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CHP and Customer Generation Potential Study Progress Report

This report provides an update on the progress of the CHP and Customer Generation Potential Study, including methodologies, data gathering, and analysis. It also discusses existing CHP and customer generation, technology overview, and economic testing.

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CHP and Customer Generation Potential Study Progress Report

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  1. Block Island Block Island Vermont CHP and Customer Generation Potential Study September 15th Study Team Progress Report Presented by: La Capra Associates, Inc. Stantec Consulting Inc. Presented to: VSPC Study Team 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 • Provide an Update of the current CHP / Customer Generation Investigations • Provide an Update on the CHP Potential including an understanding of: • Methodologies and approximations • Progress in Data Gathering • Discuss any study issues and obstacles with the VSPC Study Committee • Sub-bullet 3

  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

  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 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

  10. CHP Potential Methodology – Electric Load Data • 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

  11. CHP Potential Methodology - Sample Customer Data

  12. CHP Potential Methodology – Sample Load Zone Data

  13. CHP Potential Methodology: Estimated Thermal Load • How to obtain Thermal Load – Load not served by electricity • 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.

  14. CHP Potential Methodology: Estimated Thermal Load • 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 $1.00 of output produced: • Electricity: 3 cents Natural Gas: 2.7 cents • Algorithm to Estimate Electric to Total Thermal Load: • Relative fuel prices to electric prices for Benchmark Year 2002 • Developed algorithm to estimate Electric to Total Thermal Load • Combined ratio of each fuel’s share of output to electricity’s value – in algebraically correct manner • * Fuel price ($/ mmBtu ) divided by Electricity price ($/mmBtu) • Apply to EVT, et al, kWh by SIC to obtain Thermal Load for use as input to Customer Economic Model.

  15. Historical Price by Fuel Type: create price ratios

  16. Example: Thermal Load Estimation for one SIC

  17. Customer 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 CHP Potential Methodology: CHP Operation 17

  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 18

  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 Thermal Credit CHP Fuel Net Cost of Electricity O&M Capital

  22. Summary of Issues from Discussion Existing CHP Customer Data Methodology 22

  23. Next Steps 23 23

  24.    Thank you One Washington Mall, 9th Floor Boston, MA 02108 www.lacapra.com 617-778-5515 Contact Information: 277 Blair Park Suite 210 Williston, VT 05495 802-861-1617 or 802-861-1618 John Athas jathas@lacapra.com

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