Two bills moving through the Ohio General Assembly would promote co-generation projects by qualifying them for use by the state's investor-owned utilities to meet certain requirements under Senate Bill 221, Ohio's landmark energy law enacted in 2008.
One bill — Sub. S.B. 289, recently passed by both the Ohio House and Senate — classifies co-generation technology as "renewable energy" under Ohio's renewable portfolio standard (RPS), which requires utilities to procure 12.5 percent of their energy from renewable sources by 2025. S.B. 289 contains provisions that appear designed to limit its application to one particular project located at a steel manufacturing facility in Butler County, Ohio, which was the recipient of a sizeable federal stimulus grant for co-generation.
The other bill — S.B. 315, introduced in the Senate at the request of Governor Kasich — classifies co-generation technology as both "renewable energy" and "energy efficiency." Thus it qualifies it for inclusion in the RPS or as an eligible technology under S.B. 221's energy efficiency and peak-demand reduction provisions, which require utilities to achieve certain annual benchmarks for energy savings and demand reduction. S.B. 315 allows project owners to choose which treatment — renewable energy or energy efficiency, but not both — to apply to a particular project. It does not contain the geographical limitations included in S.B. 289.
As S.B. 289 and S.B. 315 move through the legislative process, it is unclear, at this point, how lawmakers will reconcile the bills. Here is a brief summary of the bills' major provisions:
The bill would amend Ohio Revised Code (R.C.) 4928.01, which sets definitions for the statutes governing retail electric service in Ohio, by:
- Creating the term "co-generation technology" and defining it as "technology that produces electricity and useful thermal output simultaneously." R.C. 4928.01(36).
Clarifying that the term "renewable energy resource" includes "energy produced by cogeneration technology that is placed into service on or before December 31, 2015, and for which more than ninety percent of the total annual energy input is from combustion of a waste or byproduct gas from an air contaminant source in this state, which source has been in operation on or before January 1, 1985, provided that the cogeneration technology is a part of a facility located in a county having a population of more than three hundred sixty-five thousand, but less than three hundred seventy thousand according to the most recent federal decennial census."
- The above language appears designed to limit the application of S.B. 289 to a planned co-gen project in Butler County that would use waste gas from a blast furnace as fuel.
- The bill would amend R.C. 3706.25, which sets the definitions for projects eligible for financing from the Ohio Air Quality Development Authority (OAQDA), by inserting language identical to that proposed for R.C. 4928.01. The amendment would have the effect of qualifying the project for OAQDA financing and attendant tax exemptions.
The bill — which features a package of energy proposals, many of them focused on the development of Ohio's shale natural gas deposits — would amend the state's RPS and related provisions by:
- Stating that the energy policy of the state includes encouraging "innovation and market access for cost-effective supply- and demand-side retail electric service including . . . waste energy recovery systems." R.C. 4928.02(D).
Creating the term "waste energy recovery system" and defining it as "a facility that generates electricity through the conversion of energy from either of the following:
- Exhaust heat from engines or manufacturing, industrial commercial, or institutional sites, except for exhaust heat from a facility whose primary purpose is the generation of electricity.
- Reduction of pressure in gas pipelines before gas is distributed through the pipeline, provided that the conversion of energy to electricity is achieved without using additional fossil fuels." R.C. 4928.01(36).
- Clarifying that the term "advanced energy resource" "does not include a waste energy recovery system that is, or has been, included in an energy efficiency program of an electric distribution utility." R.C. 4928.01(34).
- Including "waste energy recovery system" in the term "renewable energy resource" unless a waste energy recovery system "is, or has been, included in an energy efficiency program of an electric distribution utility." R.C. 4928.01(35).
The bill would amend R.C. 4928.66, which addresses a utility's duty to implement energy efficiency programs, by:
- Clarifying that an electric distribution utility's energy efficiency programs may include waste energy recovery systems placed in service or retrofitted on or after January 1, 2006. R.C. 4928.66(A)(1)(a) & (A)(2)(d).
- Clarifying that a utility can meet its energy efficiency requirements by counting the effects of waste energy recovery systems, including customer-sited waste energy recovery systems. R.C. 4928.66(A)(2)(c).
- The bill would amend R.C. 4906.03, which sets out the powers and duties of the Ohio Power Siting Board (OPSB), by adding a division requiring the OPSB to adopt rules providing for accelerated review of construction certificate applications for certain facilities, including "[a]n electric generating facility that uses waste heat and is primarily within the current boundary of an existing industrial facility." R.C. 4906.03(F). This provision is designed to fast-track the OPSB review process for co-generation projects.
It is not yet clear at this stage how the General Assembly will reconcile the narrowly tailored focus of S.B. 289 with the language in S.B. 315 or how it will harmonize the definitions of co-generation. We will continue to monitor both bills closely in the weeks ahead.