Trendspotting: US States Warming up to Renewable Energy Heating and Cooling, Part 2

19 january 2013

New Hampshire, U.S.A. — If states are going to add a heating requirement to their RPS or even allow heat energy to be applicable, monitoring and metering will be key and that can be problematic.

First of all, in the U.S. heat is measured in British Thermal Units (BTUs) whereas electricity is measured in kilowatt-hours (kWh) or megawatt-hours (MWh).

NEWP’s Niebling said that the U.S. and the U.K. are the only places in the world where heat is measured differently than electricity. ‘In the rest of the world, at least outside of the U.K., everybody measures heat in MW- and kW-hours,’ he said. ‘But the simple fact is that both heat and electricity can be measured, can be metered and are measured and metered in the same units,’ added Niebling.  The conversion is a straight kWh to BTU mathematical equation whereas 1 kWh = 3412.141 BTUs.  Plus, said Niebling, ‘heat meters have been around for decades and they are no different than an electricity meter.’ He said in Europe where district heating is in use, heat measurement tools are ubiquitous.

‘[In Europe] The home will have a heat meter and it is measuring the temperature and the flow rate of the water coming into the home and then it is measuring the temperature and the flow rate of the water leaving the home and the delta between the two is the amount of heat energy being used,’ he explained. ‘It is standard, off-the-shelf foolproof stuff,’ he said.

EOS Research’s Ron Gehl, whose company produces monitoring and measurement equipment for thermal energy, echoes that sentiment. ‘The fact of the matter is that it is not very difficult to monitor and measure BTUs.  We’ve been doing it in systems for years and years,’ he said.

Gehl mentions two stumbling blocks on the way to widespread adoption of thermal energy metering and monitoring.  First, is the additional cost for smaller systems.  He said that for larger systems, particularly solar water heating, measurement tools are already included.  ‘The majority of commercial and industrial type systems these days are including BTU monitoring and measurement aspects. It’s not that difficult to do particularly when you look at it being such a tiny proportion of the overall cost of such a system,’ he said.

‘The difficulty comes in coming up with something that is fairly accurate at low enough cost for any old two-panel residential hot water system.  That’s a bit more of a higher threshold to reach as far as making it inexpensive enough for more widespread use,’ he explained.

Heatspring’s Williams who consults on the sales side of solar thermal systems makes another point regarding the cost of residential systems. ‘The cost to monitor it is around $1,000 for Sunreports,’ he said. But ‘in PV, it’s built into the cost, it already comes with the inverter. So it makes selling it difficult because you are trying to sell a residential solar thermal system for $8,000 and then in order to monitor it, it’s another grand.’

Williams said this is one of the ‘catch-22’s’ of solar thermal technology.  It is so cheap already that the additional cost of monitoring seems enormous.

In order to alleviate the additional cost of monitoring smaller systems, some states like Maryland allow ‘modeled output’ rather than metered output to count towards renewable energy goals for systems under a certain size. Gehl thinks that workaround makes sense for now, but he’d rather see the industry figure out how to measure the output and use of small and large systems alike.

‘I think from a consumer perspective it will become increasingly important to know exactly what the output of a system is,’ he said, also pointing out that reliable, measurable numbers will help the industry to gain more credibility.

Gehl would like to see a national standard in place and said that the industry is working toward having one adopted. He believes that once there are nationally recognised standards for measuring and monitoring thermal renewable energy, more widespread use of the technology will result.  He said that the industry is working on creating an ANSI (American National Standards Institute) standard regarding BTU metering. ‘That is something that will need to be more widely recognised,’ he said.  But once it is, ‘at that point in time it’s no different than having a kWh meter on a PV system,’ he said. Gehl expects to see a national standard by the end of the year.

States Making a Difference – New Hampshire, Maryland, and Others

The state of New Hampshire made history this summer by becoming the first state to require utilities to obtain a portion of their renewable energy from thermal energy. The N.H. RPS, which compels the state to get 23.8% of its energy from renewables by 2025, will now require that some of its Class I renewables come from thermal energy ‘including biomass, solar thermal and geothermal projects that commence operation after January 1, 2013, and produce ‘useful thermal energy,’ said Niebling.  Specifically, the law allocates the energy equivalent of 0.2% of total electric load in 2013, increasing each year by that amount to 2.6% by 2025 when the RPS sunsets.

Thermal projects that meet PUC requirements will be able to qualify their energy output (on a straight BTU per MWH conversion basis whereas 3.412 million BTUs equals 1MWh) for renewable energy certificates worth up to $25/MWh in 2013, and increasing each year through 2025.

The thermal provision is structured as a ‘carve-out’ whereby N.H. load serving entities are required to purchase the thermal RECs or pay the $25/MWh alternative compliance payment (ACP).

Niebling offered the following example:

A 250-kW wood-fired boiler, operating 2,000 hours at load, will generate approximately 500 MWhs of useful thermal energy.  Assuming RECs for this energy output sell at the maximum price, the project would produce certificates worth $12,500 per year through 2025.  A 100-kW solar thermal project producing hot water for a commercial enterprise, and operating at load 2,000 hours, would produce 200 RECs, worth $5,000 per year through 2025.

Neibling noted that it would be more likely that RECs will sell at a price between $10-15/MWh once the market is established.

Niebling believes that the new law will have an enormous impact on the biomass thermal industry, because the thermal RECs will be enough to tip the scales in favor of new project. ‘It fundamentally changes the equation for people looking to make these investments,’ he said.  He expects that larger commercial and industrial projects will be early adopters of thermal renewable energy before the residential market takes off.  ‘So for municipalities, county governments, businesses, large and small, this has enormous implications,’ he said.

In Maryland where there already exists a solar carve-out, the legislature has pushed up the date by which the state must meet its 2% solar energy requirement by two years.  Solar thermal systems as well as PV systems can produce SRECs in that state. The legislature made the change in order to address volatility in the SREC market.  To date, only Maryland and DC allow SWH systems to generate SRECs.

According to Brad Bowery, CEO of SRECTrade, ‘The most common way that solar thermal SRECs are counted is as follows: systems that displace fewer than 10,000 kWhs of electricity annually can count SRECs based off of estimated generation based on a conversion of expected BTU output to kWhs (similarly, PV systems in some states under 10 kW can count SRECs based on PV Watts estimates).’

Bowery continued, ‘for systems that displace more than 10,000 kWhs of electricity annually, an OIML meter is typically required to measure the BTU output, which is then converted to kWhs by GATS [the generation attribute tracking system], which in then is converted into SRECs for each MWh.

But while Md. and N.H. are leading the pack in terms of thermal energy and their RPS’s other states are considering making changes to their laws as well.  Niebling believes that this is a trend in the making.  ‘You’ve got Vermont [which] has passed legislation about a month ago that directs its department of public service to study and make recommendations on something it is calling a ‘total energy standard’ which would be electricity, heat and transportation energy use,’ he pointed out.  Niebling also said that Mass. is looking at a bill that would direct its DOER to study including thermal in its APS, the state’s alternative portfolio standard. He mentioned a few other states to watch as well including N.C., Ohio, Va., Wis., and Ariz.

Particularly in states where oil is used for heat and hot water, thermal renewable energy is perhaps a cheaper, easier way to achieve state RPS goals of fuel diversity and in-state economic development. Niebling added ‘much of N.H., Vt. and Maine does not have access to natural gas and are unlikely to see it anytime soon. So for these states it’s a real powerful incentive – we hope – for people to take the plunge, spend the capital, to transition away from fossil heating fuels to locally produced fuels or locally installed technologies.’