City University CHP & the Role of the CHPA

Paul Gardiner BSc CEng Policy Advisor 9th October 2012

BRITISH SUGAR

AB Sugar: Our geographic footprint

AB Sugar: the facts today .

AB Sugar is a substantial and core business within ABF Operations in UK, Iberia, Africa, and China with a capacity of ~ 5mtpa; current production c. 4.1 4.4 mtpa Largest purchaser of agricultural products for processing (c. 34m tonnes) Sole UK producer of beet sugar; c. 12 mt of beet processed in Europe 19mt of cane processed by the Group, 6.1 mt of which is produced on our own estates by Illovo in Malawi, Zambia, Mozambique, Tanzania and Swaziland World-class agricultural productivity - Illovo for cane and UK for beet Lowest cost sugar processor in regions; exceptionally high asset utilisation in the UK Co-products not by-products, increasingly value-added; animal feed, cogeneration, betaine, tomatoes, furfural and cropguard UKs first Bioethanol refinery operational at Wissington Leading retail brands; Silver Spoon, Billingtons (ABF Grocery), Azucarera, Illovo

THE CHPA

CHPA Mission statement

To promote a greater awareness and understanding of CHP and district heating and to create a strong, dynamic and sustainable environment for its members and the communities, businesses and households they serve. Areas of focus: Combined heat and power

Sustainable energy services

District heating and cooling

Industrial CHP
Policy Formation

Buildings CHP

MicroCHP

District Heating & Cooling

Ofgem RIIO Committee on Climate Change Smart Grids Forum Gas-Fired Support for non-renewable lowcarbon heat sources Renewable Renewables Obligation (for CHP) Renewable Heat Incentive

EU Energy Efficiency Directive DECC Development of Heat Policy following publication of Heat Strategy DECC Electricity Systems Programme DECC Energy Efficiency Delivery Office EMR: CHP Feed-in tariff, capacity mechanism Gas-Fired Carbon Price Support Replace value of CCL LECs Renewable Renewables Obligation Renewable Heat Incentive Gas-Fired Feed-in Tariff

Incentives & Measures

Networks Embedded benefits Licence-Lite

Market Mobilisation Investment GIB Non-Domestic Energy Efficiency competition Investment Green Investment Bank

Consumer Mobilisation and Supplier Compliance Schemes Green Deal and Energy Company Obligation Building Regulations Zero carbon building Allowable Solutions SAP 2012 & Building Regulations Part L Planning Planning policies Waste management strategies Purchasing & Procurement Public procurement Off-balance sheet funding Procurement frameworks Facilitation & Capacity Building Capacity building in local authorities

Consumer Protection & Regulation

CHPQA

Compliance Microgeneration Certification Scheme

Standards

Consumer Protection & Regulation Consumer Charter Consumer protection Technical standards

Forum structure
Strategy forum Full members
Energy Management Alliance Building CHP forum District Heating & Cooling forum Domestic CHP forum Industrial CHP forum

Local authority capacity working group

EMR working group

Finance working group

Quality assurance & customer protection working group

Organogram
Director Graham Meeks

Office Manager Dina Kamourieh

Senior Policy Advisor Paul Gardiner (secondee British Sugar)

Deputy Director, Head of Development Ian Manders

Head of Policy Tim Rotheray

Membership Manager Brian McGuire

Policy & Development Manager Nicky Butterworth

Policy Manager To be appointed

Research & Communications Manager Craig Dennett

Responsibilities
Staff Member Level
Graham Meeks Ian Manders Tim Rotheray Director

Responsibilities
All areas

Contact for
Strategic issues: Political, policy or CHPA issues

Deputy Director, Head District heating, building scale District heating queries of Market Development CHP and microCHP Senior Manager, Head of Policy Industrial CHP Long term policy queries Energy Management Alliance queries CHPA communications policy announcements and general intelligence Industrial CHP Membership, forums and sector workshops General enquiries including appointments

Nicola Butterworth Policy and Development Energy management, district Manager heating, building scale CHP and microCHP Craig Dennett Communications Manager Policy Manager Membership Manager Office Manager

Jonathan Graham Brian McGuire Dina Kamourieh

A few of the CHPA members

CHP & DISTRICT HEATING (DH)

What is CHP and what is it for?

Combined Heat and Power (CHP) or cogeneration is not a specific technology, but a range of technologies that apply the same principle: Combustion of any fuel is at its most efficient when it delivers heat and power simultaneously. Plants that are compliant with the Cogen Directive provide primary energy savings of at least 10% Enabler of a Low Carbon Economy

Energy Supply Inefficiency Is a Huge Opportunity

Energy Flows in the Global Electricity System

2/3 of the fuel we use to produce power is wasted -CHP can more than double this efficiency
Source: IEA, CHP: Evaluating the Benefits of Greater Global Investment (2008).

Business As Usual or CHP plant

Thames Gateway Heat Network

CHP and DH Options

Scale

District, Micro, Industrial or Utility

Single or multi Heat Hosts Heat led or Power led philosophy

Grid connected or Embedded

Fuel type Biomass / Biogas, Nat Gas, Oil, Coal, Physical Waste stream or Waste Heat Enabler of a Low Carbon Economy

The prime mover - Types

Type of prime mover 1. Internal combustion engines 2. Steam turbines 3. Gas turbines Type of CHP in which it is found Packaged CHP Custom CHP Custom CHP (microturbines, are packaged) Custom CHP Custom CHP or packaged CHP

4. Combined Cycle Gas Turbines 5. New and emerging technologies, such as Stirling engines, fuel cells, and Organic Rankine Cycles (ORCs)

The prime mover Attributes (1)

Gas-engine CHP Small-scale gas turbine CHP
1,000 1,300 60 100 100 150

Elec. output (kW) Heat output (kW)

60 115

100 130

300 430

600 880

Fuel input (kW)

215

310

990

1,950

3,000

280

350

Gas-turbine CHP
Elect. output (MW) Heat output (MW) 1.1 1.8 4.9 7.2 9.7 14.5 31.0 36.5 53.0 40.5

CCGT CHP
99.8 99.3 316.0 205.3

Fuel input (MW)

4.3

16.3

34.0

96.1

134.3

271.6

686.4

The prime mover Attributes (2)

Heat / pwr Ratio

Heat Grade

System Capacity

Space Efficiency

Capital Cost per unit of Capacity Low High

Maintenance Period

Reciprocating engine Gas turbine

1.3:1 2.5:1

Low Very high

Small Large

Average Excellent

Short intervals Long intervals

Estimate of Capital Cost

Packaged Schemes 5KWe Micro 2,000/kWe 50kWe 1,250/kWe 1MWe 800/kWe Custom Schemes 1MWe 1,300/kWe (Gas Turbine) >200MWe 700/kWe (CCGT)
Based on 2008 survey

CHP IN ENERGY POLICY

Fossil fuel CHP - energy security and competitiveness

Quote from Edward Davey of 04/10/12
EON U.K. Chief Executive Officer Tony Cocker, left, and Energy Secretary Ed Davey, pose for a photograph following the opening of a joint venture with the National Grid Plc at the company's plant on the Isle of Grain. Photographer: Chris Ratcliffe/Bloomberg

Natural gas remains absolutely central to efforts to curb U.K. emissions, Energy Secretary Ed Davey said today at the opening of a heat pipe connecting an EON AG power plant to a National Grid Plc (NG/) gas terminal. Davey said in Kent that he wants obstacles removed for investors as part of a government plan to deliver gas to U.K. customers at a more affordable price.

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23

2011

British Sugar

Policies applying to CHP etc.

CoGen Directive Energy Efficiency Directive EUETS CHP QA CCL exemption LECs CPS (fuel for elec. only) ECAs Rates reduction Renewable Obligation & RHI CRC Section 36 & Section 14

Affordability

Energy three policy areas

Making Fuel go Further Security of Supply

Climate Change

Affordability

Energy three policy areas

CHP
Climate Change Security of Supply

Policy objectives
Objective Implication

Security & diversity of supply

Climate change

Fossil and Biomass / Biogas Optimise use and type of energy Rational, economic appraisal of options

Cost to consumers

The Cost of CO2 Abatement 1

Source: DTI

The Cost of CO2 Abatement 2

Measure Energy Efficiency Commitment EUETS (based on 2006 EUA prices) Climate Change Levy CCL Exemption for CHP UK Emissions Trading Scheme Renewables Obligation
Sources: Ofgem, NAO, CHPA

Carbon Abatement Cost (/tonne carbon) Negative to 60 12 - 70 18 - 40 29 - 40 66 184 - 441

The Wissington bio refinery

CHP Plant Lime kiln Bioethanol

Flue gas pipe Feed dryer Sugar process Sugar beet

CHP, the heart of the bio refinery...

Gas Turbine Based CHP

Efficiency = MW (Out) = (42+24+85+8) = 82.8% MW (In) (110+82)
Including 8 MW heat recovery to glasshouse

110 MWth Air Fuel

CO2 & heat to glasshouse Boiler

Steam Turbine

LP Steam 85 MWth

Gas Turbine

42 MWe Electricity

82 MWth Fuel

24 MWe Electricity

THE CONFUSING WORLD OF ENERGY POLICY

Discussion Energy Tax Directive

UN Framework Convention on Climate Change Kyoto Copenhagen Cancun

Burden Share Cogen Directive Review Fuel Quality Directive

European Union 20% emission by 2020 - 30% 20% Renewables 20% Energy Efficiency Roadmap for a low carbon Economy by 2050 Renewable Energy Directive Emissions Trading Scheme

Industrial Emissions Directive

Energy Efficiency Action Plan

UK
Climate Change Act 2008: Carbon Budgets

Reform of Climate Change Levy Electricity Market Reform Feed in Tariffs Renewable Obligation Certificates Reform of Climate Change Agreements? Carbon Price Support

Committee on Climate Change

Renewable Heat Incentive

Coalition Government 2010 Climate Change and Energy Policy June Budget July Energy Statement 2050 Pathway October National Energy Policy October Spending Review Energy Security and Green Economy Bill CCL Reform Consultation DECC-Marland-Simplification

Carbon Reduction Commitment Renewable Transport Fuel Obligation

British Sugar
Carbon Disclosure Project

GHG Reporting?
PAS 2050 Green Investment Bank Green Deal

Bulk Sugar
Other Sugar Bioethanol Betaine

CO2

Inputs and Outputs:

CO2 Burnt Lime

Lime Kiln
Chemicals Beet

Stone
Fuel

Manufacturing Process
Electricity

Co products

Steam

Pulp

Condensate

Boiler House
Fuel

Fuel Electricity

Animal Feed

Pulp Process
Electricity Glasshouse

CO2

Electricity

CO2

Tomatoes

Hot Flue Gases

CO2

Lime Kiln

CO2

Apply EUETS,CCL & CPS

Fuel

Manufacturing Process
Electricity Steam
Condensate

Boiler House
Fuel

Fuel Electricity

Pulp Process
CO2
Electricity

Electricity Glasshouse

CO2

Hot Flue Gases

Site input & output for an industrial process

Parasitic Power Electricity Fuel CHP Plant

Power Exported
Power On-site Heat CO2
Choices for site operator: Type of products Type of raw materials Layout of manufacturing plant Choice over provision of energy Configuration of onsite generation Fuel type(s) All of the above are informed by Energy Policies. To be effective, policies must be: sufficient, long term & stable. Widget 2

Fuel
Fuel Plant 1

Heat

Raw Materials

Fuel

Plant 2

Heat

Bio Fuel

Widget 1

Draft ETD CCL

Policies with renewable

CHPQA IED CRC? Electricity Fuel
ECA & WDA

Draft EED

Project Transmit

IED RO CPF EMR CERT CESP ECO

Parasitic Power

RO & LECs

RO & LECs

RO & LECs

EB

Power Exported

CRC?

Fuel
Sustainability Sampling Reporting

R e n e w a b l e

Power On-site

CHP Plant

Heat CO2

GHG reporting ? all 6 GHG gasses

Fuel

Plant 1

Heat

RHI ? RHI ? RHI ?

Fuel

Plant 2

Heat

Bio Fuel

Widget 1

Widget 2

Draft ETD CCL CRC? Electricity CCA 1 CCL

Policies with fossil

CPS Parasitic Power CHPQA IED LECs LECs

Draft EED

IED RO CPF EMR CERT CESP ECO Proje ct Tran smit

EB

Power Exported
Fuel

Fuel

CCL CCA 2 Sustainability Sampling Reporting

F o s s i l

Power On-site
ECA & WDA

CHP Plant

GHG reporting ? all 6 GHG gasses

CO2 Carbon Leakage EUETS

Heat

Fuel

Plant 1

Heat

Fuel

Plant 2

Heat

Non-Carbon Leakage
Widget 2

Bio Fuel

Widget 1

Policy
Draft Energy Tax Dir. Draft Energy Efficiency Dir. IED EMR (CPS/F, Capacity, FiT etc.) CRC RO CPS/CPF (also see EMR above) Under discussion in EU

Position

Under discussion in EU, very pro CHP, fast track timetable envisaged by Commission Completed EU processes, awaiting transposition into UK law Under discussion in UK, subject to consultation, expected to be implemented in April 2013 Phase 1 implemented, phase 2 rules being further revised under simplification agenda Awaiting last banding review for implementation post April 2013 Detail discussion s / consultations on application of CPS to fuel used in CHP plants To continue except for changes for fuel used in CHP Recently reviewed and adjusted, to be changed in light of CPS & consultation (autumn 11) possible further change due to EED To be renegotiated under new structure (yet to be agreed) EMR process threatens to reverse previous HMG position and remove CHP LECs from April 2013 National Grid Ltd. constantly seeking to erode Embedded Benefits Existing RHI is long term but funding limited in each year and capped for 4 years so potential value in future years (post 2015) is too uncertain for mid/large scale investments. Interface with RO for CHP unclear Value of new RO & RHI Vs existing RO uplift to be resolved for CHP Currently applies to all GHG gasses (not just CO2) and is Voluntary but might become Mandatory from 2012/3? New rules agreed and guidance finalised 15/09/11. Levels of declining free allocation for each installation is subject to a consultation to be published by HMG in Autumn 11 Spring 12 for start on 1st Jan 2013 Under discussion with Ofgem, based on RED and specific guidance from Commission Under discussion with DfT, based on RED and specific guidance from Commission To be phased out and replaced with ECO, Green Deal, Green Investment Bank from 2013 To be phased in with Green Deal etc. from 2013, rules yet to be finalised Not finalised and continues but may be overtaken by guidance / rules from ACER / CEER / EB will not be considered under this project Enhanced Capital Allowance / Writing Down Allowance for capital investment. These rules are currently under consultation

CCL
CHPQA CCA LECs (CHP)

EB
RHI (industrial) RO / RHI Interface GHG Reporting EUETS ph 3 Sustainability rules / Biomass Sustainability rules / Biofuels CERT / CESP ECO Project Transmit ECA /WDA

CHP WITH CARBON CAPTURE & STORAGE

Opportunities for CO2 capture

Prudhoe Bay compressors

Graphic courtesy of U.N. Intergovernmental Panel on Climate Change

CHP as an enabler of CCS

Aggregate heat demands shut down dispersed boiler plant Build heat led centralised CHP reduces overall CO2 emissions Fit CCS to CHP acts as a CO2 Hoover for previous industrial emissions allows for larger CCS plant allows for future gasification plant to benefit from that CCS

Example of an industrial cluster with potential for CCS

ConocoPhilli ps Humber Refinery ConocoPhillips Immingham CHP Total Lindsey Refinery

Theddlethorpe Gas Terminal 50 km

2 CCGTs (1,600 MW total) 3 km Coal Stocks

1,100 MW CCGT 10 km

Associated British Ports

Acetic acid plant + 1100 MW CCGT 11 km

Can we stop now? My head is full!