation kWh 31,615,006 Annual Chilled Water Prod TR 4,787,578 Hot Water Prod MMBtu 24,412

Energy Prices Natural Gas Price (HHV) $/MMBtu $4.70 Annual Average Price $/MWh $85.00

Cost of Generation Fuel Cost $/MWh 40.32 O&M Cost $/MWh 18.00 Stand-by Rate $/MWh 8.29 YES Variable COG $/MWh 66.60

Savings Calcs. Power Gen Savings $/yr 581,592 Chilled Water Savings $/yr 284,861 Hot Water Savings $/yr 127,433

Total Annual Savings $/yr 993,885

Total Capex (Sale Price, Incl. Margins) $ 11,093,405

Reciprocating Engine – CHP Package

+

Absorption Chiller

Typical CHP reduces energy costs around 5-15% with 10-15 year contract terms…

How Projects Get Financed – The Basics

Self Ownership

Internal Funds

Debt Financing

Loans/Bonds

Equity Financing

Performance Contracting

3rd Party

Ownership

DBOOM

Lease Financing

A Comprehensive portfolio of advanced

technologies for CHP applications

Life Cycle Support

Long Term Programs (LTPs)

Portfolio of services and options

for CHP solutions

Thank You & Questions

Dr. Jay Balasubramanian

Operations Manager

Distributed Energy Systems

Phone: (571) 393-7688

E-mail:

jay.balasubramanian@siemens.com