National Energy Technology Lab Morgantown, West Virginia June 26, 2002

1. National Energy Technology LabMorgantown, West VirginiaJune 26, 2002 Terry Surles, Director Technology Systems Division California Energy Commission

2. 2000 Net Power System Eligible Renewables Biomass & Waste - 2% Geothermal - 4.6% Small Hydro - 3% Solar - 0.4% Wind - 2%

3. How We Got HereHistory of CA Energy R&D Programs • California has historically been a leader in energy innovations and advancements in science • Legislation in the early 1980’s mandated public interest research programs by California’s major investor-owned utilities • IOU RD&D programs were regulated by the CPUC and totaled about $120 million/yr before deregulation in the mid-90’s • IOU RD&D programs declined precipitously in the mid-90’s

4. PIER Program Legislative History • AB 1890 (September 1996) established a new policy (Public Goods Charge) to support • public interest energy research (PIER), • renewable market support (CEC), and • energy efficiency market support (CPUC) • SB 90 (November 1997) created thePublic Interest Energy Research Trust Fund • AB 995/SB 1194 (September 2000) continued PIER program for another 10 years (through 2011) at $62.5 M/yr.

5. California has Established a $62M/yrPublic Interest Energy Research Program (PIER) California’s Energy Future Quality: Reliable and Available Economy: Affordable Solutions Environment: Protect and Enhance

6. Vision Statement The future electrical system of California will provide a clean, abundant and affordable supply tailored to the needs of “smart”, efficient customers and will be the best in the nation. Tailored, clean, abundant, affordable supply Smart, efficient customers

7. Our R&D Program Must Address FutureMarket Scenarios Regulated Status Quo • New energy systems • Same players Centralized De-centralized • Same energy systems • New players Supermarket of Choices De-regulated

8. PIER Public Benefit Objectives • Improve energy cost/value • Improve environment, public health, and safety • Improve electricity reliability/quality/sufficiency • Strengthen the economy • Provide consumer choice

9. Efficiency Efficiency CO2 atm CO2 produced < CO2 Btu < < Carbon Management: An Approach for Integrated Energy Systems R&D Carbon Management Sequestration Btu/GDP

10. PIER Projects Related to Major Topics Funding(in millions) Supply $82 Renewables, EPAG Demand $50 Buildings, Ind/Ag/Water System / Environment $47 Strategic, Environmental

11. PIER Research Partners

12. PIER Objectives: Meeting Ratepayers Needs • Tangible products reach market • legislative justification • Prepare for the next crisis • end-use energy efficiency • Distributed generation sources • supply alternatives • demand side management (DSM) • enabling systems • Externalities (environment, resource, security), climate change

13. EPAG’s Distributed Generation Focus Distributed generation (DG) that is clean, efficient, and cost effective • Small, innovative generation vs. large central power plants • Elimination of emissions vs. post-combustion cleanup • Initially a niche market with large growth potential

14. PIER DG Projects DG is a major focus for PIER - DG-related projects total have received 22% of total funding ($83M of $377M) • Each of the PIER program areas have ongoing or planned DG-related projects • As of March 2002, 8 DG projects have been completed, 61 DG projects are ongoing and 11 DG projects are planned

15. Environmentally-Preferred Advanced Generation • Advanced Turbine Generators • Develop ultra-low NOx combustor and other advanced control technologies • Targeted microturbine development and demonstration and testing • Fuel Cells • Targeted fuel cell development • Residential-scale fuel cell testing and development • Fuel cell performance analysis tools

16. PIER Fuel Cell and Turbine Projects Contractors: UCI, Solar, Catalytica, Alzeta, ALM Turbine, CES, LLNL, Edison, SDG&E, GE Energy, M-C Power

17. Kalina Cycle Canoga Park Facility Kalina Cycle uses working fluid of 70% ammonia and 30% water Ammonia has much lower boiling point than water and spins the steam turbine at lower temperatures 3.2 MW plant at Canoga Park, CA GE has purchased exclusive license to use Kalina in their combined-cycle gas turbine systems worldwide $505,000 royalties received from Exergy, Inc.

18. Gas Turbine Semi-Radiant Burner - Alzeta Corporation Description: • Gas turbine combustor that allows fuel to be premixed with large quantities of air prior to combustion. Benefits: • Lower NOX emissions without SCR; • Cheaper than post-combustion clean-up systems; • Allows deployment of smaller turbines for DG; and • CEC is receiving royalties from Alzeta

19. Xonon Cool Combustion System - Catalytica Energy Systems, Inc. Description: • Gas turbine combustion system that controls combustion temperature to prevent the formation of NOX. Benefits: • Lower NOX emissions without SCR; • Can retrofit existing turbines; • Allows deployment of smaller turbines for DG; and • Expandable to large, central station turbines.

20. EPAG’s Objectives Advance the technical and market status of EPAG technologies so that installed systems will achieve: • A cost of electricity that is competitive with the grid • Low environmental impact, especially low air emissions • High reliability, availability, maintainability, durability, and usability • Market connection. Implied objectives: • High fuel-to-electricity conversion efficiency • Fuel flexibility • Dispatchability

21. EPAG CEC/DOE Projects Sonoma Development Center • < 2.5ppm NOx from 1.4 MW MTG in CHP application • 1st commercial demo of Catalytica’s Xonon catalytic combustor • 1st use of MTG test protocols developed at UCI in a field installation (CEC $605k) • Funded by: • CA Department of Developmental Services $1.17M • Kawasaki Gas Turbines $200k • CEC $105k • DOE $100k

22. EPAG CEC/DOE Projects Solar Turbines • < 3ppm NOx emissions for turbines w/out exhaust gas cleanup • Parallel R&D until one technology is selected • Project funding (CEC $2.25M) • Catalytica, lean catalytic combustion (CEC $750k) • Alzeta, surface combustion (CEC $2.4M) • Precision combustion, rich/lean catalytic combustion (DOE)

23. Dry Cooling Spray Enhancement Project: CEC is funding development of a hybrid system that couples traditional dry cooling with spray nozzles to improve efficiency.

24. Dry Cooling Spray Enhancement Benefits: • Reduce regional impacts • 2.8 mil gal/day water savings from a 500 MW power plant • Spray enhancement provides a 7-14 MW increase at Crockett on a hot day

25. Senate Bill 1298 (Bowen) • California Air Resources Board DG Certification Standards January 1, 2003 Emission Standards (lb/MW-hr)

26. Senate Bill 1298 (Bowen) California Air Resources Board DG Certification Standards January 1, 2007 Emission Standards (lb/MW-hr) * Credit is 1 MW-hr for each 3.4E6 Btu’s of heat recovered at a minimum efficiency of 60%

27. Climate Change Adaptation Problem: California is unprepared for the likely physical, economic and societal disruptions of climate change

28. 1990-1999 Relative Gross Greenhouse Gas Emissions

29. Carbon Emissions: California is Doing OK Total carbon • Texas 198 mmCTE • California 93 mmCTE But, for tons of carbon per capita • Wyoming 33.7 • California 2.9

30. Carbon Sequestration Can Play a Future Role • Indirect sequestration • terrestrial • enhanced ocean fertilization • Direct sequestration • capture, separation, transport • geological - EDR, EGR, CBM, brines • ocean - direct injection

31. Benefits: High efficiency generation Emissions of only water and CO2 Emitted CO2 sequestered for possible commercial application Water Oxygen ~95% H2O vol ~5% CO2 vol Clean Fuel Zero-Emission Gas Generator - Clean Energy Systems, Inc. Description: High-temperature, high- pressure, steam turbine generation system based upon rocket engine technology

32. Attributes for Addressing State Issues Program Integration Technology Partnerships - Universities - Industry - Federal Balanced Technology Portfolio -Temporal -Technology -Risk Focus on California - Specific to State needs

33. CEC Needs to be Realistic about What it Can Accomplish • DOE funding is over an order of magnitude greater • Industry is putting considerable sums into specific technologies • Environmental research must be targeted to California needs

34. State Funded R&D Programs Result in Collaboratively-Funded Programs with U.S. Department of Energy Current Collaborative Programs Renewables Systems & Environment Small-scale Fossil Efficiency

35. Association of State Energy Research and Technology Transfer Institutions (ASERTTI) Project Project participants United States Department of Energy California Energy Commission New York State Energy Research and Development Authority Illinois Department of Commerce and Community Affairs South Carolina Institute for Energy Studies National Renewable Energy Laboratory University of Illinois University of California

36. ASERTTI Project • Project Objective • Develop standardized nationwide protocols for testing and reporting performance of DG technologies, including an unbiased database of technology performance • These protocols will: • Ensure consistent testing methodology, data analysis and test results reporting • Assist manufacturer in equipment redesign by providing independent evaluation of technology • Verify manufacturer’s claims

37. Major Potential Players Include: • State • potential/funders, e.g.: DGS, DED • Regulatory agencies, e.g.: ARB, CPUC, Cal EPA • End users, e.g., CalTrans, Corrections, UC System • Federal - EPA, DOE, DOD, California-based national labs • County/Local, e.g.: • APCDS and AQMDS • Cities and municipalities • Industry - FC makers, utilities, fuel providers, etc.

38. Summary: Eyes on the Prize • Demo’s are a step to “Move fuel cell out of the lab and into the marketplace.” • The measure of success will be near-term deployment of FCs in stationary applications • Actions to be taken • Determine matching of goals, available products, and be willing/able to host sites • Crystallize list of funding mechanisms and sources • Develop demonstration plan • Next steps • Take stock of firm manpower resources • Delegate assignments

39. Collaboration and Coordination with NETL • Continue existing activities: fuel cells (SECA), fuel cell/turbine hybrids, advanced reciprocating engines (ARES?ARICE), turbines, MTGs, etc. • Possible future activities include determining the appropriate role for the PIER Program in: • Sequestration science and technology; • Gasification technologies for pet coke and coal; • Hydrogen fuels utilization and supply technology development • New concepts for electricity generation including Clean Energy Systems, Ramgen, etc

40. PIER Project Attributes • Focus on programs that will produce near-term results (3-5 years) and lower-risk projects (includes programs with long-term objectives if they have short-term results) • Be clear on what question we want answered • Ensure high public benefits from the projects compared to cost - and have an exit plan • Develop collaborative, high-quality partnerships with experienced performers who have a record of success • Seek performers that are committed to the project, have strong technical abilities and can deliver product to the marketplace • Develop partnerships with other R&D funders to leverage funds and avoid duplication (benefits of partnerships must outweigh the transaction cost) • Exploit past successes by following up on existing funded projects