Inside Implementing the New Hampshire Thermal REC Program

This post is part of a series to do a state by state in-depth analysis of current research, policy and other legislation in New England that is impacting, or has the ability to impact the geothermal industry. An in-depth analysis of Massachusetts has already been published. Vermont, Connecticut and New York are soon to follow.

There has been a huge amount of buzz in the geothermal world about the NH REC that passed because it’s the first in the country of it’s kind. There is work that needs to be done, but what is exciting is that is we can focus on creating and implementing the program NH has the ability to be a hot bed and lead the country in geothermal heat pump industry and eliminating oil usage for residential space heating.

The current budget has the ability to fund 1500+ residential geothermal projects, which has the potential to save New Hampshire property owners $4.8 million dollars (in 2012 dollars) on fuel costs annually and would spur $48 million dollars in 100% local jobs to design and install the new equipment. To give you some perspective, the law only requires that $575,000 be spent on purchasing thermal RECs. Yes, $575,000 in public funds have the ability to spur $48 million dollars in private investment and save 1,500 homeowners around $2,000 per year on heating costs, totally $3 million in fuel savings per year. That is amazing.

Here’s a review of what happened, and what we’re working on.

NH Current State of Geothermal Policy and Lobbying Bill

• SB 218. You can read the whole bill here http://www.nhliberty.org/bills/view/2012/SB218
• Passed, due to go in effect January 1, 2013

SB 218 Key Bill Language

• XV-a. “Useful thermal energy” means renewable energy delivered from class I sources that can be metered and that is delivered in New Hampshire to an end user in the form of direct heat, steam, hot water, or other thermal form that is used for heating, cooling, humidity control, process use, or other valid thermal end use energy requirements and for which fuel or electricity would otherwise be consumed.
• 272:4 Electric Renewable Energy Classes. Amend the introductory paragraph of RSA 362-F:4, I to read as follows:
• I. Class I (New) shall include the production of electricity or useful thermal energy from any of the following, provided the source began operation after January 1, 2006, except as noted below:
• 272:5 Electric Renewable Energy Classes. Amend RSA 362-F:4, I(b) to read as follows: (b) Geothermal energy, if the geothermal energy output is in the form of useful thermal energy only if the unit began operation after January 1, 2013.
• No new employees shall be hired by the commission due to the inclusion of useful thermal energy in class I production.
• REC Prices:
• (a) Class I—[$57.12,] $55, except for that portion of the class electric renewable portfolio standards to be met by qualifying renewable energy technologies producing useful thermal energy under RSA 362-F:3 which shall be $25 beginning January 1, 2013.
• (b) Class II—[$150] $55.
• (c) Class III—[$28] $31.50.
• (d) Class IV—[$28] $26.50. 

Key Friends and Stakeholders

Below are the sponsors of the bill and the committee that sponsored it.

• NH Energy and Natural Resource Committee:http://www.gencourt.state.nh.us/senate/committees/committee_details.aspx?cc=S38
• Bill Sponsor
  • Sen Jeb Bradley
  • Sen John Gallus
  • Sen John Barnes, Jr.
  • Sen Bob Odell
  • Rep Robert Introne
  • Sen Jeanie Forrester
  • Rep Sam Cataldo
  • Sen Gary Lambert
  • Sen Jim Luther

Key Topics

• Systems must be monitored real time.
• Provide useful thermal energy
• Come into operation after Jan 1, 2013
• Current spend of $575k to be increased each year, first come first serve basis, with no specific legislation that a certain percentage must from from a certain technologies or customer profile (reuse, commercial, etc)
  • Note that this is a HUGE SUM for the geothermal industry. Assuming a project runs at an average COP of 3.75 and delivered 63MMBTU to a home, it will deliver a little more then 13,000 kWh in thermal energy, which equals 13MWh. 13 X $29 = $377.
  • $377 addition dollars including fuel savings will make geothermal an even better investment.
  • $575,000 / $377 = 1,525. This means there is roughly enough cash for 1,500 residential geothermal projects in New Hampshire in year 1
  • At an average installed costs of $8,000 per ton, at 4 tons equals $32,000 per systems X 1,525 systems equals = $48.8 million dollar investment potential for the geothermal market in NH.
  • The bill clearly states that no new personell will be added to deal with this bill, this means that we all need to do it ourselves. 

Conclusions from preliminary PUC Meeting

• No administration costs to PUC level
• Proposals go to program administration at NH PUC.
• Geothermal industry needs to be able to aggregate many systems and present to PUC in bulk, and then distribute funds to system owners

Current Conclusions about how the program will work 

After preliminary conversations with industry REC experts from SREC Trade and other small compliance solar PV markets, here are my conclusions about the basic structure of a REC program. Most programs involve a 4 to 5 steps process.

1. Project Documentation and Intake: The project documentation stage is a stage where basic information about the project is collected and then the system ‘applies’ to be a part of the project. What exactly is required by project documentation will likely be determined on a) what the NH PUC will requires to write checks and b) recommendations from NEGPA standards committee. The information tends to include a) client information b) contractor information c) project specifics d) project commissioning data e) project photo completion. For efficiency sake, we will likely create the project documentation as an online application process with support paper documentation be submitted. We need to make project documentation extremely simple.
2. Metering and Communication Standards. The metering standards will specify the type of equipment, reporting requirements to the REC database, the accuracy and type of sensors to be used, and how many data points needs to be gathered from each project. In order for a project to generate RECs, it must meeting the reporting requirements. Basically, the reporting technology will be used to monitor the projects and report the data to a central database that will be responsible for actually minting the RECs. What exactly the metering and communications standards will likely be based on input from a) the NH PUC b) recommendations from NEGPAs standards committee and c) what the database that all the monitoring equipments connects to will require. All of the systems that are monitored will need to send their information to the database in step 3.
3. REC Registry. The REC database or registry is the place where the RECs are actually created and then bought and sold between different organizations. For the Massachusetts Solar PV, the registry that is used is called NEPOOL GIS. All PV projects in the state report their product numbers to NEPOOL GIS and then they use this database to sell their RECs to aggregators or LSEs that purchase their RECs. The NH project will likely use NEPOOL or another database called North American Renewables Registry that was created by APX, the same company that created NEPOOL. The database is useful because it “issues, tracks and enables trading and retirement of certificates through a unique, traceable serial number issued”. I called APX and they are currently talking with the NH PUC to determine if and how NEPOOL can be used for the NH REC program. Even though the database clearly state that it is for electric generation, it has been used for a thermal program in Connecticut so there is hopes that it can be used in NH.
4. Minting and Selling RECs. Once the RECs are actually in a database they are bought and sold by transferring them between account holders within the database which is all done electronically.
5. Distributing Funds to Project Owners. For NH, NEGPA the two main accounts in the database will likely be NEGPA and the NH PUC, all of the geothermal projects will have sub-accounts, under a master NEGPA account. Thus, NEGPA will have the ability to sell all the RECs to the NH PUC in one sale, and then redistribute the funds to each project owner based on how many RECs they sold.

Next Steps

1. Continue to research the solar PV REC market best practices so that we do not have to reinvent the wheel. Take the lessons learned from Massachusetts Solar Thermal Pilot program as well in terms of reporting, monitoring and implementation.
2. Connect with APX to determine if their database can support the NH program and how much it costs to use their program.
3. Communicate with the NH PUC to figure out what exactly we need to present to them to get PAID for RECs, what sort of supporting documentation do they need to see. If they hold the cash, we need to make sure we provide a system that they accept.
4. Once we have determined the NH PUCs requirements for getting checks RECs and the requirement of APX or another database for creating RECs, we can determine the project documentation and monitoring technology requirements.

If you have any thoughts on this and/or want to get involved with the process or NEGPA, please let me know.