Fundamental Benefits of District Energy

Funded by the International Energy Agency Implementing Agreement on DHC including integration of CHP, Annex IX

Mark Spurr

President, FVB Energy

Legislative Director, IDEA

Agenda

Fundamental Benefits study

Study purpose and status

Big picture policy issues

Relevance of district energy

Analytical framework

Misconceptions and realities

Conclusions

Decarbonising the power grid

Results of a recent analysis in the USA

Fundamental Benefits Study

Purpose

Help policy-makers understand the potential contributions of district energy in a balanced and flexible energy policy

Status

Analysis nearly complete

Draft report in preparation

District Energy A simple but powerful idea

Decarbonising thermal grids

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1980 1984 1988 1992 1996 2000 2004 2008

TeraWatt-hours

Biomass

Other

Waste heat

Municipal waste

Peat

Heat pumps

Electric boilers

Coal

Natural gas

Oil

CO2 (kg/MWh)

Carbon dioxide

Big Picture Policy Issues

Energy Policy Goals Energy and economic security – ensuring cost-

effective long-term access to energy supplies Reliability -- strengthening energy infrastructure

to assure delivery of energy to consumers. Reduction of fossil fuel consumption – cutting

reliance on fossil fuels for both environment and energy security

Environment – reducing energy-related emissions of greenhouse gases (GHG), air and water pollution

Relevance of District Energy

Energy and Economic Security Facilitates use of local energy resources

Reduces dependence on energy imported from other regions or countries

Keeps more energy expenditures local

Power Grid Benefits Reduces power demand in high load areas

Thermal energy storage (power peak shaving)

Generating power in load areas with CHP

Relevance of District Energy

Energy and Environment Enables use of renewable and waste heat

Reduces consumption of primary energy, especially fossil fuels

Reduces related environmental impacts

Analysis Overview District Energy Configurations

20 District Heating technology/source combinations 9 District Heating & Cooling technology/source combinations 1 District Cooling-only technology/source combination 2 District system densities

Building Technology Configurations 4 Heating technologies 5 Heating & cooling technologies 2 Cooling-only technologies

6 Locations Power Grid

Current average in location Combined cycle gas turbine (CCGT) Hypothetical decarbonised grid

District Energy -- Baseload Technologies Gas engine CHP

0.2 MWe 3.0 MWe 6.0 MWe

Gas turbine CHP Simple cycle 10 MWe Combined cycle 20 MWe

Steam turbine CHP 30 MWe ORC CHP 1.5 MWe Gas boiler Biomass boiler Heat pumps Heat exchanger Flat plate solar collector Absorption chiller Electric centrifgual chiller

Energy Sources Natural gas

Biogas

Biomass

Coal

Municipal waste

Ground heat + electricity to heat pump

Industrial waste heat

Geothermal hot water

Solar

Natural cold water

District Energy

Peaking Technologies

Natural gas boiler

Electric centrifugal chiller

Densities --annual delivered energy (MWh/trench meter of distribution)

Typical 8.2

Low density 3.0

Building Technologies Heating Gas boiler (new, condensing)

Gas boiler (existing, non-condensing)

Air source heat pump

Ground source heat pump

Electric resistance

Cooling Electric centrifugal chiller

New

Existing

Electric reciprocating chiller

New

Existing

Air source heat pump

Ground source heat pump

Direct expansion

Power Grid GHG Intensity

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Power Grid GHG Intensity

Countries with low emissions all have substantial use of nuclear energy and/or hydroelectricity or other renewable sources, e.g.

Canada 73%

Finland 59%

France 79%

Sweden 88%

Analytical Framework

Compares society-wide consumption & emissions

District energy CO2 emissions are the net of –

Emissions from fuels consumed by the DE system

Emissions related to power grid generation and delivery of electricity consumed by the DE system

Offset power grid emissions for electricity supplied to the grid from DE CHP, as applicable

Building technology CO2 emissions are the sum of –

Emissions from fuels consumed by the building systems

Emissions related to power grid generation and delivery of electricity consumed by the building systems

Design Temperatures

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Misconceptions CHP is the only form of district energy If there is insufficient heat load, CHP is run and the

heat is dumped Gas turbine CHP must be simple cycle Condensing boilers can’t be used in district heating

systems District heating must meet all heating loads including

single family homes By creating district heating we create perverse

incentives to use more heat By creating district heating we will have to require

customers to connect, thereby reducing consumer choice

CHP plants don’t help meet power grid peak demand

Fundamental Benefits Study Conclusions

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Ratios of Green House Gas Emissions for District Heating Compared with Building Technologies (Assumed Current Power Grid Characteristics) - London

Air Source Heat Pump

Electric Resistance Heating

Ground Source Heat Pump

Natural Gas Boiler

Fundamental Benefits Study Conclusions

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Ratios of Green House Gas Emissions for District Heating Compared with Building Technologies (New CCGT Power Grid Characteristics) - London

Air Source Heat Pump

Electric Resistance Heating

Ground Source Heat Pump

Natural Gas Boiler

Fundamental Benefits Study Conclusions

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Ratios of Green House Gas Emissions for District Heating Compared with Building Technologies (Hypothetical Decarbonized Grid Characteristics) - London

Air Source Heat Pump

Electric Resistance Heating

Ground Source Heat Pump

Natural Gas Boiler

Conclusions

When compared to the current power grid in most locations, a broad range of district energy technologies reduce GHG compared with building technologies

The question “is district energy and CHP the best way to use natural gas?” is an extremely limited approach to policy

Decarbonisation

It can be argued that we should not compare district energy with today’s power grid, because there is an ambition to “decarbonise” the electricity grid through nuclear energy, wind farms, tide, wave power etc.

By the same token we should not compare near-term district energy to a hoped-for future power grid

It is intellectually inconsistent to assume decarbonisa-tion of the power grid but not the thermal grid

There are plenty of real-world examples of decarbonisation of thermal grids

We should compare the future power grid to the future district energy system

Conclusions

When compared to CCGT

District energy is more carbon-lean compared with building technologies, including heat pumps

Biogas, biomass and municipal waste show significant reductions compared with building options, especially if used for CHP

Industrial waste heat recovery also shows significant reductions

Solar has less impact on GHG due to the intermittency of the resource

Decarbonised power grid

With a hypothetical decarbonised power grid emitting only 312 kg/Mwhe

Natural gas-fired engine and combined cycle CHP options come down to parity with building-scale gas boilers

Building-scale heat pumps show lower GHG emissions than district energy scenarios involving fossil fuel CHP

District heating scenarios including biogas, biomass or municipal waste still show significant GHG reductions

Apples and Oranges

Comparing near-term district energy with a hypothetical decarbonised power grid is comparing apples and oranges

If we are consistent in the idea that energy systems can and will evolve, we will compare:

Near-term district energy with near-term building options

Decarbonised power grid with decarbonised thermal grids

As thermal and power grids evolve, district energy can maintain a fossil fuel and GHG advantage

Apples to Apples Near-term Long-term

Power grid

Description Current Decarbonized

GHG emissions (kg/MWHe) 539 312

Air source heat pump

COP 2.50 2.50

GHG emissions (kg/MWhth) 216 125

District heating

Energy sources

Natural gas boiler DH system 16% 8%

Engine CHP DH system 84% 12%

Biomass boiler 25%

Muncipal waste CHP 45%

Industrial waste heat recovery DH system 10%

GHG emission factors (kg/MWhth) 48.2 27

Ratio GHG of district energy/building system 0.22 0.21

No single answer

There should not be a single answer to the question “how should we heat buildings?”

District energy can play a vital role in higher-density areas

Provides flexibility for thermal decarbonisation

Avoids pinning all hopes for decarbonisation on the power grid

Relieves pressure on power infrastructure in denser areas

Decarbonising the Power Grid

Study undertaken for the International District Energy Association (IDEA)

Advisory to U.S. Senate Energy and Natural Resources Committee

Addresses “Clean Energy Standard”

Decarbonising the Power Grid

Key data source U.S. Energy Information Administration, “Levelized Cost of

New Generation Resources in the Annual Energy Outlook 2011”, Dec. 2010

Levelised costs Present value of life cycle costs

Capital

Financing

Fuel

Operation and maintenance

Utilization rate

Converted to equal annual payments in real $

Renewables

Levelised Cost of New Renewable Power-Only Generation Resources On Line in 2016

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Average 19.5 cents

Nuclear & Fossil

Levelised Cost of New Nonrenewable Power-Only Generation Resources On Line in 2016

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Average 9.8 cents

CHP

Levelized Cost of New CHP Generation On Line in 2016

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Average 8.3 cents

GHG emissions (metric tons/MWH) Conventional Coal 0.82

Conventional NGCC 0.37

Nuclear -

Advanced Coal with CCS * 0.11

Advanced NGCC with CCS * 0.04

Biomass -

Onshore Wind -

Offshore Wind -

Solar Thermal -

Large Photovoltaic -

Waste heat to power -

Biomass CHP 22 MW (0.43)

NG engine CHP 2.5 MW 0.28

NG engine CHP 5 MW 0.28

NG CC CHP 20 MW 0.24

* Note: CCS is not a proven technology.

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Thanks for your attention!

Questions?

Mark Spurr

Phone: 1-612-607-4544

Email mspurr @ fvbenergy.com