customer-side clean energy in the southeast...2. combined heat and power introduction combined heat...
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NI R 12-03
REPORT
June 2012
Etan Gumerman*
Amy Morsch*
Sarah Plikunas*
Ken Sercy†
* Nicholas Institute for Environmental Policy Solutions, Duke University† Graduate Student, Nicholas School of the Environment, Duke University
Customer-Side Clean Energy in the SoutheastOpportunities for Combined Heat and Power, Solar Water Heating
Vanderbilit University
R.M. Clayton Wastewater Treatment Plant
Hilton Asheville Biltmore Park
Guilford College
Nicholas Institute for Environmental Policy Solutions Report
NI R 12-03 June 2012
Customer-‐Side Clean Energy in the Southeast Opportunities for Combined Heat and Power, Solar Water Heating
Etan Gumerman* Amy Morsch*
Sarah Plikunas* Ken Sercy†
*Nicholas Institute for Environmental Policy Solutions, Duke University
†Graduate Student, Nicholas School of the Environment, Duke University
How to cite this report Gumerman, E., Morsch, A., Plikunas, S., and Sercy, K. 2012. Customer-Side Clean Energy in the
Southeast: Opportunities for Combined Heat and Power, Solar Water Heating. Durham, NC: Nicholas Institute for Environmental Policy Solutions, Duke University.
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Acknowledgements
The authors gratefully acknowledge the Energy Foundation, whose generous funding made this project possible. We would also like to thank Jonas Monast and Whitney Ketchum for their contributions and content review, and Paul Brantley for his perceptive editing support. Finally, we would like to thank the following individuals, without whose time and insight this project would not have been possible:
Alex Alaniz, IKEA Orlando Joanna Baker, FLS Energy Mary Pat Baldauf, City of Columbia Kate Binion, Energy Foundation Jason Bodwell, Georgia Environmental Finance Authority Jennifer Bumgarner, Energy Foundation Tavey Capps, Duke University Pace Cooper, Cooper Hotels Lee Colten, Kentucky Department of Energy Development and Independence Liz Davey, Tulane University Jim Dees, Guilford College Mark Hahn, Mecklenburg County Wendell Hardin, City of Winston-Salem Terry Hendrix, Cooper Hotels Len Hoey, North Carolina Energy Division Bill Hosken, City of Atlanta Trish Jerman, SC Energy Office Ken Jurman, Virginia Division of Mines, Minerals, and Energy Bob Leker, North Carolina Energy Division Max Light, Energy Systems Group J.D. Lowery, Arkansas Energy Office Chris Martin, University of North Carolina at Chapel Hill Glenn Mauney, Southern Alliance for Clean Energy (formerly) Colleen McCann Kettles, Florida Solar Energy Center George Mori, First Century Energy Doug Mullen, University of North Carolina at Chapel Hill Hobie Orton, Biltmore Farms, LLC Steve Palumbo, Duke University David Petree, Guilford College Mark Petty, Vanderbilt University Jean Pullen, City of Atlanta Jeff Redderson, Furman University John Sanseverino, Tennessee Solar Institute Andrea Schroer, Georgia Environmental Finance Authority Richard Self, North Carolina Energy Division Kelley Smith-Burk, Florida Office of Energy Katie Southworth, Tennessee Office of Energy Division Shane Tedder, University of Kentucky Scott Turley, University of Arkansas Fayetteville Dan Young, Guilford College
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CONTENTS 1. Introduction ............................................................................................................................................. 4
Process ...................................................................................................................................................... 4 Report Outline ........................................................................................................................................... 4
2. Combined Heat and Power ..................................................................................................................... 5 Introduction ............................................................................................................................................... 5 What Is Combined Heat and Power? ........................................................................................................ 5 Benefits of CHP ........................................................................................................................................ 6 Potential for Nonindustrial CHP ............................................................................................................... 7 Common Obstacles to CHP ...................................................................................................................... 8
Economics and upfront cost ................................................................................................................. 8 Information barriers .............................................................................................................................. 8 Policy hurdles ....................................................................................................................................... 9
CHP Case Studies ..................................................................................................................................... 9 Municipal wastewater treatment facilities ............................................................................................ 9
Case study: R.M. Clayton Wastewater Treatment Plant ................................................................ 10 University power plants ...................................................................................................................... 12
Case study: Vanderbilt University ................................................................................................. 12 3. Solar Water Heating ............................................................................................................................. 14
Introduction ............................................................................................................................................. 14 What Is Solar Water Heating? ................................................................................................................ 15 Benefits of SWH ..................................................................................................................................... 15 Potential for SWH ................................................................................................................................... 16 Common Obstacles to SWH Development ............................................................................................ 17
Economics and upfront costs .............................................................................................................. 17 Information barriers ............................................................................................................................ 18 Policy hurdles ..................................................................................................................................... 18
SWH Case Studies .................................................................................................................................. 18 Case study: Guilford College ......................................................................................................... 18 Case study: Hilton Asheville Biltmore Park .................................................................................. 20
4. Discussion ............................................................................................................................................... 21 Economics ............................................................................................................................................... 21 Information ............................................................................................................................................. 23 Policy Opportunities ............................................................................................................................... 23
Mitigate upfront costs ......................................................................................................................... 24 Facilitate access to information .......................................................................................................... 24 Remove regulatory hurdles ................................................................................................................. 25
5. Conclusions ............................................................................................................................................ 25 Appendices ................................................................................................................................................. 27
Appendix A: Case Study Development .................................................................................................. 27 Appendix B: Clean Energy Policies in the Southeast ............................................................................. 27 Appendix C: Combined Heat and Power Resources .............................................................................. 29 Appendix D: Solar Water Heating Resources ........................................................................................ 30
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1. INTRODUCTION Previous analysis by Duke University’s Nicholas Institute for Environmental Policy Solutions and the Georgia Institute of Technology (Georgia Tech) demonstrates how aggressive energy-efficiency policies in the South could reduce the need for new electric generation over the next 20 years, reduce water consumption, moderate projected electricity-rate increases, and create jobs.1 Similar research shows that renewable energy could provide a large portion of the region’s electricity within a decade at economically competitive rates, given a supportive policy environment.2 While these high-level assessments provide insight into economic potential under supportive policy regimes, this report focuses on current clean energy opportunities within existing economic and policy constraints.
The decision to adopt clean energy technologies, particularly customer-side generation technologies, cannot usually be described as a binary choice that either makes economic sense or does not. Rather, the decision-making process associated with clean energy projects, as with many purchases (i.e., lighting, vehicles, homes), involves a wide range of circumstances and considerations that are not easily captured by model-based analysis.
This document focuses on what can be learned from how public, institutional, and commercial stakeholders are engaging in that decision-making process and developing clean energy projects on the ground. In particular, this report explores two technologies identified through stakeholder interviews: combined heat and power (CHP) and solar water heating (SWH). Through case studies, it highlights how Southeastern project managers have navigated a variety of economic, policy, and informational barriers to develop successful customer-owned clean energy installations, and offers some of the lessons these developers have learned along the way.
Process In order to identify practical and relevant clean energy opportunities for Southeastern stakeholders, researchers from the Nicholas Institute contacted Southeastern state energy offices, universities, and municipalities during the fall of 2011. The researchers first gathered information on current projects, opportunities of interest, barriers encountered, and resources that would be useful through initial interviews with stakeholders representing 19 institutions and government entities. Then they limited this assessment to two technologies due to time constraints, using the initial round of interviews to identify focal technologies. While responses indicated common interest in efficient lighting, building retrofits, CHP, and SWH, this work focuses on CHP outside of industrial sector and nonresidential SWH because these strategies are less widely deployed and fewer informational resources are already available.
After selecting the focal technologies for this report, researchers conducted a literature review to identify established best practices for CHP and SHW and known barriers to deployment. Finally, researchers identified case study projects by revisiting initial scoping interviews where CHP or SHW projects were under way and by referral or web-based research. Criteria for selecting case studies included (1) representation of a diverse set of projects based on geography, sector, and financing tools; (2) relevance as a model for potential future projects; and (3) practical considerations, such as the willingness and availability of project representatives to share their experiences.3
Report Outline The following sections delve into opportunities for two clean energy technologies that are not widely adopted by commercial and institutional energy users. Section 2 explores CHP potential in the region and
1 Marilyn A. Brown et al., “Energy Efficiency in the South” (Atlanta: Southeast Energy Efficiency Alliance, 2010). 2 Marilyn A. Brown et al., “Renewable Energy in the South,” (Atlanta: Southeast Energy Efficiency Alliance, 2010). 3 For a further discussion of case study development, see Appendix A: Case Study Development.
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highlights case studies at university and municipal sites that should apply widely to similar facility types. Section 3 examines SWH, drawing on the experiences of commercial operations, campus managers, and a county facilities team. Section 4 concludes by identifying viewpoints and strategies among these case studies that empowered decision makers to overcome the economic, policy, and informational barriers noted above. It also offers recommendations for policy makers interested in facilitating clean energy adoption in the Southeast. Appendices C and D provide resources for more information about SWH and CHP technology.
2. COMBINED HEAT AND POWER Introduction Combined heat and power (CHP) is a well-tested strategy to provide large energy consumers with highly efficient on-site energy generation systems. CHP is most commonly used in industrial settings, but substantial opportunities also exist in other sectors. This section explores the potential and benefits of greater CHP deployment among nonindustrial users and ways in which economics, information, and policies interact to enable or hinder project development. The case studies that follow highlight the experiences of two nonindustrial energy users that have chosen to install CHP systems: a municipal wastewater treatment facility in Atlanta, Georgia,4 and Vanderbilt University in Nashville, Tennessee. The two projects represent different motivations, configurations, and obstacles to nonindustrial CHP deployment.
What Is Combined Heat and Power? Whereas separate production of heat and power has an overall efficiency of 45%, combined heat and power production can achieve operating efficiencies up to 80%.5 Combined heat and power applications are complex, integrated systems that maximize the usable energy of the fuel source by simultaneously generating thermal and electric outputs, as depicted in Figure 1. CHP is not a specific technology; rather, it is a site-specific application of existing technologies, such as reciprocating engines, combustion or steam turbines, microturbines, generators, and heat-recovery systems.6 Project engineers can choose the appropriate fuel and products that meet their needs. Systems usually produce both 1) electricity or mechanical drive, and 2) thermal outputs, such as process heating and cooling, steam, or hot water.7 To do this, CHP systems capture waste heat from electricity production or mechanical power and use that thermal energy to provide heating or cooling services. Alternative configurations use excess pressure from a thermal output such as steam to drive a turbine and generate electricity.
CHP systems also eliminate much of the power loss from transmission and distribution of electricity because they are generally located at the primary demand center they serve.8
4 There are some variations in the categorization of wastewater treatment facilities. Some experts categorize WWTFs as industrial sites, and others, including the Southeast Clean Energy Application Center, categorize them as institutional facilities. For the purpose of this study, we have categorized WWTFs as institutional, as they are public, nonmanufacturing facilities. 5 Anna Shipley et al., “Combined Heat and Power: Effective Energy Solutions for a Sustainable Future” (Oak Ridge, TN: Oak Ridge National Laboratory, 2008). 6 U.S. Department of Energy (DOE) Southeast Clean Energy Application Center, “CHP Electric Technologies,” accessed June 5, 2012, http://www.southeastcleanenergy.org/cleanenergy/chp/technologies.aspx. 7 Anna Chittum and Nate Kaufman, “Challenges Facing Combined Heat and Power Today” (Washington, D.C.: American Council for an Energy-Efficient Economy, 2011). 8 Shipley et al., “Combined Heat and Power.”
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Figure 1. Efficiency comparisons of traditional, separate electric and heating systems versus CHP system
Source: U.S. DOE Southeast Clean Energy Application Center, “About Combined Heat & Power,” accessed June 5, 2012, http://www.southeastcleanenergy.org/cleanenergy/chp.
This report explores the range of typically smaller-scale and less-studied commercial and institutional CHP applications. Universities, research campuses, hospitals, military facilities, airports, wastewater treatment facilities, landfills, hog farms, and other facilities with centralized heating and electric facilities and/or closely matched heat and electric demand are potentially good candidates for CHP.9 While the industrial sector remains an important area for CHP expansion, there are many more existing informational resources on industrial opportunities.10
Benefits of CHP Expanding CHP capacity could yield significant economic and environmental benefits both at the project level and regionally. At the project level, CHP can improve business competitiveness by lowering energy costs. As decentralized energy production facilities, CHP systems can reduce on-site disruptions and ensure that critical systems remain powered.11
CHP can also help energy consumers achieve environmental objectives. For instance, the overall efficiency offered by CHP can help on-site energy facilities comply with certain environmental standards, including new rules set by the U.S. Environmental Protection Agency (EPA) for hazardous air pollutants for industrial, commercial, and institutional boilers.12 Under this rule, facilities will be able to earn compliance credit for reducing emissions by installing CHP.13 Many commercial and institutional entities have adopted sustainability goals, and CHP systems offer a substantial opportunity to reduce emissions of greenhouse gases and other pollutants. On university campuses and in the public sector, CHP can also
9 International District Energy Association, “About District Energy: U.S. District Energy Systems Map,” accessed June 5, 2012, http://www.districtenergy.org/u-s-district-energy-systems-map. 10 Brown et al., “Energy Efficiency in the South”; Council of Industrial Boiler Owners, “Energy Efficiency and Industrial Boiler Efficiency: An Industry Perspective,” accessed June 5, 2012, http://cibo.org/pubs/whitepaper1.pdf; ICF International, “Effect of a 30 Percent Investment Tax Credit on the Economic Market Potential for Combined Heat and Power” (2011), accessed June 5, 2012, http://www.uschpa.org/files/public/USCHPA WADE_ITC_Report_FINAL v4.pdf. 11 Shipley et al., “Combined Heat and Power.” 12 U.S. EPA Combined Heat and Power Partnership, “Combined Heat and Power Partnership: Fact Sheet,” accessed June 5, 2012, http://www.epa.gov/chp/state-policy/obr_factsheet.html. 13 Nate Aden, “Leading the Renewal of American Manufacturing: Ohio’s Combined Heat and Power Program,” WRI Insights, March 14, 2012, accessed June 5, 2012, http://insights.wri.org/news/2012/03/leading-renewal-american-manufacturing-ohios-combined-heat-and-power-program.
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provide educational opportunities, such as the demonstration project North Carolina State University’s engineering department recently undertook.14
The Mississippi Baptist Medical Center’s well-reported experience with CHP illustrates an even wider range of benefits. The medical center in Jackson, Mississippi, has saved more than $700,000 on average each year since paying off the capital costs. When Hurricane Katrina hit in 2005, the city lost water and power. The CHP system provided the hospital with the energy needed to remain nearly 100% operational for 52 of the 57 hours the hospital was without power from the main grid. It was the only hospital in the Jackson metro area to do so. By providing the hospital with a reliable source of backup power, the CHP system allowed the Jackson community to access medical care during the disaster.15
Regionally, CHP systems reduce baseload and peak electricity demand. Reductions in peak demand diminish grid inefficiencies caused by congested transmission lines and lower the risk of power outages.16
Potential for Nonindustrial CHP Oak Ridge National Laboratory (ORNL) reported in December 2008 that a total CHP capacity of 85 gigawatts (GW) was spread over approximately 3,300 locations across the United States.17 ORNL also suggested that technology development and a favorable policy framework could allow the United States to triple its CHP capacity and achieve 240 GW by 2030. Industrial complexes with large, generally constant steam and electric loads and access to bulk fuel prices have historically been best suited to CHP development.18 Consequently, industrial operations, such as chemical and paper producers, food processors, refiners, and manufacturers, currently account for 88% of U.S. CHP capacity.19
The 2010 Nicholas Institute and Georgia Tech study “Energy Efficiency in the South” assessed how incentives and improved system performance could impact industrial CHP development in the South and found that CHP capacity in that sector alone could increase by 50% by 2030.20 The same year, an analysis of technical CHP potential by ICF International suggested that while there are 64 GW of potential industrial CHP capacity across the United States, another 68 GW of capacity could be developed at commercial and institutional facilities.21
Nonindustrial CHP installations—at retail stores, universities, and municipalities, for example—currently make up a small share of total U.S. CHP capacity, but the ICF study signaled a large potential for growth among these energy consumers.22 Achieving more CHP potential will require careful assessments by project and facilities managers. The U.S. Department of Energy’s Federal Energy Management Program recommends that facility energy managers consider installation of a CHP system when several of the following items apply:23
14 North Carolina State University, “Combined Heat and Power at North Carolina State University,” accessed June 5, 2012, http://sustainability.ncsu.edu/chp/. 15 Louay Chamra and Keith Hodge, “CHP at the Mississippi Baptist Medical Center” (Starkville, MS: Mississippi State University), accessed June 5, 2012, http://www.chpcenterse.org/reports/CHP-MBMC.pdf. 16 Shipley et al., “Combined Heat and Power.” 17 Ibid. 18 Ibid. 19 U.S. DOE Southeast Clean Energy Application Center, “About Combined Heat & Power,” accessed June 5, 2012, http://www.southeastcleanenergy.org/cleanenergy/chp. 20 Brown et al., “Energy Efficiency in the South.” 21 ICF International, “Effect of a 30 Percent Investment Tax Credit.” 22 Ibid. 23 U.S. DOE Federal Energy Management Program, “Combined Heat and Power Applications,” accessed June 5, 2012, http://www1.eere.energy.gov/femp/technologies/derchp_chpapplications.html.
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• a centralized heating or cooling system already exists, • the site’s thermal and electric demand levels are closely matched, • the ratio of average electric load to peak load is high, • the average electric load is more than 1 megawatt (MW), • the system will operate most of the year, • the cost of CHP system fuel is favorable relative to cost of grid-derived heat and power, and • energy security is critical.
Considering these criteria, there are many nonindustrial candidates for CHP applications. Centralized heating and cooling systems that produce steam, hot water, or chilled water at a central plant and then distribute it by pipes to surrounding buildings (also called “district energy systems”) currently exist at many universities, research campuses, hospitals, military facilities, and airports.24 Such facilities also tend to have large, relatively constant thermal and electric demand and are thus well-suited to use CHP. Some metropolitan central business districts also have existing district energy systems that could be expanded as CHP applications. Other facility types, such as wastewater treatment plants, hog farms, and landfills, produce methane that is commonly flared without harnessing any of the energy. As long as sufficient thermal and electric demand exists nearby, CHP can be beneficial in these settings as well. Grocery stores have recently begun to install CHP systems, suggesting that this facility type and other consumer products retailers have potential for CHP development.25 Collectively these nonindustrial energy users represent thousands of sites in the Southeast and nationally that could benefit from CHP systems in the range of 500 kilowatts to 10 MW.
Common Obstacles to CHP Despite the aforementioned potential, CHP deployment at the project level is hindered by barriers that are common to many renewable technologies. Some of the particular economic, information, and policy barriers are discussed below.
Economics and upfront cost CHP systems that generate between 1 and 10 MW—the typical size for nonindustrial applications—cost between $1 and $10 million to install. The payback period on most CHP systems is currently 4 to 6 years.26 While this is not an atypical return on investment (ROI) for large investments, current organizational budget constraints have reduced the acceptable timeframe, barring many facilities managers from pursuing CHP.27 Even in cases where the long-term economics are favorable and ROIs are acceptable, access to capital can be a challenge. Policy tools such as tax credits, loan programs, and energy portfolio standards can improve CHP system payback and help attract capital, but a recent study by the American Council for an Energy-Efficient Economy (ACEEE) noted a general lack of substantive policies to incentivize CHP in Southeastern states.28
Information barriers CHP is not an off-the-shelf technology; systems are custom designed to meet each facility’s needs. While in many ways this is a benefit of CHP, this flexibility also demands a significant time investment on the part of project developers to discover how CHP could improve efficiencies in their facility. In many cases, the effort that project managers must expend at the outset simply in order to understand the benefits of a CHP project can prevent them from seriously considering one. Unlike off-the-shelf clean energy
24 International District Energy Association, “About District Energy.” 25 ICF International, “Combined Heat and Power Database,” accessed June 5, 2012, from http://www.eea-inc.com/chpdata/. 26 Chittum and Kaufman, “Challenges.” 27 ICF International, “Effect of a 30 Percent Investment Tax Credit.” 28 Chittum and Kaufman, “Challenges.”
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technologies, such as solar water heating, it is more difficult for project managers to see CHP applications in other settings and immediately identify how they might benefit from the same technology.
Policy hurdles State policies governing grid interconnection can help or hinder CHP development. Well-developed interconnection standards set a clear and uniform process for connection to the electric grid, thereby reducing uncertainty and preventing project delays. Interconnection standards can also set out technology requirements that ensure safety and reliability for both utilities and system developers. While a number of states have adopted standardized interconnection rules in the past decade, many Southeastern states have yet to do so. Alabama, Arkansas, Georgia, Mississippi, South Carolina, Tennessee, and Louisiana currently have no interconnection standards.29 Several of these states offer guidelines or net-metering standards that can help some smaller CHP applications connect to the grid, but these policies are considered less effective than standardized interconnection rules.
In addition, owners of CHP systems that are connected to the electricity grid often pay flat monthly charges, called “standby rates,” for potential energy. Should an onsite system fail, the electric utility provides backup electricity to the facility. If utilities set standby rates too high, they can reduce or eliminate the economic benefits of distributed generation projects such as CHP. To remedy this, some public utilities commissions are attempting to define appropriate standby rates, while others have prohibited standby rates for clean-energy-generation facilities.30 ACEEE has reported that standby rates are particularly burdensome in Georgia, Louisiana, North Carolina, and Virginia.31
CHP Case Studies
Municipal wastewater treatment facilities Wastewater treatment facilities (WWTFs) require a large amount of energy to operate, consuming an estimated 21 billion kilowatt-hours (kWh) each year in the United States.32 Many facilities also produce fuel, in the form of high-energy waste biogas and heat, but are not efficient users of that energy, presenting viable opportunities for municipal CHP applications.
In June 2011, more than 130 CHP systems were operating in WWTFs in states across the country, collectively representing more than 437 MW of capacity.33 However, the practicality of CHP for WWTFs varies drastically because of differences in size, location, electricity costs, and available incentives. The U.S. EPA Combined Heat and Power Partnership suggests that large facilities are better able to produce the amount of biogas needed to satisfy facility energy needs. Facilities in warmer climates also experience lower energy needs, meaning that CHP can displace a larger portion of current energy sources. CHP applications at WWTFs are also more economical in states with high electricity rates and renewable energy incentives.34
29 U.S. DOE Southeast Clean Energy Application Center, “Policies for Clean Energy,” accessed June 5, 2012, http://www.southeastcleanenergy.org/policy/. 30 Ibid. 31 Chittum and Kaufman, “Challenges.” 32 Water Environment Research Foundation, “Wastewater Sludge: A New Resource for Alternative Energy and Resource Recovery,” accessed June 5, 2012, http://www.bayareabiosolids.com/yahoo_site_admin/assets/docs/WERF_WastewaterSludgeAltEnergy33390055.17091514.pdf. 33 U.S. EPA Combined Heat and Power Partnership, “Opportunities for Combined Heat and Power at Wastewater Treatment Facilities: Market Analysis and Lessons from the Field,” accessed June 5, 2012, http://epa.gov/chp/documents/wwtf_opportunities.pdf. We recommend this resource to those interested in assessing the opportunities, benefits, and challenges associated with developing a CHP system at a WWTF. 34 Ibid.
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In addition to these factors, CHP may be more feasible at WWTF facilities that already employ anaerobic digesters. Many large facilities are fitted with anaerobic digesters that process sludge and produce biogas, a waste product consisting of 60%–70% methane.35 Facilities can flare the biogas, sell it to external power producers, use it to fuel vehicles or provide heating onsite, or, as discussed here, use it as a fuel source in an integrated on-site CHP system.36 Assuming the factors described above are also satisfactory, any site with an anaerobic digester could offer an opportunity for a cost-effective CHP application.37 In fact, a recent analysis by the U.S. EPA Combined Heat and Power Partnership suggests that at least 178 MW of additional capacity across 257 WWTF facilities in the U.S. remains untapped. Looking only at Southeastern states, the study identified 17 wastewater treatment facilities that have technical and economic potential. These facilities are located in Florida, Tennessee, and Virginia, and represent a total of 14 MW of capacity. However, the study’s assumptions about feasibility may exclude locally appropriate projects. For example, the report did not indicate potential sites in the state of Georgia, where CHP is successfully operating. There, the F. Wayne Hill Water Resources Center in Gwinnett County38 currently employs CHP, and another installation is under way at the R.M. Clayton Wastewater Treatment Plant in Atlanta. Decision makers should understand that the EPA study, while quite thorough, assessed CHP potential at WWTFs based on strict criteria that may not be shared by all developers. Site-specific evaluations could reveal beneficial projects overlooked by larger studies. Both project managers and state agency staff point to the simplicity and economic sense of the CHP system at the R.M. Clayton Wastewater Treatment plant, highlighted below, as reasons to look for future applications.
Case study: R.M. Clayton Wastewater Treatment Plant39 The R.M. Clayton Wastewater Treatment Plant in Atlanta, Georgia, currently flares excess methane gas produced by an anaerobic digester, thus wasting a high-energy fuel. In the summer of 2012, the plant will be equipped with a combustion engine that turns this waste biogas into useful energy. Then, waste heat from the combustion engine will be captured and used as process energy for the anaerobic digesters.40 The project was made possible by a close collaboration between the City of Atlanta’s Division of Sustainability, which championed the project, and the Department of Watershed Management, which developed the design-build request for proposals and is managing the project.
The project stemmed from a city goal to produce 5% of municipal energy from renewable sources by 2015. It is designed to achieve 88% of that goal and will help the city avoid an estimated 12,700 metric tons of greenhouse gas emissions each year. While sustainability performance was the impetus for the project, favorable economics are also important to the city. In this case, the R.M. Clayton system is expected to save approximately $1 million annually. Prior to settling on the project, the Division of Sustainability
35 Ibid. 36 Ibid. 37 Ibid. 38 Gwinnett County Government, “Officials to Cut Ribbon for Gas to Energy Project,” accessed June 5, 2012, http://www.gwinnettcounty.com/portal/gwinnett/NewsandEvents/NewsDetails?url=/Content-Types/Paragraphs/NewsandEvents/PressReleases/OFFICIALS TO CUT RIBBON.xml. 39 This case study was developed through interviews with Jean Pullen and Bill Hosken at the City of Atlanta and Jason Bodwell at the Georgia Environmental Finance Authority during the fall of 2011 and winter of 2012. 40 Jean Pullen, “R.M. Clayton CHP Project Status and Overview of Energy and Economic Performance” (City of Atlanta Division of Sustainability, 2011).
BASIC FACTS Total project cost: $7.1 million Grant award: $1.5 million Loan interest rate: 3% Expected payback: 6.3 years System owner: City of Atlanta Department of Watershed Management Renewable energy produced: 12,901,000 kWh annually Heat recovered: 39,100 million Btu Avoided CO2 emissions: 12,700 metric tons annually System details: Anaerobic digester for biogas recovery
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assessed several other renewable energy opportunities for their carbon reduction benefits and found CHP to be the most cost-effective. Further analysis revealed that utilizing a combustion engine would be more economical than a microturbine.41
Overcoming barriers Consider a variety of benefits. This case demonstrates how sustainability objectives can influence decision making and interact with project economics. Project managers identified this project when seeking the most economical way to reduce the city’s greenhouse gas emissions. Comparing project economics with a number of alternatives revealed that the CHP system at R.M. Clayton was the best investment.
Overcome capital cost. The federal Clean Water State Revolving Fund, which is administered by Georgia Environmental Finance Authority (GEFA), financed this project. Federal requirements dictate that state administrators allocate 20% of the state’s money to “green” projects. To meet this requirement in 2010, GEFA offered a 50% grant on the first $3 million of project costs to incentivize green projects like the CHP system at R.M. Clayton. With a total cost of $7.1 million, GEFA awarded the city $1.5 million in grants and financed the rest of the project at an interest rate of 3%. GEFA and the city consider the 6-year payback period favorable, and GEFA has funded two similar projects at wastewater treatment facilities elsewhere in the state.42
Avoid standby rates. The City of Atlanta avoided prohibitive standby rates by designing the system at R.M. Clayton so that it will not produce more energy than it uses. Because the project will reduce the electricity pulled from the grid by the facility by approximately 15%, it will continue to require a substantial supply of energy from Georgia Power. If the system fails, the additional electricity will be purchased at the real-time pricing rate, a scheme that discourages energy use at peak times.43 This means Georgia Power will not need to maintain extra infrastructure to supply standby electricity, thereby avoiding the need for standby rates.
Contract with a design-builder. In addition, the project is “design-build,” meaning that the CHP system was designed to meet a set budget, the design and construction schedule was compressed, and project managers will work with a unified contactor-engineer team during startup.
Lessons learned When planning for clean energy investments, the City of Atlanta realized that it is important to understand the limits of guidance documents. Although guidance documents can provide direction on project assessment and scoping, these tools have their limits given the variability of CHP configurations. One project manager noted that guidance provided by federal agencies and offices could drastically underestimate capital costs. To reduce the risk of overcalculating the benefits, the project manager took a conservative approach and overestimated many of the capital and operational costs than those provided in guidance documents, ultimately achieving a more accurate estimate of the system’s benefits.
41 Jean Pullen, pers. comm., Dec. 12, 2011. 42 Jason Bodwell, pers. comm., Dec. 19, 2011. 43 Jean Pullen, pers. comm., Jan. 28, 2012.
WHAT MAKES IT WORK ü Achieves multiple goals:
renewable energy use, GHG reduction, and financial savings
ü Creative financing through the Clean Water State Revolving Fund
ü Partnership between the Division of Sustainability and Department of Watershed Management
ü System design avoids standby rates and interconnection
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University power plants On a typical university campus, thousands of students, faculty, and staff study and work within dozens of buildings close to one another. Because classrooms, dormitories, and research labs need uninterruptible sources of hot and cold water and electricity, campus energy security is critical. For this reason, many campuses have their own central steam and/or power plants that satisfy the large heating, cooling, and electricity needs of the academic community.44
Given the large thermal and electric loads of most universities, CHP can be an attractive option for facilities managers seeking to replace or repair aging central plants. University energy managers often have more flexibility with capital than industrial plant operators, who tend to be hesitant to tie up capital for even a year and thus look for very short payback periods.45 In addition, many universities have ambitious sustainability goals46 and have already tapped a large portion of the lowest-cost energy-efficiency opportunities on campus.47
Although CHP can offer long-term economic advantages and help campus managers achieve sustainability goals while ensuring reliable electric and thermal energy supplies, few Southeastern campuses have installed CHP systems to date: the Energy and Environmental Analysis Inc. database of U.S. CHP systems48 lists just 16 systems installed at universities in the Southeast. Thus there may be significant opportunities for increased university CHP deployment in the region.
Case study: Vanderbilt University49 Vanderbilt University has supplied campus buildings with steam and power produced from its own central plants since the late 19th century. In the late 20th century, the university began developing cogeneration plants to produce that energy. The first application, installed in 1988, involved the replacement of several old boilers with new steam-producing boilers from Henry Vogt Company that run on coal or natural gas. This replacement was accompanied by the installation of a backpressure turbine from Murray Turbomachinery Corporation, which serves to reduce the steam pressure for campus building use and simultaneously produce up to 7 MW of power.50 The overall goals of the project were as follows:
• reduce costs by replacing old equipment with a more efficient system • increase the reliability of campus-generated steam and electricity • maintain fuel flexibility at the central plant
44 Oak Ridge National Laboratory, “Census of Central Plant District Energy and CHP Systems at Colleges, Universities, Hospitals, Health Centers, and Airports,” accessed June 5, 2012, http://www.districtenergy.org/ornl-doe-survey-data; International District Energy Association, “District Energy Map.” 45 Chittum and Kaufman, “Challenges.” 46 “American College & University Presidents’ Climate Commitment,” accessed June 5, 2012, http://www.presidentsclimatecommitment.org. 47 Scott Turley, pers. comm., Oct. 10, 2011; Mark Petty, pers. comm., Oct. 13, 2011; Jeff Redderson, pers. comm., Oct. 13, 2011. 48 ICF International, “Combined Heat and Power Database.” 49 This case study was developed through interviews with Mark Petty at Vanderbilt University Plant Operations in the fall of 2011. 50 Vanderbilt University, “Vanderbilt University Combined Heat and Power Plant: A History of Sustainable Progress,” accessed June 5, 2012, http://www.vanderbilt.edu/sustainvu/cms/files/chp_presentation.pdf; Vanderbilt University, “Plant Operations: The Cogeneration Plant and Utility Distribution System,” accessed June 5, 2012, http://www.vanderbilt.edu/plantops/content.php?page=plant.php.
2000 EXPANSION PROJECT Total project cost: $30 million Expected payback: <10 years Electric capacity: 10 MW Steam capacity: 200,000 lbs./hr System details: Two gas-‐fired combustion turbines (Nuovo Pignone for General Electric) and heat-‐recovery steam generators (Energy Recovery International)
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In the late 1990s, Vanderbilt facilities managers surveyed campus departments to assess projected power and steam use over the next five years. The prospect of growing steam and power demand due to new construction led them to install a second CHP system in 2000. This time, natural gas–fired combustion turbines with a total capacity of 10 MW were coupled with heat-recovery steam generators that create steam as a byproduct of power production.51
Overcoming barriers Vanderbilt was able to move forward with its CHP expansion in 2000 by overcoming the frequently cited cost and policy hurdles noted above. Universities, healthcare facilities, military bases, and research campuses with similar needs may find Vanderbilt’s decision criteria and project design strategies useful for their own project feasibility discussions.
Consider nonfinancial benefits. Vanderbilt facilities managers and the university’s Board of Trust ultimately chose to install a new CHP system with consideration for not only expected costs, but also energy security benefits that are important even if difficult to quantify. The payback period estimated during the planning phase of the 2000 CHP expansion was around 10 years, which was acceptable given new supply-side and demand-side circumstances. On the supply side, since the 1988 project, Vanderbilt had entered into a Limited Interruptible Power (LIP) contract with Tennessee Valley Authority and Nashville Electric Service that reduced the cost of grid power for the university but created a need for standby power. The contract discounted Vanderbilt’s electricity rate but allowed the utility to cut service at any time as part of demand-side management operations. Thus the university needed greater backup power capacity for periods when TVA decided to cut service. Near-term campus energy demand growth would further add to backup capacity requirements. Thus, a project proposal that may not have moved forward based on expected costs alone was approved in light of strong nonfinancial co-benefits. While not an original motivator, the sustainability benefit of the CHP system is well appreciated by Vanderbilt in hindsight.
Avoid interconnection and standby rates. Much like R.M. Clayton, Vanderbilt has relied on a creative strategy for coping with the prohibitive interconnection standards and standby rates that have compromised the economics of many CHP projects: the university generates only about 30% of the power it uses. By designing its central plant in a way that necessitates regular use of grid power and treats the CHP system as a portion of its energy supply that can also serve as backup during grid outages, the university avoids the need to sell excess power or engage in difficult standby rate negotiations with the utility.
Lessons learned Since the CHP expansion in 2000, unexpected circumstances have impacted project economics. The campus construction timeline assumptions made during the planning phase were optimistic, and lower-than-expected demand in the initial years of operation meant a longer-than-expected payback period. Project economics were further disrupted when natural gas prices spiked in 2004. In addition, the utility LIP contract was cancelled in 2008, which raised the cost of grid power for the university. While pointing out the need to plan with uncertainties in mind, today facilities managers remain happy with their decision because the co-benefits of having a reliable backup system and reduced GHG emissions via central plant efficiency gains make the payback period acceptable.
51 Vanderbilt University, “Plant Operations.”
WHAT MAKES IT WORK ü Achieves multiple goals:
reliability, financial savings, and sustainability
ü System design avoids standby rates and interconnection
ü Flexible design can be continuously optimized according to fuel prices, energy demand, and the price of grid power
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One strategy for mitigating the impacts of unexpected developments is to design flexible CHP systems where possible. Vanderbilt’s original dual-fuel boilers offered some flexibility, and this was expanded with the university’s decision in 2000 to adopt a CHP configuration that generates electricity with a steam byproduct—rather than a configuration that generates steam with an electricity byproduct, as its 1988 project did. With two different CHP configurations, system operation can be optimized continuously according to coal and natural gas prices, campus thermal and electric demand, and the price of grid power. In this sense, the Vanderbilt system could serve as a model for facilities managers upgrading on-site steam and power generation capacity under uncertain future demand, fuel costs, and electricity prices.
Vanderbilt is currently looking into a third CHP system to replace oil-fueled generators on the Peabody campus, providing further testament to the flexibility and benefits of this technology for university communities. North Carolina State University is also constructing a new CHP system. The $61 million, 11 MW system will be guaranteed through a performance contract to save the university $4.3 million each year. The university’s electrical and steam efficiency will be improved by 35% and result in an 8% decrease in greenhouse gas emissions.52 While a handful of Southeastern universities have installed CHP systems like these, many more in the region could benefit from this energy strategy. Additionally, healthcare and military facilities have energy demand profiles and campus configurations similar to those of colleges and universities. Many of these facilities already have central plant and district energy systems in place,53 making CHP a viable option for meeting future energy needs. 3. SOLAR WATER HEATING Introduction Solar water heating (SWH) is a time-tested and economically viable technology for offsetting conventional energy use. SWH is most commonly used in residential settings, but opportunities also exist in other sectors, including commercial and institutional facilities, which are the focus of this report. This section introduces the potential and benefits of greater SWH use in the Southeast’s commercial and institutional sectors. The two case studies that follow—Guilford College and the Hilton Asheville—explore how economics, information, and policies interact to help or hinder SWH development. Conversations with representatives from a total of eight commercial and institutional SWH projects in five Southeastern states provide context and contribute to key lessons learned.
52 North Carolina State University, “Sustainability at NC State: Combined Heat and Power,” accessed June 5, 2012, http://sustainability.ncsu.edu/campus/energy-water/energy-supply/combined-heat-and-power. 53 International District Energy Association, “District Energy Map.”
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Figure 2. SWH system configuration
Source: National Renewable Energy Laboratory, “A Consumer’s Guide: Heat Your Water with the Sun,” accessed June 6, 2012, http://www.nrel.gov/docs/fy04osti/34279.pdf.
What Is Solar Water Heating? SWH uses energy from the sun to preheat water, supplementing conventional energy use. Depending on factors such as the amount and timing of hot water consumption, local solar irradiation, and roof orientation and slope, SWH can provide 40% to 80% of the energy required to heat water.54
SWH systems consist of a solar collector to absorb heat from the sun and a tank for water storage, as shown in Figure 2. They can be open- or closed-loop, and active or passive, depending on need. Open-loop or direct-circulation systems transfer heat directly to potable water as it flows through or is stored in the collector. Closed-loop or indirect-circulation systems circulate a freeze-resistant heat-transfer fluid, which in turn heats potable water.55 Direct-circulation systems are simpler and less expensive, but they are more vulnerable to leaks and freezes. These systems employ a variety of freeze protection mechanisms for rare freezes in warm climates.56 In climates where temperatures frequently drop below freezing, indirect-circulation systems are common.
Active SWH systems use electricity to pump and circulate the water, whereas passive systems rely on gravity and natural circulation. Passive systems are easier to maintain and have longer operating lives but are usually less efficient.57 In most cases, the solar preheated water can be stored in a separate tank or conventional water-heating tank, which provides additional heat when necessary.58
Benefits of SWH SWH can save money in the long run and provide a number of other benefits. It is often cost-effective on buildings with unshaded, south-facing or near-south-facing roofs that regularly use hot water, such as
54 U.S. DOE Office of Energy Efficiency & Renewable Energy, “Solar Water Heaters,” accessed June 5, 2012, http://www.energysavers.gov/your_home/water_heating/index.cfm/mytopic=12850. 55 Ibid. 56 Florida Solar Energy Center, “For Homes – Q&A: How do I protect my solar system from freezing weather?” accessed June 5, 2012, http://www.fsec.ucf.edu/en/consumer/solar_hot_water/homes/q_and_a/index.htm - Freeze. 57 Office of Energy Efficiency & Renewable Energy, “Solar Water Heaters”; Brown et al., “Renewable Energy in the South.” 58 Office of Energy Efficiency & Renewable Energy, “Solar Water Heaters.”
Simpli!ed representation of a solar water-heating system
Roof-top collector
Solar-heated tap water
Solar storage tank/ conventional backup heater
Swimming pools and your home may also be heated using solar energy
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homes, hospitals, apartment buildings, hotels, cafeterias, schools, and fire stations. According to the U.S. Department of Energy, the amount of money a building owner can save by adopting SWH depends on
• the amount of hot water used • the existing water heating system’s performance • geographic location and solar resource • available financing and incentives • the cost of conventional fuels • the cost of fuel for any backup water heating system59
In addition to potential energy cost savings, public and commercial entities are installing SWH to meet additional goals, such as hedging against potential future increases in utility energy rates, reducing GHG emissions, and publicly demonstrating a commitment to sustainability.60 For example, Mecklenburg County, North Carolina, compared SWH to solar photovoltaic (PV) and found that SWH was a much more cost-effective way to meet its goal of using renewable energy.61 The Hilton Asheville and Guilford College also point to the technology as a marketing tool that sets them apart as leaders in sustainability.62
Potential for SWH Studies suggest that a supportive policy framework could substantially increase SWH use in the Southeast. Recent economic modeling by the Nicholas Institute and Georgia Tech found that extending the existing 30% federal tax incentive for residential SWH through 2030 would avoid the equivalent of 21 billion kWh of generation in the South in the year 2030.63 A 2007 technical report by the National Renewable Energy Laboratory (NREL) estimated that residential and commercial SWH could offset 166 trillion Btu (TBtu) of energy in Southern states.64
Many commercial and institutional buildings with consistent hot water consumption are good candidates for SWH. However, like CHP outside the industrial sector, these installations currently make up a smaller percentage of the SWH and are less studied than residential applications.65
U.S. DOE, U.S. EPA, and ACEEE, among other organizations that facilitate clean energy development, maintain online resources for homeowners interested in SWH systems.66 As such, this report focuses on nonresidential opportunities for SWH such as at universities, hotels, restaurants, fire stations, prisons, salons, and other facilities that regularly use hot water.
59 U.S. DOE Office of Energy Efficiency & Renewable Energy, “The Economics of a Solar Water Heater,” accessed June 5, 2012, http://www.energysavers.gov/your_home/water_heating/index.cfm/mytopic=12860. 60 All of the organizations currently using solar water heating that we contacted during this study emphasized the importance of noneconomic benefits, such as meeting internal sustainability goals and marketing to an audience that is concerned with sustainability, in their decision to invest. 61 Mark Hahn, pers. comm., Dec. 8, 2011. 62 Hobie Orton, pers. comm., Feb. 1, 2012; Dan Young, David Petree and Jim Dees, pers. comm., Jan. 17, 2012; Max Light, pers. comm., Feb. 16, 2012. 63 Brown et al., “Renewable Energy in the South.” 64 This calculation includes Oklahoma, Maryland, and West Virginia; three states that are not included in our definition of “Southeast” for the purposes of this report. P. Denholm, “The Technical Potential of Solar Water Heating to Reduce Fossil Fuel Use and Greenhouse Gas Emissions in the United States” (Golden, CO: National Renewable Energy Laboratory [NREL], 2007). 65 Brown et al., “Renewable Energy in the South,” citing EIA data: As of 2008, 88% of all SWH installations were residential. 66 U.S. DOE Office of Energy Efficiency & Renewable Energy, “Energy Savers: Solar Water Heaters,” accessed June 5, 2012, http://www.energysavers.gov/your_home/water_heating/index.cfm/mytopic=12850; U.S. EPA, “Water Heater, Solar for Consumers,” accessed June 5, 2012, http://www.energystar.gov/index.cfm?fuseaction=find_a_product.showProductGroup&pgw_code=WSE; American Council for an Energy-Efficient Economy (ACEEE), “Water Heating,” accessed June 5, 2012, http://www.aceee.org/consumer/water-heating.
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Estimating the payback period for a SWH investment is difficult because future natural gas and electricity prices are not known. However, NREL found in 2010 that with state and federal incentives available at that time SWH broke even67 with electric water heating at electricity rates of 7¢–9¢/kWh across much of the Southeast.68 In January 2012, average commercial electricity rates were within or above this range in Florida, Georgia, North Carolina, South Carolina, Virginia, West Virginia, Alabama, Kentucky, Mississippi, Tennessee, Arkansas, and Louisiana. Moreover, rates in all sectors are forecast to rise for a number of reasons, including the need for new capital investments to replace aging energy infrastructure and keep pace with population growth.69 Although natural gas water heaters are consistently cheaper than electric to operate, the case studies that follow demonstrate that SWH can provide benefits when coupled with natural gas systems.70
Common Obstacles to SWH Development Although SWH is considered a mature technology and has been available for decades, it currently makes up less than 1% of the U.S. water heating market, with the greatest market penetration in Hawaii, California, and New Jersey.71 Factors that contribute to the slow adoption of SWH in the Southeast include the upfront equipment and installation cost and relatively low conventional energy prices.72 Indirect costs associated with information barriers including the time and effort needed to shop for and learn to maintain an unfamiliar product may also deter investment.73
Economics and upfront costs Although it can save money in the long run, a SWH system costs more up front than a conventional water heater. For example, the cost of a SWH system for a single-family residence in the South is approximately $5,000 without incentives.74 According to estimates from ACEEE, this is more than five times the cost of a conventional gas or electric storage water heater.75 However, these costs are not directly comparable because the useful life of a SWH is 20–25 years, whereas a conventional water heater must be replaced every 10–15 years.76 Because electricity rates are low in the Southeast, expected paybacks are longer for systems paired with electric water heating than in areas with higher rates. This creates a smaller financial incentive for energy consumers to adopt SWH, whereas in Hawaii, for example, where electricity prices reach 25¢/kWh, 30% of homes use SWH.77 Natural gas water heating systems are consistently cheaper to operate than electric systems, also contributing to longer paybacks. However, these users can benefit from SWH as well: expected paybacks for the two case study projects that follow
67 NREL defines the break-even cost as the point at which the value of the energy saved with SWH equals the cost of the electricity or natural gas required to run an equivalent conventional water heating systems 68 Hannah Cassard, Paul Denholm, and Sean Ong, “Break-even Cost for Residential Solar Water Heating in the United States: Key Drivers and Sensitivities” (Golden, CO: NREL, 2011). 69 U.S. Energy Information Administration, “Annual Energy Outlook 2011: Issues in Focus” (2011); Brown et al., “Renewable Energy in the South.” 70 ACEEE, “Water Heating”; NREL, “Federal Energy Management Program Maps: Solar Water Heating Maps,” accessed June 5, 2012, http://www.nrel.gov/gis/femp.html - water. 71 Office of Energy Efficiency & Renewable Energy, “The Economics of a Solar Water Heater”; Andy Walker, “Solar Hot Water Heating” (Washington, D.C.: Whole Building Design Guide, National Institute of Buildings Sciences, 2011), accessed June 5, 2012, http://www.wbdg.org/resources/swheating.php. 72 Harvey Sachs, Jacob Talbot, and Nate Kaufman, “Emerging Hot Water Technologies and Practices for Energy Efficiency” (Washington, D.C.: ACEEE, 2011); R. Margolis and J. Zuboy, “Nontechnical Barriers to Solar Energy Use: Review of Recent Literature” (Golden, CO: NREL, 2006). 73 Chi-Jen Yang, “Reconsidering Solar Grid Parity,” Energy Policy 38 (2010): 3270–3273; Marilyn A. Brown, “Market Failures and Barriers as a Basis for Clean Energy Policies,” Energy Policy 29 (2001): 1197–1207. 74 Brown et al., “Renewable Energy in the South.” 75 ACEEE, “Water Heating.” 76 Office of Energy Efficiency & Renewable Energy, “The Economics of a Solar Water Heater”; ACEEE, “Water Heating.” 77 Yang, “Reconsidering Solar Grid Parity.”
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(both of which use natural gas as backup) are 10–12 years at Guilford College and 8.4 years at the Hilton Asheville.
Information barriers Information availability can build awareness and confidence in SWH technology, and a lack of information can hinder potentially beneficial projects. Notably, one representative from the Virginia state energy office pointed out that fewer consumers are taking advantage of state energy rebates for SWH than for solar photovoltaic, even though SWH is more cost-effective, suggesting that many consumers may be less aware of SWH and its benefits.78
Policy hurdles SWH avoids many of the policy hurdles other types of renewable energy projects may face—such as negotiating net metering, interconnection, and standby policies with local utilities—by directly producing hot water rather than electricity that must be fed into the grid. However, for some projects, especially in the public sector, restrictions on third-party contracts such as roof access and loans can prevent projects from moving forward. For example, the University of North Carolina at Chapel Hill has been unable to enter into a third-party financing model to expand SWH on campus because of limitations on allowing a private company 24-hour access to campus roofs.79 The design of government incentives can also hinder public and nonprofit SWH projects. These entities are unable to directly benefit from tax incentives, requiring public-private partnerships to access incentives and mitigate upfront costs.
SWH Case Studies The following case studies of SWH applications at Guilford College and the Hilton Asheville provide just two examples of the strategies interested commercial and institutional entities are currently using to implement SWH, the benefits they are realizing, and lessons learned for potential future projects.
Case study: Guilford College80 Guilford College is an independent college in Greensboro, North Carolina. In 2006, the school’s Sustainability Council decided to tap into renewable energy to make a visible statement about the school’s commitment to sustainability by investing in a 12-collector SWH system for Shore Hall, a dormitory that serves approximately 50 students. As the only dormitory that used natural gas exclusively to heat water, Shore Hall allowed for the best comparison of energy use before and after the $30,000 installation. Guilford expected a 10–12 year payback period, and the system has led to an average monthly savings of 48% of historical natural gas consumption according to the facilities management “energy team.” Observing the immediate reduction, facilities managers felt early on that this project clearly demonstrated that SWH could help meet the school’s broad sustainability goals and mitigate energy costs. Using the data from Shore Hall, they took that message to other decision makers on campus.
78 Per personal communication with Ken Jurman (Feb. 6, 2012) there have been 490 photovoltaic installations totaling 3.25 MW, for a total installed cost of $23,127,600 or just over $7/watt of installed capacity and 305 thermal installations totaling 2.65 MW equivalents, for a total installed cost of $5,111,233 and an average of just under $2/watt of installed capacity. 79 Doug Mullen, pers. comm., Jan. 25, 2012. 80 This case study was developed through a telephone interview with Jim Dees on Dec. 22, 2011; a site visit with Jim Dees, Dan Young, David Petree, and students on Jan. 17, 2012; and a telephone interview with Joanna Baker on Dec. 14, 2011.
WHAT MAKES IT WORK ü Smaller initial investment
demonstrated benefits ü Public-‐private
partnership allows access to tax incentives
ü Creative financing through utility-‐like financing model
ü Achieves multiple goals: sustainability, energy cost savings
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Then FLS Energy—a company based in Asheville, North Carolina—unveiled a new financing model for providing SWH to customers with no or low upfront investment. In this model, called a Solar Energy Purchase Agreement (SEPA), FLS Energy operates like a small utility by selling its customers the energy they need to heat water. The company engineers and builds a SWH system and continues to own and maintain the system for 6 to 10 years. During that time, the building enters into a long-term contract to purchase solar-generated Btu to heat water at a set rate. At the end of the contract, the building owner may continue purchasing energy from FLS Energy or buy the system at its depreciated value.
After a positive experience with the Shore Hall system, in 2010 Guilford entered into a SEPA with FLS Energy to pursue a second SWH installation. The project was the largest SWH installation at a U.S. university at the time. More than 200 solar collectors now serve 60% of the 1,900 student residents in addition to physical education facilities and central food service in Founders Hall.
Overcoming barriers Use creative financing mechanisms. Although the Shore Hall system reduced natural gas consumption and required relatively little maintenance, scaling up to the larger system would have been too great a one-time expense without creative financing and the partnership with FLS. In addition, the SEPA model allows Guilford to indirectly benefit from state and federal tax incentives for solar energy. Guilford, like other nonprofit and public sector entities, has no tax liability and cannot directly access these incentives. FLS Energy, however, can realize the tax savings from the federal and state incentives and pass those savings on through a lower rate for purchased solar energy. In this case, FLS Energy was also able to leverage a $200,000 grant through the federal stimulus program to cover development costs and offer Guilford a lower energy rate. To receive the grant, FLS Energy matched approximately $1.1 million to develop the campus-wide SWH system.
Create partnerships to utilize tax incentives. The 30% federal tax credit, North Carolina’s 35% tax incentive, and FLS Energy’s creative financing model were key factors in Guilford College’s decision to take on such a large SWH expansion. Without the right combination of incentives, the school would have been more likely to move forward one building at a time over many years. However, the initial investment at Shore Hall clearly demonstrated the benefit of SWH on campus through an immediate reduction in natural gas consumption, and facilities mangers consider any opportunity to reduce future energy costs important. Their view is that a vibrant campus is always growing, pushing energy demand up over time. Any investment that helps keep those costs down, like SWH, can help manage the cost of student tuition.
Lessons learned Carefully planning how to monitor and track energy savings at the outset can be extremely helpful. Guilford’s expanded SWH system is now about one year old, and facilities management has been monitoring energy savings. The school has seen immediate reductions in energy use at no upfront cost. However, many of the new collectors are connected to central boilers, and because the school did not track how much natural gas it used to heat water in those buildings prior to installing SWH, accurately measuring the system’s performance has been difficult. The school plans to add submeters to better track energy use and monitor how solar hot water output varies throughout the day as water use and solar irradiation fluctuate. Other campuses pursuing SWH could install submeters prior to or at the same time as the SWH system.
In addition to monitoring system performance, there are numerous things to think about when considering SWH including roof maintenance and integrity, building character, and other design details. SWH installations should be timed appropriately with roof and other building maintenance. Roofing materials need to be strong enough to support the SWH collectors, which can add 6–8 pounds per square foot and affect the roof’s wind load. System design for older buildings can be more challenging for newer construction if owners choose to design piping routes that preserve the building’s historic character.
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Guilford College faced unexpected challenges during the design and installation of their SWH systems—such as finding asbestos in the attic of one residence hall. However, staff emphasized that those experiences are inherent in any construction project and do not necessarily make a SWH project less viable.
Case study: Hilton Asheville Biltmore Park81 The Hilton Asheville is part of a mixed-use, master-planned urban village development called Biltmore Park Town Square, built by Biltmore Farms, LLC, and Crosland, LLC. The hotel is LEED-certified (Silver) to differentiate the Hilton from other area hotels and to reflect the developers’ interest in long-term sustainability. SWH is one of the design elements incorporated to reach this goal. As owner of multiple hotels, Biltmore Farms is well aware of a hotel’s large and consistent demand for hot water. For that reason, they looked to SWH as one strategy to save energy and to meet the LEED standard.
Biltmore Farms had already selected a general contractor for the Hilton Ashville when it decided to pursue LEED certification and SWH, but the company hired a specialized subcontractor to design and install the SWH system. The subcontractor, FLS Energy, installed 70 solar panels to heat most of the 2,000 gallons per day of hot water that this 165-room hotel uses for showers, banquet facilities, a swimming pool, and a restaurant. Unlike Guilford College, Biltmore Farms owns the system outright. Biltmore Farms is a “develop-and-hold” company, meaning it has no plans to sell the hotel in the next several years. The company wanted to realize the full stream of energy savings for itself and was therefore willing to make the upfront investment. Biltmore Farms was eligible for state and federal tax credits and able to sell the Renewable Energy Credits into North Carolina’s market.
Overcoming barriers Use incentives and invest long-term. State and federal tax incentives were critical not only to offset the upfront cost of this SWH installation, but also to mitigate the perceived risk that Biltmore Farms associated with investing in an unfamiliar technology. After leveraging those incentives, the SWH system is saving the more than $10,000 on Hilton Asheville’s annual energy bill. This level of performance meets expectations, but the hotel is still making adjustments to maximize energy savings. Biltmore Farms estimated an 8.4-year payback on this system when coupled with the natural gas backup heating they selected. For the developer, a payback of 7 years or less would have been ideal, but the co-benefits of this project tipped the scale in its favor. Biltmore Farms considers that the marketing benefits of LEED certification and the use of renewable energy, although difficult to quantify, justify the slightly longer payback.
Several aspects of the Hilton Asheville SWH project contributed to a smooth design and development process. Biltmore Farms’ experience as a develop-and-hold company that owns several hotels led the company to understand the value of reducing the long-term cost of water heating, diminishing the need to start with a smaller pilot project. In
81 This case study was developed through a telephone interview with Hobie Orton on Feb. 2, 2012, and subsequent e-mail correspondence.
BASIC FACTS System owner: Biltmore Farms Year built: 2009 Number of collectors: 70 Expected payback: 8.4 years System details: New construction Flat-‐plate collectors; heat-‐transfer fluid (propylene glycol) preheats potable water; backup heat provided by natural gas.
WHAT MAKES IT WORK ü Long-‐term investment will
allow developer to realize full savings
ü Available incentives ü Achieves multiple goals:
sustainability & energy cost savings
ü High hot water use: showers, restaurant and swimming pools
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addition, because Biltmore Farms has no plans to sell the hotel before the system is paid off, it is positioned to realize the full financial (cost-savings and REC revenues) and marketing benefits (i.e., LEED certification) of its investment.
Lessons learned While Biltmore Farms is satisfied with its first SWH project, the company’s experience offers three useful lessons for future projects. First, real-time monitoring capabilities are important. Staff at the Hilton Asheville cannot easily monitor system performance in real time. A meter on the solar collectors tracks solar energy production, allowing the hotel to sell renewable energy credits, but the meter is not compatible with software packages available to communicate that data to an energy dashboard. As a result, it took hotel engineers more than a month to detect an insulation problem on the thermostat that controls the heat transfer because it was reading cold outdoor temperatures rather than the temperature of the water in the pipes. Facilities managers were not aware of the problem until a spike in the hotel’s natural gas bill prompted them to inspect the system. Now, the meter sends data to a laptop in the basement, which is easier to access than the roof, but the ability to use an energy dashboard system would make real-time monitoring even easier.
Second, including SWH in the original project scope (either for new construction or part of a larger building retrofit) for a general contractor can avoid price increases associated with change orders and can ultimately make the project more economical. Planning early also allows project managers to ensure that everyone, from the general contractor to the installer, has experience with similar projects.
Finally, practical use of space is key, especially for SWH projects on new construction. The roof of the Hilton Asheville is so crowded with panels, elevators, and HVAC equipment that Biltmore Farms had to add a catwalk to allow full access. Without careful organization, adding solar panels to the roof could be infeasible. This means that even if solar energy is not part of the original project, leaving roof space makes it easier to add solar panels in the future.
4. DISCUSSION This report explores current opportunities for customer-side clean energy in the Southeast through the lens of two technologies—CHP and SWH. While this is not a comprehensive assessment of renewable energy and efficiency measures, it highlights two promising technologies that consumers can pursue within existing economic and policy constraints. These measures are not widely adopted especially within the commercial and institutional sectors that this report focuses on, but they offer benefits to Southeastern stakeholders across different sectors and geographies. The following discussion synthesizes information gleaned through discussions with project managers and other Southeastern stakeholders and identifies strategies for overcoming common barriers and policy opportunities to reduce those barriers. Although the discussion draws on examples from CHP and SWH projects specifically, many of the strategies and opportunities also apply to other types of energy-efficiency and renewable energy projects with similar economic, information, and policy characteristics.
Economics Upfront cost is a common barrier to clean energy adoption. However, as the examples provided throughout this report demonstrate, project developers have a range of strategies for making project economics work. Project developers can avoid or spread out upfront cost and reduce overall project cost with creative financing, careful design, and available government incentives.
While representatives from nearly all of the projects that researchers contacted in developing this report described the importance of government incentives and/or creative financing tools that reduced their initial capital investment, no two projects used the exact same financing strategy (see Table 1 below).
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Table 1. SWH project financing methods Organization Financing method Building type Hilton Knoxville Airport82 Purchased outright, federal and state tax incentives Hotel Guilford College83 Purchased initial smaller system outright (no incentives),
solar energy purchase agreement and grant for expansion Dormitories, student center, athletic facility
Hilton Asheville84 Purchased outright, federal and state tax incentives, sells renewable energy credits
Hotel
University of Arkansas (Fayetteville)85
Energy Services Performance Contract – part of much larger energy-‐efficiency investment
Swimming pool
Mecklenburg County86 Federal energy grant – weighed against PV and determined SWH was a better investment
Community college culinary arts building, fire station, prison, school, social services facility
University of North Carolina at Chapel Hill87
Student clean energy fee Dormitory
Norcross Waffle House88 Purchased outright, state and federal tax incentives Restaurant IKEA Orlando89 Purchased outright, new construction, with rebate from
Orlando Utilities Commission, tax incentives. Participates in state demonstration project program but pursued own financing.
Retail/café
One reason researchers encountered for the diversity of financing strategies is that policy incentives or sales structures that work well for one project do not always work for another. For this reason, making a range of financing tools available is an important opportunity for policy makers to encourage future projects. For instance, the utility-like model that allowed Guilford College to install nearly 200 solar collectors at no upfront cost may not work for a public building that cannot authorize 24-hour roof access for a private company, such as the University of North Carolina at Chapel Hill.90 Similarly, the Clean Water State Revolving Fund that financed Atlanta’s CHP system is unlikely to fund energy-related investments except at WWTFs.
Developers can also tackle costs through careful planning. Planning with uncertainty in mind can help contain capital cost overruns and ensure that projects achieve their desired payback. For example, the City of Atlanta’s design-build approach to the R.M. Clayton CHP project helped minimize upfront cost variability. Such strategic planning and design strategies can also reduce operating costs. The CHP systems at both the R.M. Clayton WWTP and Vanderbilt University supply only a fraction of the facilities’ energy demand, thus requiring regular utility service and avoiding standby charges.
Finally, considering CHP and SWH investments in the context of other objectives—such as internal goals to improve on-site energy security or sustainability—can complement project economics and in some
82 Terry Hendrix and Pace Cooper, pers. comm., Feb. 22, 2012. 83 Jim Dees, pers. comm., Dec. 22, 2011. 84 Hobie Orton, pers. comm., Feb. 1, 2012. 85 Max Light, pers. comm., Feb. 16, 2012. 86 Mark Hahn, pers. comm., Dec. 8, 2011. 87 Doug Mullen, pers. comm., Jan. 25, 2012. 88 George Mori, pers. comm., Jan. 26, 2012. 89 Alex Alaniz, pers. comm., Jan. 6, 2012. 90 Doug Mullen, pers. comm., Jan. 25, 2012.
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cases justify upfront investments. Vanderbilt University installed its second CHP system when facilities managers needed to maintain secure steam and power supplies on a growing campus, whereas Atlanta pursued CHP at its R.M. Clayton WWTP as part of an effort to use renewable sources for 5% of municipal energy. Guilford College values SWH and other sustainability projects for their ability to attract applicants,91 and the Hilton Asheville installed SWH as part of LEED certification to distinguish itself among competing area hotels.92
Information Opportunities for clean energy, including CHP and SWH, are not always readily apparent. This is especially true among unconventional audiences such as nonindustrial potential CHP users and nonresidential potential SWH users. Motivated stakeholders—such as those highlighted in this report—have found that clean energy makes sense for many types of applications in the Southeast. However, greater awareness of clean energy opportunities could promote further development. Moreover, most current projects have not been designed to adequately measure the benefits, resulting in a lost opportunity to collect information that could help justify future projects. These trends underscore the importance of better data collection and information sharing, which could improve awareness of the opportunities and build confidence in technologies.
One way to spread awareness of the opportunities for clean energy is through demonstration projects. For example, Florida’s Solar Energy Research and Education Foundation offered SWH incentives to project developers willing to serve as publicly accessible demonstration projects.93 IKEA Orlando participates in the demonstration program, leading other businesses curious about SWH through its facility and answering questions about installation, performance, and maintenance.94
Encouraging project developers to collect and share accurate data on their energy savings could also build confidence among potential users of the technology and encourage more clean energy investments. For example, while the SWH project managers that researchers interviewed were satisfied with their investments, they commonly noted that installed metering equipment is insufficient to accurately quantify the benefit.95 Although installing meters adds to the upfront cost, tracking energy savings can help SWH users identify tweaks to maximize their benefits and communicate the benefits of their investments.
Policy Opportunities Increased clean energy development in the South would provide direct energy benefits and indirect social and environmental outcomes. Previous Nicholas Institute reports have found that with supportive policies (1) renewable energy could provide a large portion of the region’s electricity at competitive rates within a decade;96 and (2) aggressive energy-efficiency policies could reduce the need for new generation, reduce water consumption, moderate projected electricity rate increases, and create jobs.97 By lowering demand, clean energy projects mitigate the need for new generation, the demand for natural gas, the power losses and congestion associated with transmission and distribution, and the air pollution associated with conventional energy production.
91 Dan Young, pers. comm., Jan. 17, 2012. 92 Hobie Orton, pers. comm., Feb. 1, 2012. 93 Florida Solar Energy Research and Education Foundation Suncatcher Program, accessed June 5, 2012, http://www.flaseref. org/demoPartners.html. 94 Alex Alaniz, pers. comm., Jan. 6, 2012. 95 Mark Hahn, pers. comm., Dec. 8, 2011; Jim Dees, pers. comm., Dec. 22, 2011; Alex Alaniz, pers. comm., Jan. 6, 2012. 96 Brown et al., “Renewable Energy in the South.” 97 Brown et al., “Energy Efficiency in the South.”
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As creative project managers find ways to work around common obstacles to clean energy development, they are demonstrating that viable opportunities exist in the Southeast, and are also revealing specific niches where policy can encourage further development. Interested policy makers could consider the following critical entry points to influence clean energy development, particularly by commercial and institutional entities.
Mitigate upfront costs Investing in clean energy often means spending more now in order to save money later, but upfront capital can be difficult to secure. Recouping this investment through utility bill savings can take longer in the Southeast, where energy prices are low. Policy tools such as grants, tax credits, loan programs, and energy portfolio standards can help provide capital and spread out upfront costs.
Financial incentives can overcome upfront cost constraints for many projects. For example, the Nicholas Institute found that extending the existing 30% federal tax incentive for SWH could result in an increase in residential SWH in the South of 22.2 TBtu, and avoid 21 billion kWh of generation in 2030 alone.98 Although there was no assessment of the impact this incentive would have on public and commercial entities, anecdotal evidence suggests that tax credits are often what makes the economics of a public or commercial project favorable enough to allow developers to proceed when they might not otherwise.
Although clean energy incentives already exist in Southeastern states—the Database of State Incentives for Renewables and Efficiency lists 21 for CHP and more than 90 for SWH99—they are less common and typically less aggressive than in other regions,100 presenting a key opportunity for policy makers seeking to facilitate clean energy development. In developing policies to support clean energy adoption, policy makers should understand how various incentive structures enable different types of projects to move forward. For example, clean energy tax credits are not directed towards public and nonprofit entities, which lack tax liability to offset. These sectors can only benefit from tax credits indirectly by partnering with private investors. Setting clear standards for public-private partnerships can facilitate public-sector clean energy projects, and both public and nonprofit energy consumers may benefit even more from grants and low-interest loan programs.
Facilitate access to information Information plays a major role in the pursuit of clean energy projects, so a lack of information can be a major barrier to development. Individuals and organizations that could benefit from clean energy often do not know enough about it to evaluate the investment, identify reliable contractors, or feel confident in operating and maintaining a system. Systems that are highly customizable, such as CHP, can take a lot of effort for a facilities team and other decision makers to familiarize themselves with the technology and its benefits. Moreover, clean energy projects are not always designed with submeters to clearly measure energy saved, making it difficult for interested stakeholders to use others’ experiences to understand their own potential benefits.
As such, policy makers can play a role in ensuring that adequate information is generated and shared. For example, requiring publicly funded projects to use submeters that clearly track system benefits (i.e., energy and cost savings) could build confidence in the technology. Additional outreach efforts by state energy offices or the promotion of demonstration projects could increase familiarity with the technology among potential stakeholders. This has proven successful in Florida, where the Florida Solar Energy Research & Education Foundation set up SWH demonstration projects, including one at the IKEA store 98 Brown et al., “Renewable Energy in the South.” 99 Database of State Incentives for Renewables and Efficiency (DSIRE), accessed June 5, 2012, http://www.dsireusa.org; see also Appendix B for a list of incentives identified in Southeastern states in Dec. 2011. 100 Chittum and Kaufman, “Challenges.”
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in Orlando, which has generated interest from other businesses seeking to learn more about SWH.101
Demonstration projects for other types of clean energy could be expected to prove equally useful.
Remove regulatory hurdles Policy makers have an opportunity to help interested consumers invest in clean energy by removing existing hurdles as well as by facilitating third-party clean energy ownership. Restrictions on excess power sales, costly standby rates, unfavorable interconnection standards, and burdensome permitting processes can all hinder project development. By removing these hurdles, policy makers can help more clean energy projects move forward.
Policy makers can establish well-developed interconnection standards. Such standards set a clear and uniform process for connection to the electric grid, which reduces uncertainty, prevents delays in project development, and sets out technology requirements that ensure safety and reliability. Many Southeastern states have yet to adopt interconnection standards including Alabama, Arkansas, Georgia, Mississippi, South Carolina, Tennessee, and Louisiana.102 Several of these states offer guidelines or net-metering standards, which can make interconnection easier for some small projects, but these policies are less helpful than standardized rules.
Regulating bodies can also set accurate and reasonable standby rates for utilities.103 For example, owners of onsite power plants (such as CHP) often pay “standby rates” if they connect to the grid. These are flat monthly fees for the extra capacity the electric utility has to maintain in order to provide backup power in the event of an on-site system failure. These rates vary by utility, and if they are set too high, they can render on-site renewable energy investments uneconomic. High standby rates have been particularly burdensome in Alabama, Georgia, Louisiana, North Carolina, and Virginia.104
5. CONCLUSIONS Clean energy installations are emerging in the Southeast within existing economic, informational, and policy constraints. Nonetheless, supportive policies could improve the uptake of CHP, SWH, and other clean energy applications. By focusing on nonindustrial and nonresidential projects, this report highlights opportunities that may not otherwise be obvious to stakeholders interested in clean energy adoption. It also reveals that stakeholders across different sectors and geographies have different opportunities to make clean energy projects work.
A particularly interesting finding relates to the motivation behind project development. In all of the projects this report explores, the decision to take on a CHP or SWH project originated from objectives other than financial savings, such as sustainability goals or energy reliability needs. Project managers then assessed the variety of available options and settled on these technologies for their ability to satisfy a certain mix of goals. While economic feasibility was high on the list of assessment criteria, these developers show that a project’s entire array of benefits can be important to energy consumers.
Conversations with state energy offices and clean energy project developers in the Southeast also revealed the critical role that stimulus funding has played in initiating clean energy policies, programs, and projects throughout the region. As stimulus funding expires, policy makers in the Southeast may need to be more strategic in order to continue supporting clean energy development with fewer federal dollars. The policy
101 Alex Alaniz, pers. comm., Jan. 6, 2012. 102 Southeast Clean Energy Application Center, “Policies for Clean Energy.” 103 Ibid. 104 Chittum and Kaufman, “Challenges.”
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opportunities this research identified through conversations with program managers and project developers on the ground offer a few strategies for getting the most out of future policies and programs.
First, in developing policies to support clean energy adoption, policy makers should understand how various incentive structures enable different types of projects to move forward. For example, tax credits are not directed towards public and nonprofit entities, which lack tax liability to offset. While universities, local governments, and others may have sustainability goals that make them likely early adopters, these sectors can only access tax credits indirectly by partnering with private investors. Setting clear standards for public-private partnerships can help facilitate clean energy projects, as can providing direct access to capital through grants and low-interest loan programs.
In addition, policymakers have an opportunity to help early adopters catalyze more clean energy investments by encouraging or requiring project developers to accurately track and communicate system performance. While anecdotal evidence that project managers are happy with their clean energy investments helps build confidence among other potential beneficiaries, clear data on system performance and energy saved would be more useful in evaluating future projects. While submetering and energy dashboard technology is available to collect and communicate this data, many of the SWH project developers that researchers interviewed for this report did not think to install these components until after the project was in place. Policy makers might consider including the extra capital to install meters and monitoring software in incentive programs such as grants and low-interest loans. Encouraging or requiring data collection and communication could be especially valuable for demonstration projects.
This report has attempted to demonstrate how economics, information, and policy interact to affect customer-side clean energy adoption, while illustrating some effective strategies for making those factors work for particular projects. Hopefully, motivated energy users can learn from these case studies and will be better positioned to assess and successfully implement clean energy solutions to meet their own goals. More policy support could further facilitate clean energy installations in the Southeast. Altogether, an improved appreciation of the challenges and opportunities for clean energy “on the ground” will help those who are interested to work towards the regional potential for clean energy.
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APPENDICES Appendix A: Case Study Development The Nicholas Institute conducted interviews in order to develop the four case studies in this report and thereby develop an understanding of how CHP and SWH projects are implemented on the ground in the Southeast. Researchers sought to understand two key aspects of each case study: project planning and system operation. The interviews focused on illuminating the motivations and goals for each project, as well as the financial and nonfinancial criteria used to evaluate options for meeting those goals. Interviews also explored regulatory and financial barriers and opportunities that impact the planning and operational project stages. In particular, common barriers and best practices noted during the literature review were drawn on to help identify innovative strategies and viewpoints that enabled each project’s implementation and operational success.
The researchers developed the case study summaries with an aim to highlight lessons learned for stakeholders interested in installing clean energy systems. Researchers shared the case study drafts with stakeholders contacted in the scoping phase, subject area experts, and project managers, soliciting feedback about information gaps, additional cases to consider, and the kinds of decision makers that would benefit from this analysis. Researchers revised the case studies and subject area introductions accordingly and prepared final documents for wider distribution. The outreach documents are intended for a broad audience, and will be distributed to state energy offices, university sustainability networks, relevant professional associations, and other groups to help address information barriers identified as a key obstacle to clean energy development in the Southeast.
Appendix B: Clean Energy Policies in the Southeast According to the Database of State Incentives for Renewables and Energy Efficiency (DSIRE), there are over 90 incentive programs hosted by the federal government, Southeastern states, utilities, and local governments that help bring down the initial cost of installing SWH and CHP. These programs include tax credits, low-interest loans, rebates, property-assessed clean energy financing, grants, and other incentives. The following table summarizes the incentives available for commercial installation of CHP and/or SHW. The availability of multiple programs in states such as Georgia and North Carolina shows that some locations in the Southeast may have an easier time overcoming the implementation-cost barrier. Maybe states have multiple programs in one category, for complete details see http://www.dsireusa.org/.
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Current Incentives for CHP and SWH FEDERAL
Corporate tax credit Corporate depreciation
Grant program STATE
INCENTIVE AVAILABILITY State loan programs Alabama
Georgia Mississippi North Carolina South Carolina Tennessee Virginia
State grant program Georgia Kentucky
State tax credit Georgia Kentucky Louisiana North Carolina South Carolina
State Tax Exemption Florida Georgia Louisiana North Carolina Virginia
UTILITY
INCENTIVE AVAILABILITY Utility Rebate Program Florida Florida Power and Light – Solar Rebate Program
JEA – Solar Incentive Program Tampa Electric – Solar Rebate Program
Utility Rate Discount North Carolina PSNC Energy (Gas) – Green Building Rate Discount LOCAL
INCENTIVE AVAILABILITY Performance-‐based incentives
North Carolina & South Carolina
Duke Energy – Standard Purchase Offer for RECs Progress Energy Carolinas – SunSense Commercial Solar Water Heating Incentive Program
Local loan program Georgia Athens-‐Clarke County – Green Business Revolving Loan Fund Kentucky Mountain Association for Community Economic
Development – Energy Efficient Enterprise Loan Program North Carolina Local Option – Financing Program for Renewable Energy and
Energy Efficiency Town of Carrboro – Worthwhile Investments Save Energy (WISE) Homes and Buildings Program
PACE financing Louisiana Local Option – Sustainable Energy Financing Districts
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Appendix C: Combined Heat and Power Resources Southeast Clean Energy Application Center One of eight regional clean energy centers, the Southeast Clean Energy Application Center promotes greater adoption of clean and efficient energy generation and use through recycled energy. The center provides information on
• technical assistance • policy analysis and barrier removal • education and outreach • case studies
www.southeastcleanenergy.org
Oak Ridge National Laboratory – Cooling, Heating and Power Technologies Program A collection of resources about distributed energy technology, including
• publications • success stories • screening tools
http://www.coolingheatingpower.org/
U.S. Combined Heat and Power Partnership The Combined Heat and Power Partnership works closely with stakeholders to facilitate project development and promote the benefits of CHP by providing
• technical assistance • a catalogue of CHP technologies • tools to aid CHP evaluation and design • a CHP emissions calculator • a funding database
http://www.epa.gov/chp/
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Appendix D: Solar Water Heating Resources American Council for an Energy-‐Efficient Economy—Water heating consumer resources Information about
• water heater types and costs, including solar water heating • life-‐cycle costs compared by water heating technology • guidance for selecting a new water heat • strategies for minimizing water heating costs for new and existing systems
http://www.aceee.org/consumer/water-‐heating Florida Solar Energy Center—Solar hot water Information on system types, installation, collector ratings, system ratings, simplified system calculator, and frequently asked questions for
• homes • pools • commercial businesses
http://www.fsec.ucf.edu/en/consumer/solar_hot_water/index.htm National Institute of Building Sciences Whole Building Design Guide—Solar hot water Information about
• types and cost of solar water heating technology • economics • assessing resource availability with links to analysis tools • design considerations • operation and maintenance • solar access and solar rights
http://www.wbdg.org/resources/swheating.php National Renewable Energy Laboratory—Dynamic maps, GIS data, and analysis tools Maps depicting scenarios for solar water heating systems using natural gas and electricity, including
• savings-‐to-‐investment ratio • payback period • conventional energy rate needed to “break even”
http://www.nrel.gov/gis/femp.html -‐ water U.S. Department of Energy Office of Energy Efficiency & Renewable Energy—Energy savers for your home—solar water heaters Information about
• how solar water heaters work • guidance for selecting a solar water heater, including
1. the economics of a SWH system 2. evaluating your site’s solar resource 3. determining correct system size
• installing and maintaining the system • other water heating options for comparison
http://www.energysavers.gov/your_home/water_heating/index.cfm/mytopic=12850