As part of a September 1997 National Laboratory study for the U. S. Department of Energy, we estimated the potential for reducing industrial energy consumption and carbon emissions using advanced technologies for combined heat and power (CHP) for the year 2010. In this paper we re-analyze the potential for CHP in manufacturing only. We also refine the assessment by more accurately estimating the average efficiency of industrial boilers most likely to be replaced by CHP. We do this with recent GRI estimates of the age distribution of industrial boilers and standard age-efficiency equations. Our previous estimate was based on use of the best CHP technology available, such as the about-to-be commercialized industrial advanced turbine system (ATS).

This estimate assumes the use of existing off-the-shelf CHP technologies. Data is now available with which to develop a more realistic suite of penetration rates for existing and new CHP technologies. However, potential variation in actions of state and federal electricity and environmental regulators introduces uncertainties in the use of existing and potential new CHP far greater than those in our previous technology penetration estimates. This is, thus, the maximum "cost-effective" technical potential for the "frozen technology" case. We find that if manufacturers in 1994 had generated all their steam and electric needs with existing CHP technologies, they could have reduced carbon equivalent (=12/44 carbon dioxide) emissions by up to 30 million metric tons of carbon equivalent (MtC) or nearly 20 percent. Our result is consistent with carbon and energy savings found in other studies. For example, the aforementioned laboratory study found that just three CHP technologies -- fuel cells, advanced turbines, and integrated combined cycle technologies accounted for nearly 10 percent of the study's projected carbon savings of 400 MtC by 2010 -- enough to reduce projected U.S. 2010 emissions to 1990 levels.

I. INTRODUCTION

Manufacturers that use combined heat and power (CHP) technology, which produces both electricity and useable heat, can save substantial amounts of energy, carbon and money. This is because conventional separate electricity generation is inherently inefficient, converting only about a third of the fuel's potential energy into usable energy. CHP converts as much as 90 percent of the fuel into usable energy.⁽¹⁾ Because of this intrinsic efficiency, CHP is better for the bottom line and the environment.

II. BACKGROUND

CHP is well-established technology with a long history. Many manufacturing plants operated CHP facilities at the turn of the century, although most abandoned these systems as scale economies in utilities emerged. It was not until the 1950's that utilities supplied more than two-thirds of all power to manufacturing.⁽²⁾ However, major process industries have continued to operate CHP facilities, and some new CHP facilities have been constructed, especially during the late 1970's and early 1980's when legislative incentives existed.⁽³⁾ In Winter 1997, a DOE-EPA working group concluded that doubling CHP over EIA projections by 2010 was achievable with moderate policy reform and outreach.⁽⁴⁾

A. Power System Efficiency Maximization

The net demand for electricity by manufacturing industry in 1994 was about 928 billion kilowatt hours (TWh), of which 142 TWh were generated on-site. Net electricity purchases (786 TWh) were equivalent to 2.8 Exajoules (EJ) or 2.66 Quadrillion Btus (Quad). Simultaneously, manufacturing industry used about 8.5 EJ to raise 5.6 EJ (1,600 TW_th) of steam, some of which (about 0.5 EJ or 150 TW_eh) became electricity cogenerated by industry. Thus, industry used about 5.1 EJ (1,400 TW_th) of steam for process requirements.⁽⁵⁾ Electricity purchases, we assume, were conventionally produced.

We use the term CHP rather than cogeneration because modern CHP systems span a wider range of technologies, and are far more efficient and versatile than traditional cogeneration. Many new systems are "turnkey," requiring little operator attention or maintenance, and provide power system efficiency, that is more nearly optimal considering both thermal and electric requirements of manufacturers. New technologies on the horizon, such as the Advanced Turbine System (ATS) developed from a DOE-industry partnership, promise to have installed costs ($350/kW), far lower than the standard ($1000/kW) for current electric generation when it is commercialized in the year 2000.⁽⁶⁾ The ATS also will have onsite electric efficiency (42%) far higher than the delivered electric efficiency (30%) of the current grid.⁽¹⁾

B. Methodology

We posit that industry, by maximizing power system efficiency, could save energy, reduce carbon emissions, and save money. We estimate the "cost-effective" maximum of these energy and carbon savings (i.e., the technical potential), by the following steps. We first estimate the average current efficiency of steam generating equipment in manufacturing, to see what gains might occur over time as more efficient CHP equipment rather than new boilers replace old boilers. We then assume manufacturers replace all old boilers with CHP systems. We then can estimate the energy savings due to CHP taking into account the current efficiency of conventionally produced electricity. By using the current fuel mix in generation and industry, we can also estimate the carbon savings.

C. CHP Today

In 1995, CHP provided 42 gigawatts (GW_e) of electricity generation capacity, accounting for about 6 percent of the U.S. total. CHP is by far and away the "distributed" electricity technology with the largest installed capacity in the U.S. Currently, most of this capacity is in industrial sites with large steam loads. But the largest potential for growth in the near term is in the smaller sizes. New and smaller CHP technologies will begin to make up a greater part of the new capacity if environmental permitting is reformed to take account of innovations in small technologies.⁽⁷⁾

Industry power analysts do not typically examine onsite generation for applications such as power and cooling. However, market estimates for smaller size CHP units suggest much wider applicability for these uses. Consider that space conditioning in manufacturing accounts for another 482 PJ (135 TW_eh) and process cooling 146 PJ (41 TW_eh) that might be satisfied by CHP.⁽⁵⁾

D. CHP in the Process Industries

Three manufacturing industries--pulp and paper, chemicals and petroleum refining--accounted for 85% of all cogenerated electricity in 1994. Pulp and paper accounted for 41% or 59 TW_eh, up 9% from 1991. Chemicals was second accounting for 33%, or 47 TW_eh. Petroleum refining was third accounting for 10% of cogenerated electricity.⁽⁵⁾

According to recent assessments, the pulp and paper industry has a total untapped onsite power generation potential of 17.8 GW_e. Most of this (82%) is in the <40MW_e size range.⁽⁸⁾ Chemicals has a total untapped onsite power generation potential of 31.3 GW_e.⁽⁹⁾ Most (90%) of the plants surveyed did not have onsite generation. Petroleum refining has an estimated 5.6 GW_e of untapped onsite power generation potential.⁽¹⁰⁾ It also uses 36 TWh of electricity for machine drive.⁽⁵⁾ The untapped potential of 55 GW_e in just these three industries is greater than the total current installed capacity in industry.

E. Outlook for CHP in Manufacturing

Growing environmental concerns should advance the CHP market. By replacing older generating equipment with cleaner and more efficient systems, CHP will reduce carbon dioxide and other air pollutants, including NOx, while increasing thermal efficiency. In contrast, traditional "end-of-pipe" pollution control techniques usually reduce the thermal efficiency of the energy generation equipment, increasing carbon dioxide emissions.

Competition in the electric industry should also spur growth in new CHP capacity in which power and heat are not balanced and where the desire to generate electricity is more important than getting the perfect steam match. Unlike traditional cogeneration equipment, newer CHP systems run at high efficiency in a variety of steam and electricity configurations. However, there is still great uncertainty that restructuring will result in true competition.⁽¹¹⁾

III. DESCRIPTION OF GAS TURBINES FOR CHP

While much of the installed industrial CHP is the traditional boiler-plus-steam turbine configuration, in our analysis we focus on gas turbines, which are now cost-effective for systems down to a 1/2 megawatt (MW_e), the size needed for a small manufacturing plant. We will consider two types of gas turbine CHP configurations:

A. Gas Turbine with Heat Recovery

In this configuration, a combustion turbine generates electricity or mechanical energy. The heat in the exhaust generates steam in a boiler. These are used mainly in medium and small industrial applications (1MW-50MW). These systems have longer adoption curves than large systems, with a more diverse thermal profile, larger number of systems, lower baseline penetration, and greater technology diversity. Such smaller systems will capture a greater share of the CHP market in the future. We believe that systems such as the ATS, a high-efficiency, next-generation gas turbine, could lead dramatic growth in industrial CHP use. The emissions of CO₂ from ATS are projected to be 600 lb./MWh, 29-73% lower than conventional technologies.⁽⁶⁾

B. Integrated Gas Combined-Cycle (IGCC)

This is a higher efficiency, but more complex configuration in which a steam turbine is used as part of a combustion turbine system to increase the electricity produced. These systems account for a small number of industrial CHP systems but a substantial amount of the installed capacity. The electricity fraction of usable energy in these systems frequently exceeds the thermal output. These IGCCs serve mainly large (>50MW) industrial CHP systems typically found in the process industries. They have installed electricity capacities of greater than 25 MW (often hundreds of MW) and steam generation rates measured in hundreds of thousands of pounds of steam per hour. For such large systems, it makes sense to operate the turbine in a combined cycle configuration.

IGCC systems also are well suited for use with gasified biomass and landfill gas fuels. Substantial reductions in greenhouse gas emissions (>100 MtC per year potential) will result if turbines are fired with gasified biomass fuel that has been sustainably harvested.⁽¹²⁾ A biomass fuel supply infrastructure must evolve, however, or A "zero-carbon" biomass-fired CHP will be limited to those manufacturers that already have access to biomass fuels, such as forest products and some food processing sectors.

IV. ANALYSIS AND RESULTS

In what follows, we use the age distribution of industrial boilers and standard age-efficiency equations to estimate the efficiency of the current boiler population and its replacement population. We then assume existing off-the-shelf CHP technologies generate all the steam and electricity used by manufacturers in 1994.⁽⁵⁾ We then calculate the resulting energy and carbon savings. To calculate the carbon savings we need to separate the input fuel according to its carbon intensity ranging from zero for gasified biomass harvested sustainably to 25 MtC per Quad for coal.

A. Estimate of Steam Production Efficiency

Figure 1 shows the year of introduction of conventional boilers in industry, as estimated in a study for the Gas Research Institute.⁽¹³⁾ We used this age distribution and age-efficiency equations to estimate the efficiency of the boilers as they entered the stock. By assuming a 30-year life for a boiler (estimated retirements are also shown in the dotted line in this Figure), and that units are replaced on an efficiency-unit basis (i.e., a 54% efficient boiler would only require 68 percent as much capacity if replaced by a 79% efficient boiler), we have estimated the weighted average efficiency of the boiler stock at several points in time. In 1993, for example, the average efficiency is 65.7%, in 1998, 71.1%, and in 2005, 77.3%. A 1993 boiler that replaces a 1963 boiler is 35% more efficient (79 %). A 1998 boiler that replaces a 1968 boiler is 33% (81%) more efficient and so on.

B. CHP Energy Savings

The ratio of steam requirements to electricity requirements in industry is about 2:1, on an energy basis, and a typical CHP unit can operate at 85-90% efficiency.⁽⁶⁾ If all the steam and electricity used by manufacturers in 1994 were generated with CHP, it would require only 9.3-9.9 EJ (2,600-2,800 TW_t+eh) of input fuel. Whereas separate heat and power generation would require a total of 16.3 EJ (4,580 TW_t+eh). At the 1994 boiler stock efficiency, generating all the steam needed in manufacturing (5.6 EJ or 1,600 TW_th) requires required 8.5 EJ of input fuel. The 2.5 EJ (700 TW_eh) of electricity purchased by manufacturers required another 7.8 EJ of input fuel at conventional delivered electric efficiency (~30%).1. Thus, using available CHP technology to provide the steam and power used by manufacturers in 1994 would have saved 6.4-7.0 EJ (1,800-2,000 TW_t+eh) of energy. Still greater energy savings could be achieved by using the highest electric efficiency CHP technology to satisfy all the manufacturers' thermal needs and then selling the excess "low carbon" electricity to the grid as may be possible in a deregulated electricity market.⁽¹²⁾

C. CHP Carbon Savings

First we distributed the fossil (non-biomass) fuel used to raise steam (6.5 EJ or 1,800 TW_th), among coal, petroleum products, and natural gas in the ratio 24%, 10% and 66%.⁽¹⁴⁾ At this ratio, 1 EJ of energy generates about 18.5 MtC. In this ratio, the fuel used to raise steam in manufacturing in 1994 generated 121 MtC. In addition, about 2 EJ of the fuel used to raise steam, mainly in the forest products industry, is biomass. To simplify the carbon accounting, we assume that this is biomass produced on a sustained yield basis, so that there are no net carbon emissions. We calculate that the purchased electricity used emitted another 42.5 MtC, by using an average fossil fuel consumption distribution (58% coal, 14% natural gas and 3% oil).⁽¹⁾ Thus, separate steam and electricity for manufacturers accounted for 163 MtC in 1994.

At current industrial CHP efficiencies, the 9.3-9.9 EJ that could generate all the required steam and electricity would only add 0.8-1.4 EJ of energy to the current requirements for steam, and at the current CHP fuel distribution⁽¹⁴⁾ would add an additional 13-20 MtC, for a total of 133-140 MtC to generate all the steam and power used by manufacturers in 1994. That is a reduction of 23-30 MtC below 1994 emissions, or a reduction of 14-19%. With expected increases in steam and electricity use over time, these savings would increase.

V. DISCUSSION AND CONCLUSIONS

Although CHP has been used for more than a century, its importance has eroded over time. With utility restructuring now underway, these conditions are likely to change just when the technology for better and more efficient CHP becomes available. Highly-efficient, modular and easy to operate CHP systems can help meet manufacturers' future needs for low-carbon electricity generating capacity. Competition in electricity markets⁽¹¹⁾ and environmental regulatory reinvention provide enormous market opportunities, while the need to replace boilers and other energy infrastructure provides a large technology opportunity.

We have shown that there is a technology, CHP, already in use in energy-intensive industries, that has great potential to save energy and carbon. Our calculations show that as much as 7 EJ of energy and 30 Mt in carbon could have been saved if manufacturers had used existing CHP technologies to meet their electric and steam requirements in 1994. As industry grows over time, these savings would also grow, offset, perhaps, by the fact future boilers being replaced are more efficient than those replaced in 1994.

If CHP is implemented so as to maximize power system efficiency, it should also improve the bottom line. Furthermore, dramatic improvements in CHP technologies on the horizon could result in even greater energy, carbon and economic savings as we move into the 21st Century.

ACKNOWLEDGMENTS

This research was sponsored by a grant from the U.S. Department of Energy.

FOOTNOTES/REFERENCES

1. Energy Information Administration. 1997. Annual Energy Review 1996. Washington, D.C.: U.S. Department of Energy.

2. U. S. Department of Commerce, Bureau of the Census. 1975. Historical Statistics of the United States: Colonial Times to 1970. Part 2. Table P 216-230, p. 688, and Table S 32-43, p. 820.

3. Kaarsberg, T. and R. Neal Elliot, "Combined Heat and Power: Saving Energy and the Environment," The Northeast-Midwest Economic Review, March/April 1998, Washington, DC. http://www.nemw.org/ERheatpower.htm.

4. U.S. Department of Energy. 1997. Working paper on "Combined Heat and Power: The Potential to Reduce Emissions of Greenhouse Gases," Nov. 3. Washington, D.C.: Office of Energy Efficiency and Renewable Energy.

5. U.S. Department of Energy, (DOE) 1997, Manufacturing Energy Consumption Survey (MECS) Manufacturing Consumption of Energy: 1994, DOE/EIA-0512(94), Washington, D.C. These numbers are constructed by adding boiler requirements to all but 2 quads of "other" energy.

6. Major, W. and K. Davidson. 1997. Gas Fired Power Generation: Environmental Analysis and Policy Consideration, draft report by Onsite Energy, Carlsbad, CA, prepared for the U.S. Department of Energy, Office of Industrial Technology.

7. Kaarsberg, T, J. Bluestein, J. Romm, and A. Rosenfeld. "The Outlook for Small-scale Combined Heat and Power in the U.S.", CADDET Energy Efficiency Newsletter, June 1998. http://CADDET-EE.ORG/

8. Onsite Energy. 1998. Pulp and Paper Industry, On-Site Power Market Assessment. Final Report, January 14th Draft. Carlsbad, CA.

9. Onsite Energy. 1997a. Chemicals Industry, On-Site Power Market Assessment. Carlsbad, CA.

10. Onsite Energy. 1997b. Power Market Assessment for Industries of the Future. Carlsbad, CA.

11. Munson, R, and T. Kaarsberg, "Unleashing Innovation in Electricity Generation," Issues in Science and Technology, National Academy of Sciences, Spring 1998, Washington, D.C. http://www.nemw.org/unleashelec.htm

12. Interlaboratory Working Group on Energy-Efficient and Low-Carbon Technologies (LBNL, ORNL, ANL, NREL, PNNL), Scenarios of U. S. Carbon Reductions Potential Impacts of Energy Technologies by 2010 and Beyond, (a.k.a. "Five--Lab Study"), September 25, 1997, Washington, D.C. http://www.ornl.gov/ORNL/Energy_Eff/CON444.

13. Energy and Environmental Analysis, Inc., Industrial Market Evaluation, Topical Report, Analysis of the Industrial Boiler Population, prepared for the Gas Research Institute, Report # GRI-96/0200, June 1996, Chicago, IL.

14. Energy Information Administration, Emissions of Greenhouse Gases in the United States, 1996, October 1997, DOE/EA.-0573 (96), Washington, D.C. http://www.doe.eia.gov.

15. Gas Research Institute, The 1998 Edition of the GRI Baseline Projections, Arlington, VA, 1998.