Statewide Interconnection Procedures: Yes
For CHP facilities looking to export to the grid, Texas has different interconnection procedures depending on the size of the CHP facility. For projects below 10 MW, the Public Utility Commission (PUC) has designed a streamlined interconnection process that specifies the appropriate level of review and the associated technical and equipment requirements for each project. In order to be eligible to use these interconnection requirements designed for on-site distributed generation, the resource must meet the PUC definition of Distributed Resource. For facilities 10 MW or greater, the interconnection is more complex and requires registration with ERCOT and a series of studies in order to be approved for interconnection.
The Public Utility Commission is currently considering amendments to Subst. Rule 25.211 in Project 41325. These amendments will incorporate a new Interconnection Agreement form into the rule, rather than in a separate location. Other changes include adding options regarding indemnification and choice of law for parties entering into an agreement with a federal agency and adding a requirement for the owner of a distributed generation facility to report to the utility any change in ownership of the facility and the cessation of operations of the facility within 14 days of such change.
Waste Heat Included in Renewable Portfolio Standard: No
The state RPS is limited to "renewable energy technology" as defined in the Texas Utilities code 39.904(d). The definition is limited to any technology that exclusively relies on an energy source that is naturally regenerated over a short time and derived directly from the sun, indirectly from the sun, or from moving water or other natural movements and mechanisms of the environment. Renewable energy technologies include those that rely on energy derived directly from the sun, on wind, geothermal, hydroelectric, wave, or tidal energy, or on biomass or biomass-based waste products, including landfill gas. A renewable energy technology does not rely on energy resources derived from fossil fuels, waste products from fossil fuels, or waste products from inorganic sources.
CHP in Utility Demand-Side Management: Yes
Texas has an energy efficiency goal of 30% of the utility's annual growth in demand of residential and commercial customers by December 31 of each year. PUC Substantive Rule 25.181 specifies that CHP systems up to 10 MW are eligible resources that may be used to meet this goal.
Output-based Emission Standards: Yes
Texas offers a streamlined construction air permitting program, termed a permit by rule (PBR), which was issued in July 2012 for certain types of natural gas-fired CHP systems up to 15 MW. The CHP PBR, codified in 30 TAC 106.513, allows CHP systems that meet the rule's eligibility requirements to comply with NOx emission limits using the equivalence approach. The rule language simply states that the output will be calculated as the electric output plus the thermal output in MW based on the conversion of 1 MWh equals 3.413 MMBtu of heat output. To be eligible, the heat recovered must equal at least 20 percent of the total energy output of the CHP unit.
Texas also has a standard permit program for electric generating units that meet the applicability requirements of the standard permit. The program includes NOx emission limits and allows CHP systems to comply using the equivalence approach. A CHP system can take into account its secondary thermal output if "the heat recovered equals at least 20 percent of the total heat energy output of the CHP unit."
Fair Standby Rates: Varies
Stand-by rates are the result of negotiation between the resource and the utility or retail electric provider for the provision of stand-by service. PUC Substantive Rule 25.242
governs arrangements between Qualifying Facilities and Electric Utilities.
CHP-Specific Incentives: Yes
PUC Substantive Rule 25.181(m)(1)(E) states that “standard offer, market transformation, and self-delivered programs may permit the use of distributed renewable generation, geothermal, heat pump, solar water heater and combined heat and power technologies, involving installations of ten megawatts or less” to meet the state’s energy efficiency goal. The PUC has approved one CHP project to receive incentives under this program. However, the incentive was limited to the amount of demand reduction achieved through the use of the CHP facility.
Although technically not considered an incentive for CHP, the Texas legislature adopted HB 2049 which allows qualifying cogenerators to sell electric energy at retail to more than one purchaser of the cogenerator’s thermal output. This legislation will likely inspire new and innovative development of CHP in the competitive areas of Texas.
Texas has recently adopted legislation for an optional Property Assessed Clean Energy program (PACE) which may enable owners of commercial and industrial properties to obtain low-cost, long-term loans for water conservation, energy efficiency measures, and renewable generation. These loans may be available for Combined Heat and Power and may serve to incent more development of these projects.