Vermont CHP and
Customer Sited
Generation Potential
Study
Summary Presentation to the Vermont
System Planning Committee
Presented by:
John Athas, Patty Richards
Presented to:
Vermont System Planning Committee
La Capra Associates, Inc.
December 8, 2010
AGENDA
 1. Introduction to the Project and La Capra Associates Team
 2. Study Scope and Objectives
 3. Study Approach
 4. Results
 5. Study Conclusions
 6. Q&A
VSPC Summary Presentation – December 8, 2010
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 Section 1:
1.
Introduction to the Project and
La Capra Associates Team
VSPC Summary Presentation – December 8, 2010
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1. Introduction to the Project and Team
 VSPC issued an RFP to perform a study of the potential in Vermont for
Electricity Generation from Combined Heat and Power and CustomerSited Generation.
 La Capra Associates and Stantec Consulting Services teamed up to
perform the Study.

La Capra Associates performed modeling and estimates of potential.

Stantec Consulting Services provided combined heat and power (CHP)
cost and technical assumptions.
 Team members included:

La Capra Associates: Dick Hahn, John Athas, Patty Richards,
Barb Stoddard, Melissa Whitten, Mary Neal, Zach Myer, and Jeff Bower

Stantec Consulting Services: Jim Stone, Dan Kelley
VSPC Summary Presentation – December 8, 2010
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 Section 1:
2.
Study and Scope Objectives
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2. Study Scope and Objectives
 Identify and learn from existing CHP installations in Vermont.
 Identify CSG most likely to be available to Vermont consumers.
 Identify technical and economically achievable potential of CSG.
 Identify barriers to the deployment of CHP and suggest how to
overcome those barriers.
 Scope Definition: Customer-Sited Generation (CSG)

Customer-sited renewable energy generation (CREG)

Backup- or peak reducing generation (PRG)

Combined heat and power (CHP)
 Customer-Sited Generation is also defined for this study as being limited
to the size of the peak demand of the specific customer.
VSPC Summary Presentation – December 8, 2010
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2. Study Scope and Objectives
Vermont Load Zone Map
VSPC Summary Presentation – December 8, 2010
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2. Study Scope and Objectives
The Executive Summary
 Peak Reducing Generation (PRG) is the least expensive Customer-Sited
Generation option to avoid or delay transmission projects.
 Societal and customer economics of CHP are poor without natural gas
available to fuel the CHP equipment, marginal in some applications with
natural gas.
 Existing CHP is not being utilized by the host customer in many cases.
 Customer-Sited Renewable Energy Generation resulted in limited
potential assuming existing level of incentives continue.
 CSG potential did not uncover significant resources that would likely
have better economics than transmission projects.
 CHP and renewable energy are site-specific; more detailed studies
would be required to identify specific candidates.
VSPC Summary Presentation – December 8, 2010
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2. Study Scope and Objectives
Study Key Objectives
 Estimate the potential and the cost of customer- sited generation (CSG)
resources in Vermont.


Technical Potential
Economic Potential
 Economics will be examined using the three forms of resource planning
tests as well as customer economics.



Societal Cost
Total Resource Cost
Utility Cost
 Provide information to be used to assist the state and electric utilities in
assessing whether Combined Heat and Power (CHP) and customer-sited
generation may be viable alternatives to transmission projects (NTAs).

Supply Curves by Zone
VSPC Summary Presentation – December 8, 2010
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 Section 1:
3.
Study Approach
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3. Study Approach
Overall Approach
CSG studied from two perspectives:
1. CSG Customer Economics

Payback

Internal Rate of Return

Net Present Value
2. CSG Potential as an Electric System Resource

Societal Cost Basis

Net Cost to Reduce Peak Demand
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3. Study Approach
Customer-Sited Generation Technologies
Combined Heat and Power (CHP)
Renewable Energy Generation
Reciprocating
Wind turbine generators
Steam turbine generators (STGs)
Solar photovoltaic (PV)
Combustion turbine generators (CTGs)
Farm methane
Microturbines
Fuel Cells
VSPC Summary Presentation – December 8, 2010
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3. Study Approach
CSG Installed Cost Comparison
Installed Cost of CHP and PRG CSG Technologies
CHP/Renewable
PRG
$9,000
$8,000
Installed Cost ($/kW)
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$0
Reciprocating
Steam
Engine
Turbine with
New Boiler
Combustion
Turbine
Microturbine
Fuel Cell
Wind 100 kw
Solar PV
Farm
Methane
Figure 5: Installed Cost of CHP and PRG CSG Technologies
VSPC Summary Presentation – December 8, 2010
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3. Study Approach
CSG Installed Net Cost of Electricity Comparison
Levelized Cost of CHP and Renewable CSG
Technologies
CHP on Distillate Fuel/Renewable
CHP on Natural Gas Fuel
$0.30
Levelized Cost ($/kWh)
$0.25
$0.20
$0.15
$0.10
$0.05
$0.00
Reciprocating Steam Turbine Combustion
Engine
with New
Turbine
Boiler
Microturbine
Fuel Cell
Wind 100 kw
Solar PV
Farm Methane
Figure 6: Levelized Cost of CHP and Renewable CSG Technologies
VSPC Summary Presentation – December 8, 2010
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 Section 1:
4.
Results: Existing CSG
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4. Results: Existing CSG
Existing CHP in Vermont
Table 5: State of Vermont Existing Combined Heat and Power Plants
Observations
 A number of the 26 units are no longer operating.
 Developed and conducted a telephone survey. Eight customers contacted and six
returned our call. Of the six CHP customers participating only two were actually
operating their units.
 For offline units, respondents most-often cited economics (too expensive) and
equipment reliability issues as the reasons for shutting down the CHP units.
VSPC Summary Presentation – December 8, 2010
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4. Results: Existing CSG
Existing CHP – Feedback Non-Operating Facilities
 Economics
 Equipment Reliability
 Staffing Requirements
 Thermal Demand
 Natural Gas Access
 Non-economic factors can play a role in keeping CHP going:

Lack of reliability of electric grid

Social Mission
VSPC Summary Presentation – December 8, 2010
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4. Results: Existing CSG
Existing Customer-Sited Renewable Energy Generation in VT
Table 6: State of Vermont Existing Customer-Sited Renewable Energy Generation
Table 7: State of Vermont Existing Customer-Sited Renewable Energy Generation
VSPC Summary Presentation – December 8, 2010
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 Section 1:
4.
Results: Overall Projections for CSG
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4. Results: Overall Projections for CSG
Study Definition Of Technical Potential
Technical Potential
PRG
Equal to the commercial and industrial peak demand within a zone.
CREG Renewable-based technical potential is defined by the population of
customers for which the technology could be installed without regard
to cost.
CHP
Defined in this study as the sum of the optimum-sized CHP units for each
customer defined sub-segment.
Economic Potential
PRG
Amount of PRG technical potential estimated to have lower total net
costs than CHP and peak load greater than 10 kW.
CREG Developed using historic rates of implementation of projects in Vermont
and we therefore, refine the definition to being market potential in
the study.
CHP
Economic potential cut-off comes when the Net Cost to Reduce Peak for
CHP equals the cost of PRG.
VSPC Summary Presentation – December 8, 2010
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4. Results: Overall Projections for CSG
Study Overall Conclusions
Conclusions
1. There are limited customer-sited generation options which have net
benefits under the societal test and therefore the potential to avoid
significant transmission projects is limited.
2. The results of our analysis show significant technical potential but low
levels of economic potential for CHP and CREG. There are
approximately 62 MW of CHP and between 14 MW and 28 MW of
CREG economic potential.
3. The customer-sited PRG has the best chance for significant
development to reduce peak load if its costs compete favorably relative
to transmission alternatives and other non-transmission alternatives.
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4. Results: Overall Projections for CSG
From Table 8
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 Section 1:
4.
Results: CREG
VSPC Summary Presentation – December 8, 2010
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4. Results: CREG
Conclusions – Customer-Sited Renewable Energy Generations
Farm Methane Conclusions and Limitations
1. Technical Potential: 176 farms and 15 MW
2. Market Potential between 22 and 44 farms for a total of 1.9 MW to
3.7 MW over 20 years
3. Did not include discount for lack of three phase distribution.
4. Did not take into account economic pressures in the dairy industry and the
reduction of dairy farms into the future.
5. Used past rates of installation as indicator for future rate of development.
6. Based on past financial incentives; future incentives could be higher or lower.
VSPC Summary Presentation – December 8, 2010
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4. Results: CREG
Conclusions – Customer-Sited Renewable Energy Generations
Solar Photovoltaics Conclusions & Limitations
1. Technical Potential: 292 MW
2. Market Potential between 9.1 MW and 18.2 MW over 20 years which
would be installed at over 1,619 to 3,236 customer sites, respectively.
3. Projection of market potential is a generalized estimate; data has a number
of limitations.
4. Assumed past rate of development will continue into the future at an equal
pace, however the past installation rate is uncertain.
5.
Incentives and funding sources may not be the same as in the past.
6. Did not consider technology advances or lower future costs of solar on an
installation basis.
7. Actual effectiveness of intermittent solar generation resources for use in
transmission planning analyses could be as low as zero depending upon
the timing of the peak load reduction required.
VSPC Summary Presentation – December 8, 2010
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4. Results: CREG
Conclusions – Customer-Sited Renewable Energy Generations
Wind Conclusions and Limitations
1. Technical Potential: 22 MW over 20 years
2. Market Potential between 2.8 MW and 5.6 MW over 20 years which would
be installed over 294 to 588 customer sites, respectively.
3. Additional data and study would be needed in order to refine the estimate of
the number of customers living in a location with sufficient wind to provide
better results.
4. Wind classes are not uniformly distributed across the landscape and people
tend to live away from high wind locations.
5. Did not consider technology advances or lower future costs of small wind on
an installation basis.
6. Actual effectiveness of intermittent wind generation resources for use in
transmission planning analyses could be as low as zero depending upon the
timing of the peak load reduction required.
VSPC Summary Presentation – December 8, 2010
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 Section 1:
4.
Results: PRG
VSPC Summary Presentation – December 8, 2010
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4. Results: PRG
Study Conclusions – PRG
Conclusions
1. Peak reducing generation has widespread technical potential in
Vermont.
2. In most customer locations peak reducing generation has a lower net
cost than CHP.
3. Peak reducing generation must be compared to utility or system -scale
peaking generation to determine if it is the most economic way to alleviate
transmission planning identified needs.
4. Current markets for demand response program capacity do not provide
enough economic benefits to make it economic for customers to install
PRG unless an acute reliability concern exists for the customer.
VSPC Summary Presentation – December 8, 2010
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4. Results: PRG
Peak Reducing Customer-Sited Generation

Technologies




Technical Potential


Reciprocating Engines
Microturbines
Fuel Cells
Observations based on Customer Size Distributions in each zone
Economic Potential

Metrics determined ‘similar’ to CHP
– Peak Reduction costs = Installed cost minus NPV (Avoided Capacity Costs
minus required annual O&M if required)

Supply Curve
– A function of technology and size
VSPC Summary Presentation – December 8, 2010
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4. Results: PRG
Vermont State-wide Supply Curve for PRG
Supply Curve for Customer Sited
Peaking Units
Net Cost ($/kW)
$2,500
$2,000
$1,500
$1,000
$500
$0
0
100
200
300
400
500
600
700
800
Cumulative MW
Figure11: State of Vermont – Supply Curve for Customer-Sited Peaking Units
VSPC Summary Presentation – December 8, 2010
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 Section 1:
4.
Results: CHP
VSPC Summary Presentation – December 8, 2010
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4. Results: CHP
Study Conclusions – CHP
1. CHP is likely to have an extremely limited role in NTA analysis.
2. CHP has widespread technical potential in Vermont, although in most
instances the costs far exceed conventional and PRG alternatives.
3. CHP in zones with natural gas has reasonable, although marginal, economic
potential measured as a percent of technical potential.
4. In most customer locations CHP generation would have an optimum size that
is a significant portion of customer’s peak demand.
5. CHP, if natural gas supply is not available at the customers location, is a
higher cost choice than peak reducing generation as a means to alleviate
transmission planning identified needs.
6. Customer economics for installing CHP are poor even with large percentage
of installation costs being provided by incentives, making incentive-induced
customer-initiated installations minimum at best and close to zero over the
next 10 years.
7. The economic potential of CHP could approach zero if the customers within a
load zone have poor thermal match characteristics, despite reasonably high
customer thermal consumption.
VSPC Summary Presentation – December 8, 2010
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4. Results: CHP
CHP State of Vermont Supply Curves
State of Vermont
CHP Net Cost to Provide Electricity
$0.45
$0.40
$0.35
$/kWh
$0.30
$0.25
$0.20
$0.15
$0.10
$0.05
$0.00
0
100,000
200,000
300,000
400,000
Cumulative CHP Capacity (kW)
500,000
600,000
Figure 7: State of Vermont Cumulative Supply Curve
for CHP in Vermont: Net Cost to Provide Electricity
VSPC Summary Presentation – December 8, 2010
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4. Results: CHP
State of Vermont Supply Curve
State of Vermont
Total Net Present Value of Total Cost of CHP
Total Societal Cost
Run as Peaker
$25,000
$20,000
$/kW
Economic Potential
$15,000
$10,000
Technical Potential
$5,000
$0
0
-$5,000
100,000
200,000
300,000
400,000
500,000
600,000
Cumulative CHP Capacity (kW)
Figure 8: Illustration of CHP with Technical and Economic Potential
VSPC Summary Presentation – December 8, 2010
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4. Results: CHP
CHP Host Customer Economics
The returns and paybacks of CHP, even with incentives would not provide
sufficient stimulus to implement CHP.
Potential Capacity for Vermont
(kW)
State of Vermont: Effect of Utility Incentives on Customer
Economics of CHP
45,000
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
-
3-year Payback kW
5-year Payback kW
7-year Payback kW
$0
$500
$1,000
$1,500
Incentive Level ($/kW)
Figure 9: State of Vermont: Effect of Utility Incentives
on Customer Economics of CHP
VSPC Summary Presentation – December 8, 2010
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4. Results: CHP
Technology Make-up of CHP Technical Potential
Base Case: Technology Composition of CHP
Technical Potential
600,000
500,000
kW
400,000
300,000
200,000
100,000
0
Reciprocating Engine
Steam Turbine Generators_New
Boiler/STG
Technology
Figure 10: Base Case: Technology Composition of CHP Technical Potential
VSPC Summary Presentation – December 8, 2010
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4. Results: CHP
CHP Sensitivity Analysis
Naturally, the economics of CHP are very sensitive to the thermal
characteristics of the customer including not only how much, but also when
the thermal loads occur.
From Table 10
VSPC Summary Presentation – December 8, 2010
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 Section 1:
5.
Study Conclusions
VSPC Summary Presentation – December 8, 2010
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5. Study Conclusions
Recap of Major Take-Aways
 Peak Reducing Generation (PRG) is the least expensive Customer-Sited
Generation option to avoid or delay transmission projects;
 Societal and customer economics of CHP are poor without natural gas
available to fuel the CHP equipment, marginal in some applications with
natural gas;
 Existing CHP is not being utilized by the host customer in many cases;
 Customer-Sited Renewable Energy Generation resulted in limited
potential assuming existing level of incentives continue
 CSG potential did not uncover significant resources that would likely
have better economics than transmission projects; and
 CHP and renewable energy are site-specific; more detailed studies
would be required to identify specific candidates.
VSPC Summary Presentation – December 8, 2010
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 Section 1:
6.
Q&A
VSPC Summary Presentation – December 8, 2010
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6. Q&A
VSPC Summary Presentation – December 8, 2010
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End of Presentation
  
Thanks!
Contact Information:
One Washington Mall
9th Floor
Boston, MA 02108
www.lacapra.com
617-778-5515
277 Blair Park
Suite 210
Williston, VT 05495
www.lacapra.com
802-861-1617
John Athas
[email protected]
Patty Richards
[email protected]
VSPC Summary Presentation – December 8, 2010
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