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Integrated Home Energy & Sludge to Fuel Additional Business Cases and Development Plan Tom Horgan and Noa Simons February 26, 2009
Outline • Executive Summary • Sludge to Fuel • Integrated Home Energy System • Wrap Up
Executive Summary • Sludge to Fuel – Sufficient dewatered, undigested sludge is available in NYS for conversion to energy (~ 15% of total) – FT based conversion of sludge to diesel is not a realistic path to profitability given excessively high capital and processing costs and low conversion efficiencies for eithermal (17%) or catalytic (24%) gasification – Biogas Electricity generation via either anaerobic digestion or catalytic gasification is a realistic path to profitability. – At 15%, estimated annual profits $14 M/$17 M per year – Catalytic gasification is more efficient than AD in fuel gas synthesis and has more potential for improvement
Executive Summary • Integrated Home Energy Systems – NG based Micro-CHP and standalone wood-gas generators are not viable for prime power for various reasons. – The IHES provides efficient prime power and heat with grid support. Grid provides surge protection and IHES can operate independently in a grid outage. – With high renewable fraction, payback is about 3 years at 5 k. W and $5, 000 installed cost. – Larger system (>10 k. W) will generate revenue in grid buyback states (NY, MA, CT, others) however wood demand is excessive – Wood pellets are readily available from Home Depot at costs comparable to chord wood and coal
Sludge to Fuel • Sludge Availability and Tipping Fees – Per NYS DEC data, approximately 15% of sludge is aerated, dewatered and hauled for secondary processing – Plant Interviews • Guilderland, Normans Kill (216), 456 -2745, Keith Edwards – Aerates, dewaters to 24/25% solids, hauled away – $85/Wet Ton, 2/4 yr contract • Herkimer (228), 866 -0150, – Aerates, dewaters, 20/30% solids, hauls away – $72. 15/wet ton, 2 yr contract • Hudson (241), 828 -1020, Paul Lossi – Aerates, dewaters to 22% solids, hauled away – $84/ wet ton, 2/4 yr contract – Average Tipping Fee = $0. 09/kg
Sludge to Fuel • Upper bound for FT diesel… – Use NYS Data. Assume all sludge is available. Ignore efficiency, production, transportation and capital costs. – Assume a $0. 09/kg tipping fee and a diesel price of $0. 016/MJ (2/2/09) Profit: $216 M/yr • Upper bound for Biogas Electricity… – Same assumptions. – Electricity price $0. 043/MJ Profit: $416 M/yr
Sludge to Fuel • Thermal Gasification of Dewatered Sludge – Using data from http: //www. thermogenics. com - manufacturers of gasifier/generator systems designed for dried sewage sludge – Overall 27% efficient on dry sludge, 4% efficient on dewatered sludge. Assume generator efficiency of 17% on Syngas. – Gasification Efficiency on dewatered sludge ~ 22% – Assume FT Efficiency on clean syngas ~ 80% – Overall Thermal Efficiency to FT Diesel ~ 17% • Catalytic Gasification of Dewatered Sludge – Using data from “Catalytic Wet Gasification of Municipal and Animal Waste”, Elliot, et al, 2006 – Low quality fuel gas (half CH 4, half CO 2) with 90% recovery of high energy input. Conversion Efficiency to Fuel Gas ~36%. – Fuel gas to Syngas by Steam reforming ~ 83% – Overall Thermal Efficiency to FT Diesel ~ 24%
Sludge to Fuel • Issues w/ Fischer Tropsch – Excessively high capital and production costs particularly on biomass due to gas purity requirements – Added contamination issues associated with sludge – Exxon Mobil, Shell, Choren, Sasol, Syntroleum all researching heavily in FT with few improvements demonstrated • Biogas Electricity Generation – Using data from http: //www. epa. gov/chp/documents/biomass_chp_catalog_part 6. pdf – Biogas from Sludge via Anerobic Digestion ~ 35% – Biogas from Sludge via Catalytic Gasification ~ 36% – Large scale biogas generator efficiency ~ 22%/45% – Overall Thermal Efficiency to Electricity ~ 12%
Sludge to Fuel • Financial Analysis Ignoring Capital & Production Costs • Though conversion efficiency is lower, fuel value is higher resulting in higher profit potential
Sludge to Fuel • Financial Analysis with Capital & Production Costs – * Prod and Cap costs for FT estimated at 1% of Syntroleum • Capital costs 50 x lower for AD. Assume 25 x for CG.
Sludge to Fuel • Catalytic Gasifiaction Process * Sludge * Elliot, et al, , “Catalytic Wet Gasification of Municipal and Animal Waste”, American Chemical Society, 2006
Sludge to Fuel • IP Opportunities in Catalytic Gasification – Catalyst Cleaning/Regeneration: Doug Elliot listed this as the primary downside of the process. Research would focus on cleaning methods and alternative disposable) catalyst types – Efficiency Improvement: Continued research in processing conditions and pretreatment methods to increase CH 4 synthesis (minimize CO 2) – Desulphurization: Development of economical means of desulphurizing feed to minimize catalyst damage – Reactor Component Lifetime: Severe operating conditions accelerate both catalyst and equipment degradation. Research into new materials and methods is warranted.
Sludge to Fuel • Next Steps – Conduct phone interviews/plant visits with engineers & scientists working in catalytic gasification – Plan and cost out pilot facility for catalytic gasification – Investigate potential IP opportunities in anaerobic digestion and biogas efficiency improvement – Investigate higher efficiency generators and applicability of non-PEM based fuel cells – Research and quantify sludge availability, transportation costs, etc in other states & countries – Contact/interview sludge handlers (New England Organic) for assessment of actual handling costs, regulatory requirements etc
Integrated Home Energy • Net metering by State – States that offer NEG Reimbursement (up to full amount) • Massachusetts, Minnesota, Nebraska, New Mexico, North Dakota, Pennsylvania, Connecticut, Colorado, New Jersey, New York, Ohio, Wyoming, Washington, Illinois – States that offer Net Metering for Biomass, CHP & MSW • Maine, Massachusetts, Minnesota, Nebraska, New Mexico, North Dakota, Oklahoma, Pennsylvania, Wisconsin – States that offer Net Metering for Biomass & CHP • District of Columbia, Vermont – States that offer Net Metering for Biomass & MSW • Connecticut, Iowa, Michigan, Texas, Virginia – States that offer Net Metering for Biomass • Colorado, Delaware, Hawaii, Idaho, Louisiana, Maryland, Nevada, New Jersey, New York, North Carolina, Ohio Oregon, South Carolina, West Virginia, Wyoming • 6 States offer net metering and grid buyback for IHES product. 5 more probable.
Integrated Home Energy • Net metering by State
Integrated Home Energy • Net metering interview with Rex Bradford – Installed Solar Panels in Ipswitch, Ma – Had issues with LOCAL utility who can claim exemption from state law. Ultimate got local laws changed to allow for net metering. – System is not grid independent (would need battery bank w/ controls) – Solar covers half of electricity on annual basis – Installed cost, $26, 000 less $2, 000 in incentives • Massachusetts - National Grid Website - 220 CMR 11. 04 c) Net Metering. A Customer of a Distribution Company with an on-site Generation Facility of 60 kilowatts or less in size has the option to run the meter backward and may choose to receive a credit from the Distribution Company equal to the average monthly market price of generation per kilowatthour, as determined by the Department, in any month during which there was a positive net difference between kilowatthours generated and consumed. Such credit shall appear on the following month's bill. Distribution Companies shall be prohibited from imposing special fees on net metering Customers, such as backup charges and demand charges, or additional controls, or liability insurance, as long as the Generation Facility meets the Interconnection Standards and all relevant safety and power quality standards.
Integrated Home Energy • Federal Incentives (available for Biomass) – Tax Credit: 30% up to $1500 – Various loan programs • State Incentives (available for Biomass) – Massachusetts • 100% Tax Deduction. • Grant money available from Renewable Energy Trust Fund and LORI. – New York • Property Tax Exemption. • Grant money available from NYSERA (Micro CHP) – Connecticut • Property Tax Exemption. • Grant money available from Connecticut Clean Energy Fund
Integrated Home Energy • IHES Model – Conversion efficiencies, electricity/NG prices and usage conditions interact counter intuitively at times to effect economics of IHES – Spreadsheet model built to evaluate economics of micro. CHP, wood gas generators and IHES – Includes state by state electricity and NG prices (www. eia. gov) – Includes state by state net metering policies and utility reimbursement for states offering it (www. newenergychoices. org) – Total energy usage determined by home size. Distribution between NG and Electricity determined by location • Note: Used commercial price for NG calcs in previous IHES analysis discussion. This made residential stand alone Micro CHP seem more viable than it actually is.
Integrated Home Energy • Competitive Markets – Standalone Micro CHP (Freewatt, Marathon Engine) • Installation costs range from $14 K to $35 K with 30 year payback under best case conditions. • Long or no payback in many states due to high NG prices and low efficiency. • Requires efficiencies of 40% for reasonable payback – Standalone Woodgas Generator (ECO -5, 5 k. W ) • Wood pellets. System Cost - $9, 495 • Sufficient for backup and supplemental power but not for prime power (reliability, fuel handling) • Not CHP. Overall Electrical Efficiency ~ 10% • Long payback though not as long as Micro CHP.
Integrated Home Energy • Integrated Home Energy System – 5/25 k. W Grid Parallel/Grid Backup System, $5, 000 – Fuel: NG/LPG and Renewables – Benefits…. - Under 3 yr payback w/out net metering in LF mode - Faster payback with grid buyback on systems over 10 k. W (very high wood requirement) - NG can be used to fire gasifier and or dry feed Outdoor Gasifier - User controls renewables use In Door NG Micro CHP Unit - Wood chips ($0. 05/kg) or wood pellets ($0. 06/kg) - Pellets available by the ton at Home Depot
Integrated Home Energy • Case 1: Heating System replacement/upgrade, 2400 sq ft house, 25%/17% Electrical, 63% Thermal, 80% Renewables, $5, 000 Installed Cost 5 k. W 10 k. W • 10 k. W system shows annual revenue in MA however wood demand is excessive – 9 fifty pound bags of pellets /day • Note: 3% improvement in Syngas Electric Efficiency triples revenue and decreases wood demand by 12%
Integrated Home Energy • Analysis: – Heating System for 2400 sq ft house, $5 K (no deferred cost) • Diminishing returns from Max Generation as Renewable fraction increased above %70.
Integrated Home Energy • Analysis: – Heating System for 2400 sq ft house, $5 K (no deferred cost) • Improved Syngas Electrical Efficiency results in heat deficit (NG must be purchased from utility)
Integrated Home Energy • Development Plan – Proof of Concept (6 months). Assemble prototype from retrofit commercial NG generator, gasifier and CHP • Downselect and purchase gasifier, gas generator, chipper, etc • Research/validate wood gasification (mc, wood type, etc). • Assemble/test and develop heat rejection, gas cleaning • Research/development/test CHP functionality – Cost Estimates • Hardware: 2 gasifiers, 2 NG generators (~ $20 to 305 K) – Misc tools/test equipment ($1 to $3 K) – One Computer - ($1 K) – Additional Hardware for BOP ($3 to 5 K) • • Contract Services: $20/$25 K Salaries: 2 x $90 K * 0. 5 = $90 K Rental: $1 to $1. 5 K /per month = $6 to $9 K Total: ~ $150, 000
Integrated Home Energy • Development Plan – Prototype Demonstration (6 months). Integrate advanced gasification, generator and CHP loop into homogeneous unit • Validate CHP functionality/software & controls • Develop detail drawings, design system layout & enclosure • Assemble and test prototypes – Cost Estimate • Hardware: – Custom designed gasifier & system components ($100 to $150 K) – NG Generator ($3 K) – Shift reactor, software & controls ($15 K) • • • Contract Services: $20/25 K Software: Solid Works ($10 K) Salaries: 2 x $90 K * 0. 5 = $90 K Rental: $1 to $1. 5 K /per month = $6 to $9 K Total: ~ $250/300 K
Summary • Sludge to Electricity via either anaerobic digestion or catalytic gasification has high profit potential • Additional research and IP opportunities in catalyst formulations, regeneration techniques and pretreatments • IHES System can payback in two to three years in some states and generate revenue after that through grid buy back • Larger systems are required and wood requirements are excessive due to low efficiency • Small improvement in Syngas Electrical Efficiency mitigates problem and increases revenue
Integrated Home Energy • Lessons learned from model analysis… – Under two year payback possible with high renewables usage but wood requirement excessive – Small improvement in syngas electrical efficiency result in large payback improvements (research area) – MSW does not impact payback appreciably (later add-on) – Straight NG Micro CHP does not really pay for itself even at low cost. Efficiency too low/NG cost too high – Improving electrical efficiency on syngas is good to a point in LF mode (NY/Ma) • More electricity means less heat and more NG that must be purchased from grid. • Always good in MG mode. More efficiency means more money and your making excess heat anyway – Renewables are cheap but overall electrical efficiency is about 10%. Still a very good deal.
Integrated Home Energy • Standalone Micro CHP Players – Climate Energy “Freewatt” – $14 K • • • Heat following 1. 2 k. W system using Honda MCHP generator w/ integrated furnace/boiler 20% electric, 85% overall System produces about 50% of electricity needs Not grid independent. Annual savings - ~$1 K – Marathon Engine Systems – up to $35 K • • • Electric load following 2 to 4. 7 k. W, supplemental heat required Up to 27% electric, 92% overall 2000 systems in Europe Can be Grid Independent Uses heat from generator
Integrated Home Energy • Climate Energy “Freewatt” – $14 K At $2500 installed cost, payback is still 6 yrs
Integrated Home Energy • Marathon Engine Systems – ~$35 K Payback WORSE with Maximum Electricity Generation – Need %40 Efficiency for grid buyback
Integrated Home Energy • ECO -5, 5 k. W Wood Pellet gasifier/generator - $9, 495 Max Gen w/ Grid Reimbursement up to four fold improvment
Sludge to Fuel • Sludge Analysis Source data – FT Synthesis • Capital Costs Data – http: //www. syntroleum. com/Presentations/Syntroleum. Merriman. Conference. Septemb er 2008 FINAL. pdf – Capital cost of $50 M for a 9, 000 kg/d plant • Production Cost Data – Processing costs back calculated from Choren data, overall efficiency of 60%, given input biomass and output diesel fuel, adjusted for water removal in sludge at 1. 6 MJ/kg. All input energy assumed from NG. – Maint & OP Costs – estimated from Biopetrol data (low) and includes tarsnportation cost estimate – Anerobic Digestion • All data from the document ‘Anerobic Digestion’ published, 2007 by www. residua. com. Contains, economic and processing data/costs – Catalytic Gasification • All data from the paper “Catalytic Wet Gasification of Municipal and Sewage Sludge”, American Chemical Society, 12/2006 • Capital cost estimate from Elliot compilation paper
IHES Model • Model assumptions – – – All electricity and heat not provided by IHES purchased from grid Unit has separate peak heater so heat demands always met. No recovered heat from gasifier MSW = 4. 6 lbs/person/day (EPA Website) All heating is NG. For heat following mode fraction renewable is on thermal – For maximum gen/electric load following mode fraction renewable is on electricity – Electricity measured at meter - no efficiency loss. – Use average heating unit efficiency of 83% to calculate actual energy needs from purchased NG.
Energy Demographics • Warmer states use more electrical energy, colder states use more thermal energy • Total Energy use somewhat correlated to region • Total Energy use highly correlated to house size • Number of occupants less correlated to house size • Ideal State: Low Average Electrical Demand with NEG Reimbursement
State of NG & LPG • NG Demand
State of NG & LPG • Available Reserves Annual US Demand about 10% of Reserves
State of NG & LPG • Grants
State of NG & LPG • Microturbines – DOE has program for microturbine development (> 100 k. W) • http: //www. eere. energy. gov/de/microturbines/ – Program Goals: • High efficiency — Fuel-to-electricity conversion efficiency of at least 40% • Environment — NOx <7 ppm (natural gas) • Durability — 11, 000 hours of reliable operations between major overhauls and a service life of at least 45, 000 hours • Cost of power — System costs <$500/k. W, costs of electricity that are competitive with alternatives (including grid) for market applications • Fuel flexibility — Options for using multiple fuels including diesel, ethanol, landfill gas, and biofuels. – Program Partners • • • Capstone (PDF 61 KB) GE (PDF 57 KB) Ingersoll-Rand (PDF 82 KB) Solar Turbines (PDF 52 KB) UTC (PDF 71 KB).
Integrated Home Energy • Case 1: Same conditions, except…. 5 k. W 10 k. W 15 k. W