Workshop N Technology & Innovative Energy Solutions Cleveland - - PDF document

Workshop N

Technology & Innovative Energy Solutions … Cleveland Microgrid as a Strategy for Economic Growth

3 p.m. to 4 p.m.

Biographical Information Andrew R. Thomas, Executive-in Residence, Energy Policy Center Cleveland State University, Maxine Goodman Levin College of Urban Affairs 2121 Euclid Avenue, UR 132, Cleveland, OH 44125 216-687-9304 a.r.thomas99@csuohio.edu Andrew Thomas is an Executive-in-Residence in the Levin College of Urban Affairs of Cleveland State University, where he leads research for the Energy Policy Center. His research focuses on electricity regulation and markets, distributed generation, transportation and oil and gas production, regulation and markets. He teaches energy law and policy in the Cleveland Marshall School of Law and in the Levin College. He also teaches oil and gas contract short courses at various venues around the world. Prior to coming to CSU in 2008, Mr. Thomas was an energy lawyer in private practice in New Orleans, Louisiana, and a geophysicist with Shell Oil Company. Mr. Thomas received his J.D. from Loyola University, where he was editor of the law review. He is currently an Ohio Oil and Gas Commissioner, and is of-counsel to the Cleveland, Ohio- based law firm of Meyers, Roman, Friedberg and Lewis. Marc G. Divis, President, Cleveland Thermal LLC 1921 Hamilton Ave., Cleveland, OH 44114-3515 216-241-3636 mdivis@clevelandthermal.com Marc Divis is the president dually responsible for the oversight and leadership in all

• perational, customer growth and retention, and strategic planning aspects of both

Cleveland Thermal, LLC and Akron Energy Systems LLC. He has been an employee at the Cleveland Thermal facility for more than 20 years. Over the course of his career at Cleveland Thermal, Marc has served in the capacities of project engineer, distribution manager, and director of engineering, leading to his current position as president. During his tenure at Cleveland Thermal, he has developed a talented team of professionals that are focused on safety, environmental stewardship, customer service, and economic sustainability. Mark Henning, Graduate Research Assistant Energy Policy Center in the Maxine Goodman Levin College of Urban Affairs Cleveland State University 517.648.5428 m.d.henning@vikes.csuohio.edu Mark Henning is a graduate research assistant for the Energy Policy Center in the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. He recently completed his M.S. in Mathematics with Specialization in Applied Statistics at CSU and is currently in the last semester of the Master of Public Administration program at Levin College where his focus area has been public financial management.

A technical, financial, and feasibility study for a County Microgrid

MEC Energy Conference September 2018 Andrew R. Thomas and Mark Henning Cleveland State University

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µGrid Cle

Cuyahoga County Microgrid Planning Project

Cuyahoga County MicroGrid

2

No Power to the People

National Academy of Science Report on Nation’s Electricity System

• “Recommendation 1 to

DOE: Improve understanding of customer and society value associated with increased resilience….”

September 2017.

So Why the Poor Understanding?

• Complexity of Electricity

Pricing.

• Lack of Uniformity in

Regulation.

• Value of Resiliency

Highly Dependent upon Circumstances.

3

A microgrid is a contained energy system capable of balancing captive supply and demand resources to maintain reliability

• Defined by function, not

size

• Incorporates multiple

distributed technologies

• Maximizes reliability and

efficiency

• Can include other utilities –

steam, hot water, chilled water, network connectivity

• May function in “islanded

mode” disconnected from larger utility grid

What is a Microgrid?

Number of U.S. Microgrids Sorted by End Use and Scope µGrid Cle

Current as of August 2018

Type of Entity Served Scope of Microgrid Campus Community District Nanogrid Total Commercial 4 6 10 Commercial, industrial 2 2 Commercial, residential 4 4 Critical services 6 4 4 14 Education 13 4 17 Industrial 3 1 2 6 Military 14 14 Residential 3 1 4 Utility 7 7 Total 45 7 9 17 78

Commercial Microgrid Location Attributes

• Potential anchor end users
• Ability to leverage existing infrastructure
• Ability to grow both loads and infrastructure
• Economic relevance of areas
• Available land for new infrastructure and end

users

• Regulatory compatibility

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Cleveland Public Power

• Existing electric distribution

system

• 4 transmission interconnections
• 32 substations
• Street level distribution
• Metering and control systems
• Regulatory flexibility
• Developing rate structures
• Contracting for generation
• Contracting for microgrid

management

Cleveland Thermal

• Electric power project in

process

• Conversion from coal to natural

gas completed in 2016

• CHP Permit Acquired
• 13 to 40 MW capacity sizing
• Connected to CPP system

through CT Hamilton Plant

• Existing district energy system

for steam and chilled water

Leveraging Existing Infrastructure

µGrid Cle

Proposed Microgrid Footprint

• Size: 48 MW
• Resiliency: 13

MW

• Size:
• 4.8 Sq Miles
• 3000 acres
• 133 mm sq ft

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Potentially Developable Land Within Microgrid Area

µGrid Cle

Who Might Be Interested in Grid Resiliency?

• Universities
• Data and Financial

Centers

• Law, Accounting,

Consulting Firms

• Hospitals
• Emergency Services
• Food Services
• R&D Companies

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Strategies for Valuing Resiliency for Business

• Lost Production
• Value of Lost Load
• Stated Preference
• Survey
• Interviews
• Avoided Costs
• Reduced Investment into

On-Site Resiliency Infrastructure

• Business Interruption

Insurance

(Eaton Industrial UPS)

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µGrid Cle GDP for Industry ($) Electricity Consumption for Industry (kWh)

Lost Production

Production Function Approach to VOLL

• One of the more widely used methods for measuring a customer’s likely willingness to pay

for reliable electricity service. – E.g. ERCOT

• Data easy to obtain.

– BLS; Census Bureau

• Analysis at specific industry levels.

– 3rd and 4th digit NAICS

Why VOLL Approach?

Production Function Approach

1 hour outage for 1 MW facility would cost “Securities and Financial Investment” company $50,000

Offices of other health practitioners - (6213) Newspaper, periodical, book, and directory publishers - (5111) Rental and Leasing Services - (532) Specialized design services - (5414) Other professional, scientific, and technical services - (5419) Truck transportation - (484) Offices of physicians - (6211) Audio and video equipment manufacturing - (3343) Household appliance manufacturing - (3352) Other transportation equipment manufacturing - (3369) Transit and ground passenger transportation - (485) Securities, commodity contracts, & other fin. investments/activities - (523) Water transportation - (483) Software publishers - (5112) Advertising, public relations, and related services - (5418) Administrative and Support Services - (561) Air transportation - (481) Cable and other subscription programming - (5152) Home health care services - (6216) Accounting, tax preparation, bookkeeping, and payroll services - (5412) Insurance Carriers and Related Activities - (524) Legal services - (5411) Management, scientific, and technical consulting services - (5416) Computer systems design and related services - (5415)

>100 80 60 40 20

Industry Group Description and NAICS

VOLL (Value Added/kWh)

Highest Values of Lost Load for All Industry Groups

Data Sources: Bureau of Labor Statistics; U.S. Census Bureau

Stated Preference Approach: Survey

Strategy

• 35-question survey designed by the μGrid Study
• Team. Goals:
• Identify level of interest in resiliency
• Identify nature of commercial activity
• Screening Criteria:
• Respondents have a meaningful role in energy

procurement (e.g. sole decisions maker)

• 1 Hour power outage has a major or moderate effect on

company income

• Power represents a high or moderately high percentage of

respondent’s operating costs.

• Methodology
• Use of Qualtrics online platform
• 155 respondents

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Survey Results

15

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 10 cents

• r more

11 cents

• r more

12 cents

• r more

13 cents

• r more

14 cents

• r more

15 cents

• r more

16 cents

• r more

17 cents

• r more

18 cents

• r more

"Which of the following average "all in" prices per-kWh for electricity that included 99.999% availability would provide a significant inducement for you to locate your business within a microgrid?"

Avoided Costs Approach:

Backup Infrastructure Costs for Data Centers

• Expedient/Intel cost calculator for in-house data centers.
• Based on data center industry’s 4-level uptime

classification system.

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Tier Service Availability Annual Expected Time Without Service (in minutes) Expected Service Time Gained at Higher Level (in minutes) 1 99.671% 1729

• 2

99.741% 1361 368 3 99.982% 95 1266 4 99.995% 26 69

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EIA Average Commercial Electricity Costs

Ohio: 9-10.5 cents per kWh

Sensitivity Analysis For Three Tier Customer Rate Structure

19 $(20,000,000) $(15,000,000) $(10,000,000) $(5,000,000) $- $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $80 $90 $100 $110 $120 $130 $140 $150

MIcrogrid NPV Customer Rate ($ / MWh)

Tier 1 Tier 2 Tier 3

Implications for IT and IoT

• Power outages are #1 cause of IT downtime.
• Industries lose upwards of $709,000 per IT outage caused

by UPS system failure (Ponemon Institute).

• Sectors sensitive to reliable power have highest

employment growth.

• Highest VOLL: Health Care, Finance & Insurance
• Will add around 40% of the non-agriculture employment

growth nationally by 2026.

• These sectors expected to be major drivers of demand for

UPS systems as they increasingly incorporate the internet-of- things (IoT).

• IoT to impact 11% of gross world output by 2025

20

21

200 400 600 800 1,000 1,200 2022 2023 2024 2025 2026

Additional Employment Among Selected Subsectors that Value High-Quality Power with Microgrid Development

Cumulative Job Growth from Prior Years Job Growth

Economic Impact

Associated additional earnings of $91 million within the μGrid by 2026.

Energy Policy Center

Andrew R. Thomas a.r.thomas99@csuohio.edu Mark Henning

Levin College of Urban Affairs Cleveland State University

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µGrid Cle

Total Cost Differences in Dollars Across Tiers per MW

Difference Between Tiers 1 and 2 Difference Between Tiers 2 and 3 Difference Between Tiers 3 and 4 Engineering and Preparation 61,725 648,109 123,449 Power Systems/Electrical Equipment 730,588 7,671,177 1,461,178 Environmental Controls 159,261 1,672,236 318,521 Security and Monitoring 15,565 163,430 31,129 Core Network Equipment 33,000 346,500 66,000 Electrical Maintenance 53,012 556,621 106,023 HVAC Maintenance 1,984 20,832 3,968 Other Systems Maintenance 1,032 10,831 2,063

Avoided Infrastructure Costs

Change in Service Availability (A) Additional Annualize d Cost (B) Electricity Consumption at Higher Level of Availability for a 1MW Data Center (C) Additional Cost/kWh at Higher Level

• f Availability

(D) Additional Availabilit y at Higher Level (E) Extra Service Availability per 1- cent at Higher Level (F) Tier 1 to 2 $150,063 8,737,312 kWh $0.02 0.07% 0.040% Tier 2 to 3 $1,575,659 8,758,423 kWh $0.18 0.241% 0.013% Tier 3 to 4 $300,125 8,759,562 kWh $0.03 0.013% 0.004%

How Some High-employment-growth Subsectors Increasingly Rely on IT

Insurance Carriers

• maintain customer records, process financial transactions, provide sophisticated advisory

services and assist in marketing products to customers

• reduce the time taken to process insurance policy sales; gain greater access to insurance carrier

information and source insurance policies from a wider variety of carriers and underwriters. Professional, Scientific, & Technical Services

• automate industry services such as payroll; a paperless system reduces purchasing costs.
• cloud computing has enabled accountants to “bring the office to the client.”

Ambulatory Health Services

• delivery of health services via remote telecommunications (telemedicine); remote expert

medical advice and faster dispensing of diagnostic tests, training information, technical databases and access to financial transactions

• telehealth services bridge the gap between urban and rural communities with limited access to

healthcare; presents significant cost savings to healthcare providers.

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Source: IBISWorld US Industry Reports. (2018

District Energy and Microgrids

• Base load electricity
• Steam and chilled water.

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District Energy Synergies with Microgrid

Shared Markets and Focus

Markets

• Institutional
• Government
• Technology
• Healthcare
• Financial
• Commerical

Focus

• High Reliability Requirement
• Risk Averse
• Mindful of Operating Cost
• Higher Return Use of Capital
• Focus on core mission

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District Energy Presence in US

Type and Number of Systems:

• Colleges & Universities

400

• Community Utilities

119

• Healthcare Installations

251

• Military/Gov Installations

41

• Airports

10

• Industrial

13

• Other

3

• Total

837

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District Heating/Cooling Benefits to Microgrid

I. Resilient Platform

• N+1 equipment and system redundancy
• Multi-source fuel
• Specialized, trained staff
• Proven Reliability (99.99%)
• Mission critical service

II. Customer Cost Reduction

• Eliminates capital for heating / cooling source
• 10 - 20% of total project cost
• Sunk facility cost even if unused in future
• No legacy re-investment costs
• Eliminates ownership risk of non-core, depreciating asset
• Lower lifecycle costs than owning equipment on-site

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District Heating/Cooling Benefits to Microgrid

III. Lowers critical load capacity

• Data centers require electricity to operate and to power a

cooling source

• District cooling reduces up to ½ load back-up load

requirement at data or critical operations site

IV. Conserves space in data centers

• Increase rack density per square foot
• Water is more efficient conductor than air
• 1 GPM of water removes equivalent of 1,050 GPM of air

VI. District water return system water (55F) adequate to use for cooling

• Lower cost than primary chilled water (40F)
• Maintain humidity
• Improves system efficiency by improving temperature delta

across system

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District Energy Lifecycle Cost Comparison

District Energy

• Lease instead of purchase of

depreciating asset

• Minimal construction
• Pay for what capacity you need now

and buy more in the future if needed

• No significant equipment
• No employee costs
• N+1 redundancy / 99.99% reliable
• No future capital
• Minimal maintenance
• Hight return on conservation
• Leverage hedged electric, gas

purchasing strategies with a balanced use profile

• Opportunity for demand response

income

In-Building Systems

• Investing in a non-core, depreciating

asset

• Major construction project
• Design systems for 125% of maximum

need

• Does not include N+1 redundancy
• Commissioning risk
• Hire/train/manage an operating staff
• 100% at risk for:
• Operating efficiency
• Maintenance
• Capital needs
• Limited return for conservation
• Commodity purchasing risk for gas

and electric for single building

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Benefits of Adding a Microgrid to District Energy Platform

I. Reduces start-up and execution risk of microgrid

• Like-minded, urban infrastructure business
• Financing capability for long term investments
• Established and experienced operating capacity

II. Lowers Build-Out Cost

• Energy production site has extensive utility

infrastructure

• 24-Hour staffed control center to monitor and operate

microgrid

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Benefits of Adding a Microgrid to District Energy Platform

• III. Leverages Production Efficiencies
• Economy of scale
• Levelized utility use profiles
• Commodity purchasing power (elec / natgas)
• Capital
• Maintenance
• Staffing Cost
• Implement most efficient generation technologies
• Cogeneration (electric / steam)
• Trigeneration (electric / steam / chilled water)

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Cogeneration

• Co-production of thermal and

electric energy from one facility

• Commonly referred to as

combined heat and power (CHP)

• Highest efficiency energy

production facility

• Lowest carbon footprint plant

design

• Endorsed by both the

Department of Energy and Environmental Protection Agency as most efficient energy platform

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Cogeneration

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• Conversion of turbine waste heat to useful energy is key to cogeneration success
• System electric output sized on minimum, consistent thermal load
• District systems utilize aggregated thermal loads to create necessary scale and

efficiency

Data sourced from US Energy Information Administration

Trigeneration

• Simultaneous production of three sources of usable

energy

• Most efficient and lowest carbon energy production

system

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