CWEB.028/April.28.1998
AS SPRING BLOOMS AROUND THE NORTHWEST, we bring you new sprouts in microelectronics industry energy efficiency, state energy lawmaking in Washington and various renewable energy developments.
The microelectronics industry--fastest-growing in the region, and a big energy consumer--is looking more closely at energy efficiency. This issue of Con.WEB spotlights a collaborative venture examining increased efficiency in the silicon crystal manufacturing process and a case study of substantial energy efficiencies at a new silicon wafer manufacturing facility in Oregon.
On the policy front, the 1998 Washington Legislature and Gov. Gary Locke endorsed several energy-related bills with implications for conservation and renewables.
On the subject of renewables, the city of Portland is undertaking a fuel cell pilot project at a wastewater treatment plant. Also, a long-running dispute between Washington Water Power and a geothermal energy developer has ended with a power-purchase agreement. And PacifiCorp has joined a national alliance promoting renewables.
Elsewhere, a refinancing arrangement brokered by Bonneville Power Administration for another federal agency exemplifies BPA's market-oriented approach to the demand side. And, Washington Water Power has launched a duct-sealing program in cooperation with the Northwest Energy Efficiency Alliance, which is also working in the duct market.
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The Northwest Energy Efficiency Alliance and the world's largest manufacturer of solar photovoltaic (PV) equipment have joined forces in a $2 million collaboration with numerous potential benefits: substantial energy savings, reduced production time for silicon crystals, and lower costs for solar PV cells.
This enterprise involves the examination, development and transfer of efficiency improvements in the energy-intensive process of creating silicon crystals for photovoltaic and semiconductor (computer chip) applications. Roughly half of all U.S. silicon crystal and wafer production is located in the Pacific Northwest.
The Alliance and Siemens Solar Industries are splitting the cost of this venture, which was approved by the Alliance board in October (see Con.WEB, Oct. 31, 1997) and signed by representatives of both parties at an April 7 ceremony at the Siemens plant in Vancouver, WA.
"Microelectronics is this region's fastest-growing industry, and we're excited to be able to play a part in it," said Alliance chairperson Jake Fey, in a news release. "This partnership between the Alliance and Siemens has the potential to do great things. Not only will it reduce costs for photovoltaics, but the Northwest's microelectronics manufacturers will benefit with money-saving improvements they can use to become more competitive."
Siemens, according to the Alliance, has already conducted preliminary modeling on prospective efficiencies in its crystal-growing furnaces, which produce silicon ingots that are subsequently sliced into wafers for use in PV cells. Siemens still needs to refine the design and assure equivalent crystal quality. Most of the work will take place at the Siemens facility in Vancouver, according to Alliance lead project coordinator John Jennings.
The Technology
The process of manufacturing silicon ingots begins with raw polysilicon, according to the Alliance news release. This substance "is placed in a crucible and melted in a super-heated furnace. A small piece of pure silicon lowered into the spinning crucible touches the liquid silicon and slowly draws out the material to produce the ingot."
Among the specific efficiencies under study by Siemens are: "insulating the crucible in which the silicon is melted; installing a heat shield to permit more rapid cooling of the crystal as it is pulled from the crucible; and redesigning the argon gas management system." Argon gas, according to the news release, is used to regulate temperatures during the ingot-making process.
Potential Benefits
This project could provide many significant benefits.
One is energy savings on the order of 40 to 50 percent in the crystal-growing furnaces, which use electricity in reaching extremely hot temperatures. Each furnace has an average power demand of 250 kilowatts of direct-current electricity.
Siemens facilities could save an estimated 1.5 average megawatts over the 2-1/2-year term of the Alliance project, according to Alliance project coordinator Blair Collins.
In addition to energy savings, the potential efficiencies could reduce production time for silicon ingots by 15 percent, and reduce argon gas use.
But those savings could be dwarfed by the potential energy efficiencies if the Siemens work is successfully transferred to other manufacturers, particularly in the much larger semiconductor industry, which uses the same crystal-growing furnaces. Siemens will promote and sell the efficiencies it develops, according to Collins. Assuming at least two other manufacturers adopt them, the energy savings could reach 52 aMW over 10 years. And the total resource cost--which includes energy and non-energy benefits--is estimated by Alliance staff at less than 1 cent per kilowatt-hour.
And, this undertaking could lead to lower costs for PV cells, which in turn could eventually reduce the price of PV power.
Siemens Solar Industries is the leading firm internationally for the manufacture of PV cells and modules; its market share exceeds 20 percent.
In a separate venture, the Alliance is working to identify and pursue other efficiency opportunities in the booming and energy-intensive Northwest microelectronics industry. --Mark Ohrenschall
The microelectronics industry moves very quickly--developing new products, designing and building facilities, gauging future markets. There is no leisurely pace in this intensely competitive and highly capitalized business.
And so it is noteworthy that an Oregon company--assisted by Portland General Electric and others--took the time to examine and incorporate substantial energy efficiencies in its new silicon wafer manufacturing facility in south Salem.
Among the specific measures at the Mitsubishi Silicon American plant are energy-efficient HVAC systems, motors, chillers--and, notably, equipment for the firm’s energy-intensive process of growing silicon crystals. These will collectively save the company an estimated 7 million kilowatt-hours each year, and cut its annual electric bills by nearly $250,000. PGE contributed $417,000 in incentive payments and Mitsubishi funded the rest.
This project offers "a clear example that energy efficiency can be implemented even under the pressure of fast-track expansion," said PGE president and chief operating officer Peggy Fowler, in a December news release. "The fact that [Mitsubishi] worked closely with PGE to review energy efficiency measures from the first stages of design shows a real commitment to saving energy."
Smart Business
Mitsubishi Silicon America considers energy efficiency a smart business strategy providing many advantages beyond its own bottom line.
"We’re always looking for ways of saving energy, making things more efficient, less polluting," said Dan Prideaux, MSA’s associate director of corporate planning and engineering. Competitive pressures drive this pursuit--but not entirely. "If we can turn something that is not economical in the short term but works out in the long term to something we can justify, everybody benefits."
Utilities, he pointed out, avoid building new power plants and other electric facilities. Mitsubishi reduces its electric bills, which equal roughly 5 percent of its revenues. MSA customers gain from a less-expensive silicon wafer. And consumers benefit from lower prices for the ultimate products--from computers to automobile air bags to toasters--in which silicon wafers are found.
The company also prides itself on stewardship. "It’s Mitsubishi Silicon America’s policy to be a good corporate neighbor, a responsible citizen of the community," said Prideaux. "We feel that being good stewards of the energy we use and not being wasteful is all part of that policy."
As a former power-plant builder for the Sacramento Municipal Utility District, Prideaux said he is very familiar with the costs and benefits of electric use--and is personally bothered by inefficiency. "The environmental benefits and cultural benefits that accrue from high efficiency, good efficient use of electricity, make me question why anyone builds low-efficiency stuff."
In the microelectronics industry a number of barriers hinder increased energy efficiency, according to a 1997 study sponsored by the Bonneville Power Administration, Northwest Power Planning Council and the Oregon Office of Energy. Among them are "incredible time pressures to get new products to market," the perceived risks of deviating from previous designs, the sense of energy as a minor cost, lack of awareness of efficiency opportunities and benefits, and fragmented design processes. (See Con.WEB, Feb. 26, 1998, for a story on energy efficiency in the microelectronics industry.)
But as demonstrated at Mitsubishi Silicon America’s south Salem facility, many of these barriers are not as daunting as they may seem--especially with outside help.
Mitsubishi Silicon America
Mitsubishi Silicon America produces electronic-grade silicon wafers.
The company (formerly known as Siltec Corp. until a name change in 1996) is part of Mitsubishi Materials Corp., which acquired Siltec in 1986. Since that year the firm’s annual revenues have grown from $20 million to more than $200 million. MSA employs 1,200 people, including 300 at the south Salem facility, and produces both polished and epitaxial silicon wafers in diameters ranging from 100 millimeters to 200 millimeters. Altogether MSA produces about 300 different products, according to Prideaux, most of which are either polished or epitaxial (a further refined version of the polished wafer).
The process by which MSA makes silicon wafers begins with polysilicon, which Prideaux described as a gray rock that Mitsubishi melts under very controlled and very hot conditions in electrically heated crystal-growing furnaces. Single-crystal ingots emerge from this blazing environment. These ingots--4 feet by 6 inches or 8 inches--are sliced into wafers. Then off they go to Mitsubishi customers and, ultimately, into consumer products.
With temperatures exceeding 1,000 degrees Fahrenheit, the crystal-growing furnaces consume a lot of electricity--an estimated 45 percent of the entire load at MSA’s south Salem facility, according to Prideaux. They also present an opportunity for energy efficiency.
The Efficiency Project
The energy efficiencies at MSA in south Salem reflect a truly collaborative effort between MSA and its utility, Portland General Electric.
PGE’s role began after Mitsubishi bought land for the facility in Fairview Industrial Park, a short distance west of Interstate 5.
"We introduced ourselves and started to design the electrical service for the new plant," recalled Craig Zuck, PGE industrial account representative for Mitsubishi. "In that, we presented an opportunity to partner with them . . . We can provide engineering assistance in the design phase of a building to help the owners look at opportunities for savings. That’s what we did." PGE and MSA arranged for an independent energy consultant,
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| Source: Mitsubishi Silicon America |
"The challenges with high tech," he continued, "are typically the speed at which the construction goes up once they’ve decided to build something. It’s typically fast-track, highly complex, involving a lot of people. Without a prior relationship it’s sometimes also difficult to get people to take the time to look at energy efficiency . . . To their credit, Mitsubishi did that."
Gardner became involved at virtually the beginning of the design phase--which she said is unusually early. She said she had previously worked on other energy efficiency projects with Mitsubishi; company officials knew her and knew about efficiency programs. MSA, according to Prideaux, had retrofitted some older energy-using equipment at its north Salem operations, with help from Salem Electric.
"They were actually really interested" in efficiency opportunities, Gardner said. "Some of the other high-tech industries have done some [efficiency] things, but most of them had not had a separate energy analyst."
Gardner studied each of four planned buildings at Mitsubishi’s expanded south Salem site--crystal growing, central utilities, polished wafer and epitaxial--and examined a variety of potential efficiency measures.
Many were put into service.
The Efficiency Measures
The major efficiencies at MSA’s south Salem facility involve transformers that regulate power supply to each crystal-growing furnace.
"That was one area we saw could have a significant energy impact," said Prideaux. "It’s such a large dollar volume."
Standard transformers operate at about 80-percent efficiency, he explained. Other transformers on the market, though, can run as high as 92-percent efficiency. These high-efficiency models are bigger, with a lot more copper, a considerably more sophisticated design--and a price tag about double that of standard transformers for both 6-inch and 8-inch ingot production.
"The economics of buying electricity didn’t necessarily justify us buying the high-efficiency transformers," Prideaux acknowledged. The payback period would have been about six years at current electric prices, he noted. So the company proposed to share with Portland General the incremental cost of high-efficiency transformers, to which the investor-owned utility was amenable. (To date 35 transformers have been cost-shared, according to Prideaux.)
It turned out the high-efficiency models couldn’t be supplied in time for the facility’s opening in 1996--MSA arranged for standard transformers in the interim, then switched as the new transformers became available. "It was a further complication that caused us to have to do some added planning and engineering around that problem," said Prideaux. Also it came to light that the standard types had a slightly higher efficiency level than originally believed, which reduced the PGE incentive payment.
Nevertheless, after verification of the energy savings and a negotiating period, PGE provided $365,000 toward the cost of the high-efficiency transformers. "They’re working just fine, as designed," Prideaux said.
Prideaux complimented PGE staff on all their work, and described the incentive amount as "very fair."
Zuck, meanwhile, lauded "the drive and interest" in efficiency among Mitsubishi people. "Typically, energy efficiency improvements are made through improving the shell of a building," he said. "It’s much more difficult when you’re trying to possibly influence or change the customer’s high-tech process or equipment. [With MSA] we were actually able to find an opportunity and upgraded a piece of equipment to save energy. That’s one of the first times we’ve been able to influence the type of equipment that went into a high-tech fab[rication plant]." The transformers for the crystal-growing furnace run continuously and account for a big chunk of MSA’s load, Zuck noted. "The overall effect of increasing the efficiency slightly was to produce a tremendous amount of annual energy savings."
He also called the PGE payment to Mitsubishi "an exceptionally large incentive" that is "not very typical" in this era of shrinking utility funding of energy efficiency.
The MSA south Salem efficiencies included other measures beyond the transformers.
High-efficiency motors with variable-frequency drives are located throughout the plant. Not only do these conserve electricity, they tend to produce less heat than standard motors, which in turn reduces the cooling load. "It ripples through the entire design of the facility if you’re more efficient," Prideaux said. High-efficiency heat exchangers in the chiller and dehumidification systems cut back on pumping requirements. Air-handling units that supply air to virtually particle-free "clean rooms" also are energy-efficient, as are chillers in the central utilities building.
Reliable Service
And, although not related to the efficiency project, PGE built a new $4 million-plus substation across the street from the Mitsubishi plant to enhance reliable service in the Fairview Industrial Park. It has three separate 115-kilovolt lines; even if two of them go down, electricity will still flow, according to the PGE news release.
"Reliability of power is critical to this type of customer," said Zuck. "The sensitivity of their equipment is extremely high. They virtually cannot take an outage without having it produce significant expense for them. We tried to improve our design, build an improved substation, with multiple redundancies in it to eliminate the chances of outages," he reported.
The Future
With electric industry restructuring looming somewhere on the horizon, the future relationship between PGE and Mitsubishi Silicon America is about as clear as a rainy winter’s day in the Willamette Valley. Already, the company has contracted with PG&E Energy Services--an unregulated subsidiary of Pacific Gas & Electric--to provide half its power supply at south Salem, under Portland General’s customer choice pilot program.
While this action may reduce MSA’s overall power costs, Zuck noted, energy efficiencies represent permanent savings that directly benefit the company’s bottom line.
PGE hopes to continue working with Mitsubishi Silicon America on potential future efficiency projects. "We’ve built a relationship out of this work," said Zuck. "We know they have some future expansion plans [in the area]. We’ve talked about the idea of doing some similar joint things in the future. Their plans are not yet announced, and thus we haven’t gotten very far."
Prideaux confirmed that MSA has purchased 15 acres adjacent to the south Salem site, and may start designing new facilities in 1999. "It depends how fast the electronics market comes back," he said. "Once we do design we move right into construction."
In any case the company will continue to be interested in using energy efficiently, he noted.
Taking a longer and larger view, Prideaux described microelectronics as "a very young and immature industry that hasn’t gone through a maturing process, like the aluminum industry." MSA’s predecessor company, Siltec, formed less than 30 years ago; its initial Oregon facilities opened in the early 1980s.
As such, the microelectronics industry is constantly figuring out how to develop new technologies, first of all, and then how to do so economically. "Only then," said Prideaux, "can you start looking at how to make it more efficient."
Efficiency, he added, is a relative term. Before the energy crisis of the early 1970s, transformers of 60- to 70-percent efficiency were common. Not too many years ago 80 percent was very efficient. And in the future, he said, it’s quite possible that 96 or 98 percent will be the benchmark for a high-efficiency transformer. This technology continues to grow more efficient.
And so, he believes, will the microelectronics industry. --Mark Ohrenschall
Although the 1998 Washington Legislature passed on comprehensive electric industry restructuring (see Con.WEB, Jan. 28, 1998), the state's lawmakers and Gov. Gary Locke did approve several pieces of energy-related legislation affecting conservation and renewable energy.
One such bill provides a "net metering" option for utility customers with their own small-scale solar, wind or hydro systems. Another bill allows an exemption from sales and use taxes for machinery and equipment directly used in landfill-gas electric-generating facilities with capacity of 200 kilowatts or greater.
In addition, the Legislature passed and Locke signed two major electric policy bills. Unbundling legislation requires utilities to identify and report on their various specific costs, including programs for conservation and non-hydro renewables. Another bill, described as protecting electric customers, mandates assorted disclosures by utilities to their customers, including investments in conservation, non-hydro renewables and low-income energy assistance.
Net Metering
The net metering bill--unanimously passed by both the House of Representatives and the Senate and signed into law by Locke on April 3--applies to solar, wind or hydro systems of 25-kilowatts capacity or smaller located on the premises of a utility customer.
Net metering is defined as "measuring the difference between the electricity supplied by an electric utility and the electricity generated by a customer-generator that is fed back to the electric utility over the applicable billing period." Participating customers will be billed for their "net" electricity consumption, or credited if their power production exceeds utility-supplied electricity during a given billing period.
The legislation intends to "encourage private investment in renewable energy resources . . . stimulate the economic growth of this state; and . . . enhance the continued diversification of the energy resources used in this state," according to the language of the adopted bill.
"This legislation provides significant new incentives for utility customers to generate their own power using renewable energy," said Rachel Shimshak, executive director of Renewable Northwest Project, in a news release. Sara Patton, director of the Northwest Energy Coalition, praised Locke and the Legislature for their "foresight . . . [in] establishing this incentive to boost the use of renewable sources of energy right here at home."
Specifically, the net metering provisions improve the economics and simplify the rules for small-scale renewables, while at the same time ensuring power quality for utilities, according to renewable energy consultant Tom Starrs, who testified in favor of the bill.
Under the Public Utility Regulatory Policies Act (PURPA), Starrs said, customers with small-scale renewables already are entitled to a utility interconnection, and utilities must buy any excess power generated beyond what a customer uses to meet on-site loads. PURPA, though, doesn't distinguish between the likes of huge wind-energy farms in California and small solar photovoltaic systems on residential rooftops. The large-scale plants generally are intended for wholesale power markets, Starrs said, while the small-scale renewables typically are designed for a customer's own use.
"What really has precipitated a lot of interest in net metering is the sense there needed to be a different set of arrangements for what I will call informally micro-QFs (PURPA qualifying facilities), really small-scale generators," Starrs said.
These are most commonly residential, but they are also found on commercial and government buildings, and even in industrial facilities, according to Starrs. Solar and wind are the predominant fuels--"hydro is much rarer but not unheard of."
For smaller renewables PURPA interconnection requirements "tend to be pretty complicated and pretty cumbersome . . . extensive engineering reviews, power-testing requirements, that kind of thing," he said. "There's really no reason to impose those same sorts of requirements on those micro-QFs," which are connected to utility grids through "very sophisticated" inverters "that ensure the [renewable] system can operate safely and reliably and address all the power quality issues utilities are concerned with." Under Washington's net metering law, eligible small-scale renewable systems must meet nationally recognized safety, power and interconnection standards.
Also under PURPA, qualifying renewable systems need two meters--one to measure power coming in from the utility, another to measure surplus electricity going back into the grid. Installing these meters costs up to $1,300, according to Starrs. "That can actually be a deal-breaker for a customer otherwise willing to put in one of these systems." The net metering law allows utility interconnections through standard bidirectional meters that Starrs said already are found in the vast majority of homes and small businesses.
And, not least, the net metering law provides a much better price for small-scale renewable power. Under PURPA, Starrs explained, utilities buy QF power at their wholesale avoided cost, which varies but is invariably far below the retail price it charges end-use customers. With net metering, participating customers effectively receive the prevailing retail rate for the utility purchases they offset with their renewable generation.
Still, the impact of net metering is likely to be modest. It will have no effect on the myriad off-grid small renewable-energy systems around the state. And with Washington's low electric rates, small-scale renewables produce energy at a cost at least three or four times the retail price. "People don't do this for conventional economic reasons," Starrs acknowledged; the motivations are more likely environmental affinity, concern over global climate change, technological interest and/or a desire for energy self-sufficiency. In any case, the law limits net-metering capacity in any service territory to .1 percent of the local utility's 1996 peak demand.
Starrs anticipates "maybe a handful of customers a year" statewide will take advantage of net metering, which officially becomes available in June. Over time, participation may depend on additional incentives for small-scale renewables provided through electric industry restructuring. In California, he noted, restructuring-related financial incentives for renewables have attracted collective commitments to build 1 megawatt of solar PV generating capacity.
Landfill-Gas Sales Tax Exemption
Machinery and equipment directly used to generate wind or solar energy already are exempt from sales and use taxes in Washington. Now, under a bill approved by the House and Senate (with only one no vote, in the Senate) and signed by Locke on April 3, this exemption is extended to landfill-gas energy facilities.
The legislation defines landfill gas as "biomass fuel of the type qualified for federal tax credits." And the tax-exempt machinery and equipment are described as "industrial fixtures, devices, and support facilities that are integral and necessary to the generation of electricity using . . . landfill gas . . . as the principal source of power." Such items as hand tools, certain repair and replacement parts, and buildings not directly related to power generation are ineligible for the tax exemption.
This could save a fair amount of money for landfill-gas developers, since the total sales tax in Washington ranges from 7 percent to 8.6 percent, depending on locale, according to a legislative synopsis.
This tax exemption will cut about .1 cent per kilowatt-hour off the energy cost at the planned landfill-gas energy project at the Roosevelt Regional Landfill in Klickitat County, according to Tom Svendsen, power manager for Klickitat PUD, which is developing the plant. It would be the largest landfill-gas energy facility in the state.
"Trying to get our project up and off the ground, and because of the cost of energy right now, we need every advantage we could get," he said. "This one we saw had been available to other renewable resources, and we were able to get the Legislature to do that" for landfill gas.
Primarily, he said, the sales tax exemption will reduce the PUD's costs for reciprocating engines and generators. Each generator set runs about $750,000, according to Svendsen.
Snohomish County PUD has agreed to buy 2.5 average megawatts from the project, at prices ranging from about 2.5 cents/KWh to about 3.5 cents/KWh (see Con.WEB, March 31, 1998). Other entities are interested in purchasing output from the landfill, Svendsen said, but no agreements have been reached. The projected on-line date is March 1999.
Unbundling
The unbundling legislation calls for utility cost studies along with histories of system reliability and customer satisfaction. "This information . . . should prove useful in evaluating our current electric system and proposed changes to it," wrote Locke in a message accompanying his April 2 approval of the bill. The House passed the bill 86-12, while the Senate endorsed it 42-5.
Among the specific items to be unbundled: "generation and energy supply, delivery services separately identifying transmission, distribution and control area services, programs to support conservation or renewable resources other than hydroelectric power, fish and wildlife mitigation, general administration and overhead, and taxes." The bill also requires the "functionalization" of costs for generation, energy supply, transmission and distribution, and cost allocations for different classes of customers.
Investor-owned utilities will submit their findings to the Washington Utilities and Transportation Commission by Sept. 30 of this year. Consumer-owned utilities must provide these studies to their governing bodies by Sept. 1, and then to the state auditor by Oct. 1. (Publicly owned utilities with 25,000 or fewer meters are "encouraged, but not required" to participate.)
The WUTC and the state auditor will present a joint report by Dec. 1.
Customer Protection/Information Disclosures
Every Washington lawmaker who voted, and Locke, endorsed this consumer protection legislation.
"Retail electric customers have the right to receive specified disclosures from their electricity distribution utilities," according to a bill summary. "Required disclosures include consumer protection policies and procedures and the utility's annual report containing specific information."
The annual report items will include an "explanation of the amount invested by the electric utility in conservation, non-hydro renewable resources, and low-income energy assistance programs, and the source of funding for the investments." In addition, utility billing statements to customers must include the following statement: "YOUR BILL INCLUDES CHARGES FOR ELECTRICITY, DELIVERY SERVICES, GENERAL ADMINISTRATION AND OVERHEAD, METERING, TAXES, CONSERVATION EXPENSES, AND OTHER ITEMS."
Small utilities--25,000 or fewer meters--are exempt from the requirements of this legislation.
By the end of 1998, the WUTC and the Washington Department of Community, Trade and Economic Development are mandated to jointly study a variety of issues. Among them: "Current levels of investments in conservation, non-hydro renewable resources, and low-income energy assistance programs, trends affecting such investments, and ways to fairly, efficiently, and effectively foster future achievement of the purposes of such investment." --Mark Ohrenschall and Ben Tansey
Although its traditional energy conservation programs have sharply declined, Bonneville Power Administration is still in the market for market-oriented energy efficiency.
BPA's activities to advance the efficiency marketplace are exemplified by a recent deal in California with a federal agency. This example shows that even though BPA conservation spending is plummeting--from $172 million in fiscal year 1994 to $42 million in FY 1997--the agency can still effectively promote energy efficiency in certain niches.
Bonneville in this case enabled a refinancing of an energy conservation project at a federal building in Southern California, saving the General Services Administration (and thus federal taxpayers) about $1 million. This led directly to an additional water reclamation project.
"We negotiated a basic win-win-win-win," said BPA vice president for energy efficiency Terry Esvelt.
GSA reduced its costs, and undertook new efficiency work toward meeting a presidential order to reduce federal agency energy consumption 30 percent below 1985 levels by 2005. The private sector gained new business in financing and in the water reclamation project. Bonneville, meanwhile, recovered all its modest costs for facilitating this arrangement, while adhering to the principles established by the Regional Review in 1996 for BPA's market development activities in energy efficiency. (Even the strong California connection meets these Northwest-developed guidelines.)
"This seems to be exactly the kind of thing we contemplated when we were talking about opportunities to grow the pie," said Esvelt. "Make more work, create opportunities where none otherwise existed . . . We think it's a breakthrough."
Esvelt and Tim Scanlon, BPA's market lead for federal agencies, both believe more such financing opportunities can be realized.
How It Happened
Bonneville and the GSA--which among other roles operates many general-purpose federal buildings--have interagency agreements to work together on energy efficiency. A BPA report from January lists numerous such projects in various stages of progress in the Northwest and California.
Among them is the refinancing project in Southern California.
"We had talked about project financing with GSA for quite a while," said Scanlon. "Like many federal agencies, they've seen their appropriations for energy efficiency projects significantly reduced in their budgets . . . What they've been trying to do is find ways to leverage projects, to get projects going with the limitations they have."
GSA had completed a substantial efficiency upgrade at the Chet Holifield Building, a large federal complex in Laguna Niguel, between Los Angeles and San Diego. The $3.9 million project included chiller replacements, HVAC improvements and extensive lighting retrofits, according to Scanlon. Financing came from Southern California Edison's Envest program.
"It was very successful, everything worked fine, end of story . . . [but] they were paying 14-percent interest for the capital, and with these low interest rates they were very interested in refinancing," said Esvelt.
However, Scanlon noted, GSA can't directly borrow private capital. So the federal agency asked Bonneville to explore financing options. "They have a little bit more flexibility in procurement methods than other federal agencies," said GSA building management specialist Mark Levi. BPA, in turn, turned to assorted investment banks experienced in federal financing. "Our role was to serve as a facilitator," Scanlon said. "We do not have any direct way of financing using BPA capital. We just wanted to assist them."
From the bids it received BPA selected Hannon Armstrong, a Virginia-based investment bank. "They were able to come in and take advantage of extremely favorable interest rates in the market . . . approximately 7.5 percent," Scanlon said. And while the term remained the same--10 years, of which nine remain--the deal is much sweeter for GSA. The agency will save an estimated $1 million in net present value, according to Scanlon, while reducing its monthly financing payment for the Hollifield project by 25 percent.
BPA, meanwhile, has no financial liability. "We do not carry any of the risks," Scanlon emphasized. Under a separate agreement with Hannon Armstrong, the bank provides BPA with the capital and Bonneville assigns the payment stream from GSA to the financier, which in turn profits from what Scanlon called a "stable, conservative investment backed by the federal government." In any case, Levi noted, the project is already completed and the risks are miniscule.
Bonneville's fully recovered costs for putting together this arrangement amounted to $15,000.
"The combination of what we could do and what Bonneville could do opened the window to this," said Levi, who believes the deal is "setting a precedent for refinancing projects. When interest rates get better, it opens up other opportunities for other projects that could be done this way."
The refinancing, though, was only part of the program for BPA; Scanlon called it "a means to an end. The end result we were trying to achieve was to get more efficiency projects in place, more measures installed."
As a condition of its involvement in the refinancing, he said, Bonneville required GSA to undertake additional efficiency work. Thus a $200,000 water reclamation initiative is now in progress at the Holifield complex. "The water reclamation work saves them energy and water," said Scanlon. "It's a really good project, very cost-effective." GSA is using a portion of the $1 million refinancing savings to pay for the water work. "Our hope is that's the first of what will be other projects that would not otherwise have happened," he said.
California Connection
Despite the many apparent benefits of this deal, it is considerably Californian--outside Bonneville's traditional service territory in the Pacific Northwest.
Has this raised eyebrows? "We get questions about it from time to time," said Scanlon. But, he noted, GSA asked Bonneville for help; the two agencies already had agreements to pursue efficiency projects; GSA is not bound by Northwest geography; and federal agencies helping one another in this fashion save money for taxpayers everywhere. "We just try to help them," said Scanlon. "We're not trying to displace or compete with anybody. If we can assist them meet their energy efficiency objectives and honor [the Regional Review guidelines] . . . we feel good about that." Bonneville, he added, is "uniquely positioned" in this circumstance.
The Review principles circumscribe BPA's role in expanding the efficiency marketplace, while seeking to prevent Bonneville from "unduly competing with private enterprises." These guidelines suggest BPA should act primarily as a facilitator/aggregator and should recoup its full costs for services. And it should work only with regional power sales contract customers and federal agencies. There is no specific prohibition on federal projects outside the Northwest.
"This is a big project," said Scanlon. "We do hope to do more of these in similar circumstances, and in the Northwest we're actively pursuing project finance opportunities here as well . . . Bonneville by virtue of its position can aggregate across federal agencies and across projects. By aggregating, we can pool those projects together and . . . get a lower interest rate than we could otherwise achieve." --Mark Ohrenschall
Washington Water Power has launched a new residential heating, ventilation and air conditioning (HVAC) system efficiency program.
This new service, announced Feb. 27 and implemented in cooperation with the Northwest Energy Efficiency Alliance, is designed to "build public and industry awareness of the health, safety and energy-saving benefits of properly installed, sealed and maintained forced-air duct systems and filters," said WWP Energy Services program manager Tom Kliewer.
Studies have shown leaky residential duct systems can sustain energy losses of up to 30 to 40 percent as heat travels from its source to its intended spaces (see Con.WEB, Jan. 24, 1997). Kliewer said properly maintained systems can bring a household up to $75 in average annual energy-bill savings.
WWP's HVAC pilot program is available to all the Spokane-based investor-owned utility's residential customers whose homes are heated by electric heat pumps or natural gas forced-air systems, with duct work routed through unheated spaces. The service has two separate components.
The HVAC filter maintenance element is devoted to customer education. It seeks to increase consciousness of the fact properly maintained furnace filters can augment energy savings, as well as confer health and comfort benefits upon the consumer.
The second element of the program, duct testing and leak control, offers homeowners a $50 incentive to assess the efficiency of their HVAC systems, and a follow-up test to verify the results. If these tests indicate duct sealing is needed, WWP will pay 50 percent of the cost, up to a $200 maximum.
While Water Power's program does not offer monetary incentives for improving HVAC systems in new homes, it does offer developers the opportunity to certify new properties as "Energy Efficiency Duct Homes" by meeting minimum efficiency criteria.
Alliance Duct Work
WWP's program is one of about 10 HVAC efficiency pilot programs in cooperation with the Northwest Energy Efficiency Alliance's regional Residential Space-Conditioning Air-Distribution Systems Project. Proposed and operated by the Oregon Office of Energy and approved by the Alliance board last June (see Con.Web June 27, 1997), the project "seeks to establish retrofitting of leaky air-distribution systems in homes as a viable and profitable business around the Northwest, and to create sustained demand for efficient duct systems in new homes," according to the Alliance Web site.
WWP's Kliewer said his utility had a duct efficiency program in the works prior to approval of the Alliance project, and planned to fund it exclusively under its demand-side management distribution charge (see Con.WEB, Sept. 27, 1996, for a story on the charge). But when the Alliance initiated its duct project, WWP was eager to sign on as a test site. Thus Water Power's three-year, $342,000 program is still being supported by the DSM charge, with some additional funding for training coming from the Alliance.
Alliance lead project coordinator John Jennings said pilot programs such as WWP's are part of the regional project's initial research phase. "What should the criteria be for duct-tightening and HVAC system efficiency as a whole?" Jennings asked. "One of the tasks of this project is to develop protocols and standards for duct testing and sealing. Additionally, how does a home become a target for duct testing? We need to devise a viable screening process."
To these ends, WWP worked with David Hales, a residential contractor, building scientist and technical trainer affiliated with the Washington State University Cooperative Energy Extension Program--a subcontractor on the Alliance's project--in devising a procedure for testing the efficiency of residential duct systems.
Although talk of efficiency criteria 
gets very technical very quickly," according to Kliewer, "basically what we did was standardize an acceptable rate of leakage. We won't seal beyond a certain level of efficiency. We don't want to have contractors spending days in a crawl space, " he noted. "Our design challenge was to develop a method for sealing ducts to an appropriate level of efficiency, while maintaining cost-effectiveness and transforming the market," Kliewer added. "I believe we've found a reasonable balance."
Hales said the protocol used in WWP's pilot program uses blower doors and a pressure pan diagnostic. "The duct-system efficiency standards are currently evolving," Hales said. The criteria used for WWP's program "are similar to standards used in other programs," and based on "studies like [Bonneville Power Administration's] Residential Conservation Demonstration Project," he noted.
Contractor Training
Another goal of the Alliance's duct project is to establish a training mechanism to teach contractors about the benefits of installing efficient HVAC systems, and how to test and repair leaky ducts. Hales was instrumental in training contractors for WWP's program.
He said he has conducted two rounds of contractor training--in October 1997 and February of this year. Offered to independent HVAC or weatherization contractors, the course consists of about 40 hours of training. Half of this time is spent in the classroom, reviewing fundamentals of building science and duct systems, according to Hales. Additional class time is spent on how HVAC systems interact with houses, how to do efficiency diagnosis, and how to use the necessary equipment. The other 20 hours are spent in the field, where contractors actually get to test homes and seal systems under Hale's supervision. He reported that members of his February contractor class sealed five homes while training in the field.
Hales said nine people have completed the WWP course, while seven are currently on WWP's list. Upon completion of training the independent contractors are referred by WWP to customers interested in its duct-sealing program. Eventually, Hales added, full certification as a qualified contractor will "involve sealing homes in compliance with the program's standards. We intend to go out and evaluate the jobs [contractors] have done, testing the homes ourselves." To get final certification contractors will have to complete a certain number of sealings, "at least three or four homes," that meet program criteria. Hales said a random number of sealed homes will be checked each year for compliance.
In Water Power territory, the utility has received approximately 150 customer inquiries since the HVAC program's inception. "That's about where we expected to be for the first month," said Kliewer. Hales said he has been in contact with certified contractors, many of whom have been fielding referral calls and have begun doing diagnostics.
WWP's is just one of the pilot programs that will be part of the Alliance's regional project. "Water Power got out ahead of the game," according to Jennings, owing to the utility's previously existing plans to implement a similar program.
The Alliance project has either reached or is fast approaching a number of the interim milestones that were set last June when the board allocated an initial $1.12 million over two years to the duct efficiency effort. The board has approved a draft literature review report on the costs and benefits of duct sealing. This report was prepared by OOE, and is based on published HVAC research throughout the country and Northwest.
Jennings also reported that the Seattle-based consulting firm Ecotope is working on the project's research design. Contractor training, like that associated with WWP's program, has also commenced in some other test regions, including Puget Sound, Tacoma and the Tri-Cities in Washington and Ashland, Eugene and Salem in Oregon. The final milestone--a research report, marketing and business plan--is scheduled to be finished sometime between June and December of this year. --Angela Becker-Dippmann.
Portland's Columbia Boulevard wastewater treatment plant will become a power plant, of sorts, by the end of the year--one that generates its own fuel as well.
The city of Portland is in the midst of an experimental project in which a fuel cell will convert some of the facility's excess methane into electricity, which will then be used to help operate the treatment plant.
The $1 million project is being funded in part by a new agreement with Portland General Electric.
By way of background, starting in 1996 the city signed up to buy renewable power under PGE's market-based tariffs (Schedule 87) and its renewable resource tariff (Schedule 54). Under these tariffs the city paid a higher rate, which PGE set aside to fund renewable energy projects. But as time passed, PGE merged with Enron and the renewable energy market changed, it became clear the utility would not be actively developing new renewable energy projects.
PGE suggested the city drop out of those tariffs, according to David Tooze, project manager for the Portland Energy Office. The utility would then provide the premiums it had collected from the city for renewables--about $240,000--and invest it in the city's wastewater plant initiative. "They decided to support renewables in the front yard of the largest city they serve," Tooze said.
"The funds hadn't been spent yet, and with PGE moving away from the generation side" it made sense, said PGE spokeswoman Vickie Rocker. In addition, the city of Portland was the only customer that had signed up under Schedule 54--although that schedule remains open to PGE customers.
The 200-kilowatt fuel cell should be installed and in operation by the end of the year, Tooze said. The city will still need an outside energy source for the wastewater treatment plant, which uses about 5 megawatts of electricity. However, he added, "There is a potential for a big chunk of our power coming from fuel cells." The treatment plant has enough extra digester gas to operate 10 to 12 fuel cells; power from that many cells, along with energy from waste-heat recovery, would supply about 2 MW of the plant's power.
To date, however, the city has committed only to the first fuel cell installation. "This is definitely a pilot, experimental unit," Tooze said. "We need to make sure it performs well before we expand." Funding for additional fuel cells is "up in the air," he added, although the city will likely make a decision by the year 2000.
Funding for the first fuel cell has been secured. In addition to the $240,000 from PGE, the project received about $200,000 in grants from the U.S. Department of Defense climate change fuel cell program, $10,000 of in-kind services from the Oregon Office of Energy, and the equivalent of a $50,000 price break through the use of Oregon Business Energy Tax Credits--also provided through OOE. The project is eligible for the tax credits because Western Bank/Washington Mutual will actually own the fuel cell, through a lease-purchase arrangement. As a result, the interest rate on the city's loan for the remaining $746,000 of the project cost is actually a negative 2.4 percent, according to Tooze, "so we pay back $49,000 less than we borrow."
Tooze also said that when the savings from displacing the plant's battery-powered uninterruptible power-supply system are added, the gross price of $1 million becomes a net price of around $500,000. "That's a reasonable price to place on it," he said. --Jude Noland
After years of contention, a firm power purchase agreement between Washington Water Power and the developer of a planned geothermal plant was approved by the Idaho Public Utilities Commission in mid-March.
The IPUC in November had ordered WWP to negotiate a 20-year contract with Earth Power Resources to buy power from a small geothermal facility in Nevada, at grandfathered rates more favorable to the developer as a qualifying facility under the federal Public Utility Regulatory Policies Act (PURPA). In addition, the commission's order sharply criticized Water Power's conduct toward Earth Power, describing it as "inexcusable." The investor-owned utility and Earth Power had sparred since late 1995 over prospective power purchases from two proposed geothermal facilities in Churchill County, east of Reno. (See Con.WEB, Jan. 28, 1998, for a summary of the long-running conflict.)
"The message the commission was trying to convey is that PURPA still is the law of the land, and attempts to thwart it or throw roadblocks in contract negotiations won't be permitted, in Idaho at least," Peter Richardson, an Idaho attorney representing Earth Power, told Con.WEB in January.
Under the terms of the agreement approved March 16 by the IPUC, Earth Power will receive the IOU's higher avoided-cost rates in effect before July 1996 for PURPA qualifying facilities smaller than 1-megawatt capacity. The relevant rate is 4.1 cents per kilowatt-hour, levelized over 20 years, according to Richardson.
Earth Power's planned Allen Springs geothermal project narrowly meets the size standard, with a projected capacity of 999 kilowatts. It is scheduled to be in operation by Jan. 1, 1999, and is forecasted to produce 8.75 million KWh (slightly less than 1 average megawatt) of electricity each year. The generated power will be transmitted to Water Power at Idaho Power's Lolo-Oxbow line, where the transmission facilities of the two IOUs connect, according to the IPUC.
In its November order, the IPUC also ruled that a proposed Earth Power geothermal plant adjacent to Allen Springs was ineligible for a similar power purchase contract. --Mark Ohrenschall
Six companies that market renewable energy--including Portland-based PacifiCorp--have formed a new trade association to promote the role of renewables in a restructured electric industry.
Members of the Renewable Energy Alliance are PacifiCorp, Enron, Foresight Energy, Green Mountain Energy Resources, Edison Source and AllEnergy Marketing.
PacifiCorp joined the Alliance because the utility has a big interest in renewables and believes its customers do as well, said spokeswoman Jan Johnson. As the industry opens to competition "a segment of the market will demand renewables," she said, "and we want to offer it."
Johnson noted PacifiCorp already is involved in several renewable energy projects, including its majority ownership of the Wyoming Wind Energy Project now under construction, and a geothermal project in Utah. The great majority of the utility's domestic energy resource capacity is coal-fired.
Johnson said members of the Renewable Energy Alliance believe restructuring can lead to an improved environment by encouraging the use of renewable energy as displacement power for more polluting sources of electricity. The REA's goal, she said, is to increase the sale of renewables to help the environment. The group will advocate policies that foster the development of renewables, such as uniform environmental disclosure labeling for all power products, development of advertising guidelines for power marketers, and consumer education and public outreach. --Jude Noland
When fine design combines with efficient energy use, a building serves both form and function, beauty and sustainability. This blend is showcased by the Northwest Energy Efficiency Alliance through "Architecture + Energy: Building Excellence in the Northwest," an awards and workshop program for commercial buildings.
Entries for this year's awards program are open through June 5.
"This is a very unique program in that it's looking for the integration of architectural excellence and energy savings," said Dorothy Payton of the American Institute of Architects/Portland Chapter, which administers the program. The venture includes a juried competition but also stresses education. "We're really looking at this as being a learning opportunity," says Payton. "We can all get examples and see how those different projects and different building types can approach energy efficiency."
Buildings need not display the latest and greatest energy-saving technologies, Payton notes. "We're looking for strategic plans, strategic maneuvers that architects, consultants and clients put into place to integrate design of their building in order to save energy."
This year's awards program--scheduled for June 25 and 26 in Portland--is open to any completed non-residential building in Idaho, Montana, Oregon or Washington. Submittals will be judged on energy performance, treatment of energy-related elements, climatic-responsive design, resource efficiency and creativity.
Entries can be submitted by architects, engineers, owners and developers of buildings, and are due to AIA/Portland by June 5.
Awards will be presented June 26 at the McMenamins Kennedy School in Portland. Award-winning projects will be featured in a four-color spread published in a national design magazine.
The 1997 Architecture + Energy awards program honored the following Northwest buildings: the REI store in Seattle; the Pacific Gas Transmission building in Portland; Widmer Bros. Brewing Company Expansion No. 2 in Portland; City of Portland Bureau of Environmental Services Water Pollution Control Laboratory in Portland; and the F.W. Olin Science Center at Willamette University in Salem. (See Con.WEB, June 1997, for a story on the 1997 program).
In addition to the 1998 awards, a workshop highlighting successful energy-efficient design is planned later in the year east of the Cascades.
For an entry packet and/or more information, contact AIA/Portland at (503) 223-8757, phone; (503) 220-0254, fax; aeprogram@aiaportland.com, e-mail. --Mark Ohrenschall
A Northwest Daylighting Forum and several other lighting-related events highlight the spring calendar for the Lighting Design Lab in Seattle.
The daylighting forum will include case studies, new products, research results and a luncheon speaker, among other agenda items. It is scheduled for all day on May 29.
Other upcoming events at the Lab will cover retail lighting displays (May 5); lighting resources on the World Wide Web (May 12); high bay lighting and controls (June 2); and human factors in lighting (a videoconference on June 11).
For more information on these events, contact the Lab: phone, (206) 325-9711 or 1-800-354-3864; fax, (206) 329-9532; or visit the Lab's Web site at http://www.northwestlighting.com/calendar/index.html.
A Building Operator Certification training series will be offered in Portland beginning in June, to prepare building operations and maintenance staff for certification in energy- and resource-efficient building systems.
The seven-course series--sponsored by the Northwest Energy Efficiency Council and the Northwest Energy Education Institute--will cover building systems, energy conservation techniques, facility electrical systems, HVAC systems and controls, efficient lighting fundamentals, maintenance and related codes, and indoor air quality.
The first course is scheduled for June 4, and the final course is Dec. 9. BOC courses, which run all day, will be held at the Oregon Institute of Technology in Portland.
The BOC training is supported by the Northwest Energy Efficiency Alliance.
For more information on the Portland series, call Cynthia Putnam at (206) 292-3977 or Roger Ebbage at 1-800-769-9687.
A spring catalog of publications, videos and software focusing on the nuts and bolts of green building has been released by Oregon-based Iris Communications.
The extensive catalog, which features 26 new titles, can be seen on the World Wide Web at http://oikos.com/catalog/.
Or contact Iris: phone, 1-800-346-0104 or (541) 484-9353; fax, (541) 484-1645; mail, Iris Communications, P.O. Box 5920, Eugene, OR 97405-0911.
Installation of an energy-efficient fan-control device in the HVAC system of the new Grant County (WA) Airport terminal resulted in a $4,876 incentive payment from Grant County PUD to the Port of Moses Lake.
The check was presented at the April 2 dedication of the new terminal building in the central Washington community of Moses Lake, according to a Grant County PUD news release.
"It helps everyone in Grant County when we join together as good stewards of the county's energy resources," said PUD commissioner Dean Hagerty.
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