Integrated Home Energy
Business Cases and Development Plan
Tom Horgan, Noa Simons
February 26, 2009
Outline
• Executive Summary (Horgan)
• Concept Description (Horgan)
– What it does and why people will want it
– Estimate of monthly savings
– This works because Biomass & NG is way cheaper than electricity
• Business Case (Horgan)
– State by state payback and returns
– Detailed calcs for one state
• Marketing Analysis (Simons)
– How many could we sell & how much would we make
• Competitive Analysis (Horgan)
– Why MicroCHP & Woodgas Generators aren't realistic
• Product Design(Zanoni)
– How will we build this and how much will it cost?
– What is our IP?
• Proforma Business Plan (Simons)
– How much money do we want
Executive Summary
• Integrated Home Energy Systems
– Electricity is the most expensive energy we buy. It is 2x
natural gas, 3x gasoline and 10x biomass on $/BTU
basis.
– MicroCHP units combine NG generators and heat
exchangers to improve overall efficiency and reduce
energy costs, but capital investment is too high and
efficiencies still too low for commercial viability.
– The Integrated Home Energy System combines a fuel
gas generator and a biomass gasifier to supply up to
90% of energy needs from low cost biomass with grid
security and back up capability.
– Renewable, green home energy system reduces
monthly energy costs up to 70% and pays for itself in
two years.
Concept Description
Concept Description
• Integrated Home Energy System Concept
– Generates residential heat and power from natural gas, propane
and biomass (wood, wood pellets or coal)
– Integrates a natural gas generator and wood pellet gasifier with
heat exchangers and peak heater.
– Outdoor system follows electric load and combines generator heat
with peak heater to meet heat demand.
– Excess heat discharged in warm conditions
Electricity
NG or LPG
Wood
Wood pellets
Coal
Dry biomass
Biomass
Gasifier
Heat
Concept Description
• Integrated Home Energy System Concept
– Unit operates in grid stand-by mode, supplying primary power using
the grid for surges and back up.
– Unit serves as back-up power during grid outages.
– Proprietary control algorithm determines proper ratio of biofuel, NG,
propane, etc.
Picture of
Unit Here
Business Case
Business Case
• Configuration Options:
– Heating System Replacement
• Generator/Peak Heater/Gasifier:
– Grid Parallel, Heat Following. Blended NG and/or Syngas. Connected for
net metering. Generator operates at fixed load with peak heater based on
heat demand. Excess power rolled over, reimbursed.
– Grid Parallel, Electric Load Following, Connected for net metering.
Generator operates at variable based upon electric demand. Excess heat
wasted or dumped to 2nd hot water tank.
– Energy System Add-on
• Generator/Gasifier:
– Grid Parallel, Electric load following. Generate electricity and rollover
excess. Do not want reimbursement at ‘avoided cost rate’. Include hot
extra water tank for stored heat.
Business Case
• Residential Energy Use
– Energy use varies significantly nationwide depending on climate.
– Roughly 69% of space/water heating is by natural gas
– Warmer states use less energy in total but more electricity
• ~125 MBTU/yr, ~27% electric, ~72% thermal
– Colder states use less electricity and quite a bit more heat
• ~137 MBTU/yr, ~22% electric, ~78% thermal
• Residential Energy Costs
– Energy costs vary significantly depending on a number of factors
(data in $/MBTU)
Average:
Max:
Min:
Electricity
$ 25.86
$ 60.72
$14.42
NG
$ 13.81
$ 37.72
$ 7.68
Wood
$ 2.51
Pellets Coal
$ 3.15 $2.88
Business Case
• Residential Energy Costs
– Natural Gas is about half the cost of electricity ($/MBTU)
– Woody biomass has roughly half the heating value of NG but is less
than ¼ of the cost.
– Electricity and NG are conveniently available from utilities
– Wood is also available either from local suppliers or hardware
stores in the form of pellets
– With current technology, electricity can be made from NG and
biomass at fractions of grid costs.
– Moreover, consumers are looking for …
• Self sufficiency in unstable times
• Reliable back up power
• Environmentally friendly energy
Business Case
• New York State:
– 2400 sq ft home. Energy Usage: 26 MBTU/yr electric, 124
MBTU/yr thermal
– Electricity Price : $ 44.75/MBTU, NG price: $ 15.22/MBTU
– Total Annual Fuel Cost: $3,051
– Integrated Home Energy System at 80% Renewables
Wood Requirement
Energy to Generator
= 0.80 x 26 MBTU/yr ÷0.17 = 122.4 MBTU
Energy to Gasifier
= 122.4 MBTU/0.6 = 203.9 MBTU
Amount of Wood
= 203.9 MBTU ÷0.018531 MBTU/kg
= 11,004 kg/yr
~ 1.3 fifty pound bags of wood pellets per day
Cost of Wood
= 11,004 kg/yr x 0.06 $/kg = $660/yr
Business Case
• New York State:
– 2400 sq ft home. Energy Usage: 26 MBTU/yr electric, 124
MBTU/yr thermal
– Electricity Price : $ 44.75/MBTU, NG price: $ 15.22/MBTU
– Total Annual Fuel Cost: $3,051
– Integrated Home Energy System at 80% Renewables
Natural Gas Requirement
Energy from NG
= 0.20 x 26 MBTU/yr ÷0.25 = 20.8 MBTU
Heat from Wood
= 203.9 MBTU x 0.6 x 0.63 = 78.3 MBTU
Heat from NG
= 20.8 MBTU x 0.63 = 13.01 MBTU
Addition NG for Peak Heater
= (124 – 78.3 – 13.1)/0.92 = 35.4 MBTU
Cost of NG
= (20.8 + 35.4) x $15.22 = $856/yr
Business Case
• New York State:
– 2400 sq ft home. Energy Usage: 26 MBTU/yr electric, 124
MBTU/yr thermal
– Electricity Price : $ 44.75/MBTU, NG price: $ 15.22/MBTU
– Total Annual Fuel Cost, no IHES: $3,051
– Total Annual Cost w/ IHES: $660 + $856 = $1516
– Total Annual Savings: $3,051 - $1516 = $1536
– Payback Term at $5,000 installed cost, $3000 Deferred, $150/year
maintenance:
($5000 – $3000 – $150)/$1536 = 1.2 yr
Business Case
• OK, so why not just buy a pellet stove and make heat?
– Pellet stove ~ 85% Efficient, providing 80% of heat, $3,000.
– For NY…
• Wood Pellet Cost = 0.8 * 124 MBTU/yr /0.85 * $3.15/MBTU = $375/yr
• NG Cost = 0.8 * 124 MBTU/yr * $15.22/MBTU = $1509/yr
• Savings: $1142/yr, $300 less than IHES
– Also…
• No deferred costs (need heating system)
• No back up power
• Payback: ~3 yr
Marketing Analysis
Competitive Analysis
Integrated Home Energy
• Competitive Systems (Standalone Micro CHP)
– Climate Energy “Freewatt” – $14K
•
•
•
•
•
•
Heat following 1.2kW system using
Honda MCHP generator w/ integrated furnace/boiler
20% electric, 85% overall
System produces about 50% of electricity needs
Not grid independent.
Annual savings - ~$1K
– Marathon Engine Systems – up to $35K
•
•
•
•
•
Electric load following 2 to 4.7kW, supplemental heat required
Up to 27% electric, 92% overall
2000 systems in Europe
Can be Grid Independent
Uses heat from generator
Integrated Home Energy
• Climate Energy “Freewatt” – $14K
At $2500
installed
cost,
payback is
still 6 yrs
Integrated Home Energy
• Marathon Engine Systems – ~$35K
Payback WORSE with
Maximum Electricity
Generation – Need %40
Efficiency for grid buyback
Integrated Home Energy
• ECO -5, 5kW Wood Pellet gasifier/generator - $9,495
Max Gen w/ Grid
Reimbursement
up to four fold
improvment
Competitive Analysis
- Expensive/large battery bank for grid
independence
- Always need an inverter for power quality
requirements
- What new batter technology could work
INSIDE a unit?
Product Design Details
Product Design Details
• Big Questions
– How big does the battery bank or hot water tank have to be?
– How big a daily surge should we account for?
– What about unit reliability? Possible to make a unit
requiring less then 1/yr service call?
– Is it possible to seamlessly connect to the grid?
Product Design Details
• Configurations:
– Space heating: Forced hot air, Water heating:
Gas Hot Water Tank
– Space heating: radiant (hot water), Water
Heating: Gas Hot Water Tank
– ELF Mode Options:
• Generator operates intermittently, allowing batteries
to draw down to some SOC and then recharging. If
generator is on, heat is supplied to home if needed.
Home heat Peak heater is primary
Product Design Details
• Control Logic, ELF Mode:
– Sensors: Electric Load, Inside Air Temp, Water Temp,
Outside Temp, Wood Availability, Battery SOC,
Syngas flow, PH/Gen two-way valve
– Actuators: Air Pump to Gasifier, NG pump, Grid/IHES
relay, Wood feed screw, Gen HX Circulating Pump,
Gasifier HX Circulating Pump, Peak Heater
– Wood Available System States:
• Cold Start Up: Unit powers up on NG and supplies required
heat & power. Wood Igniter fires. As Syngas becomes
available, NG flow is proportionally decreased. Power is
generated and batteries are charged as necessary
Product Design Details
• Operating Modes(Electric Load Following):
– Start up
– Steady State:
• Heat Demand Met or Exceeded by Generator
– Divert all syngas to generator. Waste excess heat. Mix NG as
necessary. Controller determines (1) amount heat to collect from
generator, peak heater and gasifier, (2) amount of heat to send to
space and hot water (3) amount of heat to environment (radiator)
• Heat Demand Not Met by Generator
– Controller determines optimum flow of syngas & NG to generator
and peak heater. Controller determines (1) amount heat to collect
from generator, peak heater and gasifier, (2) amount of heat to send
to space and hot water (3) amount of heat to environment (radiator)
– Shut Down
Schematic 2
Exhaust
Grid
R1
NG
Gen
Heat
V1
Electric Demand
Syngas
Peak
Heater
V2
Blower/
Circulator
Space Heat
V6
Syngas
Wood
Hot
Water
Tank
Gasifier
Hot Water
V7
Air
P1
CPU
P2
Radiator
Electric Demand
Space Heat Demand
Hot Water Demand
Wood Level
Syngas Flow
Coolant Temp
Backup Slides
Schematic 1
Exhaust
Grid
R1
NG
Gen
Heat
V1
V3
Syngas
Peak
Heater
V2
Electric Demand
radiator
Blower/
Circulator
V4
Space Heat
V6
Syngas
Wood
Hot
Water
Tank
Gasifier
V5
Air
Hot Water
V7
P1
P2
CPU
Electric Demand
Space Heat Demand
Hot Water Demand
Wood Level
Syngas Flow
Integrated Home Energy
• Integrated Home Energy System
– 5/25 kW Grid Parallel/Grid Backup System, $5,000
– Fuel: NG/LPG and Renewables
– Benefits….
- Under 3 yr payback w/out net
metering in LF mode
- Faster payback with grid
buyback on systems over 10 kW
(very high wood requirement)
- NG can be used to fire gasifier
and or dry feed
Outdoor
Gasifier
- User controls renewables use
In Door NG
Micro CHP Unit
- Wood chips ($0.05/kg) or wood
pellets ($0.06/kg)
- Pellets available by the ton at
Home Depot
Integrated Home Energy
• System Schematic
Electricity
NG or LPG
Wood
Wood pellets
Coal
Dry biomass
Biomass
Gasifier
Heat
Integrated Home Energy
• Configurations
– Heat Following:
• System operates based upon heat demand from hot water/home
thermostat.
• Excess electrical energy stored in battery bank
• Need battery bank, hot water tank
– Electric Load Following
• System operates based on electric demand from residence. Excess heat
stored in water tank
– System automatically switches to gas if wood is not available.
Integrated Home Energy
• Case 1: Heating System replacement/upgrade, 2400 sq ft house,
25%/17% Electrical, 63% Thermal, 80% Renewables, $5,000
Installed Cost
5 kW
10 kW
• 10 kW system shows annual revenue in MA however wood demand
is excessive – 9 fifty pound bags of pellets /day
• Note: 3% improvement in Syngas Electric Efficiency triples revenue
and decreases wood demand by 12%
Integrated Home Energy
• Case 1: Same conditions, except….
5 kW
10 kW
15 kW
Integrated Home Energy
• Analysis:
– Heating System for 2400 sq ft house, $5K (no deferred cost)
• Diminishing returns from Max Generation as Renewable
fraction increased above %70.
Integrated Home Energy
• Analysis:
– Heating System for 2400 sq ft house, $5K (no deferred cost)
• Improved Syngas Electrical Efficiency results in heat deficit
(NG must be purchased from utility)
Integrated Home Energy
• Net metering by State
– States that offer NEG Reimbursement (up to full amount)
• Massachusetts, Minnesota, Nebraska, New Mexico, North Dakota,
Pennsylvania, Connecticut, Colorado, New Jersey, New York, Ohio,
Wyoming, Washington, Illinois
– States that offer Net Metering for Biomass, CHP & MSW
• Maine, Massachusetts, Minnesota, Nebraska, New Mexico, North Dakota,
Oklahoma, Pennsylvania, Wisconsin
– States that offer Net Metering for Biomass & CHP
• District of Columbia, Vermont
– States that offer Net Metering for Biomass & MSW
• Connecticut, Iowa, Michigan, Texas, Virginia
– States that offer Net Metering for Biomass
• Colorado, Delaware, Hawaii, Idaho, Louisiana, Maryland, Nevada, New
Jersey, New York, North Carolina, Ohio Oregon, South Carolina, West
Virginia, Wyoming
• 6 States offer net metering and grid buyback for IHES
product. 5 more probable.
Integrated Home Energy
• Federal Incentives (available for Biomass)
– Tax Credit: 30% up to $1500
– Various loan programs
• State Incentives (available for Biomass)
– Massachusetts
• 100% Tax Deduction.
• Grant money available from Renewable Energy Trust Fund and
LORI.
– New York
• Property Tax Exemption.
• Grant money available from NYSERA (Micro CHP)
– Connecticut
• Property Tax Exemption.
• Grant money available from Connecticut Clean Energy Fund
Integrated Home Energy
• Development Plan
– Proof of Concept (6 months). Assemble prototype from retrofit
commercial NG generator, gasifier and CHP
• Downselect and purchase gasifier, gas generator, chipper, etc
• Research/validate wood gasification (mc, wood type, etc).
• Assemble/test and develop heat rejection, gas cleaning
• Research/development/test CHP functionality
– Cost Estimates
• Hardware: 2 gasifiers, 2 NG generators (~ $20 to 305K)
– Misc tools/test equipment ($1 to $3K)
– One Computer - ($1K)
– Additional Hardware for BOP ($3 to 5K)
•
•
•
•
Contract Services: $20/$25K
Salaries: 2 x $90K * 0.5 = $90K
Rental: $1 to $1.5K /per month = $6 to $9K
Total: ~ $150,000
Integrated Home Energy
• Development Plan
– Prototype Demonstration (6 months). Integrate advanced
gasification, generator and CHP loop into homogeneous unit
• Validate CHP functionality/software & controls
• Develop detail drawings, design system layout & enclosure
• Assemble and test prototypes
– Cost Estimate
• Hardware:
– Custom designed gasifier & system components ($100 to $150K)
– NG Generator ($3K)
– Shift reactor, software & controls ($15K)
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•
•
•
•
Contract Services: $20/25K
Software: Solid Works ($10K)
Salaries: 2 x $90K * 0.5 = $90K
Rental: $1 to $1.5K /per month = $6 to $9K
Total: ~ $250/300K
Summary
• IHES System can payback in two to three years in some
states and generate revenue after that through grid buy
back
• Larger systems are required and wood requirements are
excessive due to low efficiency
• Small improvement in Syngas Electrical Efficiency
mitigates problem and increases revenue
Integrated Home Energy
• IHES Model
– Conversion efficiencies, electricity/NG prices and usage conditions
interact counter intuitively at times to effect economics of IHES
– Spreadsheet model built to evaluate economics of microCHP, wood
gas generators and IHES
– Includes state by state electricity and NG prices (www.eia.gov)
– Includes state by state net metering policies and utility
reimbursement for states offering it (www.newenergychoices.org)
– Total energy usage determined by home size. Distribution between
NG and Electricity determined by location
• Note: Used commercial price for NG calcs in previous
IHES analysis discussion. This made residential stand
alone Micro CHP seem more viable than it actually is.
Integrated Home Energy
• Net metering by State
Integrated Home Energy
• Net metering interview with Rex Bradford
– Installed Solar Panels in Ipswitch, Ma
– Had issues with LOCAL utility who can claim exemption from state
law. Ultimate got local laws changed to allow for net metering.
– System is not grid independent (would need battery bank w/
controls)
– Solar covers half of electricity on annual basis
– Installed cost, $26,000 less $2,000 in incentives
• Massachusetts - National Grid Website - 220 CMR 11.04
c) Net Metering. A Customer of a Distribution Company with an on-site Generation Facility of 60 kilowatts or less
in size has the option to run the meter backward and may choose to receive a credit from the Distribution
Company equal to the average monthly market price of generation per kilowatthour, as determined by the
Department, in any month during which there was a positive net difference between kilowatthours generated
and consumed. Such credit shall appear on the following month's bill. Distribution Companies shall be
prohibited from imposing special fees on net metering Customers, such as backup charges and demand
charges, or additional controls, or liability insurance, as long as the Generation Facility meets the
Interconnection Standards and all relevant safety and power quality standards.
Integrated Home Energy
• Lessons learned from model analysis…
– Under two year payback possible with high renewables usage but
wood requirement excessive
– Small improvement in syngas electrical efficiency result in large
payback improvements (research area)
– MSW does not impact payback appreciably (later add-on)
– Straight NG Micro CHP does not really pay for itself even at low
cost. Efficiency too low/NG cost too high
– Improving electrical efficiency on syngas is good to a point in LF
mode (NY/Ma)
• More electricity means less heat and more NG that must be purchased
from grid.
• Always good in MG mode. More efficiency means more money and
your making excess heat anyway
– Renewables are cheap but overall electrical efficiency is about
10%. Still a very good deal.
Integrated Home Energy
• IHES Model
– Conversion efficiencies, electricity/NG prices and usage conditions
interact counter intuitively at times to effect economics of IHES
– Spreadsheet model built to evaluate economics of microCHP, wood
gas generators and IHES
– Includes state by state electricity and NG prices (www.eia.gov)
– Includes state by state net metering policies and utility
reimbursement for states offering it (www.newenergychoices.org)
– Total energy usage determined by home size. Distribution between
NG and Electricity determined by location
• Note: Used commercial price for NG calcs in previous
IHES analysis discussion. This made residential stand
alone Micro CHP seem more viable than it actually is.
IHES Model
• Model assumptions
–
–
–
–
–
All electricity and heat not provided by IHES purchased from grid
Unit has separate peak heater so heat demands always met.
No recovered heat from gasifier
MSW = 4.6 lbs/person/day (EPA Website)
All heating is NG. For heat following mode fraction renewable is on
thermal
– For maximum gen/electric load following mode fraction renewable
is on electricity
– Electricity measured at meter - no efficiency loss.
– Use average heating unit efficiency of 83% to calculate actual
energy needs from purchased NG.
Energy Demographics
• Warmer states use more electrical energy, colder states
use more thermal energy
• Total Energy use somewhat correlated to region
• Total Energy use highly correlated to house size
• Number of occupants less correlated to house size
• Ideal State: Low Average Electrical Demand with NEG
Reimbursement
State of NG & LPG
• NG Demand
State of NG & LPG
• Available Reserves
State of NG & LPG
• Grants
State of NG & LPG
• Microturbines
– DOE has program for microturbine development (> 100kW)
• http://www.eere.energy.gov/de/microturbines/
– Program Goals:
• High efficiency — Fuel-to-electricity conversion efficiency of at least 40%
• Environment — NOx <7 ppm (natural gas)
• Durability — 11,000 hours of reliable operations between major overhauls and
a service life of at least 45,000 hours
• Cost of power — System costs <$500/kW, costs of electricity that are
competitive with alternatives (including grid) for market applications
• Fuel flexibility — Options for using multiple fuels including diesel, ethanol,
landfill gas, and biofuels.
– Program Partners
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•
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Capstone (PDF 61 KB)
GE (PDF 57 KB)
Ingersoll-Rand (PDF 82 KB)
Solar Turbines (PDF 52 KB)
UTC (PDF 71 KB).
Conclusions