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New Hampshire Sets Thermal Renewable Energy Carve Out

Yesterday Governor John Lynch of New Hampshire signed a new bill into law that adds thermal renewable energy to the state's renewable portfolio standard (RPS) currently set at 23.8 percent by 2025. The RPS requires that utilities incorporate at least 23.8 percent of renewable energy into their energy mixes by 2025.

The new bill requires that utilities source a portion of that 23.8 percent of renewable energy from thermal sources including wood pellet boilers, solar water heating panels and geothermal heating and cooling systems.  It sets specific annual targets for thermal renewable energy and ramps up slowly. 

New Hampshire is the first state to fully incorporate renewable thermal energy into its RPS program, and grant incentives to biomass, solar and geothermal project developers that are equivalent in value to those for developers of renewable electricity projects. Renewable energy certificates (RECs) will be worth up to $29 per megawatt-hour of useful thermal energy produced by qualified thermal projects, and the program is authorized at least through the year 2025. Rick LaBrecque of PSNH said that by the time the program sunsets in 2025, it would cost NH ratepayers about $9 million or about $.50 per month on an average household bill.

Examples of projects that will qualify are wood or wood pellet boilers that heat commercial or institutional buildings, solar hot water arrays on hospital rooftops, or geothermal heating and cooling systems for nursing homes or correctional facilities. The NH provision will be available to residential, commercial and industrial applicants. Qualified projects will be able to utilize the revenues from the sale of RECs to finance the often high-capital cost of these advanced renewable technologies, thus greatly increasing their return on investment.

The RPS will now offer the same incentives to local, community scaled high-efficiency biomass thermal projects that biomass-to-electricity plants currently have in many states.

RPS programs have been adopted in more than half of U.S. states and the District of Columbia to provide incentives to develop energy from renewable resources such as wind, solar and biomass. Traditionally, these programs are implemented through electric utilities and focus exclusively on electricity. Some eight states have limited thermal provisions in their RPS programs (AZ, IA, MA, MD, NC, OH, VA and WI), but they are generally narrowly restricted. Several states, notably MA, MD and VT, are considering expanding their RPS programs to include thermal. The U.S. Energy Information Administration has estimated that the northeast U.S. exports over $20 billion in consumer wealth annually due to its regional dependence on imported heating oil.

With passage of the bill, the NH Public Utilities Commission will now undergo administrative rulemaking to implement the thermal provision. Thermal projects will not qualify for the new incentives until after January 1, 2013.

"This is an important step forward in efforts to gain equal consideration for thermal energy," said Biomass Thermal Energy Council (BTEC) Executive Director Joseph Seymour. "With little happening on energy policy in Washington, efforts must focus on state policy to achieve a more fuel and technology neutral incentive structure for renewable energy. New Hampshire has led the way in showing the nation that it is possible to enhance state RPS programs by adding thermal energy."

The New Hampshire effort was spearheaded by NH Senate Majority Leader and former US Congressman Jeb Bradley, a long-time energy policy expert. Governor John Lynch, who in 2006 publicly endorsed the national goal of 25 percent of all energy from renewable resources by 2025 and backed the passage of the RPS in 2007, worked with the NH Public Utilities Commission in support of the legislation.  BTEC member company New England Wood Pellet of Jaffrey, NH developed the concept and led efforts to organize advocacy in support of the provision.

"Now is the time for other states to consider New Hampshire's leadership," said Seymour. "Thermal energy represents over one-third of all energy consumed in America. Energy policy that only focuses on electricity or transportation fuels ignores the tremendous economic and environmental benefits of displacing our dependence on fossil heating fuels with renewable energy."

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