The Alliance for Industrial Efficiency, Washington Gas, and Columbia Gas appreciate the opportunity to offer these comments on the 2018 Virginia Energy Plan (the “energy plan”). We seek to encourage greater use of CHP in the Commonwealth and look forward to working with the Administration to move these recommendations forward.
Our comments focus on encouraging the deployment of combined heat and power (CHP) and waste heat to power (WHP). These actions would help the Commonwealth recognize the multiple economic, energy efficiency, and greenhouse gas reduction benefits that CHP and WHP provide, as outlined in the section “About CHP and WHP in Virginia” (below). We recommend that DMME develop an energy plan that:
Recommendations for the 2018 Virginia Energy Plan
The following recommendations focus on encouraging the deployment of CHP and WHP in Virginia. These actions would help the Commonwealth recognize the multiple economic, energy efficiency, and greenhouse gas reduction benefits that CHP and WHP provide.
While the Department of Energy published a CHP technical potential study for all 50 states, it does not capture the nuances of CHP potential in Virginia. For instance, the DOE study was limited to CHP potential at existing sites, but does not anticipate potential growth. Therefore, our third recommendation is that Virginia examine the potential for CHP at all current and planned state facilities and develop a statewide CHP technical potential study. This addition would help Virginia achieve its “lead-by-example” goal of reducing state government electricity consumption by 15 percent by the end of 2017, using 2010 electricity usage as the baseline.[17]
We further recommend a sectoral study that examines technical potential for CHP beyond state facilities and includes other potential end users, such as industrial facilities, military installations, and critical infrastructure. Ideally the report would also examine future growth—as the existing DOE technical potential study only considers existing facilities. Finally, we recommend that the technical potential study identify the ten most promising facilities with the largest CHP potential in Virginia in each examined sector. The information gained by commissioning such a study would be extremely valuable in future efforts to expand CHP deployment in the Commonwealth.
The Grid Transformation and Security Act (SB 966) directs Dominion Energy to consider deploying 200 MW of CHP and WHP, through either supply-side or demand-side incentives, over the next five years in its next integrated resource plan. We recommend that the 2018 Virginia Energy Plan not only reaffirm Dominion’s target, but also establish a more ambitious, statewide deployment target.
We propose a cumulative target of 750 MW of new CHP and WHP capacity by 2030. DOE has identified 4,308 MW of technical on-site CHP potential, including 65 MW of WHP potential at existing facilities in Virginia.[18] The proposed target thus represents approximately 17 percent of potential deployment.
Utility ownership of CHP can be one approach to helping the Commonwealth achieve an ambitious CHP target. Dominion and other Virginia utilities can harness the potential for CHP by offering incentives to support deployment and including utility-owned CHP in their IRPs. Utility-owned CHP is a relatively untapped efficiency resource that can improve grid reliability while reducing operational costs. Utility-owned CHP can provide substantial benefits to utilities and the grid, including:[24]
Some utilities in other states are beginning to recognize these benefits. For example, in 2015, Duke Energy began to include a small amount of CHP development and ownership in its integrated resource planning process. As a result, Duke partnered with Clemson University in South Carolina on a 15 MW CHP project that is planned to be operational by 2020.[28] Duke will own the CHP system, while Clemson will purchase all of the steam from the CHP to heat its campus. Through this partnership, Duke and its customers will receive an efficient, low-cost, baseload grid generation asset, while reducing greenhouse gas emissions.
Finally, the State Corporation Commission (SCC) will need to approve any utility integrated resource plans that include a CHP deployment target developed to meet the statewide target. Since the SCC will be a key decision-maker on next steps, they should be engaged in the process.
Third, we recommend that the DMME establish a collaborative platform between stakeholders to further explore the potential opportunities and barriers associated with CHP and WHP in Virginia. At a minimum, these stakeholders should include the U.S. Department of Energy Mid-Atlantic CHP Technical Assistance Partnership (CHP TAP), Virginia’s electric and gas utilities, and end users (e.g., manufacturers, hospitals, universities, Department of Defense, national security agencies).
We propose the working group assess: (1) CHP’s and WHP’s value proposition (including exploring the resiliency value of CHP) and (2) barriers to CHP and WHP deployment (including interconnection rules and standby rates), as detailed below.
We also recommend that this working group seek to produce an interim report by June 2019 and a final report by November 2019 with its findings. As an example, Michigan recently released a “CHP Roadmap for Michigan.”[29] This Roadmap was developed in response to the Michigan Legislature’s interest in developing a new comprehensive energy plan for Michigan and Governor Snyder’s goal of meeting 30 to 40 percent of Michigan’s energy demand by a combination of energy waste reduction efforts and renewable energy by 2025. As noted above, the Virginia legislature and administration has expressed similar support for energy efficiency and renewable energy efforts. As such, a Virginia CHP and WHP Roadmap would be an appropriate next step. We recommend that the working group inform the plan, while the Commonwealth explores the possibility of funding it with potential assistance from the Department of Energy.[30]
[1] Code of Virginia, “§ 56-576. Definitions” (https://law.lis.virginia.gov/vacode/title56/chapter23/section56-576/).
[2] Code of Virginia, “§ 67-101. Energy objectives” (https://law.lis.virginia.gov/vacode/title67/chapter1/section67-101/).
[3] U.S. EPA, Mar. 21, 2016, “CHP Benefits” (https://www.epa.gov/chp/chp-benefits).
[4] Natural Resources Defense Council (NRDC), Apr. 2013, “Combined Heat and Power Systems: Improving the Energy Efficiency of Our Manufacturing Plants, Building, and Other Facilities” (http://www.nrdc.org/energy/files/combined-heat-power-ip.pdf); David Gardiner & Associates and Institute for
Industrial Productivity, Jul. 2015, “Combined Heat and Power as a Compliance Option under the CPP” (reporting incremental emissions of natural gas CHP of 450 to 600 lbs/MWh, compared to 2000 to 2200 lbs/MWh for coal) (http://www.dgardiner.com/wp-content/uploads/2015/08/CHP-Pathway-Final-Report-8-18-15.pdf).
[5] Alliance for Industrial Efficiency, 2018, “CHP Response in Natural Disaster Mitigation: Delivering Reliability, Saving Lives” (https://bit.ly/2mTDsmk).
[6] Federal Emergency Management Agency, “Data Visualization: Disaster Declarations for States and Counties” (https://www.fema.gov/data-visualization-disaster-declarations-states-and-counties).
[7] Virginia Department of Emergency Management, “Hurricane Matthew – Virginia Impacts” (http://dls.virginia.gov/groups/flooding/impacts101716.pdf).
[8] U.S. Department of Energy, U.S. Department of Housing and Urban Development, and U.S. Environmental Protection Agency, Sep. 2013, “Guide to Using Combined Heat and Power for Enhancing Reliability and Resiliency in Buildings” (https://www.hud.gov/sites/documents/ENERGY_CHP_FOR_RC.PDF).
[9] Secretary of the Army, Nov. 1, 2016, “Memorandum for Assistant Secretary of the Army (Installations, Energy and Environment” (https://www.army.mil/e2/c/downloads/457144.pdf).
[10] U.S. Department of Energy, Mar. 2016, “Combined Heat and Power (CHP) Technical Potential in the United States,” Table 2 (https://bit.ly/2N7QfN0).
[11] U.S. DOE Combined Heat and Power Installation Database (https://doe.icfwebservices.com/chpdb/state/VA).
[12] Oak Ridge National Laboratory (ORNL), Mar. 2015, “Waste Heat to Power Market Assessment” (https://info.ornl.gov/sites/publications/files/Pub52953.pdf).
[13] Percentage of the state’s technical potential for CHP with less than 10-year payback period.
[14] The Alliance for Industrial Efficiency, Sep. 2016, “State Ranking of Potential Carbon Dioxide Emission Reductions through Industrial Energy Efficiency” (http://alliance4industrialefficiency.org/wp-content/uploads/2016/09/FINAL-AIE-State-Industrial-Efficiency-Ranking-Report_9_15_16.pdf). Unpublished data on results from CHP and WHP deployment alone.
[15] National Association of Manufacturers, Feb. 2015, “Virginia Manufacturing Facts” (http://www.nam.org/Data-and-Reports/State-Manufacturing-Data/2014-State-Manufacturing-Data/Manufacturing-Facts--Virginia/).
[16] U.S. Energy Information Administration, Dec. 2015, “Virginia: State Profile and Energy Estimates” (https://www.eia.gov/state/?sid=VA#tabs-2).
[17] Executive Order No. 31, Oct. 16, 2014, (https://bit.ly/2O3XCGM).
[18] DOE, supra note 10.
[19] Virginia General Assembly, 2018 Session, approved Mar. 9, 2018, “SB 966” (https://lis.virginia.gov/cgi-bin/legp604.exe?181+ful+CHAP0296+pdf).
[20] DOE, supra note 10.
[21] California Energy Commission, “2015 Integrated Energy Policy Report” (http://www.energy.ca.gov/2015_energypolicy/).
[22] New Jersey Board of Public Utilities and New Jersey Department of Environmental Protection, Dec. 2015, “New Jersey Energy Master Plan Update” (https://nj.gov/emp/docs/pdf/New_Jersey_Energy_Master_Plan_Update.pdf).
[23] Rhode Island Division of Planning, Oct. 8, 2015, “Energy 2035: Rhode Island State Energy Plan” (http://www.planning.ri.gov/documents/LU/energy/energy15.pdf).
[24] ICF and Sterling Energy Group, Jun. 1, 2017, “Utility-Owned CHP—A Least-Cost Baseload Resource,” (https://www.icf.com/resources/white-papers/2017/utility-chp-ownership).
[25] Id.
[26] ICF and Sterling Energy Group, supra note 24.
[27] ICF and Sterling Energy Group, supra note 24.
[28] Duke Energy Carolinas, Sept. 1, 2017, 2017 Integrated Resource Plan (Annual Report), at 76 (https://bit.ly/2Lp05sK); see also District Energy Magazine, Jan. 16, 2018, “Utility Ownership—a new partnership” (https://bit.ly/2BIKtR9).
[29] Michigan Agency for Energy, 5 Lakes Energy, Sustainable Partners LLC, Energy Resources Center, NextEnergy, Feb. 2018, “CHP Roadmap for Michigan” (https://bit.ly/2viAH1L).
[30] Note that the Michigan CHP Roadmap was supported by the U.S. Department of Energy and the Michigan Agency for Energy under Award No. DE-EE0006226.
[31] American Council for an Energy-Efficient Economy (ACEEE), Apr. 2018, “Valuing Distributed Energy Resources: Combined Heat and Power and the Modern Grid” (http://aceee.org/white-paper/valuing-der).
[32] New Jersey Economic Development Authority, “Energy Resiliency Bank” (https://www.njeda.com/erb/erb-(1)).
[33] Personal communication with the MidAtlantic CHP Technical Assistance Partnership.
[34] Energy Information Administration, Feb. 8, 2013, “An introduction to spark spreads” (https://www.eia.gov/todayinenergy/detail.php?id=9911).
[35] Houston Advanced Research Center (HARC), “How Do Extreme Weather Events Impact Investment in Combined Heat and Power?” (https://bit.ly/2Kfzcai).
[36] Id.
[37] DSIRE, NC Clean Energy Technology Center, May 24, 2017, “Energy Equipment Property Tax Exemption” (http://programs.dsireusa.org/system/program/detail/1683).