OHIO STATE UNIVERSITY EXTENSION Energy as an Economic Development Strategy Aiding Public Officials in the Decision Making Process June, 2015

OHIO STATE UNIVERSITY EXTENSION

Energy as an Economic

Development Strategy

Aiding Public Officials in the Decision Making Process

June, 2015

2


Learning Objectives

• Energy Trends

• Energy and Economic Development

• Large Scale Renewable Energy Development

• Shale Energy Development & Trends

• Distributed Energy Development

• Next Steps - Energy as a BR&E Strategy


Ohio Energy Trends

4


Total Global Energy Consumption

SourceSource: U.S. Energy Information Administration, Independent Statistics & Analysis. www.eia.gov

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

0

100

200

300

400

500

600

(Qua

dril

lion

Btu

)

The 2011

International Energy

Outlook Report

estimates the world

energy consumption

of 770 quadrillion Btu

in 2035.

5


Average Retail Price of Electricity in Ohio

19901992

19941996

19982000

20022004

20062008

20102012

20140.00

2.00

4.00

6.00

8.00

10.00

12.00

Residential Sector Commercial Sector Industrial Sector Transportation SectorOther All Sectors

Source: (USDOE/EIA, 2014) The Current and Historical Monthly Retail Sales, Revenues and Average Revenue per Kilowatthour by State and by Sector

Cent

s per

Kill

owatt

-hou

r


“There has been a fivefold increase in investment

in new electricity transmission capacity since

1997, as well as large increases in spending for

distribution capacity. Since 1997, roughly $107

billion has been spent on new transmission

infrastructure and $318 billion on new distribution

infrastructure.”

Energy Information Administration, ANNUAL ENERGY OUTLOOK

2015. (2015).

7


Age of Ohio Electric Power Generators

10 or fewer

11-20 21 - 30 31 - 40 41 - 50 51 - 60 More than 60

0%5%

10%15%20%25%30%

6%

24%

9%

22% 24%

12%

3%

Percentage of Total Generation Capacity in Ohio

Age in Years

Source: 2012 Form EIA-860 Data - Schedule 3, 'Generator Data' (Operable Units Only)


Energy and Economic Development

9


JobsOhio Classifies Energy as a Primary Industry

Ohio’s Utica shale presents substantial opportunities for investments at all levels. The state also is experiencing growth in the wind and solar supply chain, as well as advanced technologies for energy efficiencies and a diverse supply of power generation.

Quick facts• Employment - 40,835 people • Gross state production - $17.5 billion • Average wages - $72,705 • Number of firms - 1,213


“The main goal of economic development is

improving the economic well being of a

community through efforts that entail job

creation, job retention, tax base enhancements

and quality of life.”

The International Economic Development Council

Economic Development Reference Guide

What is Economic Development ?

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Tax Generatione.g. Large Scale

Renewable Energy

Job Creatione.g. Shale Energy

Development

Job Retentione.g. Distributed

Energy Generation

Energy and Economic Development


Large Scale Renewable Energy Development

13


Walmart’s Approach to Renewable Energy

• Text

14


2009 2010 2011 2012 2013 2014 20150

100

200

300

400

500

0

100

200

300

400

500

Ohio Renewable Energy Development ( All Technology)

# of Facilities Total MW

# o

f C

ert

ifie

d F

ac

ilit

ies

Ca

pa

cit

y -

Me

ga

wa

tts

(M

W)

304 MW49 MW

71 MW

99 MW

100 MW

10 MW37 MW

49 MW

49 MW

177 MW25 MW

12 MW

10 MW

Source: PUCO (March, 2015)

15


Ohio Renewable Energy Generation By Technology


Abandoned Coal Mine Methane

4%

Biomass27%

FuelCell0%

Hydroelectric6%

Solar PV10%

Solid Waste4%

Waste Energy Recovery5%

Wind45%

16


17


Full slide picture

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Support for Wind Turbines Based on Residents’ Zip Code of Renewable Energy

Other zipcode 433590%

10%

20%

30%

40%

50%

60%

70%

80%73%

48%

16%

30%

11%

21%

Support/strongly support

Neutral

Opposed/strongly opposed

General support or op-position for wind tur-bines in their county:

Local Support or Opposition of Development?


Shale Energy Development

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Ohio Natural Gas Production (2000 - 2014)


2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

-

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,000

Total Production Shale Production

Mill

ion

Cub

ic F

eet

(Mcf

)

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Ohio Oil Production (2000 - 2014)


2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

-

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

Total Production Shale Production

Bar

rels


“But Global Data also flagged the competitive advantage that

U.S. companies will receive from the lower cost provided

by shale gas. And this opportunity is attracting investment

from some of the industry’s bigger names. Just last week the

International Energy Agency said some 30 million European

jobs are at risk as manufacturers of petrochemicals, plastics

and fertilizers are relocating to the U.S.”

Source: Shale Reshapes Petrochemicals Business. The Wall Street Journal. Ben Winkley (July, 2014)


Natural Gas Processing Plant - Natural gas processing removes impurities and separates higher- valued products known as natural gas liquids. Processing prepares a dry gas stream that meets industry standards for transportation in high-pressure pipelines.

Fractionation Plant - Fractionation is the process that involves the separation of the natural gas liquids into discrete natural gas liquid purity products (i.e., ethane, propane, normal butane, isobutane, and natural gasoline).

Steam cracker Plant - A steam cracker is a petrochemical plant that uses feedstocks (i.e., ethane, propane) to create ethylene, propylene, and other petrochemicals.

Ohio Midstream Processing Terms

24


Ohio Midstream Processing Infrastructure

2013 2014 2015 -

50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

Fractionation Natural Gas Processing

Nat

ural

Gas

Pro

cess

ing

Mm

cf/d

ay

Fra

ctio

natio

n –

bbl/d

ay


Ohio Getting Ethane Cracker Plant? “Appalachian Resins Inc., a Houston company, has leased 50 acres of land in

Monroe County. When built, the Ohio plant would process about 18,000 barrels a

day of ethane.”

Source: the Columbus Business First (August, 2014)

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Downstream Value Chain Markets


Distributed Energy Development

28


Walmart’s Approach to Renewable Energy

• Text

29


“This is a financial investment, it just happens to

be green. We will never tell you, go spend six or

seven million dollars to be green. We will tell you,

spend six or seven million dollars to be profitable,

and if you can be green while doing this, great”

– Jereme Kent One Energy LLC.

31


G&S Titanium Solar Project• 65 kW PV Solar fixed/tracking System installed by Carbon Vision LLC

• “With the financial incentives we have already received, the elimination of our monthly electric bill, and the avoidance of future rate increases, we foresee a total R.O.I. of roughly 8.5 years.” - Roger N. Geiser, Owner, October 5, 2012

$323,700 - Cost

$93,081 – Federal Government Check

$75,000 – AEP Credits Check

$68,049 – IRS Asset Dep.

$76,500 – 8.5 Years of Electric Bills (9K)

$11,000 – 8.5 Years Future Rate Increases (5%)

$323,000

32


Example: Swine Facility

29.25 kW system / Generating 29,250 kWh per year

117 panels (250 watt)

Average usage = 54,000 kWh per Yr.

Offset 70% of electric needs

Rooftop system south facing at 35 degree tilt.


Energy as a BR&E Strategy

34


What Can You do Locally?

• Identify businesses that have an interest in energy efficiency and distributed energy investments.

• Research net metering rules for your county/township.

• Identify funding and support programs.

• Include rules for siting renewable energy projects in local zoning ordinances.

• Include space for energy development into future planning of business parks.

35


NFIB National Small Business (less than 250) Poll

• The energy costs of individual small businesses vary greatly. Ten (10) percent of small employers claim that energy costs are the largest single cost they have while 8 percent claim that they have no direct energy expenses.

• Small-business energy costs (closely related to

consumption) are primarily linked to vehicles (38%), heating and cooling of occupied space (33%), operating equipment or processes (21%) and lighting (6%).

So, How Can We Help You?

• OSU has developed a Business Retention and Expansion Program.

• Program was created in 1986 and has been used in nearly all Ohio Counties.

• Originally created to focus on the manufacturing sector but has since expanded in the retail sector and specific sectors ie health care, downtowns

BRE Energy Development Program

• The primary objective of this program is to increase the knowledge, awareness of business owners and leaders concerning distributed energy generation, net metering, and renewable energy development.

• This program will provide participants the tools and knowledge to enhance decision-making capacity on energy investments, allowing Ohio businesses to prosper, grow, and provide stabilized employment opportunities

Components of the BR&E

• A customized business retention and expansion survey to be distributed to businesses in your community. This electronic survey will serve as a needs assessment, market the program to businesses, and collect critical data to assess overall compatibility with distributed energy projects.

• Presentation from OSU Extension providing renewable energy policy overview and foundation level information on distributed energy generation, net metering, and renewable energy projects.

• Expert Q&A panel session with utility, industry, and financial experts, to provide detailed information on net metering, rules, cost, construction, permitting, timing, and financing options.

Components of the BR&E

• Case study sessions presented by business leaders who have successfully implemented distributed energy generation projects in Ohio and can highlight both opportunities and challenges with their respective projects.

• Meetings with panel representatives to advance project discussions to a more detailed level. Companies (participants) will bring electric consumption data with them to take advantage of this initial consultation with facility visits to follow at a later date, if the company chooses.

• A Comprehensive Economic Development Energy Strategy


Questions ?

Eric Romich

OSU Extension Field Specialist, Energy Development

[email protected]

energizeohio.osu.edu

David Civittolo

OSU Extension Field Specialist, Community Economics

[email protected]

comdev.osu.edu/programs/economic-development/business-retention-expansion

Documents

OHIO STATE UNIVERSITY EXTENSION Energy as an Economic Development Strategy Aiding Public Officials in the Decision Making Process June, 2015