Wisconsin Bioenergy Initiative Summit 2011 October 6, 2011
Biogas Incentives and Policy Opportunities Peter Taglia, P.G., Environmental Geologist and Consultant
Overview
Wisconsin’s Biogas Successes • Early Promotion and Coordination Among Stakeholders • Utility Incentives Current Challenges • Excess Electrical Capacity • Utilities Already Meeting Renewable Requirements • LiQle Appetite for Additional Ratepayer Impacts Policy Opportunities • Regulatory Streamlining • Biogas Targeted Public Benefits Funding • Voluntary Renewable Energy Programs Targeting Biogas • Public Outreach and Market Promotion
Operational On‑Farm Anaerobic Digestion Projects
Source: U.S. EPA AgStar Program h3p://www.epa.gov/agstar/accomplish.html#ky
Wisconsin’s Biogas Advantages Feedstocks • •
#1 Cheese state Large dairy, food processing and forestry industries, #1 in paper output
Support Infrastructure • • •
#1 Manufacturing state Many agricultural coops, aggregators Robust electrical, natural gas and transportation system
Energy Security • •
WI has no fossil fuels Currently spends ~$18 Billion on energy imports
Cheese and Meat Packing are Major Wisconsin Industries (and identities) and Potential Applications for Biogas Energy
Wisconsin’s Biogas Success Wisconsin’s Public Benefits Fund (Focus on Energy) Encouraged Biogas Energy Systems with Technical Assistance and Grants up to $250,000 from a Ratepayer Surcharge. State agency and university support: •
Technical workshops and outreach
•
Grant writing and funding assistance Biogas research Success at aQracting REAP and ARRA funding for biogas projects
• •
Non‑profits, associations and businesses assisting interested farmers and increasing awareness
Wisconsin’s Biogas Success Utility Experimental Renewable Tariffs •
We Energies 15‑year fixed‑price $0.09 per kWh (avg. on/off peak)
•
Alliant Energy 10‑year fixed price $0.09 per kWh (avg. on/off peak)
•
Wisconsin Public Service Corp. 10‑year fixed price of $0.08 per kWh (avg. on/off peak)
•
Xcel Energy 10‑year fixed price at $0.07 per kWh
•
Dairyland Power 5 to 10 year fixed price at $0.08 per kWh (avg. on/off peak)
Wisconsin’s Biogas Challenges • •
Utility Buyback Rates Form a Patchwork Across WI Electricity Only‑ −
−
• •
Limited applications in areas with poor distribution lines Missed opportunities for heating, process fuel, vehicle applications
Many Programs are Fully Subscribed Additional Utility Buybacks Electrical Utility Service Territories. Utilities that are Unlikely for Many provide ARTs for biogas as of Summer 2011 include Reasons… Xcel (light blue), WPS (dark blue), We Energies (dark green) and some Cooperative members of Dairyland Power (yellow).
Wisconsin’s Biogas Challenges
Electricity Prices and Supply •
•
Excess electrical capacity (24% reserve margin) in WI due to recent expansions of coal, natural gas and wind Access to large, low cost imported wind capacity to meet renewable energy mandates New 1,200 MW Oak Creek, WI Coal Plant (TOP) and Wind Resource Map (BOTTOM) Sources: We Energies and NREL
Wisconsin’s Biogas Challenges Electricity Prices and Supply • Most WI utilities are ahead of requirements for renewable electricity (10% renewables by 2015) • 2011 legislation allows low priced Manitoba Hydro to qualify after 2015
Wisconsin Statewide Renewable Electricity Progress Source: WI PSC (hLp://psc.wi.gov/hotTopics/documents/ complianceReport.pdf)
Wisconsin’s Biogas Challenges
•
•
Retail electric rates in WI are higher than most other Midwestern States The causes of WI rate increases are debated, but liQle support exists for more utility‑ funded renewable incentives
Table 5.6.A. Average Retail Price of Electricity to Ultimate Customers by End-Use Sector, by State, June 2011 and 2010 (Cents per Kilowatthour) Census Division and State
Commercial1
Residential Jun-11
Jun-10
Jun-11
Transporta@on[1]
Industrial1
Jun-10
Jun-11
Jun-10
Jun-11
Jun-10
East North Central
12.21
12.01
9.8
9.58
6.8
6.56
8.07
7.61
Illinois
12.09
12.68
9.02
9.07
6.71
6.6
8.05
7.45
Indiana
10.21
9.47
8.85
8.21
6.42
5.86
10.12
9.04
Ohio
12.02
12.1
9.69
9.7
6.26
6.39
6.82
8.96
13.68
12.96
10.89
10.16
7.61
7.22
--
--
11
10.4
8.98
8.46
6.47
6.14
9.68
8.06
Iowa
11.17
10.74
8.41
8.03
5.38
5.55
--
--
Kansas
11.02
10.21
9.15
8.32
7.01
6.18
--
--
11.4
10.83
9.12
8.87
6.92
6.48
9.47
7.69
10.99
10.34
9.29
8.65
6.87
6.41
9.87
8.51
Wisconsin West North Central1
Minnesota Missouri
Midwestern Retail Electricity Rates Source: EIA
PSC Decision in September 2011: Mercury Marine Will Receive A Discount of Up to $5 Million Per Year on Electrical Rates as Part of an Economic Incentive to Maintain Headquarters in WI
Wisconsin’s Biogas Challenges •
•
•
Increasing #s of Vocal Opponents of Wind, Biomass and Even Energy Efficiency A Promulgated Increase in the Public Benefits Fund Reversed by the Wisconsin Legislature in May 2011 Limited Financial Incentives From the Public Benefits Fund Resulted in Suspension of the Business Renewable Energy Program Grants
And Yet, Biogas Energy Enjoys Widespread Support •
Biogas Energy Development is Supported By Diverse Stakeholders: − Dairy Industry − Food Processing Industry − Rural Legislators
•
Biogas electricity is highly competitive with other renewables
•
Biogas heating and vehicle fuel opportunities are under‑ recognized October 2010 PSC Analysis of Various Renewable Options in
Key: Find methods to expand biogas energy systems in a tight fiscal and regulatory environment
$ per MWH Note: Biogas Incentives of $0.11 per kWH is equivalent to $110 per MWH hQp://psc.wi.gov/apps35/ERF_view/viewdoc.aspx?docid=140444
Targeted Public Benefits Funding •
•
Proposed compromise legislation in 2010 would have provided public benefits funding for biogas projects of approx. $13 to $16 Million per year for 4 years
Scenario
Biogas Standard Offer Price ($/kWh)
Biogas Capacity (MW)
Biogas Biogas Incentive Incentive Annual Cost Cost Above Avoided Cost
Resource Cost as a Proportion of Utility Rates (Range)
0.2% of
$0.11
20 MW
$15.3 Million
$8.8 Million
0 to 0.23%
$0.11
50 MW
$38.4 Million
$22.1 Million
0 to 0.57%
$0.11
100 MW
$76.7 Million
$44.3 Million
0 to 1.3 %
An electric rate analysis Utility finds small impacts and Retail Sales some zero cost 0.5% of opportunities (some small Utility Retail Sales utilities have high avoided electricity costs) 1% of Utility Retail Sales
•
Public Benefits Funding (e.g., Focus on Energy) has the advantage of providing technical assistance and grants to both electric and natural gas applications of biogas (heating and vehicle fuel)
Potential Biogas Incentive Projections Prepared for the WBI Avoided Cost Data from PSC Utility Filings
Expand Focus on Energy to Propane and Fuel Oil •
Current Public Benefits Funding in WI thru Focus on Energy is limited to natural gas and electricity applications
•
Expanding Focus on Energy to fuel oil and propane customers would open more economical applications of biogas since these fuels are more expensive than natural gas
•
Funding would come from fuel oil and propane customers, but Focus on Energy routinely saves more than $2 for every dollar invested
Energy Derived from Petroleum (e.g., Propane, Fuel Oil) is Significantly More Expensive than Natural Gas; Biogas is More Competitive Versus Petroleum
Streamline Regulatory PermiQing For Biogas Projects
•
Initiate a Joint Agency Task Force
•
Ohio has aligned agriculture, water, and solid waste regulation to streamline biogas permiQing
•
Analogous to Recently Announced DOE Transmission Initiative
•
Opportunities: − − −
Wisconsin NR 214 limits for outside waste treatment on farms NR 243.5 Plans and Specification for agriculture waste treatment General permits for specific biogas energy systems.
Dane County community digester near Waunakee, WI produces 2 MW of electricity using biogas from 3 dairy farms and food processing wastes Source: Dane County
Customer Choice Biogas Energy Programs
•
Customer choice programs for renewable electricity have been popular with some WI utilities but are typically met with wind
•
Integrys markets natural gas to customers in Illinois and Ohio with a combination of renewable natural gas and carbon offsets
•
Investigate Options for WI Utilities to Provide Biogas Natural Gas and/or Electric Voluntary Programs
• Central Vermont Public Service markets “Cow Power” for biogas electricity • Fortis BC, the largest natural gas utility in British Columbia, now markets renewable natural gas to all of its gas customers
Public Outreach and Marketing •
•
Expanded Visibility of Biogas as a Homegrown Energy Resource Can Build Customer Demand and Greater Support for Biogas Policies State Agencies (Agriculture, Economic Development) or Associations Could Develop Biogas Marketing Initatives or Checkoff Programs
Family Owned and Operated ~Our Own Farm Fresh Milk ~A Carbon Negative Company* ~Sustainable Farming Practices ~Recyclable Packaging ~100% Green Power ~Water Conservation & Recycling • We produce more energy with our bio digester than we use for both the dairy and the cheese plant. Source: http://www.cravecheese.com
Thank You Peter Taglia, P.G. Peter.taglia@gmail.com (608) 217‑8219