MARCH 2017 • Volume 13 • Issue 3 9 CHP IN NEW YORK: A PRIMER HARNESSING THE POWER OF GEOTHERMAL BY NICHOLAS A. GIANNASCA New York State is at the forefront of encouraging the development of distributed energy resources (“DERs”). Through its Reforming the Energy Vision (“REV”) and Clean Energy Standard (“CES”) proceedings, market and regulatory structures are being established for a new generation of DERs such as distributed generation, energy efficiency measures, and demand response. One form of DER--cogeneration or combined heat and power (“CHP”)--has a long history in New York and stands to benefit from additional regulatory and tax incentives to spur further growth. CHP refers generally to a system that utilizes a single fuel input (typically natural gas) to drive an engine and electric generator to produce both heat and electricity. The heat product of this process can be harnessed for space heating or for the production of cool air (through the use of an absorption chiller), and the electrical output can be used to serve load located at the site of the CHP facility (e.g., the basement of a multi-story commercial or residential building) and/ or sold into the wholesale electric market. CHP facilities operate with enhanced efficiency as compared to more traditional electric/heat facilities because a single fuel process is used to produce two useful products. Depending on the size and operating characteristics of the CHP facility (e.g., ramp rate), the facility could be eligible for additional revenue from participating in ancillary service and demand response markets administered by the NYISO or the local utility. Additional revenue may be realized through “net metering,” under which excess electric generation may be credited to the CHP owner at a rate equal to the local utility’s retail tariff rate, but such programs are under intense scrutiny in New York and may be replaced. Several factors are driving the development of CHP in New York, including the desire on the part of property owners and managers to have a reliable and resilient source of back-up power in the event of a catastrophic interruption in utility service (e.g., stemming from a severe storm). In considering whether CHP is the right DER application for its premises, the property manager/owner should consider several project parameters. CHP facilities can be financed through direct ownership, which requires a capital outlay by the property owner/manager and may have adverse balance sheet consequences, or through a third-party using a long-term power purchase agreement (“PPA”) or energy services agreement (“ESA”) structure. Under the PPA/ESA arrangement, the property owner leases its premises to a company that will construct and install the CHP facility on the premises, and will own and maintain the CHP facility. The CHP owner will then operate the CHP and sell electricity and thermal energy (e.g., heat) to the property owner. The PPA/ ESA structure may be more favorable for the property owner as a balance sheet operating lease, and not a capital lease. Whether using the direct ownership or PPA/ESA model, numerous federal and state incentives, including tax incentives and grants, may be available to offset in part the cost of the CHP facility. The process for installing a CHP facility can be complex. Numerous permits and approvals must be procured, including possible emissions permits, and installation time periods can be delayed by equipment availability and utility interconnection procedures. Property owners/managers will need to weigh the benefits of CHP against these considerations. Fortunately, competent counsel and establishing strong relationships with utility CHP personnel will make the process less daunting. New York is on the verge of a significant expansion of CHP development, and wise property owners/managers would do well to consider this efficient and resilient technology. Nicholas A. Giannasca is a partner with the Energy Group of Davis Wright Tremaine LLP, a nationwide law firm. He has practiced for over 28 years, primarily in New York, and has advised numerous commercial and residential property owners and managers, including an NFL franchise, on transactional and regulatory aspects of CHP. BY ZACHARY FINK ZBF Geothermal, LLC Imagine this: Someone came up to you and said that there was a treasure buried in the ground. Would you go on that scavenger hunt? Luckily, you won’t have to, because that treasure is all the stored energy from the sun that can be utilized to provide heating, cooling and domestic hot water for your home or business through the utilization of a ground source heat pump. And best of all, we already know how to harness it! The ground stays at a constant temperature throughout the year. Geothermal heating and cooling systems take advantage of this constant temperature primarily through a ground loop. Water circulates through the ground loop to exchange heat between your home or business, the heat pump and the earth. This provides geothermal heating, cooling and domestic hot water production at some of the highest efficiencies that heating and cooling units can operate. Ground source heat pumps can interface with numerous types of distribution systems within a building. System designs can include low temperature baseboard heating, radiant heating, snowmelt, and forced air heating. Throughout New York City, buildings, with the exception of those heated by cast iron radiators and steam heating, are candidates for conversion. Throughout the five boroughs more and more projects are starting to incorporate geothermal heating and cooling systems. Saint Patrick’s Cathedral recently converted its facility to geothermal and utilizes a standing column well for the heat exchanger. Over the years, hundreds of geothermal systems have been installed in other iconic landmarks and buildings through the city. Brooklyn Botanic Garden, Weeksville Heritage Center and Queens Botanic Garden have all converted to geothermal systems that are operating efficiently. Even in midtown Manhattan, installing a geothermal system is possible. New York City, through RISE:NYC, has awarded a grant to help promote resiliency in the Rockaways for small businesses. One of the winning proposals, HOME FREE Safe Space Solutions, plans on including geothermal heat pumps as part of its proposal in addition to solar panels and batteries. This combination would allow the businesses to have basic heating, lighting, security and other communication needs in the event of an extended power outage situation. There are currently numerous initiatives throughout New York State to raise the awareness of geothermal systems. Governor Cuomo recently announced a $15 million rebate program to help promote geothermal technologies throughout New York State. This rebate will allow for a $1,500 per ton rebate for residential systems and a $1,200 per ton rebate of commercial systems. In New York City, Local Law 6 of 2016 takes into account the social cost of carbon emissions and now requires city financed projects that started planning after February 1, 2017, to review the feasibility of a geothermal system over a 20 year lifecycle. Throughout the industry we expect most, if not all, buildings to start going geothermal under this new local law. Zachary Fink can be reached at Zach@ ZBFGeothermal.com.
QB032017
To see the actual publication please follow the link above