thermal energy standard for colorado, mignogna, 28 jun2012

Development of a Thermal Energy

Standard for Colorado

Richard P. Mignogna, Ph.D., P.E.

Renewable & Alternative Energy Management, LLC

Golden, Colorado 80401 USA

Tel: +1.303.875.0857

[email protected]

28 June 2012

Colorado Geothermal Working Group

Denver, Colorado USA

R. Mignogna, 2012

Renewable Energy Standards & Public Policy Goals What do you hope to achieve?

Energy security

Conservation of scarce resources

Fuel

Water

Reduce environmental impacts

Economic development

Technological advancement

Cost reduction

Promote specific resources & technologies (e.g. GSHP,

biomass, etc.)

R. Mignogna, 2012

How Will You Do This?

Legislature

Voter Referendum

Utility Commission

Executive Order

R. Mignogna, 2012

...or perhaps,

R. Mignogna, 2012

Understand Stakeholder Groups Balance competing interests

Utilities

Will they lose revenue?

Renewable energy developers

Environmental groups

Ratepayers/taxpayers Recipients of incentive programs

Funding source

R. Mignogna, 2012

Thermal Energy Standard Administration Who will oversee the program and ensure compliance?

Utility

PUC

State energy office

Third party administrator Recharge Colorado?

Financial Incentives for Solar Water Heating www.dsireusa.org / May 2012

Direct Cash Incentive

Tax Credit

VT

NH

MA

RI

CT

NJ

MD

D

D

U

U

U

U

U

U

U

U

U

U U

U

U

U.S. Virgin Islands

Puerto Rico

U

D

40 states +

DC, PR & USVI offer financial incentives for solar water

heating Direct Cash Incentive and Tax Credit

DC

Sales Tax Incentive

Property Tax Incentive

Tax Deduction Utility Direct Cash Incentive(s) D

Local option to provide property tax incentive

U

$ $ Local option to provide sales tax incentive

$ $

$

$

$

$

$

$ D

$

$

$

$

$ $

$

$ U

$

U

U U

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$

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http://www.dsireusa.org/

R. Mignogna, 2012

Principles for Incentivizing Distributed Generation HB07-1228, PUC Docket 07M-230E (page 1 of 2)

1. Programs should be founded on measurable and transparent

goals. Evaluation, measurement, and verification are critical to

providing accountability to ratepayers and policy makers.

2. Responsibility for compliance should be borne equally by all

consumers and companies.

3. There should be congruence between the population that pays for

incentive programs and the population that benefits from them.

4. In order for renewable credits to be applicable to the Renewable

Energy Standard, a distributed generation technology should

displace electric energy from the grid.

R. Mignogna, 2012

Principles for Incentivizing Distributed Generation HB07-1228, PUC Docket 07M-230E (page 2 of 2)

5. The policy goals for promoting renewable energy should address

society's need for clean energy considering environmental

consequences, energy security, efficient use of scarce resources, and

economic development at lowest cost. Incentives should be aligned

accordingly.

6. Good public policy should focus on societal needs, not on specific

technologies or the associated proprietary interests.

7. The policy should consider a broad range of possible incentives and

funding sources, including tax credits and exemptions, rebates, cost

sharing, grants, low interest loans, etc., in addition to ratepayer

surcharges.

8. The goal of incentives should be to stimulate sufficient marketplace

activity and induce cost reductions. The incentives should be designed

to be eventually removed, not become permanent.

R. Mignogna, 2012

Creating a Thermal Energy Standard Approaches to incentivizing thermal energy

Add thermal technologies to list of eligible energy

resources for compliance with the RES

Incentives in utility DSM/EE programs

Alternatively, state administered rebate program

State tax credits based on installed cost of thermal

Sales and/or property tax

Refundable income tax credits

Require that a portion of the thermal load of new

construction be met with clean thermal energy

technologies

Rather than add to the RES, TES would be a companion focused on

thermal energy

R. Mignogna, 2012

Can DSM/EE Support a Thermal Energy Standard?

HB07-1037 (§40-3.2-101 C.R.S. et. seq.)

Directs Colorado’s investor-owned electric and gas utilities

to pursue energy efficiency (Demand Side Management)

o §40-3.2-103 C.R.S. Gas DSM

o §40-3.2-104 C.R.S. Electric DSM

Utilities now file biennial DSM plans

o PSCo combined DSM Plan for 2012-2013

(Docket 11A-631EG)

o Black Hills DSM

o Electric 2012-2015 (Docket 12A-100E)

o Gas 2011 (Docket 10A-082G)

HB08-1107 similarly attempted to require DSM for coops

& munis but failed in the legislature.

R. Mignogna, 2012

There are six regulated gas utilities in Colorado

Atmos Energy

Colorado Natural Gas

Public Service Company of Colorado

SourceGas

Black Hills Energy Corp

Eastern Colorado

There are two regulated electric utilities in Colorado

Black Hills Colorado Electric Utility

Public Service Company of Colorado (PSCo or Xcel)

None make any appreciable mention or use of GSHP

(or any thermal energy technologies) in their DSM

plans


R. Mignogna, 2012

GSHP to serve heating load:

Decrease in gas

Btu

Increase in kWh

None of the utility DSM plans submitted to the PUC

integrate gas and electric usage for a total energy DSM


R. Mignogna, 2012

Creating a Thermal Energy Standard Approaches to incentivizing thermal energy

Add thermal technologies to list of eligible energy

resources for compliance with the RES

Incentives in utility DSM/EE programs

Alternatively, state administered rebate program

State tax credits based on installed cost of thermal

Waive sales and/or property tax

Refundable income tax credits

Require that a portion of the thermal load of new

construction be met with clean thermal energy

technologies.

Note: Tiered electric rates serve as disincentive for thermal technologies

such as GSHP. To be fully effective, must waive tiered rates associated

with operation of clean thermal energy equipment.

R. Mignogna, 2012

Opportunities for Third-Party Providers

Principal barrier is high first cost

Learn from experience with another technology that has

high first cost and long payback

PV solar services model

Geothermal Heat Suppliers Act, 1984

(§40-40-101 et. seq., C.R.S.)

Only exclusion for thermal technologies from certificated

utility monopoly(1)

Third party would own and install system

Sell metered thermal energy to customer

(1) SB09-051 now allows PV (but not solar thermal) suppliers to sell electrical energy

directly to end use customers

R. Mignogna, 2012

Promoting and Deploying GSHP

Rebates (utility)

Buy down first cost

Loop tariff programs (utility)

Loop lease programs (utility or third-party provider)

Low interest loan programs (state, utility, or third-party provider)

Decrease monthly payment, improve cash flow

Target replacement of heating technologies where there is a clear

benefit in cost and CO2 (electric, propane)

Direct sale of metered thermal energy (utility or third-party

provider) Colorado has already taken the first step in this direction – Geothermal Heat

Suppliers Act, §40-40-101 et. seq., C.R.S.

R. Mignogna, 2012

Geothermal Heat Suppliers Act §40-40-101 et. seq., C.R.S. (page 1 of 3)

Defines Geothermal Heat Supplier as any person who supplies

geothermally heated groundwater or other substances to the public or

other customers for industrial process heat, commercial use, space

heating, or other purposes. The term includes systems which enhance

the thermal content of the substance supplied through the use of heat

pumps, solar assistance, or other means.

Exemptions for wholesale and publicly owned providers

Requires the Commission to “establish a system of operating permits

for geothermal heat suppliers. Before commencing construction of

distribution facilities, a geothermal heat supplier must obtain an

operating permit from the commission.”

An operating permit “may not be denied because the area which

the applicant proposes to serve is already being served by a gas

or electric utility.”

R. Mignogna, 2012

The Act lists several requirements that must be met by the

operator to obtain an operating permit including that the

operator enter into a contract with the customer specifying:

The period of time service will be provided

Rates or method for determining rates to be charged

That the operator will submit to complaint procedures contained

in 40-6-108, C.R.S.

Before issuing an operating permit, the commission must

find that:

The applicant is fit, willing, and able to provide the proposed

services; and

The applicant has made an adequate showing that the

geothermal heat supply and distribution system appears

reasonably capable of delivering the proposed services.


R. Mignogna, 2012

First application for registration at PUC under

the Geothermal Heat Suppliers Act recently

received at PUC:

PanTerra Energy, PUC Docket 12A-478ST

Application for registration only, not an operating

permit

Decision C12-0684

o Finding: “…PanTerra is found to be fit, willing, and

able to provide geothermal heat supply services.”

o Operating permit to require separate application

o Registration expires in 5 years if no operating

permit is obtained

Implementation of a thermal energy standard

could foster additional penetration via the

GSHA


R. Mignogna, 2012

Moving Forward on a Thermal Energy Standard Next Steps

Thermal standard working group as per SB12-180 &

SR12-003.

Focus on thermal energy separate from the RES

Establish goals for a thermal energy program

Define program characteristics

Identify technologies for consideration

o Define parameters for qualified thermal facility (commercial &

residential)

Identify thermal energy incentive programs nationally that

may serve as models

Align incentives with

o Program goals

o Available funding

Policy recommendations

R. Mignogna, 2012

Thank you

306 Berthoud Way

Golden, Colorado 80401 USA

Richard P. Mignogna, Ph.D., P.E.

Tel: +1.303.875.0857

Email: [email protected]

Blog: richmignogna.blogspot.com

thermal energy standard for colorado, mignogna, 28 jun2012

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