Kyle Siler-Evans Carnegie Mellon University Dept. of Engineering & Public Policy 2011 CEDM Advisory Board Meeting Distributed Cogeneration for Commercial.

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Presentation transcript:

Kyle Siler-Evans Carnegie Mellon University Dept. of Engineering & Public Policy 2011 CEDM Advisory Board Meeting Distributed Cogeneration for Commercial Buildings: Can We Make The Economics Work?

Areas of Research 1 Marginal emissions rates of the US electricity system Comparison of emissions benefits from various demand- and supply-side interventions in the electricity industry Strategies for improving the economics of cogeneration

The Current System… η ~ 35% η ~ 90% η ~ 80% 2

Cogeneration is ~30% More Efficient 3 η thermal ~ 45% η electrical ~ 35%

Slow Adoption of Small-Scale Cogeneration  Cogeneration is a high risk, low return investment.  Large capital expense  Huge uncertainties in future fuel and electricity prices 4

Case Study: Large Hospital In Newark, NJ Case Study Building  150,000 sq. ft. hospital  $850,000 annually for heating and electricity Cogeneration Unit  300 kW e reciprocating engine (natural gas-fired)  Capital Cost: $600,000  Net Efficiency=79%  Discount rate=12% 5

Model Overview 6 Engineering/ Economic Model Engineering/ Economic Model Building Thermal/Electrical Demand Profile (hourly) Building Thermal/Electrical Demand Profile (hourly) Fuel & Electricity Prices Cogen Operating Schedule Net Present Value of Cogen Inputs Outputs

Historic Fuel & Electricity Prices 7

Cogen: High Risk, Low Return 8 Expected Return High Risk

9 Increasing Revenue to Cogen

Decreasing risks 10

Economies of Scale 11

Insights/Conclusions  We can design mechanisms to increase the revenue and decrease the risks to a cogeneration project.  Improving the economics of cogeneration may mean decreasing the efficiency. 12

Decision Makers 13  Clarifying the legal status of microgrids will require action from state legislatures  FERC and state PUCs should play an active role in designing rules and regulations for microgrids  Depending on the region, small-scale DG may or may not be able to earn revenue through ancillary services  FERC, state PUCs, and electricity system operators all have a role in creating or removing barriers to entry  Enacting a national program to price CO 2 emissions requires federal legislation

Acknowledgments 14  Advisors: Granger Morgan and Inês Lima Azevedo  This research was supported by a grant from the Gordon Moore Foundation and by the Center for Climate and Energy Decision Making (CEDM), which is supported under a cooperative agreement between the National Science Foundation (SES ) and Carnegie Mellon University.

Thank You Questions? 15