U.S. Department of EnergyMidwest Clean Energy Application Center

Public Utilities Commission of OhioDecember, 2012

Ohio’s Pilot Project for Combined Heat & Power

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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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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)

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CHP’s 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

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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 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

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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.)

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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.

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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

Levelized cost per KWh

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Genesis of Ohio’s 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.

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Ohio’s 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

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Ohio’s engagement with CHP, 2

Senate Bill 315, Gov. Kasich signed June 2012:• CHP and waste energy recovery can be counted toward the state’s EnergyEfficiency requirements.• Waste energy recoveryfacilities qualify as renewable energy sources under Ohio’s Alternative Energy Portfolio standard.

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How we did it – U.S. DOE Pilot Partnership

PUCO’s 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

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PUCO’s Financial Tools Workshop

Aug. 2, 2012PUCO offices

Others:DOE PilotCHP ProjectsStandby RatesKey Account Reps

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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

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President Obama’s 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

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How we did it – U.S. DOE Pilot Partnership

U.S. DOE’s 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”

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Boiler MACT Affected Boilers in Ohio

Fuel Type Number of Units

Capacity (MMBtu/hr)

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

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

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Snapshot of Ohio CHP Market Current Potential

CHP Implementation in Ohio 530 MW 9,800 MWCHP % 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

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Results: PUCO outreach

385 people attended 5 CHP workshops at PUCO405 people joined the PUCO listserv on CHP3,500 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

• 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 Pilot in Ohio

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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

• 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

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For more information, contact

U.S. Department of Energy Katrina Pielli, Senior Policy Advisor, Acting CHP Deployment Leadkatrina.pielli@ee.doe.gov202-287-5850

Boiler MACT Technical Assistance Programhttp://www1.eere.energy.gov/manufacturing/distributedenergy/boilermact.html

Midwest Clean Energy Application CenterJohn Cuttica, Director, Energy Resource Centercuttica@uic.edu312-996-4382

http://www.midwestcleanenergycenter.org/

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For more information, contact

Public Utilities Commission of Ohio: Matt Butler, Administrative Officermatthew.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/

U.S. Department of EnergyMidwest Clean Energy Application Center

Public Utilities Commission of Ohio

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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