(Posted by Trent A. Dougherty, Director of Legal Affairs, Ohio Environmental Council, Director of the Ohio Environmental Law Center)
While oil and gas extraction was at the heart of Governor Kasich’s Energy Summit in September, the Governor’s concluding remarks began with recommending expansion of Ohio’s cleanest energy resource — Combined Heat and Power. Combined heat and power (CHP) technologies produce both electricity and steam from a single fuel at a facility located near the consumer. These efficient systems recover heat that normally would be wasted in an electricity generator, and save the fuel that would otherwise be used to produce heat or steam in a separate unit.
Ohio has tremendous opportunity for CHP. Approximately 766 megawatts of capacity are installed in the state, and the Department of Energy (DOE) estimates Ohio’s market potential to be 15-times that current amount by 2025.
In 2011 DOE released a report outlining various scenarios for CHP potential in Ohio. The findings suggest the potential for CHP is approximately 8,000 megawatts if systems were unable to sell power and 11,000 megawatts if systems could export power.
As a suite of technologies, CHP and WER (WER’s most common technology being Waste Heat Recovery or WHR) have the potential to significantly increase industrial energy efficiency, increase the use of distributed generation of electricity and reduce demand on traditional electricity generation facilities, such as fossil-fired electricity. However, with few actual CHP installations, Ohio is near the bottom in the nation for implementation, currently generating only about 766 megawatts.
The reason for the gap (potential vs. implementation) can be attributed to several factors in Ohio’s law, regulatory environment and investor-owned utility culture. All three of those barriers – legal, regulatory and cultural – must be overcome in order for more industrial efficiency (and its less fossil fuel emissions)to become a reality.
In early September, American Electric Power- Ohio (AEP) signed a stipulation in a major rate and restructuring case with a variety of parties. This case spanned many months, and involved the participation of all the major entities that traditionally participate at the Public Utilities Commission of Ohio (PUCO). The signed settlement includes a provision that requires AEP to procure 350 MW of Combined Heat and Power or Waste Heat Recovery resources, a case to determine cost recovery details for this new generation resource must be opened within 12 months of the signature of the settlement. This settlement represents a major win for CHP/WHR development interests in Ohio, and for clean energy advocates and their supporters. Through this one case, Ohio is poised to increase the amount of CHP/WHR in the state by 46%.
In the case the Ohio Environmental Council reviewed AEP’s proposed resource and rate plan, identified gaps, conducted discovery upon the company, prepared an aggressive case arguing for the inclusion of CHP/WHR resources. The OEC then began direct negotiation with the company, working to incorporate CHP and WHR into a global settlement for the case. The OEC also worked directly with other stakeholders to incorporate CHP/WHR goals and objectives into the negotiation efforts by the Ohio Manufacturing Association – who was a critical partner in pushing the CHP/WHR language with other parties to the case.
This achievement was made possible through legal action and staff and stakeholder engagement with fellow environmental organizations and the manufacturing community. Now this important step forward must be secured and finalized through a new action at the Commission. Soon, the OEC will begin work with AEP and manufacturing stakeholders to build an effective mechanism to secure this new power source from the marketplace, and achieve essential cost recovery.
Similarly, in Duke Energy-Ohio’s three year rate case, the company’s recent stipulation also contained a provision that moves Ohio steps closer to CHP reality. In that stipulation, Duke agreed to work with OEC to find and evaluate CHP potential in the Company’s Cincinnati service territory. The results will be an integral part of Duke’s 2012 Long Term Forecast filing.
In 2012, a wide swath of southern Ohio will be positioned to reap the environmental and economic benefits of clean energy. This success was made possible through committed and sustained action at the PUCO.