mCHP in North America Promise, Progress & Obstacles

Dr. Samuel Bernstein Special Assistant to the Chairman National Grid, US Presentation at the

GAS INDUSTRY MICRO CHP WORKSHOP PARIS, FRANCE 29 & 30 MAY, 2008

Outline
Why mCHP? Technology evaluation and demonstration The obstacles to mCHP Conclusions

The views expressed in this presentation are these of the author only and do not reflect National Grid policy

mCHP advantage in the NE of USA

Climate Change Option

Regional Greenhouse Gas Initiative, (RGGI) (Cap and Trade Program including NY, NH MA & RI) New York

City - 30% reduction by 2030 State - 15% reduction by 2015

Massachusetts Lead by Example Program (through 2080) Active Rebate Programs in MA, NH & NY Cost to Benefit Metric (Based on Reduced Gas Consumption)

Energy Efficiency Option

Offer an alternative to use of Oil & Electricity

Issues Favoring Distributed Generation in the US

Environment & Global Warming

Increased Efficiency LEED Points (at least 3 pts under EAc1)

Rate of Increase in Energy Costs Massachusetts sell-back provisions

Net Metering & Interconnect Being Actively Sought in NY & RI

Local Electric Distribution Limits

High Cost (especially Urban Areas) Demand reduction programs Concerns over EMF Radiation

Difficulties Siting New Power Plants

Community Opposition Environmental Concerns (Air Emissions, Thermal Discharge)

Why do customers want on-site generation?

1.

2. 3.

4.

5.
6. 7.

No Worries About Outages/Blackouts Save Money on Energy Bills Independence From Electric Utility Greater Predictability of Energy Costs Help the Environment Home Office Needs Medical Equipment Needs

Consultant Survey

As a key energy utility, National Grid is leading Climate and Energy Efficiency Programs in North America
Service mix

Largest energy distribution in the US Northeast Customers:

4.5 Million Electric** 3.3 Million Gas

** Includes 1.1 Million customers of the Long Island Power Authority

Turn over ~ 11.5 Billion *

* Does not include the commodity in the UK

Possible Advantage of mCHP to the utility service

Increased Overall Efficiency

Potential for Customer Savings

Environmental Benefits

To be verified....
Increase in Summer Gas Load
TYPICAL SEASONAL VARIATION OF NATURAL GAS & ELECTRICITY ENERGY USE

Potential for Electric Grid Support

Normalized Natural Gas Energy Consumption

1.0 0.8 0.6 0.4 0.2 0.0 Natural Gas Electricity

1.0 0.8 0.6

0.4
0.2 0.0

J F M A M J J A S O N D

Normalized Peak Electric Demand

mCHP Technology options in North America

IC engines: Climate Energy / Honda

(1 -1.2 kw)

Stirling Engines: (pre-com)

Disenco (3kw)

Fuel Cells: (development) PEM and

Advanced PEM: Plug- Power, Vaillant, Pemeas (3-5kw), Clear Edge Power (5kw)

Field Evaluation of mCHP:

Beta Unit Testing: 19 sites in Eastern Massachusetts 2006/07 Sample data

Totals for the heating season: Run Time: 3,968 hours; gas usage 732 Therms

Auxiliary Furnace Run Time: 450 hours; gas usage 360 Therms
Total Gas Usage: 1092 Therms Electrical Generation: 3,968 kwh Total Combined Heat Generated: 884 Therms Fraction of Total Annual Heat Delivered by the mCHP: 62% Total Combined Annual Efficiency: 93% Energy Cost: $1,747 Combined heat and Electric Energy Cost Savings: $756 Reduction in CO2 Produced: 5,111 lbs. (2.5 tons)

Current technology projects at IC (1/2)

Evaluation of mCHP market and market barriers in NY

5 units test program (Climate Energy) Joint project with

Current technology projects IC (2/2)

Next generation mCHP unit for North America

Hot water capability Back-up power capability 40+ unit demonstration (NE US & Canada) Joint project with

Performed with

Current technology projects: Fuel Cells

Advanced high temperature PEM fuel cell demonstration Joint project with

Project performed with

Issues Stifling Distributed Generation

Electric Grid Connection

High cost (relay protection) Reactive power limits/costs Onerous approval processes

Customized application review Insurance & liability Site (not product) certifications

Electric standby-rates (One outage more than eliminates savings) High Cost Equipment (Up to $4,000 per kW + Installation) Poor Performance of Some Systems
Reliability (Maintenance Interval & MBTF < 1 year) Emissions (excessive CO or NOX)

Fuel Price Volatility

Regulatory Progress

Electric Grid Connection

Most States have published Standard Interconnect Requirements (SIRs), (limited to 300 kVA in NY) IEEE 1547 type testing of grid protection devices universally recognized & UL Standard for Inverters UIL 1741

Special Gas Utility Rates for CHP for all size customers New Emissions standards (California & proposed for NY) Net Metering

Allows customer payback at rate paid for electricity (2-3 times avoided cost previously paid for) Most states allow only for renewable but considering for all CHP.
New Standard for Safe Use and Installation of Energy-Efficient Microturbine Systems will enable Owners to Participate in PlaNYC Goal of Increasing Clean Power Generation Mayor Bloomberg

Micro-turbines (Concern over on-board gas compressor)

Public Utility Commissions Investigating Disincentives to CHP in NY & MA Electric & Gas Utility Financial De-coupling

Active Discussion on Ways to Finance Distributed Generation

Government incentives

Federal & local Rate-based Gas utility incentives

Transfer avoided cost from electric wires company to customer purchasing equipment

Rate Design Offer electric load management rebates NOX & SOX (aggregate) Greenhouse gases

Emissions reduction credits

Share customer savings or energy sales model

Conclusions
CHP has Tremendous Potential in All Sizes mCHP Making Progress in US Economic Obstacles Remain International Cooperation can help in identifying best solution

Lower

costs

Economies of scale Innovation Code harmonization