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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?
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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
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The Current System… η ~ 35% η ~ 90% η ~ 80% 2
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Cogeneration is ~30% More Efficient 3 η thermal ~ 45% η electrical ~ 35%
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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
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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
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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
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Historic Fuel & Electricity Prices 7
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Cogen: High Risk, Low Return 8 Expected Return High Risk
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9 Increasing Revenue to Cogen
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Decreasing risks 10
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Economies of Scale 11
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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
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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
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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-0949710) and Carnegie Mellon University.
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Thank You Questions? 15
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