Energy and Technology Committee

JOINT FAVORABLE REPORT

Bill No.:

HB-7036

Title:

AN ACT PROMOTING THE USE OF FUEL CELLS FOR ELECTRIC DISTRIBUTION SYSTEM BENEFITS AND RELIABILITY.

Vote Date:

3/21/2017

Vote Action:

Joint Favorable

PH Date:

2/21/2017

File No.:

SPONSORS OF BILL:

Representative Joe Aresimowicz

Representative Matthew Ritter

Senator Martin Looney

Senator Bob Duff

REASONS FOR BILL:

This bill was introduced to the Committee by the Governor regarding the promotion of fuel cells for electric distribution.

RESPONSE FROM ADMINISTRATION/AGENCY:

Testimony of Commissioner Robert Klee, Connecticut Department of Energy and Environmental Protection and Chair Katie Dykes, Public Utility Regulatory Authority

Commissioner Robert Klee and Chair Katie Dykes testified in support of this bill on behalf of Connecticut Department of Energy and Environmental Protection (DEEP) and Public Utility Regulatory Authority (PURA). This bill would provide an important mechanism to expand current grid modernization initiatives under Section 103 of June Special Session Public Act 15-5.

This bill recognizes the important benefits fuel cells can provide to the electric distribution system as baseload distributed generation. Such benefits include harmonizing load, providing voltage support, and deferring the need for costly distribution system upgrades in the future. PURA is in the best position to identify areas of the system need along the distribution system that would benefit from these distributed resources.

Fuel cells can complement the grid-style system enhancements demonstration projects recently approved by DEEP, allowing the electric distribution companies to pilot projects that can demonstrate how distributed energy resources can be reliably and cost-effectively integrated into the electric distribution system.

Testimony of Consumer Counsel Elin Swanson Katz, Office of Consumer Counsel

Consumer Counsel Elin Swanson Katz testified in support of this bill on behalf of the Office of Consumer Counsel (OCC). Depending on the bids received in a competitive process and the value of the distribution system benefits, it is possible that implementation of this bill would be cost-beneficial or cost-neutral for electric ratepayers. If there is a net cost, OCC expects it to be quite minor, since the aggregate limit of ten megawatts is a small percentage of the over 7,000 megawatts installed to meet Connecticut's overall electric needs.

This bill allows for the flexibility on the part of PURA and potentially interested parties. Proposals may come either directly from the electric distribution companies as a self-build option, or through power purchase agreements with third parties, or as part of an incentive plan for the development of combined heat and power systems using fuel cells, so long as the incentive plan is consistent with the Comprehensive Energy Strategy.

NATURE AND SOURCES OF SUPPORT:

Testimony of Senior Counsel Eric Brown, Connecticut Business and Industry Association

Eric Brown testified in support of this bill on behalf of the Connecticut Business and Industry Association (CBIA). Fuel cells offer some important benefits within the Class I renewable universe of electricity generation. Like large-scale hydropower, fuel cells can be used for clean, continuous, baseline generation. Unlike large-scale hydro, fuel cell technology is highly scalable and can be stationed almost anywhere. And fuel cells are a uniquely Connecticut-based technology, supplying hundreds of jobs with the potential to provide many more.

CBIA is confident that this bill will provide positive benefits for the Connecticut economy and ratepayers because of it authorization the use of ratepayer dollars to support expansion of fuel cell deployment in Connecticut, while specifying that PURA may only approve such support if it finds that doing so “serves the long-term interests of ratepayers.”

Testimony of President William Corvo, Connecticut Energy and Technology, LLC

William Corvo testified in support of this bill on behalf of Connecticut Energy and Technology (CT E&T), to the extent that it promotes the use of fuel cells as a Class I renewable energy source to provide important benefits to Connecticut's electric distribution system. CT E&T suggests, however, that the bill be amended to provide for a more robust procurement of fuel cell projects. Currently, the bill caps the fuel cell facilities to be acquired at a nameplate capacity of ten megawatts in the aggregate. Based on CT E&T's technical review, larger fuel cell procurement is necessary to achieve the positive impacts on the electrical distribution system outline in the bill.

CT E&T suggests expanding the cap from ten megawatts to one hundred fifty megawatts. This significantly higher cap is in the long-term interest of the Connecticut ratepayers and will benefit Connecticut by:

● Creating the opportunity for development of substantial in-state Class I base load renewable energy projects that use fuel cells to enhance system reliability and provide increased electric grid reliability and stability during high demand levels

● Greatly increasing the likelihood that Connecticut will achieve 20% renewable energy generation goal by 2020

● Creating a powerful economic development opportunity which will provide jobs for Connecticut companies

● Increasing Connecticut sales tax, income tax, and municipal tax revenues without the State of Connecticut having to spend any funds to make these benefits happen

Testimony of Connecticut Green Bank

The Connecticut Green Bank testified in support of this bill. This bill carries the promise of being not just a policy that promotes clean energy deployment, but also one that promotes Connecticut's industrial manufacturing sector. Connecticut Green Bank believes that it may be possible to administer the competitive procurement for fuel cells in a similar process to that of the state's successful 300 MW residential solar incentive (the Residential Solar Investment Program). This would be done through declining incentive blocks, with an incentive offered in exchange for delivery of Class I Renewable Energy Credits to the grid or to a customer behind the meter to help satisfy the Class I Renewable Portfolio Standard. In this way, not only will the energy and environmental policies of cleaner, cheaper, and more reliable be achieved, but the economic development policies of job creation in support of the sustained orderly development of the fuel cell industry as well.

Testimony of UIL Holdings

UIL Holdings testified in support of this bill. UIL recognizes the need to transition to a cleaner electric system while maintaining affordable electric costs and believes that fuel cells are an important part of the solution. Furthermore, UIL believes that distributed energy resources (DER) such as fuel cells can be combined with microgrids, storage technologies, and smart grid analytics to enhance electrical grid operation in conjunction with DER deployment.

Testimony of David Giordano, Doosan Fuel Cell America, Inc.

David Giordano testified in support of this bill on behalf of Doosan Fuel Cell America. The State of Connecticut is one of the most important markets for the emerging fuel cell sector, and fuel cells are contributing greatly to State's goals of reducing greenhouse gas emissions, reducing peak load, and improving the reliability of the electric utility system.

Stationary fuel cell applications offer customers throughout the State a clean and efficient method of producing energy that provides resiliency, reliability, and price stability, while reducing stress on the electric grid. A wider deployment for distributed generation will lead to clean, efficient electric generation, and will alleviate the need for additional transmission facilities when developed where the demand is needed.

Doosan would suggest expanding the aggregate fuel cell generating capacity beyond the 10 MW allowed.

Testimony of Executive Director Paul Michaud, Renewable Energy and Efficient Business Association and Testimony of President Anthony Rescigno, Greater New Haven Chamber of Commerce

Paul Michaud testified in support of this bill on behalf of Renewable Energy and Efficient Business Association (REEBA) and President Anthony Rescigno submitted testimony in support of this bill on behalf of the Greater New Haven Chamber of Commerce.

Passage of this bill is a win-win scenario, which allows for well-paying jobs to continue and grow locally, while helping the state comply with its Renewable Portfolio Standards goals. It will also provide sales tax revenue to the State and much-needed revenue to struggling municipalities through new local property tax payments. A number of fuel cell installations have been completed and this bill will only add to the success by continuing to deliver cost effective clean energy to the states utility customers.

Testimony of Middlesex County Chamber of Commerce

Middlesex County Chamber of Commerce submitted testimony in support of this bill. Fuel cell power plants offer a reliable, predictable, and cost effective in-state resource. With their compact footprint they are the ideal Class I resource to be sited in locations where resiliency and local power are necessary. Furthermore, the fuel cell projects contemplated under this proposal will support high tech manufacturing and much-needed sales tax revenue to municipalities, such as Middletown, through the generation of significant local property tax payments.

Testimony of Director of Energy Initiatives Joel Rinebold, Connecticut Center for Advanced Technology, Inc.

Joel Rinebold testified in support of this bill on behalf of the Connecticut Center for Advanced Technology (CCAT). CCAT suggests expanding the aggregate fuel cell generating capacity that the electric distribution companies are allowed to acquire from ten megawatts to between 131 and 175 megawatts, consistent with the targets identified in the 2015 Hydrogen and Fuel Cell Development Plan (Roadmap) for Connecticut. CCAT also suggests that this Hydrogen Fuel Cell Development Plan be used as the basis for state planning and identification of locations for voltage and frequency improvements.

CCAT strongly supports the intent of this bill to allow the electric distribution companies to invest in fuel cell generating capacity for power quality and energy reliability, with such investment leveraged to meet other state objectives including:

● Economic goals for job retention and job creation associated with fuel cell manufacturing

● Environment goals to reduce emissions of nitrogen oxides and the formation of ground level ozone

● Class I renewable energy to meet Connecticut's RPS with in-state resources

● Premium power needs for businesses and industries that require high quality/highly reliable power from compact on-site generation

Testimony of Senior Counsel Angela Ruggiero, Eversource Energy

Angela Ruggiero testified in support of this bill on behalf of Eversource Energy. This bill is an important step to enhance grid reliability, resiliency and transition to a cleaner and more modern electric grid. Eversource believes that allowing electric distribution companies to own the fuel cells after receiving approval from PURA can provide the most cost effective solution to getting these assets deployed.

Eversource believes this bill provides an appropriate tool to balance the important interests of customers for affordable and reliable electricity while facilitating the integration of additional distributed resources into the electric system.

Testimony of Commissioner Catherine Smith, Department of Economic and Community Development

Commissioner Catherine Smith testified in support of this bill on behalf of the Department of Economic and Community Development (DECD). DECD believes this bill would allow an already established fuel cell industry to expand within the state, and help reach the Governor's goals of reducing emissions by 80 percent by 2050, while creating new jobs and spurring economic growth.

This bill will allow Connecticut to be in a better position to continue leading the world in the fuel cell industry.

Testimony of President and CEO Diane Nadeau, Windham Region Chamber of Commerce

Diane Nadeau submitted testimony in support of this bill on behalf of the Windham Region Chamber of Commerce. This bill will not only secure thousands of high paying jobs in Connecticut, but it will also be cost effective, efficient, reliable, and a predictable source of clean energy production which Connecticut needs to improve its energy grid and make it better able to meet the needs of its businesses and residents.

Testimony of Vice President Frank Wolak, FuelCell Energy, Inc.

Frank Wolak testified in support of this bill on behalf of FuelCell Energy. FuelCell Energy is especially supportive of the provisions that seek to make efficient use of existing sites and other infrastructure.

FuelCell Energy asks the committee to take into consideration the following details in support:

Fuel cells are valuable resources

This bill advances least cost investment in CT electric infrastructure

This bill advances a host of state policy goals

Utility installations have been successful to date

The process of selection and review is mature

This bill complements other energy procurement

FuelCell Energy suggests expanding the aggregate fuel cell generating capacity that the electric distribution companies are allowed to acquire from ten megawatts in aggregate to an allocation of up to 30 megawatts. This will ensure a reasonable set of project options, ability to diversify location, and ability to define the most cost effective project sizes. FuelCell Energy further suggests a mechanism by which, if the projects are demonstrated to be successful in providing grid resiliency in a cost-effective manner, the utilities be permitted to expand the program on an annual basis through 2020.

NATURE AND SOURCES OF OPPOSITION:

None submitted.

Reported by: Jessica Topper

Date: March 29, 2017