Turning Down the Heat

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WADE 5th Intl Conference, 2004 Recycling Energy
with CHP and Decentralized Energy A Bridge to the
Future Thomas R. Casten Chairman WADE World
Alliance for Decentralized Energy
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World Energy Situation

• Growing energy demand is driving up fossil fuel
  prices
• 132 nations increased energy use faster than USA
  last decade, including China and India
• Hubberts Peak says world oil production will
  peak in the 2003 to 2005, then decline
• Oil purchases are a massive wealth transfer,
  propping up dictators, religious zealots, and
  those supporting global terrorism

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Fossil Use is Changing Climate

• Increasing atmospheric CO2 is warming the globe,
  causing
• Increased frequency and severity of storms
• Rising seal level could flood low countries, such
  as Bangladesh
• More rapid species extinction disease spread
• Failure to recycle energy, and over reliance on
  central generation adds needless costs and CO2
  emissions to every country

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Cost of Work Drives Income per Capita

• Changes in the real cost of work explain 80 of
  past per/capita income growth
• Work is useful changes moving people,
  transforming materials, lighting, etc
• Cost of work function of 1) fuel prices, 2)
  conversion efficiencies, 3) transmission losses,
  4) appliance and vehicle conversion efficiency
  5) other steps from fuel to useful work.

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Policy Implications

• To promote improved standard of living, reduce
  real cost of work, by
• Increasing energy conversion efficiency in all
  sectors heat and power generation, appliances,
  manufacturing
• Reducing losses and costs of transmitting energy
• Recycling energy
• Widespread efficiency and energy conservation
  policies would reduce demand for fossil fuel,
  reducing energy prices and thus reducing the cost
  of work

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Cost of Work Rising, Worldwide

• Real fuel prices are increasing
• Central electric generation efficiency has been
  frozen for 40 years at 33
• Electric TD losses rising, due to grid
  congestion, remote generation
• Appliance efficiency gains are slowing
• Mandated growth of renewable energy will raise
  electric prices
• These trends hurt per capita incomes

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Energy Myths Lead to Bad Policy Choices

• Myth 1 It is cheaper to move electricity than
  to move fuel build mine mouth power stations
• Myth 2 Central generation has economies of
  scale, costs less capital than smaller
  decentralized generation
• Myth 3 Energy can only be used once
• Myth 4 Heat and power generation are optimal,
  given current technology

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The Rule of SevensFacts Versus Myth 1

• Moving fuel (coal, gas, or oil) takes 7 times
  less energy than moving electricity
• Moving thermal energy takes 7 times more energy
  moving electricity
• Thus, moving thermal energy takes 49 times more
  energy than moving fuel.
• Implication Burn fuel near thermal users in CHP
  plants to provide local heat and power

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Asking the Right QuestionChallenges Myth 2

• Single large power plants are cheaper per kW than
  smaller plants, but
• Central power requires 1.1 to 1.25 kW new
  generation and new TD wires to deliver 1
  kilowatt of new power to users
• Local power requires 1 kW new generation plus 10
  of new TD to deliver 1 kW to users
• Total capital cost for central power 1.8 times
  cost of DG (US2,500 versus 1,400)

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Energy Can be RecycledChallenging Myth 3
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What Energy Can Be Recycled?

• Fuel and electricity is typically used only one
  time, with all waste discarded
• Power plants burn fuel and then discard 2/3s as
  heat
• Industry transforms raw materials to finished
  goods and then vents heat, pressure, waste
  fuels
• Local power generation of heat and power recycles
  normally wasted heat
• Industrial waste energy can be recycled to heat
  power without extra fuel or pollution.
• Use blast furnace gas, carbon black gas, hot
  exhaust, pressure drop, combustible wastes,
  agricultural wastes

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Combined Heat and Power (CHP)
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Recycled Energy (At user sites)
No Added Pollution
Capital costs similar to other CHP or DG plants
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Recycled Energy Case Study Primary Energy

• We invested 360 million in six projects to
  recycle blast furnace gas and coke oven exhaust
  in four steel plants.
• 440 MW electric and 460 MW steam capacity.
• Return on assets exceeds 15
• Steel mills save over 100 million per year and
  avoid significant air pollution
• Reduced CO2 equals uptake of one million acres of
  new trees.

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90 MW Recycled from Coke ProductionChicago in
Background
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DG, Using Conventional Technology, Saves 40
versus Central Generation

• WADE model challenges
• Myth 4

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WADE Model Description

• Model database has all generation choices
  calculates costs to meet 20 year load growth with
  CG or DG
• Central generation scenarios are user specified
  mix of electric-only plants
• DG scenarios include good CHP (4,000 Btu heat
  recovery per kWh electric,) industrial recycled
  energy, and renewable DG
• Model works for any country with local data on
  existing generation, load growth, TD losses

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US Results, CG versus DG, for Next 20 years
(Billion Dollars)
Item All CG All DG Savings Saved
Capacity TD 831 504 326 39
Power Cost 145 92 53 36
Tons NOx 288 122 166 58
Tons SO2 333 19 314 94
MM Tonnes CO2 776 394 381 49
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Extrapolating US Analysis the World

• We do not have sufficient data to run WADE model
  for the world, but
• We believe US numbers are directionally correct
  for CG versus DG
• We analyzed conventional approach of IEA
  Reference Case versus optimal solutions with DG
  using US values

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Worldwide CG for 2030 Load Growth
33 delivered electricity
Generation 890 / kW 4,800 GW worldwide 4.2
trillion
Transmission 1,380 / kW 4,800 GW 6.6trillion
Totals 2,495 / kW 4,368 GW 10.8 trillion
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Worldwide DG for 2030 Load Growth
Transmission 138/kW (10 Cap.) 0.44 GW
DG 600 billion 6.0 trillion
Generation 1,200/kW 4,368 GW World Cost 5.2
trillion DG vs. CG (1.0 trillion)
Totals 1,338/kW 4,368 GW 5.8 trillion 5.0
trillion
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Worldwide Benefits of Meeting 2030 Load Growth
with Decentralized Energy

• Consume 122 billion fewer barrels of oil
  equivalent (½ Saudi reserves)
• 2.8 trillion less fossil fuel purchases
• Reduced illness from air pollution
• Much easier to supply electric services to entire
  population
• Global warming might slow down

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Potential Savings for China

• WADE model has been run with Chinese data
• Tomorrow morning we will present results

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Summary and Implications

• Worldwide energy policies, based on four energy
  myths, promote excessive energy use and cost
• The current energy trends hurt per capita income
  in all countries
• By promoting energy recycling, governments can
  lower the real cost of work, enhance income
  growth, and lessen environmental damage

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Conference Goals

• Help delegates, government officials, and media
  move beyond todays energy myths
• Offer a vision of the future based on DG that
  recycles energy
• Provide analytical tools and experiences to
  illustrate value of needed policy changes
• Encourage the widest possible dialogue between
  top energy policy and application specialists
  from all over the world

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The Coming DG Revolution

• The DG revolution is as important as the Green
  Revolution of 30 years ago
• In time, the DG revolution will spread to all
  countries, but first movers will have advantages
• We tip our hats to our enlightened hosts who
  seek to foster a DG revolution in the worlds
  largest nation

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Thank you for listening!