Bell - PDF for Website

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Electricity production at the point of use, irrespective of

size, fuel or technology on-grid or off-grid:

High efficiency cogeneration (CHP)

On-site renewable energy

Industrial energy recycling and On-site power

Otherwise known as: Distributed Generation, Captive Power, Embedded Generation,

Microgeneration, CHP, CCHP, Trigeneration, etc.

What is Decentralized Energy (DE)?What is Decentralized Energy (DE)?


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Decentralized Energy The Main Choices

Microturbines

Reciprocating EnginesLarge & small

Rooftop PV

Fuel Cells

Gas Turbines

Stirling Engines

On-site wind


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Non-profit research & promotion organisationcreated June 2002

WADE is supported by:

National DE organisations

UK CHPA, USCHPA, Cogen Europe etc.

CHP/DE companies with international interests

Thermax, Capstone, Siemens, Caterpillar , Solar Turbines,FuelCell Energy, MTU, Marubeni, Primary Energy, Wrtsil, etc

About WADEAbout WADE


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WADE Network

In train

WADE Annual International Conferences

1st

(Washington, 2000)

4th (Rio, 2003)

2nd (Amsterdam, 2001)

3rd (Delhi, 2002)

WADE Network of DE Promotional Organisations

5th (Beijing, 2004)

6th(NYC, 2005)7th (Prague, 2006)

Other Events:

1. DE Conference, Toronto, September 20062. Sugar Bagasse Cogeneration, Bangkok, November 20063. C20 Event, Municipal Energy Self Sufficiency, NYC, April 2007?

4. DE and Energy Security, ? , 20075. 8th Annual DE Conference, ? , 2007


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WADE Research

DE Market

data

Sector Specific

DE Research

Research on

Specific Challengesfacing DE

Future Studies:

Onsite Power in the

Cement Industry,August 2006

Cogeneration andthe CDM,September 2006

Onsite Power andSecurity, ?


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Energy Madness worldwide energy waste

Electricity Generation Worldwide (TWh)

(Source: International energy Agency 2002)

1. Efficiency:

End Use Efficiency DSM Supply Side

2. Renewables3. CCS etc..

Prioritize opportunities:


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G

lobalDE

Statistics

38.038.037.5

26.421.520.5

17.617.517.216.715.013.612.111.411.111.010.410.010.09.8

9.78.48.07.97.87.87.57.47.2

6.85.95.65.65.44.94 1

53.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

DenmarkFinland

NetherlandsLatviaCzechHungaryGermanyTurkeySlovakiaPolandJapanPortugal

AustriaIndiaCanada

SouthAfricaEstoniaWORLDChileChinaKorea

LithuaniaMexicoUruguay

LuxembourgGreeceSpainBelgiumItalyUK

SwedenSloveniaIndonesiaUgandaAustraliaFranceUS

DE share as % of total power generationSourceWADEAnnualWo

rldSurveyofDE2006

Wheredoesyour

countrysta


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Different Areas Require Different Approaches

Off-grid

Micro-grids Village scale renewables

Small scale industrial CHP

Small wind

Solar PV

Micro hydro

On-grid

Micro-grids Community scale renewables

Industrial CHP, large and small

Building-integrated Cooling

Heat and Power

Microturbines

Fuelcells BIPV


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Different Areas Require Different Priority Applications

Water pumping

Rural electrification

Textile mills

Sugar mills

Food products

Forestry

Buildings:

Universities Hotels

Supermarkets

etc

Community Heating andCooling

Heavy Industry

Petrochemical plants

Steel plants

Cement

Etc

Individual homes


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Coal

2%

Gas

19%

Electricity

60%Oil

19%

World All-Energy Investment, 2001 - 2030

Source: International Energy Agency, 2003

46%

54%

Power generation

Network T&D

Network investment needsexceed generation needs

by 17%

$5.2 trillion of investment

Reference Scenario Business-as-Usual


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IEA Analysis - DE Scenario is lower cost

0

1000

2000

3000

4000

Reference scenario Alternative scenario

$US

billion

Distribution

Transmission

Generation (new and refurbishment)

20% lower investmentneed; CO2 emissionsremain at 2000 level

OECD Investment in Reference (BAU) and Alternative Policy Scenarios, 2001-2030

Source: International Energy Agency, 2003

Alternative scenario:

More cogenerationMore efficiency

More renewables

IEA comment:However, the relianceon more expensivegenerating options inthe Alternative PolicyScenario is likely to

result in higherelectricity prices.


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WADE Economic Model

Object

To compare cost of DE and of central power in providingnew electricity demand growth over next 20 years

Model builds new capacity to meet demand

growth and replace old plant

Takes account of peak time network losses

Can be applied to any country / region / city in theworld


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Capital

Costs

RetailCosts

Fossil Fuel

Use

CO2 andotherPollutantEmissions

WADE

Economic

Model

Existing yearly capacity retirement by technology

System growth properties

Operation and maintenance (O&M) and fuel expenses by technology

Existing capacity and generation by technology

Pollutant emissions by technology

Capital and investment costs by technology and for T&D

Heat rates, fuel consumption and load factor by technology

Future growth in capacity by technology

The DE Model Inputs and Outputs


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Applications of the WADE Economic Model

Australia - Commonwealth Scientific and Industrial Research Organisation Canada - Federal Government of Canada (Natural Resources Canada) China - UK Government (Foreign Office), for China EU - European Commission DG-FER programme Ireland - Government of Ireland (Sustainable Energy Ireland)

Sri Lanka - European Commission Germany - IZES for the Ministry of Environment UK - Greenpeace UK

USA - Primary Energy Inc.

City of Calgary- Federal Government of Canada

Province of Ontario- Federal Government of Canada

WADE would like to seemodel work replicated:

In major citiesIn provinces/states

In more countries


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An Example UK Application Scenarios

Delivered Costs

0.001.002.003.004.005.006.007.00

8.009.00

CentrNucl

DE/Renew

CG

DE

CG

DE

CG

DE

CG

DE

CG

DE

CG

DE

Low Fuel

Price

High Fuel

Price

No Nuclear No New

Centr Gas

No Nucl & No

Dmnd Grw th

Greenpeace

Scenario

R

etailCosts(p/k

Wh)

O&M Fuel Capital T&D


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IEA Analysis T&D Savings from Decentralized Energy


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Policy and DE

What policies affect DE investment?

Example Policy Drivers

1. Targets

2. Feed-in Tariffs3. Renewable Portfolio Standards

4. Disclosure labeling on power bills5. Public Benefits charges

6. Carbon taxes

Example Policy Obstacles

1. Interconnection standards/rules.

2. Settlement rules


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Financing and DE

Financial Drivers

1. Guaranteed financing for DE

2. Favorable loans for DE

3. Government buy-downs for residential, commercial scale

systems

4. Import-export duty exemptions5. Grants

Financial Obstacles

1. High Transaction costs

2. Shortage of precedence

3. Lack of institutional capacity


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DE and the Gleneagles Dialogue?

Economic Development:

Climate Change:

Energy Security:

Poverty:

Overall reduced energy costs:

Lower capital costs Lower delivered energy costs

Reduced emissions, and other

air pollutants

Less Import Dependence

Increased Grid Reliability

More democratic energy system

Better access to energy


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Thanks!

www. localpower.org


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PART 2.

Climate for Decentralized Energy


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What makes up the climate for DE?

Factors that make investment in DE attractive have to

in the context of factors which make it unattractive.

The climate is made up of ideals and realities.

Drivers + Obstacles = Climate.


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Drivers/ Obstacles

Grid Extent (geographic)

Grid Extent (constraints) Fuel Access (natural gas, biomass etc..)

Generation Capacity (surplus or shortage?)

Heat Loads Cooling Loads

Power Loads

Public perception (environmental concerns) Policy (interconnection and settlement)

Financing/economics


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Grid Extent (geographic)

Is the demand for power near the T&D network?

If not then DE is an ideal solution.

Onsite power applications are a much cheaper

alternative to grid extension


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Grid Extent (capacity)

Transmission or distribution bottlenecks?

If so DE may be attractive alternative to T&Dupgrades.

Even non-dispatchable capacity can offer grid relief

when generation coincides with demand

e.g. solar powered air conditioning or refrigeration


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Fuel Access

Natural Gas:

Distribution network in place?

Sparkspread (i.e. differernce between price per unitof electricity and natural gas High electricity pricecombined with low gas price makes CHP attractive)

Biomass:

Distribution network in place?

Fuel seasonal? (e.g. sugarcane) Sufficient storage space for fuel? Biomass is a low

energy density fuel compared to fossil fuels.


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Generation Capacity

Generation Capacity (surplus or shortage?)

Demand(GWh)

Year

Decentralizedcapacityinvestment

Centralized

capacityspending

50MW

1 5 10

Power shortage due to long

lead times for central plants

Power surplus due to lumpy nature of centralinvestment.Reduces incentive for conservation.


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Heat Loads

Is there local demand for heat?

CHP investments are heat driven Is there need for space heating?

Are there any factories that need process heat?

Food processing? Mills?

Manufacturing facilities? etc.

Demand for heat is the single biggest driver for CHP


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Cooling Loads

Cooling Loads

More demand in Equatorial Regions/DevelopingNations

Can be combined in CCHP applications

Space cooling (air conditioning) and process cooling

applications

If there is a predictable need for cooling/heating thenCCHP will likely be economic and power will

become a valuable biproduct.


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Public Perception (opinion of DE)

Do people want DE or care about it?

Public support for/demand for DE is the singlebiggest driver for DE investment because it

influences so many other factors

That people dont or care about the benefits of DEis the most important obstacle.


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Public Perception (environment and DE)

Is there demand for DE because of its environmentalbenefits compared to central generation?

DE results in fewer GHG

DE reduces other air pollutants associated withcentral power

DE results in fewer overhead power lines


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PART 3.

Experience from Abroad


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Policy Drivers

EU Level

European Cogeneration Directive European Energy Efficiency for Buildings Directive

European Emissions Trading Scheme

Case Studies

Portugal

Belgium

United Kingdom

USA

Japan


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European Cogeneration Directive

Directive number2004/8/EC

Builds on Common Rules for the Internal Market for Electricity

Directive

Came into effect in 2004

Legally binding

Member states must address key barriers to CHP

Member states are encouraged to develop their own, more

specific and ambitious rules for promoting CHP


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European Cogeneration Directive

5 main drivers

Obliges the Commission to establish criteria for high-efficiencyCHP (Article 4)

Obliges members to implement certification system to

guarantee that CHP power is from plants that meetestablished criteria (Article 5)

Obliges members to evaluate the national potential for CHPand report progress in realizing it (Article 6, Article 10).

Obliges members to address grid connection barriers(Article 8)

Obliges regulatory authorities of member states to maketransparent back-up and top-up tariffs (Article 8)


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European Energy Efficiency for Buildings Directive

Directive number2002/91/EC

Came into effect January 2003

Applies to buildings over 10002 feet

Obliges each Member State to define minimum energy

standards for buildings

Calculation process must account for the positive influence

of electricity produced by CHP

Ultimate aim to harmonize standards for all Member States.


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European Energy Efficiency for Buildings Directive

3 possible drivers for DE

Members could require developers to integrate possible

benefits of DE into building energy performance calculations

Members could require mandatory DE feasibility studies for

new buildings and major renovations

Members could simply require DE to be installed to obtain theenergy performance certificate


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European Emissions Trading Directive

Directive number 2003/87/EC

Driven by Kyoto commitments

Came into effect January 2005

Legally binding

National Allocation Plans have now been submitted by all

Member States


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European Emissions Trading Directive

Scheme will promote DE directly

Member States in their national allocation plans can provideincentives for further DE development

e.g. In the UK a number of permits have been set aside for

new entrant CHP projects.

Scheme will promote DE indirectly

General increase power prices expected from the schemewill make onsite generation comparatively attractive.

Because DE results in lower carbon emissions projects will be

better suited for carbon constrained market.


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Portugal

Feed-in Tariffs

Renewables and CHP of any scale are guaranteed generous feed-in

tariffs Eff

carbon savings

reduced network use

PRIME Program

Many costs incurred by investors in renewables, efficiency and CHP,are eligible for up to 50% capital cost reduction

Eligible costs include materials, feasibility studies, land, field trials,transport etc

Tax deductions

The government is currently considering a new tax

regime which may favor DE applications


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Belgium

CHP certificate Scheme

Cap and trade type scheme to promote CHP Must be high quality, commissioned after January 2002 and

generate energy savings in the region

All electricity supply companies not submitting sufficient

certificates are subject to a fine


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United States

National CHP Roadmap (Strategy Document)

Has put CHP on political agenda Set target of 92GW by 2010

Identified main barriers

State Initiatives

California: air pollution regulations are based on useful energy

output rather than pollution in exhaust per fuel input.

New York: systems benefits charge charges small surplus onevery kWh used and funds collected used to finance up to

50% of DE projects

Pennsylvania: RPS requires renewables and CHP


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Japan

Rational Use of Energy Law (1993)

All factories must hire energy manager and prove energyefficiency measures including CHP are being taken whenever

possible

Energy Master Plan

Targets for biomass, MSW, and fuel cells as well asreciprocating engines

Feed-in Tariffs

Net metering for PV Financing

Low interest loans for CHP and renewables

Rebates for renewables


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Remaining Obstacles

Similar obstacles remain in place in many places all

over the world

1. Lack of clear interconnection rules/step-by-step

procedures because of concerns over:

safety,

power quality,

dispatch.

2. Lack of clear settlement rules.

3. Lack of financing for those who do decide to invest inDE

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