Renewable Energy Incentives Workshop

Transcription

1 Renewable Energy Incentives Workshop What energy incentives are available to businesses in the region? Photo Credit: EEA Clean Energy Results Program Wednesday, June 11, :00 pm - 7:30 pm UMass Lowell Inn and Conference Center 50 Warren Street Lowell, MA

2 Agenda Welcome Beverly Woods, Executive Director Northern Middlesex Council of Governments Project Overview and Introductions Jay Donovan, Assistant Director Northern Middlesex Council of Governments Renewable Energy Financing and Economics Sean Robertson, Director Bostonia Partners MassDevelopment Lending Programs Rebecca Sullivan, Senior Vice President of Institutional Finance Massachusetts Development Finance Agency Renewable Heating and Cooling Alternatives Bram Claeys, Deputy Director, Renewables Division Massachusetts Department of Energy Resources (DOER) Combined Heat and Power (CHP) Incentives Dinesh Patel, Principal Engineer National Grid Thermal Heat Recovery Solutions and Sustainable Gas Efficiency Measures David Gaudet, Senior Energy Engineer National Grid Questions and Answers Adjournment

3 Renewable Energy Financing and Economics Spring 2014

4 Overview Bostonia Group Overview Renewable Energy Financing Basics Investment Demand for Solar Key Drivers of Renewable Energy Economics Federal Incentives State Incentives Other State Incentives Case Study 10MW Solar Installation Conclusions 2

5 Bostonia Group - Overview Bostonia Group (Bostonia) has completed over $10 billion of transactions in real estate, energy, and contract finance since The firm consistently ranks in the top ten among all banks for U.S. for domestic private placements. Bostonia Partners, the investment banking arm of Bostonia Group, specializes in financing federal, corporate, and institutional projects in energy and real estate. Bostonia Global Securities, the broker/dealer arm of Bostonia Group, provides direct access to institutional investors through daily activity in the capital markets. Bostonia works closely with clients to devise the most appropriate execution strategy for their capital needs and is an industry leader in the following areas: Energy Finance Project Finance Public Finance Federal Contract Finance Commercial Real Estate 3

6 Renewable Energy Financing Basics Renewable Energy financing is project finance. Cash flow driven Non-recourse Projects are capital intensive (low cash flows vs. high project costs) with important requirements. Investment grade developer and Power Purchase Agreement counterparty Large projects required to justify tax equity structure / achieve economies of scale Proven Technologies Capital stack typically consist of various sources. Debt (supported by PPA revenue and contracted RECs) Tax equity Sponsor equity 4

7 Investment Demand for Solar Solar PV is a high growth, stable, low risk, and high yield asset class producing reliable cash flows for 25+ years. PV Solar projects have minimal operational and resource risk Performance guarantees/other credit enhancement is common Installation costs have fallen from over $5-$6/Watt in 2009 to approximately $2-$3/Watt today. Although costs have been greatly reduced, financing is key to sustained PV growth. Relies on monetization of Tax benefits for projects to be economic Tax advantaged transaction structures are complex with high transaction costs Significant demand for Tax Equity (TE) with limited supply established investors; $2.8 Billion in 2012, down from $6B in 2011 TE scarcity has led to flight to quality and size (typically only look at best of the best projects >20MW) Very high cost of capital 5

8 Key Drivers of Renewable Energy Economics Generation Market with electricity prices to support Power Purchase Agreement at grid parity with or without escalators Renewable Portfolio Standard Renewable Energy Credits (RECs) Federal and State Tax Incentives RPS Policies Average Price per kwh 6

9 Federal Incentives Business Energy Investment Tax Credit (ITC) Applicable to commercial RE installations. The credit is equal to 30% of expenditures, with no maximum credit. Systems must be placed in service on or before December 31, At this time, systems placed in service after this date will qualify for a 10% ITC. Personal Tax Credit Applicable to residential RE installations. The credit is equal to 30% of expenditures, with no maximum credit. Systems must be placed in service on or before December 31, Modified Accelerated Cost-Recovery System (MACRS) Businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property, ranging from three to 50 years, over which the property may be depreciated. A number of renewable energy technologies are classified as five-year property. 7

10 State Incentives MA Solar Renewable Energy Credits (SREC II) Market-based incentive program designed to support residential, commercial, public, and non-profit entities in developing new solar photovoltaic capacity across the Commonwealth. The DOER is currently in the process of transitioning from the SREC-I program to a new SREC-II program that will allow a total solar capacity of 1,600 MW DC to produce SRECs. Project eligibility: Have a capacity of 6 MW DC or less per parcel of land. Be interconnected to the distribution system in the Commonwealth of Massachusetts, which includes municipal light districts. Use some generation on-site and be interconnected to the utility grid. Have a Commercial Operation Date of January 1, 2013 or later. Net Metering Program In Massachusetts, the state's investor-owned utilities must offer net metering. Municipal utilities are not obligated to offer net metering, but they may do so voluntarily. 3 Classes of net metering facilities, based on size of generating capacity: Class 1 (up to 60 kw), Class 2 (60kW to 1MW), Class 3 (1 2MW). Municipal or Government net metering facility (Class 2 or 3) up to 10MW. Must be owned by entity, or use all of the facility s output. 8

11 Other State Incentives Utility Rebate Programs MuniHELPS Offered by 17 Utilities through the MMWEC (Residential Energy Efficiency): rebate varies Chicopee Electric Light Residential Solar Rebate Program: $.50/W up to $2,500 Concord Municipal Light Plant Residential Solar Rebate Program: $625/kW up to $3,125 Hudson Light & Power - Photovoltaic Incentive Program (Commercial + Res): $1/W up to $5,000 (Res) and $10,000 (Comm) Marblehead Municipal Light Department Residential Solar Rebate Program: Varies Reading Municipal Light Department - Business Energy Efficiency Rebate: Up to $50,000 Reading Municipal Light Department - Residential Renewable Rebate: $1/W up to $5,000 Taunton Municipal Lighting Plant - Residential PV Rebate Program: $2/W up to $5,000 9

12 Case Study 10MW Solar Installation Development Assumptions: Project Size: 10MW EPC Cost per Watt: $2.50 Additional Development Costs: Interconnection, Site Work, Legal Fees, Financing Fees, Construction Interest, Independent Engineer PPA Price: $0.10/KwH SREC Price: $150/MwH x 9 years Operations Expenses: O&M, Insurance, Property Tax, Administration Financing Assumptions: 85% Construction Loan to EPC Cost 10 Year Senior Loan, LIBOR swap + 350bps at a 1.35x Debt Service Coverage Ratio (48% of Capital Stack) 10 Year Debt Service and O&M working capital facility Tax Equity investment for 99% of benefits (ITC + MACRS Depreciation) and 2% preferred cash return over 5 years (40% of Capital Stack). Buyout is sized to approximately 10% of initial investment. Long Term Equity 20 year hurdle rate of 15% IRR (12% of Capital Stack) 10

13 Case Study 10MW Solar Installation Capital Stack Across Stages of Development Development Stages of a Typical 10MW Project Shovel Ready COD $200,000 $26,250,000 $28,700,000 $30,000,000 Tax Equity $117,194 $25,000,000 $20,000,000 Project Equity $4,251,224 Tax Equity $11,719,393 $15,000,000 Project Equity $2,860,064 $10,000,000 Construction Loan $21,887,500 $5,000,000 85% of EPC Cost Term Debt $14,091,612 Project Equity $200,000 $- Early Development (Cash) Construction Stage (Cash) Placed in Service (Cash) 11

14 Conclusions Renewable Energy development on a large scale requires the consideration of many competing elements. Arranging financing for RE from concept to commercial operation is a multi-step process. Important to assemble a well-rounded team early in the process including the financing. Important to understand federal and state incentives, portfolio standards, and energy prices in order to determine complete revenue picture. Projects need champions, and stakeholder support. 12

15 Sean F. Robertson Director Office This information has been prepared solely for information purposes and is not an offer to buy or sell or a solicitation of an offer to buy or sell any security or instrument or to participate in any trading strategy. No representation or warranty can be given with respect to the accuracy or completeness of the information, or that any future offer of securities, if any, will conform to the terms hereof. Bostonia disclaims any and all liability relating to this information, including without limitation, any express or implied representations or warranties for, statements contained in, and omissions from, this information. 13

16 MassDevelopment Energy Finance Programs June 11, 2014

17 Massachusetts Development Finance Agency Self-supported quasi-public finance and development agency. Promotes capital investment and economic development in Massachusetts by providing financing and development solutions. Formed in 1998 under Chapter 23G (Massachusetts General Laws) by the merger of Massachusetts Industrial Finance Agency and Government Land Bank. Merged with Mass HEFA in Primary tools Tax-exempt and taxable bonds (99 issues totaling $2.3 billion in FY 2013) Loans and guarantees (61 transactions totaling $40.9 million in FY 2013) Real estate planning and development services MassDevelopment

18 Energy Financing Programs Offer three primary lending programs: Green Loan Fund for Not For Profits and Businesses Tax Exempt Bonds for Not For Profits and Manufacturers Property Assessed Clean Energy Bonds (PACE) Coming soon MassDevelopment

19 What types of projects can be financed under these programs? Energy efficiency projects such as HVAC replacements or improvements, windows, insulation, lighting, energy control systems, chillers, boilers, hot water heaters and building enclosures/envelope modernization. Renewable energy projects such as solar, wind, geothermal and/or other renewable energy sources MassDevelopment

20 Green Loan Program MassDevelopment wants to help not for profits and businesses optimize energy efficiency and reduce energy costs. Loan program bridges the gap between energy efficiency or renewable energy project costs and the rebates or subsidies provided by utility companies and state/federal incentive programs such as MassSave. Loans are available in the amounts of $50,000 to $500,000 and are net of project-related rebates or subsidies. Interest rates currently range between 4.0% - 5.0% and term usually follows useful life of assets being financed MassDevelopment

21 Green Loan Program The application is a two step process: The borrower must file an application with a utility for an energy efficient program rebate and/or other federal or state incentive program. Utility energy efficiency incentive programs are available through the Mass Save web site ( Upon approval by a program, a loan application is filed with MassDevelopment MassDevelopment

22 Green Loan Program Case Study Lawrence-Solar LLC Multi-tenanted adjacent buildings, one a retail strip mall and the other a mill building, located in Lawrence. Owned by Pacific VIII Realty Trust. Installing 475kW solar arrays on both roofs which will reduce overall electricity expenses for the buildings, enabling the borrower to pass the savings on to the companies in the buildings. MassDevelopment providing $100K Green Loan for seven years at 4.50%. Project also received Solar Renewable Energy Credits ( SRECs ) from the Commonwealth s Department of Energy Resources ( DOER ) MassDevelopment

23 Green Loan Program Case Study Community Music School of Springfield Not for profit music education school in downtown Springfield. Installed energy efficiency improvements including a new hybrid HVAC system that includes equipment housed on a rooftop mechanical room and a new distribution system that integrates high efficiency geothermal/solar thermal and condensing boiler technologies. MassDevelopment providing $300K Green Loan for 12 years with a 5 year interest rate lock at 4.50%. Project also received Incentive dollars from WMECO/Columbia Gas and DOER MassDevelopment

24 Tax Exempt Bonds/Leases for Not for Profits and Manufacturers Tax-exempt bonds and leases are usually the lowest interest rate option for energy efficiency projects and renewable energy projects because they are exempt from federal taxes and in certain cases state taxes. Tax-exempt bonds can be sold in the capital markets or directly to your bank or another financial institution. Most renewable energy projects using tax-exempt bonds are financed by a bank or a leasing company. Interest rates run about 70% of conventional rates and currently range from 3%-4% depending on credit and length of interest rate lock. MassDevelopment serves as a conduit issuer, or intermediary, as these projects need a governmental sponsor to qualify for the lower tax-exempt rates MassDevelopment

25 Tax-Exempt Bonds Case Study Malden Housing Authority MassDevelopment issued $11.2 million of tax-exempt bonds that were directly purchased by East Boston Savings Bank at a 4.10% fixed interest rate with a 20 year term and amortization. Project included energy and water conservation improvements to several multi-tenanted residential buildings. An Energy Services Company ( ESCO ), Siemens, guaranteed the utility savings for electric/gas and water/sewer over 20 years MassDevelopment

26 Property Assessed Clean Energy Bonds (PACE) Coming Soon Currently under review by the Senate as docket No Allows commercial property owners to pay for energy efficiency upgrades and on-site renewable energy projects through low cost bond financing. MassDevelopment issues bonds to fund 100% of project costs, and is repaid with a special assessment or betterment over a term of up to 20 years. The PACE Program must be adopted by the local municipality. Companies may work with their own bank or funding source or look to MassDevelopment to assist in arranging the financing MassDevelopment

27 Property Assessed Clean Energy Bonds (PACE) Who Can Use PACE? Benefits of PACE? Large or small commercial Industrial Multi-family housing (5+ units) Access to new financing sources Financing travels with property ownership Agricultural Not for profits Financing can not be accelerated Can be non-recourse MassDevelopment

28 Property Assessed Clean Energy Bonds (PACE) Case Study Connecticut Clean Energy and Finance Investment Authority (CEFIA) Program that works very similarly to the proposed Massachusetts PACE program. Focuses on energy efficiency and renewable energy projects. Completed 20 transactions to date ranging from $150,000 to several million dollars. Types of users include multi-family, multi-tenant, office, shopping plazas, manufacturers, not for profits, a hardware store, farm store and a lumberyard MassDevelopment

29 MassDevelopment Contact: Rebecca Sullivan, Senior Vice President, Institutional Finance MassDevelopment 99 High Street Boston, MA MassDevelopment

30 Creating A Cleaner Energy Future For the Commonwealth Renewable Heating & Cooling Renewable Energy Incentives Workshop, Lowell, MA - June 11, 2014

31 Creating A Greener Energy Future For the Commonwealth

32 Creating A Greener Energy Future For the Commonwealth

33 Large thermal energy users in MA Source: MassDEP, 2012 Creating A Greener Energy Future For the Commonwealth

34 Renewable Heating & Cooling Using energy in sunlight, underground, air, biomass, biogas, biofuels for Space heating/cooling Domestic hot water Process heating/chilling Market opportunities overcoming challenges Fuel cost savings, less energy imports, business creation, greenhouse gas emission reduction, improved air quality If done right Creating A Greener Energy Future For the Commonwealth

35 Creating A Greener Energy Future For the Commonwealth

36 Barriers to RE Heating & Cooling High upfront costs Compared to conventional appliances Especially for high performing systems Conventional HVAC sector not familiar with renewable technologies Lack of adequately trained personnel Poor public awareness 7 Creating A Greener Energy Future For the Commonwealth

37 Renewable Thermal in Massachusetts Clean Energy & Climate Plan 2020 goals Pilot programs (DOER/MassCEC) to kick-start market ($32M) Demonstrate Communicate Multi-pronged market strategy Upfront and performance based financing Capacity Building & Communication Regulation Creating A Greener Energy Future For the Commonwealth

38 Commercial Building Heating System Conversion Source: DOER, Renewable Heating and Cooling, Opportunity and Impacts Report (March 2012) Creating A Greener Energy Future For the Commonwealth

39 RE Thermal Grant Programs Tech Amount Source Admin Closed Biomass Boilers & Distribution (Sandri) BIO $ 4,800,000 ARRA DOER Woodstove change-out BIO $ 1,200,000 RTF, DEP, ACP MassCEC Outdoor Hydronic Heater change out BIO $ 150,000 ACP MassCEC Residential wood pellet boiler BIO $ 500,000 ACP MassCEC Home MPG BIO, ASHP (TBD) DOE, ACP DOER Subtotal $ 6,650,000 Ongoing Commonwealth Solar Hot Water SOL $ 10,000,000 RTF MassCEC Commercial Renewable Thermal & District Energy BIO, GSHP $ 4,300,000 ACP MassCEC Residential Heat Pumps ASHP, GSHP $ 800,000 ACP MassCEC SAPHIRE admin. $ 715,000 DOE DOER SAPHIRE partim public housing ALL $ 2,000,000 ACP, QECB DHCD SAPHIRE partim schools ALL $ 1,700,000 ACP, QECB DOER State Pilot Projects ALL $ 2,000,000 ACP DOER Reduce Fuel Oil and Electric Heating in State and Municipal Buildings (LBE) ALL $ 2,500,000 ACP DOER Solar Water Heating and Wood Pellet Stoves for LIHEAP Households SOL, BIO $ 1,000,000 ACP DOER Renewable Thermal Business Investment Financing ALL $ 6,000,000 ACP DOER UMass Amherst Extension ALL $ 4,000,000 ACP DOER Waste water heat recovery WSHP $ 1,000,000 ACP DOER Subtotal $ 36,015,000 Creating A Greener Energy Future For the Commonwealth

40 Commonwealth Solar Hot Water Administered by MassCEC For both residential & commercial buildings Commercial buildings: Feasibility studies (max. $5,000) Construction grants Financing Creating A Greener Energy Future For the Commonwealth

41 Commercial RE Thermal & District Energy MassCEC/DOER pilot for feasibility/design & construction of: Biomass heating & ground source heat pumps District energy Targets: Public, private, vocational and regional schools serving any subset of grades K-12 Municipal buildings Greenhouses Not-for-profit organizations Deadline 9/30/ Creating A Greener Energy Future For the Commonwealth

42 RE Thermal Business Investment Financing DOER administered program for infrastructure development Address the lack of capacity in manufacturing, distribution, quality assurance, communication Across portfolio of technologies First round of $3.5M to 9 projects Creating A Greener Energy Future For the Commonwealth

43 Business Investment Financing Creating A Greener Energy Future For the Commonwealth

44 Contact Bram Claeys Deputy Director, Renewable & Alternative Energy MA Department of Energy Resources (617) Creating A Greener Energy Future For the Commonwealth

45 Renewable Energy Workshop June 11, 2014 MA and RI Utility Incentives for ERV Basics Combined Heat and Power (CHP) Presenter: Dinesh Patel 1

46 Sustainability has many names CHP is one of them Renewable sources like Wind, Solar, Biogas, etc. Demand Side Management Energy Efficiency Distributed generation Green House Gas Reduction Initiative Global Warming/ Climate Change Efforts Low Global Warming refrigerants Initiative Net Zero Building 2

47 How to decide on solution? Space constraints Acceptable payback period Location constraints Public acceptance/ permitting And many more factors 3

48 Renewable Vs. CHP CHP is one of the solution in some cases where Renewable Energy Projects are not feasible because of: Space Limitation Longer Payback Period Need to generate at all times of the day 4

49 What is CHP? Combined Heat and Power (CHP) is the sequential or simultaneous production of two different forms of useful energy electrical and thermal Single primary energy source Single, integrated system 5

50 CHP vs. SHP (Separate Heat and Power) 6

51 Components of CHP CHP systems consist of an integrated package Prime mover engine, gas turbine, steam turbine or fuel cell Generator Heat recovery system - water, steam, absorber, etc. Electrical interconnections to Utility Power Grid 7 7

52 CHP An Important U.S. Resource CHP is also Green 84 GW of installed CHP at almost 4,000 industrial and commercial facilities (2011). About 10% of U.S. power generating capacity. Avoids more than 1.8 quadrillion Btus of fuel consumption annually (10% of total residential fuel consumption) Avoids 241 million metric tons of CO 2 as compared to traditional separate production CO 2 reduction equivalent to removing 42 million cars from the road CO 2 reduction equivalent to eliminating Forty Three 1,000 MW coal power plants Source: ICF B. Hedman 8

53 General rule of Thumb for CHP Payback Analysis, Varying the Price of Natural Gas & Electricity Engines Sizes for Electrical Load Electricity Price, $/kwh Natural Gas Price, $/MMBtu $5 $6 $7 $8 $9 $10 $11 $12 $13 $14 $ $ $ $ $ $ $ $ $ $ Greater than 5-year payback Less than 5-year payback *From GE Presentation; The Business Case for CHP, 5/3/12 9 9

54 Energy Efficiency Opportunities for Natural Gas Customers Dave Gaudet Lead Engineer C & I Efficiency Programs

55 Agenda Energy Efficiency Opportunities for Small/Mid Commercial Facilities Energy Efficiency Opportunities for Large Commercial and Industrial What s new & upcoming for energy efficient gas technologies Leveraging Utility Incentives for Efficiency Improvements

56 Controls Energy Star Programmable Thermostats A thermostat that is able to be programmed to set back temperature to a low setting during times of low use. 3

57 Boiler Reset Controls On/Off or Modulating Control for one or more Boilers As Outdoor Air Temp changes, so does Hot Water Supply Temp 4

58 Heating Equipment Infared Heaters Low intensity tubular heaters generate radiant heat like the sun and is absorbed by objects, such as floors and equipment, this heat then is re-radiated back out to the surrounding area Efficiencies to 90% Extremely comfortable heat for warehouses, manufacturing space, garages etc 5

59 Heating Equipment Boilers Steam boilers produce steam for heat or process. 82%-85% AFUE is considered high Efficiency for a steam boiler 6

60 Heating Equipment Hydronic boilers are hot water boilers most typical boiler type 85% AFUE/Thermal efficiency is considered a high efficient boiler 7

61 Heating Equipment Condensing Boilers How does a condensing boiler work? Very similar to a hydronic boiler except it is designed capture even more heat from the flue gases. The flue gases give up their latent heat, forming condensate. Flue Gas temperature of Condensing boiler is degrees Flue Gas temperature of standard hydronic boiler is 250 to 400 degrees High efficiency condensing boilers are 90 % or higher 8

62 9 Condensing Boilers

63 10 Condensing boiler efficiency

64 Water Heaters On Demand Indirect Condensing Energy Star 11

65 Kitchen Equipment Fryers Ovens Steamers Spray Valve Griddles 12

66 Incentives for high efficiency equipment Furnaces, up to $600/unit Condensing unit heaters, up to $750/unit Infrared heaters, up to $750/unit Condensing boilers, up to $10,000/unit Water Heaters, up to $800/unit Controls, up to $225/unit Kitchen Equipment, up to $1000/unit Visit for more detail 13

67 Energy Efficiency Opportunities for Large Commercial and Industrial Customers Steam Boiler Terminology Steam Boiler Efficiencies Common Steam Generation & Distribution Systems Popular Energy Efficiency Measures Natural Gas Incentive Programs & Initiatives 14

68 Common Steam Generation Equipment Boiler Types Cast Iron Sectional Fire-Tube Water-Tube Steam Generator 15

69 Cast Iron Sectional Boiler In cast iron boilers, the boiler water is held in cast iron sections that are bolted together. Exhaust gases past around the sections to conduct heat transfer. Since the sections are made cast iron, they typically cannot withstand higher internal pressure. 16

70 Fire-Tube Boiler In firetube boilers, the combustion gases pass inside boiler tubes, and heat is transferred to water on the shell side. Firetube boilers are often characterized by their number of passes, referring to the number of times the combustion (or flue) gases flow the length of the pressure vessel. 17

71 Water-Tube Boiler In watertube boilers, boiler water passes through the tubes while the exhaust gases remain in the shell side, passing over the tube surfaces. Since tubes can typically withstand higher internal pressure than the large chamber shell in a firetube, watertube boilers are used where high steam pressures (as high as 3,000 psi) are required. (Power plants and large central plants.) 18

72 Steam Generator Steam generators are like boilers in that they are fired by gas and produce steam, but they are unlike boilers in that they do not have large pressure vessels and are made of light-weight materials. The fact that they do not have pressure vessels means that in most locations they do NOT require a boiler operator (always confirm with local codes). The fact that they are made out of light weight materials means they perform well at part loads and respond quickly to changes in loads. This greatly increases part load operating efficiency. 19

73 Popular Energy Efficiency Measures Steam Energy Efficiency Measures Pipe Leaks Pipe Insulation Reduce Steam Pressure Steam Traps Combustion Controls Blowdown Heat Recovery Boiler Stack Economizer Flash Steam Heat Recovery 20

74 Pipe Leaks Increases Boiler Capacity Reduces Fuel Usage Reduces City Water Make-Up Increases Personnel Safety 21

75 Pipe Insulation Increases Boiler Capacity Reduces Fuel Usage Improves Heat Distribution Increases Personnel Safety 22

76 Pipe Insulation Fiberglass 1,000 o F Mineral Wool 1,800 o F Rock Wool 1,200 o F Calcium Silicate 23 1,200 o F

77 24 Pipe Insulation

78 25 Pipe Insulation

79 26 Pipe Insulation

80 Steam Traps Increase Boiler Capacity Reduce Fuel Usage Prevent Condensate Pressurization Reduce City Water Make-Up Reduce Chemical Treatment 27

81 Steam Traps Inverted Bucket Float & Thermostatic Disc Thermostatic 28

82 Steam Traps DOE research has found in steam systems that have not been maintained for 3 to 5 years, between 15% to 30% of the installed steam traps may have failed These failures allows live steam to escape into the condensate return system. Steam in condensate loops causes overheating in adjacent rooms. In a recent steam trap audit of a RI school, we found that 54% of the facilities steam traps were leaking or blowing by. The payback to install all the measures was under a year. 29

83 Steam Traps Steam Trap Maintenance Results in Savings of More Than $100,000! A steam trap assessment of three VA hospitals located in Providence, RI, Brockton, MA, and West Roxbury, MA was conducted with help of FEMP & the SAVEnergy Program. The facilities are served by 15, 40, and 80 psig steam lines. The Providence system alone includes approximately 1,100 steam traps. The assessment targeted steam trap performance and the value of steam losses from malfunctioning traps. The malfunctioning traps were designated for either repair or replacement. Included in this assessment was a training program on steam trap testing. The cost of the initial steam trap audit was $25,000 for the three facilities. Estimated energy savings totaled $104,000. The cost of repair and replacement traps was about $10,000. Thus, the cost savings of $104,000 would pay for the implementation costs of $35,000 in about 4 months. 30

84 Combustion Controls Optimizes Fuel-to-Air Ratio Increases Combustion Efficiency Maximum Efficiency at all Loads Minimizes Short-Cycling 31

85 Combustion Controls Linkage Controls are common on modulating burners. One motor usually positions the fuel valves and combustion air damper via fixed position cams and rods. Burners typically set-up for stable Light- Off ratio and efficient HI-Fire position, but lack a LO- Fire position and efficient part-load positions. Parallel Positioning Controls use Direct-Coupled Actuators (DCA) on the fuel valve(s) and air damper individually receiving directions from a Programmable Logic Controller (PLC) to position them at most efficient points to maximize efficiency at up to 24 points on the burner s combustion curve. O 2 Trim Controls use Parallel Positioning Controls with a continuous feedback signal from an oxygen sensor in the exhaust gas to continually and automatically minimize excess oxygen. 32

86 33 Combustion Controls

87 34 Combustion Controls

88 Combustion Controls Fire Tube Boiler with linkage controls 35

89 Combustion Controls Fire Tube boiler with linkage less controls 36

90 Combustion Controls Modulating Burners Only Payback usually 1-3 Years 37

91 Blowdown Heat Recovery Minimize City Make-Up Water Increase Steam System Efficiency Reduce Fuel Usage 38

92 Blowdown Heat Recovery Continuous Steam Boiler Surface-Level Blowdown System 39

93 Blowdown Heat Recovery Blowdown rates are typically 4%-8% of total steam generated, but can be as high as 10% where incoming water has high solids content. If a 150 psig steam boiler generates 10,000 PPH of steam at a blowdown rate of 10%, the heat recovery potential is ~220,000 Btu/H. At $12/MMBtu and 80% combustion efficiency, the potential savings is ~$25,200/Y. 40

94 41 Blowdown Heat Recovery

95 Boiler Stack Economizer Increase Steam System Efficiency Reduce Fuel Usage 42

96 Boiler Stack Economizer Non-Condensing Stack Economizer Condensing Stack Economizer 43

97 Boiler Stack Economizer Economizers Pre-Heat Feedwater & Combustion Air Dependent on Exhaust Gas Temperature, Feedwater Flowrate & Boiler Operating Hours Exhaust Gases typically exit from 450 o F-650 o F Rule-of-Thumb 1% Increase for each 40 o F Decrease Fuel Usage Reduction of 4%-10% Common Paybacks of ~0.5-3 Years on Economizers 44

98 45 Boiler Stack Economizer

99 Flash Steam Heat Recovery Increase Steam System Efficiency Reduce Fuel Usage 46

100 Flash Steam Heat Recovery Condensate & Deaerator Boiler Surface & Mud-Drum Blowdown Tank Vents 47

101 48 Flash Steam Heat Recovery

102 What s New & Exciting in the Natural Gas Energy Efficiency world Advanced High Efficiency Boiler Maximizing steam generation efficiency for commercial and industrial boilers Up to 95% fuel to steam efficiency with novel heat and water recovery device 15% carbon emission reduction Ultra low NO x (sub 9 ppmv) Target: < 2 year payback Multiple field tests underway 49

103 Transport Membrane Condenser (TMC) Tubes with nanoporous membrane that selectively removes water through low-pressure-drop capillary condensation Simultaneously captures waste heat and pure water (from combustion products) Applicable to wide range of applications Industrial and commercial boilers Steam power plants, engines and turbines Industrial drying and dewatering processes 50

104 Ultra-High Efficiency Boiler Advanced Heat Recovery System at RBC Over 15% savings in steam production costs Up to 20% less make-up water consumed Lower NO x and CO 2 emissions 51

105 Ultra-High Efficiency Boiler Advanced Heat Recovery System at Baxter Healthcare 13-15% energy and carbon savings Total efficiency of 93-95% Over $35,000 annual savings at Baxter Over $80,000 at higher hours & firing rates Over 250,000 gallons annual water savings Cannon Boiler Works 52

106 Commercial Food Service Equipment Saving energy First Boilerless Gas- Fired Steamer Improving product quality Increasing foodservice productivity High-Efficiency Wok Burner High Efficiency Pizza Ovens & Combi-Ovens High-Efficiency Low Oil Volume Fryers 53

107 Energy Efficiency Incentives Available from your Program Administrator Prescriptive incentives are designed to cover approximately 75% of incremental cost Retrofit incentives have increased, now up to 50% of project cost Combustion Controls Heat Recovery Insulation 54

108 MA Commercial Gas HEHE Program incentives for 2014 List of qualifying equipment is at 55

109 2010 MA Statewide Commercial Kitchen Incentives High-Efficiency Fryers ENERGY STAR $1,000 High-Efficiency Large Vat $1,000 ENERGY STAR Food Steamer $1,000 ENERGY STAR Griddles $500 ENERGY STAR Convection Oven $1000 High Efficiency Conveyor, Rack, & Combi Ovens $1000 High Efficiency Pre-Rinse Spray Valve $25 On Demand H2O $700 Condensing H20 $500 Go to for a list of qualifying models 56

110 Custom Measures Retrofit incentives have increased, now up to 50% of project cost Combustion Controls Heat Recovery Insulation 57

111 In Summary Visit for information on energy efficiency incentives Contact your local program administrator early and often for potential projects 58

112 QUESTIONS??? Dave Gaudet,

113 CHP as an Electric Energy Efficiency Measure In MA Green Communities Act of 2008 now recognizes CHP projects as an Energy Efficiency Measure eligible for Incentive Funding by Program Administrators ( Utilities plus Cape Light Compact ) RI Least Cost Procurement Statute requires that a CHP project qualifies for incentive if passes BCR test and other requirements. 10

114 MA CHP Program Incentives and Requirements Tier 1 Systems smaller than 150 kw: $750 per kw Over 150 kw: Up to $750 per kw Incentive offered will consider the overall added value of the CHP project to the PA s EE portfolio considering factors such as the overall building energy efficiency, BCR ratio and project risk. Max Incentive up to 50% of Installed Cost May be subject to Program Administrator Budget Limitations Requirements Identify EE Measures Correctly sized CHP based on thermal and electrical loads 11

115 MA CHP Program Incentives Tier 2 Systems smaller than 150 kw: up to $1000 per kw Over 150 kw: Up to $950 per kw Incentive offered will consider the overall added value of the CHP project to the PA s EE portfolio considering factors such as the overall building energy efficiency, BCR ratio and project risk. Max Incentive up to 50% of Installed Cost May be subject to Program Administrator Budget Limitations Requirements Identify EE Measures using ASHRAE Level 1 Audit Annual Efficiency > 60% Correctly sized CHP based on thermal and electrical loads assuming that EE measures with less than 3 year payback will be implemented Agree to implement EE measures with less than 3 year payback within 18 months 12

116 MA CHP Program Incentives Tier 3 Systems smaller than 150 kw: up to $1200 per kw Over 150 kw: Up to $1100 per kw Incentive offered will consider the overall added value of the CHP project to the PA s EE portfolio considering factors such as the overall building energy efficiency, BCR ratio and project risk. Max Incentive up to 50% of Installed Cost May be subject to Program Administrator Budget Limitations Requirements Identify EE Measures using ASHRAE Level 2 Audit Annual Efficiency > 65% Agree to reduce site energy use by more than 10% within 3 years Correctly sized CHP based on thermal and electrical loads assuming that EE measures with less than 3 year payback will be implemented Agree to implement EE measures with less than 3 year payback within 18 months 13

117 RI Incentive Levels $900/Net kw for Annual efficiency >55% and <60% $1000/Net kw for Annual efficiency >60% If reduce the site energy use at least 5% or identified by TA study 1) $1125/kW for projects <60% and greater than 55% annual efficiency 2) $1250/kW for projects >60% annual efficiency (Thermal Load following facility will have reduce 5% of thermal energy use. Electric Load following system will have to reduce 5% of the electrical energy use) Commitments made for energy efficiency projects in last 5 Years can be counted towards 5% 14

118 Other Resources Mass Save Website CHP Guidebook (Google: Mass Save CHP Guidebook) CHP Technical Study Requirements Interconnection to Utility - NGrid Website Contact John Rathbun upcoming April 24th DG Interconnection seminar in Worcester. Registration Site: Financing Contact your account representative 15

119 Presenter Information Dinesh Patel M.S(Mech), PE, CEM, CEA Principal Engineer Technical Strategy and Policy nationalgrid Also send to 16