1. Development of a Thermal Energy
Standard for Colorado
Richard P. Mignogna, Ph.D., P.E.
Renewable & Alternative Energy Management, LLC
Golden, Colorado 80401 USA
Tel: +1.303.875.0857
Rich.Mignogna@gmail.com
28 June 2012
Colorado Geothermal Working Group
Denver, Colorado USA

2. Renewable Energy Standards & Public Policy Goals
What do you hope to achieve?
 Energy security
 Conservation of scarce resources
Fuel
Water
 Reduce environmental impacts
 Economic development
 Technological advancement
Cost reduction
Promote specific resources & technologies (e.g. GSHP,
biomass, etc.)
R. Mignogna, 2012

3. How Will You Do This?
Legislature
Voter Referendum
Executive Order
Utility Commission
R. Mignogna, 2012

4. ...or perhaps,
R. Mignogna, 2012

5. Understand Stakeholder Groups
Balance competing interests
 Utilities
Will they lose revenue?
 Renewable energy developers
 Environmental groups
 Ratepayers/taxpayers
 Recipients of incentive programs
 Funding source
R. Mignogna, 2012

6. Thermal Energy Standard Administration
Who will oversee the program and ensure compliance?
 Utility
 PUC
 State energy office
 Third party administrator
 Recharge Colorado?
R. Mignogna, 2012

7. Financial Incentives for Solar Water Heating
NH U
www.dsireusa.org / May 2012
U $ VT
$ MA $ D
U $$
D U
U
U
RI $
U $
$U U CT $ U
$
U $ NJ $
U U
$ U U DC MD $
U
$ U
U $ D$
U Puerto Rico
D U U
U.S. Virgin Islands
$
U U 40 states +
DC, PR & USVI
Direct Cash Incentive
offer financial
D Tax Deduction U Utility Direct Cash Incentive(s)
incentives for
Tax Credit $ Sales Tax Incentive $ Local option to provide sales tax incentive solar water
Direct Cash Incentive
Property Tax Incentive
Local option to provide property tax heating
and Tax Credit incentive

8. Principles for Incentivizing Distributed Generation
HB07-1228, PUC Docket 07M-230E (page 1 of 2)
1. Programs should be founded on measurable and transparent
goals. Evaluation, measurement, and verification are critical to
providing accountability to ratepayers and policy makers.
2. Responsibility for compliance should be borne equally by all
consumers and companies.
3. There should be congruence between the population that pays for
incentive programs and the population that benefits from them.
4. In order for renewable credits to be applicable to the Renewable
Energy Standard, a distributed generation technology should
displace electric energy from the grid.
R. Mignogna, 2012

9. Principles for Incentivizing Distributed Generation
HB07-1228, PUC Docket 07M-230E (page 2 of 2)
5. The policy goals for promoting renewable energy should address
society's need for clean energy considering environmental
consequences, energy security, efficient use of scarce resources, and
economic development at lowest cost. Incentives should be aligned
accordingly.
6. Good public policy should focus on societal needs, not on specific
technologies or the associated proprietary interests.
7. The policy should consider a broad range of possible incentives and
funding sources, including tax credits and exemptions, rebates, cost
sharing, grants, low interest loans, etc., in addition to ratepayer
surcharges.
8. The goal of incentives should be to stimulate sufficient marketplace
activity and induce cost reductions. The incentives should be designed
to be eventually removed, not become permanent.
R. Mignogna, 2012

10. Creating a Thermal Energy Standard
Approaches to incentivizing thermal energy
 Add thermal technologies to list of eligible energy
resources for compliance with the RES
 Incentives in utility DSM/EE programs
Alternatively, state administered rebate program
 State tax credits based on installed cost of thermal
Sales and/or property tax
Refundable income tax credits
 Require that a portion of the thermal load of new
construction be met with clean thermal energy
technologies
Rather than add to the RES, TES would be a companion focused on
thermal energy
R. Mignogna, 2012

11. Can DSM/EE Support a Thermal Energy Standard?
 HB07-1037 (§40-3.2-101 C.R.S. et. seq.)
Directs Colorado’s investor-owned electric and gas utilities
to pursue energy efficiency (Demand Side Management)
o §40-3.2-103 C.R.S. Gas DSM
o §40-3.2-104 C.R.S. Electric DSM
Utilities now file biennial DSM plans
o PSCo combined DSM Plan for 2012-2013
(Docket 11A-631EG)
o Black Hills DSM
o Electric 2012-2015 (Docket 12A-100E)
o Gas 2011 (Docket 10A-082G)
 HB08-1107 similarly attempted to require DSM for coops
& munis but failed in the legislature.
R. Mignogna, 2012

12. Can DSM/EE Support a Thermal Energy Standard?
 There are six regulated gas utilities in Colorado
Atmos Energy
Colorado Natural Gas
Public Service Company of Colorado
SourceGas
Black Hills Energy Corp
Eastern Colorado
 There are two regulated electric utilities in Colorado
Black Hills Colorado Electric Utility
Public Service Company of Colorado (PSCo or Xcel)
 None make any appreciable mention or use of GSHP
(or any thermal energy technologies) in their DSM
plans
R. Mignogna, 2012

13. Can DSM/EE Support a Thermal Energy Standard?
 GSHP to serve heating load:
Decrease
in gas
Btu
Increase
in kWh
None of the utility DSM plans submitted to the PUC
integrate gas and electric usage for a total energy DSM
R. Mignogna, 2012

14. Creating a Thermal Energy Standard
Approaches to incentivizing thermal energy
 Add thermal technologies to list of eligible energy
resources for compliance with the RES
 Incentives in utility DSM/EE programs
Alternatively, state administered rebate program
 State tax credits based on installed cost of thermal
Waive sales and/or property tax
Refundable income tax credits
 Require that a portion of the thermal load of new
construction be met with clean thermal energy
technologies.
Note: Tiered electric rates serve as disincentive for thermal technologies
such as GSHP. To be fully effective, must waive tiered rates associated
with operation of clean thermal energy equipment.
R. Mignogna, 2012

15. Opportunities for Third-Party Providers
 Principal barrier is high first cost
 Learn from experience with another technology that has
high first cost and long payback
PV solar services model
 Geothermal Heat Suppliers Act, 1984
(§40-40-101 et. seq., C.R.S.)
Only exclusion for thermal technologies from certificated
utility monopoly(1)
 Third party would own and install system
Sell metered thermal energy to customer
(1) SB09-051 now allows PV (but not solar thermal) suppliers to sell electrical energy
directly to end use customers
R. Mignogna, 2012

16. Promoting and Deploying GSHP
 Rebates (utility)
Buy down first cost
 Loop tariff programs (utility)
 Loop lease programs (utility or third-party provider)
 Low interest loan programs (state, utility, or third-party provider)
Decrease monthly payment, improve cash flow
 Target replacement of heating technologies where there is a clear
benefit in cost and CO2 (electric, propane)
 Direct sale of metered thermal energy (utility or third-party
provider)
 Colorado has already taken the first step in this direction – Geothermal Heat
Suppliers Act, §40-40-101 et. seq., C.R.S.
R. Mignogna, 2012

17. Geothermal Heat Suppliers Act
§40-40-101 et. seq., C.R.S. (page 1 of 3)
 Defines Geothermal Heat Supplier as any person who supplies
geothermally heated groundwater or other substances to the public or
other customers for industrial process heat, commercial use, space
heating, or other purposes. The term includes systems which enhance
the thermal content of the substance supplied through the use of heat
pumps, solar assistance, or other means.
Exemptions for wholesale and publicly owned providers
 Requires the Commission to “establish a system of operating permits
for geothermal heat suppliers. Before commencing construction of
distribution facilities, a geothermal heat supplier must obtain an
operating permit from the commission.”
 An operating permit “may not be denied because the area which
the applicant proposes to serve is already being served by a gas
or electric utility.”
R. Mignogna, 2012

18. Geothermal Heat Suppliers Act
§40-40-101 et. seq., C.R.S. (page 2 of 3)
 The Act lists several requirements that must be met by the
operator to obtain an operating permit including that the
operator enter into a contract with the customer specifying:
The period of time service will be provided
Rates or method for determining rates to be charged
That the operator will submit to complaint procedures contained
in 40-6-108, C.R.S.
 Before issuing an operating permit, the commission must
find that:
The applicant is fit, willing, and able to provide the proposed
services; and
The applicant has made an adequate showing that the
geothermal heat supply and distribution system appears
reasonably capable of delivering the proposed services.
R. Mignogna, 2012

19. Geothermal Heat Suppliers Act
§40-40-101 et. seq., C.R.S. (page 3 of 3)
 First application for registration at PUC under
the Geothermal Heat Suppliers Act recently
received at PUC:
PanTerra Energy, PUC Docket 12A-478ST
Application for registration only, not an operating
permit
Decision C12-0684
o Finding: “…PanTerra is found to be fit, willing, and
able to provide geothermal heat supply services.”
o Operating permit to require separate application
o Registration expires in 5 years if no operating
permit is obtained
 Implementation of a thermal energy standard
could foster additional penetration via the
GSHA
R. Mignogna, 2012

20. Moving Forward on a Thermal Energy Standard
Next Steps
 Thermal standard working group as per SB12-180 &
SR12-003.
Focus on thermal energy separate from the RES
Establish goals for a thermal energy program
Define program characteristics
Identify technologies for consideration
o Define parameters for qualified thermal facility (commercial &
residential)
Identify thermal energy incentive programs nationally that
may serve as models
Align incentives with
o Program goals
o Available funding
Policy recommendations
R. Mignogna, 2012

21. 306 Berthoud Way
Golden, Colorado 80401 USA
Thank you
Richard P. Mignogna, Ph.D., P.E.
Tel: +1.303.875.0857
Email: rich.mignogna@gmail.com
Blog: richmignogna.blogspot.com
R. Mignogna, 2012