The Clean Power Plan and CHP: How Combined Heat and Power can help Ohio achieve carbon reduction goals
- 1. Webinar Agenda: 1. Welcome & Introductions 2. Treatment of CHP in Clean Power Plan 3. Potential for Ohio to use CHP in its State Plan 4. Q & A December 17, 2015
- 2. Trish Demeter – Ohio Environmental Council/Ohio Coalition for CHP Jennifer Kefer – David Gardiner & Associates/Alliance for Industrial Efficiency Meegan Kelly – American Council for an Energy Efficient Economy (ACEEE)
- 3. CHP in the Clean Power Plan Jennifer Kefer Vice President December 17, 2015 Ohio Environmental Council
- 5. Conventional Power Generation 60% Waste Heat 7% Line Loss 100% Fuel 33% Delivered Electricity
- 6. Efficiency Lowers Carbon Emissions Source: EPA
- 7. CHP Is Cost-Effective Levelized Costs of Energy across Power Generation Technologies, Q4 2013 ($/MWh) Source: BCSE 2014
- 8. CPP Timeline
- 9. Changes in Final Rule More ambitious target Shift in compliance timeline Early action program introduced Changes to the building blocks Clarifies allowable energy efficiency Greater emphasis on trading programs Addresses federal enforceability
- 10. Target Setting
- 11. Final Power Plant Limits by State (2030) 1190 lbs/MWh
- 12. Current CHP Projects CHP Installation Database. ICF International. 2014.
- 13. Current CHP Projects (MW) Sources: CHP Installation Database (2014 Data); EIA http://www.eia.gov/todayinenergy/detail.cfm?id=8250 Energetics, “US Manufacturing Energy Use and Greenhouse Gas Emissions Analysis, November 2012” Food 8% Paper 14% Chemicals 28%Refining 19% Primary Metals 5% Other Manufacturing 6% Commercial/ Institutional 14% Other/Misc. 6%
- 14. Affected Units • Constructed before 2014 • Sell more than 25 MW to the grid • Excludes units that sell < 25 MW or < 1/3 power to the grid • Excludes units which have historically limited fossil fuel use to < 10% capacity factor • Excludes units that are not connected to natural gas pipelines • Excludes highly efficient units
- 16. Remaining Potential for CHP 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000 Capacity(MW) CHP Technical Potential Existing CHP Capacity
- 17. CHP/ WHP Market Penetration under CPP (2015-2030) SOURCE: ICF International, Pew Charitable Trusts 2015
- 18. CHP as a Compliance Option • Installed after 2012 (post-2022 generation) • Non-affected units • Eligible under a rate or mass-based approach “Electric generation from non-affected CHP units may be used to adjust the CO2 emission rate of an affected EGU, as CHP units are low-emitting electric generating resources that can replace generation from affected EGUs.” (80 Fed. Reg at 64902)
- 19. CHP in the Clean Power Plan How combined heat and power can help Ohio achieve CO2 reduction goals Presented by Meegan Kelly Senior Research Analyst, Industry
- 20. The American Council for an Energy- Efficient Economy (ACEEE) • ACEEE is a 501(c)(3) nonprofit that acts as a catalyst to advance energy efficiency policies, programs, technologies, investments, & behaviors • About 50 staff; headquarters in Washington, D.C. • Focus on end-use efficiency in industry, buildings, & transportation • Other research in economic analysis; behavior; energy efficiency programs; & national, state, & local policy • Funding: ◦ Foundation Grants (52%) ◦ Contract Work & Gov’t. Grants (20%) ◦ Conferences & Publications (20%) ◦ Contributions & Other (8%) www.aceee.org/@ACEEEdc
- 21. Overview • How does CHP count? • Rate-based approach • Mass-based approach • How much can CHP help in Ohio? • Potential impact of CHP on CPP goal • Main takeaways and next steps…
- 22. Two Basic Approaches to Compliance Target = CO2 emitted (tons) Mass Target = CO2 emitted (lbs) Generation + ERCs (MWh) Rate CHP may earn Emission Rate Credits (ERCs) CHP may earn Allowances or other incentives 73,769,806 tons in 20301,190 lbs/MWh in 2030
- 23. How could it work in practice? Example: Manufacturer wants to reduce energy use by investing in a 10 MW CHP system at their facility Rate lbs/MWh Mass tons CO2 • Estimate MWh savings • Verify savings • Earn ERCs • Sell ERCs • Reducing CO2 from grid implicitly contributes to state compliance • State may provide incentives from auction proceeds to fund CHP • State may choose to directly allocate allowances to CHP
- 24. Two options to credit CHP in a mass- based approach • Set-aside some portion of allowances for CHP • Preferentially award allowances to EE Auction Revenue to CHP • State conducts an auction and sells allowances • Revenue from auction can be reinvested in CHP • RGGI model is valuable example Direct Allocation to CHP
- 26. Another option is the direct allocation of allowances for CHP Example: At $10/ton, we can expect an $825 million allowance market in Ohio in a given year. CHP can earn a slice!
- 27. A direct allocation alternative to set-aside may be preferred • Different from allowance set-aside • Efficiency could earn a bigger slice of allowance pie • Allowances are allocated to all sources on an output-basis • Allowances reflect CO2 emissions associated with MWh output • Levels the playing field for crediting efficiency See: http://ajw-inc.com/wp-content/uploads/2015/12/151210-Mass- based-Allocation-White-Paper-FINAL.pdf
- 29. Technical potential is large for CHP in Ohio • 517 MW installed; 6,001 MW of technical potential • Technical potential does not consider capital costs, regulatory barriers, policy changes, market conditions • The Clean Power Plan may influence how much technical CHP potential is realized • How far would installing 10% of technical potential (600 MW) get Ohio toward it’s goal?
- 30. Impact of new CHP on CPP target, 10% of technical potential EPA Goal CHP (600 MW) 7% of Ohio’s emission rate goal may be achieved with 600 MW of new CHP 2012 baseline of 1,855 lbs CO2/MWh Final 2030 goal of 1,190 lbs CO2/MWh Source: Preliminary results from Version 2 of ACEEE’s State and Utility Pollution Reduction (SUPR) Calculator – DO NOT CITE OR DISTRIBUTE.
- 31. Impact of new CHP on CPP target, 25% of technical potential EPA Goal CHP (1500 MW) 16% of Ohio’s emission rate goal may be achieved with 1,500 MW of new CHP Source: Preliminary results from Version 2 of ACEEE’s State and Utility Pollution Reduction (SUPR) Calculator – DO NOT CITE OR DISTRIBUTE.
- 32. Impact of new CHP on CPP target, 50% of technical potential 27% of Ohio’s emission rate goal may be achieved with 3,000 MW of new CHP EPA Goal CHP (3000 MW) Source: Preliminary results from Version 2 of ACEEE’s State and Utility Pollution Reduction (SUPR) Calculator – DO NOT CITE OR DISTRIBUTE.
- 33. Main takeaways and next steps • CHP can make a significant dent in Ohio’s target • CHP can count, but a clear path for inclusion must be included in Ohio’s compliance plan • 5 Regional Listening Sessions in early 2016 • Submit comments to Ohio EPA at 111drulecomments@epa.ohio.gov • Contact us for assistance 33
- 34. Meegan Kelly Senior Research Analyst ACEEE mkelly@aceee.org 202-507-4008 Jennifer Kefer Vice President David Gardiner & Associates jennifer@dgardiner.com 202-365-2194 Thank you! Questions? Comments?
- 35. Please Type Your Question into the GoToMeeting Chat Box
- 36. Trish Demeter Managing Director, Energy & Clean Air Programs Tdemeter@theOEC.org @tademeter 614-487-5829