Energy as an Economic Development Strategy Aiding Public Officials in the Decision Making Process June, 2015
Learning Objectives Energy Trends Energy and Economic Development Large Scale Renewable Energy Development Shale Energy Development & Trends Distributed Energy Development Next Steps - Energy as a BR&E Strategy 2
Ohio Energy Trends
(Quadrillion Btu) OHIO STATE UNIVERSITY EXTENSION Total Global Energy Consumption 600 500 400 300 200 100 0 1980 1985 1990 1995 2000 2005 2010 The 2011 International Energy Outlook Report estimates the world energy consumption of 770 quadrillion Btu in 2035. SourceSource: U.S. Energy Information Administration, Independent Statistics & Analysis. www.eia.gov 4
Cents per Killowatt-hour OHIO STATE UNIVERSITY EXTENSION Average Retail Price of Electricity in Ohio 14.00 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Residential Sector Commercial Sector Industrial Sector Transportation Sector Other All Sectors Source: (USDOE/EIA, 2014) The Current and Historical Monthly Retail Sales, Revenues and Average Revenue per Kilowatthour by State and by Sector 5
There has been a fivefold increase in investment in new electricity transmission capacity since 1997, as well as large increases in spending for distribution capacity. Since 1997, roughly $107 billion has been spent on new transmission infrastructure and $318 billion on new distribution infrastructure. Energy Information Administration, ANNUAL ENERGY OUTLOOK 2015. (2015).
Age of Ohio Electric Power Generators 30% 25% 20% 15% 10% 5% 0% Percentage of Total Generation Capacity in Ohio 6% 10 or fewer 24% 9% 22% 24% 12% 3% 11-20 21-30 31-40 41-50 51-60 More than 60 Age in Years Source: 2012 Form EIA-860 Data - Schedule 3, 'Generator Data' (Operable Units Only) 7
Energy and Economic Development
JobsOhio Classifies Energy as a Primary Industry Ohio s Utica shale presents substantial opportunities for investments at all levels. The state also is experiencing growth in the wind and solar supply chain, as well as advanced technologies for energy efficiencies and a diverse supply of power generation. Quick facts Employment - 40,835 people Gross state production - $17.5 billion Average wages - $72,705 Number of firms - 1,213 9
What is Economic Development? The main goal of economic development is improving the economic well being of a community through efforts that entail job creation, job retention, tax base enhancements and quality of life. The International Economic Development Council Economic Development Reference Guide
Tax Generation e.g. Large Scale Renewable Energy Job Creation e.g. Shale Energy Development Job Retention e.g. Distributed Energy Generation Energy and Economic Development 11
Large Scale Renewable Energy Development
Renewable Portfolio Standard Policies www.dsireusa.org / March 2015 Walmart s Approach to Renewable Energy WA: 15% x 2020* OR: 25%x 2025* (large utilities) CA: 33% x 2020 NV: 25% x 2025* UT: 20% x 2025* AZ: 15% x 2025* MT: 15% x 2015 CO: 30% by 2020 (IOUs) * NM: 20%x 2020 (IOUs) ND: 10% x 2015 MN:26.5% x 2025 (IOUs) 31.5% x 2020 (Xcel) SD: 10% x 2015 KS: 20% x 2020 OK: 15% x 2015 IA: 105 MW Text MO:15% x 2021 WI: 10% 2015 IL: 25% x 2026 MI: 10% x 2015* IN: OH: 12.5% 10% x x 2026 2025 NY: 29% x 2015 VA: 15% x 2025 NC: 12.5% x 2021 (IOUs) SC: 2% 2021 DC ME: 40% x 2017 NH: 24.8 x 2025 VT: 20% x 2017 MA: 15% x 2020(new resources) 6.03% x 2016 (existing resources) RI: 14.5% x 2019 CT: 27% x 2020 NJ: 20.38% RE x 2020 + 4.1% solar by 2027 PA: 18% x 2021 DE: 25% x 2026* MD: 20% x 2022 DC: 20% x 2020 HI: 40% x 2030 Renewable portfolio standard Renewable portfolio goal * Extra TX: 5,880 MW x 2015* U.S. Territories NMI: 20% x 2016 Guam: 25% x 2035 PR: 20% x 2035 USVI: 30% x 2025 credit for solar or customer-sited renewables Includes non-renewable alternative resources 29 States + Washington DC + 2 territories have a Renewable Portfolio Standard (8 states and 2 territories have renewable portfolio goals) 13
# of Certified Facilities Capacity - Megawatts (MW) OHIO STATE UNIVERSITY EXTENSION Ohio Renewable Energy Development ( All Technology) # of Facilities Total MW 500 400 300 200 100 0 2009 2010 2011 2012 2013 2014 2015 500 400 300 200 100 0 25 MW 12 MW 10 MW 177 MW 49 MW 49 MW 304 MW 99 MW 100 MW 71 MW 49 MW 37 MW 10 MW 14 Source: PUCO (March, 2015)
Ohio Renewable Energy Generation By Technology Abandoned Coal Mine Methane 4% Wind 45% Biomass 27% Waste Energy Recovery 4% FuelCell 0% Hydroelectric Solar PV 6% 10% Solid Waste 4% 15 Source: PUCO (March, 2015)
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Local Support or Opposition of Development? Support for Wind Turbines Based on Residents Zip Code of Renewable Energy 80% 70% 60% 50% 73% 48% General support or opposition for wind turbines in their county: 40% 30% 20% 10% 0% 30% 21% 16% 11% Other zipcode 43359 Support/strongly support Neutral Opposed/strongly opposed 18
Shale Energy Development
Million Cubic Feet (Mcf) OHIO STATE UNIVERSITY EXTENSION Ohio Natural Gas Production (2000-2014) 600,000,000 500,000,000 400,000,000 300,000,000 200,000,000 100,000,000 - Total Production Shale Production Source: PUCO (March, 2015) 20
Barrels OHIO STATE UNIVERSITY EXTENSION Ohio Oil Production (2000-2014) 16,000,000 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - Total Production Shale Production Source: PUCO (March, 2015) 21
But Global Data also flagged the competitive advantage that U.S. companies will receive from the lower cost provided by shale gas. And this opportunity is attracting investment from some of the industry s bigger names. Just last week the International Energy Agency said some 30 million European jobs are at risk as manufacturers of petrochemicals, plastics and fertilizers are relocating to the U.S. Source: Shale Reshapes Petrochemicals Business. The Wall Street Journal. Ben Winkley (July, 2014)
Ohio Midstream Processing Terms Natural Gas Processing Plant - Natural gas processing removes impurities and separates higher- valued products known as natural gas liquids. Processing prepares a dry gas stream that meets industry standards for transportation in highpressure pipelines. Fractionation Plant - Fractionation is the process that involves the separation of the natural gas liquids into discrete natural gas liquid purity products (i.e., ethane, propane, normal butane, isobutane, and natural gasoline). Steam cracker Plant - A steam cracker is a petrochemical plant that uses feedstocks (i.e., ethane, propane) to create ethylene, propylene, and other petrochemicals.
Natural Gas Processing Mmcf/day Fractionation bbl/day OHIO STATE UNIVERSITY EXTENSION Ohio Midstream Processing Infrastructure 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500-2013 2014 2015 Fractionation Natural Gas Processing - 24
Ohio Getting Ethane Cracker Plant? Appalachian Resins Inc., a Houston company, has leased 50 acres of land in Monroe County. When built, the Ohio plant would process about 18,000 barrels a day of ethane. Source: the Columbus Business First (August, 2014)
Downstream Value Chain Markets ream Value Chain: Markets 26
Distributed Energy Development
Net Metering www.dsireusa.org / March 2015 Walmart s Approach to Renewable Energy WA: 100 OR: 25/2,000* CA: 1,000* AK: 25* MT: 50* NV: 1,000* UT: 25/2,000* AZ: 125% WY: 25* CO: 120%* NM: 80,000* HI: 100* State-developed mandatory rules for certain utilities ND: 100* NE: 25 OK: 100* MN: 40 IA: 500* Text WI: 20* KS: 15/100/150* MO: 100 IL: 40* AR: 25/300 LA: 25/300 MI: 150* IN: 1,000* KY: 30* OH: no limit* GA: 10/100 VA: 20/1,000* NC: 1,000* FL: 2,000* U.S. Territories: American Samoa: 30 Guam: 25/100 Puerto Rico: 25/1,000/5,000 Virgin Islands: 20/100/500 Note: Net Metering rules are being actively discussed in over a dozen state public service & utility commissions across the country. ME: 660* SC: 20/1,000* 44 States + DC, AS, Guam, USVI, & PR have mandatory net metering rules No uniform or statewide mandatory rules, but some utilities allow net metering * State: kw limit residential/ kw limit nonresidential State policy applies to certain utility types only (e.g., investor-owned utilities) Note: Numbers indicate individual system capacity limit in kw. Percentages refer to customer demand. Some limits vary by customer type, technology and/or application. Other limits might also apply. This map generally does not address statutory changes until administrative rules have been adopted to implement such changes. 28 DC VT: 20/250/2,200 NH: 1,000 MA: 60/1,000/2,000/10,000* RI: 5,000* CT: 2,000/3,000* NY: 10/25/500/1,000/2,000* PA: 50/3,000/5,000* NJ: no limit* DE: 25/100/2,000* MD: 2,000 WV: 25/50/500/2,000 DC: 1,000/5,000/120%
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This is a financial investment, it just happens to be green. We will never tell you, go spend six or seven million dollars to be green. We will tell you, spend six or seven million dollars to be profitable, and if you can be green while doing this, great Jereme Kent One Energy LLC.
G&S Titanium Solar Project 65 kw PV Solar fixed/tracking System installed by Carbon Vision LLC With the financial incentives we have already received, the elimination of our monthly electric bill, and the avoidance of future rate increases, we foresee a total R.O.I. of roughly 8.5 years. - Roger N. Geiser, Owner, October 5, 2012 $323,700 - Cost $93,081 Federal Government Check $75,000 AEP Credits Check $68,049 IRS Asset Dep. $76,500 8.5 Years of Electric Bills (9K) $11,000 8.5 Years Future Rate Increases (5%) $323,000 31
Example: Swine Facility 29.25 kw system / Generating 29,250 kwh per year 117 panels (250 watt) Average usage = 54,000 kwh per Yr. Offset 70% of electric needs Rooftop system south facing at 35 degree tilt. 32
Energy as a BR&E Strategy
What Can You do Locally? Identify businesses that have an interest in energy efficiency and distributed energy investments. Research net metering rules for your county/township. Identify funding and support programs. Include rules for siting renewable energy projects in local zoning ordinances. Include space for energy development into future planning of business parks. 34
NFIB National Small Business (less than 250) Poll The energy costs of individual small businesses vary greatly. Ten (10) percent of small employers claim that energy costs are the largest single cost they have while 8 percent claim that they have no direct energy expenses. Small-business energy costs (closely related to consumption) are primarily linked to vehicles (38%), heating and cooling of occupied space (33%), operating equipment or processes (21%) and lighting (6%). 35
So, How Can We Help You? OSU has developed a Business Retention and Expansion Program. Program was created in 1986 and has been used in nearly all Ohio Counties. Originally created to focus on the manufacturing sector but has since expanded in the retail sector and specific sectors ie health care, downtowns
BRE Energy Development Program The primary objective of this program is to increase the knowledge, awareness of business owners and leaders concerning distributed energy generation, net metering, and renewable energy development. This program will provide participants the tools and knowledge to enhance decision-making capacity on energy investments, allowing Ohio businesses to prosper, grow, and provide stabilized employment opportunities
Components of the BR&E A customized business retention and expansion survey to be distributed to businesses in your community. This electronic survey will serve as a needs assessment, market the program to businesses, and collect critical data to assess overall compatibility with distributed energy projects. Presentation from OSU Extension providing renewable energy policy overview and foundation level information on distributed energy generation, net metering, and renewable energy projects. Expert Q&A panel session with utility, industry, and financial experts, to provide detailed information on net metering, rules, cost, construction, permitting, timing, and financing options.
Components of the BR&E Case study sessions presented by business leaders who have successfully implemented distributed energy generation projects in Ohio and can highlight both opportunities and challenges with their respective projects. Meetings with panel representatives to advance project discussions to a more detailed level. Companies (participants) will bring electric consumption data with them to take advantage of this initial consultation with facility visits to follow at a later date, if the company chooses. A Comprehensive Economic Development Energy Strategy
Questions? Eric Romich OSU Extension Field Specialist, Energy Development romich.2@osu.edu energizeohio.osu.edu David Civittolo OSU Extension Field Specialist, Community Economics Civittolo.1@osu.edu comdev.osu.edu/programs/economic-development/business-retention-expansion