House Committee Approves Energy Efficiency Buildings Bill

Today (01/13/10) the Indiana House Environmental Affairs Committee approved HB 1063 concerning energy efficient buildings by a vote of 8 to 3. The three members of the committee voting against the bill were Rep. David Wolkins (R-Winona Lake), Rep. Jack Lutz (R-Anderson and Rep. Sean Eberhart (R-Shelbyville). For more details on the bill and members of the committee see http://blog.indianarenew.org/2010/01/hb-1063-energy-efficient-buildings-bill.html



Since Rep. Matt Pierce (D-Bloomington) has introduced a similar bill the past two sessions that passed the House, there was a brief committee hearing and public testimony. After Rep. Pierce explained the bill, Miriam Dant representing the Indiana Association of Cities and Towns (IACT) testified against the bill. The remainder of the testimony was in support of the bill and included:



Donald Abel, American Institute of Architects Indiana Chapter (AIA Indiana);

Mark Flint, Indianapolis Power & Light (IPL);

Lynn Dennis, The Nature Conservancy (TNC);

Tim Maloney, Hoosier Environmental Council (HEC);

Kerwin Olson, Citizens Action Coalition (CAC); and

Glenn Pratt, Hoosier Chapter of the Sierra Club.



HB 1063 now moves to the floor for further action.

Indianapolis Power and Light (IPL) is a member of the Indiana Renewable Energy Association.

HB 1063 Energy Efficient Buildings Bill Introduced by Rep. Pierce Scheduled for Hearing Wed., Jan. 13th

ACTION ALERT!

HOUSE BILL No. 1063 Energy Efficient Buildings Scheduled for Public Hearing as follows:

AGENDA FOR: House Environmental Affairs Committee

MEETING: January 13, 1:30PM, 156C, State House, Indianapolis

CHAIR: Dvorak

VICE-CHAIR: Stevenson

MEMBERS:

Candelaria Reardon, L. Lawson, Moses, Pearson, Pierce.
Wolkins R.M.M., Eberhart, Lutz, Neese, Ruppel.

AGENDA: HB 1063 Energy Efficient Buildings

--------------------------------------------------------------------------------

A BILL FOR AN ACT to amend the Indiana Code concerning state and local administration.


Be it enacted by the General Assembly of the State of Indiana:

SOURCE: IC 4-13-20; (10)IN1063.1.1. -->

SECTION 1. IC 4-13-20 IS ADDED TO THE INDIANA CODE AS A NEW CHAPTER TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2010]:

Chapter 20. Government Building Design Standards for Energy Efficiency
Sec. 1. (a) This chapter applies to a design plan that is:
(1) for the major renovation or construction of a government building consisting of at least five thousand (5,000) square feet of floor space;
(2) for a project costing the owner of the government building at least five hundred thousand dollars ($500,000); and
(3) approved by the owner of the government building after June 30, 2010.
(b) This chapter does not apply to a design plan for the major renovation or construction of a building that does not consume energy for heating, ventilating, or air conditioning.
Sec. 2. As used in this chapter, "government building" means a
building owned, occupied, and used by any of the following:
(1) A state agency (as defined in IC 4-13-1-1(b)).
(2) Any other authority, board, branch, commission, committee, department, division, or instrumentality of the executive branch of state government, including the following:
(A) A license branch operated or administered under IC 9-16.
(B) The state police department created by IC 10-11-2-4.
(3) A state educational institution (as defined in IC 21-7-13-32).
(4) A body corporate and politic created by statute.
(5) The judicial department of state government.
(6) The legislative department of state government.
(7) A political subdivision (as defined in IC 36-1-2-13).
(8) A school corporation (as defined in IC 36-1-2-17).
Sec. 3. As used in this chapter, "LEED rating system" refers to the United States Green Building Council's Leadership in Energy and Environmental Design rating system.
Sec. 4. As used in this chapter, "major renovation" refers to a renovation of a government building in which:
(1) the building shell is used to contain new construction;
(2) the heating, air conditioning, ventilation, electrical, and plumbing systems of the building are replaced; and
(3) at least seven thousand five hundred (7,500) square feet are renovated.
Sec. 5. (a) A newly constructed government building must be designed and constructed to achieve or exceed the performance criteria determined under any of the following:
(1) The silver rating under the LEED rating system.
(2) The Two Globes rating under the Green Building Initiative's Green Globes rating system.
(3) An equivalent rating under a rating system that is accredited by the American National Standards Institute.
(b) This subsection does not apply to contracts for the reconstruction, repair, alteration, or retrofitting of a building or structure that is listed or eligible for listing on the National Register of Historic Places. A major renovation of a government building must be designed, renovated, or reconstructed to achieve or exceed the performance criteria determined under any of the following:
(1) The silver rating under the LEED rating system.
(2) The Two Globes rating under the Green Building

Initiative's Green Globes rating system.
(3) The Environmental Protection Agency's Energy Star rating system.
(4) An equivalent rating under a rating system that is accredited by the American National Standards Institute.
Sec. 6. The owner of a government building shall consider the historic or aesthetic qualities of the building and the availability of local materials when determining performance criteria required of the design, construction, renovation, or reconstruction of the government building by section 5 of this chapter.
Sec. 7. (a) As used in this section, "Indiana hardwood lumber" means hardwood lumber harvested from real property located in Indiana.
(b) The owner of a government building may consider Indiana hardwood lumber for use as a local source material in any project in which the use of Indiana hardwood lumber is practicable.

SECTION 2. [EFFECTIVE JULY 1, 2010] The general assembly recognizes that the 2006 study:
(1) conducted by the department of natural resources division of forestry; and
(2) entitled "The Sustainability of Indiana's Forest Resources";
indicates Indiana timberland acreage and volume has steadily increased since 1967.

This article brought to you by the Indiana Renewable Energy Association and Indiana Distributed Energy Advocates.

Indiana Legislator Introduces Feed-in Tariff Bill; First Comprehensive Proposal of 2010 in US

Adapts Rates from Ontario for a "Made In Indiana" Policy

January 8, 2010

By Paul Gipe

Representative Matt Pierce (D-61st, Bloomington) introduced HB 1190 into the Indiana General Assembly January 7, 2010. The bill is the first comprehensive proposal for a system of feed-in tariffs in the current legislative sessions that have begun in states across the US.

The bill to create a system of what Representative Pierce calls Advanced Renewable Energy Contracts was referred to the House Committee on Commerce, Energy, Technology and Utilities. Representative Pierce is vice chair of the committee.

Representative Pierce had introduced a previous bill on feed-in tariffs in the 2009 session. HB 1190 has been extensively rewritten and has incorporated the feed-in tariffs, or renewable energy rates as they will be called in Indiana, recently introduced in the Canadian province of Ontario.

The proposed rates in HB 1190 have been adapted to the Indiana context by incorporating two tracks: one track with US federal subsidies, one track without. Unlike Ontario, where there are no federal subsidies for renewable energy, some Indiana projects could qualify for US federal subsidies. However, not all potential renewable energy generators in Indiana may be able to use the federal subsidies. For those who may not be able to use the federal subsidies, Representative Pierce has proposed the second track where the feed-in rates are proportionally higher.

Republican Governor Mitch Daniels and the legislature have liked to characterize Indiana as a potential renewable energy hub of the Midwest.

HB 1190 tries to go Ontario one better as competition for renewable energy heats up in North America's heartland. Representative Pierce has proposed a sophisticated system of rates for wind energy that is based on the intensity of the wind resource. Both Germany and France successfully use a similar policy and the concept has been raised frequently in Ontario. However, the Canadian province has yet to adopt such a program.

Differentiating the rates for wind energy based on the wind resource is used by Germany and France both to spread development opportunity to more farmers and rural landowners than one, single rate for wind energy, but also to avoid the concentration of wind turbines in only the windiest regions. Such a proposal in Indiana would give farmers in central Indiana as much opportunity to develop their wind resource as farmers in northern Indiana where it is windier.

And in another departure from Ontario, Representative Pierce has proposed specific tariffs for small wind turbines like those that would be used by individual households. While HB 1190's proposed rates for small wind turbines are less than those that will likely go into effect this April in Great Britain, they are the first of their kind in North America.

In other provisions, the bill requires the Indiana Utility Regulatory Commission (IURC) to review the renewable energy rates paid to new generators beginning in 2012. HB 1190 directs the IURC's review to ensure the rates are sufficient for the rapid development of renewable energy without resulting in excessive profits for generators or excessive costs to ratepayers.

The bill establishes an equalization program to spread the costs of the policy across all ratepayers so that no one utility or its ratepayers absorb more than their fair share of the costs of the program.

HB 1190 creates a statewide registry of generators and requires the IURC to issue annual reports on the robustness of the program in meeting the bill's objective of encouraging the rapid and sustainable development of renewable energy in Indiana.

Before it becomes law, the bill must pass the House, controlled by Democrats, and the Senate, controlled by Republicans, and be signed by Republican Governor Daniels.

Summary of HB 1190's renewable energy "rates".


Project size cap: None, 10 MW for solar PV only
Contract terms: 20 years, 40 years for hydro
Technologies: most, excluding biomass from forestry, excluding coal-bed methane
Inflation indexing: 60%

Wind without and with tax credits:

• Small <50>
• Small <500>
• Offshore: $0.180,$0.126
• Onshore low wind: $0.140,$0.098
• Onshore high wind: $0.104,$0.073

Solar PV without and with tax credits:

• Any Type <10>
• Rooftop >10 kW<250>
• Rooftop >250 kW<500>
• Rooftop >500 kW: $0.500,$0.350,
• Groundmounted <10 MW: $0.400,$0.280
  
  Interestingly, Indianapolis Power & Light (IPL) has proposed a pilot feed-in tariff program to the IURC. The IURC has yet to rule on IPL's proposal, yet IPL's proposed wind enegy tariff is quite similar to that in Representative Pierce's HB 1190.
  
  At a site with an average yield of 1,200 kWh/m²/yr, the average or equivalent 20-year tariff for onshore wind energy in HB 1190 is $0.104/kWh without tax credits and $0.073/kWh with federal tax credits. The latter "rate" is nearly identical with that proposed by to the IURC for wind turbines larger than 1 MW by IPL of $0.075/kWh.
  
  HB 1190 Status
  
  HB 1190 Latest version
  
  HB 1190 Fiscal Impact

This article brought to you by the Indiana Renewable Energy Association.

Proposed Indiana (Midwest) Feed-in Tariffs 2009

November 25, 2009

By Paul Gipe

This is a brief explanation of the proposed feed-in tariffs provided to the Indiana Renewable Energy Association and Representative Matt Pierce.

The tariffs suggested are applicable throughout the Midwest and not solely to Indiana.

The tariffs, or prices paid for renewable generation per kilowatt-hour, are based on my professional judgment of current best practice worldwide and best practice specifically in North America.

In large part the tariffs are based on those implemented October 1, 2009 in Ontario, Canada. The Ontario Power Authority derived a system of tariffs for renewable energy following the most rigorous and, equally as important, the most transparent price-setting process yet conducted in North America. The Ontario tariffs were converted to US dollars.

Because of lucrative federal subsidies in the US, there are two tariff tracks: one without federal subsidies, and one with the subsidies.

Two Tracks (with & without Federal Tax Credits)
There are two tracks because not every potential generator can fully use the federal tax credits. If the program is to be equitable, that is, if the program is to provide equal opportunity to all Indiana citizens, it must not be limited to only those with substantial federal taxes. Thus, even those who do not have substantial federal tax liability can take advantage of the program by using the tariffs.

While it would be technically more correct to run a full financial model taking into account the discounted effects of the federal subsidies, this was determined to be unnecessary. Instead, the proposed Indiana tariffs derived from Ontario's current rates were simply reduced 30 percent, representing the equivalent benefit of the federal tax credits.

Wind Energy
Wind energy is a special case and was treated separately and in much more detail. There are four classes of wind energy tariffs: two tariff classes for small wind turbines, an offshore class, and a tariff class for onshore, commercial-scale wind turbines.



Small Turbines
Tariffs for small wind turbines are divided by the area swept by the wind turbine's rotor. This measure allows inclusion of both conventional horizontal-axis wind turbines as well as novel vertical-axis wind turbines.

The smallest class is representative of household-size wind turbines. These are currently more expensive and less productive than commercial-scale turbines and, consequently, the tariff needed is much greater. The tariff proposed for household-size wind turbines is comparable to that in several European countries and to that proposed in Great Britain.

The second small turbine class is for wind turbines considered suitable for small businesses. With the federal tax credit, the tariff proposed is similar to that proposed by Indianapolis Power & Light in its filing with the Indiana Utility Regulatory Commission (IURC) for wind turbines less than 100 kW in capacity.


Commercial-Scale Turbines Onshore
The price necessary for profitable operation of commercial-scale wind turbines is highly dependent upon the wind resource and the resulting productivity of the wind turbine. To spread economic opportunity to a greater percentage of Hoosier farmers, rural landowners, and small businesses it is necessary to offer a range of tariffs to reflect the different wind resources available.

When a single wind energy tariff is used for commercial-scale wind turbines, some generators will be overpaid and others underpaid. Both to avoid overpayment at windier sites and to enable profitable wind development at less windy sites it's necessary to calculate a range of tariffs.

There are two techniques currently in use to accomplish this task: the German system, and the French system. Both systems use a trial period of five to ten years. All turbines are paid the same price during the trial period. After the trial period, the tariff payment changes, reflecting the site's productivity. The German system (it is also used in Switzerland) is more unwieldy than the French system and less adaptable to North America.

The French system bases the post-trial tariff on a measure of the wind turbine's productivity.

The proposed Indiana tariffs are similar to those proposed in Ontario by the Ontario Sustainable Energy Association. They have been specifically adapted to the North American wind resource and costs.

The proposed Indiana tariffs are derived from the Profitability Index Method developed by Bernard Chabot for the French equivalent of the National Renewable Energy Laboratory.

This method incorporates average installed costs, annual expenses, inflation, the cost of capital, and so on. Most importantly, this method enables simple recalculation of the tariff needed as the wind resource and turbine productivity vary.

The two most important parameters are the installed cost relative to the area swept by the wind turbine rotor. In this case, the installed cost is approximately $2,400/kW for a 2 MW wind turbine with a 90 meter diameter rotor.

The base productivity is set at a minimum average annual specific yield of 650 kWh/m2/yr. This yield is equivalent to a wind resource of 5.5 m/s (12.3 mph) at hub height. The calculation results in a tariff of $0.14/kWh without tax credits and $0.098/kWh with the federal tax credits.

The base tariff is paid for the first five years to all turbines installed under the program. Turbines with a productivity of 650 kWh/m2/yr or less will be paid the base tariff for the full 20 years.

At the end of the first five years, the yield for each year is determined. The year with highest yield and the year with the lowest yield are discarded. The productivity of the turbine is calculated from the yield of the remaining three years.

The profitability index is limited to 0.55 at an annual yield of 1,200 kWh/m2/yr. This eliminates overpayment for development at windy sites where the wind resource is equivalent to 7.4 m/s (16.6 mph) at hub height. The calculation results in a tariff for years 6 through 20 of $0.084/kWh without tax credit, and $0.059/kWh with federal tax credits.

Note that because there are two tariffs (for years 1-5, and for years 6-20), the average or equivalent tariff is somewhat more than the second period tariff. Thus, at a site with an average yield of 1,200 kWh/m2/yr, the average or equivalent 20-year tariff is $0.104/kWh without tax credits and $0.073/kWh with federal tax credits. The latter equivalent tariff is nearly identical with that proposed by Indianapolis Power & Light to the IURC for wind turbines larger than 1 MW of $0.075/kWh.

This article brought to you by the Indiana Renewable Energy Association. For more information, please visit www.indianarenew.org.

REMINDER: Advanced Renewable Energy Contracts Webinar on Aug 18 @ 2 pm

The Indiana Renewable Energy Association is hosting a webinar on Advanced Renewable Energy Contracts or Feed-in Tariffs as follows:

Tuesday, August 18, 2009

2:00 to 3:30 pm EDT

SPEAKERS:

Chris Striebeck, Integrated Development Services

Laura Ann Arnold, The Arnold Group

State Rep. Matt Pierce

John Haselden, Indianapolis Power & Light

To sign up for this webinar, please send an e-mail to info@indianarenew.org. An e-mail will be sent with the call-in number and weblink to access the presentation.

Rep. Matt Pierce to Introduce Advanced Renewable Energy Contract Legislation in Indiana Again in 2010

Indiana Rep. Matt Pierce (D-Bloomington) is quoted in the article below that ran in today's New York Times. Rep. Pierce has agreed to participate in InREA's upcoming webinar on Feed-in Tariffs or Advanced Renewable Energy Contracts on Tuesday, August 18, 2009 from 2:00 to 3:30 pm EDT. The webinar orginally scheduled for Wednesday, August 5, has been re-scheduled. For more information on this webinar contact info@indianarenew.org.

August 3, 2009

House Will Get Another Shot at Feed-In Tariffs

By PHIL TAYLOR of Greenwire

With the Senate girding for a debate over sweeping legislation that would reduce greenhouse gas emissions and spur development of renewable electricity, two House Democrats are preparing a more limited bill with similar goals.

Reps. Jay Inslee of Washington and Bill Delahunt of Massachusetts are preparing a bill that would require utilities to purchase small-scale renewable energy from developers at rates equal to the cost of production plus a premium. The so-called feed-in tariffs proposal would set European-style guarantees for investors that many credit for a recent boom in solar energy in Germany.

"We have some brilliant Americans with brilliant business plans with brilliant technologies, but they don't have financing," Inslee said at a briefing last week on Capitol Hill. "The charm of the feed-in tariff is solid, take-it-to-the-bank security and confidence for the investing community."
Proponents say feed-in tariffs can be more effective than renewable-energy standards, such as the one included in the House climate bill by Democrats Henry Waxman of California and Ed Markey of Massachusetts, because they offer staggered rate incentives for each energy source based on current production costs. The initial rate that utilities would pay for solar energy, for example, would be higher than payments for less-expensive wind energy.

"The renewable-energy standard is good, and I'm a firm backer, but it has a weakness," Inslee said. "It's really only an incentive for the next-closest-to-competitive technology, frankly, which is wind right now."

The case for feed-in tariffs assumes that the cheapest renewable technology today won't necessarily be the cheapest technology in the future. Rate incentives that support many energy sources would create a race to become the next competitive alternative to fossil fuels or nuclear power, proponents say.

One widely cited model is Germany, which has become the world's largest market for photovoltaic systems and wind energy since passing its Renewable Energy Sources Act almost a decade ago. Germany more than doubled its national supply of renewable energy between 2000 and 2007 and was able to meet its 2010 target of 12.5 percent renewable electricity three years ahead of schedule.

"The Germans made a big and very important change," said former CIA Director James Woolsey, a panelist at last week's briefing and a partner in the "clean tech" division of investment group VantagePoint Venture Partners. "It's the reason that Germany -- a quarter of the size of the United States -- has six times as much solar."

There is a building in Munich, Woolsey said, that produces more solar energy on its rooftop than is produced in either Texas or Florida. The German boom in renewable energy -- driven in large part by the feed-in tariff -- generated 117,000 new jobs in the renewable power sector between 2004 and 2008, according to the German Environment Ministry.

Woolsey said feed-in tariffs could also improve national security by diversifying the United States' electricity production.

Today's electric grid relies on a sprawling network of transmission lines and centralized power plants that are vulnerable to attack, Woolsey said. Feed-in tariffs would expand the use of distributed generation like small wind and solar, helping reduce grid congestion and eliminating targets for terrorists.

"What we have today, with extremely high-voltage transmission lines and transformers sitting out behind cyclone fences next to highways, is vulnerable to physical attack; it is vulnerable to cyber attack," said Woolsey, adding that even amateur hackers can penetrate some off-the-shelf software programs that utilities use to monitor operations.

'Nightmares of PURPA'

Under a feed-in tariff proposal that Inslee sponsored last year, renewable energy developments of less than 20 megawatts would be given priority access to the grid and could sign 20-year contracts with utilities that guarantee a 10 percent rate of return. Rates would be tailored to fit the cost of production in different regions of the country and would be set by the Energy Department.

The "Renewable Energy Job and Security Act" would have paid for itself through an increase in consumer utility bills. The feed-in tariffs could also include built-in decreased payments to drive innovation and cost reduction over time.

Opponents of feed-in tariffs say their mandatory rate structures would raise electricity bills and would warp the free market as the Public Utilities Regulatory Policies Act (PURPA) did in the 1970s and '80s.

PURPA was meant to support the expanded use of renewable energy by requiring utilities to purchase power from non-utility producers at the "avoided cost" rate, or the amount the utility would have paid to generate the power on its own or to purchase it from another source.
"Thanks to PURPA, many customers were paying a higher price for electricity than what was selling on the open market," said David Owens, vice president of business operations at the Edison Electric Institute, at an April panel discussion at the Washington-based New America Foundation.

Owens argued against proposals to add a national feed-in tariff on top of a comprehensive cap-and-trade bill for greenhouse gases that includes a renewable energy standard. He said the national march toward renewable energy must happen at an evolutionary, not a revolutionary, pace if customers want to avoid being hit with excessive hikes in their utility bills.

"We have a range of options available to stimulate the development of renewables," Owens said.
"But I have difficulty if we seek to take another national approach that gives me the nightmares of PURPA."

Action by states, cities

In May, Vermont became the first state to pass feed-in tariffs for renewable energy, joining Ontario as the only state-level governments in North America to adopt such a policy.
The Vermont bill got a mixed response from lawmakers and was passed into law without the signature of Gov. Jim Douglas (R), who released a statement saying the bill "fails to recognize the current viability of renewable energy in a competitive setting and will needlessly increase costs to Vermont consumers."

Several other states -- including Michigan, Minnesota, Indiana, California and South Dakota -- are considering their own versions of feed-in renewable energy tariffs.

"The feed-in tariff has proven to be the best way to get quick movement in renewable energy development and create a lot of jobs," said Indiana state Rep. Matt Pierce (D), who has introduced a feed-in tariff proposal.

While Inslee and Delahunt's proposal would award states that adopt rates set by DOE and the Federal Energy Regulatory Commission, national feed-in tariffs have been criticized as an encroachment on states' rights to approve their own rates.

Gainesville, Fla., imposed the nation's first solar feed-in tariff in March, offering owners of new photovoltaic systems 32 cents per kilowatt-hour of electricity produced over the next 20 years.
The Edison Electric Institute's Owens, who argued against a national feed-in tariff, said the policy might be better implemented at the local and regional level, instead of coming from Washington.

"The city of Gainesville has benefited immensely through job creation," Owens said, such as through the millions of dollars in solar investments many anticipate as a result of the financial certainty offered by the renewable contracts.

Meanwhile, South Dakota's Public Utilities Commission is taking public comments on policies to support more wind development through rates that would reflect utilities' avoided costs, falling short of incentives offered by full feed-in tariffs.

Michigan became the first state to consider European-style feed-in tariffs with state Rep. Kathleen Law's (D) "Renewable Energy Sources Act" in September 2007. Law's bill was presented later that year at a National Caucus of Environmental Legislators meeting and became the inspiration for similar proposals in Illinois, Rhode Island and Indiana.

"Indiana has been so far behind the eight ball on renewable energy," said Pierce, whose bill died in committee without a vote. He said one of the biggest challenges was that so many lawmakers are unfamiliar with feed-in tariffs.

"Some have absolutely no idea what I'm talking about," Pierce said. "They hear the word 'tariff' and they think I want to tax something. ... Tariff equals tax or trade barrier to them."

'Worst name in the business'

Woolsey referred to "feed-in tariff" as "the worst name in the business." Others complain the term conjures up the idea of levying taxes on imported cattle feed.
Some have proposed calling them "advanced renewable energy payments" or "renewable buybacks," but for now, lawmakers are stuck with "feed-in tariffs," which was drawn from the German word for "electricity feeding-in law."

Pierce said he is planning to introduce another feed-in tariff bill in the 2010 session, by which time he suspects several more cities will have passed or considered feed-in tariffs. Being able to point to proven models, he said, will be important to gaining lawmaker support.

Copyright 2009 E&E Publishing. All Rights Reserved.

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