NYSERDA’s CHP Program Dr. Dana Levy of NYSERDA: NYSERDA CHP thought-leader since 1999. Recipient of the USCHPA CHP Champion Award in 2007. Recipient of the NECHPI CHP Champion Award in 2014. Dana Levy, June 9, 2016 NECHPI Annual Meeting, Brooklyn

Axioms (we hold these truths to be self-evident) Public policy objectives encourage the deployment of clean & efficient CHP Axiom #2 The perpetual use of publicly-funded subsidies is a less-desirable mechanism than transforming the market to where it can be self-sustaining Incentivizing CHP projects one-after-another has some transformative value in that it helps build competency in the marketplace -- and NYSERDA is committed to doing this -- but this alone is too passive an approach for achieving “market transformation” The market needs genuine cost reductions in order to reach self-sufficiency A well-crafted CHP incentive program is important, but is not enough

Objective Scale-up the market penetration of CHP Expand cadre of competent solution providers active in NY Temporary use of incentives to lubricate the market Reduce project costs Raise other sources of revenues Provide consumer protection to yield good-quality projects Mature, quality equipment, configured as an integrated system Competent solution providers Proper sizing of systems Fair and equitable deals Long-term relationships Evolve to self-sufficiency in absence of incentives

Consumer Protection

Consumer Protection

Consumer Protection

Consumer Protection Guidelines have been created for: Multifamily Residential (master-metered) Assisted Living Facilities Hospitals Hotels

Previously (sunsetted on 2/29/2016) CHP Acceleration Program (PON 2568) Catalog-based rebate program Systems 50 kW through 1.3 MW CHP Performance Program (PON 2701) Pay-for-performance-based program Systems over 1.3 MW

Now The CHP Program $21 Million PON 2568 -- for projects (nyserda.ny.gov/pon2568) RFI 2568 -- for vendors (nyderda.ny.gov/rfi2568) Currently $21 Million available through 2018 $21 Million

The CHP Program No minimum size -- currently recruiting vendors of microCHP No maximum size until end of 2016 -- Max size 3 MW starting in 2017 Projects over 3 MW eligible for not more than $9 of the $21 Million pool Catalog approach for any size system Vendor centric -- vendor/module must be in catalog Single module, or multi-modules integrated into a system NYSERDA contracts with the vendor Quick NYSERDA technical review Custom design option for systems 1 MW and larger Project centric -- any contractor/equipment not in catalog NYSERDA will contract with site/developer/ESCO/etc. Longer NYSERDA technical review Identical incentive, identical payout structure, regardless of approach

The CHP Program Catalog Approach -- vs -- Custom Design Standardization with Personalization

The CHP Program Catalog Approach -- vs -- Custom Design Standardization with Personalization

The CHP Program Catalog Approach -- vs -- Custom Design Standardization with Personalization

The CHP Program Catalog Approach -- vs -- Custom Design Standardization with Personalization -- vs -- Customization

The CHP Program In general, Program rules follow the former CHP Acceleration Program Clean and efficient Performance data collection Full system single-point responsibility 5-year service plan “Stand-alone” operability… except systems 50 kW and smaller … except Steam Turbines or ORCs of any size All payments as milestone-based lump-sum payments Bonuses (critical infrastructure, target zones) Clean gaseous fuels: Pipeline natural gas, CNG, propane

The CHP Program New Rules Going forward, site MUST pay SBC surcharge on the electric bill. Incentive is calculated based on CHP System size, not Catalog Module size Awarding of incentives will decrease* to: 95% of original, for new applications received in full on or after 9/1/2016 90% of original, for new applications received in full on or after 3/1/2017 85% of original, for new applications received in full on or after 9/1/2017 80% of original, for new applications received in full on or after 3/1/2018 Projects will be paid their awarded incentive rate regardless of operational date There is now an Incentive Calculator available for estimation purposes When we soon update the Catalog, the incentive amount will be removed from the individual catalog pages Cap is now $2.5 Million per project (inclusive of bonuses) * Incentive decreases for microCHP (50 kW and smaller) still to be determined

The CHP Program New Rules, continued Modules 50 kW and smaller can be black-start capable or non-black-start If non-black-start, the incentive will be reduced to ⅔ that of a black-start capable module of the same size It is permissible to mix and match black-start/non-black-start modules within one System as long as the total System size is 50 kW or less Back-pressure Steam Turbines and waste-heat driven ORCs are now eligible, any size can be black-start capable or non-black-start

Comprehensive Support for the Marketplace Incentives help get projects built, which provides learning that helps reduce costs, and attracts solution providers to focus on NYS marketplace -- but this alone is not enough. In addition, NYSERDA further helps reduce costs by: Customer acquisition Branding Technical assistance via Outreach Agent And, NYS and NYSERDA are also striving to help raise alternative sources of revenues: REV Monetizing the value of resiliency

ERS Inc. is NYSERDA’s Agent for CHP Technical Outreach ERS is available to help guide customers through the process. ERS can provide technical support, answer questions, etc. to customers without their own resources. Gita Subramony gsubramony@ers-inc.com (212) 789-8182 x292

Market Transformation is a Journey How will we know when we’ve arrived at a market that can flourish in the absence of subsidies?

Market Transformation is a Journey How will we know when we’ve arrived at a market that can flourish in the absence of subsidies?

Thank You! www.nyserda.ny.gov/chp NYSERDA 17 Columbia Circle Albany, NY 12203 Dr. Dana L. Levy, D.Eng., P.E. Dana.Levy@nyserda.ny.gov (518) 862-1090 x 3377 NYSERDA, a public benefit corporation, offers objective information and analysis, innovative programs, technical expertise, and funding to help New Yorkers increase energy efficiency, save money, use renewable energy, and reduce their reliance on fossil fuels.  NYSERDA professionals work to protect our environment and create clean-energy jobs. NYSERDA has been developing partnerships to advance innovative energy solutions in New York since 1975.