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Federal Energy Legislation

Energy Leadership Federal Energy Legislation

Mark WagnerJohnson Controls, Inc.

Ashley Patterson

Ameresco

August 11, 2015

Energy Exchange: Federal Sustainability for the Next Decade2

This presentation reflects information about pending legislation that is current as of August 2015, when Congress departed for summer recess. The legislation discussed is likely to change when Congress reconvenes in the Fall.

August 11, 2015

Energy Exchange: Federal Sustainability for the Next Decade3

Energy Legislation

Energy Exchange: Federal Sustainability for the Next Decade4

House Energy Package Title I, Modernizing and Protecting InfrastructureTitle II, 21st Century WorkforceTitle III, Energy Security and Diplomacy Title IV, Energy Efficiency and Accountability

House and Senate Energy Legislation

Senate Energy PackageTitle I, Efficiency Title II, InfrastructureTitle III, Supply Title IV, Accountability Title V, Conservation

State of Play• House Energy Committee Chair Rep. Upton and Senate Energy Committee Chair

Sen. Murkowski each committed to introducing comprehensive energy bills in 2015.

• Over 200 energy-related bills were introduced in the first half of the year in the House and Senate.

• The House Energy Package currently has 26 provisions while the Senate Energy Package includes over 200.

• Both House and Senate Energy Packages include an Energy Efficiency Title.

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• The Energy Savings Through Public-Private Partnerships Act (S. 858/H.R. 1629) – “Fix it” bill intended to clean up the statute. – Clarifies that plug-load measures are allowable (energy-consuming

devices). – Provides clarification pertaining to utilizing renewable energy credits

and waste recycling under an ESPC.– Included in Senate and House Energy Packages.

• Utility Energy Service Contracts Improvement Act (S.723/H.R.1630) – Authorizes UESCs for up to 25 years so long as the contact includes

requirements for measurement, verification, and performance assurances or guarantees of the savings.

– Included in Senate Energy Package.

Performance Contracting Energy Legislation

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• Building Code Improvements (S.720/H.R.2177)– Encourages the adoption of local building energy codes that meet or exceed model building energy codes and supports

compliance enforcement. – In Senate Energy Package.– Controversial counter provision removed from House Energy Package.

• The Streamlining Energy Efficiency for Schools Act (H.R. 756 /S.523) – Creates a program within DOE to promote energy efficiency, distributed generation, and energy retrofitting projects in

schools.– Identical provisions included in House and Senate Energy Packages.

• Non-profit Energy Efficiency Retrofit Pilot Program (S.600 / H.R. 2132) – Establish a pilot program to award grants for retrofitting non-profit buildings with energy efficiency improvements. – Included in Senate Energy Package.

• The Weatherization Enhancement and Local Energy Efficiency Investment and Accountability Act (S. 703)– Reauthorize the Weatherization Assistance Program (WAP) and the State Energy Program (SEP) from 2016-2020. Create

grants for new, self-sustaining low-income, single-family and multifamily housing energy retrofit model programs and sets up a quality assurance program to ensure that WAP contractors hold minimum accreditations.

– Included in Senate Energy Package.

• Net Metering Study – Requires DOE to conduct a study on net metering and release related guidance to ensure that owners of distributed

energy resources (DERs) are properly compensated for the energy they add to the electricity grid. – Included in Senate Energy Package.

Non-Federal Building Improvements Energy Legislation

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• Energy Intensity Reduction Targets (Codification of Executive Order 13693)– Directs the head of each Federal agency to reduce their building energy intensity by 2.5 percent

per year for fiscal years 2016 through 2025. – In Senate Energy Package.

• Federal building energy efficiency performance standards (S.720/H.R.2177)– Require the Secretary of Energy to establish revised Federal building energy efficiency

performance standards meeting or exceeding the most recent model codes. – In Senate Energy Package.

• Federal Building Design Updates (S.720/H.R.2177)– Provides for the update of designs for unconstructed federal buildings to meet applicable

Federal building energy efficiency standards. – In Senate Energy Package.

• Green Building Certification (S.720/H.R.2177)– Directs DOE to determine which certification systems for high performance green buildings are

the most likely to encourage a comprehensive and environmentally sound approach to the certification of green buildings (Expands the evaluation beyond LEED certification).

– In Senate Energy Package.

Federal Building Improvements Energy Legislation

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• Repeal of fossil fuel phase-out (S. 869) – Removes the requirement for federal buildings to reduce fossil fuel use by 100% by 2030 (EISA

Section 433). This bill would repeal this requirement and provide for rigorous energy efficiency requirements.

– In Senate Energy Package. – Potential amendment in House Energy Package.

• Energy efficient data centers (S.720/H.R.2177)– Requires the development of a metric for data center energy efficiency, and establishes a data

center energy practitioner program and open data initiative for Federal data center energy usage. – In Senate and House Energy Packages.

• The Thermal Insulation Efficiency Improvement Act (H.R. 568)– Requires DOE to report on the impact of thermal insulation on energy and water systems for hot

and chilled water in federal buildings, including an analysis of cost-savings and the return on investment for installing insulation.

– In House Energy Package.

• Evaluation and Consolidation of Duplicative Green Building Programs – Would require DOE to submit a report that analyzes all green building programs under its control

and identify which programs, if any, should be consolidated or eliminated. – Included in Senate Energy Package.

Federal Building Improvements Energy Legislation

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• The Smart Building Acceleration Act (S. 1046/H.R. 2564) – Requires DOE to conduct a study of private and federal smart buildings. Also establishes a smart

building pilot program under the jurisdiction of several key Federal agencies (DOD, DOE, GSA, VA). – In Senate Energy Package.

• Smart Grid Capability on Energy Guide Labels (H.R. 2245) – Requires FTC to initiate a rulemaking to develop Energy Guide labels that promote the smart grid

capabilities of certain products. – In House Energy Package.

• Energy Efficient Government Technology Act (H.R. 1268 /S.1706)– Requires that each federal agency develop an implementation strategy – that includes best practices

and measurement and verification techniques – for the maintenance, purchase, and use of energy-efficient and energy saving information technologies.

– In Senate and House Energy Packages.

• Benefits of Operational Efficiency Programs– Requires DOE to conduct a study quantifying the energy savings benefits of operational efficiency

programs and services (services that use information and communications technologies to operate buildings and equipment in the optimum manner at the optimum times).

– In Senate Energy Package.

Smart Technologies Energy Legislation

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• Establishment of ‘Future of Industry Program’ and ‘Sustainable Manufacturing Initiative’ (S.720, S.1054) – These programs will streamline Federal manufacturing efforts by directing

Industrial Assessment Centers to coordinate with other Federal manufacturing programs, National Laboratories, and energy service and technology providers, and directing EERE to provide onsite technical assessments.

• Small and medium manufacturers (S.720, S.1054) – Directs DOE to expand the scope of the Industrial Assessment Centers to

include manufacturing technologies and practices and to equip the Centers’ Directors with the tools and training to provide technical assistance to manufacturers.

• National Laboratories (S.720, S.1054) – Directs DOE to study and implement ways for small and medium

manufacturers to access the high-performance computing facilities at National Laboratories.

All three are in Senate Energy Package and are a possible amendments to House Energy Package.

Manufacturing Energy Legislation

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• The Nexus of Energy and Water for Sustainability (NEWS) Act (S. 1218) – Establishes an interagency coordination committee with the leadership of

DOE and DOI that is focused on the nexus between energy and water production, use and efficiency.

– In Senate Energy Package.

• The Smart Energy and Water Efficiency Act (S. 886)– Directs DOE to create a pilot program that would award grants to entities to

further develop technologies that will improve the efficiency of the energy-water nexus

– In Senate Energy Package.

• Energy and water conservation demonstration program for improvements at multifamily residential units (S.720/H.R.2177)– In Senate Energy Package.

Energy and Water Energy Legislation

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• Energy Inefficient Electric Motors Replacement Rebate Program (S.720/H.R.2177)– In Senate Energy Package.

• Efficiency standards for residential non-weatherized gas furnaces or mobile home furnaces (S. 1029)– Requires DOE to engage a stakeholder advisory group and complete an analysis of the impact, technical

feasibility and economic justification of a nationwide furnace efficiency standard. – In Senate Energy Package. – Similar language was removed from House Energy Package.

• Energy Conservation Standards for Commercial Refrigeration Equipment – Delays the implementation of efficiency standards for commercial refrigeration for a short time in order to

allow manufacturers to use climate-friendly refrigerants.– In Senate Energy Package.

• Energy Star Program Changes: – Voluntary Verification Program Act of 2015 (H.R.1785)

• Requires the DOE to recognize voluntary verification programs for air conditioning, furnace, boiler, heat pump, and water heating products to demonstrate compliance with the Energy Star program.

• In House and Senate Energy Packages.

– Third-party certification under Energy Star program (S.720/H.R.2177)• Revises the certification requirements for Energy Star program partners that have complied with all program

requirements for at least 18 months.• In Senate Energy Package.

Appliances Energy Legislation

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• Grid Modernization Act of 2015 (S.1243) – Establishes a research program for electric grid energy storage. – Requires DOE to develop a model grid architecture and a set of

future scenarios for the electric system. – Directs an investigation of the need for additional standards for

ensuring the interoperability of the grid system and associated communications.

– In Senate Energy Package.

• Micro-grid systems for isolated and resilient communities (S. 1227) – Establishes a program to promote micro-grid systems for isolated

communities to increase resiliency. – In Senate Energy Package.

Grid Modernization & Energy Storage Energy Legislation

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• The Heat Efficiency through Applied Technology (HEAT) Act (S. 1202) – Amends regulation to assist States in adopting updated

interconnection procedures and standards for projects for combined heat and power technology and waste heat to power technology.

– Proposed amendment to House Energy Package.

• Federal purchase requirement– Expands the definition of “renewable energy” in section 203 of

the Energy Policy Act of 2005 to include thermal energy and qualified waste heat resources and modifies the term “municipal solid waste” by excluding certain commonly recycled paper.

– In House Energy Package.

Combined Heat and Power/Waste Heat Energy Legislation

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• Cybersecurity Threats (S. 1068) – Provides the Secretary of Energy with emergency authority to

protect the bulk-power system (BPS) from cybersecurity threats.– Encourages coordination with Canada and Mexico. – In Senate Energy Package.

• Enhanced Grid Security Act of 2015 (S. 1241) – Establishes a research program to develop advanced cybersecurity

applications and technologies and to leverage electric grid architecture as a means to assess risk to the energy sector.

– Directs pilot demonstration projects for new technologies and to develop workforce curricula for energy sector-related cybersecurity.

– In Senate Energy Package.

Cybersecurity Energy Legislation

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Tax/Finance Legislation

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• Senate Finance Committee passed a Tax Extenders Package out of committee July 21. – The Senate Package would extend the energy tax

incentives (along with other non-energy tax incentives) for two years (through Dec. 31, 2016).

• The House Ways and Means Committee passed legislation in May permanently extending the R&D Tax Credit, but has not yet taken up Tax Extenders Legislation in 2015.

• Senate Floor action and/or House action on a Tax Extenders Bill is unlikely until October or later.

Tax/Finance Legislation Tax Legislation

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• Deduction for energy efficient commercial buildings (179D) – Allows for the accelerated depreciation of high performance

equipment in commercial buildings that achieves significant energy savings.

• Credit for nonbusiness energy property (25C) – 10-percent credit for the purchase of qualified energy efficiency

improvements to existing homes (up to $500).

• Credit for energy-efficient new homes (45L) – Credit for qualified new energy efficient homes that meet the

standards for either a 30-percent or 50-percent reduction in energy usage.

Energy Efficiency Tax Extenders Tax Legislation

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• Renewable Energy Tax Credits – Under current law, taxpayers can claim a 2.3 cent per kilowatt hour tax

credit for renewable electricity produced for a 10-year period from a facility that has commenced construction by the end of 2014.

– They can also elect to take a 30 percent investment tax credit instead of the production tax credit.

– Applies to: wind, closed-loop biomass, open-loop biomass, geothermal energy, Indian coal and refined coal at qualified facilities, solar energy, small irrigation power, municipal solid waste, qualified hydropower production, and marine and hydrokinetic renewable energy.

– The Senate bill extends these credits through December 31, 2016.

• Alternative fuel vehicle refueling property – 30% investment tax credit for alternative vehicle refueling property. – Eligible refueling property includes fuel pumps for ethanol, biodiesel,

liquefied hydrogen, and compressed or liquefied natural gas.

Clean Energy Tax Extenders Tax Legislation

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• Master Limited Partnership Parity Act (S.1656/H.R.2883)– Extends availability of the MLP business structure to additional energy and related categories

of business activity, including renewable energy, waste heat technologies, and energy efficiency.

– Not in current Senate Tax Extenders Bill, but is an anticipated amendment.

• Sec. 48 Commence Construction Modification – This would change the requirement for the full 30% solar ITC from "placed in service" by

December 31, 2016 to "commence construction" by December 31, 2016.– Would provide an extension to solar similar to what was provided to the Section 45 PTC for

other renewable technologies. – Not in current Senate Tax Extenders Bill, but is an anticipated amendment.

• Power Efficiency and Resiliency Act (POWER Act) (S.1516/H.R. 2657) – Adds WHP as a qualifying technology that is able to access the ITC. – Increases the ITC from 10 percent to 30 percent for CHP. Allows the application of the credit

towards a project’s first 25 megawatts, rather than the first 15 megawatts. – Removes the cap limiting the credit to projects under 50 megawatts. – Extends the credit for two years, to the end of 2016.– Not in current Senate Tax Extenders Bill, but is an anticipated amendment.

New Clean Energy Tax Incentives Tax Legislation

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Questions?