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2017 NH Business Energy Education Series: Vol 18 – Purchasing Electricity directly from ISO-NE Guest Blog by Gus Fromuth

‘Direct-from-grid’ electricity: a cost-saving option

Hands-on purchasing gives larger users a chance to benefit from wholesale pricing

Guest Blog  by Gus Fromuth,   FREEDOM ENERGY LOGISTICS

 

It’s well known that the price of electricity is high in New England, and specifically high in New Hampshire. But even with that reality, there are solutions to mitigate the issue, specifically for heavy users.

During a four-day period from May 4 to May 7, when electricity pricing in the New England wholesale market reached an unusual low, many of the region’s largest wholesale energy users were actually paid to use electricity.

The average price of electricity was negative, so instead of paying for the electricity that they used, they received a credit for the amount that they used. This is something that all large users should be aware of; not many typical users are aware that there is a framework in place to navigate the grid and lessen the constant burden of electricity pricing.

In 2014, ISO-NE implemented policy enhancements to the wholesale energy market that allowed electricity prices to go beyond zero to being negative during certain hours. These changes allowed generators to submit price offers for each hour of the day based on their actual cost of fuel, including negative price offers.

At times of excess energy on the grid, certain generators have made operational decisions to continue producing free and even negative-priced energy rather than shut down and then restart again hours later. It’s called buying direct from the New England Power Pool via hands-on purchasing, and it’s a reality. Large-scale manufacturers are among the businesses that can actually benefit from these market movements.

Freedom Energy Logistics is working with its customers one-on-one to encourage them to take advantage of the “direct-to-grid” purchasing process based on those policy changes at ISO-NE.

One of our customers, Shipyard Brewing Company of Portland, Maine, recently reaped the benefits.

“We’ve been buying directly from the New England Power Pool for almost a decade now and have done extremely well,” said Paul Hendry, plant manager at Shipyard.

Simply said, while energy costs are indeed high, it’s a great time to be purchasing electricity wholesale.

How does this help the general New Hampshire resident? It’s economic development smart. We often hear that the cost of energy is among the leading barriers to businesses locating and operating in New Hampshire. Such positive results of business-friendly policy improvements and creative energy buying strategies are a welcome change in tune.

This article appears in the July 21 2017 issue of New Hampshire Business Review …….with permission to reprint by the author.

Gus Fromuth, managing director of Freedom Energy Logistics, is a founding member of the NEPOOL Market Participant End User Sector.

 

The Freedom Team

5 Dartmouth Dr. Ste 301
Auburn, NH 03032

P 603.625.2244
F 603.625.8448

2017 NH Business Energy Education Series: Vol 16 – HB1116 – The PUC Order On Met Metering is Delivered

HB1116- The PUC Order On NET METERING is Delivered, …………and now what?

 

Arguably, the biggest legislative battle in 2016 on the energy front in New Hampshire was Net Metering (see Post #5).  That process eventually culminated into the passage of HB1116, which required the New Hampshire Public Utilities Commission (PUC) to issue an order in 2017 on changes to the old law and pricing structures…….which it just did.  Below is a quick outline of the PUC’s order done by the New Hampshire Sustainable Energy Association (NHSEA).

 

Information provided by the NHSEA:

The PUC released their final Order on net metering on Friday, 6/23/17. It is a mix of the two filed settlement proposals, and is generally reasonable and will maintain a strong industry, is good for consumers, and makes positive conclusions about cost-shifting and the benefits of DER, but keep in mind we are still combing through it. Highlights from the Order and listed below. The full Order can be found on the PUC’s website here.

To explain and discuss the Order in greater detail, NHSEA gave a webinar as part of the Local Energy Solutions series on Monday July 3, from noon – 1:00. You can view the free webinar HERE.

 

  1. The new NEM rate begins on September 1, 2017. This date may be later if utilities can’t update their billing systems in time to reflect the new NEM regime. Customers must be given 30 days notice in advance of the new rate start date.  

 

  1. Grandfathering – all existing NEM systems are still grandfathered through 2040.  NEW systems (under new rate) also grandfathered through 2040. 

 

  1. Small systems ≤100 kW are still credited monthly at 100% of retail energy and transmission charges but only 25% of distribution charge; the customer will receive monetary bill credits instead of kWh credits (allowing cash payment if customer moves or annual credit balance exceeds $100)

 

  1. Large systems >100kW are still credited monthly at the default energy rate; bill credits now monetary instead of kWh.

 

  1. All customer-generators must pay non-bypassable charges (system benefits, stranded cost recovery, storm recovery) based on full amount of electricity imports without netting exports.

 

  1. Monthly Netting is maintained to measure net imports/exports – except all non-bypassable charges will be charged on all (gross) imports and will not be credited on any exports.  

 

  1. Value of DER Study: Eversource must perform a marginal cost of service study within twelve months (of Order date) to inform the Value of DER study. Value of DER study will focus on solar and small hydro and use a 10-15 year framework for the analysis. Staff will direct/manage the study, hire a consultant to help perform it, and will begin by convening a workgroup to develop scope of study within two months’ time of this Order.  Note: That meeting to form the workgroup is set for August 16, 2017 at the PUC.

 

  1. Statewide Cap- No new cap was set (so effectively the cap has been removed).

 

  1. Pilots – Four pilot programs are approved, including: Time-of-Use (Eversource and Unitil only), shared bill credits for low/moderate income customers, Real-Time-Pricing for one municipality (Lebanon), and a non-wires alternative pilot.

 

  1. 20% Onsite Use – If a customer-generator uses at least 20% of the system generation onsite, then they can receive the group net metering rates without registering as a group host and going through the GNM protocol with the PUC, etc. 

Practical bill impacts for a customer-generator with solar PV: An example from ReVision Energy (2017 Eversource Electric Rates):

  • Customer Charge (per month): $12.89 (unchanged)
  • Energy Charge (per kWh): 11.17 cents (still 100%)
  • Transmission Charge (per kWh): 2.39 cents (still 100%)
  • Distribution Charge (per kWh): 4.21 cents (now 25% = 1.05 cents)
  • Stranded Cost Recovery Charge (per kWh): 0.032 cents (no netting)
  • System Benefits Charge (per kWh): 0.356 cents (no netting)
  • Electricity Consumption Tax (per kWh): 0.055 cents (repealed in state budget)
  • Current net metering credit value (systems ≤100kw): 18.16 cents (excl. repealed tax)
  • New net metering credit value (≤100kW): 14.61 cents (80% current)
  • Difference = 3.55 cents (20% loss)

 

 Questions in the Order requiring response within 30 days (PUC will facilitate):

  1. Should the subsequent sale of solar array or property on which it is installed entitle the new owner to continue to be net-metered under the grandfathered tariff provisions?
  2. Should the subsequent expansions of/modifications to solar array be entitled to net metering under the grandfathered tariff provisions?

 

That was a quick, but enlightening, rehash of the full Order, which you can read here .  I would encourage you to also click on the link HERE and follow the NHSEA webinar to learn more about what it all means to you.  NHSEA has about a 30 minute presentation and another 30 minutes of questions and answers …….both parts will help you out if you want to understand net metering better in New Hampshire going forward.

 

Now, a few of my “business” opinions on what is ………and is not included in the order for the larger system sized “business” consumers:

1) There is no increase or decrease to the electric rates credited for projects >100KW.  Some of you may think that’s a good outcome …………not me.  Going to 101KW doesn’t automatically impact the utility’s distribution system, any more than 100KW did.  Basically, “small” projects got a 25% credit on Distribution System costs and “large” projects got a 0% credit.  The wires won’t know the difference going to from 100 to 101KW.  There are many small PURPA generation projects between 101KW and 5 MW that have been sitting on the utility distribution systems in New Hampshire for decades with no “costs” attributed to the distribution system because of these projects………. and any “costs” to the distribution companies to evaluate the interconnections or physically make the interconnections were paid for by the PURPA generators.

Additionally, small projects got a 100% credit for Transmission costs and large projects got 0% credit.  Going to 101KW doesn’t automatically put you into use of the Transmission system either. Same applies to the much larger PURPA generators unless their power was potentially being “wheeled” by agreement to other utilities outside of the locally connected distribution system via Transmission Lines ……….all of which is on paper since the actual electrons stay on the local system.  New Hampshire distribution companies routinely (daily) “wheel” PURPA project generation output to ISO-NE at no cost.

In fact, a clear case could have been made before the PUC that larger projects were entitled to see credits for some portions of the “wires” chargers too ………..at the very least Transmission cost, but there was no business consumer group at the table making that case! No organized group intervened on behalf of businesses who wanted to self- generate a portion of their electrical load >100KW and use net metering to economically optimize the size of their system ……….. and receive increased off-set credits for their self- generation when it exceeds their own use ( for instance, think about weekend solar generation for most businesses). The 101KW break point from small to large is a completely arbitrary level to change classifications ………..and the subsequent rates that go with it.

Remember, the New Hampshire Electric Co-operative increased their net metering (NEM) credit rates by 25% for projects >100KW over a year ago, while slightly decreasing their small project credit rates.  Take a look at their updated rates HERE. They aren’t regulated by the PUC.  They are “owned” by their members who pay the rates. That same magnitude (25%) of increase could have easily happened at the PUC as well in this order…………. but it didn’t.  Why, because nobody argued for it (NOTE: that is a win for the utilities, not the business consumers).

2) The maximum sized individual net metering project remained the same at 1.0MW (1000KW). Once again, that works for all residential properties, commercial properties, and smaller industrial properties ……..but large industrial companies are S.O.L. (my technical term)!  Again, no one was at the table advocating for the needs of the large industrial consumer to self- generate and lower their operating costs.  If a project was sized at 1001KW, it would not be eligible to net meter at all.

3) The one new (good) provision in the order for large projects deals with the 20% rule for self- consumption (i.e- if you consume >20% of the project’s output, you don’t have to register to act as a group net metering host, but you can function as one).  For properties that can take advantage of this provision, that’s one in the win column for you!

 

In general, think of this new (after September 2017) period of Net Metering as Phase IIPhase III will come along some time (years) down the road after the pilot projects and studies have been undertaken and completed, and there is more real NH data to go by for future modifications to net metering ……. like real time pricing effects, actual system benefits to DER determined, etc. etc. Meanwhile, let’s hope that someone takes the initiative to increase the allowable project size from 1MW to 5MW during next year’s legislative session so that large industrial consumers can see some meaningful benefits too, because they need more options than they have today for “competitive” energy supplies.

 

2017 NH Business Energy Education Series: Vol 13 – Biomass Heating Comes of Age By Jim Van Valkenburgh

Biomass Heating Comes of Age: Not Just Woodchips & Cordwood Anymore

Guest Blog By Jim Van Valkenburgh, VP Sales & Marketing at Froling Energy in Peterborough, NH

The use of Biomass as a heating fuel has a long history in New England but it seems to be under-appreciated by the general public.  Solar arrays that are popping up all over our region are getting a lot of attention lately but Biomass is still providing more kilowatts of energy than all of the Solar system combined.  Those are kilowatts of both heat and electricity derived from wood in power plants, boiler systems, plus wood and pellet stoves in countless homes.

The people of Froling Energy are happy to be a part of the modern wood heat movement that has so positively impacted the economies of broad rural areas of New England.  Having a new paying market for low grade wood is very important to loggers due to the shutting down of numerous paper mills and wood fired power plants.  We believe that much more can be done with Biomass for heating all kinds of buildings and this will have real, positive economic impacts on our region.

Froling Energy has focused on the technology of biomass boilers for almost 10 years and has accumulated a long list of happy customers who, all together, are no longer burning over 1 million gallons of fuel oil each year.

As with most businesses, technology and innovation have made significant improvements in the biomass industry.  It may surprise many that most of this development has happened in Austria.  Twenty years ago the Austrian government made a commitment to convert a large percentage of their energy use to biomass.  Today, modern biomass heating systems are commonplace in large and small buildings and Austrian boilers are the most advanced in the world:  clean burning, fully automated and very reliable.  As a result, they dominate the US biomass market.

Observing what is happening in Austria now allows one to gaze about 10 years into the future of the US biomass market. What can we see there?    Today their biomass market is divided up fairly evenly among 3 distinct biomass fuels:  Green Chips, Dry Chips and Pellets.

  1. GREEN (not dry) WOOD CHIPS began the movement of the automated central heating of buildings using biomass.
  2. PDCs—Precision Dry Wood Chips have come along to fill the wide gap in cost and adaptability between Green Chips and Pellets.
  3. WOOD PELLETS were an important new fuel starting about 2005:  a versatile, simple to use fuel that is easy to transport and deliver.

You may be asking, “What about woodstoves?”  Our industry is focused on fully automatic, self feeding central boiler systems.  Any devices that are manually loaded, like a wood stove, chunk wood boiler or pellet stove, are not considered in this discussion.

The US central biomass heating market is split between Green Chips and Wood Pellets.  Dry Chips account for less than 1% here.  (Froling Energy is looking to change that—read on.)   Let’s look at the two extremes of the market that have taken hold in the US:  Boilers that burn Wood Pellets and very large boilers burning Green Chips.

 

GREEN WOOD CHIP BOILER SYSTEMS

Green Chip systems make the most financial sense for organizations that are BIG fuel users.  There are many successful installations of large green chip boiler systems on rural campuses and public schools in Vermont, New Hampshire, Massachusetts and New York.  Green chip boiler systems tend to be most common in situations where they are offsetting 100,000 gallons of fuel oil or more per year.

While a fresh cut log would be nearly impossible to light in a wood stove or fireplace, fresh wood chips burn well in a green chip boiler.  That is because the chips go from wet to dry fairly quickly as they enter and pass through the boiler.  By the time they make it to the fire grate, the heat of the boiler has driven out the moisture so that they burn very well.

Green wood chip boiler systems have evolved nicely to be quite well automated and reliable, but they are only economically viable for heating campuses and other large multiple building complexes.  This is due to the large infrastructure costs required to purchase and install the large scale material handling and boiler systems.  Big green chip boilers are typically fired up around Thanksgiving and run straight through until about the first day of Spring.  They modulate their output, adjusting to a heat load like a pellet boiler, but they don’t turn off and cannot turn low enough for the intermittent loads of fall and spring.

A ton of Green chips is significantly less costly than a ton of Pellets to buy (75% less+), however nearly twice as many tons are required to generate the same amount of heat.  That’s because green chips contain between 40% and 55% water by weight.  Part of the heat from the burning chips is used up when that water is boiled off inside the boiler.

Burning Green Chips brings with it a number of other costly requirements:  Large volumes of Green chips need to be stored under cover, usually in large boiler buildings with deep concrete pits and “live floor” material handling systems operated by complex hydraulics and connected to big augers and belt conveyors that move the chips into the boiler.   These buildings must have large garage doors that 18 wheel trucks frequently dump their loads into.  Particulate matter in flue gas is a concern for all biomass boilers and green chip boilers tend to need expensive Electrostatic Percipitators and/or other expensive devices in order to pass local clean air regulations.

Green chips need to be purchased from reliable suppliers—not just low bidders.  This cheaper, rougher, and more basic fuel simply requires more monitoring by a trained staff.  Green chips must be managed well by technicians to prevent mold growth and freeze-ups.

Maintenance staff must also keep their eyes on the big, complex green chip mechanical systems.

 

WOOD PELLET FIRED BOILER SYSTEMS

The earliest “fully automatic” pellet boilers from Europe were first imported to the US in 1997.   Initially it seemed that these boilers were ready for commercial use and many were installed.  Unfortunately they required too much manpower to keep them running reliably.  They could run for a few days without attention but once a week cleanings were mandatory and daily check ups proved to be good practice.  “Burn-backs” occasionally happened where the fire in the firebox would migrate through augers into the pellet feed system, creating a dangerous situation.  Improvements were needed.

Around 2010 (when Froling Energy got into the business) a new generation of fully automated pellet boilers began to be imported from Austria by OkoFEN and Froeling.   The systems proved to be much more reliable so sales grew steadily with the help of a couple of solid US distributors.  With boilers ranging from 40,000 to 200,000 BTU/hour, a wide range of residences and small commercial buildings like town halls, churches and small schools installed systems. Staging 2 or more of them together was an effective way to get more firepower.

Sales were good and as time passed Froling Energy got into progressively larger installations.  We went from installing fairly small boilers in homes and small offices to multiple boilers that could heat large areas.  In the past few years we are installing biomass boilers with outputs of one to three million BTUs as a matter of course. New England Wood Pellet in Jaffrey had established itself as a reliable supplier of bulk wood pellets at a steady price.  Times were good.  The price of oil was averaging $3 a gallon and people were looking for options to oil.  Wood pellet boilers had become a least cost, viable alternative.

Why did people buy pellet boilers?  We found that fuel cost savings drove most of these purchases.  Anyone with green leanings will be happy that a viable biomass option was available but if the savings of a fuel switch didn’t pay for themselves in less than 10 years it was unlikely that a project would go forward.

We discovered that larger pellet boiler systems typically pencil out better than small ones.  If more fuel is being offset you get more savings.  And if you add in an old, failing oil boiler and/or a leaking 10,000 gallon oil tank, an investment in a biomass boiler system has a better return on investment than any conventional options.  Within a few years we were installing one and two million BTU/hour pellet boiler systems in schools and commercial businesses.

Things were going well in the biomass boiler business for Froling Energy.  Customer systems were not without problems but we pushed through, learning all the way, building a solid customer base.  Froling Energy has focused on customer satisfaction since day one—fixing troublesome boilers and always working to make things right.

 

A NEW FUEL IN THE US:  PDCs—SEMI-DRY WOOD CHIPS

Back in Austria and in much of northern Europe where the biomass heating market is mature a third fuel has evolved.  Pellets are a perfect refined fuel for small boilers and green chips are the least cost fuel for big fuel users–but at a time today of $2 per gallon oil, neither of these systems pencils out very well in terms of Return on Investment.  PDCs have changed that, especially in the medium to large boiler market.  PDCs (precision dry wood chips) are green wood chips that are chipped down to a smaller size and then dried down to 25% moisture content.  They are made under quality control standards that result in a more consistent product—similar to wood pellets.

PDCs are 35% less costly than wood pellets and can be delivered by a blower truck through a 5” diameter pipe.  That’s a significant difference.  The usual way of delivering any kind of wood chips is by a live floor truck.  Being able to blow them into a silo cuts the infrastructure costs by $150,000.  Not having to construct a building containing storage pits with live floor material handling systems saves at least that much money again.  Not having to maintain all that extra equipment saves a lot in man hours over the years.

PDC boiler systems are a hybrid that costs about 10% more than a similar pellet only system.  The biggest differences from a pellet system are the size of the silos and the mechanics of the material handling system that brings fuel from the storage silo to the boiler.  Pellets flow like water while PDCs (and Green Chips) stack up.  If pellets are drawn out from the bottom, pellets from above flow downwards.  If chips are pulled from the bottom, the upper chips just stay in place.  Force must be applied to make them move.  The most common and least cost method is a rotary extraction device or “sweeper arm” which moves under the pile, pushing chips into an auger channel below everything.  From there, rigid augers move the PDCs directly into the boiler.

Most European pellet boilers over 500,000 BTU/hr can burn either pellets or PDCs.   If a system is built to handle PDCs, it can also burn wood pellets as a “back up fuel”.  However a system that’s built for pellets is not able to move PDCs.

Who manufactures PDCs?  Froling Energy makes and delivers them in blower trucks to multiple customer sites.  One other company in New Hampshire makes a semi-dry wood chip and delivers them in live floor trucks.  We expect others to join into this market as it expands.

 

FUEL COMPARISONS

Price per ton of each of these three important biomass fuels is surprisingly different.  But don’t be fooled by price per ton because increased cost is due to increased value to the customer, which is added by levels of processing.  To replace 10,000 gallons of fuel oil you would need 83 tons of pellets, 107 tons of PDCs or 162 tons of green chips.   All three are sourced from the same wood material. Water content and size/shape are the biggest variables which impact the ease of handling, delivery methods, and stability on site.

 

THERMAL RECS

What are Thermal RECs?  Renewable Energy Certificates.  RECs are bought by power companies who are required by each state’s Renewable Portfolio Standards to generate fixed percentages of their delivered power from renewable sources.  Solar RECs are quite commonly understood as one of the key factors to making practical the generation of electricity with solar photovoltaic arrays.  Where solar systems create RECs by generating megawatts of electricity, biomass boilers create Thermal RECs based on the net amount of heat they produce.

New Hampshire was the first state to authorize Thermal RECs.  Today, NH Thermal RECs can be sold for between $12 and $25 each.    Thermal RECs are only available in New Hampshire at this time but Massachusetts is making plans to offer them in 2018.

Burning one ton of pellets can generate about 4 T-RECs while a ton of PDCs generates about 3 and Green Chips generate about 2 per ton.  (These are rounded estimates.  Each situation will vary.)

 

PDCS REVITALIZE A DIFFICULT MARKET

In recent years where the price of oil has pushed below $2 a gallon, the availability of PDCs with a net cost of about 80 cents a gallon of oil have kept our crews busy.  Wood pellet systems have lost momentum.  As a result, most of the new boiler systems that we have installed lately have been set up to burn PDCs.

PDCs make a biomass boiler system a much better investment and have the potential to add growth and stability to the low grade wood market in New England.  Our most recent PDC Boiler projects include the Merrimack County Jail in Boscawen, NH, Plymouth Regional High School in Plymouth, NH, a third PDC boiler room at Whelen Engineering in Charlestown, NH and the Applegate Housing Project in Bennington, VT.  This summer our crews remain very busy doing boiler installations.  We see a bright future in this industry so long as we keep advancing the technology.

 

Download a PDF of this blog post here: http://bit.ly/2tcoiNk

Download a PDF of Froling Project – Merrimack County Department of Corrections here: http://bit.ly/2sJLH8q

Download a PDF of Froling Project –Whelen Engineering Boiler System #3 Burning PDCs: http://bit.ly/2rUNkNF

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