Buying Electricity and Natural Gas for a BIG User

1. Buying Electricity and Natural Gas for a BIG User Joan Kowal Energy Manager, UMCP March 6, 2012 Sustainable Tuesdays Speaker Series

2. Retail Electric Competition

3. The Electric Utility Industry The electric utility industry consists of three functions needed to deliver power to customer loads: • Generation • Transmission • Distribution It consists of many entities. Most notable are: • Generators (Fossil, Nuclear, and Renewable) • Regional Transmission Organizations (PJM) • Distribution Companies (PEPCO, BGE) • Load Serving Entities or Suppliers (Constellation, Washington Gas Energy Services, Pepco Energy Services) • Government Regulators (FERC, PSC) • End-users (UMD, homeowners, retail stores)

4. Typical Electrical System

5. Electric Supply at UMCP • The electric needs on campus are met through: • On-site production from a natural gas, combined heat and power plant • Purchased energy delivered at the Mowatt substation (building located by Architecture.)

6. Campus Electric Consumption

7. UMD Combined Heat and Power Plant • 27.5 MW natural gas, CHP plant installed at the College Park Campus • Doubled steam efficiency from 35% to nearly 70% • Energy Star award for 2005 • Annual CO2 reductions of 53,000 tons • Also produces chilled water for air conditioning using steam in summer

8. Auxiliary Boilers How System Works: 2 Heat Recovery Steam Generators Steam Driven Chillers on Campus Back Pressure Steam Turbine 125 PSI Steam 625 PSI Steam Make Up Water Heating Steam Electric Power 5MW Exhaust Heat 6250 F Electric Power 22 MW 2 Combustion Turbines and Generators Fuel Gas or Oil Chilled Water 70% of Condensate Returns to CHP

9. Energy Procurement • Electricity • Supplier – WGES • Distribution Company – PEPCO • Contract Structure (main campus) • Block and Index • Fixed Supplier Fee • All other costs are a pass-through • Term is 3 years with two, 1 year options

10. Electric Contract (cont’d) • Block and Index Contract • Advantages • Reduces risk premiums from supplier • Allows UMD to reduce costs by reducing load in high priced hours • Allows rate to more closely reflect market over term of contract in lieu of locking in fixed-price for entire term on one day • Disadvantages • Reduced price certainty

11. Electricity ProcurementBlock and Indexed

12. Natural Gas Procurement • Supplier – Pepco Energy Services/WGES • Distribution Company – Washington Gas Light • Contract Structure • Fixed Price for small accounts • Block and Index contract for CHP supply • Large account is interruptible; oil used as back-up fuel

13. Natural Gas ProcurementBlock and Indexed

14. MD Renewable Energy • State has a renewable portfolio standard (RPS) that requires electric suppliers to meet certain standards: • In 2012, 6.5% from Tier 1 renewable sources (including at least .1% from solar); and 2.5% from Tier 2 resources • In 2022, 20% from Tier 1 renewable sources (including at least 2% from solar); and 0% from Tier 2 resources

15. RPS Definitions – Tier I • (1) solar energy including PV and solar hot water heating;  • (2) wind;  • (3) qualifying biomass;  • (4) methane from the anaerobic decomposition of organic materials in a landfill or wastewater treatment plant;  • (5) geothermal;  • (6) ocean, including energy from waves, tides, currents, and thermal differences;  • (7) a fuel cell that produces electricity from a Tier 1 renewable source under item (3) or (4) of this subsection;  • (8) a small hydroelectric power plant of less than 30 megawatts • (9) poultry litter-to-energy • (10) waste-to-energy; and • (11) refuse derived fuel. 

16. RPS Definitions – Tier II • Hydroelectric power other than pump storage generation 

19. On-site Renewable Energy • Solar hot water heating system installed at Ellicott Dining Hall and to be included at the University House • Solar photovoltaic at Cole Field House – 5.25 kW • Installation of geothermal heat pumps at the new Shuttle Facility; two renovated Sorority Houses; and new University House

20. Project Sunburst • DOE American Recovery and Reinvestment Act of 2009 funds allocated to Renewable Energy in MD • UMCP was awarded a grant of $1000/kW of installed solar capacity • Competitive solicitation awarded to WGES and Standard Solar for a 630kW installation at Severn • Commercial Operation June, 2011 • Estimated output of 792 MWh annually

21. Aerial View of Severn with 2,300 Solar Panels

22. Off-Site Renewable Energy • Executed three long term power purchase agreements (PPAs) • Two land based wind with total capacity of 65 MW • One solar project with capacity of 13MW • Aggregation of University System of Maryland Institutions with state and local agencies

23. Buying Off-Site Renewables • Bundled RECs through PPAs • Long term commitment to buy power and RECs • If buyer doesn’t buy RECs, power cannot be counted as renewable energy • Unbundled RECs • Green attributes associated with power generation

24. Bundled RECs through PPAs 1 MWh Elect. 1 MWh REC Electricity and RECs bundled together Load Serving Entity

25. Unbundled RECs Can claim renewable energy 1 MWh REC 1 MWh Elect. 1 MWh Elect. Electricity and RECs sold separately Can’t claim renewable energy

26. Renewable PPA Contracts –

27. References • eia.doe.gov/ • www.ferc.gov/ • www.eei.org/ • www.energy.state.md.us/