Special Subcommittee on Energy


Minutes of the<MeetNo1> 5th Meeting

of the 2013 Interim


<MeetMDY1> November 15, 2013


Call to Order and Roll Call

The<MeetNo2> 5th meeting of the Special Subcommittee on Energy was held on<Day> Friday,<MeetMDY2> November 15, 2013, at<MeetTime> 10:00 AM, in<Room> Room 131 of the Capitol Annex. Senator Jared Carpenter, Chair, called the meeting to order, and the secretary called the roll.


Present were:


Members:<Members> Senator Jared Carpenter, Co-Chair; Representative Richard Henderson, Co-Chair; Senators Ernie Harris, Jimmy Higdon, Ray S. Jones II, and Dorsey Ridley, Representatives Rocky Adkins, Dwight D. Butler, Leslie Combs, Tim Couch, Will Coursey, Keith Hall, Thomas Kerr, Martha Jane King, Tanya Pullin, Tom Riner, John Short, John Will Stacy, and Fitz Steele.


Guests: Rodney Andrews, Director, Center for Applied Energy Research; Ron Willhite, Director, School Energy Managers Project, Kentucky School Boards Association; Gregory T. Guess, Director, Division of Efficiency and Conservation, Kentucky Department for Energy Development and Independence; and Representative Dennis Horlander, legislative guest.


LRC Staff: D. Todd Littlefield, Janine Coy-Geeslin, and Susan Spoonamore, Committee Assistant.


The July 19, 2013, September 20, 2013, and October 18, 2013 minutes were approved without objection, by voice vote, upon motion made by Representative Hall and seconded by Senator Higdon.


Carbon Capture and Utilization Research and Development at the Center for Applied Energy Research

Mr. Rodney Andrews, Director, Center for Applied Energy Research (CAER), said that the new source performance standards report for carbon dioxide (CO2) emissions from electrical utility generating units is the reason for carbon capture research. The new emission limits for new coal units will be 1,100 pounds CO2 per mega watt hour, and natural gas-fired units have a limit of 1,000 pounds of CO2 per mega watt hour. The easy and low-cost solution for coal units would be highly efficient new generation that does not include carbon capture and storage, but the report indicates that using new technology would not help to reach the new standards. The report also stated that any unit that does not have carbon capture and storage will not provide meaningful reductions in CO2 emissions.


Mr. Andrews discussed other points of the report saying that the end result would be switching from coal units to natural gas, to renewable, or to nuclear to reduce the carbon dioxide emissions. Efficiency can be improved and should be done on existing plants and on use. Carbon can be captured, stored, and used. While carbon capture is not the solution for all CO2 produced from power plants, it has uses.


CAER is working to make carbon capture more efficient in order to reduce the operating costs by having better solvent and capture systems. The Department of Energy (DOE) wants 90 percent of CO2 captured. DOE has set a timeline to lessen carbon emissions, but new technology takes a lot of money and time to develop.


The Carbon Management Research Group (CMRG) was initially funded by $1,000,000 in state funds along with matching funding from the utilities in Kentucky. The money has been leveraged to support CMRG’s research. For every dollar of state money spent, approximately $11 comes into the program.


Mr. Andrews spoke about the Slipstream Project, a CO2 capture demonstration project at E.W. Brown Generation Station in Harrodsburg, Kentucky. The project involves advance solvents, adding a catalyst, and reducing energy costs and penalties. Goals of the project are to lower capital costs and operational costs.


Another research area of CAER is CO2 utilization. Mr. Andrews spoke about the East Bend Project, which involves growing algae off of flue gas. Algae can be used to make drop-in diesel and jet fuel, methane, bio diesel, animal feed, and crude bio oil. The novel, lower cost technologies used to make these products may be available in 2020.


Mr. Andrews stated that standards will be placed on natural gas in the future, and that industry will also have a tough time reaching those standards. Kentucky needs to keep all options available which will take time and money. Investments in coal communities need to be made in Kentucky.


In response to Senator Carpenter, Mr. Andrews said the major growth for coal-fired generation is in China and developing Asia. He said that some plants in the United States are at least 50 years old, and China is building new plants that are more efficient.


Representative Adkins stated that AEP recently decided to shut down the Big Sandy Plant in eastern Kentucky. The economies of eastern and western Kentucky have taken an enormous financial hit. As an example, the school district and property taxes in Louisa, Kentucky, have lost approximately $500,000, and the county government has lost about the same amount. The Public Service Commission made a ruling to help with $200,000 per year for five years to help recover the economy. One trucking company alone pays $200,000 per month in payroll to its truck drivers.


In response to Representative Adkins, Mr. Andrews stated that the Clean Air Act had a timeline for implementation that was based on current technology. The new regulations reducing carbon emissions are based on doing everything now. Because natural gas is cheap right now, Kentucky is getting away from coal-fired plants. When the cost of natural gas starts to increase, coal will be an alternative. As that happens, there will be no available technology for coal units that have been closed. Policies cannot be developed that ignore current technology.


In response to Representative Henderson, Mr. Andrews stated that waiting to see what is going to happen with the federal regulations regarding coal would be detrimental to Kentucky. Kentucky needs to continue to find solutions that work for the state.


In response to Representative Hall, Mr. Andrews stated that the Kemper County Energy Facility in Mississippi is integrating new technology for the gasifier with carbon capture storage, which has not been done in that way. Cost overruns will happen because it is an ambitious and experimental project.


In response to Representative Hall, Mr. Andrews stated that, in terms of transportation efficiency, diesel is still the best fuel. Coal to ethanol works well and the plants can be smaller. The United States is producing more oil but still imports approximately 40 percent.


In response to Representative Martha Jane King, Mr. Andrews said the units that are closed in the TVA area could be made more efficient by repowering. To bring the plants back on-line would depend on each plant and unit. They would have to be retro-fitted with current emission control requirements.


In response to Representative Riner, Mr. Andrews said that the Chinese are making efforts to reduce their emissions. China is willing to make more significant investments in carbon capture and to try things on a larger scale than the United States. The United States is pushing China to reduce its emissions, but China is also moving forward on its own.


In response to Representative Kerr, Mr. Andrews said the cost of algae utilization conversion compared to solvent based capture is more expensive. The major hurdle of algae is that the process of algae utilization is very slow, requiring long-term use of large amounts of land.


Energy Efficiency in Kentucky Schools

Ron Willhite, Director, School Energy Managers Program, Kentucky School Boards Association, Gregory T. Guess, Director, Division of Efficiency and Conservation, Kentucky Department for Energy Development and Independence, Jon Nipple, Energy Manager for programs that are funded by Louisville Gas and Electric and Kentucky Utilities, and Jim Arnold, Energy Manager for Butler County Schools, testified.


Mr. Willhite explained that some of the statutory requirements for School Energy Management and Highly Efficient buildings include developing and implementing energy management plans and presenting an annual report to Kentucky School Boards Association (KSBA) and the Legislative Research Commission. When new schools are being constructed or renovated, they should meet or exceed efficiency standards. KSBA works with the local boards of education to develop and implement an energy policy.


Mr. Willhite said that the School Energy Managers Project was initially funded by the Kentucky Energy and Environment Cabinet through the American Reinvestment Recovery Act. The money funded 35 new energy mangers to serve 130 school districts. There were 14 energy managers already in place.


Mr. Nipple explained that half of the energy in schools can be attributed to heating and air conditioning and ventilation, and about one-fourth of the energy is for lighting. Some of the best practice trends include geo-thermal, variable refrigerant flow systems, and energy recovery wheels and Co sensors on air coming into buildings.


Best practice trends for lighting are daylight harvesting and LED technology. LED offers better illumination, long reliable life, and good energy savings. A building automation system is a web-based digital control system for zone and individual room control. The system is sophisticated and requires training. A new school constructed in Owen County used best practices such as geothermal heating and cooling and web-based automation lighting control. When renovating an old school, certain elements are kept but others, such as lighting, are replaced. After the old building was renovated, the annual operating costs were reduced by approximately $21,000 to $60,135. The new construction, which was double the size of the renovated building, has an annual operating cost of approximately $77,000.


Mr. Arnold said that Butler County was one of the first to be all Energy Star throughout the district. The formula for success has been leadership, investment, partnership, and recognition. Before the school district will invest in any energy saving opportunity, the opportunity must pay for itself. Butler County reinvests money from energy savings into technology and maintaining and updating buildings. Since 2009, the financial impact has been a savings of approximately $62,000 per year.


Key actions for energy savings are accountability by tracking improvements and sustainability, collection of data, reinvestment of energy savings, investment in proven technologies, and having an Energy Manager.


Mr. Guess gave an update on Net-Zero Energy Schools and energy and education collaborative, which has enabled schools to be energy efficient. A net-zero energy school is one that produces and uses the same energy over the course of the year. Locust Trace AgriScience Farm qualified as a net-zero energy school within the past year. Locust Trace produces a surplus of energy. The Richardsville Elementary School in Warren County is widely acknowledged as the first public school in the country to achieve net-zero status. For the last two years, the elementary school produced enough energy that it receives money from its electricity supplier for excess power generated. In 2012, it received a check from TVA for $37,277.31. So far in 2013, it has received approximately $30,000. The savings can be attributed to solar panels installed on the roof of the school. Mr. Guess suggested that schools might want to be net-zero ready because the cost of solar is expensive at this time. After solar costs come down, a net-zero ready school can install solar panels.


Initiatives and organizations such as Kentucky Energy Efficiency Program for Schools (KEEPS), National Education Development Project, Kentucky Environmental Education Council, and the Kentucky School Board Association are working with the School Energy Managers Program.


Mr. Willhite said that schools are collecting and assembling data to provide the results for the last three years to the Legislative Research Commission. For the last three years, Kentucky has gone from 65 to 59 on the Energy Utilization Index resulting in a savings of approximately $30 million. Savings can be found in older schools by placing a trained energy specialist in the schools and utilizing the existing technology. Since 2008, Kentucky has increased the number of Star Energy schools from 12 to 233, and now ranks third in the nation.


The Energy Cabinet is providing state grant funds to the Kentucky Energy Managers Program. LG&E and KU also provide matching funds for salaries of energy managers in their service areas. There are 34 energy managers serving 76 districts. The largest issue in getting energy managers hired in school districts is the decision by the local school board and the superintendent to hire a non-classroom position.


In response to Representative Stacy, Mr. Arnold stated that Butler County reduced its transportation costs by reducing bus routes and limiting the number of minutes to warm up a bus on a cold day.


Representative Stacy stated there are other ways to cut costs on energy savings such as renovating older schools instead of building new mega-schools and using liquefied natural gas (LNG), which is a proven technology for transportation fuel. LNG would save millions of dollars in transportation costs.


In response to Representative Riner, Mr. Nipple said there are several schools that have employed the use of motion sensor lighting and dark campus strategy, which turns the lights out at certain times of the day when the school is not in use.


In response to Representative Adkins, Mr. Willhite agreed that there are net-zero schools that have an agreement with utility companies to sell back excess power.


The meeting adjourned at 12:00 p.m.