PUCO approves energy efficiency rebates for Sofidel America’s combined heat and power systems
On July 25, 2018, the Public Utilities Commission of Ohio (PUCO) approved the joint application of AEP Ohio and Sofidel America to commit the energy efficiency benefits of Sofidel’s combined heat and power (CHP) project to AEP Ohio’s energy efficiency statutory requirements.
In 2016, Sofidel, one of the largest tissue paper manufacturers in the world, began construction of a new plant in Circleville, Ohio. Sofidel requires a substantial amount of steam as part of its papermaking process as well as a substantial amount of electricity to operate. These two needs make Sofidel a prime candidate for a CHP system.
CHP is a technology that generates electricity and captures the heat from electric generation that would otherwise be wasted to provide useful thermal energy such as steam or hot water. The thermal energy from the generator can be used for space heating, cooling, domestic hot water and, in the case of manufacturers like Sofidel, industrial processes.1 CHP systems are considered an excellent form of energy efficiency technology because combining the heat and power sources into one generation system helps avoid much of the thermal energy losses that occur in conventional power generation systems. While the conventional method of separately producing usable heat and power has a typical combined efficiency of 45 percent, CHP systems can operate at efficiency levels as high as 80 percent.
To meet its power and operational needs, Sofidel will install two CHP systems at its Circleville plant. The gas-fired CHP systems will significantly reduce the amount of electricity Sofidel needs to purchase from the grid, and Sofidel will use the exhaust heat from the generators to dry tissue paper, which is a key component of the tissue manufacturing process.
In addition to energy cost savings and operational benefits, the CHP systems will allow Sofidel to qualify for energy efficiency rebates from AEP Ohio. This is because Sofidel’s CHP projects will help AEP Ohio reach its statutory energy efficiency requirements. Under R.C. 4928.66(A)(1)(a), Ohio electric distribution utilities (EDUs) are required to implement energy efficiency programs that achieve specific levels of energy usage reductions in their service territories. One of the ways EDUs meet these energy efficiency requirements is by obtaining the benefits of an energy efficiency project from a customer that has self-funded their own project. More specifically, industrial customers that perform energy efficiency projects on their facilities can seek to commit the energy efficiency benefit of these projects to their EDU.
Pursuant to Rule 4901:1-39-05 of the Ohio Administrative Code, AEP Ohio and Sofidel submitted a joint application to commit the energy efficiency benefits of Sofidel’s CHP systems to AEP Ohio’s energy efficiency requirements. In exchange for committing these benefits to AEP Ohio, Sofidel will receive rebate payments.
The PUCO approved a rebate payment of $0.007 per net kilowatt hour (kWh) for five years, which is capped at $400,000 for each CHP system. AEP Ohio estimates the annual incentive for both CHP systems to be about $350,000 each or approximately $700,000 a year for both systems.
These are the largest CHP systems that the PUCO has approved as eligible for energy efficiency rebates. Because of its size, Sofidel’s project provides a significant rebate opportunity for its Circleville plant, which is viewed as an economic development success for Ohio. In addition, the CHP systems give AEP Ohio a substantial win with respect to its statutory energy efficiency requirements.