energy as an economic development strategy sum romich energy.pdfindependent statistics &...

OHIO STATE UNIVERSITY EXTENSION

Energy as an Economic

Development Strategy

Aiding Public Officials in the Decision Making Process

June, 2015

2


Learning Objectives

• Energy Trends

• Energy and Economic Development

• Large Scale Renewable Energy Development

• Shale Energy Development & Trends

• Distributed Energy Development

• Next Steps - Energy as a BR&E Strategy


Ohio Energy Trends

4


Total Global Energy Consumption

SourceSource: U.S. Energy Information Administration,

Independent Statistics & Analysis. www.eia.gov

0

100

200

300

400

500

600

1980 1985 1990 1995 2000 2005 2010

(Quad

rill

ion B

tu)

The 2011

International Energy

Outlook Report

estimates the world

energy consumption

of 770 quadrillion Btu

in 2035.

5


Average Retail Price of Electricity in Ohio

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Cen

ts p

er

Kill

ow

att-

ho

ur

Source: (USDOE/EIA, 2014) The Current and Historical Monthly Retail Sales, Revenues and Average Revenue per Kilowatthour by State and by Sector

Residential Sector Commercial Sector Industrial Sector

Transportation Sector Other All Sectors


“There has been a fivefold increase in investment

in new electricity transmission capacity since

1997, as well as large increases in spending for

distribution capacity. Since 1997, roughly $107

billion has been spent on new transmission

infrastructure and $318 billion on new distribution

infrastructure.”

Energy Information Administration, ANNUAL ENERGY

OUTLOOK 2015. (2015).

7


Age of Ohio Electric Power Generators

6%

24%

9%

22%24%

12%

3%

0%

5%

10%

15%

20%

25%

30%

10 orfewer

11-20 21 - 30 31 - 40 41 - 50 51 - 60 Morethan 60

Age in Years

Percentage of Total Generation Capacity in Ohio

Source: 2012 Form EIA-860 Data - Schedule 3,

'Generator Data' (Operable Units Only)


Energy and Economic

Development

9


JobsOhio Classifies Energy as a Primary Industry

Ohio’s Utica shale presents substantial opportunities for

investments at all levels. The state also is experiencing growth in

the wind and solar supply chain, as well as advanced

technologies for energy efficiencies and a diverse supply of

power generation.

Quick facts

• Employment - 40,835 people

• Gross state production - $17.5 billion

• Average wages - $72,705

• Number of firms - 1,213


“The main goal of economic development is

improving the economic well being of a

community through efforts that entail job

creation, job retention, tax base enhancements

and quality of life.”

The International Economic Development Council

Economic Development Reference Guide

What is Economic Development ?

11


Tax Generation

e.g. Large Scale Renewable Energy

Job Creation

e.g. Shale Energy Development

Job Retention

e.g. Distributed Energy Generation

Energy and Economic Development


Large Scale Renewable

Energy Development

13


Walmart’s Approach to Renewable Energy

• Text

Renewable Portfolio Standard Policieswww.dsireusa.org / March 2015

WA: 15% x 2020*

OR: 25%x 2025* (large utilities)

CA: 33%

x 2020

MT: 15% x 2015

NV: 25% x

2025* UT: 20% x

2025*†

AZ: 15% x

2025*

ND: 10% x 2015

NM: 20%x 2020

(IOUs)

HI: 40% x 2030

CO: 30% by 2020 (IOUs) *†

OK: 15% x

2015

MN:26.5%

x 2025 (IOUs)31.5% x 2020 (Xcel)

MI: 10% x

2015*†WI: 10%

2015

MO:15% x

2021

IA: 105 MWIN:

10% x

2025†IL: 25%

x 2026

OH: 12.5%

x 2026

NC: 12.5% x 2021 (IOUs)

VA: 15%

x 2025†KS: 20% x 2020

ME: 40% x 2017

29 States + Washington

DC + 2 territories have a

Renewable Portfolio

Standard (8 states and 2 territories have

renewable portfolio goals)Renewable portfolio standard

Renewable portfolio goal Includes non-renewable alternative resources* Extra credit for solar or customer-sited renewables

†

U.S. Territories

DC

TX: 5,880 MW x 2015*

SD: 10% x 2015

SC: 2% 2021

NMI: 20% x 2016

PR: 20% x 2035

Guam: 25% x 2035

USVI: 30% x 2025

NH: 24.8 x 2025

VT: 20% x 2017

MA: 15% x 2020(new resources)

6.03% x 2016 (existing resources)

RI: 14.5% x 2019

CT: 27% x 2020

NY: 29% x 2015

PA: 18% x 2021†

NJ: 20.38% RE x 2020 + 4.1% solar by 2027

DE: 25% x 2026*

MD: 20% x 2022

DC: 20% x 2020

14


0

100

200

300

400

500

0

100

200

300

400

500

2009 2010 2011 2012 2013 2014 2015 Cap

acit

y -

Meg

aw

att

s (

MW

)

# o

f C

ert

ifie

d F

acilit

ies

Ohio Renewable Energy Development ( All Technology)

# of Facilities Total MW

304 MW

49 MW

71 MW

99 MW

100 MW

10 MW37 MW

49 MW

49 MW

177 MW25 MW

12 MW

10 MW

Source: PUCO (March, 2015)

15


Ohio Renewable Energy Generation By Technology


Abandoned Coal Mine Methane

4%

Biomass27%

FuelCell0%

Hydroelectric6%

Solar PV10% Solid Waste

4%

Waste Energy

Recovery4%

Wind45%

16


17


18


Support for Wind Turbines Based on Residents’ Zip Code of Renewable Energy

73%

48%

16%

30%

11%

21%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Other zipcode 43359

Support/strongly support

Neutral

Opposed/stronglyopposed

General support or

opposition for wind

turbines in their county:

Local Support or Opposition of Development?


Shale Energy Development

20


Ohio Natural Gas Production (2000 - 2014)


-

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

Mill

ion C

ubic

Feet

(Mcf)

Total Production Shale Production

21


Ohio Oil Production (2000 - 2014)


-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

Barr

els

Total Production Shale Production


“But Global Data also flagged the competitive advantage that

U.S. companies will receive from the lower cost provided

by shale gas. And this opportunity is attracting investment

from some of the industry’s bigger names. Just last week the

International Energy Agency said some 30 million European

jobs are at risk as manufacturers of petrochemicals, plastics

and fertilizers are relocating to the U.S.”

Source: Shale Reshapes Petrochemicals Business.

The Wall Street Journal. Ben Winkley (July, 2014)


Natural Gas Processing Plant - Natural gas

processing removes impurities and separates

higher- valued products known as natural gas

liquids. Processing prepares a dry gas stream that

meets industry standards for transportation in high-

pressure pipelines.

Fractionation Plant - Fractionation is the process

that involves the separation of the natural gas

liquids into discrete natural gas liquid purity

products (i.e., ethane, propane, normal butane,

isobutane, and natural gasoline).

Steam cracker Plant - A steam cracker is a

petrochemical plant that uses feedstocks (i.e.,

ethane, propane) to create ethylene, propylene,

and other petrochemicals.

Ohio Midstream Processing Terms

24


Ohio Midstream Processing Infrastructure

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

-

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

2013 2014 2015

Fra

ctionation

–bbl/day

Natu

ral G

as P

rocessin

g M

mcf/

day

Fractionation Natural Gas Processing


Ohio Getting Ethane Cracker Plant?

“Appalachian Resins Inc., a Houston company,

has leased 50 acres of land in Monroe County.

When built, the Ohio plant would process

about 18,000 barrels a day of ethane.”

Source: the Columbus Business First

(August, 2014)

26


Downstream Value Chain MarketsDownstream Value Chain: Markets


Distributed Energy

Development

28


Walmart’s Approach to Renewable Energy

• Text

Net Metering

State-developed mandatory rules for certain utilities

No uniform or statewide mandatory rules, but some utilities allow net metering

www.dsireusa.org / March 2015

* State policy applies to certain utility types only (e.g., investor-owned utilities)

Note: Numbers indicate individual system capacity limit in kW. Percentages refer to customer demand. Some limits vary by customer type, technology and/or application. Other

limits might also apply. This map generally does not address statutory changes until administrative rules have been adopted to implement such changes.

Note: Net Metering rules are being actively discussed in over a dozen state public service & utility commissions across the country.

WA: 100

OR: 25/2,000*

CA: 1,000*

MT: 50*

NV: 1,000*UT: 25/2,000*

AZ: 125%

ND: 100*

NM: 80,000*

WY: 25*

HI: 100*

CO: 120%*

OK: 100*

MN: 40

AR: 25/300

MI: 150*WI: 20*

MO: 100

IA: 500*

IN: 1,000*IL: 40*

FL: 2,000*

KY: 30*

OH: no limit*

GA: 10/100

NC: 1,000*

VA: 20/1,000*

NE: 25

KS: 15/100/150*

ME: 660*

AK: 25*

State: kW limit residential/ kW limit nonresidential

U.S. Territories:American Samoa: 30

Guam: 25/100

Puerto Rico: 25/1,000/5,000

Virgin Islands: 20/100/500

LA: 25/300

44 States + DC,AS, Guam, USVI, & PR

have mandatory net

metering rules

DC

WV: 25/50/500/2,000

VT: 20/250/2,200

NH: 1,000

MA: 60/1,000/2,000/10,000*

RI: 5,000*

CT: 2,000/3,000*

NY: 10/25/500/1,000/2,000*

PA: 50/3,000/5,000*

NJ: no limit*

DE: 25/100/2,000*

MD: 2,000

DC: 1,000/5,000/120%

SC: 20/1,000*

29


“This is a financial investment, it just happens

to be green. We will never tell you, go spend

six or seven million dollars to be green. We

will tell you, spend six or seven million dollars

to be profitable, and if you can be green while

doing this, great”

– Jereme KentOne Energy LLC.

31


G&S Titanium Solar Project

• 65 kW PV Solar fixed/tracking System installed by Carbon Vision LLC

• “With the financial incentives we have already received, the elimination of our

monthly electric bill, and the avoidance of future rate increases, we foresee a total

R.O.I. of roughly 8.5 years.” - Roger N. Geiser, Owner, October 5, 2012

$323,700 - Cost

$93,081 – Federal Government Check

$75,000 – AEP Credits Check

$68,049 – IRS Asset Dep.

$76,500 – 8.5 Years of Electric Bills (9K)

$11,000 – 8.5 Years Future Rate Increases (5%)

$323,000

32


Example: Swine Facility

29.25 kW system / Generating 29,250

kWh per year

117 panels (250 watt)

Average usage = 54,000 kWh per Yr.

Offset 70% of electric needs

Rooftop system south facing at 35 degree

tilt.


Energy as a BR&E

Strategy

34


What Can You do Locally?

• Identify businesses that have an interest in energy efficiency

and distributed energy investments.

• Research net metering rules for your county/township.

• Identify funding and support programs.

• Include rules for siting renewable energy projects in local

zoning ordinances.

• Include space for energy development into future planning of

business parks.

35


NFIB National Small Business (less than 250) Poll

• The energy costs of individual small businesses vary

greatly. Ten (10) percent of small employers claim that

energy costs are the largest single cost they have while 8

percent claim that they have no direct energy expenses.

• Small-business energy costs (closely related to

consumption) are primarily linked to vehicles (38%),

heating and cooling of occupied space (33%), operating

equipment or processes (21%) and lighting (6%).

So, How Can We Help You?

• OSU has developed a Business Retention and

Expansion Program.

• Program was created in 1986 and has been used in

nearly all Ohio Counties.

• Originally created to focus on the manufacturing sector

but has since expanded in the retail sector and specific

sectors ie health care, downtowns

BRE Energy Development Program

• The primary objective of this program is to increase the

knowledge, awareness of business owners and

leaders concerning distributed energy generation, net

metering, and renewable energy development.

• This program will provide participants the tools and

knowledge to enhance decision-making capacity on

energy investments, allowing Ohio businesses to

prosper, grow, and provide stabilized employment

opportunities

Components of the BR&E

• A customized business retention and expansion survey to be

distributed to businesses in your community. This electronic survey

will serve as a needs assessment, market the program to

businesses, and collect critical data to assess overall compatibility

with distributed energy projects.

• Presentation from OSU Extension providing renewable energy policy

overview and foundation level information on distributed energy

generation, net metering, and renewable energy projects.

• Expert Q&A panel session with utility, industry, and financial experts,

to provide detailed information on net metering, rules, cost,

construction, permitting, timing, and financing options.

Components of the BR&E

• Case study sessions presented by business leaders who have

successfully implemented distributed energy generation projects in

Ohio and can highlight both opportunities and challenges with their

respective projects.

• Meetings with panel representatives to advance project discussions

to a more detailed level. Companies (participants) will bring electric

consumption data with them to take advantage of this initial

consultation with facility visits to follow at a later date, if the company

chooses.

• A Comprehensive Economic Development Energy Strategy


Questions ?

Eric Romich

OSU Extension Field Specialist, Energy Development

[email protected]

energizeohio.osu.edu

David Civittolo

OSU Extension Field Specialist, Community Economics

[email protected]

comdev.osu.edu/programs/economic-development/business-retention-expansion

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