industrial combined heat and power: why is it stalled in...
TRANSCRIPT
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Marilyn Brown Professor of Energy Policy
Georgia Institute of Technology
Industrial Combined Heat and Power: Why is it Stalled in the U.S.?
Clean Energy Seminar Georgia Tech
December 4, 2013
Numerous Market Failures and Barriers Inhibit the Growth of Industrial CHP
• Key strengths – Waste heat recycling=free fuel and
high efficiency* – Low-cost & clean energy – Enhances system reliability
• Numerous barriers to CHP investments – Regulatory barriers
• CHP cuts utility profits
– Financial barriers – Information and workforce barriers
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CHP
Power Plant
Boiler
ELECTRICITY
HEAT
Traditional System
CHP System
45- 49%
75- 80%
Efficiency Efficiency
Policy options are available to tackle these barriers.
Source: Shipley et al. (2008) and Brown et al. (2011)
*Central generation cannot economically recycle waste heat because steam, hot or chilled water travel at most ≈5 miles.
• The U.S. has about 84 GW of CHP capacity (about 12% of power generation); the vast majority is in the industrial sector.
• In August 2012, an executive order set a national goal of 40 GW of new industrial CHP by 2020.
• The Energy Information Administration forecasts that the nation will meet only about half of this goal by 2020.
• Baer, Brown and Kim (2013) estimate that a 30% Investment tax credit (ITC) would meet the goal in 2023, and would create jobs.*
Some Recent Policies: A CHP Goal, a Tax Credit, State Portfolio Standards,
and DOE Technical Assistance
* Baer, P., M.A. Brown and G. Kim. (2013). “The Job Generation Impacts of Expanding Industrial Cogeneration,” Georgia Institute of Technology School of Public Policy, Working Paper #76. Available at http://www.spp.gatech.edu/aboutus/workingpapers
Methodology for Estimating Job Impacts: Hybrid NEMS-Input/Output Model
• We first modeled the investment tax credit in Georgia Tech’s National Energy Modeling System (GT-NEMS).
National Energy Modeling System
(Source: EIA 2009)
• NEMS outputs (capacity, supply, & energy bill changes) drive input-output multipliers (based on IMPLAN) to estimate employment impacts.
Marilyn A. Brown, Matt Cox, and Paul Baer. 2013. “Reviving manufacturing with a federal cogeneration policy.” Energy Policy. 52 (2013) 264–276.
Each GW of installed CHP capacity creates and maintains ≈2,000-3,000 full-time equivalent jobs throughout the lifetime of the system.
The Job Generation Benefits of Expanding Industrial Cogeneration
Job Coefficients by Sector (Jobs per Million of Expenditures, in $2009)
5
14.5
19.8
6.6 5.7
7.4
15.5
-
5.0
10.0
15.0
20.0
25.0
CHP Construction and Installation
CHP Operation & Maintenance-Non
Fuel
Natural Gas Electricity Coal & Petroleum Re-spending of Utility Bill Savings
Induced Impact
Construction & Installation
Operation & Maintenance
Energy Production
(Natural Gas)
21400 21300
32800 33800
-30000
-20000
-10000
0
10000
20000
30000
40000
50000
60000
70000
2015-2019 2020-2024 2025-2029 2030-2034
Num
ber o
f Job
s
14 GW of new CHP capacity between 2015 and 2035 would create 21,000-34,000 jobs. • Direct jobs in manufacturing,
construction, O&M • Indirect and induced jobs, resulting
from redirection of industrial energy expenditures and re-spending of energy-bill savings due to price and demand changes
Such job impacts are typical of energy efficiency investments.
Estimated Employment Growth with a 20% ITC
Source: K. Gyungwon, P. Baer and MA Brown. 2013. “The Statewide Job Generation Impacts of Expanding Industrial CHP,” Proceedings of the American Council for an Energy Efficient Economy (ACEEE) Summer Study on Energy Efficiency in Industry, July 23-26, Niagara Falls, NY.
• Create a shared vision about the value of CHP – today and in light of forthcoming Clean Air Act rules.
• Include CHP in integrated system planning. • Address regulatory barriers. • With a policy makeover, CHP could help America build
a prosperous and secure future based on low-carbon and clean energy.
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CONCLUSIONS/RECOMMENDATIONS
Weyerhaeuser, MS, pulp plant on 6/21/11: Producing 68 MW of electricity, consuming 49 MW, and selling 19 MW back to the grid.
Dr. Marilyn A. Brown, Professor Georgia Institute of Technology School of Public Policy Atlanta, GA 30332-0345 [email protected] Climate and Energy Policy Lab: http://www.cepl.gatech.edu
FOR MORE INFORMATION
Coca-Cola’s Atlanta Landfill Gas Cogeneration Project
Richard Crowther – Coca-Cola
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ENERGY & CLIMATE
SUSTAINABLE PACKAGING
WATER STEWARDSHIP
Where doe s Coca -Co l a focus
on Sus t a i nab i l i t y ?
F l e e t T r a n s p o r t a t i o n
P r o d u c t i o n E f f i c i e n c y
A l te rna t i ve Energy
P r o d u c t D e l i v e r y
Four Key Areas for Energy & Cl imate
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Alternative energy
Fuel Cells
Bio-Fuels
Solar Power
Cogeneration
Project Overview • Project Description
– 6.525 MW combined heat and power plant using landfill gas from Hickory Ridge landfill – Electric and thermal energy used by Coca-Cola’s Atlanta Plant – Project includes:
• Landfill gas processing • 6.0 mile dedicated pipeline • 3 Jenbacher J616 engines
• Heat recovery steam generators • Steam turbine chiller
• Project Schedule – Construction start – 12/2010 – Commercial operations – 3/2012
• Key Project Partners – Mas Energy – Republic Services
– Atlanta Gas Light
– GE Jenbacher
– Veolia Energy N.A.
– Crowder Construction
System Schematic
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Appendix A
Cooling'&'Dehydra0on'
Siloxane'Removal'
Polishing'Bed'
'''Gas'Compressor'
2.175'MW'GenBset'
2.175'MW'GenBset'
2.175'MW'GenBset'
H'R'S'G'
H'R'S'G'
H'R'S'G'
1065'Ton'SteamBDriven'
Chiller'
Landfill'Gas'to'Exis0ng'Flare'
Siloxane'Bed'Regen'&'Destruc0on'Flare'
Steam'to'Process,'HVAC'
Chilled'Water'to'Process,'HVAC'
6.0'mile'Dedicated'LFG'pipeline'to'Trigenera0on'Plant'
11,400'lb/hour'of'125'psig'steam'
Electricity'to'CocaBCola'&'Ga'Power'
Combined Heat and Power Increasing Awareness and Action
Isaac Panzarella Director, DOE Southeast CHP TAP
North Carolina Solar Center
North Carolina State University
Clean Energy Seminar GA Tech
December 4, 2013
o Reduces energy costs for the end-‐user o Increases energy efficiency, helps manage costs, maintains jobs
o Provides stability in the face of uncertain electricity prices o Reduces risk of electric grid disrup>ons & enhances energy reliability (Hurricanes Katrina & Sandy; 2004 Blackout)
o Used as compliance strategy for emission regula>ons (Boiler MACT & Reduced Carbon Footprint)
o Natural gas supply increases and price stability
Why are CHP investments typically made? (> 4,100 installations & ~ 82 GW installed capacity)
Recent CHP Investments Trend and Factors
Hedman, “CHP: Market Status and Emerging Drivers,” for Midwest Cogeneration Association Meeting, April 2013; http://www.cogeneration.org/pdf/MCA2013April4_Hedman.pdf
Plans for 4,500 MW CHP
Annual CHP Capacity Additions
Historical NG Price at Henry Hub
Natural gas reserves have increased confidence in price stability
More development in states with favorable regulatory or policy status
Spark Spread improving in areas; Northeast, Texas, California
Biomass and other opportunity fuels in Southeast, Midwest and Northwest
Awareness of strategic applica>ons: universi>es, hospitals, wastewater treatment, ins>tu>ons
Growing interest in power reliability and cri>cal infrastructure
Opportunity to meet environmental performance requirements in industrial and ins>tu>onal sectors
CHP Value Proposition
Based on: 10 MW Gas Turbine CHP - 30% electric efficiency, 70% total efficiency, 15 PPM NOx Electricity displaces National All Fossil Average Generation (eGRID 2010 ) - 9,720 Btu/kWh, 1,745 lbs CO2/MWh, 2.3078 lbs NOx/MWH, 6% T&D losses
Thermal displaces 80% efficient on-site natural gas boiler with 0.1 lb/MMBtu NOx emissions
Category 10 MW CHP
10 MW PV
10 MW Wind
Combined Cycle
(10 MW Portion)
Annual Capacity Factor 85% 25% 34% 67%
Annual Electricity 74,446 MWh 21,900 MWh 29,784 MWh 58,692 MWh
Annual Useful Heat 103,417 MWht None None None
Footprint Required 6,000 ft2 1,740,000 ft2 76,000 ft2 N/A
Capital Cost $24 million $60.5 million $24.4 million $10 million
Annual Energy Savings 343,747 MMBtu 225,640 MMBtu 306,871 MMBtu 156,708 MMBtu
Annual CO2 Savings 44,114 Tons 20,254 Tons 27,546 Tons 27,023 Tons Annual NOx Savings 86.9 Tons 26.8 Tons 36.4 Tons 59.2 Tons
State 50-500
kW (MW) .5-1 MW
(MW) 1-5 MW (MW)
5-20 MW (MW)
>20 MW (MW) Total MW
Alabama 116 107 351 227 602 1,404
Arkansas 64 62 182 199 236 742
Florida 190 115 377 241 156 1,079
Georgia 220 169 683 755 803 2,631
Kentucky 114 104 287 396 339 1,239
Louisiana 80 60 345 517 2,052 3,054
Mississippi 69 56 170 223 571 1,089
North Carolina 254 184 746 686 428 2,298
South Carolina 109 90 415 447 747 1,809
Tennessee 149 118 430 457 1,053 2,207
Total 1,365 1,064 3,987 4,149 6,985 17,550
Southeast Industrial CHP Technical Potential
Data prepared by ICF International for U.S. DOE, October 2013
State 50-500
kW (MW) .5-1 MW
(MW) 1-5 MW (MW)
5-20 MW (MW)
>20 MW (MW) Total MW
Alabama 329 219 219 136 104 1,006
Arkansas 190 146 174 72 20 601
Florida 1,433 1,543 1,332 376 210 4,894
Georgia 695 492 566 182 166 2,101
Kentucky 268 193 237 92 65 855
Louisiana 324 258 236 144 0 963
Mississippi 184 137 195 92 0 607
North Carolina 574 403 438 211 148 1,774
South Carolina 315 216 294 39 0 864
Tennessee 450 287 350 132 22 1,241
Total 4,762 3,894 4,040 1,476 735 14,908
Southeast Commercial CHP Technical Potential
Data prepared by ICF International for U.S. DOE, October 2013
o Na>onal Governors Associa>on Policy Academy on Enhancing Industry through Industrial EE & CHP; Alabama, Arkansas, Illinois, Iowa and Tennessee.
o DOE SEP Compe>>ve Funding Selec>ons for “Advancing Industrial Energy Efficiency” Nov 2013; Alabama, Iowa, Kentucky, Minnesota, Mississippi, Oregon, Texas and Wisconsin.
o Continued Federal support for states through DOE CHP Technical Assistance Partnerships and SEE Action Network
State Awareness and Policy Activities
CHP and Critical Infrastructure “Critical infrastructure” refers to those assets, systems, and networks that, if incapacitated, would have a substantial negative impact on national security, national economic security, or national public health and safety.” Patriot Act of 2001 Section 1016 (e)
Applications: o Hospitals and healthcare
centers o Water / wastewater
treatment plants o Police, fire, and public
safety o Centers of refuge (often
schools or universities) o Military/National Security o Food distribution facilities o Telecom and data centers
Superstorm Sandy o Nearly $20 billion in losses from
suspended business activity o Total losses estimated between $30 to $50
billion o Two-day shutdown of the NY Stock
Exchange, costing an estimated $7 billion from halted trading
o Rutgers estimates economic losses of $11.7 billion for New Jersey GDP
SOURCE: http://www1.eere.energy.gov/manufacturing/distributedenergy/pdfs/chp_enabling_resilient_energy_infrastructure.pdf
One estimate states that over $150 billion per year is lost by U.S. industries due to electric network reliability problems
Source: https://www1.eere.energy.gov/manufacturing/distributedenergy/pdfs/chp_critical_facilities.pdf
Power Outage Cost Estimates
o South Oaks Hospital - Amityville, NY, 1.25 MW reciprocating engine
o Greenwich Hospital - Greenwich, CT, 2.5 MW reciprocating engine
o Christian Health Care Center - Wyckoff, NJ, 260 kW microturbine
o Princeton University - Princeton, NJ, 15 MW gas turbine
o The College of New Jersey - Ewing, NJ, 5.2 MW gas turbine
o Salem Community College - Carney’s Point, NJ, 300 kW microturbine
o Public Interest Data Center - New York, NY, 65 kW microturbine
o Co-op City - The Bronx, NY, 40 MW combined cycle
o Nassau Energy Corporation – Garden City, NY, 57 MW combined cycle
o Bergen County Utilities Wastewater Plant – Little Ferry, NJ, 2.8 MW reciprocating engine
o New York University – New York, NY, 14.4 MW gas turbine
o Sikorsky Aircraft Corporation – Stratford, CT, 10.7 MW gas turbine
CHP Operates Through Super Storm Sandy
For more information: https://www1.eere.energy.gov/manufacturing/distributedenergy/pdfs/chp_critical_facilities.pdf.
Microgrid generally considered to be self-contained grid systems equipped with on-site power generation
“A group of interconnected loads and distributed energy resources (DER) with clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid [and can] connect and disconnect from the grid to enable it to operate in both grid connected or island mode.” (DOE Microgrid Working Group Definition)
o CHP systems act as the backbone of microgrids by providing base load reliably
o Microgrids must be capable of “island” mode in anticipation of or in event of grid power failure
o Intermittent renewables & storage, complementary to CHP
CHP and Microgrids
Microgrid Example: Gainesville Regional Utilities / Shands Hospital
• 4.3 MW GT CCHP • chilled water: 4,200 tons • steam: 14,500 pph
• 100% island / blackstart capability
• Category 4 Hurricane
Advantages
• utility–private partnership
• critical power • no-low capital • 50 yr life
Savings
• 36.2% cost • $1.68 M/year • 68% less CO2 • 99% less SOX • 98% less NOX
Recent State / Local Policy Measures o DOE/State of New Jersey/ NJ Transit/New
Jersey Board of Public Utilities – announces microgrid to power the transit system among Newark, Jersey City, and Hoboken.
o Connecticut – first state to launch an microgrid program: $18M awarded to 9 microgrid projects in July 2013 – Gov. Malloy to commit additional $30M over the next 2 years.
CHP and Microgrids
EPA’s Boiler MACT Rule (CHP Role) • ICI Boiler MACT -‐ Standards for hazardous air pollutants from
major sources: industrial, commercial and ins>tu>onal boilers and process heaters Final rule December 2012 – Compliance by January 31, 2016
• Compliance with MACT limits will be expensive for many coal and oil users (standard compliance measures)
• May consider conver>ng to natural gas Conversion for some oil units, replacements for coal units?
• May consider moving to natural gas fueled CHP (trade off of benefits versus addi>onal costs) – Represents a produc>ve investment – Poten>al for lower steam costs due to genera>ng own power – Higher overall efficiency and reduced emissions – Higher capital costs, but par>ally offset by required compliance costs or
new gas boiler costs
ICI Boiler MACT - Potential CHP Capacity
Fuel Type Number of Facili=es
Number of Affected Units
Boiler Capacity
(MMBtu/hr)
CHP Poten=al (MW)
CO2 Emissions Savings (MMT)
Coal 332 751 180,525 18,055 114.2
Heavy Liquid 170 367 48,296 4,830 22.9
Light Liquid 109 241 22,133 2,214 10.5
Total 611* 1,359 250,954 25,099 147.6
*Some facili>es are listed in mul>ple categories due to mul>ple fuel types; there are 567 ICI affected facili>es
• CHP poten>al based on average efficiency of affected boilers of 75%; Average annual load factor of 65%, and simple cycle gas turbine CHP performance (power to heat ra>o = 0.7) • GHG emissions savings based on 8000 opera>ng hours for coal and 6000 hours for oil, with a CHP electric efficiency of 32%, and displacing average fossil fuel central sta>on genera>on
The data on this chart is still being refined
o Issued Proposed New Power Plant Standards on September 20, 2013
o Utility Boilers fired with Coal and IGCC Units – 1,100 lb CO2/MWh gross over a 12-operating month
period, or – 1,000-1,050 lb CO2/MWh gross over an 84-operating
month (7-year) period o Stationary Gas Combustion Units SC/CC
– 1,000 lb CO2/MWh gross for larger units (> 850 mmBtu/hr)
– 1,100 lb CO2/MWh gross for smaller units (≤ 850 mmBtu/hr)
Proposed Carbon Pollution Standard for New Power Plants
0
500
1,000
1,500
2,000
2,500
Average Coal Average Oil Average NG NG CHP Solar, Hydro, Nuclear
Biomass
Em
issi
ons
(lb C
O2/
MW
h)
0 ?
Relative Carbon Emissions from Power Generation
Based on US EPA Egrid Averages for United States
Industrial Plant, Institutional
Campus, etc.
Carbon Emissions Reduction from CHP
10MW CHP System,
NG CT
On-site Boiler
83,220 MWh/yr
315,730 MBtu/yr
51,152 tons CO2
TOTAL
23,029 tons CO2
97,060 tons CO2
TOTAL
23,029 tons CO2 recovered thermal
28,123 tons CO2
CHP Electric 676 lbs CO2/MWh
74,031 tons CO2
Grid Electric 1,779 lbs CO2/MWh
Results from EPA CHP Emissions Calculator
43% Reduction of CO2 Equivalents
Conventional Power / Heat CHP
o States may consider flexible approaches to meeting carbon pollution standards, including support for CHP to mitigate other emissions.
o Emissions savings from CHP could be captured in a number of ways: – Through utility ownership – Efficiency programs – Credit trading
What does this mean for CHP?
o Large Capital Investment which most companies are reluctant to make – Long payback periods by their standards
– Not directly related to their main area of business
o Discouraged by many electric utilities – Utility regulatory framework often does not encourage
CHP
– Utilities encouraged to invest in central station power and upgrading the present grid structure (larger rates of return on their investments)
– Requires state policy changes
Two Prominent Barriers to CHP
o Competitive cost with traditional centralized power o Speed of deployment o Avoids significant line losses
o Defer significant grid upgrades (reduces conjestion) o Reduce emission compliance costs o Ability to function as a capacity resource
o Ability to balance system power fluctuations o Ability to supplement and support greater renewable
energy deployment
Utility CHP Benefits
Example CHP Installations w/ Utilities o We Energies (Domtar Paper Mill), Rothschild, WI, 50 MW
boiler/steam turbine (2013)1
o Lansing Board of Water & Light (REO Town Cogeneration Plant), Lansing, MI, 100 MW boiler / steam turbine (2013)2
o City of Macon (Northeast Missouri Grain, LLC), Macon, MO, 10 MW combustion turbine (2003)3
o City of Russell (U.S. Energy Partners, LLC), Russell, Kansas, 15 MW combustion turbine (2002)4
o Detroit Thermal Energy (Cristal Global), Ashtabula, OH, 28 MW combustion turbine (2001)5
o Muscatine Power & Water (Grain Processing Corp.), Muscatine, IA, 18 MW boiler / steam turbine (2000)6
o Southern Co. approx 700MW CHP across its service area 1 - http://www.jsonline.com/business/power-plant-to-run-on-wisconsin-biomass-b9985790z1-221960911.html 2 - http://www.lansingstatejournal.com/article/20130630/BUSINESS/306300016/BWL-s-REO-Town-plant-fuels-next-generation-power?nclick_check=1 3 - http://www.midwestcleanenergy.org/profiles/ProjectProfiles/NortheastMissouriGrain.pdf 4 - http://www.midwestcleanenergy.org/profiles/ProjectProfiles/USEnergyPartners.pdf 5 - http://www.eea-inc.com/chpdata/States/OH.html 6 - http://www.eea-inc.com/chpdata/States/IA.html
The Regulatory Assistance Project 50 State Street, Suite 3 Montpelier, VT 05602
Phone: 802-223-8199 www.raponline.org
CHP Power Sector Policy: How government action enables CHP
Georgia Tech Energy Series
Presented by Richard Sedano
December 4, 2013
Introducing RAP and Rich
• RAP is a non-profit organization providing technical and educational assistance to government officials on energy and environmental issues. RAP staff have extensive utility regulatory experience. – Richard Sedano directs RAP’s US Program.
He was commissioner of the Vermont Department of Public Service from 1991-2001 and is an engineer.
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CHP development inevitable, can be nurtured
• Inevitable because customers are being empowered – Technology – Use of markets in regulation
• Valuable to the Electric Grid • Nurtured how? And how well?
– By State Government? – By Utilities?
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CHP as a program How a utility would encourage CHP rather than be passive?
• Programs are about customers – Can CHP fit into utility program practice?
• Screening – Distinctions with Industrial Energy
Efficiency? • Managing Electric / Gas Savings
– Compare with Geothermal Heating • Counting against requirements
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From SEE Action CHP Guide (2013)
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Regulatory Issues
• Mechanics of counting (and EM&V) • Sharing electric and gas responsibility • Motivating performance by customer • Motivating performance by utility • Enabling customer • Costs
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Regulatory Issues
• Mechanics of counting (and EM&V) – Routine EM&V methods apply
• Sharing electric and gas responsibility • Motivating performance by customer • Motivating performance by utility • Enabling customer • Costs
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Regulatory Issues
• Mechanics of counting (and EM&V) • Sharing electric and gas responsibility
– Methods are fine, companies often don’t agree • Motivating performance by customer • Motivating performance by utility • Enabling customer • Costs
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Regulatory Issues
• Mechanics of counting (and EM&V) • Sharing electric and gas responsibility • Motivating performance by customer • Motivating performance by utility
– Incentives (financial, performance) • Enabling customer • Costs
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Regulatory Issues
• Mechanics of counting (and EM&V) • Sharing electric and gas responsibility • Motivating performance by customer • Motivating performance by utility • Enabling customer
– Fair Interconnection, stand by rates, … • Costs
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Regulatory Issues
• Mechanics of counting (and EM&V) • Sharing electric and gas responsibility • Motivating performance by customer • Motivating performance by utility • Enabling customer • Costs
– ?
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Advanced program elements: planning and market rules
• Geo-target – Motivate CHP where most needed by grid
conditions • Acquire ancillary services with capacity
and energy • Responsive customers
– motivated especially by high amounts of wind and solar, enabled by tech)
– what does that mean for CHP? 12
Policy Barriers to CHP
• Rate design – Presumptions in Stand by Rates about
reliability of CHP tend to be too cautious • Planning
– Credit for reliability benefits from CHP • Operations
– Purchase terms and valuation of products • REC issues where applicable
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Policy Barriers to CHP
• Loss of sales in traditional regulation is a disadvantage to utilities – This can be addressed, some utilities don’t
want to • Control of utility operation by the utility
may not be compatible with customer-sited generation
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A Resource Standard is a political act to value preferred resources
• CHP can qualify
for any standard – Assure no double
counting – Carve out / tier
for CHP? – All or just new/
recent?
• Make it easy – utility acquires tags with power
• Make it market – allow marketing of tags
• Adding CHP means standard amounts should be reassessed
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Resource Standard is a political act to value preferred resources
• Policy first – Resource standard should be designed to meet
policy goals so best to be clear about them • Then create market rules that work and
don’t interfere with other markets created • Try to give the created market stability,
but remember that government has created the market to serve policy
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http://www1.eere.energy.gov/seeaction/pdfs/see_action_chp_policies_guide.pdf
About RAP
The Regulatory Assistance Project (RAP) is a global, non-profit team of experts that focuses on the long-term economic and environmental sustainability of the power and natural gas sectors. RAP has deep expertise in regulatory and market policies that:
§ Promote economic efficiency § Protect the environment § Ensure system reliability § Allocate system benefits fairly among all consumers
Learn more about RAP at www.raponline.org