Costs And Benefits Of Combined Heat And Power
Costs and Benefits of Combined Heat andPowerJune 19, 2013Draft v.2With minor modifications to the presentation made to the NJCHP/FC Working Group on 19 June 2013 (marked in red)Center for Energy, Economic and Environmental Policy,Rasika Athawale and Frank A. Felder
CHP Cost-Benefit AnalysisAGENDA1.Context of a Cost‐Benefit Analysis (CBA)2.Approach for analysisa.Caveatsb.Database for major Technical & Financial assumptionsc.Methodology for cost‐benefit calculationsd.Major assumptions requirement from stakeholders3.Summary of what has been completed4.Next StepsWe would like to thank Gearoid Foley, Richard Sweetser and the Mid‐Atlantic Clean EnergyApplication Center for their time and valuable inputs.Note: References used by CEEEP can be found at http://policy.rutgers.edu/ceeep/chpRasika Athawale and Frank A. Felder2DRAFT
CHP Cost-Benefit AnalysisGeneral Remarks on Cost‐benefit Analysis1.Cost‐benefit analysis (CBA) is an economic tool that reduces costs andbenefits that occur over time into a numerical scorea.Benefit/Cost (B/C) ratio, Net Present Value (NPV), Return on Investment (ROI), PaybackPeriodb.The time value of money and the risk associated with the investment are both capturedin the discount rate2.CBA is relatively easy to use but also easy to misuse3.CBA only accounts for efficiency but not other values and objectives such asequity and therefore should inform public policy but not be dispositive4.A CBA can be conducted from different perspectives, e.g., from that of aproject developer or societyRasika Athawale and Frank A. Felder3DRAFT
CHP Cost-Benefit AnalysisPrivate vs. Social Costs and Benefits1.Economists distinguish between private costs and benefits and social costsand benefits2.Actions taken by private individuals or entities that result in society bearingcosts or receiving benefits are called externalities3.A CBA conducted from a private perspective may be different than from asocial perspective4.In a social CBA, payments from one part of society to another are transfersnot benefits or costs; of course to the individual parties they are consideredbenefits or costs5.The above are incorporated in NJ’s CBA of energy efficiency programsRasika Athawale and Frank A. Felder4DRAFT
CHP Cost-Benefit AnalysisPrivate vs. Social Costs and Benefits (contd.)SOCIALBENEFITSCOSTS9 CHP Incentives9 Gas T&D costs (foradditional supply of gas toCHP)9 Increased Reliability resulting incommunity benefits such as stormshelter etc.9 Avoided electric T&D costs9 Reduction in air emissionsThere could be some macroeconomic effects (such as job growth) which could bepositive or negativePRIVATECOSTSBENEFITS9 Capital Costs9 Fuel Costs9 O&M Costs9 Increased Reliability9 Savings on electricitysupply bills (afterpaying for standbycharges)The above does not consider impact of SBC & SUT (discussed on next slide)Rasika Athawale and Frank A. Felder5DRAFT
CHP Cost-Benefit AnalysisPrivate vs. Social Costs and Benefits – SBC & SUTwithout CHPe‐SocietalBenefitsCharge (SBC)NJ Sales & UseTax (SUT) SBCCents/kWh 7 % applied toall sub‐typesof chargesincluding SBCNG SBC /therm 7 % applied toall sub‐typesof chargesincluding SBCRasika Athawale and Frank A. Felderwith CHPe‐NG Reduced e‐purchase fromgrid Increased NGpurchase fromgrid SBC collectionis reduced SBC collectiondecrease Reducedcollection oftax due tolower e‐consumptionfrom grid Increasedcollection oftax due tohigher NGconsumptionfrom grid assuming all electricitygenerated is self‐consumed6DRAFT
CHP Cost-Benefit AnalysisPrivate vs. Social Costs and Benefits – Air Emissions (1)without CHPwith CHPCO2 emissions from e‐ generationFuel Type% Marginal Run(2012) PJMState of theMarket 2012*US Avg.EmissionsRate CO2(lbs/MWh)EPA*CHP %0Other0.5%0MunicipalWaste0.1%2,988Average 2012CO2 emissions from e‐ generationEmissionsRate CO2(lbs/MWh)#Source ofInformationRE 1 MW1,142EPA CatalogRE 3 MW1,110EPA CatalogRE 5 MW1,024EPA CatalogGT 10 MW1,404EPA Catalog# does not include reductions for thermal load1,770* For references pl see the last slideRasika Athawale and Frank A. Felder7DRAFT
CHP Cost-Benefit AnalysisPrivate vs. Social Costs and Benefits – Air Emissions (2)without CHPwith CHPNOX emissions from e‐ generationFuel Type% Marginal Run(2012) PJMState of theMarket 2012US Avg.EmissionsRate NOX(lbs/MWh)EPACHP r0.5%0MunicipalWaste0.1%5.4Average 2012Rasika Athawale and Frank A. FelderNOX emissions from e‐ generationEmissionsRate NOX(lbs/MWh)#Source ofInformationRE 1 MW1.49EPA CatalogRE 3 MW1.52EPA CatalogRE 5 MW1.24EPA CatalogGT 10 MW0.65EPA Catalog# does not include reductions for thermal load4.38DRAFT
CHP Cost-Benefit AnalysisPrivate vs. Social Costs and Benefits – Air Emissions (3)without CHPwith CHPSOX & Hg emissions from e‐ generationFuelType% MarginalRun (2012)PJM State ofthe Market2012US Avg.EmissionsRate SOX(lbs/MWh)EPAUS Avg.EmissionsRate Hg(TPY i.e.tons peryear) EPA *SOX & Hg emissions from e‐ generationCHP TypeEmissionsRate SOX(lbs/MWh)#EmissionsRate Hg(TPY) #Source ofInformationRE 1 MW00EPA CatalogCoal58.8%13.0RE 3 MW00EPA CatalogGas30.4%0.1RE 5 MW00EPA CatalogOil6.0%12.0GT 10 MW00EPA rage 20128.4Rasika Athawale and Frank A. FelderParticulate Matter (PM) emissions needs to beincluded53.0* For references pl see the last slide9DRAFT
CHP Cost-Benefit AnalysisGeneral Remarks on Combined Heat and Power (CHP)1.CHP applications require the right combination of thermal and electric load2.Engineering efficiency is different from economic efficiency3.CHP facilities require black start and islanding capabilities if they are to runwhen the electric power system is unavailable4.CHP applications are site specific; a generic analysis is a useful starting point,but individual applications should be examined in detailedRasika Athawale and Frank A. Felder10DRAFT
CHP Cost-Benefit AnalysisAGENDA1.Context of a Cost‐Benefit Analysis (CBA)2.Approach for analysisa.Caveatsb.Database for major Technical & Financial assumptionsc.Methodology for cost‐benefit calculationsd.Major assumptions requirement from stakeholders3.Summary of what has been completed4.Next StepsRasika Athawale and Frank A. Felder11DRAFT
CHP Cost-Benefit AnalysisCAVEATS1.The analysis presented illustrates the capabilities of the database and model;once feedback is obtained from BPU Staff and stakeholders, preliminaryresults will be generated2.3.Some important and large uncertainties exist in the assumptions such as:1.Avoided transmission and distribution costs2.Environmental externalities3.Value of loss of loadFor a given standby charge, the CHP CBA analysis can inform policymakersabout how that would affect private investment in CHP, but the CHP CBAcannot determine the appropriate standby charge4.The CHP CBA model could be used to refine the 1,500 MW of CHP goal butthat may not be necessaryRasika Athawale and Frank A. Felder12DRAFT
CHP Cost-Benefit AnalysisKey Input parameters for CHP EconomicsElectric Heat ERATORELECTRICITYFigure 1: Components of a typical CHP SystemSource: Midwest Clean Energy RACFactors affectingCosts &Performance ofindividual CHPPlantsTechnicalThermal EnergyOutput (MMBtu/hr)FinancialInstalled CapitalExpenditure( /KW)O&M Costs( /kWh)We have compiled a database of variousCHP technologies and their correspondingtechnical and financial factorsRasika Athawale and Frank A. Felder13DRAFT
CHP Cost-Benefit AnalysisDatabase capturing CHP Technology Type and key input parameters1. ICF International Inc., CHP Policy Analysisand 2011‐2030 Market Assessment Report,Feb 2012 (prepared for California EnergyCommission)2. SENTECH Incorporated, C&I CHPTechnology Cost and Performance DataAnalysis for EIA, June 2010 (prepared forEnergy Information Administration)3. EPA CHP Catalog, Combined Heat andPower Partnership, Dec 2008 (study doneby Energy and Environmental Analysis – anICF International Company)Observations1. Numbers from referred studies are for thewhole of the US and not for the state of NJComplete Database and References used by CEEEP can be found athttp://policy.rutgers.edu/ceeep/chpRasika Athawale and Frank A. Felder2. Numbers reported assume ‘simple’installations and therefore no majorinstallation costs14DRAFT
CHP Cost-Benefit AnalysisAGENDA1.Context of a Cost‐Benefit Analysis (CBA)2.Approach for analysisa.Caveatsb.Database for major Technical & Financial assumptionsc.Methodology for cost‐benefit calculationsd.Major assumptions requirement from stakeholders3.Summary of what has been completed4.Next StepsRasika Athawale and Frank A. Felder15DRAFT
CHP Cost-Benefit AnalysisMethodology for CBA – CHP Owner’s perspectiveScenario 1: NO CHP (cash outflow)0Yr 0Yr 1Yr 2Yr 3Yr .Yr .Yr .Yr .Yr .Yr .Yr n(50)(100)(150)Natural Gas BillsElectricity BillsYr 0Scenario 2: CHP (cash outflow)0Yr 0Yr 1Yr 2Yr 3Yr 1Yr 2Yr 3Yr .Yr .Yr .Yr .Yr .Yr .Yr nReliability Benefit to the ownerYr .Yr .Yr .Yr .Yr .Yr .Yr nNet Savings to the owner (CHP – No CHP)(50)(100)1. NPV, B/C Ratio and IRR can be determined for the above net savingsrealized as a result of CHP installation(150)(200)(250)(300)CHP O&M CostsNatural Gas BillsElectricity BillsInstalled Capital CostAssuming Capital Cost includescosts for Black Start & islandingcapabilityRasika Athawale and Frank A. Felder2. Installed Capital Cost would account for incentives, if any, received bythe CHP Owner3. Reliability benefits in part would depend upon the Owner’s ability torealize benefits in case of a grid outageGraph not to scale; for illustrativepurpose only16DRAFT
CHP Cost-Benefit AnalysisMethodology for CBA – Societal perspectiveScenario 1: NO CHP (cash outflow)0Yr 0Yr 1Yr 2Yr 3Yr .Yr .Yr .Yr .Yr .Yr .Yr n(50)(100)(150)Natural Gas BillsElectricity BillsYr 0Yr 1Yr 2Yr 3Yr .Yr .Yr .Yr .Yr .Yr .Yr nAvoided T&D cost benefit to the SocietyScenario 2: CHP (cash outflow)0Yr 0Yr 1Yr 2Yr 3Yr .Yr .Yr .Yr .Yr .Yr .Yr nReliability benefit to the SocietyEmissions reduction benefit to the SocietyReliability benefit to the Owner(50)Net Savings to the owner (CHP – No CHP)(100)1. Installed Capital Cost would account for incentives, if any, received bythe CHP Owner(150)(200)(250)(300)CHP O&M CostsNatural Gas BillsElectricity BillsInstalled Capital Cost2. Reliability benefits in part would depend upon the Owner’s ability torealize benefits in case of a grid outageAssuming Capital Cost includescosts for Black Start & islandingcapabilityRasika Athawale and Frank A. FelderGraph not to scale; for illustrativepurpose only17DRAFT
CHP Cost-Benefit AnalysisAGENDA1.Context of a Cost‐Benefit Analysis (CBA)2.Approach for analysisa.Caveatsb.Database for major Technical & Financial assumptionsc.Methodology for cost‐benefit calculationsd.Major assumptions requirement from stakeholders3.Summary of what has been completed4.Next StepsRasika Athawale and Frank A. Felder18DRAFT
CHP Cost-Benefit AnalysisFinancial assumptions requested for model spreadsheetCHP Project Key Financial AssumptionsDebt: Equity Ratio?Cost of Equity (%)?Cost of Debt (%)?Loan Repayment Period (yrs)?Depreciation Schedule?CHP Project Construction Period (days)?Rasika Athawale and Frank A. Felder19DRAFT
CHP Cost-Benefit AnalysisNG and Electricity Tariff assumptions requested for modelspreadsheet1. CEEEP would like to meet with utility staff to understand ‘standby tariff’ for CHPusers and future rates for consumers of electricity and natural gasRasika Athawale and Frank A. Felder20DRAFT
CHP Cost-Benefit AnalysisUser consumption data required for model spreadsheet1. CEEEP would like to receive the following data for electricity and natural gasusage by a facility1. Monthly Peak2. Monthly UsageRasika Athawale and Frank A. Felder21DRAFT
CHP Cost-Benefit AnalysisReliability benefit calculation assumptions required formodel spreadsheet1. Capital Cost of Black Start equipment & islanding costs ( /KW)2. Private & Social assumption for Value of Loss Load ( /MWh)3. Outage frequency (no. of days/ year)Outage assumptions depend in part on the utility plans for grid hardeningRasika Athawale and Frank A. Felder22DRAFT
CHP Cost-Benefit AnalysisAvoided costs assumptions for model spreadsheet1. CEEEP is updating the avoided electricity, natural gas and environmental costsassumptionsRasika Athawale and Frank A. Felder23DRAFT
CHP Cost-Benefit AnalysisAGENDA1.Context of a Cost‐Benefit Analysis (CBA)2.Approach for analysisa.Caveatsb.Database for major Technical & Financial assumptionsc.Methodology for cost‐benefit calculationsd.Major assumptions requirement from stakeholders3.Summary of what has been completed4.Next StepsRasika Athawale and Frank A. Felder24DRAFT
CHP Cost-Benefit AnalysisNJ CHP – status of applications received1.1st round of Large Scale Combined Heat and Power – Fuel Cells (LSCHP‐FC)Program (2012) – run by EDA with technical review by BPU2.a.6 projects approved (24.8 MW)b.2nd round initiated Jan 2013; 2 new applications receivedARRA solicitation Program (2010) ‐ run by EDA with technical review by BPUa.6 projects approved (34 MW)3.Small‐scale CHP Program – run by TRC/BPU4.We have received detailed applications for – 1.a (6 applications), 1.b (for 1applicant), 2.a (6 applications), 3. (4 applications)5.These applications were not part of a competitive solicitation processWe are going through the received applications for CBA AnalysisRasika Athawale and Frank A. Felder25DRAFT
CHP Cost-Benefit AnalysisSUMMARY OF WHAT HAS BEEN COMPLETED1.A data base of 39 CHP technologies has been compiled using crediblesources2.A CBA model is being developed which would do the analysis of CHP fromthe perspective of owner and the society3.Test cases are been run through the model4.Stakeholders are been asked to provide input assumptionsStakeholders are requested to provide their inputs on assumptions within a period of 2weeks from todayRasika Athawale and Frank A. Felder26DRAFT
CHP Cost-Benefit AnalysisAGENDA1.Context of a Cost‐Benefit Analysis (CBA)2.Approach for analysisa.Caveatsb.Database for major Technical & Financial assumptionsc.Methodology for cost‐benefit calculationsd.Major assumptions requirement from stakeholders3.Summary of what has been completed4.Next StepsRasika Athawale and Frank A. Felder27DRAFT
CHP Cost-Benefit AnalysisSpecific Next Steps1.Comparison of stakeholder assumptions with information from receivedapplications2.Conduct CBA from an owner’s and societal perspective for receivedapplications and for generic projectsRasika Athawale and Frank A. Felder28DRAFT
CHP Cost-Benefit AnalysisQuestions/CommentsCan be addressed to the below email eduRasika Athawale and Frank A. Felder29DRAFT
CHP Cost-Benefit AnalysisReferences1.PJM State of the Market – 2012, Section 2 – Energy Market, pg. 622.EPA – Air Emissions ‐ affect/air‐emissions.html (last updated June 20, 2013)3.EPA – Sources of Mercury Emissions in the US ‐http://www.epa.gov/mats/powerplants.htmlRasika Athawale and Frank A. Felder30DRAFT
CHP Cost-Benefit Analysis General Remarks on Cost‐benefit Analysis 1. Cost‐benefit analysis (CBA) is an economic tool that reduces costs and benefits that occur over time into a numerical score a. Benefit/Cost (B/C) ratio, Net Present Value (NPV), Return on Investment (ROI), Payback Period b.
FISH & WILDLIFE COSTS 17TH ANNUAL REPORT TO THE NORTHWEST GOVERNORS PAGE 3 Figures 08 Figure 1: Costs by Major Area, FY2017, as Reported by Bonneville's Fish and Wildlife Division 09 Figure 2: Costs by Types of Species 10 Figure 3: Costs of FCRPS BiOp Projects 11 Figure 4: Costs Associated with ESA Listed Fish 12 Figure 5: Costs by Fund 13 Figure 6A: Costs by Category
Table 2 The Various Measures of Cost: Thirsty Thelma's Lemonade Stand Average Costs Average costs can be determined by dividing the firm's costs by the quantity of output it produces. The average cost is the cost of each typical unit of product. Average Costs Average Fixed Costs (AFC) Average Variable Costs (AVC)
benefits of caring for country. These benefits include: health and wellbeing benefits; cultural and socio-political benefits; economic benefits; and, environmental benefits. The discussion includes some of the barriers to achieving benefits, as well as anticipated and realised benefits of caring for country.
The Benefits to Costs of ECs . Although positive outcomes for students are evident, little research has assessedhow the costs of ECs compare with costs associated with a traditional high school education, as well as how the costs compare with the economic benefits of ECs . In addition to understanding whether
This study on the costs and benefits of Natura 2 was designed to support the European Commission in obtaining an accurate estimate of the costs of managing the network, increasing awareness of its socio-economic benefits, and developing a methodology for the systematic updating and refinement of the costs and benefits linked to the net-work.
070101 FEDERAL EMPLOYEES BENEFITS. VA will recognize its share of the costs for providing pension benefits, health and life insurance benefits and annual leave to its employees. VA will make bi-weekly contributions for these benefit costs and will accrue such costs at year end for any existing liabilities for these benefits.
834 Other long-term employee benefits are all employee benefits other than short-term employee benefits, post-employment benefits and termination benefits. Termination benefits are employee benefits provided in exchange for the termination of an employee's employment as a result of either: (a) an entity's decision to terminate an employee's employment before the normal retirement
comprise of core APC costs of 26.4 billion in 2015-16, mental health costs of 6.9 billion, community costs of 5.4 billion and ambulance costs of 1.7 billion. 15. Figure 2 shows the total costs reported in 2015-16, split by setting10. The largest single proportion of costs is non-elective inpatient care, which accounts for 25.9% of
