In the Move to Go Green, Gray Power Should Be a Significant Player

By Jude Noland
September 22, 2008 from Clearing Up—Notes & Comments

While cries of "Drill, baby, drill!" continue to bounce off the walls, other opinions are also being voiced—and we should be listening.

One is that of Thomas L. Friedman, The New York Times columnist who has just published the book, "Hot, Flat and Crowded: Why We Need a Green Revolution . . . And How It Can Renew America."

I just received it and haven't read it yet, but I heard Friedman interviewed recently, and I liked what I heard. He talked a lot about the energy policy missteps of the past 25 years and of the importance of efficiency in solving the current energy crisis.

Another is in Forbes magazine. The publication's September issue includes an article, "Gray Is the New Green," about Tom Casten's company, Recycled Energy Development, and his efforts to capture the heat and other energy wasted in the nation's industries and recycle it into usable energy. That's Gray Power.

You may have heard of Tom Casten before. He has been in the energy business for at least 30 years, focusing on decentralized energy projects. I heard him speak at a Northwest energy seminar, probably in the early 1990s. Casten founded Trigen Energy Corp. in 1977 and was its president and CEO until 2000; then founded Primary Energy Ventures LLC, where he served as chair and CEO until 2006, when he and son Sean started Recycled Energy Development. Sean is president and CEO of RED; Tom is its chairman.

I came across his name again this spring, in the May issue of The Atlantic magazine, which included a profile of Casten and RED. I was pleased to see that he was still involved, and excited to learn about his latest enterprise. Throughout his career, Casten has been focused on the same goal: reducing the amount of energy wasted in various industrial processes and putting it to use, wringing out every last kilowatt of electricity.

"If we recycle energy that an industrial plant is throwing away, we have zero incremental fossil fuel or greenhouse gas, so as a simple matter it is as pristine as a windmill or new solar," Casten told me. "Actually, it's better than that, because if we do like we have done at steel companies—take blast furnace gas that was flared, convert it to heat and power—we displace the fossil fuel in the boiler, and [the fuel] that would have been used to make electricity."

At this point, Recycled Energy Development works directly with industrial companies, not utilities. The company hopes to develop a $1.5-billion portfolio of waste energy recycling projects. RED started with "EPA databases that show half a million exhaust stacks in country," he said, and is focusing on those industries that have a lot of exhaust. "We see great opportunities in all of the metals—silicon, magnesium, steel," he said. "Anybody making glass is throwing heat away; anyone making sheet rock or ceiling tile." "We can do amazing things to ethanol production—triple the amount of fossil savings from producing corn-based ethanol by putting local generation plants there," he added.

Chemical factories have big opportunities for cogeneration and heat recovery, and many pipeline compressor stations throw heat away, too, Casten said.

(As an aside, Puget Sound Energy entered a PPA in 2006 with Reno-based Ormat for 5 MW generated with waste heat from the Northwest Pipeline's Sumas compressor station (CU No. 1183 [10.6], 1191 [8.3]). The heat-recovery units are modifications of the geothermal binary-fluid power plants Ormat manufactures.)

RED's latest project, as featured in Forbes, involves installing a $55-million, 40-plus MW heat recycling system at a West Virginia Alloys silicon smelter. For the last 80 years, silicon furnaces have operated the same way, dumping huge amounts of excess heat, Casten explained. Nowadays, they run the exhaust through a bag house to remove particulates.

"They run as much air through as possible, but we want the air for steam." Casten said.

So rather than venting the ultra-hot exhaust from West Virginia Alloys' five electric arc furnaces, RED will install waste-heat recovery boilers, recycle the heat into steam, and use the steam to drive a turbine generator.

"The resulting energy will provide nearly one-third of the electricity used in the furnaces, reducing the need for grid-purchased power and its associated emissions," according to a project fact sheet on RED's Web site, recycledenergy. com/documents/projects/fact-sheet-globe.pdf.

RED will cover the capital costs and provide the energy expertise, and West Virginia Alloys will contract with RED to buy the power from the project. RED will get a "modest return" on its capital, and split all remaining financial benefits with West Virginia Alloys.

Besides producing 40 to 44 MW of clean energy with no fossil fuels, the project will reduce CO2 emissions by 290,000 metric tons annually, equal to removing "nearly 60,000 cars from the road," the fact sheet indicates.

RED expects the West Virginia Alloys project will be up and running by 2010. Casten said such projects require some environmental permitting and "some way around monopoly utility restrictions," but can generally be completed from 10 months to three years.

"When you get all that together, all these things pretty much continue in force," Casten said.

In fact, almost all of the 200 or so projects he developed at Trigen are still in operation, he said. Those projects save their hosts about $500 million annually and 5 million tons of carbon emissions per year.

The U.S. economy wastes 55 percent of the energy it consumes, according to the Atlantic article; so there are many more opportunities just like this. Why, then, aren't we seeing millions more, or at least a thousand points of such light? Because, according to Casten, they are still incredibly difficult to develop.

"There is no such thing as a cookie cutter in a local generation project; it's not a matter of going out and buying a model and sticking it in with a plug," he said. It takes an understanding of the specific industrial process—or processes—and "very often we have to convince them to change their processes," Casten pointed out. Those closest to the operation know the processes, but aren't always able to see all the ways of pulling those processes together.

"We typically tell a host, when this is finally done, somebody is going to look at it and say, 'this is obvious'," he said. "But it's not obvious until it's obvious."

Then there's the utility disincentive. "Frankly, as long as the utilities are allowed to charge whatever they have to charge to get the electric plants to pencil, they are going to do that because it's just easier," he said.

If recycling industrial waste energy can only displace the retail electricity purchase, "we are looking at 4 to 6 cents per KWh," Casten said. "But meantime, somewhere else some [regulatory] commission is raising its hand and saying, 'yes, it's okay to build a coal plant that will cost 11 cents.'"

At the same time, "if we're converting an industrial waste stream into electricity only, we can probably get by for 6 to 7 cents, depending on the size," he said.

For a brand new fossil-fired CHP, using the same gas plant but recovering the heat, it's 7-9 cents/KWh to make it pay off.

"All of that local generation is significantly cheaper than any option for electric-only central generation—significantly cheaper . . . and by definition way less polluting," especially in terms of greenhouse gas, he said.

Still, Casten believes that very few changes in the rules would make such Gray Power projects easier to develop, at a tremendous benefit to the economy.

"At the bottom of the deal, we have a very simple choice—continue with the century-old process of having one fire to make electricity, throwing the heat away, and making another fire to make heat . . . or change the rules and do both jobs with one fire," Casten said. "When natural gas costs $10 per MMBtu, it pays to make these changes."

Casten adds that it's frustrating "to know that there is such an easy way to fix it that benefits almost everybody . . . we just haven't been eloquent enough to explain it to everybody, so we just go keep making money for our investors and hope somebody listens some day."

It's time to start listening—and acting.

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Copyright ©2008 , Energy NewsData Corporation

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