Work Group Meeting September 10, 2014

2014 Schedule and Sub-committee Progress KY Department for Energy Development and Independence Lee Colten Assistant Director Efficiency and Conservation

3 State Energy Office Kentucky Department for Energy Development and Independence The Department for Energy Development and Independence's mission is to improve the quality and security of life for all Kentuckians by creating efficient, sustainable energy solutions and strategies; by protecting the environment; and by creating a base for strong economic growth.

CHP Meeting Schedule

5 Sub-committee Status Technical Application Education and Outreach Policy Financing  Each committee has met 3 times with the exception of the Policy committee which has met twice  Committee members/stakeholders are actively participating in sharing the work load  Sub-committee work items are being rolled into a CHP Action Plan for Kentucky  Committees will continue to collaborate on specific items and pass along information via the main work group

KPPC Kentucky’s Resource Center for Environmental Sustainability 6

Technical Application Update Harshaw Trane Jason Volz Energy Engineer, P. E., LEED AP

8  A presentation was given August 6 th regarding maintenance of reciprocating engines by Steve Killian of the Wayne Co –Used by over ½ of CHP applications in the US –Well proven technology with a lifetime maintenance cost of <.75 cents/kWh –Maintenance requirements are well documented –A lube analysis can optimize reliability while reducing downtime and maintenance costs  Development of Air Permitting Guidance for CHP –Will also discuss in Policy committee as necessary  State-wide Interconnection requirements being reviewed –Will also discuss in Policy committee as necessary  Also working on: –Vendor list, Heat Load Guidance, CHP Reference Library Technical Committee Recent Work Items

9  Upcoming Sub-committee Items –Turbine Maintenance o Tentative presentation in October from Jeff Fassett of IEM Energy Consultants –Waste Heat to Power References o Discussion of cited reports and opportunities for KY –Fuel Issues o Infrastructure o Availability Next Actions

Finance Update Utilities Dynamics John Boyd Business Development Executive

11  August 13 th Presentation for Electricity Price Structure by Cheryl Eakle and Jason Volz –Defined all components of a non-residential electric bill –Variation in Application of Demand Charge, Ratchet and Standby Rates –Scenarios examined with and without CHP o Looked at the effect of an unplanned outage with demand ratchet on the utility bill.  August 13th Presentation for Natural Gas Outlook by Jason Willan of Fellon McCord –Increased domestic production seems to have reduced volatility, but the supply/demand balance remains tight. Prices should trend higher due to coal retirements, LNG exports, regulations, and mfg demand, but expected to remain below peak levels of mid 2000s. Finance Committee Recent Work Items

12  Discussion of Industrial Revenue Bonds with the Economic Development Cabinet  Review of the White Oak Case Study for a CHP performance contract  Continue ESA Discussions –Are there CHP scenarios outside of those outlined in the 2012 PSC memo?  Continue Standby Rate Discussions –Review State rates and application in conjunction with demand ratchet clauses  Review possibility of USDA or other programs and applicability to CHP Next Actions

Education and Outreach Update Kentucky Pollution Prevention Center Lissa McCracken Acting Director Cheryl Eakle Engineer

14 November 6, 2014 Bowling Green, KY November 13, 2014 Richmond, KY CHP Workshops

15  Financing Options/Incentives  Economics  Demand Management & Ratchets  Stand-by Charges  Policy Implications  *Panel Discussion*  Other Topics?? CHP Workshop Topics  CHP 101  Overview  Technologies  Kentucky Installations  Benefits & Risks  Fuels  Natural Gas  Biomass  Biogas  Other/Waste Heat to Power

16  Confirm Workshop Venues  Finalize Agenda  Develop Marketing Materials –Direct-mail postcard to targeted audience – week of Sept 29 th – campaign to spread the word  Identify Associations to Engage –Association of Independent Kentucky Colleges & Universities (AIKCU) –KY Hospital Association (KHA) –KY Association of Counties (KACO) –KY League of Cities (KLC) –KY Industrial Utility Customers (KIUC) –Other? Next Actions

17  Promote Workshop at Various Events –Gov. Local Issues Conference – Aug 28 (Louisville) –Gov. Conference on Energy & the Environment – Oct 7-8 (Lexington) –KY League of Cities Conference & Expo – Oct 7-10 (Louisville) –KY Innovation Conference – Oct 24 (Lexington) –Other?  Promote Workshop through Publications –“The Goods” (KAM) –Kentucky Living –Kentucky Energy Watch (DEDI) –Sustainable Solutions Post (KPPC) –Other? Next Actions

Policy Update Kentucky Association of Manufacturers Greg Higdon President and CEO

19  Presentation was given August 14 th by Jeremy Faust of GCEA about the ePAD legislation (PACE) –ePAD is an energy project finance tool that works through property tax assessments –Allows for longer term financing –May be seen as “off balance sheet” –Nationally $245 million worth of projects are in the pipeline using a similar (PACE) financing mechanism –Legislation will likely be proposed again in January  Thermal Sales –EKPC Spurlock Plant sells steam to Inland Container, but only because of additional boiler capacity (additional fuel used) –Recast Energy Case Study Policy Committee Recent Discussions

20  Letter will be drafted requesting PSC opinion of CHP-related issues.  Information will be relayed to the Policy committee as it becomes available for: –Permitting Issues – waiting on Tech SubCommittee –Interconnection Guidance - waiting on Tech SubCommittee –Rate Issues - waiting on Finance SubCommittee –Air Quality Regulation Impacts – 111(d) – comments to EPA due Oct. –Third Party Arrangements – need to clarify with PSC, per 2012 staff opinion –CHP as coop-owned asset – opportunity? Next Actions

21 Questions/Comments? –Next Work Group Meeting will be November D Fair Oaks Roundtable and Next Steps

Frankfort, KY September 10, DEDI(502) KAM(502) KPPC(502) Work Group Meeting Number 4