Michigan Energy Plan Comments
Submitted May 2, 2013, by the Geothermal Exchange Organization (GEO). Comments were provided through the Michigan website. Answers below refer to specific questions (as numbered).
GEO—the Geothermal Exchange Organization—is a non-profit 501(c)(6) trade association representing the interests of its member companies, with outreach to government institutions and the public about the economic, national security, and environmental benefits of geothermal heat pump systems for both residential and larger scale commercial applications. For information about geothermal heat pumps and GEO membership, visit www.geoexchange.org. Phone: (888) 255-4436. Email: GEO@geoexchange.org.
#3 – How do Michigan’s costs for renewable energy compare to the cost of existing generation and to the cost of new non-renewables generation today? Any meaningful Renewable Energy and Energy Efficiency policy moving forward must include the most efficient heating and cooling systems. Geothermal heat pumps (GHPs) fill the bill. GHPs and the distributed, renewable thermal energy that they provide should be considered in any comprehensive statewide energy plan. GHPs help reduce power demand and lessen the use of fossil fuels (heating oil, natural gas and propane). They help flatten utility demand peaks in summer and build load during the winter. The cost of GHP deployment can be far less than the cost of new renewable power plant commissioning.
#8 – What is Michigan’s long-term potential for more wind, solar, hydro, biomass, landfill gas, and other renewables sources? According to the U.S. Department of Energy (DOE), buildings are the largest single sector of total U.S. energy consumption, accounting for 41% of primary energy use in 2010. Approximately 24% of the nation’s total energy use is for space heating, cooling and water heating. Those numbers are similar for Michigan. This “thermal load” in homes, industrial and institutional buildings (hospitals, schools, colleges, churches) represents a huge cost, both in terms of energy supply and environmental damage. GHPs are a unique renewable energy technology that can dramatically reduce the thermal energy demands of buildings in Michigan. GHPs are not tied to geologic or tectonic heat-generating resources. They use the near surface of the earth (ground) as a convenient heat sink near the buildings they serve. Unlike biomass, they do not burn anything, and unlike solar and wind, they don’t depend on the sun to shine or the wind to blow. In Michigan, buildings are the largest single opportunity available for cutting thermal loads and improving the demand-side efficiency of electrical energy use. According to the U.S. Environmental Protection Agency (EPA), “GHPs are among the most efficient and comfortable heating and cooling technologies currently available…” In addition, EPA’s Energy Star program website says that, “…qualified geothermal heat pumps are over 45 percent more energy efficient than standard options.” Programs to promote GHPs and assist homeowners with installation cost will serve the state well in reduction of fossil fuel use and consumer costs for energy. A paper from the Geothermal Exchange Organization on the concept of “Negawatts” describes how GHPs can play a much more important role in demand side management by electric utilities.
#10 and #11– What are the current and projected relative costs ( #11 – per kilowatt hour) of existing and new builds for wind, solar, hydro, biomass, landfill gas, coal, natural gas, nuclear, and other sources? Typical cost for a 3-ton average residential geothermal heat pump system (GHP) is between $15,000 and $20,000. This upfront cost is higher than conventional heating and air conditioning systems, but with 40% to 70% reductions in energy consumption bills – plus a federal GHP installation tax credit of 30% of system cost – paybacks are in the realm of 3 to 7 years. Even greater cost savings are realized in commercial and institutional GHP projects, as economies of scale and federal tax incentives (10% tax credit and accelerated depreciation) provide relatively rapid system paybacks. Both energy savings and reduction in fossil fuel use are part of any sensible state energy plan. Widespread GHP use across utility service territories would produce renewable energy and save energy production with fossil fuels, whether by a home-based natural gas or propane system or the burning of coal or natural gas at an electric generation plant. A study (attached) by Western Farmers Cooperative (Anadarko, OK) on the relative reduction in power use by GHPs vs. conventional air-to-air systems found that GHPs reduced power consumption by .65 kW per ton of installed capacity. Residential GHP installed cost vs. that of renewable power sources on a $/MWh comparison basis is a fraction of that for installed renewable power plants. Installing GHPs across utility service territories would cost approximately half that of constructing new power plants. More information on the energy savings potential of GHPs can be found starting on page 22 of “Ground Source Heat Pumps, Market Status, Barriers to Adoption and Actions to Overcome Barriers,” Patrick Hughes, 2008, Oak Ridge National Laboratory.
#12 – What methods have been used by other states or countries to set renewable targets? New Hampshire, Maryland, and Wisconsin have modified their Renewable Energy Standard laws to include geothermal heat pumps (GHPs) as a renewable energy source. These states amended their renewable and energy efficiency laws by expanding the definitions to include the thermal energy avoided by use of GHPs, and providing renewable energy credits for their use. Advocacy groups in Connecticut, Massachusetts, Illinois, Colorado, and New Mexico are currently working in various ways to amend their states’ renewable and energy efficiency standards to include GHPs and the thermal loads they avoid as both renewable and efficient sources of energy. Simple formulas for calculating thermal loads avoided with GHPs are readily available. Please contact the Geothermal Exchange Organization (GEO) for more information (firstname.lastname@example.org). The U.S. Department of Energy DSIRE website (Database of State Incentives for Renewables & Efficiency – http://www.dsireusa.org/) lists all renewable and energy efficiency information on a state-by-state basis, including renewable energy and energy efficiency mandates, incentives and rebate programs by government and utilities.
#15 – What has Michigan’s experience been with siting renewable and non-renewable energy generation to date? If siting becomes easier or more difficult, how will that impact both cost and the overall renewable capacity of Michigan? Geothermal heat pump installations generally do not entail siting issues. They are distributed energy under measured decisions by homeowners, businesses, industry and institutional management. Beyond generally simple regulatory considerations for ground loop boreholes, GHP installations don’t generally fall under the spate of regulatory demands (and added costs) as large power production facilities. GHP systems installations are based upon decisions by private landowners that have little or no impact beyond the property on which they are installed.
#23 – How have eligible “renewable”/ “clean”/ “sustainable” energy resources been defined in other jurisdictions? How has the possibility of new forms of energy been accommodated, if at all? New Hampshire, Maryland, and Wisconsin have modified their Renewable Energy Standards to include geothermal heat pumps (GHPs) as a renewable energy source. These states amended their renewable and energy efficiency laws by expanding the definitions to include the thermal energy avoided by use of GHPs, and providing renewable energy credits for their use. Advocacy groups in Connecticut, Massachusetts, Illinois, Colorado, and New Mexico are currently working to amend their states’ renewable and energy efficiency standards to include GHPs and the thermal loads they avoid as both renewable and efficient sources of energy. An Oak Ridge National Laboratory report (Liu – 2010) has enumerated the potential national benefits of GHPs in terms of energy savings; reduced summer peak power demand; consumer energy savings; and reduced carbon emissions from retrofitting the heating and cooling systems with GHPs in existing U.S. single-family homes. Michigan would not be alone in realizing similar benefits from widespread adoption of GHPs. Renewable energy purchase mandates increase the cost of power by forcing installations of expensive solar and wind facilities. GHPs on the other hand, actually place downward pressure of electric rates by producing renewable energy onsite that avoids use of electricity and fossil fuels while reducing summer peak power demand and cutting carbon emissions. GHPs use 25% to 50% less electricity than conventional heating or cooling systems. And even though they use some electricity in their operation, a GHP uses only one unit of electricity to move three units of renewable heat from the earth. A recent white paper from the Geothermal Exchange Organization (attached) describes how geothermal heat pumps produce “Negawatts,” which have a higher value than any megawatt of power generation as GSHPs produce the thermal equivalent of a Negawatt at a fraction of the installation cost compared to a megawatt of electricity produced by any renewable power source like wind, solar, or biomass and GSHPs avoid the need for additional transmission lines. The idea of a Negawatt is cutting electricity consumption through energy efficiency without necessarily reducing energy usage.
#29 – How has Michigan or other jurisdictions proposed addressing possible impacts from the adoption of a federal RPS? The Geothermal Exchange Organization (GEO) has worked for several years with legislators in the U.S. House and Senate to amend federal renewable energy purchase requirements to include the thermal energy produced by GHPs, as well as including GHPs in any new federal RPS or Clean Energy Standard. Once a definition that includes renewable thermal energy from GHPs is established in federal code, it will make it more apparent and easier for state legislators and regulators to see beyond renewable electricity to the thermal loads avoided by GHPs as they efficiently and cost effectively heat and cool buildings across the state.