A Biogas Friendly Bill
Since the Public Utility Regulatory Act was passed in 1978, power utilities have been required to pay an “avoided cost” rate to certain types of small power production, cogeneration facilities and other types of qualifying facilities. That rate is typically the cost of the cheapest type of energy the utility has in its portfolio—usually coal—and that’s a price with which small renewable energy providers cannot compete.
More than 20 years later, PURPA is doing something it was never intended for—limiting individual states’ ability to make their own decisions about incentivizing small distributed renewable energy. A new bill introduced in the Senate Energy & Natural Resources Committee, however, could change that.
PURPA Plus, which is intended to encourage distributed generation of renewable energy, would remove the avoided cost restriction and let states set their own prices, according to Patrick Serfass, executive director of the American Biogas Council. In many cases, PURPA makes small renewable energy generation unfeasible.
For example, if a biogas producer has to turn on his facility’s lights or use power for something else, he’s probably paying a retail rate, Serfass says. “If he is selling any power back, he is getting a small fraction of that rate, so he’s not even getting paid the same rate he’s being charged. In most cases, they only have to pay you for the cost of avoiding the same amount of electricity from coal.”
PURPA Plus is a way for states to raise that price to incentivize distributed renewable electricity generation. “Generally in the energy industry it makes the most sense to produce your own electricity where you need it because it costs money to move it some place,” Serfass explains. “If you have a locally available resource, and people who need energy locally, why not produce and use it there? That’s where distributed generation comes in. If states want to encourage that, not only does it create business for those companies and jobs, but also increases the amount of electricity the state produces without having to upgrade transmission systems.”
The most important component of PURPA Plus is that it allows states a choice, and it is at no cost to taxpayers, Serfass says. “It’s a gateway for states to create more incentives, one of which could be a feed-in tariff. That would allow biogas projects to compete with other traditional energy sources on a level playing field.”
Though it’s less of a priority, the ABC would like to see PURPA Plus tweaked so that the cap is raised from 2 to 5 megawatts.. “Over half of current biogas projects are less than that, but a lot of larger projects in the works are between two and five,” Serfass says. “A slightly larger project could have a big impact on the industry.”
The ABC is urging its members to write their senators to request support of the bill. “With the current Congress being focused on cutting our federal budget and reducing costs everywhere, this bill is important because it doesn’t cost taxpayers any money,” Serfass reiterates. “It’s a really valuable piece of legislation.”