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IEDA Industrial Energy ProgramsIowa EDGE and CHP Policy AcademyApril 23, 20131AgendaIEDA Energy Team and Focus Areas

Why Industrial Energy and Water Use in Iowa Matters

EDGE Industrial Recognition Program

Combined Heat and Power Initiative

2Iowa State Energy Office3 Housed at the Iowa Economic Development Authority Formerly the Iowa Office of Energy Independence Small Team- 7 team members Focus Areas Energy Efficiency (Public and private sectors) Renewable Energy Biomass and Biofuels Public policy

Formerly the Office of Energy IndependenceSmall staff- 6 full-time, 1 part-timeLimited resources- 90% federally funded

3IOWA EDGE

4Industrial Energy Use

5Industrial Energy Use Trend

6Energy Consumption by Sector

7Case for Energy EfficiencyKeep money in local economyIn Iowa, for each $1 million invested in energy efficiency:25 job years created$1.50 of additional disposable income per $1 invested Improve economic competitiveness Meet environmental goals

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9Case for Energy EfficiencyA New Approach to Energy AssistancePASTFUTUREIntent:Save energyCareer development

Audience:Engineer/facilitiesMulti-disciplinary

Focus: Boiler roomBusiness needs

Product:ProjectsBusiness solutions

Dynamic:Program PUSHProgram PULL

Perception:DistractionOpportunitySource: Christopher Russell, ACEEE10EDGE Focus on Energy Management Enhance an industrys energy management approach through the following:

Evolve from PROJECTS to SOLUTIONS, from EPISODES to RELATIONSHIPS

Groom proactive leadership so that energy management can grow at member organizations

MONETIZE energy outcomes to harvest income from waste

11EDGE Program ObjectivesCreate a highly visible recognition program that recognizes industries that have undertaken significant energy efficiency initiatives to reduce energy and water usage.

Make significant progress in reducing energy and water consumption and greenhouse gases by bringing process efficiencies to Iowas industrial and manufacturing plants and encouraging forward-thinking design for new industrial construction.

12EDGE Program OutcomesRecognize the energy and water efficiency achievements of industrial organizations through an ongoing goal setting and utility tracking process

Increased coordination with state and federal energy resources

Through efficiency gains, improve business competitiveness to retain and create jobs in Iowa

13EDGE Advisory CommitteeIowa Association of Municipal Utilities

Office of Consumer Advocate

Department of Natural Resources, Pollution Prevention Services

MidAmerican Energy

Alliant Energy

Other members such as Black Hills Energy, Iowa Energy Center, Iowa Assessment Center etc. 14Company Selection ProcessMarket to companies with total utility bills of $500,000 or more per year (Some flexibility built-in)

Target energy reduction of 2% or higher per year

Companies should commit to establish or maintain green team/energy team

Diverse geographic & industry profile

15IEDAs EDGE AssistanceTechnical AssistanceEnergy Management 101Green Team/LeadershipBaselining Energy & WaterFederal Energy Efficiency Programs & ResourcesResources for Energy& Water Audits Financial AssistanceState and Federal financing optionsUtility financial assistance- rebates, custom incentives3rd party financial assistanceProject Implementation Support One-on-one assistanceCase studies- development and disseminationHold peer networking events

16EDGE Financial and Technical Support TeamEPA Region 7Pollution Prevention Grant

EPA Better Plants Challenge

Department of Energy

17EDGE Timeline and MilestonesQ1 & Q2 (2013)Recruit 10 companiesHold kick-off eventBegin baselining and goal setting processQ3 (2013)Companies begin work towards goalsQ1 (2014)Recruit 10 more companiesOrientation for second set of companiesQ3 (2014)Recognition event for 10 original membersQ4 2014 Document results and close EPA grantWebinars/workshops and peer networking (ongoing, schedule TBD)Ongoing cycle of goals and recognition for all participants

181st Workshop UpcomingTitle: Energy Management Workshop Time: April 11, 10 a.m. to 3:30 p.m.Location: Iowa Association of Municipal Utilities Invited Speakers: Bruce Bremer, Former Toyota Corporate Energy Manager, EPA ENERGY STAR consultant Brad Runda, Corporate Energy Manager, Saint Gobain Joanne Howard, Energy and Climate Strategy Manager, Deere & Company Open and free to industrial representatives. 19

Contact20Shelly Peterson, Iowa EDGE Project ManagerShelly.peterson@iowa.gov

NGAs CHP Policy Academy

21BackgroundThe Policy Academy on Enhancing Industry Through Energy Efficiency and Combined Heat and Power focused on hosting senior-level policy advisors to identify cost-effective strategies, design new policies, programs and other measures, structure financing and funding options, and explore outreach, education and training techniques. 22ProcessIowa Utilities Board (IUB) and Iowa Economic Development Authority (IEDA) submitted a joint application to the National Governors Association.

Iowa was selected along with four additional states including Illinois, Arkansas, and Alabama. Tennessee was later added on to the Policy Academy.

Two national convening in Portland, OR, and Philadelphia, PA

23GoalsCompile and share information

Increase understanding of potential CHP market

Identify and address potential policy options.24Major Activities UndertakenLiterature review and research on existing CHP and potential of CHP in Iowa

Stakeholder meetings

Survey on challenges and barriers related to CHP

Site-visits to ADM plant in Des Moines as well as to the Des Moines Wastewater Reclamation Facility

Compilation of the final report and memo to the Governor and National Governors Association (ongoing)

25List of StakeholdersAg Processing, Inc.Iowa Association of Electric CooperativesAlliance PipelineIowa Association of Municipal UtilitiesArchers-Daniels-Midland CompanyIowa Department of Natural Resources Air Quality BureauBrown Engineering CompanyIowa Environmental CouncilCity of Des Moines WRA Wastewater Reclamation FacilityIowa Office of Consumer AdvocateEnvironmental Law and Policy CenterIowa Utility AssociationInternational Paper CompanyLarge Energy GroupInternational Paper CompanyRoquette America Inc.Interstate Power and Light Company26CHP SurveyGoal Seek feedback on factors affecting CHP installation and operations from CHP stakeholders.Two similar surveys were sent to:Existing CHP Facilities and those interested in CHP Surveys were sent and completed electronically. Some paper responses were received. Survey ComponentsBackground Information on CHP(size, # of FTEs, fuel source, years of operation)Brief Description of CHP SystemCHP Installations and BarriersQualitative ResponseContact Information

27Sample Survey28

Survey 1: Existing CHPDOE database lists 34 sites in Iowa (590 MW installed CHP capacity)Survey sent out to 22 entities15 entities responded Some CHP facilities seem to have gone out of operationInformation gathering for small CHP facilities was difficult

2929Barriers: Existing CHPNote: Arranged by most common to least common response30

Qualitative Responses-Existing CHPEnvironmental Regulations & Permitting requirementsRegulatory requirements are based on peak load and not actual operating conditions which create stricter requirements.No incentives offered by regulated utilities that encourage or promote CHP in Iowa.Air regulators do not account for CHPs reduced net air emissions.Interconnection with utilities is a challenge as some of the requirements can be significant. Environmental regulations are constantly changing. Site already meets maximum emission limits even with technological controls.

3131Qualitative Responses-Existing CHPFinancingHard to raise capital for new construction of CHP. Its easier to get appropriation funds for utility expense. Upfront expense and the nature of investment makes CHP projects difficult. Difficult to provide economic justification.Organizations are reluctant to spend the upfront money for a feasibility study.Establishing partnerships, for feedstock materials, thermal loads, etc. can help make a CHP project cost-effective.Tax credits are not an incentive to a public entity.

32Qualitative Responses-Existing CHPPower purchase agreement Preference would be to sell energy at retail rates.Give incentives for those who use renewable fuel as a fuel source for CHP. CHP operations become electrical power generators according to state definitions and this is not a role a company wants to play.Purchase price rates vary considerably across the state and project by project.Operation of CHPOperation of CHP is not a core business function.Time consuming and difficult.Learning curve is high.

3333Survey 2: Interested in CHPSent to over 60 contacts of vendors, consultants, industrial energy provided by Midwest Clean Energy Application CenterIowa Association of Municipal Utilities, Iowa Association of Electric Cooperatives, and Large Energy User organization sent the survey to their contacts7 completed surveys, 7 replies of no history with CHPAll but one are private sector entities

3434Barriers: Interested in CHP35

Arranged by most common to least common responseQualitative Responses- No Existing CHPThe spark spread between electric costs and natural gas costs needs to widen a bit more to make CHP financially attractive.Financing and return on investment is a challenge therefore Incentives such as grants should be made available. EPA regulations and working with utilities are big challenges.Natural gas price volatility is a challenge. High cost of natural gas pipeline tap and pipeline capacity limitations limit new CHP.No information or experience on CHP. 36Next StepsMemo to the Governor on the next steps on the CHP Policy AcademyIEDA will plan to hold three webinars in May on the following topics:Small scale CHP systems and its applicabilityBoiler MACT rules and CHP as an optionThe CHP Final Report will be released to the stakeholdersPossible topics that may be explored further relate to information sharing, permitting and financing as well as utility topics.

37Questions/Comments

Contact

Paritosh Kasotia, Team Leader515-725-0434Paritosh.kasotia@iowa.gov 38