ohio chp pilot a puco and u.s. doe partnership

March 4, 2013 NGA Policy Academy

Cheryl Roberto, Former Commissioner Public Utilities Commission of Ohio

Ohio CHP Pilot: A PUCO and US DOE Partnership

Snapshot of Ohio CHP Potential Current Potential

CHP Implementation in Ohio 530 MW 9,800 MW CHP % of Total Ohio Electric Generation 2% 29.4% Nationally, CHP % of Total Generation 8.0% -

Market Sector 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 2

Why CHP matters to the PUCO

PUCO’s  statutory  responsibilities: • Energy assurance and reliability • Addressing market deficiencies • Encouraging diversity of electricity supply • Ensuring emergency preparedness

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Why now?

Clean Air Act’s Industrial Boiler MACT* • U.S. EPA finalized rules Dec. 20, 2012 • Establishes three-year compliance window** • Facility owners’ choices:

– 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

Coal-Fired Plant Retirements • Localized grid constraints • Reduced capacity

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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

• Eliminate or defer investment in “t” and “d” • Assist industries in developing cost-effective

emission compliance strategies (Boiler MACT) • Expand customer choices to remain economically

competitive (i.e. retaining businesses and jobs in Ohio)

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Boiler MACT Affected Boilers in Ohio

Fuel Type Number of Units

Capacity (MMBtu/hr)

Coal 48 10,015 Heavy Liquid 6 743 Light Liquid 16 5,112 Biomass 7 1,448 Process Gas 6 2,003 Total 83 19,321

industrial, commercial and institutional boilers only Source: EPA Information Collection Request

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Potential Coal-fired Plant Replacement?

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.

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CHP can be cost-effective choice

Costs for new 20 MW plants (ACEEE , September 2012)

$- $0.02 $0.04 $0.06 $0.08 $0.10

Natural-Gaspowered CHP

Natural-gaspowered combined

cycle

Nuclear powerplant

Levelized cost per KWh

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Genesis of PUCO/US DOE Partnership

• 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.

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PUCO’s  Role  and  Commitment

From PUCO resolution, February 2012: – 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 – Facilitate information sharing with other state

agencies (OEPA, ODOD, ODNR) – Seek opportunities to remove educational and

regulatory barriers to voluntary adoption of cost-effective CHP

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US  DOE’s  Role  and  Commitment

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. • 40+ major source facilities (~ 90 to 100

boilers) in Ohio • Share information on financial incentives

available at the local, state, utility and federal levels as well as private financing

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Removing Educational Barriers

CHP 101 Workshop (3/9/12): • Target Audience – MACT boiler owners • DOE Technical Assistance Program • Ohio EPA on MACT rule • Examples of successful CHP in Ohio • PJM market overview • DR opportunities in PJM

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Removing Educational Barriers

CHP Case Studies Workshop (6/20/12): • Target Audience – MACT boiler owners • CHP 101 • Two Medical Centers • Wastewater Treatment Plant • Landfill • Coke Plant • Chemical Plant

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Removing Educational Barriers

Financial Tools Workshop (8/2/12): • Target Audience – MACT boiler owners • Federal and State tax policies • State Financing Program • Fuel Procurement Hedging • Debt, Developer, Equity Financing • EPA Spark Spread Tool • Project Cost Screening Tool

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Removing Educational Barriers

Training Natural Gas Utility Key Account Reps (12/7/12): • Target Audience – Gas Utility Key Account Reps • Understanding Fundamentals of CHP • Why CHP Can Bring Value to Your Customers • Recognizing CHP opportunities in Your Customers’  Facilities

• Finding Assistance For Your Customer Once CHP Potential is Identified 15

Removing Regulatory Barriers

Stand-by Rates Workshop (9/13/12): • Target Audience – MACT boiler owners,

developers, utilities, all stakeholders • Introduction to Stand-by Rates • Existing Stand-by Rates in Ohio (RAP) • Best Regulatory Practices (NRRI)

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Removing Regulatory Barriers

PUCO Rulemakings and Comment Opportunities: • Target Audience – MACT boiler owners,

developers, utilities, all stakeholders • Interconnection, Case No. 12-2051-EL-ORD • Net Metering, Standard Market-Based Rate for

Energy and Capacity for Co-Gen, Case No. 12-2050-EL-ORD

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Results: Outreach & Education

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

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• 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

Results: Boiler MACT Technical Assistance

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Ohio’s  Legislative  Support  of  CHP Senate Bill 315, Gov. Kasich signed June 2012: • CHP and waste energy recovery can be counted toward  the  state’s  Energy Efficiency requirements.

• Waste energy recovery facilities qualify as renewable energy sources under Ohio’s  Alternative  Energy  Portfolio  standard.

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What did we learn?

Successful CHP applications operate in Ohio

University of Cincinnati Central Utility Plant

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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

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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

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What’s  ahead  for  CHP  in  Ohio

• Market-specific newsletters created by Midwest CEAC and PUCO

• Rules updates

• 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

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For More Information

Public Utilities Commission of Ohio: Matt Butler, Administrative Officer matthew.butler@puc.state.oh.us 614-644-7670 CHP@puc.state.oh.us http://www.puco.ohio.gov/puco/index.cfm/industry-information/industry-topics/combined-heat-and-power-in-ohio/ Midwest Clean Energy Application Center: John Cuttica, Director, Energy Resource Center cuttica@uic.edu 312-996-4382

http://www.midwestcleanenergycenter.org/

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For More Information

U.S. Department of Energy Katrina Pielli, Senior Policy Advisor, Acting CHP Deployment Lead katrina.pielli@ee.doe.gov 202-287-5850 Boiler MACT Technical Assistance Program http://www1.eere.energy.gov/manufacturing/distributedenergy/boilermact.html

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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-energy-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

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