Economic Study of BioEnergy Production from Digesters at Dairies in California, CEC Report No. 500-06-013; prepared by Princeton Energy Resources International, under subcontract to SAIC; prepared by Nicholas Cheremisinoff, Kathryn George, Joseph Cohen; December 2008
(December 31, 2008)
In July 2008, PERI analyzed and reported on energy produced by on-farm small digester systems using medium-Btu biogas from dairy cow manure as feedstock. Nine anaerobic digester systems, in the form of covered lagoons or plug-flow digesters, that fed engine-generator plants producing power at 75 kW to 500 kW, with one sized at about 950 kW, generously funded with state grants, mostly ranging from 35% to 55% of capital cost, were closely reviewed.
For the reporting period from about June 2004 through July 2006, farmers connected on-site load, representing power saved at retail rates, and sold surplus power under net metering agreements to the local utility. Some farmers operated the dairy digester system, produced and sold power successfully, but a few suffered contract problems where they were credited only with the energy portion of the retail rate, not the capacity/demand portion. Regarding the wholesale payment, under the net metering agreements, the seller must use an equivalent amount of power within twelve months or forfeit net metering credits and some farmers forfeited credits.
PERI prepared a discounted cash flow return on investment (DCF-ROI) model into which the user enters capital costs, performance (e.g., plant capacity factor, heat rate), and operating expenses. When revenues are known, the model figures rate of return, and when they are not, the user enters a target IRR and the model figures revenues. The model further calculated levelized nominal-dollar and constant-dollar (excluding inflation) Costs Of Energy, expressed as $/kWh for power and as $/therm for pipeline-quality gas. PERI analyzed: 1) actual existing plants, 2) no subsidy plants with normalized operations producing power, and 3) hypothetical no subsidy plants producing pipeline-quality gas (with the objective that it is sold to the local utility which, in turn, will produce power more efficiently). PERI further analyzed no subsidy plants producing power and pipeline-quality gas that were built to a voluntary level of enhanced environmental quality to achieve standardization and speed permitting. The enhanced environmental quality systems involved a double liner of high performance advanced material (e.g., HDPE), applied to the digester lagoon for covered lagoon systems or to the effluent storage lagoon for plug-flow systems, and groundwater monitoring by a well and periodic sampling.
Findings and recommendations were that: 1) With grants and current pricing, some farmers managed to make the best and earn over 155 IRR’s while others operated at break-even or a loss, 2) Assuming an attractive payment schedule for power, farmers would operate their engine-generators at reasonable plant capacity factors and not flare gas, 3) Without grants, no subsidy power COE’s tended to run from $0.10/kWh to about $0.35/kWh (nominal 2007$), 4) Given small size of the farm systems (under 250 Mcf/day) and the high cost of gas clean-up, the pipeline-quality gas product is not yet economically feasible, 5) COE’s for the enhanced environmental quality systems are more costly yet, at about 5% to 80%, depending on size of the lagoon, and 6) no subsidy power COE’s can be reduced if the farmer sells carbon credits (e.g., on the Chicago Climate Exchange, at, say, $3/MT CO2 equivalent), takes the 10-year Section 45 inflation-adjusted Production Tax Credit (PTC), and builds with 50% Bonus Depreciation (2008).
Recommendations were that: 1) While financial incentives like carbon credits, the PTC, and Bonus Depreciation should be utilized, the primary focus needs to be to improve underlying economics; 2) Research is needed on biogas system design (i.e., digesters, engine-generator, heat recovery equipment, and gas clean-up and pollution control equipment); 3) Grants are probably still needed to build more plants and gain field experience; 4) an attractive power price is needed, which requires resolving issues on net metering, Standard Offer Contracts for small power projects, and California’s new Feed-In Tariffs (which offer MPR rates); 5) Regarding prices, the California Market Price Referent (MPR) now holds flat for 10, 15, or 20 years under an assumed built-in rate of inflation but, because inflation rates will vary, the MPR probably should be indexed; and 6) State government and environmental agencies might offer outreach on building and environmental permits.
Primer: The DOE Wind Energy Program's Approach to Calculating Cost of Energy: July 9, 2005 - July 8, 2006; NREL Report No. SR-500-37653, January 2008
(December 31, 2008)
In January 2008, the National Renewable Energy Laboratory (NREL) published Primer: The DOE Wind Energy Program's Approach to Calculating Cost of Energy. This report was researched and written by Dr. Thomas C. Schweizer, PERI’s late president, and Kathryn E. George, Senior Economist at PERI. They describe how to calculate a levelized constant-dollar Cost Of Energy (COE), reflecting the revenues (tariff) a wind energy plant must charge to cover its capital cost, operating expenses, and a return to debt and equity investors. This metric is employed by DOE’s Low Wind Speed Technology Project to evaluate R&D progress over time.
Dr. Schweizer and Ms. George describe DOE’s 2002 Reference Turbine and how the same physical plant will give different COE’s depending on the Financing/Ownership structure selected and the values of different financial, economic, and tax parameters. They then present updated assumptions for more recent wind energy plants. They presented results with and without the Section 45 Production Tax Credit (PTC), for ownership/financing by Independent Power Producers (IPP’s) using limited recourse Project Finance and by large established Generating Companies using balance sheet finance. Ms. George finalized the report and included two variations that had gained some vogue, Portfolio Finance and All Equity finance by passive institutional investors, as well as one aggressive approach to reduce COE, where the developer/sponsor “monetizes” the Section 45 PTC and agrees to pay certain outside equity investors, sometimes termed Tax Investors, from this revenue stream. (See http://www.osti.gov/bridge/product.biblio.jsp?osti_id=922149 .)
Funding Sources and Financial Assistance in Maryland for Renewable Energy Development and Conservation
(September 10, 2007)
Under contract to Exeter Associates, Princeton Energy Resources International (PERI) prepared a detailed tracking database and final report describing a variety of financial and other incentive programs that are available to encourage the development and implementation of renewable energy and energy conservation measures and technologies in the State of Maryland. Together, these documents provide detailed information regarding the financial incentives that are currently available from the federal, state and local governments, to Maryland residents, businesses (commercial, agricultural and industrial), electric cooperatives, and local governments. The types of incentives include grants, direct subsidies, rebates, loans and bonds, and tax incentives and exemptions. These financial incentives can often make the difference between an infeasible and an economically viable project, and can substantially influence the profitability of the project.
The incentive database includes specific details about each incentive, such as:
For more information about the Funding Sources and Financial Assistance in Maryland for Renewable Energy Development and Conservation report or database, please contact Mr. Daniel Ancona via email at dancona@perihq.com or via telephone at 301-468-8414.
Mr. Rezaiyan Presented "Assessing the Economic Potential of IGCC With Liquid Sparing at Symposium on Western Fuels
(November 15, 2006)
Mr. John Rezaiyan presented a paper titled"Assessing the Economic Potential of IGCC With Liquid Sparing at Symposium on Western Fuels on October 24, 2006. This paper examines the potential for revenue enhancement for an Integrated Gasification Combined Cycle (IGCC) power plant using a spare gasifier train as an operating unit to assure electrical output and to convert any surplus syngas, after power generation needs have been met, to marketable liquid fuels (“liquid sparing”). The liquid fuels production technology considered is the well-established Fischer-Tropsch (F-T) technology. The F-T technology is used to convert natural gas and syngas to liquid fuels and is available for license from Sasol, Rentech, Exxon, Shell, and others. This option is made more attractive by the potential to run several of the commercially available gasifiers at feed rates above rated levels. The ability to do this without life reduction has been demonstrated on operating units. Other options such as storing syngas to fire co-located peaking generation units might also be attractive should liquid prices drop. The goal is to keep the capital equipment as productive as possible while assuring high system availability for power generation. This paper also considers a number of ownership perspectives, each with different financing structures, financing costs, desired rate of return, and/or taxes obligations. The ownership perspectives considered include independent power producer (IPP), non-recourse financing; corporate owned, balance sheet financing; regulated investor-owned utility (IOU); and municipal-owned utility (MOU).
PDF of Paper | PDF of Presentation
PERI Hosts Jordanian Delegation on Visit to Boston
(October 12, 2006)
In late August, PERI assisted CDM International in hosting a major delegation of Jordanian industrialists and environmental regulators during
a visit to Boston and the surrounding area. The delegation met with members of USEPA and visited several industrial and municipal wastewater treatment facilities to observe the newest technologies.
Dr. Cheremisinoff led several of the lectures, as shown here, and guided members on parts of the tour.
Dr. Nicholas Cheremisinoff to Conduct Workshop at Environment
Management System/ Pollution Prevention (EMS/P2) Event
(May 19, 2006)
Dr. Cheremisinoff will be conducting workshops at an FiK International event
on Intergrating EMS/P2: Beyond compliance by maximizing profits and minimizing environmental risk. The event will be held on the 10th (Mon) & 11th (Tue) of July at the JW Marriott, Dubai and on the 13th (Thu) & 14th (Fri) of July
at the Grand Plaza ParkRoyal, K. Lumpur. If you register by the 15th of June, 2006, you will receive a free copy of Beyond Compliance: ISO14001 worth US$100-00. Please see FiK International website for more information. Click here or on picture at right for a brochure on the event (PDF).
PERI Awarded Follow-Up Contract with the U.S. Trade and Development Agency
(April 13, 2006)
Princeton Energy Resources International, LLC (PERI) was recently awarded
its second Conferences, Workshops, Orientation Visits, Training and Other Events contract with the U.S. Trade and Development Agency (USTDA). Under
this contract, PERI will support USTDA activities worldwide in the energy and environment/water sectors by providing (1) Conference and Workshop Support by coordinating and managing both the substantive and logistic activities. (2) Training Support by developing and preparing training and presentation material, identifying high caliber trainers and speakers and coordinating with them, planning, managing, and executing all logistical activities; (3) Outreach Support by conducting background research, providing subject matter experts and expert advice, preparing special reports and presentation material in support of USTDA employees meeting with business people, marketing the event, and providing all logistic support. Since 2002, PERI has been planning, organizing, and implementing orientation visits, technical symposiums and conferences on behalf of USTDA. In addition, PERI has conducted Definitional Missions (DM) to the countries of Central and Eastern Europe to identify and evaluate projects to be recommended for USTDA grants and performed feasibility studies for power and black liquor energy and chemical recovery projects in Venezuela, South Africa and Russia. PERI look's forward to continuing its tradition of providing quality support services to the U.S. Trade and Development Agency. For additional information, please contact José Menéndez at 301-468-8421 or jmenendez@perihq.com.
PERI Prepares Report for the National Commission on Energy Policy
(July 6, 2005)
The U.S. electricity sector is operating today under a number of uncertainties as power providers are forced to make significant long-term investments in the face of potential market structure reform, fundamental changes in fuel prices, and looming environmental regulations. In addition to these largely uncontrollable external forces, technological innovation is presenting a set of new options for investment that have the potential to facilitate a transformation in the industry by allowing it to increase reliance on the nation’s most abundant energy resource – coal – in a manner that significantly improves the sector’s environmental profile and enhances the nation’s energy security objectives. But these nascent technologies come with a set of technological and financial risks that complicate the realization of their potential. This report examines a potential configuration for coal gasification leading to production of electricity (via integrated gasification combined cycle or IGCC) as a primary product, and liquid transportation fuels secondarily, and provides an assessment of the IGCC and coal gas to liquid (CGTL) technologies along with a comprehensive analysis of the economics under various financial structures.
PDF file of report
Gasification Technologies: A Primer for Engineers and Scientists
(April 22, 2005)
Written by John Rezaiyan, PERI’s Vice President for Advanced Engineering, and Nicholas Cheremisinoff, Director of Clean Technologies/P2 Projects, Gasification Technologies: A Primer for Engineers and Scientists provides a multidimensional and well rounded look at current technology, research, applications, and development challenges for the commercialization of this technology. In addition to providing a historical perspective and commercialization trends of this increasingly popular technology, it features the following:
The Hashemite Kingdom of Jordan Reuse for Industry, Agriculture and Landscaping (RIAL) Project
Guidance Document for Worker Safety Training Program for the Jordan Oil Refinery Co. — Task 3 Report (PDF)
(April 20, 2005)
The Reuse for Industry, Agriculture and Landscaping (RIAL) Project is a technical assistance program funded by the United States Agency for International Development (USAID) and designed to assist the Gov. of Jordan (GOJ). The primary aim of Task 3 of the RIAL Project (Water Reuse, Conservation and Pollution Control in Industries) is to assist the GOJ in developing a national strategy for the enhancement of industrial water recycling, reuse and conservation that will be both acceptable and “implementable” for industries in Jordan. It also focuses on the application of pollution prevention (P2) through ISO 14001 for improving enterprise competitiveness through improved environmental performance. Dr. Nicholas P. Cheremisinoff, PERI’s Director of Clean Technologies/P2 Projects, leads Task 3 of the RIAL Project.
Recently, Dr. Cheremisinoff prepared a report focusing on worker safety issues for implementing ISO 14001 for the Jordan Oil Refinery Co. The enterprise is developing a formal Environmental Management System which will improve their overall management of water and wastewater. This document serves as a Guidance Document for the worker safety training component that the facility will need to develop in order to implement ISO 14001 more effectively. The education and training of the workforce on safe work practices will help to ensure high productivity, leading to lower operating costs and improved environmental performance; fewer accidents, less insurance claims and lost work time; decreased negative environmental impacts such as spills and unplanned discharges/releases; and a reduction of future liabilities and lower overall risk to the community as a whole.
Please click here for more information on PERI's work in Jordan.
Paper and PowerPoint Presentation by Joe Cohen: Assessment of Potential Improvements in Large-Scale Low Wind Speed Technology Presented at Global WINDPOWER 2004, Chicago, Illinois
(March 29, 2004)
At the Global Windpower 2004 Conference, in Chicago Illinois, held in late March 2004, Joseph Cohen of PERI presented a paper, Assessment of Potential Improvements in Large-Scale Low Wind Speed Technology. The paper first sets forth a reference set of capital cost, performance and operating expense characteristics for wind energy plants, using a composite of leading-edge 2002 technology. It then defines a set of Technology Improvement Opportunities (TIO) that may lead to lower cost power, as measured by levelized cost of energy (COE). Various turbine technology configurations, or “pathways,” are tested against possible R&D outcomes and probabilities of achieving success.
MS Word Document | PowerPoint Presentation
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