Off-Grid Power Markets
26 May 2011
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Off-Grid Markets
• The off-grid market consists of some of the largest industrial enterprises on the planet, operating in remote and often extreme
environments
High fuel delivery costs – battlefield,
remote locations, at sea
Emissions restrictions/incentives –
European markets tax carbon
emissions, in-port vessels, harbor
dredging
High maintenance costs –
dangerous, harsh or remote
locations, at sea, highly technical
equipment, mission-oriented
power systems
Silent and low vibration power
– military operational security,
luxury yachts, highly
instrumented equipment
RELIABILIT Y
High generator utilization rates –
where gensets provide prime power,
where engineers factor in excess
capacity as a rule
Clean, high quality power –
sensitive instrumentation
RELIABILITY
Mission-critical power –
uninterruptible power supplies
RELIABILITY
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Generator Dependency and Inefficiency
Fuel Consumption in Marine Diesels
The area under this curve
quantifies generator
inefficiency
200%
190%
Most operators
think they operate
at 50-80% load
180%
Fuel Consumption (% of Optimal)
• Electrical generators in off-grid power systems are highly
inefficient, resulting in exponentially higher
•
Fuel consumption
•
Emissions
•
Maintenance costs
•
Physical depreciation of the generator
• In off-grid markets, inefficiency is expensive and
customers pay a premium for reliable power
•
Fuel logistics
•
Maintenance
•
Equipment replacement
•
Emissions mitigation
170%
Most actually
operate at 10-25%
load, where energy
costs are 20-50%
higher
160%
150%
140%
130%
120%
110%
100%
01
56
11
10
16
15
21
20
26
25
3031
3536
4041
4546
50
Load Factor (%)
Example - John Deere 60kW generator
Annual Generator Power Output (kWh)
Cost of Power at Optimal Power Factor
Annual Cost of Power at Optimal Power Factor
$
$
86,085
0.30
25,600
Observed Cost per kWh (incl. fuel & maint.)
Observed Annual Cost of Power
$
$
0.71
60,988
Annual Cost of Generator Inefficiency
$
35,388
Example - 60kW Tactical Quiet Generator (TQG) at $10 FBCF
Annual Cost of Generator Inefficiency
$
71,743
•
•
•
•
•
•
•
Market Size
3,697 tank barges (U.S)
3,932 tugs (U.S.)
6,890 bulk carriers
4,170 containerships
18,982 general cargo
1,600 drilling rigs
1,083 offshore platforms
Approximately 8,600 MW of
small generator capacity in
Iraq and Afghanistan today
Annual Cost of Generator Inefficiency
• $129 million
• $137 million
• $6.1 billion
• $12.3 billion
• $6.7 billion
• $944 million
• $638 million
•
Approximately $3.7 billion
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Expeditionary Market - Fuel Drivers
• The U.S. military has established a price signal called the “Fully-Burdened Cost of Fuel” (FBCF)
to stimulate development of alternative energy and energy efficiency systems on the battlefield
• The FBCF quantifies the costs associated with transporting and securing fuel in the battlespace
Delivery/Security to FOB
(35Miles)
Convoy Delivery/Security
FBCF Fuel
($/gallon)*
FBCF Fuel
($/gallon/mile)
$9.20 - $11.81
$0.26 - $0.34
Convoy Delivery/Air Security
$15.63 - $18.59
$0.44 - $ 0.53
Air Delivery/Security
$28.94 - $30.78
$0.82 - $0.88
•Headquarters Marine Corps P&R, PA&E
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Commercial Maritime Market – Emissions Drivers
• Oversized power generation capacities for mission-critical systems and redundancy at sea
• 24/365 utilization rates and generally low load profiles, especially while in port
• Highly variable cost of generator maintenance depending on location of vessel and urgency of repair
• Additionally, because the maritime industry is a heavy polluter, it has become the target of intense environmental regulations
from a variety of overlapping local, national and international regulatory bodies, particularly focused on air quality and
emissions
Representative Regulatory Tightening
• IMO MARPOL Annex IV, 2010 North American Emissions Control Area (ECA)
• In 2020, emissions from ships operating in the ECA are expected to be reduced annually by 320,000 tons for NOx, 90,000 tons for
PM2.5, and 920,000 tons for SOx. The overall cost of the North American ECA is estimated at $3.2 billion in 2020, while its benefits
are expected to include preventing as many as 14,000 premature deaths*
• California Harbor Craft Rule
• Existing California Harbor Craft must repower with new diesel engines per a sliding
compliance schedule based on the age of the existing engine and home port
• Operators may avoid repowering if they demonstrate that the engine operates
<300 hours per year
• PA NY NJ Harbor Deepening Project
• Requires operators to offset all NOx emissions so that dredging in NOx net-zero
Area of the North American ECA*
*
Designation of North American Emission Control Area to Reduce Emissions from Ships: Regulatory Announcement , EPA-420-F-10-015, March 2010
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Why Now?
• Renewables, energy storage, and large-scale power conversion technology have benefitted from 5+ years of significant government
and private investment resulting in lower costs and improved performance, reliability, and safety
• In off-grid markets, the costs of hybrid power are now competitive with traditional power systems
Increasing Operating Costs
Fuel
Emissions
Environmental Regulations
Safety
Reliability
Maintenance
$
Hybrid power is
economically
compelling today in
off-grid markets…
… and will improve in
the future
Decreasing Hybrid Power
Costs
Renewables
Energy Storage
Power Electronics
Specialized Engineers
Time
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Thank You
Josh Prueher
Office: 757-606-3214
Mobile: 917-806-1725
jprueher@earlenergy.com
www.earlenergy.com
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