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Advanced Manufacturing Office Fall 2020 Combined Heat and Power (CHP)

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Advanced Manufacturing Office Fall 2020 Combined Heat and Power (CHP) Within the U.S. Department of Energy (DOE) Office of Energy Efficiency and Renewable Energy (EERE), the Advanced Manufacturing Office (AMO) partners with industry, small business, academia, and other stakeholders to identify and invest in emerging technologies with the potential to create high-quality domestic manufacturing jobs and enhance the global competitiveness of the United States. This document was prepared for DOE-EERE’s AMO as a collaborative effort by AMO and Energetics, under a contract with Boston Government Services. Disclaimer This report was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof. ii FALL 2020 COMBINED HEAT AND POWER VIRTUAL WORKSHOP List of Acronyms AI Artificial intelligence AMO Advanced Manufacturing Office BGE Baltimore Gas & Electric CEO Chief executive officer CHP Combined heat and power CHP TAP Combined Heat and Power Technical Assistance Partnership CPS Capital resources, performance and scalability DER Distributed energy resource DISPERSE DIStributed Power Economic Rationale Selection DOE U.S. Department of Energy EERE U.S. Department of Energy, Office of Energy Efficiency & Renewable Energy HHV Higher heating value kW Kilowatt kWh Kilowatt-hour MEA Maryland Energy Administration MW Megawatt NREL National Renewable Energy Laboratory PUC Public utility commission RNG Renewable natural gas R&D Research and development UF University of Florida i FALL 2020 COMBINED HEAT AND POWER VIRTUAL WORKSHOP Executive Summary The U.S. Department of Energy’s (DOE’s) Advanced Manufacturing Office held the Fall 2020 Combined Heat and Power (CHP) Virtual Workshop in September 2020. The workshop brought together more than 90 individuals representing manufacturers, end users, utilities, academia, government, and other stakeholders to discuss the potential role that energy-efficient combined heat and power (CHP) technologies can play in enhancing the energy flexibility and resilience of manufacturing facilities, as well as the advancements needed to bolster technology adoption. This workshop report summarizes the presentations, panel discussions, and breakout group discussions that took place at this event. Note that the results presented here are a snapshot of the viewpoints of the experts who attended the workshop; they do not necessarily reflect the views of the broader CHP community. Discussions at the workshop focused on exploring issues in three major areas: 1) priority research and development (R&D) needs to advance CHP technologies; 2) new and innovative approaches to overcoming non-technical barriers to CHP deployment; and 3) the future of thermal energy production in industry and what role CHP may play in that future. Based on the common themes identified during the workshop, a number of high-priority areas emerged, as discussed below. Electrification and Decarbonization: Decarbonization is a trend that will have a significant impact on the industrial sector and power systems in the years and decades ahead. One of the avenues to achieve decarbonization is electrification. These trends will play a major role in the viability of CHP systems and the type of technology development that is needed. As electrification of all thermal processes will be difficult, CHP systems will likely be among the most efficient ways to provide the needed thermal energy for many processes and applications. CHP systems powered by renewable and other alternative fuels, such as hydrogen, will have a role in a net-zero-carbon future. Development of smaller carbon capture systems suitable for integration with CHP systems was identified as a potential R&D area worthy of exploration. Distributed Energy Resources: The future grid is expected to continue the trend toward more pockets of distributed energy resources. Many of these distributed generation systems will be part of local microgrids that operate independently of the power grid or can island whenever needed. These local or community energy systems increasingly rely on renewable technologies and/or energy storage, but many such systems are―and will likely continue to be―hybrid configurations that include dispatchable CHP systems to complement and support variable renewables and energy storage. Technologies to ensure seamless integration of CHP with renewable technologies, energy storage solutions, and microgrids are important. More Diverse Fuel Sources for CHP: While natural gas is the overwhelming fuel of choice for CHP systems today, future systems are expected to rely on a more diverse input stream. Hydrogen is expected to be one of the largest displacers of fossil fuels, and use of other hydrogen carriers, such as ammonia, is also being explored. Another fuel that is expected to increase in use is renewable natural gas (RNG). Greater use of RNG will require more supply, and a more diverse waste input stream for RNG production will therefore be required. Improvements to RNG clean-up processes will also be necessary. Utilization of Thermal Energy: For CHP viability, matching electric and thermal loads is important. The need to find cost-effective and innovative new ways to utilize thermal energy should be a high priority. Without a cost-effective way to employ thermal energy, a CHP project may not be financially viable. As circumstances vary greatly in different types of facilities and geographic locations, there is a need for a broad range of solutions. Owing to the diverse nature of potential CHP applications, the ability to modify heat/power ratios is another potentially promising R&D area. ii FALL 2020 COMBINED HEAT AND POWER VIRTUAL WORKSHOP Systems Integration: CHP systems will require new functionality to bring value to new applications, such as district heating systems and microgrids. Facilitating CHP’s integration into other systems will require interoperable controls, interfaces, standards, and other advanced capabilities. Financing Options and Ownership Models: There is a need to create and further develop CHP financing options and ownership models. Effective financing options might include energy as a service, cash flow positive financing, commercial property assessed clean energy, power purchase agreements, and new ownership models, such as utility ownership of CHP facilities. Incentives: Cost savings from installing a CHP system are often enough to justify a project, but some entities require very short payback periods for all investments and are reluctant to pursue CHP. In these instances, financial incentives continue to be an effective tool to encourage CHP implementation. Thus, there is a need to increase or create new incentives. Currently financial incentives either are not available from certain utilities or states, or they fail to consider the full benefits of CHP. Examples of potentially effective approaches include long-term incentive programs, incentives that consider the carbon and non-energy benefits of CHP, expansion of existing incentives to include public entities, and incentives for utilities to assist in and coordinate CHP adoption. Education, Engagement, and Recognition: CHP education should be readily available to all stakeholders involved in CHP (utilities, end users, building architects, the engineering community, regulators, etc.). CHP education needs to include details on the problems that CHP can solve and its importance to the grid of today and the future. Tools, discussion forums, and consulting services by impartial experts could increase end-user understanding of the often-complicated CHP development process and impacts of CHP installation. Training and workforce development, such as the development of a certification scheme for CHP experts is another potential avenue to pursue. Recognition through award programs could highlight the benefits of CHP and acknowledge companies that have implemented CHP. Reducing Risk: Energy and environmental markets are rapidly changing, leading to a degree of market confusion and often causing paralysis in decision-making. Both real and perceived risk of taking action is too high to make energy changes for fear of making the wrong decision. This includes choosing to install a CHP plant. Risk reduction should be a major element in DOE education, outreach, and research. Continued emphasis on packaged, modular, and integrated CHP systems should remain a key focus of DOE’s program. In a recent project, DOE completed interviews with CHP site owners to gain insights into the market environment and major challenges to CHP adoption. The gathered input was utilized in the planning effort for the workshop, and results from the interviews are summarized in Appendix C of this report, Key Insights on CHP Market Adoption – Results of End User Interviews. Among the major findings of the interviews was that cost savings,
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