COMBINED HEAT AND POWER STEERING COMMITTEE August 20, 2014

ADVANCING INDUSTRIAL ENERGY EFFICIENCY AND THE CHP PARTNERSHIP  2014 CHP Meeting Schedule  Sub-committee Status  Work Group Meeting #4  Other CHP Activities  Roundtable Discussion  Next Steps and Action Item Recap 2

OBJECTIVES/OUTCOMES  Tool s and resources to help industry clear CHP hurdles – technical and financial  Informational materials/workshops  Screenings and assessments  Suite of policy and legislative recommendations 3

2014 CHP SCHEDULE 4

SUB- COMMITTEE STATUS TECHNICAL APPLICATION EDUCATION AND OUTREACH POLICY FINANCING 5  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

Sub-committee Progress and Interaction 6

7 FINANCE COMMITTEE RECENT WORK ITEMS  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 13 th 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.

8 FINANCE COMMITTEE UPCOMING WORK  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

9 POLICY COMMITTEE RECENT DISCUSSSIONS  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)  Looking for industrial case studies

 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? POLICY COMMITTEE NEXT STEPS 10

 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 DISCUSSIONS 11

TECHNICAL COMMITTEE NEXT STEPS  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 12

EDUCATION AND OUTREACH WORK ITEMS TASKS TIMEFRAME Workshops (2)June-Nov 14 Webinar (1)Sept - Nov 14 Networking Event (1)Sept - Nov 14 WebsiteOngoing 13

EDUCATION//OUTREACH CONTINUED  Manufacturers/Commercial Facilities/Institutions → End Users  Message: Reduce energy costs; more control of energy consumption; reliability; reduce GHGs  Public Policy Makers  Message: Opportunity for greater competitive edge  Utilities  Message: Distributed generation can help with peak shaving; power quality; achievable/controllable  Resource Assistance Providers → Promotion/Networking i.e. Small Business Development Centers, Economic Development Agencies, ADDs, Local Chambers of Commerce, Local Officials  Message: Present simplified, unbiased, solution for issues; Legitimize; opportunity for information sharing and voluntary participation  Equipment Manufacturers  Message: Make sure that the message is correct and completely accurate; make aware of initiative  Designers  Message: What is it? What types of considerations for including CHP? What are the issues involved? 14

ADDITIONAL CHP ACTIVITIES  Work Group Meeting Number 4  September 10 th 10:30am 300 Fair Oaks, 301D  CHP Workshop  November 6 th, Location TBD  CHP Action Plan Status  KPPC/DEDI Drafting, over 50% complete  Technical Screening Opportunities  One Performed, two more potential 15

ROUNDTABLE AND NEXT STEPS  Next Meetings are proposed for October 15th and December 17 th at 9am (Third Wednesday of every even month) 16 _____________________________________________________________________________ DEDI – KY DEPARMENT FOR ENERGY DEVELOPMENT AND INDEPENDENCE * KAM – KENTUCKY ASSOCIATION OF MANUFACTURERS KPPC – KENTUCKY POLLUTION PREVENTION CENTER * U.S. DOE – CHP TECHNICAL ASSISTANCE PARTNERSHIP - SOUTHEAST