File No. 467

House of Representatives, April 10, 2006

The Committee on Government Administration and Elections reported through REP. CARUSO of the 126th Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT ESTABLISHING THE RENEWABLE ENERGY DEVELOPMENT INSTITUTION.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (Effective October 1, 2006) For the purposes of this section and section 2 of this act:

(1) "Renewable energy" means a Class I renewable energy source or a Class II renewable energy source, as defined in section 16-1 of the general statutes;

(2) "Conservation" means reduction in the consumption of energy or a substance;

(3) "Liquid fuels" means any stable liquid at or near ambient temperature and pressure, including propane and butane that are stored as liquids at relatively low pressures;

(4) "Depletable energy" means energy from nonrenewable resources;

(5) "Internal combustion engine" means an engine with fuel combustion within the engine apparatus, including a gas turbine, rotary combustion, diesel and gasoline piston engine;

(6) "Funding priority" means the priority on which the Renewable Energy Development Institution, established in section 2 of this act, considers and funds competitive projects;

(7) "Energy return on energy invested" or "EROEI" means the ratio of the amount of energy expended to obtain a resource to the amount of energy obtained from such resource; and

(8) "Distributed energy projects or resources" means conservation or load management with modular electric generation or storage and fuel-diverse fossil and renewable energy generation that is either grid-connected or that operates independently.

Sec. 2. (NEW) (Effective October 1, 2006) (a) There is hereby created as a body politic and corporate, constituting a public instrumentality and political subdivision of the state created for the performance of an essential public and governmental function, the Renewable Energy Development Institution which is empowered to carry out the following purposes that are hereby determined to be public purposes for which public funds may be expended: (1) The assurance of affordable, secure, sustainable, domestic energy supplies in the state; (2) the stimulation of economic development and job creation in the state; (3) creating competition in energy and oil markets; and (4) attracting, enhancing and keeping a strong renewable energy knowledge base in the state, including, but not limited to, scientists, researchers, educators, technicians, inventors, entrepreneurs, technology developers and other persons to timely meet the challenges of the forthcoming era of energy change. The Renewable Energy Development Institution shall not be construed to be a department, institution or agency of the state.

(b) Any notes, bonds or other obligations issued by the Renewable Energy Development Institution shall be in accordance with their terms of full force and effect, valid and binding upon the institution for the financing of any project or projects described in subsection (d) of this section.

(c) The board of directors of the institution shall consist of eleven members that have experience in renewable energy, renewable energy technology development, renewable energy research, renewable energy commercialization or financing of renewable energy projects and technologies. At least three of such members shall have extensive experience as an entrepreneur, engineer, technician or scientist independent of corporate entities or projects primarily funded by corporations.

(d) The Renewable Energy Development Institution shall be authorized to sell bonds and provide financing, on a project finance basis, for development, construction, commissioning, operation and other needs of the following commercial scale projects: (1) Renewable energy projects that produce renewable fuels or other forms of renewable energy capable of replacing or conserving depletable liquid fuels or other forms of depletable energy, (2) other projects, equipment, materials or works that conserve depletable energy, allow or facilitate the replacement of depletable energy with renewable energy, and (3) distributed energy projects or resources that demonstrate a reasonable potential to achieve an EROEI of at least one.

(e) In determining priority for the funding of any project, the institution shall assign priority as follows: (1) First priority shall be given to projects, technologies and equipment that conserve depletable liquid fuels or replace them with renewable fuels in significant volumes in internal combustion engines where over seventy per cent of oil is consumed and other projects, including distributed energy projects or resources, that replace or conserve depletable liquid fuels with renewable fuel volumes comparable to the savings in internal combustion engines. The potential volume of liquid fuel savings of a project shall be the greatest factor in consideration by the institution in determining funding priority within this category of projects while reductions in pollution and global warming gas production shall be the second greatest factor in determining funding such decision-making. The institution shall consider the reasonable potential to achieve an EROEI of at least one in considering replacement values; (2) second priority shall be given to projects, technologies, equipment and other items that replace or conserve depletable fuels or energy. The reasonable potential to achieve an EROEI of at least one shall be the greatest factor in determining funding priority within this category of projects while reductions in pollution and global warming gasses shall be the second greatest factor in determining funding priority for projects in this category. The institution shall consider the reasonable potential to achieve an EROEI of at least one in considering energy replacement values; (3) notwithstanding the provisions of subdivisions (1) and (2) of this subsection, the institution may give additional funding priority to a project based on the ability of a project or product to reduce or eliminate toxic air and water pollutants, global warming gasses, particulates and other emissions; and (4) when considering the priority of funding any such project, the project's potential to repay the institution shall be a prerequisite to funding.

The following fiscal impact statement and bill analysis are prepared for the benefit of members of the General Assembly, solely for the purpose of information, summarization, and explanation, and do not represent the intent of the General Assembly or either House thereof for any purpose:

OFA Fiscal Note

State Impact:

Municipal Impact:

Explanation

The bill establishes the Renewable Energy Development Institution (REDI) for the purpose of providing project financing to certain renewable energy projects. Under the bill, REDI may also provide project financing to certain distributed energy projects. To the extent that such projects increase competition in energy and oil markets, the state and municipalities could experience a savings.

The bill authorizes REDI to sell bonds. This does not appear to have any state or municipal impact because the bill specifies that: (1) REDI is not a department, institution or agency of the state, and (2) any bonds issued by them are valid and binding on that institution. Therefore, any bonds issued by REDI would not be a direct or indirect liability of the state or its municipalities. It should be noted that although the bill authorizes REDI to issue bonds, it does not provide a mechanism for raising the revenue that would be needed to support such bonds.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.



OLR Bill Analysis

sHB 5728

AN ACT ESTABLISHING THE RENEWABLE ENERGY DEVELOPMENT INSTITUTION.

SUMMARY:

The bill establishes the Renewable Energy Development Institution that is apparently run by an 11-member board of directors. The institution is not a state agency, department, or institution but rather a body politic and corporate, constituting a public instrumentality and political subdivision of the state created to perform an essential public and government function.

EFFECTIVE DATE: October 1, 2006

RENEWABLE ENERGY DEVELOPMENT INSTITUTION

Board of Directors

The bill requires the 11–member board to consist of people with experience in (1) renewable energy, (2) renewable energy technology development or commercialization, (3) renewable energy research, or (4) financing of renewable energy projects and technologies. At least three of the members must have extensive experience as an entrepreneur, engineer, technician, or scientist independent of corporate entities or projects primarily funded by corporations. The bill does not directly authorize the board to carry out the institution's functions.

Duties

The institution can use public funds to carry out the following public purposes:

1. assure affordable, secure, sustainable, domestic energy supplies in the state;

2. stimulate economic development and job creation in the state;

3. create competition in energy and oil markets; and

4. attract, enhance, and keep a strong renewable energy knowledge base in the state, including scientists, researchers, educators, technicians, inventors, entrepreneurs, technology developers, and other persons to meet new energy challenges.

The bill authorizes the institution to sell bonds and provide project financing for development, construction, commissioning, operation, and other needs of the following commercial scale projects: (1) renewable energy projects that produce renewable fuels or other forms of renewable energy capable of replacing or conserving depletable liquid fuels or other forms of depletable energy; (2) other projects, equipment, materials, or works that conserve depletable energy, allow or facilitate the replacement of depletable energy with renewable energy; and (3) distributed energy projects or resources that demonstrate a reasonable potential to achieve an energy return on energy invested (EROEI) of at least one.

The bill specifies that any notes, bonds, or other obligations the institution issues to finance any project are valid and binding. The bill requires that any project's potential to repay the institution is a prerequisite to funding, but it is unclear how this will be implemented to finance projects.

“Depletable energy” is energy from nonrenewable resources and “EROEI “is the ratio of the amount of energy expended to obtain a resource to the amount of energy obtained from the resource.

Prioritizing Projects

The bill requires the institution to consider certain factors when determining whether to fund a project and what priority to give it. It must give first priority to projects, technologies, and equipment that conserve depletable liquid fuels or replace them with renewable fuels in significant volumes in internal combustion engines, and other projects, including distributed energy projects or resources, that replace or conserve depletable liquid fuels with renewable fuel volumes comparable to the savings in internal combustion engines. When determining funding priority for projects falling under this category, the institution must first consider the potential volume of liquid fuel savings. The institution must next consider the reduction in pollution and global warming gas production. The bill requires the institution to also consider the reasonable potential to achieve an EROEI of at least one.

The institution must give second priority to projects, technologies, equipment, and other items that replace or conserve depletable fuels or energy. When determining funding priority for projects falling under this category, the institution must first consider the reasonable potential to achieve an EROEI of at least one. It must next consider the reduction in pollution and global warming gasses. The institution must also consider the reasonable potential to achieve an EROEI of at least one in considering energy replacement values.

The bill allows the institution to give additional funding priority to any project based on its ability to reduce or eliminate toxic air and water pollutants, global warming gasses, particulates, and other emissions.

BACKGROUND

Related Bill

sHB 5525, favorably reported by the Committee on Energy and Technology, establishes among other things the Energy and Technology Authority and the Department of Energy Policy and Development, which the authority oversees.

COMMITTEE ACTION

Government Administration and Elections Committee

Joint Favorable Substitute