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Waste Heat as Clean as Wind Deserves U.S. Help, GE Group Says
2011-01-10 05:00:02.1 GMT
By Jim Snyder
Jan. 10 (Bloomberg) -- The gray steam rising from the
smokestacks of industrial plants is an energy resource as green
as a wind turbine or a solar panel, according to General
Electric Co., the Sierra Club and the United Steelworkers union.
It's also equally deserving of federal tax help, say GE and
its partners in an alliance lobbying U.S. lawmakers to provide
incentives for capturing and recycling the waste heat.
Heat vented from facilities such as steel mills, cement
kilns, glass manufacturers and natural-gas compressor stations
could generate enough clean energy to power more than 7 million
homes, based on a study by ICF International, a consulting firm.
"There is a tremendous opportunity to cut costs, the
amount of fuel we are burning, and to cut CO2," said Tom
Casten, chairman of Recycled Energy Development LLC, a closely
held waste-heat company in Westmont, Illinois.
With cap-and-trade legislation to combat global warming
dead in Washington, supporters say government incentives to
capture waste heat would help companies meet planned
Environmental Protection Agency carbon-dioxide regulations as
well as standards requiring the use of renewable energy under
consideration in Congress.
Capturing waste heat typically costs $1.5 million to $3.5
million per megawatt generated, according to the Energy
Department. While that's less expensive than a new coal plant,
waste heat often can't compete with decades-old generators
unless extra credit is given for the recycled energy's
environmental benefits, according to Casten.
Waste heat is also at a competitive disadvantage because it
doesn't get federal tax breaks benefiting solar and wind-
generation projects or count toward renewable-energy mandates in
certain states, advocates say.
Level Playing Field
"The issue is trying to create a level playing field,"
Paul Thomsen, director of policy and business development at
Ormat Technologies Inc., a Reno, Nevada-based unit of Ormat
Industries Ltd. of Yavne, Israel, said in a phone interview.
The study by ICF International of Fairfax, Virginia, in
2006 estimated that as much as 9 gigawatts of power could be
recovered from industrial facilities and natural-gas compressor
stations. That is the equivalent of $4.3 billion in annual
electricity costs, assuming the industries used that power 80
percent of the year and paid 6.85 cents per kilowatt-hour, the
average industry cost reported to the Energy Information
Administration for 2010.
The Sierra Club and the Steelworkers union joined 20
businesses such as GE, Dow Chemical Co. and Recycled Energy in
signing a Sept. 29 letter urging lawmakers to support a first-
ever tax break for waste heat as a way to cut greenhouse-gas
emissions and create jobs.
GE's Acquisition
GE, which reported 24 percent of its 2009 revenue from
energy-infrastructure sales, expanded in the business with the
October purchase of Calnetix Power Solutions Inc., a maker of
waste-heat power generation systems in Stuart, Florida, for an
undisclosed sum.
Tax breaks for capturing waste heat would give investors
"greater confidence" in the technology, Shonodeep Modak,
senior marketing manager for GE Energy, wrote in an e-mail.
Casten's company developed a project to capture the 1,400-
degree Fahrenheit (760 degrees Celsius) heat exhaust from West
Virginia Alloys Inc., a subsidiary of Globe Specialty Metals
Inc. of New York that manufacturers silicon by heating quartz
and coal in furnaces.
Denham Capital's Role
The project, costing more than $180 million, will produce
at least 65 megawatts of power and reduce carbon emissions by
518,000 metric tons a year, according to Dick Munson, Recycled
Energy's vice president for public affairs. It was partially
paid for by Denham Capital Management LP, a Boston-based private
equity firm whose investors have included Microsoft Corp.
Chairman Bill Gates and Harvard University.
The Tennessee Valley Authority will buy the power, and West
Virginia Alloys will get half of the revenue once investors
recoup their costs, Munson said in an e-mail.
While large projects like the one at West Virginia Alloys
can compete without tax help, most opportunities are at smaller
facilities that have trouble attracting investors, Munson said.
Senators Jeff Bingaman, a New Mexico Democrat who is the
new chairman of the Energy and Natural Resources Committee, and
Olympia Snowe, a Maine Republican, introduced legislation last
year to provide a break for waste heat. Bingaman will work with
Snowe to advance the tax breaks this year, according to a
statement issued by his staff on Dec. 17.
A House bill introduced last year by Representative Paul
Tonko, a New York Democrat, and supported by Representative Ron
Paul, a Texas Republican and Tea Party favorite for his
opposition to government spending, would provide waste-heat
companies a 30 percent investment tax credit that solar
developers now receive.
Used or Sold
As much as 20 percent to 50 percent of the energy that
manufacturing processes consume is released as waste heat,
according to a 2008 Energy Department report. That power can be
used by the factory where it's captured, sold to the local power
grid, or both.
High-temperature exhaust like that from the West Virginia
silicon plant can be captured more economically than lower-grade
heat. That raises a challenge for developers because most of the
unrecovered heat in the U.S. is at temperatures below 450
degrees Fahrenheit, defined as "low-quality" in the Energy
Department study.
Vaporizing Refrigerant
A process called the Organic Rankine Cycle can now capture
and use lower-temperature heat, expanding the number of
factories that can double as a clean-energy source, said Tom
Pierson, founder of TAS Energy Inc., a Houston-based
manufacturer of waste-heat equipment.
Captured heat is used to vaporize a refrigerant or a
hydrocarbon, which spins a turbine to make power. The vapor is
returned to a liquid and used again without releasing greenhouse
gases.
Waste heat is similar to cogeneration, also an energy
efficiency effort that links thermal energy with electricity. In
cogeneration, factories or office parks get both power and heat
from a source on site or nearby.
Together, waste heat and cogeneration can provide as much
as 20 percent of the nation's electricity by 2030, equal to the
amount now generated by the nuclear-power industry, the Oak
Ridge National Laboratory in Tennessee said in a December 2008
report. Combined heat and power now meets 8 percent of U.S.
electricity demand, according to the U.S. Clean Heat and Power
Association in Alexandria, Virginia.
Challenge in Congress
Winning support for new spending and tax measures may be
difficult in the new Congress, said Michael Fulton, a Washington
lobbyist for Chicago-based GolinHarris who is seeking a tax
break for insulation at industrial plants.
"Any new tax incentive in the energy arena is going to be
a major lift given the deficit situation, regardless of the
benefits it brings," Fulton said in a phone interview.
Congress shouldn't provide additional subsidies for energy
development because they create an inefficient market, said
Kenneth Green, an energy scholar at the American Enterprise
Institute in Washington, which advocates free-market approaches.
"You only subsidize something that consumers don't want,"
he said.
For Related News and Information:
Top energy stories: ETOP <GO>
Carbon markets: EMIS <GO>
Top renewable-energy stories: GREEN <GO>
Top business and government news: GBIZ <GO>
--Editors: Larry Liebert, Steve Geimann
To contact the reporter on this story:
Jim Snyder in Washington at +1-202-624-1972 or
jsnyder24@bloomberg.net.
To contact the editor responsible for this story:
Larry Liebert at +1-202-624-1936 or
lliebert@bloomberg.net.
