EU 304 Environmental Management

APPA Institute, New Orleans, January 2016 1

1

Erin F. HazenRenewable Energy Business Development Manager

University of Iowa

erin-hazen@uiowa.edu

Forms of Generation ◦ Turbine Generators

◦ Solar

◦ Combined Heat and Power

The Case for Self-Generation

Cost Considerations◦ Understand Energy Use vs Demand

◦ What’s your Generation Strategy?

Technology Selection◦ Renewable Energy Generation

2

HOW?

WHY?

HOW MUCH?

WHICH KIND?

3

80% of world’s electricity generated by steam turbines driving rotary generators

Turbines extract energy from fluid flow and convert it to useful work

◦ Fluid flow acts on the turbine blades to produce rotation of a shaft (rotor) attached to generator

Prime Mover: the mechanical means of turning the generator rotor

◦ STEAM Turbine: Steam raised in a boiler which is heated by the combustion of coal, gas, or biomass

◦ GAS/DIESEL Turbine: flow of gas caused by the combustion of fossil fuels

◦ WIND Turbine: air flow caused by sun’s uneven heating of earth’s surface

◦ HYDRO Turbine: water flow from natural run-of river, or artificial pumped water storage

EU 304 Environmental Management

APPA Institute, New Orleans, January 2016 2

4 5

Wind Turbine GeneratorSteam Turbine Generator

Gas-fired Turbine GeneratorTurbine Blade Cross-section

HIGH

LOW

A conductor is moved in a magnetic field & induces voltage

• Rotating Armature: the conductive coil is rotated within stationary magnetic field (limited to low-voltage generation)

• Rotating Field: magnetic field rotates within stationary conductive coil (armature)

Copper is a highly efficient conductor due to molecular structure

The voltage magnetic field pushes on & dislodges the free electrons

6

Electricity = flow of electrons

EU 304 Environmental Management

APPA Institute, New Orleans, January 2016 3

Solar PV

Direct conversion of solar irradiance into electricity

PV panels contain silicon layers which carry a negative and positive charge

Silicon molecules, like copper, are prone to losing electrons

Photons from the sun dislodge electrons in the atoms from the negative layer

7

Electron ping-pong game ensues

Conductors embedded in panel collect the flowing electrons

Electricity = flow of electrons

8 9

EU 304 Environmental Management

APPA Institute, New Orleans, January 2016 4

10

Purchased Electricity from GridPurchased Electricity from Grid

90

90

90

Continuity of service despite grid outages

Agile response to market conditions

Time of Day and Seasonal pricing factors Rates vary by on-peak/off-peak periods, and summer/winter

Demand Response/Curtailment Agreement Lower rates/rebates utility for curtailment (load reduction) Curtailment triggered by congestion, wholesale market price spikes, grid

reliability concerns University of Iowa’s 2015 rebate: $1,012,000

Base Load Generation vs. Peak Shaving Base Load: Continuous operation serving all or most of campus demand Peak Shaving: Rapid response generation offset load during high demand

hours Energy Storage is another tool to achieve peak shaving—system costs

rapidly coming down

11 12

Source: EIA, August 2016

EU 304 Environmental Management

APPA Institute, New Orleans, January 2016 5

Efficiency– how much of the primary energy stored in the fuel is converted to useful power?

13

Net Capacity Factor Ratio of actual output to its potential output if operating continuously at full capacity

Most helpful to understand impact of intermittent resource on output

Captures how many hours/year the facility can be expected to produce energy

Solar PV NCF: 15-35% Varies by region. Tracking can add ~4%.

Windpower NCF: 35-50% Highly site specific. Many options to boost NCF (tower height, blade length, turbine mfr.)

Natural Gas 32-38%

Coal 39-47%

Solar 18-20%

Wind 35-55%

CHP 80-85%

14

Rate Type cents/KWh

Summer On Peak Rate 11.022

Summer Off Peak Rate

4.142

Winter On Peak Rate

4.024

Winter Off Peak Rate

3.836

Cost of Generation Purchased Electricity

Cost Avoidance

15

Power: The rate at which energy is supplied (KW)Energy: The amount of power delivered over time (KWH)

Energy (KWh)

24-Hour period

PricePower (KW)

EU 304 Environmental Management

APPA Institute, New Orleans, January 2016 6

16

Energy Charge: $/KWh for total Energy Use (entire blue area)

On-peak Demand Charge: $/KW

Charge that’s based on your highest Demand (highest rate of energy consumption) during On-Peak hours

Peak Demand: 652 KWDemand Charge $6.77/ KW

Total:$4,414

17

What changes might this facility take to reduce the electricity bill?

Scheduling optionsGeneration options

Load-following Generation?Net metering?Energy storage?

Begin cooling

bldgs Staff arrives

Classes in full

swing

Outdoor temps

rising

Fleet Mgmtplugs in the

EV’s for the night

Evening classes

wrap up

Custodial, dorm

lighting

Consider institutional priorities

Utilities Cost Reduction

Budget Stability

Fixed Costs – Construction & Regulatory

Marginal Costs – Fuel and O&M

Energy Security

Continuity of Services/Emergency Power

Environmental Impacts

University branding

Research and Learning opportunities18

EU 304 Environmental Management

APPA Institute, New Orleans, January 2016 7

Consider limitations

Available Capital

Regional Energy Resources

Physical Space / Existing Infrastructure

Permitting Regime

Community Support

Timeline, Scalability

Staffing & In-house Expertise

◦ Bring in third party operators?

◦ Ohio State University plans to outsource utilities:

https://www.osu.edu/energymanagement/index.php?id=1119

• Intrinsic environmental benefits

• Branding: students expect and demand it

• Dramatic CoE reductions- some regions at grid

parity

• Understand available incentives and market value

of Renewable Energy Credits

• Seek partners with tax appetite for CAPEX

reduction

• Forward curve projections of coal/gas prices:

a flat PPA may be a great bet. …Or it may not.

• What’s your clout with your utility? Get them to do

the heavy lifting!20

NYMEX Henry Hub Monthly Futures Prices June 2008 – December 201321

• Forward Curve Pricing shows the market expectation of future commodity costs

• Good demonstration of the cost insecurity associated with fossil fuel generation, and overall price trends. But not absolute #s

• Don’t bet the farm - especially vendor-supplied.

• Natural Gas predictions were drastically (&repeatedly) wrong- did not predict fracking tech advances and cost reductions. Jun ‘08, the market predicted

>$11/MMBtu by Dec ’09

Actual in Dec ‘09 was <$5/MMBtu

In Dec ‘09, new market prediction

was ~$7/MMBtu by Dec ’11.

In Dec ‘11, actual <$4/MMBtu

EU 304 Environmental Management

APPA Institute, New Orleans, January 2016 8

Goal: 40% Renewable by 2020, majority to be achieved by replacing coal with biomass

Currently co-firing coal and NG with oat hulls, Miscanthus grass, and wood chips

~550 acres planted of Miscanthus. 12ft height at maturity, displaces ~4 tons of coal per planted acre

Moving from R&D to commercial reality--currently developing cost-effective, diverse biomass supply chain

Future fuels include short rotation woody crops, timber management output, and non-recyclable manufacturing by-products from Iowa businesses

22

• Increasingly cost-competitive vs fossil fuels

• Siting and the wind resource are critical

• Not a load-following generation source (usually)

• Technology choice matters greatly

• Not conducive to phased implementation- high mobilization costs

• Engage permitting experts

23

• Load-following (usually)

• Less picky about siting, easier to permit

• Economics (usually) depend on tax incentives

• Scalable; fairly easy to construct in phases

• PV Panels essentially commoditized, but supplier quality can vary

• $5.2MM project for one 1.65MW Vestas turbine

• Serves 41% of campus load

• 15-year payback period

• Projected 4.3MWh annual production; actual 4.8 MWh

• Utility offers favorable net metering at retail rate

• Financing: $950k US DoE grant & $512k IL Clean Energy Community Foundation grant. College-issued bonds will be repaid with energy cost savings

24

Annual expense $755k $420k

(while other HCC campuses went up 40%-65%)

EU 304 Environmental Management

APPA Institute, New Orleans, January 2016 9

Tax-exempt bonds for construction of facilities Short-term capital project notes Some deal structures common to wind/solar

projects:◦ Partnership flip of Project Company

Partner with tax appetite owns 99% of project company until a defined trigger.

Then ownership flips to University under defined FMV terms ◦ Sale-Leaseback◦ Third-party PPA: Project Developer installs and owns the

energy facilities on Host’s site, offers a PPA to the Host.◦ Synthetic PPA: a contract-for-differences.

Off-site generation where University pays fixed PPA price Project owner sells energy on wholesale market (“merchant”) Settle difference based on price at agreed-upon index site Financial hedge, not a physical trade Bundle with RECs for green attributes

25 26

Sale / Leaseback Third-Party Power Purchase Agreement

Comprehensive tally of available RE incentives & net metering by state: www.DSIREUSA.org

Berkeley Lab RE publications

https://emp.lbl.gov/reports/re

Searchable database of NREL publications

http://www.nrel.gov/research/publications.html

NREL’s LCOE (Levelized Cost of Energy) calculator

http://www.nrel.gov/analysis/tech_lcoe.html

27