Cracking the Barriers to CHP Policy Drivers & CHP Market Opportunities in the Gulf Coast

Transcription

1 Cracking the Barriers to CHP Policy Drivers & CHP Market Opportunities in the Gulf Coast Wednesday, April 8 th Jessica Rackley, Manager 1

2 Presentation Outline U.S. & Gulf Coast CHP Trends Federal Regulations Driving CHP Development State and Regional Policy Drivers for CHP U.S. & Gulf Coast Technical Potential Estimates for CHP Conclusions 2

3 Current CHP Market About 82.7 GW of installed CHP at over 4,300 industrial and commercial facilities Historically over 80% of capacity in industrial applications Changing market to include more commercial/institutional applications 70% of capacity is natural gas fired 2% of CHP capacity currently owned by utilities Universities, 296 MW Healthcare, 143 MW Wastewater Treatment, 165 MW CHP Capacity Additions, Other Commercial, 397 MW Utilities, 120 MW Other Industrial, 303 MW Food, 142 MW Source: ICF CHP Installation Database Paper, 406 MW Refining, 502 MW Chemicals, 445 MW 3

4 Existing CHP Natural gas based CHP concentrated in Northeast, Gulf Coast, Midwest and California Northwest and Southeast have high concentration of sites in forest products and paper industries 4

5 Capacity (MW) CHP Annual Additions since ,000 6,000 5,000 >100 MW <100 MW 4,000 3,000 2,000 1,000 0 *Preliminary Data Source: CHP Installation Database, July

6 Existing CHP in the Gulf Coast By State By Application Alabama, 3,396 MW Florida, 3,273 MW Dist. Energy, 248 MW Hospitals, 101 MW Other Industrial, 654 MW Colleges/Univ., 299 MW Other Commercial, 342 MW Food, 1,229 MW Paper, 2,719 MW Refining, 10,241 MW Texas, 17,016 MW Mississippi, 528 MW Louisiana, 6,109 MW Chemicals, 14,488 MW Source: CHP Installation Database (as of December 31, 2013) 6

7 CHP in Development or Under Construction (1,229 MW) CHP by State Alabama, 25 MW Florida, 102 MW CHP by Application Unknown, 325 MW Paper, 20 MW Texas, 754 MW Louisiana, 349 MW Other, 32 MW Military, 25 MW Colleges/ Univ, 21 MW Hospitals, 39 MW Solid Waste, 20 MW Rubber/ Plastic, 49 MW Chemicals, 698 MW Note: There are 43 sites on the Watch List without capacity information There are currently no CHP sites under development in Mississippi Source: ICF Internal Tracking, March

8 Key Emerging Drivers for CHP Outlook for natural gas supply and price in North America Returning industries (new chemical plant announcements, primarily located in the Gulf Coast) Opportunities created by environmental drivers ICI Boiler MACT NSPS 111(b) & 111(d) Need for energy reliability and resiliency Benefits of CHP recognized by Federal and State policymakers White House Executive Order: 40 GW by 2020 Increasing state interest 8

9 ACEEE State Energy Efficiency Rankings Source: ACEEE State Energy Efficiency Scorecard Rankings

10 Beneficial Policies & Programs in the Gulf Coast TX and LA have instituted laws requiring critical government facilities to consider the value of implementing CHP TX Permit by Rule (PBR) for CHP streamlined permitting rule for natural gas-fired CHP systems up to 15 MW in size TX 2049 clarified language in the TUC to allow CHP facilities to sell electricity and heat to any customer in proximity of the facility LA had a RPS pilot program the recently ended and included CHP as an eligible technology AL Power has 2,000 MW of CHP in its service territory 1,500 MW is customer-owned CHP and more than 500 MW is companyowned CHP located at large industrial sites Source: ICF CHP Installation Database 10

11 Pending Proposals Texas HB Introduced in March 2015 Proposes a franchise tax (corporate tax) credit for certain energygenerating equipment CHP projects must meet a minimum efficiency of 60% to qualify A taxable entity may deduct either 1) the total cost of the system from its taxable capital or 2) 10% of the system s cost may be deducted from the company s income Federal ITC February 2015, the Senate Finance Committee approved a proposal that would amend the ITC and would allow for waste heat to power to qualify for credit 11

12 Key Existing Barriers for CHP in the Gulf Coast & Risks Current Barriers Financial and Economic generally low level of financial incentives for CHP, although low and stable natural gas prices in the region helps offset the lack of incentives Regulatory net metering and interconnection rules typically do not acknowledge CHP, no streamlined permitting for CHP (except in TX), no current RPS that include CHP Low electricity prices, meaning that the spark spread is not as favorable as in other regions of the country Future Risks Current industrial reshoring in the Gulf Coast could lessen if LNG exports lead to higher natural gas prices 12

13 The Potential for Additional CHP Is Nationwide Source: ICF Internal Estimates 13

14 Capacity (GW) Where is the Remaining Potential for CHP? Existing CHP vs Technical Potential CHP Technical Potential Existing CHP Capacity Source: ICF internal estimates 14

15 Conclusions Due to a number of drivers such as relatively steady and low natural gas prices, increased federal support, and EPA regulations, we expect CHP development to increase over the next few years In the Gulf Coast region, CHP development has been significant in recent years in specific sectors, e.g., in the ethylene industry and at other chemical plants This positive trend is expected to continue and could further be enhanced with regulatory improvements and additional financial incentives ICF projects technical potential in the Gulf Coast region at 27.1 GW (TX comprises 11.7 GW of this total). 15

16 Questions & Contact Information Jessica Rackley Manager