District energy in North-eastern universities - PowerPoint Presentation

Slide1

District energy in North-eastern universities – greener and more flexible

Daniel Møller Sneum

Dartmouth College

19 April 2018

Slide2

Agenda

PART I

What is district energy?

PART II

Student consultants: DTU looks at Dartmouth

PART III

Why district energy and flexibility?

Preliminary findings

Next steps

Slide3

PART I

What is district energy?

Slide4

Q: What is district energy?

Illustration:

https://en.wikipedia.org/wiki/Communism#/media/File:Communist_star.svg

TECHNOLOGY ONLY SEEN IN

COMMUNIST COUNTRIES

+

HIPPIES

IN

NORTHERN EUROPE

Slide5

A: An American invention

By

Birdsill

Holly in NY

Illustration:

https://en.wikipedia.org/wiki/Flag_of_the_United_States#/media/File:Flag_of_the_United_States.svg

Slide6

A: (cont.) Efficient way to heat and cool buildings

Image: Danfoss. http://districtenergy.danfoss.com/assets/img/desktop/d_1.jpg

Warm

or

cold

water

/

steam

in

pipes

Transmitted

to

consumers

From a multitude of heat

sources

Slide7

Heating and cooling in EU: 50%

Slide8

Heat delivery (2014) and deployment

https://www.districtenergy.org/resources/resources/system-maps

S. Werner, International review of district heating and cooling, Energy. 137 (2017) 617–631. doi:10.1016/j.energy.2017.04.045.

Slide9

PART II

Student consultants: DTU looks at Dartmouth

Slide10

Course: Feasibility studies of energy projects

Autumn 2017

11 groups - 70 students

Feasibility study: carbon neutral supply

Technology

Environment

Economy

Financing

Ownership

Regulation

Elizabeth Wilson +

Rosi KerrDartmouth: invaluable!

Zones of learning-comfort

OUCH!-zone

Slide11

Results

Technology

Count

Biomass CHP

9

Heat pump

2

PV

8

Electric boiler

1

Thermal storage

1

Solar thermal

2

Biomass and waste CHP

1

Oil boiler

1

Biomass boiler

1

Hydropower transmission

1

NPV [2017-MUSD]

Technology

Financing

22

Biomass CHP

Geothermal heat pump

Dartmouth

-316

Biomass CHP

PV

Electric boiler

100% debt

-107

Biomass CHP

PV

Thermal storage

100% debt

-250

Biomass CHP

PV

PV:

- 30% Dartmouth

- 30% tax equity investor

- 40% debt

CHP biomass:

- 40% Dartmouth

- 60% debt

-222

Biomass CHP

Solar thermal

Tax equity investor

-261

Biomass CHP

PV

44% tax equity investor

16% Dartmouth

40 % debt

-322

Biomass and waste CHP

Oil boiler

Dartmouth 91%

Tax equity investor 9%

-226

Biomass CHP

PV

Solar thermal

70% Dartmouth and tax equity investor

30% debt

-213

Biomass CHP

PV

50% tax equity investor

30% debt

20% Dartmouth

-252

Biomass CHP

PV

Biomass boiler

Hydropower transmission

Tax equity investor

Debt

Angel investor

-104

PV

Heat pump

PV:

44% tax equity investor 20% Dartmouth

36% debt

Heat Pump:

15% tax equity investor 20% Dartmouth

65% debt

Slide12

Conclusions from students

Consider thermal storage + bioCHP + PV

Balance RE credits + local actions (keep oil?)

Project finance – tax equity investor makes sense for solar PV; not thermal side

Local carbon price

Hydro behind the meter

Slightly more experienced consultants. Challenge assumptions

Slide13

PART III

Why district energy and flexibility?

Preliminary findings

Next steps

Slide14

Methodology

Define analytic

framework

Planning

Financing

Construction

Operation

Apply analytic

framework

US universities

https://www.abcleg.dk/media/catalog/product/cache/1/image/1200x1200/9df78eab33525d08d6e5fb8d27136e95/0/0/000575_11481982468.5643_1_2.jpg

Slide15

THEORY: How can DE integrate renewables/operate on market?

Figure: http://www.nordicenergy.org/wp-content/uploads/2016/10/Flex4RES-WP2-DH-report.pdf

Slide16

PRACTICE: DE can integrate renewables/operate on market

Figure: http://www.emd.dk/desire/hvidesande/

Slide17

PRACTICE: How can DE integrate renewables?

Figures: http://www.emd.dk/desire/hvidesande/ and https://www.energidataservice.dk

Slide18

District energy in the North-east

10 universities – 100+ years DE

5 experts

2 ISO/RTO

+ a few more

Slide19

Planning

Utilities a hurdle

needs new tariff scheme

Hot water instead of steam

scary

All universities have carbon/energy targets

unclear how to reach them

Hesitance to thermal storages (footprint)

800-1000 ft

2

(~100 m

2) – is that a lot?Becoming a utility is not attractive (wires + sales = utility)mitigating by owners associations/coops/license limitsLimited understanding within organisationindividual school-structure can be challenging in decision-makinghigher management

Slide20

Financing

Financing as energy efficiency

rating agencies begin to understand this.

tax exempt bonds (heat side) + ”green banks” (Delaware, CT, VT)

RGGI: Price on carbon

Access to finance

some are rich (balance sheet)

others considering alternatives (ESCO/alumni)

standard structures would help (like for PV)

Slide21

Construction

http://gph.is/1KC75Mz

Slide22

Operation

Maturity of wholesale markets important – actors must know how it’s working

aggregators are by now pretty sophisticated

ISO: Minimum bid size 0.1 MW

Economic dispatch AND environmental dispatch?

some are looking at it – some are buying RECs and PPAs

Demand-side

steam AND electric chillers are common

Slide23

Operation (cont.)

Grid ”too green” – no incentive to be flexible

now, is it really?

Prices too low – no incentive to be flexible

interesting/worrying

Keeping humans in the loop is important for

security (reasonable)

believing humans are better (manual override - hmmm)

Slide24

Other findings

Every plant is the best

except it’s not…

myopic views can lead to sub-optimisation

knowledge-sharing is HUGELY important!

Almost no heat systems are integrated with the surroundings

excellent way to waste money and energy

Local opposition ”Don’t cut down the trees for biomass!”

Technical limitations – limited

avoid cycling

new relays needed for exporting to grid (safety)

Slide25

Next steps

In-depth processing of interviews

7 states’ regulation and policy

Write paper

Write more papers

Write thesis

Get PhD

Slide26

Daniel Møller Sneum

PhD Fellow, visiting scholar at Dartmouth College

 

US

111 Fairchild

Arthur L. Irving Institute for Energy and Society

Dartmouth College

03755 Hanover, NH

+1 (603) 322-8385

Daniel.M.Sneum@dartmouth.edu

 

DENMARK

Systems Analysis Division

Technical University of Denmark

DTU Management Engineering

Produktionstorvet

Building 426, room 033A

2800  Lyngby

DK +45 93511642

dasn@dtu.dk

linkedin.com/in/

danielmollersneum

Publications

Slide27

District energy in Denmark

5.7 million inhabitants

(3.6 with district heating)

31% of final energy consumption RE-based

54% of electricity RE-based*

60% of district heating waste and RE-based*

>400 district energy ‘microgrids’

* Yes, biomass included. Let’s save that discussion

Map

: Danish Energy Agency.

Regulation

and planning of district heating in Denmark. Copenhagen: 2015.

Slide28

District heating deployment in the Nordic countries

Graph: Sneum DM, Sandberg E, Rosenlund Soysal E, Skytte K, Olsen OJ. Smart

regulatory

framework

conditions

for smart energy systems?

Incentives

for

flexible

district

heating in the Nordic

countries 2017. (

unpublished

primo 2017)

Slide29

District

heating

share

of heat

supply

in 2014

NO 8%

SE 50%

DK 51%

FI 46%

Slide30

EXTRA: Where is DH in traditional

flex

definition?

As

defined

in IEA. The power of transformation. Paris: IEA; 2014. doi:10.1007/BF01532548.

System

persp

; not single-

technology

persp.

Slide31

Capacity

charge: 12 000 EUR/MW/

month

EXTRA:

Why

capacity

tariffs

can

be bad for flexibility12 000 EUR x 10 MW = 120 000 EUR

10 MW x 3 hours = 30 MWh

120 000 EUR/30 MWh = 4 000 EUR/MWh

Standard house 18 MWh/

year

= 72 000 EUR/

yearExample: 10 MW electric boiler, which pays to dispatch

when electricity spot price is 7 EUR/MWhCompletely infeasible to operate!

For

comparison

Slide32

Results: CHP + electric

boiler

depends

on

subsidies

No

subsidies

= high LCOH & vice versa

Slide33

Storage costs are low for DH

ELECTRIC

THERMAL

Same

order

of magnitude

Graphs:

Lund H, Østergaard PA, Connolly D,

Ridjan

I, Mathiesen BV, Hvelplund F, et al. Energy

storage

and smart energy systems. Int J Sustain Energy Plan Manag 2016;11:3–14. doi:10.5278/ijsepm.2016.11.2.BNEF: https://www.bloomberg.com/news/articles/2017-04-26/the-cheap-energy-revolution-is-here-and-coal-won-t-cut-it

Batteries closing in on pumped

hydro

; not on heat

storages

Slide34

Comparing apples

and oranges

makes

sense in

some

cases

?

Images by

Abhijit

Tembhekar

from Mumbai, India - Nikon D80 Apple, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=7823406 and https://upload.wikimedia.org/wikipedia/commons/7/7b/Orange-Whole-%26-Split.jpgGraph: Lund H, Østergaard PA, Connolly D, Ridjan I, Mathiesen BV, Hvelplund F, et al. Energy storage and smart energy systems. Int J Sustain Energy Plan Manag 2016;11:3–14. doi:10.5278/ijsepm.2016.11.2.

Storages are part of the ENERGY system – not just the ELECTRICITY system

Slide35

Student results 1

Group

CAPEX split

by technologies

[

$M]

University NPV

[

$M]

Ownership structure

Financing structure

SPV NPV

SPV

IRR

Technology mix in MW

University energy cost

Incentives applied

CO2 emissions

1137 biomass CHP15 GHP system22

100% owned by Dartmouth College

Self-financing

2nd option: Bank loan

35 MW Biomass CHP

10MW Geothermal Heat Pump

-

Not applicable

1820t/year reduction for heating

3910t/year reduction for power

3

105 biomass CHP

-316

SPV owns PV system, institution owns the rest of the system

Share of debt at investment time - 100%

Interest on debt – 4,8%

Duration of loan 30 years

0

8%

Biomass plant: 16

PV Plant: 9,60

Electric Boiler: 11,60

0,33 $/kWhITC and Biomass subsidy of 6500 $89843 tons CO2-eq/year576 biomass CHP20 solar PV 2.6 Thermal storage -107SPVLoan from bank0 - 30MW / 10MW /10MW 2.35 ITCSCRECMACRS 4 782 818 solar PV46 biomass CHP-250

SPV

Solar:

- 30% Dartmouth

- 30% 3rd party

- 40% Bank

CHP Biomass:

- 40% Dartmouth

- 60% Bank

-245 m$

N/A

Solar:

10

MWp

CHP

Biomass:

8

MWel

36

MWth

-10.55 $/kWh

ITC for solar

Accelerated & bonus depreciation

1.75m tonnes (reduction of 21.54% of current emisssions)

9

184 biomass CHP

(65.5%

CHPthermal

,

34.5% Solar thermal

100%

CHPelec

)

-222

University

- 3rd party (company) for ITC purpose

- Bank

- Green certificates

CHPthermal

: 40 MW

CHPelec

15 MW

Solar thermal: 38 MW (21%)

LCOE: 136$/MWh

ITC

Grants

Avoided CO2 emissions: 609528 ton/year

Slide36

Student results 2

Group

CAPEX split

by technologies

[

$M]

University NPV

[

$M]

Ownership structure

Financing structure

SPV NPV

SPV

IRR

Technology mix in MW

University energy cost

Incentives applied

CO2 emissions

13218 biomass CHP21 solar PV-261Joint venture (Tax investor and university)

44% Tax investor

16% Dartmouth College

40 % Debt

0

CHP: 224.7 GWh

SOLAR:16.8GWh

70 USD/MWh

ITC, Accelerated MACRS Depreciation, Renewable energy credits

1290

kton

CO2e (Avoided)

15

199 biomass and waste CHP

-322

Sponsor 91%

Tax Investor 9%

-351 680

Wood pellets and waste 35

Oil plant 5

Investment tax credit

-295.593

16228 biomass CHP1.2 solar PV4.7 solar thermal-226SPVUniversity funds + ITC+ Loan of 30% CAPEXBiomas CHP: 37.6 MWSolar PV: 1 MWSolar thermal: 7.5 MWCombination: 0.26 USD/kWhITCBiomass: 8775 t/yrSolar PV: 58.78 t/yrSolar thermal: 84.55 t/yr1745 biomass CHP14 solar PV-213CHP: universityPV: SPV

Tax equity investor: 50%

Loan: 30%

University: 20%

-3.81 M

University: 4,2%

Investor: 8%

CHP: 40 MW

PV: 10 MW

PV SPV: 148,60 $/MWh

PV: ITC & Accelerated depreciation

-98%

20

28 biomass CHP

23 biomass boilers

9 solar PV

0.5 hydro transmission

-252

FLIP PARTNERSHIP

UNIVERSITY OWNERSHIP

THIRD PARTY COMPANY

COLLABORATION

ANNUITY LOAN

ANGEL INVESTORS

-20.68 M

-3%

BIOMASS CHP: 5 MW(E)

BIOMASS BOILER: 32 MW(TH)

SOLAR PV: 4.78 MW(EP)

HYDRO IMPORTS: 16,965 MWH/YR

ITC , MACRS RENEWABLE ENERGY GRANT

41,699 t/

yr

21

81 solar PV

8 heat pump

-104

Private Ownership through an SPV

Two subprojects, one for PV and one for Heat pump.

PV:

Sponsor Equity=20%

Tax Equity = 43.8%

Debt Share = 36.2%

Heat Pump:

Sponsor Equity=20%

Tax Equity = 15%

Debt Share = 65%

NPV using LCOE: 31.163 M

NPV using 62.08 $/MWh: 0 M

Nominal Heat Pump: 40

MWTh

Nominal PV: 10 MW

LCOE with Dartmouth as owner:

89.5 $/MWh

Price of Heat/ Electricity that Dartmouth pays to the SPV:

62.08 $/MWh

On CAPEX:

•Commercial and Industrial Renewable Energy Grants (for PV)

•NH Electric Cooperative (for HP)

•ITC

0 Emissions with

PV+Heat

Pump