Tetra Tech, Inc.

10306 Eaton Place, Suite 340 Fairfax, VA 22030 phone 703 - 385 - 6000 fax 703 - 385 - 6007 DATE: January

14, 2009 TO : Paul Shriner and Jan Matuszko, EPA FROM : Kelly

Meadows, Tetra Tech SUBJECT: Cogeneration Cogeneration is “ [t]he production of electrical energy and another form of useful energy (such as heat or steam) through the sequential use of energy industrial sites or manufacturers . rejected as waste increases the efficiency of the expended fuel viability of cogeneration as a potential possibly reducing the volume of Background The process of electricity generation is inherently inefficient. electric power throws away much of the heat generated in production, and conventional thermal energy generation often misses an eas y opportunity to generate power” Schaper (2008) stated that “[r] ecent EPA and D heat to generate an estimated 200,000 megawatts of power nation uses. That's enough electricit y to replace up to 400 coal Cogeneration provides a way to recapture this waste heat and turn it into electricity. website provides a very

thorough description of the configuration for cogeneration facilities:

“ A ty pical cogeneration system consists of an engine, steam turbine, or combustion turbine that drives an electrical generator. recovers waste heat from the engine and/or exhaust gas to produce hot water or steam. There are two mai n t ypes of cogeneration techniques:



### MEMORANDUM

Paul Shriner and Jan Matuszko, EPA Kelly Meadows, Tetra Tech [t]he production of electrical energy and another form of useful energy (such as heat or steam) through the sequential use of energy ” (DOE 2009) and is most commonly found at

. The creation of a secondary product from heat that is normally increases the efficiency

of the expended fuel . EPA directed Tt to explore the potential component of increasing the efficiency (and thereb y intake water) of Phase II facilities. The process of electricity generation is inherently inefficient. “[C]onventional generation of electric power throws away much of the heat generated in production, and conventional thermal energy generation often misses an eas y opportunity to generate power” (USCHPA 2008). ecent EPA and D OE studies suggest U.S. industries waste enough heat to generate an estimated 200,000 megawatts of power

— nearl y 20 percent of what this nation uses. That's enough electricit y to replace up to 400 coal - fired power plants. recapture this waste heat and turn it into electricity. website provides a very

thorough description of the technologies used in cogeneration and the configuration for cogeneration facilities: A ty pical cogeneration system consists of an engine, steam turbine, or combustion turbine that drives an electrical generator. A waste heat exchanger recovers waste heat from the engine and/or exhaust gas to produce hot water or

n t ypes of cogeneration techniques: “ t opping c yc le ” plants, and 1 [t]he production of electrical energy and another form of useful energy (such as and is most commonly

found at from heat that is normally EPA directed Tt to explore the

(and thereb y “[C]onventional generation of electric power throws away much of the heat generated in production, and conventional thermal (USCHPA 2008). OE studies suggest U.S. industries waste enough

nearl y 20 percent of what this fired power plants. ” recapture this waste heat and turn it into electricity. A vendor’s

technologies used in cogeneration and the

A waste heat exchanger recovers waste heat from the engine and/or exhaust gas to produce hot water or plants, and2

“ b ottoming c ycl e ” plants. A topping cy cle plant generates electricity or mechanical power first (usually for its own use) and can then sell an y excess power to a utility . There are four ty pe s of topping cy cle cogeneration sy stems , with each using a slightly different generating process, fuel, or technology . Bottoming cy cle plants are much less common than topping cy cle plants and usually exist in heavy

industries such as glass or metals manufacturing where very high temperature furnaces are used. A waste heat recovery boiler recaptures waste heat from a manufacturing heating process , us ing it to produce steam that drives a steam turbine t o produce electricit y. Since fuel is burned first in the production process, no extra fuel is required to produce electricity ” (Cogeneration Technologies 2009). Cogeneration accounts for approximately 8 - 10% of the electricity generation in the US. Secon dary

uses (i.e., the by

products of power generation

— heat or steam) might include process steam, hot water heating, space heating, and other thermal needs. The fuel efficiency

of cogeneration facilities is approximately double that of a standard fossil fue l electric generator. A modern cogeneration facility t ypicall y has a fuel efficiency of 55 - 60%, but can exceed 60% under commonly attainable conditions and even reach efficiencies of 80 - 90% under optimal conditions (USCHPA 2008). Similarly , c ogeneration produces a given amount of electric power and process heat with 10% to 30% less fuel than it would take to produce the electricit y and process heat separatel y (Cogeneration Technologies 2009) . Cogeneration is more widely used in some European nations (e speciall y those in northern climates), where the percent of electricity produced by

cogeneration can exceed 50%. As a whole, however, the European Union averages about 11%, which is comparable to U.S. production. 1 European governments also appear to be moving towards enacting policies to encourage increased use of cogeneration. History of Cogeneration Historically , man y industrial sites produced their own electricit y, largel y due to the lack of widespread electr ic generating fac i lities and transmission sy stems. A s electric utilities grew and the cost of power fell , industrial facilities more frequently purchased all their electricity from a utility instead of using on - site generation . Industrial sites that stil l needed the heat or steam for other processes would simply use fuel oil or natural gas to produce heat as a separate process (i.e., not through cogeneration ) . However, as the cost of energy rose in the 20 th century , the economies of scale provided by centralized e lectricity

production decreased and cogeneration became more popular. Various statutory and regulatory

programs continue to affect the feasibility and cost - effectiveness of cogeneration (Cogeneration Technologies 2009).

1 Eurostat. 2005. Combined Heat and Pow er (CHP) in the EU and Turkey - 2005 data . http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS - QA - 08 - 002/EN/KS - QA - 08 - 002 - EN.PDF3

Typical Uses of Cogeneration Cogeneration s ys tems can be designed for man y facilities, but have typically focused on manufacturing and industrial sites, as well as large commercial buildings. 2 In fact, 90% of all cogeneration sy stems are owned by manufacturers . Prefera

bly , cogeneration sy stems are built at or near the site of the end user of the steam, negating the need for extensive piping and making the delivery

much simpler (Cogeneration Technologies 2009) . Cogeneration Technologies (2009) provides two characteristi cs where installing cogeneration is most likely

to be economically

viable:

 Coincident demand for electricit y and thermal energy (i.e., steam, heating, or co oling) during most of the ye ar.  Access to fuels, including natural gas, biomass, 3 and/or by - product fuels ) . Limitations While cogeneration offers some logical (and potentially significant) increases in efficiency , the applicability

to Phase II facilities may be limited for several reasons:

 Most power plants looking to capture waste heat would instead install a combined cy cle sy stem.  Lack of a “ customer ” for the secondary product

— if a power plant were able to capture waste heat or steam, a partner industrial site would need to be located nearby . While possible for some Phase II facilities, man y are no t located near potential partner industries.  Depending on the configuration of the s ys tem, removing steam may be detrimental to the electricit y generation process, as additional energy must be expended to operate the boiler and steam loop at the appropriat e temperature.  Difficulty

to integrate into 316(b)

— as with repowering , cogeneration is associated with the generation process and not the cooling water intake structure. It may be difficult to incorporate rule provisions to address cogeneration.  Market structure

—the current regulatory structure often limits the ability of power plants to sell excess electricity

( Schaper 2008).  New Source Review

— under the Clean Air Act, installing cogeneration equipment would likely be considered a major modification and tr igger stricter emissions requirements ( Schaper 2008). Ultimately , there may be opportunities for Phase II facilities to improve fuel efficiency through cogeneration , but is unlikely to be common. T he Phase II rule could encourage facilities to 2 Hospitals, office buildings, universities and even large residential buildings may install cogeneration systems. Municipal steam systems are also common

— Consolidated Edison has seven steam plants in New York City, forming the largest steam district in the world. 3 Som e sites may have by - products from their industrial proce ss that are w ell - suited for cogeneration. For example, a paper plant may have scrap wood that can be burned as biomass fuel, making it a logical candidate for onsite electricity generation.4

employ cog eneration by

developing flow credits or amending the scoping criteria for Phase II facilities (e.g., b y cl assifyingwater associated with cogeneration as process water instead of cooling water). Cogeneration may , however, be a much more integral part of the Phase III regulation. References Cogeneration Technologies. 2002. http://www.cogeneration.net/Cogeneration.htm . Eurostat. 2005. Combined Heat and Power (CHP) in the EU and Turkey - 2005 data. http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS - QA - 08 - 002/EN/KS - QA - 08 - 002 - EN.PDF Schaper, D. 2008. 'Recy cling' Energy Seen Saving Companies Money . For National Public Radio, May

22, 2008. http://www.npr.org/templates/story /story .php?storyId=90714692 . USCHPA. 2008. CHP Basics. http://www.uschpa.org/files/public/CHP%20Basics.pdf . US Department of Energy (DOE), Energy Information Administration (EIA). 2009. Glossary . http://www.eia.doe.gov/glossary /g lossary _c.htm .