A Shift in Power

FROM THE JULY ISSUE: Energy recycling technologies and changing market dynamics provide new options for electricity production, and revive opportunities for old ones.
By Susanne Retka Schill | June 25, 2018

Improving energy efficiency has long been the goal at ethanol plants and, increasingly, driving down carbon intensity is equally important. Changing market dynamics are opening the door for some new and old energy technologies. 

In particular, energy efficiency technologies that reduce carbon intensity provide an additional payback for those shipping to the West Coast. Under California’s Low Carbon Fuel Standard, a one-point drop in a plant’s carbon intensity is potentially worth 1 cent per gallon at spring values for carbon credits. Nick Bowdish, CEO of Siouxland Ethanol, an 80 MMgy plant in Jackson, Nebraska, reports the plant’s carbon intensity score dropped more than three points after installing a new heat recovery system and could drop another point or so when the second phase of the project is complete. With virtually all its ethanol shipped to California, Bowdish says lowering carbon intensity “takes economics that I would call average and turns them into economics that are pretty exciting.”

Siouxland is the first plant to install Bioleap Inc.’s Dryer Exhaust Energy Recovery system. Wayne Mitchell, Bioleap CEO, explains the system recovers low-quality, lower-temperature energy from the dryer exhaust and upgrades it to medium-pressure, boiler-quality steam. “I’ve been in the industry since 1992, and we knew back then there was a lot of energy going up the stack, but nobody figured out a way to recover it,” he says. “Our system is unique and efficient.” Depending on the plant, the DEER system adds 15 to 20 percent more steam, he says. The return on investment on natural gas savings alone is three to four years.

But many plants might see the real benefit of added steam in overcoming boiler capacity restrictions. And of course, for those shipping to California, a means of lowering carbon intensity. The DEER system also produces water that can replace fresh water, Mitchell says, at rates between 80 and 150 gallons per minute, depending on the plant.

CHP Revisited
Running 24/7, year-round, ethanol plants are prime candidates for combined heat and power (CHP), using high-pressure steam to first generate electricity. Conventional electrical generation loses the remaining lower-pressure heat up the stack, making the process around 30 percent efficient. Using the steam in the ethanol process bumps the overall efficiency closer to 80 percent—an attractive greenhouse gas (GHG) reducer. Still, CHP has been relatively uncommon in the ethanol industry, partly because of the high capital cost and, in recent years, low natural gas prices. Also, many plants got favorable rates from rural electric cooperatives or other suppliers that welcomed increased loads.
Those market dynamics are changing, says Dalia El Tawy, director of thermal power solutions at Siemens Energy Inc. “The abundance of natural gas at really low cost is absolutely helping, and the fact that CHP results in one of the highest efficiencies for the overall system.” Some regions have incentives to adopt GHG-reducing technologies, and in some cases, even larger utilities are interested in owning CHP plants at industrial sites, she reports. Other reasons to consider CHP include rising electric rates and aging equipment. “Even in areas where electricity is cheap, but not very reliable, the interruptions to the process drives manufacturers to having their own power as backup, or it could be their primary power and the grid is the backup,” she says.

Historically working in large, utility-scale generation over 100 megawatts, Siemens’ portfolio has expanded to include 5 to 60 MW options. An acquisition from Dresser Rand added smaller reciprocating engine technology and another from Rolls Royce added industrial aeroderivative gas turbines. The smaller turbines, similar to airplane jet engines, offer flexibility, she explains. With a small footprint and quick, cold starts, they can be integrated with renewables like wind or solar with intermittent generation. Siemens works with manufacturers to determine the best configuration for CHP at each facility. “We ask customers to give us their bills for a year,” El Tawy says, adding the bills are used to evaluate loads. The company also offers financing services, including one where the plant pays for itself using the energy savings it generates.

“The market is shifting from centralized, large power plants to more distributive generation,” El Tawy continues. “Siemens is very focused on this market.” Interest is growing among utilities for the same reason individual facilities contemplate CHP, she says, addressing concerns about system reliability caused by multiple factors: remoteness, an aging grid, frequent disruptive weather events or even the potential for man-made interruptions.

In Nebraska, Perennial Public Power is adopting one of the new business models in supplying low-carbon renewable energy to an ethanol customer in its service region in York and Fillmore counties—Bluestem Energy Solutions. “Plant management approached us a few years ago about renewable energy, and we didn’t have anything at the time,” says Jamey Pankoke, Perennial general manager. By the end of the summer, three wind turbines will be supplying renewable power to the plant.

The public utility worked with Bluestem to install the three turbines with a total 6.9 MW generating capacity, delivering power via underground lines to Perennial’s substation serving the plant. “We’ll have a separate bill for the wind energy that will show how many kilowatt hours we delivered,” Pankoke says. “We will also sell the renewable electricity credits to them, if they want.”

The business model solves a major issue for rural power suppliers. “We won’t be losing load,” Pankoke explains. Bluestem will own and operate the wind turbines, and Perennial will buy the power from Bluestem. “We have room under our wholesale contract for up to 10 percent of our peak load for renewables from other utilities,” he explains. “It’s not costing our other customers. The little bit of premium we get will cover our cost and a little above, and it keeps our largest customer.”

Adam Herink, vice president of Bluestem Energy Solutions, describes it as a win-win-win model. “The local distribution utility is able to go through a partnership with Bluestem. We take on the operational risk, the debt and financial risk. We allow that local utility to make that transformative decision to stay in the 21st century and offer their largest and best industrial customers what they need.” Bluestem is technology agnostic, he adds, and will work with local distribution utilities to determine which combination of wind, solar or natural gas will work best.

“These smaller, 5 to 10 MW projects are a resourceful way to do renewable energy,” Herink says. The intermittent nature of wind or solar generation is offset by integration with the utility, and the utility doesn’t take on the financial and operational risk, although it does enter into a long-term power purchase agreement with Bluestem. “It really is a winning model for rural utilities to invest back into their service areas, and offer their largest customers a turnkey solution so they don’t have to get into the electric generation business themselves.”

Perennial has a 25-year contract with Bluestem. Long-term contracts not being the norm in the ethanol industry, Pankoke says they negotiated a shorter, renewable contract with the plant. He hopes the plant will not only renew, but will continue to work with the utility as it adopts new technologies. “We want to see them expand,” he says. “We want to help because of the value ethanol brings to our area—not only the jobs but the value of corn.”

Author: Susanne Retka Schill
Freelance Journalist