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Title: Modeling the Impact of Flexible CHP on the Future Electric Grid In California

Abstract

The US electric grid is changing fundamentally: not only are the generation sources that supply the grid changing, but so too are the profiles of the loads that use the electricity. Traditionally, generation followed a fairly predictable demand pattern, which allowed a baseload fossil fuel generation infrastructure to run constantly at a high capacity factor to meet the minimum load, with less capital-intensive, flexible generation used to meet the additional varying load. However, recently, the country began shifting fossil generation moved from coal-based to natural gas–powered electricity generation, and renewable generation has increased steadily. In California, utility-scale renewable energy generation has grown more rapidly than in many other states. In 2018, 34% of California’s retail electricity sales were provided by renewable energy resources, and these sales are expected to continue to grow. California recently passed a bill mandating a Renewable Portfolio Standard goal of 100% zero-carbon electricity generation on its grid by 2045. Renewable energy generation from wind and solar photovoltaic (PV) sources is variable and dependent upon the resource (the amount of sunshine or wind at the time of generation). Variable generation brings new challenges to a grid originally designed for baseload power. Additional technologies are required to meetmore » the challenges and operate the grid effectively. The impacts are both in the bulk power system and more localized. As consumers adopt rooftop solar PV panels, the net electricity demand drops during daytime hours and increases steeply to a peak in the evenings when PV systems stop generating electricity. This “duck curve” puts stress on the grid and requires California’s grid operator to curtail generation from renewable resources during the day and then later ramp up output from conventional generation to meet the rapidly escalating evening electricity demand in the state. Natural gas generation is the current solution because of its flexibility and cost profile—which is impacted more by demand for gas than by capital expense. However, more efficient solutions would better support the state’s greenhouse gas (GHG) emissions reduction goals. How can energy technologies mitigate intermittent renewable generation coming onto the grid? How can the grid become responsive to the changes in demand and load profiles created by developments ranging from higher energy efficiency to distributed generation to smart appliances to increased end-use electrification to increased interoperability of loads? The solution is unlikely to come from one single technology or policy change, but rather from embracing a variety of technologies across all sectors and approaches to helping all sectors transition to thinking about and using energy differently. Technologies of the future require flexibility and advanced control mechanisms to respond to changing requirements. One example is combined heat and power (CHP) technology. CHP is a technology that was historically used most extensively by the industrial sector, with its largescale electricity and heat demands. CHP allows for the use of heat generated concurrently with power generation to be used for industrial and building needs—space and water heating and cooling, as well as other thermal loads. The utilization of what would normally be wasted heat results in a highly efficient power generation technology—up to 85% overall efficiency. The high efficiency of CHP also results in financial savings for the owner by reducing the need to purchase grid electricity, and it reduces the need to generate steam or hot water using a separate boiler, reducing the consumption of natural gas use as a boiler fuel. CHP has been used for decades, usually to meet the electrical load while reducing the thermal load. “Flexible CHP” technologies are being developed that efficiently provide both a baseload that meets the site’s electrical load and a surplus that can be sold to the grid when the electricity price is high. Coupled with changes in grid operations, flexible CHP technologies may have more opportunities for adoption within the industrial sector than traditional technologies. In most locations, the additional thermal generation by the CHP units would reduce some of the remaining use of boilers to generate heat. This flexible CHP approach would provide a distributed energy resource that the grid could call upon during times of high net demand. CHP owners would generate revenue from selling the excess electricity to partly offset the capital cost of owning and operating large CHP systems. The benefits of increased adoption of CHP are numerous: GHG emissions are lower, compared with traditional fossil-fuel based power generation, because of the higher efficiency of CHP.; Where energy prices and usage patterns are conducive, CHP lowers costs for businesses, helping them become more competitive.; CHP provides a distributed grid resource that contributes to reliability and energy security. However, for these benefits to be realized, there must be sufficient financial value to the grid as a whole. This report describes an analysis of the potential financial value of both traditional and advanced, flexible CHP units in California. A multi-organizational team that included representatives from the National Renewable Energy Laboratory (NREL), Resource Dynamics Corporation (RDC), Oak Ridge National Laboratory (ORNL), Booz Allen Hamilton, and Energetics, Inc. performed this analysis. The team used cost-benefit analysis techniques to identify sites where CHP units could be installed and are likely to meet a payback period requirement (i.e., meet profitability requirements). Using those sites and a production cost model of the California electricity grid, the team estimated the impacts on the cost of operating the grid with those CHP units and compared them to the cost of operating the grid without the CHP resources. The intent of this report is to inform decision-makers who are determining budgets for CHP technology research and development (R&D). The results should enable those decision-makers to compare potential benefits of CHP technology improvements to potential impacts of other R&D opportunities. The impact estimates can also inform decisions regarding where to focus CHP R&D by comparing the magnitude of the various value streams. To estimate the financial impacts to the grid, the analysis team modeled several scenarios, which are detailed in the following table. The scenarios aim to show the potential for flexible CHP in California and its possible impacts on grid operating costs. The Traditional, Advanced, and Combined scenarios have about 1,400 more CHP sites in California than the Reference scenario because those sites were assumed not to have CHP in the Reference Scenario’s source.« less

Authors:
 [1];  [1];  [2]; ORCiD logo [3]; ORCiD logo [3];  [4];  [5];  [5]
  1. National Renewable Energy Lab. (NREL), Golden, CO (United States)
  2. Resource Dynamics Corp., McLean, VA (United States)
  3. Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)
  4. Booz Allen Hamilton, Inc., McLean, VA (United States)
  5. Energetics, Inc., Columbia, MD (United States)
Publication Date:
Research Org.:
Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)
Sponsoring Org.:
USDOE Office of Energy Efficiency and Renewable Energy (EERE)
OSTI Identifier:
1649545
Report Number(s):
ORNL/TM-2019/1259
DOE Contract Number:  
AC05-00OR22725
Resource Type:
Technical Report
Country of Publication:
United States
Language:
English

Citation Formats

Desai, Jal, Ruth, Mark, Lemar, Paul, Bhandari, Mahabir S., Storey, John, Srivastava, Kiran, Rogers, Jonathan, and Schwartz, Harrison. Modeling the Impact of Flexible CHP on the Future Electric Grid In California. United States: N. p., 2020. Web. doi:10.2172/1649545.
Desai, Jal, Ruth, Mark, Lemar, Paul, Bhandari, Mahabir S., Storey, John, Srivastava, Kiran, Rogers, Jonathan, & Schwartz, Harrison. Modeling the Impact of Flexible CHP on the Future Electric Grid In California. United States. doi:10.2172/1649545.
Desai, Jal, Ruth, Mark, Lemar, Paul, Bhandari, Mahabir S., Storey, John, Srivastava, Kiran, Rogers, Jonathan, and Schwartz, Harrison. Sat . "Modeling the Impact of Flexible CHP on the Future Electric Grid In California". United States. doi:10.2172/1649545. https://www.osti.gov/servlets/purl/1649545.
@article{osti_1649545,
title = {Modeling the Impact of Flexible CHP on the Future Electric Grid In California},
author = {Desai, Jal and Ruth, Mark and Lemar, Paul and Bhandari, Mahabir S. and Storey, John and Srivastava, Kiran and Rogers, Jonathan and Schwartz, Harrison},
abstractNote = {The US electric grid is changing fundamentally: not only are the generation sources that supply the grid changing, but so too are the profiles of the loads that use the electricity. Traditionally, generation followed a fairly predictable demand pattern, which allowed a baseload fossil fuel generation infrastructure to run constantly at a high capacity factor to meet the minimum load, with less capital-intensive, flexible generation used to meet the additional varying load. However, recently, the country began shifting fossil generation moved from coal-based to natural gas–powered electricity generation, and renewable generation has increased steadily. In California, utility-scale renewable energy generation has grown more rapidly than in many other states. In 2018, 34% of California’s retail electricity sales were provided by renewable energy resources, and these sales are expected to continue to grow. California recently passed a bill mandating a Renewable Portfolio Standard goal of 100% zero-carbon electricity generation on its grid by 2045. Renewable energy generation from wind and solar photovoltaic (PV) sources is variable and dependent upon the resource (the amount of sunshine or wind at the time of generation). Variable generation brings new challenges to a grid originally designed for baseload power. Additional technologies are required to meet the challenges and operate the grid effectively. The impacts are both in the bulk power system and more localized. As consumers adopt rooftop solar PV panels, the net electricity demand drops during daytime hours and increases steeply to a peak in the evenings when PV systems stop generating electricity. This “duck curve” puts stress on the grid and requires California’s grid operator to curtail generation from renewable resources during the day and then later ramp up output from conventional generation to meet the rapidly escalating evening electricity demand in the state. Natural gas generation is the current solution because of its flexibility and cost profile—which is impacted more by demand for gas than by capital expense. However, more efficient solutions would better support the state’s greenhouse gas (GHG) emissions reduction goals. How can energy technologies mitigate intermittent renewable generation coming onto the grid? How can the grid become responsive to the changes in demand and load profiles created by developments ranging from higher energy efficiency to distributed generation to smart appliances to increased end-use electrification to increased interoperability of loads? The solution is unlikely to come from one single technology or policy change, but rather from embracing a variety of technologies across all sectors and approaches to helping all sectors transition to thinking about and using energy differently. Technologies of the future require flexibility and advanced control mechanisms to respond to changing requirements. One example is combined heat and power (CHP) technology. CHP is a technology that was historically used most extensively by the industrial sector, with its largescale electricity and heat demands. CHP allows for the use of heat generated concurrently with power generation to be used for industrial and building needs—space and water heating and cooling, as well as other thermal loads. The utilization of what would normally be wasted heat results in a highly efficient power generation technology—up to 85% overall efficiency. The high efficiency of CHP also results in financial savings for the owner by reducing the need to purchase grid electricity, and it reduces the need to generate steam or hot water using a separate boiler, reducing the consumption of natural gas use as a boiler fuel. CHP has been used for decades, usually to meet the electrical load while reducing the thermal load. “Flexible CHP” technologies are being developed that efficiently provide both a baseload that meets the site’s electrical load and a surplus that can be sold to the grid when the electricity price is high. Coupled with changes in grid operations, flexible CHP technologies may have more opportunities for adoption within the industrial sector than traditional technologies. In most locations, the additional thermal generation by the CHP units would reduce some of the remaining use of boilers to generate heat. This flexible CHP approach would provide a distributed energy resource that the grid could call upon during times of high net demand. CHP owners would generate revenue from selling the excess electricity to partly offset the capital cost of owning and operating large CHP systems. The benefits of increased adoption of CHP are numerous: GHG emissions are lower, compared with traditional fossil-fuel based power generation, because of the higher efficiency of CHP.; Where energy prices and usage patterns are conducive, CHP lowers costs for businesses, helping them become more competitive.; CHP provides a distributed grid resource that contributes to reliability and energy security. However, for these benefits to be realized, there must be sufficient financial value to the grid as a whole. This report describes an analysis of the potential financial value of both traditional and advanced, flexible CHP units in California. A multi-organizational team that included representatives from the National Renewable Energy Laboratory (NREL), Resource Dynamics Corporation (RDC), Oak Ridge National Laboratory (ORNL), Booz Allen Hamilton, and Energetics, Inc. performed this analysis. The team used cost-benefit analysis techniques to identify sites where CHP units could be installed and are likely to meet a payback period requirement (i.e., meet profitability requirements). Using those sites and a production cost model of the California electricity grid, the team estimated the impacts on the cost of operating the grid with those CHP units and compared them to the cost of operating the grid without the CHP resources. The intent of this report is to inform decision-makers who are determining budgets for CHP technology research and development (R&D). The results should enable those decision-makers to compare potential benefits of CHP technology improvements to potential impacts of other R&D opportunities. The impact estimates can also inform decisions regarding where to focus CHP R&D by comparing the magnitude of the various value streams. To estimate the financial impacts to the grid, the analysis team modeled several scenarios, which are detailed in the following table. The scenarios aim to show the potential for flexible CHP in California and its possible impacts on grid operating costs. The Traditional, Advanced, and Combined scenarios have about 1,400 more CHP sites in California than the Reference scenario because those sites were assumed not to have CHP in the Reference Scenario’s source.},
doi = {10.2172/1649545},
journal = {},
number = ,
volume = ,
place = {United States},
year = {2020},
month = {8}
}

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