greener and more flexible Daniel Møller Sneum Dartmouth College 19 April 2018 Agenda PART I What is district energy PART II Student consultants DTU looks at Dartmouth PART III Why district energy and flexibility ID: 792817
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Slide1
District energy in North-eastern universities – greener and more flexible
Daniel Møller Sneum
Dartmouth College
19 April 2018
Slide2Agenda
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
Slide3PART I
What is district energy?
Slide4Q: 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
Slide5A: 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
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
Slide7Heating and cooling in EU: 50%
Slide8Heat 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.
Slide9PART II
Student consultants: DTU looks at Dartmouth
Slide10Course: 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
Slide11Results
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
Slide12Conclusions 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
Slide13PART III
Why district energy and flexibility?
Preliminary findings
Next steps
Slide14Methodology
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
Slide15THEORY: How can DE integrate renewables/operate on market?
Figure: http://www.nordicenergy.org/wp-content/uploads/2016/10/Flex4RES-WP2-DH-report.pdf
Slide16PRACTICE: DE can integrate renewables/operate on market
Figure: http://www.emd.dk/desire/hvidesande/
Slide17PRACTICE: How can DE integrate renewables?
Figures: http://www.emd.dk/desire/hvidesande/ and https://www.energidataservice.dk
Slide18District energy in the North-east
10 universities – 100+ years DE
5 experts
2 ISO/RTO
+ a few more
Slide19Planning
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
Slide20Financing
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)
Slide21Construction
http://gph.is/1KC75Mz
Slide22Operation
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
Slide23Operation (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)
Slide24Other 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)
Slide25Next steps
In-depth processing of interviews
7 states’ regulation and policy
Write paper
Write more papers
Write thesis
Get PhD
Slide26Daniel 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
Slide27District 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.
Slide28District 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)
Slide29District
heating
share
of heat
supply
in 2014
NO 8%
SE 50%
DK 51%
FI 46%
Slide30EXTRA: 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.
Slide31Capacity
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
Slide32Results: CHP + electric
boiler
depends
on
subsidies
No
subsidies
= high LCOH & vice versa
Slide33Storage 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
Slide34Comparing 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
Slide35Student 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
Slide36Student 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