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Will Ohio industry tap its grey and green power?

Marc Lefkowitz  |  03/05/10 @ 7:09pm

In its Feb. 15 edition, The Nation describes Ohio as the Saudi Arabia of 'grey power'. That's quite a striking statement, and absolutely true considering 145 to 285 megawatts of grey power-"the massive bank account of steam and energy that could be used to generate electricity"-is coughed into the biosphere every day from hundreds of old line manufacturers. That's the equivalent of a new coal-fired power plant. 

At this week's CSU Levin College Forum, "Distributed Generation and Industrial Energy: Reducing Costs, Increasing Efficiency" panelists looked at the barriers and opportunities to scale up grey and green power in Ohio. Since the state approved an Advanced Energy Portfolio Standard ? mandating that power producers ramp up sourcing of green and possibly grey power (and increase their efficiency) to 25% by the year 2025 ? new opportunities for individuals and business have come on line. For example, Senate Bill 221 authorized businesses to apply for "special contracts" to produce their own power and sell it back to the grid (in the past, only utilities could make requests of the state).

The trouble is, navigating the regulatory and financial aspects of setting up, say, a wind turbine or solar array on an industrial property is "daunting" because industry is stretched thin, says Sam Randazzo, general counsel for the Industrial Energy Users of Ohio.

On top of that, utilities have an undue influence on policies that create strong disincentives for industry to tap grey and green power, according to advanced energy activists. The Nation sums up the problem this way: "Sometimes utilities don't refuse to buy power outright, but they make the process of connecting to the grid onerous or require that factory generators purchase 'backup power' at prohibitively high prices."

Randazzo sees it differently. He says barriers for a grey or combined heat and power? such as the proposed 400 megawatt system with Cleveland Thermal, ArcelorMittal and Alcoa in Cleveland as partners ? are more "cultural" than regulatory.

"I won't say (regulatory issues) are something we don't have to look at, but we're not captive to the utilities to get things done," Randazzo says. "Back up power is an issue, but distributed generation is available in the market place. It takes some knowledge of the regional transmission organizations, which now have control of the dispatching from generators, and an understanding of the economics."

Randazzo adds that the uncertainty of carbon legislation from the federal government is scaring industry away from investing in green and grey power (confirming what others have said, that industry would prefer Congress pass carbon legislation than wait in limbo).

Craig Kasper's K&H Energy Services is helping so-called "self-generators" of power navigate the new Advanced Energy terrain in Ohio. K&H started on its own office, in Bedford, where the company, a division of national project development and engineering firm Hull & Associates, is installing a ground-mounted 90 kilowatt solar array. It had the know-how and devoted resources to secure grants.

At one point, K&H considered scuttling the deal, even with a $162,000 federal investment tax credit. But after a $216,000 Stimulus grant through the Ohio Department of Energy came through, and an estimated $13,000 in cash flow from selling power back to the grid brought their out of pocket expenses down to $81,000 and a payback period to six years, it made the deal a 'go'.

"Make sure when you're putting this together, all of your capital and O&M (operations and maintenance) costs are included in the financial models," Kasper says. "Account for the revenue streams. When you're producing power to yourself, (the numbers) are good. When you sell it back to the grid, it's not as good."

The reason for this is Ohio's net metering rules, passed in 1999, allowed self-generators to charge utilities retail rates. But, the retail rate rule was struck down by an Ohio Supreme Court decision in 2002 so that self-generators can now only charge 'generation' rates (bringing income levels from producing renewable energy way down).

Kasper, who also has a 225kw solar project in the works in the area, says other income producing opportunities for industrial users are renewable energy credits and income from waste products, such as fertilizers, as a by-product of biogas digesters (as is being discussed in the Cleveland municipal solid waste to energy proposal).

"State and federal grants were key for us," Kasper says. "As the market grows, capital and installed costs will come down. The private sector will need to fuel the renewable energy efforts."

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