Block Island

Block IslandBlock Island

Vermont CHP and Customer Generation Potential StudySeptember 15th Study Team Progress Report

VSPC Study TeamPresented by: La Capra Associates, Inc.Stantec Consulting Inc.

Presented to:

September 15, 2010

2

Agenda Objectives for today’s briefing John Athas

Existing CHP/Customer Generation Dan Kelly, Jose Donnell

CHP Technology Overview Dan Kelly

CHP Potential Methodology - John Athas, Patty Richards, Barbara Stoddard, Melissa Whitten

Assumptions and Economic Testing John Athas

Summary of Issues from Discussion Patty Richards

Next Steps Patty Richards, John Athas

3

Objectives for today’s briefing

1.Provide an Update of the current CHP / Customer Generation Investigations

2.Provide an Update on the CHP Potential including an understanding of:

Methodologies and approximations

Progress in Data Gathering

3.Discuss any study issues and obstacles with the VSPC Study Committee

– Sub-bullet

4

Existing CHP/Customer Generation

Data Gathering

Industrial Database review

Vermont Utility Survey by La Capra Team

VT PSB

• Net-metering applications

• Posted CHP Existing Facilities

Host Customer Electric Load Information Request?

Mapping of Locations

Summaries of Technology and Operations

Customer Phone Interviews

Economic Review

5

Existing CHP/Customer Generation – Preliminary Tabulation

PLANT_NAME PHYS_CITY COUNTYZONE_VEL

CO IND_DESC START PRIME_MVRFUEL_TYPE1 GEN (kW) CHP

Brattleboro Kiln Dry Company Battleboro Windham O Wood Products 2000 ERENG NG 380   YESEthan Allen, Inc. Beecher Falls Essex A Furniture 1940 B/ST WOOD 1,232   NOBellow Falls High School Below Falls Windham O Schools 1991 ERENG OIL 433   YESCrescent Manor Nursing Home Bennington Bennington O Nursing Homes 1996 ERENG NG 60   YESBerkshire Cow Power Berkshire Franklin P Agriculture 2006 ERENG BIOMASS 600   YESBrattleboro Retreat Brattleboro Windham O Misc. Education 1988 ERENG OIL 1,000   YESOmega Optical Brattleboro Windham O Instruments 2005 ERENG OTR 461   YESBlue Spruce Farm Bridport Addison J Agriculture 2005 ERENG BIOMASS 392   YESVermont Energy Investment Corporation Burlington Chittenden G Office Buildings 1988 ERENG NG 60   YESHinsdale Farms Charlotte Chittenden I Agriculture 2005 ERENG BIOMASS 65   YESEast Ryegate Wood Energy East Ryegate Caledonia E Pulp and Paper 1992 B/ST WOOD 20,000   NOPompanoosuc Mills East Thetford Orange K Furniture 2008 B/ST WAST 30   YESEssex Junction Wastewater Treatment Essex Junction Chittenden B,I Wastewater Treatment 2004 MT BIOMASS 60   YESFlorence Project Florence Rutland L Minerals 1992 CT NG 7,600   NOGilman Mill Gilman Caledonia F Pulp and Paper 1982 B/ST WOOD 4,000   NOBell Gates Lumber Jeffersonville Lamoille C Wood Products 1988 B/ST WOOD 75   YESMiddlebury College Middlebury Addison J Colleges/Univ. 1982 B/ST OIL 1,885   NOFoster Brothers Farm, Inc. Middlebury Addison J Agriculture 1982 ERENG BIOMASS 142   YESNorth Country Hospital Newport Orleans A Hospitals/Healthcare 2005 B/ST WOOD 274   YESNorwich University Northfield Washington E Colleges/Univ. 1987 B/ST OIL 625   YESGreen Mountain College Biomass Facilitiy Poultney Rutland M Colleges/Univ. 2010 B/ST WOOD 300   YESWestminster Farms Putney Windham O Agriculture 2009 ERENG BIOMASS 225   YESGreen Mountain Dairy Farm Sheldon Franklin B,C Agriculture 2007 ERENG BIOMASS 275   YESRock Tenn Sheldon Springs Franklin B,C Pulp and Paper 1994 B/ST OTR 1,135   NOSouth Burlington School South Burlington Chittenden G Schools 1999 ERENG NG 60   YESSouthern State Correctional Facility Springfield Windsor N Justice/ Public Order 2005 ERENG NG 600   YESMontagne Dairy Farm Swanton Franklin B,P Agriculture 2007 ERENG BIOMASS 300   YESGreen Mountain Coffee Roasters Waterbury Washington E Food Processing 2003 ERENG NG 375   YES

6

CHP Technology Overview

Prime Mover Technologies to be Studied

Internal Combustion Turbine

Diesel Based Configurations

Fuel Cells

Combustion Turbine

Steam Turbine / Back Pressure Steam Turbine

Key assumptions being finalized

Available Sizes and Fuel

Electric and overall thermal efficiencies

Cost & Performance

7

CHP Potential Methodology

Overview of analysis

Customer / Segment Characteristics

Segment Size

Electric Load

Thermal Load

Natural Gas Availability

CHP / Customer Generation Equipment Operation

8

CHP Potential Methodology - Overview Begins with estimation of Customer segment

sizes represented by a typical customer SIC Code – two digit

Load Zone

Fuel availability

Electric and Thermal Use Characteristics, potential for CHP and Electric to Thermal Switching such as Absorption Chilling

Various Generation technologies and sizes tested for each segment.

Analysis approximates the operation of a CHP unit based upon electric and thermal match

Lowest cost per kWh plant will be chosen

9

CHP Potential Methodology – Electric Load Data

MWH by ZoneMWH by Zone Statewide - EVT Data

Burlington - BED Data

Retail Sales (no distribution, transmission or sub-transmission losses)

Missing IBM 2008 and 2009 data set

– Used average 2005 to 2007 for missing IBM data

Missing ~ 8% of the load data from the zone counts.

– Per EVT missing data :» OMYA

» Stowe Mount Mansfield Load

» Unknown Loads

» Will make adjustment to load zones per above

Customer Count by Zone

 SIC

MWH by Zone by SIC

Number of Customers by Zone by SIC

No KW… yet (EVT)

If no data produced may need “typical load” factor

Will have to back into KW

10

CHP Potential Methodology – Electric Load Data

CHP Potential Methodology - Sample Customer Data

11

Number Customers per Load Zone per Type (C= Commerical, I=Industrial, R= Residential)

Sum of CountOfUPremise SectorLoadZone ZoneDescription C I R Grand Total

A Newport 1,980 4 14,640 16,624 B St. Albans 2,236 6 17,744 19,986 C Johnson 1,098 4 11,007 12,109 D Morrisville 2,538 11,262 13,800 E Montpelier 5,182 9 33,815 39,006 F St. Johnsbury 1,938 2 11,412 13,352 G Burlington 3,722 13 16,293 20,028 H IBM 1 1 I Chittenden\Addison GMP 7,220 11 41,980 49,211 J Middlebury 1,499 3 9,027 10,529 K Central - Barnard 4,699 4 28,436 33,139 M Rutland 5,938 9 36,266 42,213 N Ascutney 1,830 2 12,300 14,132 O Southern 7,179 14 45,515 52,708 P Highgate 1,263 1 10,111 11,375

Grand Total 48,322 83 299,808 348,213

CHP Potential Methodology – Sample Load Zone Data

12

Sales KWH Average (2007 through 2009)

Sum of KWH (Avg '07-'09) SectorLoadZone Zone Commercial Industrial Residential Unknown Grand Total

A Newport 69,659,778 30,866,073 83,614,924 184,140,775 B St. Albans 103,448,666 84,367,278 136,617,733 324,433,677 C Johnson 31,920,910 52,837,304 78,019,063 162,777,277 D Morrisville 75,106,752 73,593,970 148,700,722 E Montpelier 196,122,954 74,853,804 225,812,447 496,789,204 F St. Johnsbury 73,957,128 22,938,649 75,903,868 172,799,645 G Burlington 215,256,667 49,632,000 88,089,333 352,978,000 H IBM 225,431,785 225,431,785 I Chittenden\Addison GMP 436,347,593 85,216,134 312,905,919 834,469,646 J Middlebury 60,622,871 48,355,935 72,955,409 181,934,215 K Central - Barnard 148,893,221 36,991,422 202,185,166 388,069,809 M Rutland 227,723,347 97,049,549 260,818,338 585,591,233 N Ascutney 71,284,266 11,059,939 86,981,782 169,325,987 O Southern 305,780,389 135,891,646 324,318,285 765,990,320 P Highgate 51,398,438 55,529,543 66,950,910 173,878,891

Unknown Vermont 103,537,847 103,537,847 Grand Total 2,067,522,979 1,011,021,060 2,088,767,147 103,537,847 5,270,849,033

Statewide Avg 5,696,793,053 Delta 460,456,636

8%

Missing Action Zone - OMYA Assign to L - Mount Mansfield Assign to D - Unknown Accounts load weight avg all zones

CHP Potential Methodology: Estimated Thermal Load

How to obtain Thermal Load – Load not served by How to obtain Thermal Load – Load not served by electricityelectricity

Sources for natural gas usage by Industry may exist:

Vermont Natural Gas:

– Service territory does not include entire state

– Availability: to be determined

Need total thermal load served by all fuels not just gas

Input-Output data collected annually by SIC code

– Annual tables have limited detail

– Benchmark years have more detail but released with a lag – latest year is 2002

– Provides metric for electric, gas, coal, and petroleum used to produce each industry’s output.

13

14

CHP Potential Methodology: Estimated Thermal Load

Input – Output Table: Bureau of Economic Analysis (BEA)Input – Output Table: Bureau of Economic Analysis (BEA) Provides value of fuel used as a share of output

Correspondence to 4-digit SIC code level detail (*)

Paper Mills (SIC 26): for every $1.00 of output produced:

– Electricity: 3 cents Natural Gas: 2.7 cents

Algorithm to Estimate Electric to Total Thermal Load:Algorithm to Estimate Electric to Total Thermal Load: Relative fuel prices to electric prices for Benchmark Year 2002

Developed algorithm to estimate Electric to Total Thermal Load

Combined ratio of each fuel’s share of output to electricity’s value – in algebraically correct manner

* Fuel price ($/ mmBtu ) divided by Electricity price ($/mmBtu)

Apply to EVT, et al, kWh by SIC to obtain Thermal Load for use as input Apply to EVT, et al, kWh by SIC to obtain Thermal Load for use as input to Customer Economic Model.to Customer Economic Model.

Historical Price by Fuel Type: create price ratios

15

Year State Industry Sector Category Residential Commercial Industrial

Other (street lighting,

agricultural & irrigation,

transporation)

Total Price

2002 US-TOTAL Total Electric Industry - Cents per kWh 8.44 7.89 4.88 6.75 7.20

$ per MWhr 84.40 78.90 48.80 67.50 72.00

$ per MMBtu 24.73 23.12 14.30 19.78 21.10

Residential Commercial Industrial Electric Power All Users

2002 U.S. U.S. Natural Gas Prices $/Mcf 7.89 6.63 4.02 3.68

mmBtu/Mcf 1.03 1.03 1.03 1.03

$/MMBtu 8.10 6.81 4.13 3.78 0.00

Residential Commercial Industrial Electric Power All Users

2002 U.S. Petroleum Products (Wgtd Average) 9.86 6.83 6.41 4.29 8.93

2002 U.S. Steam Coal 1.57 1.25 1.27

2002 U.S. GDP Deflator 0.98 0.98 0.98 0.98 0.98

3.05 3.40 3.46 3.78 2.36

2.23 3.33 16.65

9.10 11.46 16.65 Ratio of Electric / Coal Price $/MMBtu

Source: EIA AEO 2005, Reference Case Forecast Table A3. Energy Prices by Sector and Source, and

Table A19. GDP Price Deflator Index

U.S. Price of Fuel Delivered to Sector (Dollars per MMBtu)

Ratio of Electric / Petroleum Price $/MMBtu

U.S. Price of Natural Gas Delivered to Sector (Dollars per Mcf)Source: http://www.eia.gov/dnav/ng/ng_pri_sum_dcu_nus_a.htm (Note: Thousand Cubic Feet = Mcf)

Ratio of Electric / Gas Price $/MMBtu

EIA Electric Power Annual - State Historical Tables for 2008 Released: January 21, 2010

Average Price of Electricity by Provider, 1990-2008

Example: Thermal Load Estimation for one SIC

16

EVT / La Capra / BEA SIC Concordance (NAICS) IOCode Industry Name (NAICS Description)

212100 Coal mining

221100 Electric power

gen, transm, distr

221200 Natural gas distribution

324110 Petroleum refineries

26 322120 Paper mills 0.0028467 0.0309194 0.0266901 0.0084476

Electric / Other Fuel Input as a share of Total Output: 10.86 1.16 3.66

Electric Price / Other Fuel Price - Industrial Sector: 9.10 3.46 2.23

Fuel Prices $/MMBtu 1.57 14.30 4.13 6.41

Interim Step 1.19 0.33 1.64

Estimated Electric to Total Thermal Load: 0.23

EVT & Segments kWh (converted to Btus) / Estimated Electric to Total Thermal Load = Thermal Load Btus

Used as Input to Economic Analysis

U.S. BUREAU OF ECONOMIC ANALYSIS (BEA) INPUT-OUTPUT (I-O) ACCOUNTS 2002 BENCHMARK YEAR (Detailed SIC Code Data)

TABLE: Commodity-by-Industry Direct Requirements, after Redefinitions (1987, 1992, 1997 to 2008)

INPUT / OUTPUT: Each Industry Uses these Sources of Energy as a Commodity

INPUT. The values shown represent the cost of that INPUT as a share of $1.00 of each industry's OUTPUT.

17

CHP Potential Methodology: CHP OperationCustomer Segment Characteristics

Electric Peak Demand Estimation

Split of High Quality (e.g. Steam) and Low Quality (e.g. Hot Water) Thermal Usage

Capture Existing Fuels used for Thermal Energy Production

Allowance for Thermal Use Characteristics

Thermal Match Factor (reduces customer thermal)

Thermal Requirement Split (reduces hours of CHP operation)

CHP Unit Assumptions Sizes Evaluated – Max Customer Peak, Minimum based on

Load factor

Units Operate whenever Thermal output is utilized on-site

Excess sold at Market Prices to grid

18

CHP Potential Methodology: Potential Definitions

Technical Potential Generation Plant Sized ‘optimally’ for each segment

Customer Thermal Load dependent

Will not include creation of aggregated thermal loops such as district heating and cooling

Segment CHP Cost of Electricity Net Cost of Electricity for the “Technical Potential” Blocks

Economic Potential Sizes Evaluated – Max Customer Peak, Minimum based on

Load factor

Units Operate whenever Thermal output is utilized on-site

Excess sold at Market Prices to grid

19

Assumptions and Economic Testing

Assumptions

EVT Assumptions

Cost of Money

Discount rate

Avoided Costs

Escalation Rates

‘Core’ Fuel Price

Externality ‘costs’ of emissions

Electric Utility Rates – specific local utility

20

Assumptions and Economic Testing

Economic Testing

Net Cost of Electricity

Host Customer Economics – value based upon electric rates and market prices

20 year NPV, Simple Payback, Internal Rate of Return

Electric Utility Resource Economics – value based on market prices for energy and capacity, avoided distribution and transmission

Societal Test, Total Resource Cost Test, Utility Cost Test

21

Economic Testing – Net Cost of Electricity

Capital

O&M

CHP FuelThermal Credit

Net Cost of Electricity

22

Summary of Issues from Discussion

MethodologyMethodologyCustomer DataCustomer DataExisting CHPExisting CHP

23

Next Steps

23

24

Thank youThank you

One Washington Mall, 9th Floor Boston, MA 02108www.lacapra.com

617-778-5515

Contact Information:

John [email protected]

277 Blair ParkSuite 210Williston, VT 05495802-861-1617 or802-861-1618