1 / 29

The Role of Financial Incentives in Promoting CHP Development

The Role of Financial Incentives in Promoting CHP Development. Nate Kaufman, Research Assistant American Council for an Energy-Efficient Economy Co-Author: R. Neal Elliott, Ph.D., P.E., Associate Director for Research Presented to the Industrial Energy Technology Conference May 21, 2010

mikel
Download Presentation

The Role of Financial Incentives in Promoting CHP Development

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Role of Financial Incentives in Promoting CHP Development Nate Kaufman, Research Assistant American Council for an Energy-Efficient Economy Co-Author: R. Neal Elliott, Ph.D., P.E., Associate Director for Research Presented to the Industrial Energy Technology Conference May 21, 2010 New Orleans, LA

  2. The American Council for an Energy-Efficient Economy (ACEEE) • Non-profit 501(c)(3) dedicated to advancing energy efficiency • Focus on end-use efficiency in: • Industry • Buildings • Utilities • Transportation • Federal and State Policy • Funding from foundation and government grants, specific contract work, conferences and publications

  3. Encouraging CHP: Policies Needed • CHP has been primarily consumer-driven • High energy costs • Concerns about reliability • Concerns about environmental harm • Utilities have concerns about adding CHP to their systems, for technical and financial reasons • Environmentalists have concerns about CHP’s emissions

  4. The Policy Arena • Main take-away: • CHP faces a number of barriers that could be reduced with good policies, including: • Interconnection standards • CHP-friendly standby tariffs • CHP-directed financial incentives • Output-based air regulations • Eligibility in RPS/EERS/other energy portfolios

  5. What should states focus on: Removing regulatory barriers or providing financial incentives? Images: http://www.thalmann.com/largeformat/images/Barrier.jpg, http://www.dbtechno.com/images/Medicare_e-prescriptions.jpg

  6. Assessing energy efficiency policies by state: ACEEE’s Annual Energy Efficiency Scorecard • Ranks states on a variety of energy efficiency practices, policies and programs • CHP a targeted category due to potential to achieve great efficiency savings • Calls out specific leaders and best practices • 2010 version will be released this fall

  7. Interconnection standards Utility tariffs for supplemental, backup, and standby power CHP eligibility in an EERS, RPS, or other portfolio standard Output-based air emissions regulations Note: Net metering is currently not factored into ACEEE’s scorecard, but likely will be in future iterations State Regulatory Environments for CHP

  8. Regulatory Environments for CHP: State Scorecard Rankings (2009) WA MT ME ND VT OR MN NH ID WI SD NY WY MA MI CT RI IA PA NE NJ* NV OH IL UT IN DE CO WV KS VA MD CA MO DC KY NC TN OK AZ NM AR SC AL GA MS TX LA AK FL Rank 1-10 Rank 31-40 Rank 11-20 Rank 41-51 HI Rank 21-30

  9. Financial Incentives for CHP: State Scorecard Rankings (2007-2009) WA MT ME ND VT OR MN NH ID WI SD NY MA WY MI CT RI IA PA NE NJ* NV OH IL UT IN DE CO WV KS VA MD CA MO DC KY NC TN OK AZ NM AR SC AL GA MS TX LA AK FL Rank 1-10 Rank 31-51 Rank 11-20 HI Rank 21-30

  10. Incentives vs. Regulatory Environments: State Examples

  11. State Leaders, New Installed CHP Capacity, 2005–2009

  12. State Leaders, Number of New CHP Installations, 2005–2009

  13. State Leaders, Average Capacity of New Installations, 2005–2009

  14. State Leaders, Capacity of New Installations normalized by state population, 2005–2009

  15. State Leaders, Number of New CHP Installations normalized by state population, 2005–2009

  16. States with the highest-ranked regulatory policies

  17. States with the best financial incentives

  18. 10 states with the best regulatory environments 10 states with the best financial incentives Overlap: Ohio and Connecticut(68 total new sites, 230.5 total new capacity)

  19. Incentives vs. Regulatory Environments: State Examples

  20. Good regulations, good incentives… 61 sites,181.9 MW 7 sites,48.6 MW CT OH 10 sites,38.8 MW 94 sites,98.8 MW OR NY Good CHP!

  21. Bad regulations, bad incentives… 0 sites,0 MW 4 sites,2.9 MW GA LA 3 sites,0.1 MW 2 sites,0.4 MW WY VA Bad CHP!

  22. Good regulations, bad incentives… 8 sites,380.8 MW 32 sites,36.7 MW MA TX 3 sites,2.2 MW 2 sites,4.5 MW IN ME A wash… Why haven’t IN and ME seen more CHP development?

  23. Bad regulations, good incentives… AK 1 site,0.4 MW 3 sites,43.9 MW FL 2 sites,3.8 MW 10 sites,3.2 MW VT ID Few installations except VT, little capacity except FL…

  24. Examining the anomalies: Florida • One new site: 36.5 MW • Other two: 3.2 and 4.2 MW • Large site, installed by Smurfit Stone Container Corporation at a wood products plant, was a QF under PURPA (sect. 210) • Able to bypass regulatory processes at the state level • Other two systems undertaken by municipal utilities—Ocala and Gainesville • CHP systems installed by utilities are inherently exempt from utility-related barriers, and munis lie outside state regulatory environment FL 3 sites,43.9 MW Strong incentives, weak regulations

  25. Examining the anomalies: Vermont • Despite lack of good reg. policies, EE programs, utility energy objectives, & other factors encourage CHP • Recent energy savings goals • Save 261.7 GWh between 2006 and 2008 (handily beat) • Efficiency Vermont, the state’s “efficiency utility,” which has its own set of savings goals, provides technical assistance for CHP developers. • Strong renewable energy goals - Sustainably Priced Energy Enterprise Development (SPEED) program • 7 of the 10 projects fired by biomass • Net metering available for systems <250 kW, (3 of the 10) VT 10 sites,3.2 MW Strong incentives, weak regulations

  26. Examining the anomalies: Maine & Indiana Weak incentives, strong regulations • Unclear why ME & IN have seen little CHP activity recently • Always many other factors at play • Subtleties of regulations • Education & awareness • Lack of access to NG • ACEEE will be exploring these factors in upcoming research 3 sites,2.2 MW IN 2 sites,4.5 MW ME

  27. Other factors • Size matters • >20 MW • At large firms – time, $, staff • Lower relative cost • FERC IC standards • PURPA QFs • Facilitation by state players • Technical assistance e.g. RACs/CEACs • EE programs e.g. Efficiency VT • Incentives for renewables (biomass CHP)

  28. Conclusions • Financial incentives are beneficial, but not necessarily sufficient to create a healthy CHP market • Removing barriers can significantly improve potential for CHP implementation • System size is key • Incentives more useful for smaller systems • Larger systems can overcome hurdles more easily • Path to market transformation: good regulation, coordinated incentives, sufficient education & marketing • Findings can be applied to other EE systems – look for hidden barriers!

  29. Questions? Comments?Thanks! • Nate Kaufman • American Council for an Energy-Efficient Economy • nkaufman@aceee.org • (202) 507-4026

More Related