Smart Cogeneration & Refining Help Cities Compete
by Angelos Angelou, Floyd Akers, and Phillip P. Gennarelli
Natural gas fracking and other changes in the U.S. energy sector have provided a boom to oil and gas industries, especially in central Texas’ Eagleford shale. That boom is reverberating in small communities with non-competitive pricing models, pitting them against larger communities in the competition for new high energy consuming customers.
Whether you are a start-up wishing to participate in central Texas’ booming economy or a small Austin-based business seeking to expand, keeping utility costs down and profitability healthy is a constant battle and can make a difference between success and failure.
One central Texas city without its own utility has found a way to use new technology and recent regulatory changes to compete successfully. By partnering with FirstPower Energy, the City of Pflugerville, Texas will be integrating traditional utility services into one of the first community smart multi-grid systems (SMGS) in Central Texas using smart cogeneration as an operating platform.
Economic & Environmental Impacts Across the U.S.
While the project will need to clear several hurdles as it executes its plans under new Texas CHP open access legislation allowing CHP facilities to sell electricity to all their thermal energy customers (HB 2049), the path to commercial startup is clearer today than it was several years ago. With the start-up and operation of the Helios Energy Center, the PCDC – even in the face of significantly lower grid
power – has indeed found smart cogeneration as a profitable way of minimizing energy and cooling costs. Other industry players and cities are noticing this shift as well.
Per a 2011 study distributed by the Texas CHP Initiative, increasing CHP power production from 20-35 percent across the state would have the same impact of: (i) increasing annual natural gas consumption by 533 BCF worth $2.3 billion to producers, (ii) lowering annual CO2, SO2, and NOx by 600 tons equivalent to retiring 53-500 MW coal plants; and, (iii) lowering annual water consumption by 25 billion gallons per year, equivalent to water used by ten 500 MW coal plants per year.
In addition to Texas, CHP incentives in California and New Jersey have recently been announced supporting greater use of CHP and onsite generation to increase their generation reserve margins and improve grid reliability. This effort has been especially acute in hard hit areas of New Jersey where local communities are taking a more active approach to grid management after the devastation caused by Super Storm Sandy.
Future Trends – Efficient Natural Gas Technologies Take the Lead in Helping Communities Compete
In addition to smart cogeneration, smart refining is also being used a means to compete. Recently, the City of Ashtabula, Ohio announced a $100 million state of the art 2,800 barrel of oil per day natural gas to liquids (GTL) facility that will create 30 new, direct, well-paying jobs, 400 temporary construction jobs, as well as result in the creation of an estimated 112 indirect jobs, to give a total of 542 local jobs. It will convert abundant low-cost natural gas from the Utica and Marcellus shale region, into high-value specialty products (solvents, lubricants, and waxes), as well as ultra clean transportation fuels. Up to now, GTL technology infrastructure has been the playground of bigger companies along the Gulf of Mexico where expenditures greater than $5 billion are common. We believe a move to smaller cities for micro natural gas technologies is a trend that will continue as other states rich in natural gas supply increasingly look for ways to leverage their resources.
A Low Carbon Future is Coming
Renewable electricity generation has been the predominant beneficiary of the green agenda that came to the fore after 2000. Yet, compared to low carbon CHP heating/cooling, energy efficiency, and low carbon processing, its impact on carbon emissions is modest. By 2020, we see an industry paradigm shift to a low carbon economy where the policy agenda will instead be dominated by the need to accelerate improvements in smart natural gas technologies such as CHP energy efficiency and GTL processing The early signs are already there: re: the new $8 bn DOE solicitation draft “Advanced Fossil Energy Projects Solicitation,” and a raft of measures in the European Union point to a future low-carbon world economy. Indeed, efficient distributed power and refining systems will be substantial beneficiaries of this agenda.
The Bottom Line
New micro-grid technologies such as smart cogeneration in Texas, California, and New Jersey and smart refining in Ohio are entering a period of tremendous change—and opportunity. A confluence of factors is now setting the stage for new commercial vehicles to lower the cost of energy and unlock the next phase of CHP power and GTL development. Local communities willing to step forward and seize this opportunity will profit both from growing their tax base and as market leaders in the forefront of economic development expansion.
About the Authors:
Angelos Angelou is the Founding Principal of Angelou Economics, an
Austin, Texas based economic development advisory firm. For additional
information, please visit: www.angeloueconomics.com.
Floyd Akers is the Executive Director of the Pflugerville Economic
Development Corporation. For additional information, please visit:
Phillip P. Gennarelli is the President of FirstPower Energy Texas LLC,
an Austin-based developer of smart multi-grid systems. Additional
information, please visit: www.firstpowerenergy.net.