Distributed Energy System- pooling heat and power -

22nd September, 2004

IPCC Expert Meeting, Tokyo, Japan

Hiroshi Ozaki

1

Introduction

The 21st Century - the Age of Natural Gasabundant reserves and low environmental impact

Japan's Energy Policy and Energy Supply / Demand Prospects

shift to natural gas increasing use of distributed energy systems

Role of Japanese gas utilities• to improve the efficiency & economics of natural gas

cogeneration systems• to promote distributed energy networks

2

Distributed Energy System vs. Centralised power system

Performance effective use of exhaust heat and no transmission loss energy savings through combination of energy systems (ie. distributed +distributed or distributed + centralised)

Reliabilitylow risk of investment = high probability to materialiseadditional power source improvement in the stability of power supply for customers

Diversityplayers increase in number and competition bringsefficiency improvement

3

Natural Gas

Combustion Products (Coal = 100)

Oil70

Coal100

SOxCoal100

Oil80

Natural Gas60

CO2Oil70

Coal100

NOxNatural Gas

20-40

Natural Gas0

(Source: The Institute of Energy Economics, Japan)

System Efficiency

Electricity34.2

Hot water31.5

34.234.2

31.5 31.5Heat pump

water heaterCOP4

Large-scale centralisedpower station

Efficiency through toend user 36.6%

115

Waste heat

7.9

Auxiliary equipment

1.8

High efficiency gas engine(200-300kW)

100

Generating efficiency 36%Exhaust heat recovery rate 31.5%

4

CO2 Reduction Potential

7335299**Estimated CO2

mitigation(million t-CO2)

56152714*Installation potential(GW)

TotalIndustrialConsumer/commercial

Consumer/residentialSector

Equivalent to 6.2% of Japan's greenhouse gas emissions in 1990

* Installation potential : "New Energy Potential and Economy" (METI, January 2000).

** CO2 mitigation : estimated by Japan Gas Association.

5

Prospects of Distributed Energy

[Share of natural gas cogeneration in the total generating markets (FY 2000):capacity base ]

[Prospects for distributed energy systems in a scenario with progress in energy saving ]

4.9 4.1 2.2 0.9

8.5

18.1

28.2

05

1015202530

Netherlands Denmark Germany Italy UK USA Japan (2003)

%[x 10MW]

OthersFuel oilKeroseneLPGNatural gas

Incentives available in Europe•subsidies for installing facilities•tax incentives (exemptions from environment

tax, etc.)•subsidies for development of technology, etc.

( Source: "Prospects for Energy Supply and Demand in 2030" (METI, June 2004) )

1711

561233233

561

1711

45

132

443

131

283

411

610

65

58

40

23

44

2936

649

1205

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2002FY 2010FY 2030FY

OthersHFOKerosineLPGNatural Gas

Estimated CO2 reduction: 24 million t-CO2 (JGA estimates)

233561

1711

6

R&D on the Efficiency

SOFC

GE

GT

PEFC

20

30

40

50

60

70

2004 2010 2020 2030

SOFC

GE

GT

PEFC

Elec

tric

al e

ffici

ency

(% L

HV)

(Source: Surveys for Formulation of Policy for Energy Technology Strategy (in the Field of New Energies) (MITI, March 2000))

Note: SOFC: solid oxide fuel cells, PEFC: proton-exchange membrane fuel cells, GE: gas engines, GT: gas turbines

7

Energy Pool

Next-generation micro-cogeneration/fuel cells

Homes

Hospitals

Electricity from waste

Large-scale centralisedpower stationNext-generation

cogeneration/fuel cells

Wind power

Electric power networks

Stores

Factories

Waste treatment plants

Natural gas pipeline network

Hydrogen stations

Eco-stations

Natural gas/fuel cell vehicles

Solar powerLNG terminals

Hydrogen stations

Hydrogen stationsCondominiums

Next-generation cogeneration/fuel cells Fuel cell vehicles

Internet

Trading in electricity

Trade in heat

Trading in Hydrogen

Residential cogeneration/fuel

cells

Next-generation micro-cogeneration/fuel cells

Homes

Hospitals

Electricity from waste

Large-scale centralisedpower stationNext-generation

cogeneration/fuel cells

Wind power

Electric power networks

Stores

Factories

Waste treatment plants

Natural gas pipeline network

Hydrogen stations

Eco-stations

Natural gas/fuel cell vehicles

Solar powerLNG terminals

Hydrogen stations

Hydrogen stationsCondominiums

Next-generation cogeneration/fuel cells Fuel cell vehicles

Internet

Trading in electricity

Trade in heat

Trading in Hydrogen

Residential cogeneration/fuel

cells

8

Roppongi Hills : an example

Roppongi Hills Mori Tower

TV Asahi

Hollywood Beauty PlazaRoppongi Hills Residence

Keyakizaka Terrace

Grand Hyatt Tokyo

Roppongi Hills Residence

Keyakizaka Complex

Roppongi Hills Mori Tower

TV Asahi

Hollywood Beauty PlazaRoppongi Hills Residence

Keyakizaka Terrace

Grand Hyatt Tokyo

Roppongi Hills Residence

Keyakizaka Complex

<Effect of distributed energy system (estimated) >Reduction in primary energy consumption: 20%Reduction in CO2 emissions: 27%

　

Electricity supply facilities District heating and cooling facilities

Roppngi Hills Mori Tower

Grand Hyatt TokyoKeyakizaka Complex

ElectricityCold water

Steam ElectricityCold water

Steam ElectricityCold water

Steam Cold water Steam

Hollywood Beauty Plaza

Keyakizaka Terrace

Roppongi Hills Residence

TV Asahi Roppongi Hills Gate Tower

Heat supply piping

Exhaust gas Exhaust heat boiler

City gas

Generator

Electricity receiving facilities

Backup electricity(Complementary power supply)

Steam injection gas turbine Back-pressure steam facilities

GeneratorSteam

Steam

City gas

Steam

Electricity

Steam boiler

Steam absorption chiller

　

Electricity supply facilities District heating and cooling facilities

Roppngi Hills Mori Tower

Grand Hyatt TokyoKeyakizaka Complex

ElectricityCold water

Steam ElectricityCold water

Steam ElectricityCold water

Steam Cold water Steam

Hollywood Beauty Plaza

Keyakizaka Terrace

Roppongi Hills Residence

TV Asahi Roppongi Hills Gate Tower

Heat supply piping

Exhaust gas Exhaust heat boiler

City gas

Generator

Electricity receiving facilities

Backup electricity(Complementary power supply)

Steam injection gas turbine Back-pressure steam facilities

GeneratorSteam

Steam

City gas

Steam

Electricity

Steam boiler

Steam absorption chiller

9

Agenda for the Future

Potential sites for heat and power pooling:More than 1,000 locations identified in Japan

(Source: Japan District Heating & Cooling Association)

Coordinated action by the national and the local governments with private sectors

to make pooling a standard feature of urban development projects to take the initiative in introducing core facilities of poolingto incorporate renewable energies, etc.

Easy access method to the power grid

10

Business Creation

Financial services

Power supply cogeneration

LNG purchasing Gas supply

Financial institutions (Banks, securities companies, leasing companies, etc.)

Diagnosis for energy savingsProcedures for

system introduction /adjustment

Users

Energy supply companies (Gas, electricity, oil, etc.)

Building management companies

Construction and construction materials companies

Heavy electric manufacturersEnergy appliance manufacturers

Trading companies

Engineering companies

ESCO, ESP businesses

Areawide load adjustment

(Electricity/heat etc.)

Operation/controlInspection and maintenance

Measuring/remote monitoring

Equipment ownership

Procurement of equipmentInstallation

work

Flow of onsite energy service business

Financial services

Power supply cogeneration

LNG purchasing Gas supply

Financial institutions (Banks, securities companies, leasing companies, etc.)

Diagnosis for energy savingsProcedures for

system introduction /adjustment

Users

Energy supply companies (Gas, electricity, oil, etc.)

Building management companies

Construction and construction materials companies

Heavy electric manufacturersEnergy appliance manufacturers

Trading companies

Engineering companies

ESCO, ESP businesses

Areawide load adjustment

(Electricity/heat etc.)

Operation/controlInspection and maintenance

Measuring/remote monitoring

Equipment ownership

Procurement of equipmentInstallation

work

Flow of onsite energy service business

*Solid lines mark core business areas

Business expansionEntry into new market

Service Variety

11

Conclusions

Connecting distributed energy systems to local area networks

to maximise energy efficiency, to provide new business opportunities, to make a variety of services available to customers.

Japanese experience and technology will be transferred overseas by ESCO’s and ESP’s as their businessexpands, which is the key to achieving energy savings and CO2 reductions on an international basis.