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Combined Heat and Power Combined Heat and Power Opportunities in the Dry Mill Ethanol Opportunities in the Dry Mill Ethanol Industry* Industry* Bruce Hedman Bruce Hedman Energy and Environmental Analysis, Inc Energy and Environmental

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SLIDE 1

Combined Heat and Power Combined Heat and Power Opportunities in the Dry Mill Ethanol Opportunities in the Dry Mill Ethanol Industry* Industry*

Bruce Hedman Bruce Hedman Energy and Environmental Analysis, Inc Energy and Environmental Analysis, Inc March 18, 2008 March 18, 2008

* *Based on work supported by the EPA CHP Partnership

Based on work supported by the EPA CHP Partnership

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Drivers for Ethanol Demand

  • Originally promoted in early 1980s as an octane

enhancer and alternative to imported oil

– Resulted in a many very small, very inefficient ethanol producers – most shut down

  • Then used as an oxygenate for compliance with

federally mandated programs

– Replacement for MTBE (22 states had banned MTBE as of 2006)

  • Increased value perceived as gasoline prices climb
  • Demand is poised to increase dramatically as a result
  • f the Renewable Fuels Standard
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3

Historic U.S. Ethanol Production

Source: Renewable Fuels Association

1 2 3 4 5 6 7

1 9 8 1 9 8 2 1 9 8 4 1 9 8 6 1 9 8 8 1 9 9 1 9 9 2 1 9 9 4 1 6 1 9 9 8 2 2 2 2 4 2 6

Billions of Gallons

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The 2007 Renewable Fuels Standard Requires 36 Billions Gallons of Biofuels Capacity by 2022

5 10 15 20 25 30 35 40

2 6 2 7 2 8 2 1 2 1 5 2 2 2

Billions of Gallons

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5

How Is Ethanol Produced?

  • Wet Corn Milling (18% in 2006)

– Large “chemical” plant – Ethanol is one byproduct

  • Dry Corn Milling (82% in 2006)

– Dedicated ethanol production – Small to medium size range – Fastest growing market segment

  • Cellulosic Ethanol

– Emerging process – Enables wide range of feedstocks

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Corn Ethanol Capacity Will More than Double by 2015

5 10 15 20 25 30 35 40 2 9 2 1 2 1 1 2 1 2 2 1 3 2 1 4 2 1 5 2 1 6 2 1 7 2 1 8 2 1 9 2 2 2 2 1 2 2 2

Billion Gallons

Corn-based Ethanol Cellulosic Biofuels Biodiesel Additional Advanced Biofuels

Source: Center for Agricultural and Rural Development, University of Iowa

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Dry Corn Mill Process

Source: Renewables Fuel Association

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Ethanol Plants in North America

Source: Center for Agricultural and Rural Development, University of Iowa

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The Dry Mill Ethanol Industry Today

  • Over capacity in producing regions
  • Distribution capacity lags production
  • Ethanol prices have fallen
  • Corn prices remain high
  • Energy prices rising
  • Some plant closings
  • Questions about energy efficiency and

carbon benefits of fuel ethanol

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Dry Mill Ethanol Production Costs

Source: USDA’s 2002 Cost of Ethanol Production Survey

Energy 15 - 20% Materials 8 - 10% Other 1% Admin 3 - 4% Labor 5 - 6% Corn 60 - 70%

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CHP (Cogeneration) Is an Excellent Fit for the Ethanol Industry

  • Energy is the second largest cost of production for dry

mill ethanol plants

  • Electric and steam demands are large and coincident

– Typical power demand is 2 to 10 MW – Typical steam use is 40,000 to 250,000 lb/hr

  • Electric and steam profiles are relatively flat
  • Operating hours are continuous
  • Energy costs are rising
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What Can CHP Offer the Ethanol Plant?

  • Increased energy efficiency of ethanol production
  • Energy cost savings from 10 to 25 percent
  • Reliable electricity and steam generated
  • n site
  • Hedge against unstable energy costs
  • Improved competitiveness
  • Reduced carbon footprint
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CHP Recaptures Much of that Heat, Increasing Overall Efficiency of Energy Services

Source: EEA

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Increased Efficiency Results in Reduced Carbon Emissions

Source: EEA

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CHP Options for Ethanol Plants

  • Gas Turbine CHP

If sized to electricity load, additional steam needed

  • Gas Turbine/Supplemental Fired CHP

Can be sized to meet both steam and electric loads

  • Boiler/Steam Turbine CHP

Short payback, limited electric capacity

  • Biomass Fueled

Least-cost fuel but capital intensive; Tax credit for biomass electricity; Green electricity if sold

  • Integrated VOC destruction

Produce power with steam from thermal oxidizer, incorporate VOC destruction in turbine or boiler systems

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Blue Flint Ethanol* Underwood, ND 50 MMGal/y Coal Creek Power Plant Golden Cheese Company of California* Corona, CA 5 MMGal/yr 47 MW Gas Turbine Northeast Missouri Grain LLC* (POET) Macon, MO 45 MMGal/yr 10 MW Gas Turbine U.S. Energy Partners LLC* (White E) Russell, KS 48 MMGal/yr 7.5 MW Gas Turbine Adkins Energy LLC Lena, IL 40 MMGal/yr 5 MW Gas Turbine The Andersons Albion Ethanol LLC Albion, MI 55 MMGal/yr 2 MW TO/Steam Turbine Archer Daniels Midland Peoria, IL 200 MMGal/yr 64 MW Boiler/ST - Gas Turbine Archer Daniels Midland Wallhalla, ND 40 MMGal/yr 2 MW Boiler/Steam Turbine East Kansas Agri-Energy LLC Garnett, KS 35 MMGal/yr 1 MW TO/Steam Turbine Front Range Energy LLC Windsor, CO 40 MMGal/yr 2 MW TO/Steam Turbine Otter Creek Ethanol LLC (POET) Ashton, IA 55 MMGal/yr 7 MW Gas Turbine Prairie Horizon Agri-Energy LLC Phillipsburg, KS 40 MMGal/yr 4 MW TO/Steam Turbine Sterling Ethanol LLC Sterling, CO 42 MMGal/yr 1 MW Boiler/Steam Turbine

Total 695 MMGal/yr 152.5 MW Subtotal - Partnerships 148 MMGal/yr 64.5 MW

There Are 12 Ethanol Plants Using CHP

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Total 718.5 MMGal/yr ~45 MW CHP Subtotal - Partnerships 275 MMGal/yr E Caruso* (Goodland Energy Center) Goodland, KS 20 MMGal/yr Steam from coal power plant Missouri Ethanol* (POET) Laddonia, MO 45 MMGal/yr Gas Turbine Spiritwood Ethanol* Jamestown, ND 100 MMGal/yr Co-located with 50 MW coal power plant Southwest Iowa Renewable Energy LLC* Council Bluffs, IA 110 MMGal/yr Steam from MidAmerica Power Plant Archer Daniels Midland Columbus, NE 275 MMGal/yr Boiler/Steam Turbine Bonanza Energy LLC/Conestoga Garden City, KS 55 MMGal/yr TO/Steam Turbine Central Illinois Energy LLC Canton, IL 37 MMGal/yr Boiler/Steam Turbine Central MN Ethanol Coop Little Falls, MN 21.5 MMGal/yr Gasifier/Steam Turbine Renova Energy Heyburn, ID 15 MMGal/yr Digester/Boiler/Engines Yuma Ethanol Yuma, CO 40 MMGal/yr TO/Steam Turbine

There Are at least 11 CHP Systems Under Construction

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What is CHP’s Role in Reducing Overall Energy Use and Lowering the Carbon Footprint of the Dry Mill Ethanol Process?

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State of the Art Operating Assumptions for Dry Mill Ethanol

Operating Assumptions Natural Gas Coal/Biomass Plant Capacity, MMgal/yr 50 50 Operating Hours 8600 8600 Boiler Type Packaged Fluidized Bed DDGS 100% 100% Dryer Type Direct Fired Steam VOC Destruction RTO Boiler Electricity Use, kWh/gal 0.75 0.90 Steam Use, lb/gal 17.1 31.4 Dryer Fuel, MMBtu/gal 10,500 NA RTO Fuel, MMBtu/gal 330 NA

Dry Mill Baseline Assumptions

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SLIDE 20

20 Energy Consumption Natural Gas Coal/Biomass Plant Capacity, MMgal/yr 50 50 Operating Hours 8600 8600 Annual Electric Use, MWh 37,500 45,000 Average Electric Demand, MW 4.4 5.2 Total Plant Fuel Use, Btu/gal 32,300 40,300 Boiler Fuel Use, Btu/gal 21,500 40,300 Steam Use, lbs/hr 100,000 182,000 Annual Steam Use, MMlbs 860 1,570 Annual Boiler Fuel Use, MMBtu 1,075,000 2,015,000 Annual Drier Fuel Use, MMBtu 525,000

Dry Mill Energy Consumption Baseline

State of the Art Energy Consumption for Dry Mill Ethanol

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CHP Options Evaluated

  • Case 1: Natural Gas - Gas Turbine/Supplemental Fired

Electric output sized to plant demand

  • Case 2: Natural Gas – Gas Turbine with Power Export.

Thermal output sized to plant demand

  • Case 3: Natural Gas – Gas Turbine/Steam Turbine with Power

Export. Thermal output sized to plant demand, maximum power generation

  • Case 4/5: Coal/Biomass – High pressure boiler/steam turbine

Power output matched to plant demand

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CHP Options Evaluated

  • Case 1: Natural Gas - Gas Turbine/Supplemental Fired

Electric output sized to plant demand

  • Case 2: Natural Gas – Gas Turbine with Power Export.

Thermal output sized to plant demand

  • Case 3: Natural Gas – Gas Turbine/Steam Turbine with Power

Export. Thermal output sized to plant demand, maximum power generation

  • Case 4/5: Coal/Biomass – High pressure boiler/steam turbine

Power output matched to plant demand

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CHP Options Evaluated

  • Case 1: Natural Gas - Gas Turbine/Supplemental Fired

Electric output sized to plant demand

  • Case 2: Natural Gas – Gas Turbine with Power Export.

Thermal output sized to plant demand

  • Case 3: Natural Gas – Gas Turbine/Steam Turbine with

Power Export. Thermal output sized to plant demand, maximum power generation

  • Case 4/5: Coal/Biomass – High pressure boiler/steam turbine

Power output matched to plant demand

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CHP Options Evaluated

  • Case 1: Natural Gas - Gas Turbine/Supplemental Fired

Electric output sized to plant demand

  • Case 2: Natural Gas – Gas Turbine with Power Export.

Thermal output sized to plant demand

  • Case 3: Natural Gas – Gas Turbine/Steam Turbine with Power

Export. Thermal output sized to plant demand, maximum power generation

  • Case 4/5: Coal/Biomass – High pressure boiler/steam

turbine Power output matched to plant demand

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CHP Case Description

CHP Case 1 CHP Case 2 CHP Case 3 CHP Case 4 CHP Case 5

CHP System Gas Turbine/ Fired- HRSG Gas Turbine/ HRSG Gas Combined Cycle Coal Boiler/ Steam Turbine Biomass Boiler/ Steam Turbine Net Electric Capacity, MW 4.0 22.1 30.0 5.0 5.0 System Availability, percent 97% 97% 97% 95% 95% Annual Operating Hours 8,334 8,334 8,334 8,334 8,334 Annual Electric Generation, MWh 33,337 184,187 250,027 40,812 40,812 CHP Steam Generation, MMBtu/hr 22.5 100.1 100.1 204.3 204.3 Supplemental Firing Steam, MMBtu/hr 77.6 NA NA NA NA Process Steam Generation, MMBtu/hr 100.1 100.1 100.1 182.6 182.6 Annual Process Steam Generation, MMBtu 834,200 834,200 834,200 1,521,800 1,521,800

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Total Net Energy Consumption, Btu/Gal Ethanol

10,000 20,000 30,000 40,000 50,000 60,000 70,000 N a t G a s

  • B

a s e N a t G a s

  • C

H P / N

  • E

x p

  • r

t N a t G a s

  • C

H P / E x p

  • r

t N a t G a s C C C H P / E x p

  • r

t C

  • a

l

  • B

a s e C

  • a

l

  • C

H P B i

  • m

a s s

  • B

a s e B i

  • m

a s s

  • C

H P Plant Energy Central Station Energy

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Total Net Energy Consumption, Btu/Gal Ethanol

10,000 20,000 30,000 40,000 50,000 60,000 70,000 N a t G a s

  • B

a s e N a t G a s

  • C

H P / N

  • E

x p

  • r

t N a t G a s

  • C

H P / E x p

  • r

t N a t G a s C C C H P / E x p

  • r

t C

  • a

l

  • B

a s e C

  • a

l

  • C

H P B i

  • m

a s s

  • B

a s e B i

  • m

a s s

  • C

H P Plant Energy Central Station Energy

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Total Net Energy Consumption, Btu/Gal Ethanol

10,000 20,000 30,000 40,000 50,000 60,000 70,000 N a t G a s

  • B

a s e N a t G a s

  • C

H P / N

  • E

x p

  • r

t N a t G a s

  • C

H P / E x p

  • r

t N a t G a s C C C H P / E x p

  • r

t C

  • a

l

  • B

a s e C

  • a

l

  • C

H P B i

  • m

a s s

  • B

a s e B i

  • m

a s s

  • C

H P Plant Energy Central Station Energy

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Total Net Energy Consumption, Btu/Gal Ethanol

10,000 20,000 30,000 40,000 50,000 60,000 70,000 N a t G a s

  • B

a s e N a t G a s

  • C

H P / N

  • E

x p

  • r

t N a t G a s

  • C

H P / E x p

  • r

t N a t G a s C C C H P / E x p

  • r

t C

  • a

l

  • B

a s e C

  • a

l

  • C

H P B i

  • m

a s s

  • B

a s e B i

  • m

a s s

  • C

H P Plant Energy Central Station Energy

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Total Net Energy Consumption, Btu/Gal Ethanol

10,000 20,000 30,000 40,000 50,000 60,000 70,000 N a t G a s

  • B

a s e N a t G a s

  • C

H P / N

  • E

x p

  • r

t N a t G a s

  • C

H P / E x p

  • r

t N a t G a s C C C H P / E x p

  • r

t C

  • a

l

  • B

a s e C

  • a

l

  • C

H P B i

  • m

a s s

  • B

a s e B i

  • m

a s s

  • C

H P Plant Energy Central Station Energy

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Total Net Energy Consumption, Btu/Gal Ethanol

10,000 20,000 30,000 40,000 50,000 60,000 70,000 N a t G a s

  • B

a s e N a t G a s

  • C

H P / N

  • E

x p

  • r

t N a t G a s

  • C

H P / E x p

  • r

t N a t G a s C C C H P / E x p

  • r

t C

  • a

l

  • B

a s e C

  • a

l

  • C

H P B i

  • m

a s s

  • B

a s e B i

  • m

a s s

  • C

H P Plant Energy Central Station Energy

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SLIDE 32

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Total Net Energy Consumption, Btu/Gal Ethanol

10,000 20,000 30,000 40,000 50,000 60,000 70,000 N a t G a s

  • B

a s e N a t G a s

  • C

H P / N

  • E

x p

  • r

t N a t G a s

  • C

H P / E x p

  • r

t N a t G a s C C C H P / E x p

  • r

t C

  • a

l

  • B

a s e C

  • a

l

  • C

H P B i

  • m

a s s

  • B

a s e B i

  • m

a s s

  • C

H P Plant Energy Central Station Energy Displaced Central Station Energy

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Total Net CO2 Emissions, lb/Gal Ethanol

  • 1

1 2 3 4 5 6 7 8 9 10 11 N a t G a s

  • B

a s e N a t G a s

  • C

H P / N

  • E

x p

  • r

t N a t G a s

  • C

H P / E x p

  • r

t N a t G a s

  • C

C C H P / E x p

  • r

t C

  • a

l

  • B

a s e C

  • a

l

  • C

H P B i

  • m

a s s

  • B

a s e B i

  • m

a s s

  • C

H P Plant CO2 Central Station CO2

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Total Net CO2 Emissions, lb/Gal Ethanol

  • 1

1 2 3 4 5 6 7 8 9 10 11 N a t G a s

  • B

a s e N a t G a s

  • C

H P / N

  • E

x p

  • r

t N a t G a s

  • C

H P / E x p

  • r

t N a t G a s

  • C

C C H P / E x p

  • r

t C

  • a

l

  • B

a s e C

  • a

l

  • C

H P B i

  • m

a s s

  • B

a s e B i

  • m

a s s

  • C

H P Plant CO2 Central Station CO2

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Total Net CO2 Emissions, lb/Gal Ethanol

  • 1

1 2 3 4 5 6 7 8 9 10 11 N a t G a s

  • B

a s e N a t G a s

  • C

H P / N

  • E

x p

  • r

t N a t G a s

  • C

H P / E x p

  • r

t N a t G a s

  • C

C C H P / E x p

  • r

t C

  • a

l

  • B

a s e C

  • a

l

  • C

H P B i

  • m

a s s

  • B

a s e B i

  • m

a s s

  • C

H P Plant CO2 Central Station CO2

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CHP in Ethanol - Bottom Line

  • Energy use and carbon footprint primarily driven by fuel

choice and process configurations

  • Once fuel is selected, CHP can reduce net energy use,

reduce carbon footprint, and enhance competitive position

  • Increased thermal utilization improves energy efficiency

and reduces net carbon emissions

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SLIDE 37

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Questions?

Bruce Hedman Energy and Environmental Analysis, Inc 1655 North Fort Myer Drive Arlington, VA 22209 703-373-6632 bhedman@icfi.com