Pilot Project for Combined Heat & Power

Pilot Project for Combined Heat & Power

Ohios Pilot Project for Combined Heat & Power U.S. Department of Energy Midwest Clean Energy Application Center Public Utilities Commission of Ohio December, 2012 Why CHP matters to the PUCO PUCOs statutory responsibilities: Energy assurance and reliability Addressing market deficiencies

Encouraging diversity of electricity supply Ensuring emergency preparedness 2 How CHP could help Ohio Create distributed generation in pockets of electricity constraint Provide Island of Power during outages: -- for sensitive/critical organizations including hospitals, data centers, others -- black start capabilities for everyone else Assist industries in developing emission compliance strategies (Boiler MACT)

Expand customer choices to remain economically competitive (i.e. retaining businesses and jobs in Ohio) 3 CHPs comparative advantages As boiler owners weigh options, CHP should be considered because it is: Cleaner More efficient for thermal energy and electricity -- CHP ~ 65-80% -- Traditional generation ~ 45-55% When feasible, less expensive to operate Avoids need for costly T&D expansions 4

Why now? Clean Air Acts Industrial Boiler MACT* U.S. EPA finalized rules Dec. 20, 2012 Establishes three-year compliance window** Facility owners need to choose: Add environmental controls/ retrofits to existing boilers Replace oil/coal boilers with natural gas boilers Consider installing new CHP as a natural gas option Shut down/move *Maximum Achievable Control Technology **Owners can request additional year to comply 5 Retiring coal plants to dampen supply

Up to 48 GW to be lost nationwide (roughly 15% of U.S. coal generation of 318 GW in 2011, according to EIA.) 6 One view: Alternative worth considering ACEEE 12-state study (Fall 2012): CHP can help replace generation lost to retired coal power plants. The CHP technical potential in those 12 states alone is more than enough to offset all coal retirements nationwide.* * Study did not overlay specific locations of CHP technical potential with specific locations of retiring coal utility power. 7 CHP can be cost-effective choice

Costs for new 20 MW plants (ACEEE , September 2012) Levelized cost per KWh $0.10 $0.08 $0.06 $0.04 $0.02 $- 8 Genesis of Ohios effort September 2011: Ohio Gov. John Kasich hosts energy summit and expresses interest in promoting CHP for its economic and environmental benefits.

Winter 2011: U.S. DOE, through the Midwest Clean Energy Application Center, offers to pilot technical assistance to boiler operators in Ohio. February 2012: PUCO adopts resolution in support of the DOE pilot and becomes the first state to participate. 9 Ohios engagement with CHP PUCO resolution, February 2012: Remove educational and regulatory barriers to voluntary adoption of cost-effective CHP Identify boilers in areas of potential constraint as priorities for U.S. DOE educational efforts Work with PJM Interconnection to understand how new CHP could be incorporated into markets

Help boiler owners connect with U.S. DOE and utilities 10 Ohios engagement with CHP, 2 Senate Bill 315, Gov. Kasich signed June 2012: CHP and waste energy recovery can be counted toward the states Energy Efficiency requirements. Waste energy recovery facilities qualify as renewable energy sources under Ohios Alternative Energy Portfolio standard. 11

How we did it U.S. DOE Pilot Partnership PUCOs role: Identified key areas of information needs and held workshops (in-person and via the web) 3 workshops for facilities considering CHP 1 workshop to elicit ideas for policy change 1 workshop to expand outreach to facility owners via natural gas key account reps 12 PUCOs Financial Tools Workshop Aug. 2, 2012 PUCO offices Others:

DOE Pilot CHP Projects Standby Rates Key Account Reps 13 U.S. DOE launches national dialogues Midwest Industrial Energy Efficiency and Combined Heat & Power Dialogue Meeting, June 21-22, 2012 Cosponsored by State and Local Energy Efficiency Action Network (SEE Action) and Midwest Energy Efficiency Alliance (MEEA), held in Columbus Focus on state best practice policies and investment models that address barriers to industrial EE and CHP in the Midwest State regulators, industrial users, utilities and

regional industrial and efficiency alliances 14 President Obamas Executive Order August 2012: promoted accelerated investment in industrial energy efficiency, including CHP Established a new national goal of 40 GW of new CHP power capacity by 2020, a 50% increase from current levels 15 How we did it U.S. DOE Pilot Partnership U.S. DOEs role: Provide site-specific technical and cost information to facilities that are burning coal or oil in their boilers and are affected by EPA Boiler MACT Rules.

Target the 40+ major source facilities (~ 90 to 100 boilers) in Ohio Information on financial incentives available at the local, state, utility and federal levels as well as private financing Assist in the implementation of CHP as a Clean Energy Compliance Strategy 16 Boiler MACT Affected Boilers in Ohio Fuel Type Coal Heavy Liquid Light Liquid Biomass Process Gas

Total Number of Units 48 6 16 7 6 83 Capacity (MMBtu/hr) 10,015 743 5,112

1,448 2,003 19,321 industrial, commercial and institutional boilers only Source: EPA Information Collection Request 17 Snapshot of Ohio CHP Market CHP Implementation in Ohio CHP % of Total Ohio Electric Generation Nationally, CHP % of Total Generation Market Sector Current

530 MW 2% 8.0% Potential 9,800 MW 29.4% - Gen. Potential* (MW) Paper 2,329

Chemicals 2,838 Primary Metals 430 Food 310 Other Industrial 767

Commercial/Institutional 3,082 Total 9,800 CHP Technical Potential * Includes CHP export potential 18 Results: PUCO outreach 385 people attended 5 CHP workshops at PUCO 405 people joined the PUCO listserv on CHP

3,500 unique page views of our CHP web page for: -- Archived workshop webcasts -- Existing and potential CHP facilities in Ohio -- CHP rulemakings and tariffs -- Technical assistance and reports 19 Results: Boiler MACT Pilot in Ohio

Over 50 companies contacted 12 feel they are already in compliance 6 no longer in business Analyses for 15 in various stages All companies are now aware of how CHP can assist in a compliance strategy U.S. DOE will continue to track results of technical assistance 20 What did we learn? Successful CHP applications operate in Ohio

University of Cincinnati Central Utility Plant 21 What did we learn? Pay-back horizons are best suited to institutional or governmental boiler operators. Joint ventures work for private industry. Ashtabula, Ohio joint venture: Millenium Inorganic Chemicals and Duke Energy Generation Services 22

What did we learn? Financing is project specific and owners often use consultants to pursue best options Standby tariffs must be updated to reflect current conditions 23 Whats ahead for CHP in Ohio Market-specific newsletters created by Midwest CEAC and PUCO

Investigation of best practices for potential revisions to standby rate tariffs Midwest CEAC implementation assistance when an owner chooses a CHP solution Additional training opportunities as topics and interests develop Open invitation from U.S. DOE for additional ways they can assist PUCO 24 For more information, contact U.S. Department of Energy Katrina Pielli, Senior Policy Advisor, Acting CHP Deployment Lead [email protected] 202-287-5850 Boiler MACT Technical Assistance Program

http://www1.eere.energy.gov/manufacturing/distributedenergy/boilermact.html Midwest Clean Energy Application Center John Cuttica, Director, Energy Resource Center [email protected] 312-996-4382 http://www.midwestcleanenergycenter.org/ 25 For more information, contact Public Utilities Commission of Ohio: Matt Butler, Administrative Officer [email protected] 614-644-7670 [email protected] http

://www.puco.ohio.gov/puco/index.cfm/industry-information/industry-topics/combined-heat-an d-power-in-ohio / U.S. Department of Energy Midwest Clean Energy Application Center Public Utilities Commission of Ohio 26 References Coal Retirements an the CHP Investment Opportunity, Anna Chittum and Terry Sullivan, American Council for an Energy-Efficient Economy, September 2012 http:// www.aceee.org/research-report/ie123

FACT SHEET: Adjustments for Major and Area Source Boilers and Certain Incinerators, U.S. EPA, December 2012 http:// www.epa.gov/airquality/combustion/docs/20121221_sum_overview_boiler_ciswi_fs.pdf President Obama Signs Executive Order Promoting Industrial Energy Efficiency, The White House, August 2012 http:// www.whitehouse.gov/the-press-office/2012/08/30/executive-order-accelerating-investment-industrial-en ergy-efficiency Natural Gas Key Account Reps Training for Combined Heat and Power, John Cuttica and Cliff

Haefke, Midwest Clean Energy Application Center, December 2012 Annual Energy Outlook 2013 Early Release Overview, U.S. Energy Information Administration, December 2012 http://www.eia.gov/forecasts/aeo/er/pdf/0383er(2013).pdf 27

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