To: DEED BoardApril 13, 2006

From: Jim Walters

Subject: DEED HESS PHASE II FIRST QUARTER REPORT

Project Title: Hybrid Energy System Study (HESS) Phase II.

Utility Name and Address: Rochester Public Utilities, 4000 East River Road NE, Rochester, Minnesota 55906-2813

Key Personnel & Phone Numbers: Jim Walters, CEM, Director of Customer Relations, 507-280-1606, who is the RPU HESS management contact. Tony Benson, Communications Coordinator, 507-280-1534, who is the RPU communications contact.

Description: The HESS Project is a joint research project between the University of Minnesota Rochester (UMR), Rochester Public Utilities (RPU), and other Consortium partners. With the completion of the Phase I basic study on fuel cells, the RPU/UMR partnership will move to a project level that begins to make full use of fuel cell capabilities. Fuel cells typically run at an efficiency level of about 40% when generating electricity. A major part of the efficiency loss is in the heat generated during the fuel cells operation. Capturing this heat, and making use of it as part of a systems energy solution is the focus of Phase II. The objective of HESS Phase II is to explore the application of a fuel cell in conjunction with a geothermal heat system. In particular, we will study how best to integrate a fuel cell and a heat pump based geothermal heating system. The project will study processes to capture the excess heat from the fuel cell and make it available for use by the heat pump. We will study the amount of heat that can be captured from the fuel cell, time lines involved in both the capture and release of this heat, and how effective this will be in increasing the overall system efficiency.

While not related directly to the research investigation for this project, the project has expanded to include the construction of a significant building to house the HESS test laboratory. The test laboratory will be an addition to buildings at the QuarryHillNatureCenter in Rochester, Minnesota. The Center is owned by the City of Rochester. A significant number of contractors and other institutions within Rochester, including RPU and the City of Rochester have made donations for the construction of the 24 by 24 ft laboratory addition to the Center. After the HESS project is complete, the building will be turned over to the QuarryHillNatureCenter for use as an energy educational building which will be jointly managed by RPU. While this is all very positive, it has delayed somewhat the actual research work on the HESS Phase II project.

Dates/Project Timelines:

Part 1: Aug 15, 2005 – Dec 15, 2005

  • Finalize selection of test site
  • Define geothermal system and fuel cell designs
  • Define and select test facility and experimental equipment

Part 2: Dec 15, 2005 – April 15, 2006

  • Complete installation of geothermal field/system
  • Set up fuel cell/integrate into geothermal system
  • Install and verify experimental monitoring and analysis equipment
  • Begin market potential assessment

Part 3: April 15, 2006 – Sept 15, 2006

  • Verify operation of integrated test system
  • Begin structured testing and operation of system
  • Confirm test set up design and operation
  • Begin to collect first experimental data
  • Ongoing market potential assessment

Part 4: Sept 15, 2006 – May 15, 2007

  • Stress/evaluate integrated test system under various conditions/modes of operation
  • Collect sufficient data to allow for development of a comprehensive system model
  • Ongoing market potential assessment

Part 5: May 15, 2007 – Aug 15, 2007

  • Summarize experimental data collected; run final tests
  • Complete development of total system model
  • Define areas of market opportunity that could be ‘first users’ of the HESS technology
  • Complete final HESS Phase II report

Because of the extended Quarry Hill addition construction time, we are running 1 - 2 months behind on the above schedule. The current arrangement we have with the City of Rochester and the QuarryHillNatureCenter is to use the test laboratory building for the HESS Phase II project until January 2008.

Results to Date:

  • Dr. Louise Goldberg, College of Design, University of MN joined the project in the fall of 2005. She is an expert in the area of fuel cells, geothermal systems, thermal/heat transfer, materials, modeling and related subjects.
  • A group of local businesses in the building/construction industry, along with the City of Rochester, the Friends of Quarry Hill Nature Center, Rochester, Rochester Public Utilities, and the University of MN Rochester agreed to build a 24 X 24 ft addition to the QuarryHillNatureCenter. All labor and materials was either donated for the project or covered by funds provided by some of the businesses participating in the building construction. This structure will serve as the test laboratory for the HESS Phase II project and eventually as an education energy center for Quarry Hill. The building design was completed in early December with construction starting immediately there after. HESS personnel worked closely with the architects and construction lead manager to assure our experimental needs would be met. The main structure was completed at the end of March. We will erect a sign to communicate the project to visitors to Quarry Hill and to recognize all those that have donated time and materials in construction of the lab (see Appendix A). The cost of the sign will be covered by the University of Minnesota Rochester.
  • The heat pump specifications for the test laboratory were completed in February, 2006. The heat pump was shipped and delivered to Quarry Hill in mid March 2006. The unit has a 1.5 ton capacity and will serve as the main heating and cooling system for the new addition once the HESS Phase II experiment is completed. The heat pump was donated by the TRANE, Co.
  • Two wells for the geothermal field were drilled in mid March by Bergerson-Caswell, Inc. The wells were standard designs for a heat pump based system—about 4.5 inches in diameter and 200 feet deep. These two wells, along with the heat pump, will make up the heating and cooling plant for the QuarryHillEnergyCenter. Thermocouples will be added to

the lines running in and out of these wells to help give base line information for the well to be constructed for the HESS experimental testing. Special accommodations are in place within the test laboratory to allow us to manifold all lines from the current 2 wells and the experimental well inside the building.

  • The fuel cell for the project has been selected. It is a 5 KW unit built by Plug-Power. We will purchase the device from Cragg, Inc a supplier, in the Minneapolis area. The system will include a hydrogen storage cabinet which can be place about 25 feet from the test laboratory. Cragg currently has the system in hand, and they have agreed to allow us to run the system on their site before shipping it to Rochester, MN. We agreed to the bid offered by Cragg in March, 2006.
  • A special experimental well is being designed to test the hypothesis that waste heat from a fuel cell, stored underground, will be available when the heat pump is operating for heating. Heat transfer considerations, time constants, well materials, etc will be evaluated. Finite element models of the well design were being developed in March. Currently, the well design assumes a width of 12 inches and a depth of about 25 ft. We are using a shallower depth due to the water table in the area. Ultimately, we could see a system of several of these wells (in a circular pattern). The area around and on top of the wells would be insulated.
  • An overall schematic of the fuel cell, water heater, heat pump, line pumps and well systems has been developed to serve as the basis to integrate all the equipment and instrumentation critical to running the experiment. We plan to use an electrical heating element in the primary thermal storage vessel to eventually simulate the fuel cell production of hot liquids and to allow flexibility to do other thermal testing.
  • The HESS Phase II project was displayed in March at the City of Rochester Legislative Day at the Minnesota Capital in St. Paul, MN.

Future Plans (Next 3 months):

  • For the test laboratory building, interior work for the experimental set up and outside landscaping is to be completed in the second quarter 2006.
  • Trenching, connection, and instrumentation of the 2 standard 200 ft. wells will be completed. The labor and materials necessary to trench these two wells is being donated by Haley Comfort Systems, Plainview, MN.
  • The fuel cell purchase will be completed. The fuel cell will be tested and modifications necessary for the experiment will be implemented at Cragg, Inc.
  • The heat pump, fuel cell and thermal storage vessel units will be installed and integrated.
  • Finite element model results will be available to finalize the design of the experimental well. All piping, instrumentation, insulation, etc necessary for the experimental well will be purchased. We expect to close on a bid for the construction of the experimental well with the goal of building the well before the end of the June. However, this could move into the third quarter of 2006.
  • We will begin the process to obtain additional funding for the second year of the HESS Phase II project.

Budget:

The funding for the first year of this project has been provided by the following organizations:

-American Public Power Association (APPA)$40,000

- American Public Power Association Scholarship $ 4,000

- Initiative for Renewable Energy & the Environment (IREE-U of MN)$40,000

- Rochester Public Utilities (RPU)$40,000

- Southern Minnesota Municipal Power Association (SMMPA)$18,000

-TRANE, Inc.$ 5,000

------

Total Project Budget $147,000

Allocations and Expenditures to March 31, 2006

Budget Expense to 3/31/06

------

- Personnel$ 60,889$30,500

- Computer/General Lab Equip/Special Instrumentation$25,000 $ 0

- Travel$1,611 $ 0

- Heat Pump—TRANE Donation$ 5,000$ 5,000

- RPU In-Kind Personnel$10,000$ 5,000

------

SUBTOTALNON APPA$103,000$40,500

Items Allocated to APPA Budgets

- Std Geothermal Wells/Instrumentation$ 4,150$3,700

- Heat Pump Installation/Manifold/PVC Pipe$ 1,200$ 0

- Fuel Cell/H2 Cabinet/Installations$17,455$ 0

- Water Heater System$ 4,640$ 0

- DC/AC Inverter and Load System$ 3,400$ 0

- Experimental Well-Drilling/sleeves/Instrumentation/Etc$ 9,155$ 0

- Scholarship Payments$ 4,000$ 1,000

------

SUB TOTAL APPA$ 44,000$ 4,700

TOTAL BUDGET/EXPENSE TO 3/31/06$147,000$45,200

NOTE: Significant expenditures will occur in the Second Quarter 2006

Additional Notes:

The following personnel are involved in the HESS Phase II project:

Dr. Hal Ottesen, University of MinnesotaRochester

Dr. Louise Goldberg, University of Minnesota

Dr. James P Licari, University of MinnesotaRochester

Sophronis Mantoles, Riverland Community College/U of M graduate student

Appendix A

Page 110/2/2018