NGA Policy Academy on Industrial EE and CHP

New  Jersey’s  Clean  Energy  Program

Opportunities for CHP

Michael Winka NJBPU Senior Policy Advisor

March 4-6, 2013

NJ Clean Energy Program Background

• Introduced in 2001 as part of the 1999 EDECA • Funded  from  “Societal  Benefits  Charge”  on  utility  bill • Administered by the New Jersey Board of Public Utilities • Provides energy efficiency project opportunities for:

– Residential – Renewables – Commercial & Industrial

NJ Clean Energy Program Background

New Jersey is a competitive state in terms of energy Do not look to the tax structures for the most part in energy to develop incentives –

Either through SBC or riders/trackers rates – Clean Energy program incentive – NJBPU statewide – Conservation Improvement Program - Gas decoupling- NJ Natural

and South Jersey Gas utilities – Utility EE and solar filings – Utility area specific which

complement or enhance the statewide NJBPU Clean Energy Programs

SBC rate impact and bill costs Electric 0.3 cents/kWh (1.5%) $1.90/mo Gas 2 cents/therm (1.8%) $2.00/mo

Commercial & Industrial Portfolio

• NJ SmartStart Buildings • Local Government Energy Audit • Direct Install • Pay for Performance • Large Energy Users Pilot • SBC Credit • Benchmarking

• Combined Heat & Power/Fuel Cells • Small scale < 1 MW Large scale > 1 MW

NJ SmartStart Buildings

• Electric Chillers • Natural Gas Cooling • Electric Unitary HVAC Systems

& Controls • Ground Source Heat Pumps • Gas Heating • Water Heating

• Variable Frequency Drives VAV Systems or ChW Pumps

• NEMA Premium Motors • Prescriptive & Performance

Lighting • Lighting Controls • Refrigeration Doors/Covers and

Controls

Custom measure path for unique electric or natural gas measures not on this prescriptive list

Prescriptive Incentives – Prequalified Technologies

Local Government Energy Audit

The Audit is available for: • NJ Local Governments • 501(c)(3) Non-profit Agencies • NJ State Colleges and Universities

Covering a wide range of building types, including: • Offices • Town Halls • Police and Fire Stations • Courtrooms • Community Centers • School Buildings

100% of cost up to $100,000 per entity

Direct Install

• A turn-key, retrofit program designed to address the replacement of lighting, HVAC and other outdated operational equipment in small to medium size facilities with a peak electric demand not exceeding 150 kW in the preceding 12 months

• Provides incentives of up to 70% of the installed cost • Incentives are paid directly to the contractor

– customer pays remaining 30% – $75,000 project cap – $250,000 per entity cap

Pay for Performance Eligibility

• Existing Building – Located in New Jersey – Annual peak demand in excess of 100kW

• New Construction – Located in New Jersey within Smart Growth area – 50,000 gross heated square feet of planned space reduce facility energy consumption by 15% or more, or 4% for eligible high-energy intensity customers Incentives up to $2 million per project, assuming both gas and electric improvements are made; $4 million annual entity cap

Thresholds waived for hospitals, non-profits, local government buildings, affordable multi-family housing and public universities and colleges

Large Energy Users Pilot

• Designed for large C&I facilities who paid a minimum of $300,000 toward the NJCEP fund in 2011

• Average billed peak demand 400 kW and/or 4,000 DTh • $0.33 per kWh & $3.75 per Therm annual savings • Total of $28 million reserved for 2012 pilot • 45 day new enrollment period began February 13th • Application package available at:

NJCleanEnergy.com/LEUP

SBC Credit program

• Designed for any C&I customer that currently pays a societal benefits charge (SBC) to a regulated utility

• 50% of the capital costs and service for a customers EE project

• 50% of the SBC you pay into the fund • Must be equipment or services approved by BPU in NJCEP • Can carryover for 10 years (total of 11 years)

Ex: $1.1 M EE project for equipment and services SBC Credit of $550,000 Customer pays $50 K per year Carryover for 10 years plus the year they applied.

Free Benchmarking Report

Benchmarking assessments are designed to help:

• Understand energy cost trends and consumption at each building

• With sufficient comparative data, see how building(s) compare to similar buildings using ENERGY STAR® Portfolio Manager

• Identify opportunities for improving operations, reducing costs, and getting an energy efficiency project started

Combined Heat & Power/ Fuel Cells- Small Scale program

All system size limited to one MW or less

100%  or  less  of  facility’s  historic  usage New equipment or incremental for existing system

Non-RE Fuel < 500 kW $1000/kw > 500 kW $500/kW $250/kw bonus w PfP capped at 30% or 40% with cooling

RE Fuel < 500 kW $3000/kw > 500 kW $2000/kW Capped at 40%

Fuel cells HR $2000/kW Fuel cells w/o HR $1500/kW $250/kW bonus w PfP capped at 60%

Combined Heat & Power / Fuel Cells – Large scale program

All system sizes, incentives limited to first 3 MW • 1-3 MW $550/ kW • > 3 MW $350 / KW • Capped at $3 M or 30%

Fuel cells • $2000 per kW w HR • $1,500 per kW w/o HR • Capped at $3 M or 45%

• HHV or 45% or LHV of 65% Must  be  “new”  and  no  export  -100% on site use

NJ CHP Background

NJ current has 3,000 MW of CHP at 209 facilities Governor  Christie’s  EMP  set  a  goal  of  1,500  of  CHP by 2020 or approx 200 MW per year. Market potential study performed by MA CEAC Goal was for duel economic and environmental benefits – facilities have to demonstrate net benefits. Sandy amended that goal

NJ CHP Background

Small scale – Non- RE fuel 26.3 MW 2006- 2012 $ 17.6 M RE fuel 3.2 MW $ 6.8 M Fuel Cells 1.5 MW $ 4.7 M Budget for 2012 $17M now it is $12M 7 projects approved 2.3 MW 5 under review 2.8 MW Large scale – 24 MW $11M – 2012 6 projects ($67.5M) Budget for 2012 was $55M now it is $35 M ARRA - 34 MW $15 MW 2010-2011

NJ CHP Policy – storm Response

– Power was out at in Princeton for over a week but Princeton University was able to switch off grid and power a large part of the campus with an 11 MW CHP unit

– The College of NJ was able to island their facilities because of their CHP units and continue to stay open while the 26kV line that feeds power to the campus was down and was being repaired

NJ CHP Policy – Storm Response for Critical Facilities

CHP more than just an emergency BUG operates 24/7

Can generate a portion/all of the facilities energy needs including electric and thermal

What is needed for CHP for Critical Facilities Operate isolated from the grid – Islanding Undergrounding of wires Blackstart - (Code issues) Testing Training

NJ CHP Policy – Storm Response for Critical Facilities

• To highlighted the importance of training and testing • Rutgers attempted to isolate and black start their CHP

facility but it was determined that the control logic prevented the black start system to function.

• Rutgers needed to upgrade that logic as needed to perform in island mode with installation of a new and upgraded 69 KV substation that was recently installed.

• This requires both software and electrical equipment upgrade. The estimated cost is $350,000.

NJ CHP Policy – Storm Response for Critical Facilities

If we were to fund the installation of 1500 MW of CHP in the same manner as in the current Large Scale CHP and Fuel Cell program

This would cost the ratepayers approximately $700M over 8 years and over $1B if that includes the small scale CHP- Fuel cell program

Approximately $100 M per year (0.3% rate impact)

Rebates and grants are not the more effective and efficient way to incentivize actions

Uncertainty in the start and stop of a rebate budget – CHP needs a larger degree of certainty because of size And timeframe needed to develop CHP

NJ CHP Policy – Storm Response for Critical Facilities

Options for Financing

CHP Portfolio Standard Long history with RECs and Portfolio Standards Some degree of uncertainty w/o long term contracts Third party supplier need to manage another REC Public Private Partnerships (P3) Long term contracts Competitive Bidding ? Increase transparency separating audits from work Bond Financing – QECB More complex Brings in Private capital 3:1 +

NJ CHP Policy – Storm Response for Critical Facilities

• BPU has engaged Rutgers Center for Economic, Energy and Environmental Policy (CEEEP) to work with the CHP-Fuel Cell Work Group to complete a cost benefits analysis of these options.

• The outcome of that analysis will be built into the SC CHP-FC Program and the LS CHP –FC program in 2014 which actually starts July 1, 2013 on the same year as the State’s  fiscal  year.

NJ CHP Policy – Questions

1. NG decoupling does not address chp 2. PJM provides capacity for EE and RE and some other ancillary

services like frequency regulation (capacity payments small) 3. NJBPU can direct utilities to file EE and RE on their side or

customer side of the meter – Rate Counsel issues sale of gas 4. NJ has a CHP general permit for CHP < 5 MW 5. MACT issues minimal no industrial coal and few #6 oil 6. We do not mange the financing models except on public 7. Biggest issue is certainty in financing/incentives 8. Sales Tax exemption for sale of energy from CHP 9. Extends onsite generation to any customer connected with a pipe 10. Public Private Partnerships (P3) Performance contracting on

steroids 11. CHP- PS as an option is easier than other EE because of generation

so it looks more like a RE PS and RECs 12. Best use of funds is our job

For More Information

Visit NJCleanEnergy.com/SSB Call (866) NJSMART