Energy Efficiency and Renewable Energy Programs for New Hampshire Municipalities
The information contained in this article is not intended as legal advice and may no longer be accurate due to changes in the law. Consult NHMA's legal services or your municipal attorney.
Energy efficiency is widely understood to be the cheapest, cleanest, most plentiful energy resource. Investing in energy efficiency and renewable energy reduces reliance on imported fuels, boosts the state’s economy, provides stability, and reduces energy. Municipalities play an important role when it comes to energy conservation, energy efficiency, and renewable energy. Installed efficiency measures, renewable energy systems, and conservation efforts have a significant impact in local “lead by example” efforts due to community involvement and high local visibility.
According to the New Hampshire 10-Year State Energy Strategy, schools, public safety, and municipal buildings tend to be some of the largest energy users in municipalities, and efforts to improve their efficiency saves taxpayers money. Efficiency measures can also improve the overall comfort and health for building occupants—something that is particularly important for schools. Many New Hampshire towns have been pursuing benchmarking and efficiency initiatives in recent years, often thanks to the efforts of their Local Energy Committees/Commissions, the Local Energy Work Group (LEWG), and utility, federal, and state incentive programs.
Energy Efficiency Measures and Programs
The four main New Hampshire electric utilities offer Core programs, one of which is specifically focused on municipalities. It provides technical assistance and partial funding to implement energy efficiency measures in municipal buildings. Effective January 1, 2014, Senate Bill 123 required that the utilities allocate up to $2,000,000 per year from the Regional Greenhouse Gas Initiative (RGGI) auction proceeds for energy efficiency for municipal and local governments. Please note RGGI allocations are currently under review by the NH House and Senate (SB26), so this funding level may change in future years.
The Core municipal program leverages existing commercial and industrial programs, incorporates a fuel blind component (non-electric), and encompasses a flexible approach for technical assistance. Municipal retrofit incentives include financial and technical services associated with installing new energy efficient equipment to replace old, inefficient equipment in existing facilities. The program provides incentives for measures such as lighting and controls (interior and exterior), fuel neutral measures including HVAC, air compressors, LED traffic lights and variable frequency drives (VFD). Based on data from the utilities, the 2014 calendar year program resulted in:
- Energy efficiency incentives and services to 70 towns/cities/schools in the amount of approximately $1.39 million
- 195 energy efficiency projects resulting in:
- Estimated annual electric savings = ~ 5,117,000 kWh
- Estimated lifetime electric savings = ~ 67,600,000 kWh
- Estimated lifetime estimated cost savings (@ $0.15/kWh) = ~ $10 million
- Estimated annual energy savings (oil and propane) = ~ 1,568 MMBtu
- Estimated lifetime energy savings (oil and propane) = ~ 33,000 MMBtu
Renewable Energy and Programs
Renewable energy comes from an energy source that is rapidly replaced or renewed through a natural process. The five common renewable energy sources are sunlight, wind, hydropower, biomass, and geothermal heat. When harnessed, these energy sources provide a clean, sustainable, affordable, and relatively unlimited power supply. Renewable energy enables municipalities to realize economic and energy security benefits. Fuel sources become “local” allowing more energy dollars to be retained in state rather than spent on imported fuels. Additionally, the industries associated with building and installing these systems increases economic activity within the municipality and the state.
New Hampshire’s net metering policy provides a compensation mechanism for the electricity generated “behind the meter” by solar (PV) and other renewable systems. Under net metering, when a system produces more electricity than the building is using, the excess electricity flows back onto the grid. This effectively reverses the direction of the meter, “netting out” that production so the customer-generator’s overall bill is lower at the end of the billing cycle. If the usage in the cycle is negative, the customer gets a bill credit that can be carried forward to future billing cycles. New Hampshire recently expanded its policy to allow group net metering. Under this structure, the owner of a renewable electricity generating system (typically PV) can share the output with other customers (e.g. municipal buildings) without the requirement that they share a meter, as long as they are customers of the same distribution utility. Customers with multiple meters such as municipalities and schools can share renewable production.
New Hampshire’s Renewable Portfolio Standard (RPS) allows renewable system owners to sell Renewable Energy Certificates in the RPS market. A renewable energy certificate (REC) represents 1 megawatt-hour of electricity produced from eligible renewable energy sources. System owners must purchase and install an eligible meter to measure the output. Output is verified and reported by independent monitors. The sale of RECs can create a revenue stream for towns and cities helping to further defray energy costs.
The NH Public Utilities Commission (PUC) administers several programs, supported by the Renewable Energy Fund (REF), which incent the installation of renewable energy systems. The REF offers two commercial and industrial (C&I) rebate programs for which municipalities qualify (note that customers of municipal utilities are not eligible for these REF rebates):
- C&I solar rebate program (thermal and electric)
- C&I central wood pellet heating system rebate program
The C&I solar rebate program offers incentives for solar energy systems in two eligible project categories. Category 1 is for new and expanded solar electric and thermal systems rated less than or equal to 100 kW (AC) or thermal equivalent. Category 2 is for new and expanded solar electric systems greater than 100 kW (AC) but less than or equal to 500 kW (AC). In each category, incentives are limited to 25% of the total project cost if less than the per watt AC incentive payment otherwise calculated. To date, rebates have supported the installation 25 solar PV systems by towns totaling 347 kW. For example, the Town of Bristol received a rebate of $12,075 for a 15.37 kW solar electric system installed on its library.
The C&I central wood pellet heating system rebate program offers an incentive equal to 30% of the heating appliance(s) and installation cost, and up to a maximum of $50,000 for investments in non-residential bulk-fuel fed wood pellet boilers and furnaces of 2.5 million BTU or less that became operational on or after December 18, 2013, serve design intent, and are installer-certified. Additionally, a rebate of 30% up to $5,000 is available for thermal storage tanks and related components. To date, rebates have supported the installation of systems in three towns: Peterborough, Dummer, and Franconia. Two school districts, the Lyme School District (SAU 76) and the Mascenic Regional School District (SAU 87), have also taken advantage of the rebate program. A number of other municipal projects have been approved for rebates but have not yet been completed.
Projects that are not eligible to participate in the rebate programs may respond to the PUC’s annual request for proposals by submitting a grant proposal for a renewable energy project. Historically, approximately $1,000,000 to $2,500,000 has been awarded annually. Examples of municipal renewable energy projects awarded grants include the installation of:
- 127 kilowatt solar photovoltaic array at Plymouth Wastewater Treatment Plant
- 947 kilowatt solar photovoltaic array at Peterborough Wastewater Treatment Plant
- Wood pellet boiler for Claremont Fire Department
- Hydrokinetic turbine at Dover Waste Water Treatment Plant
- Wood chip district heating system at Sullivan County Complex
- Two wood pellet boilers in Fall Mountain Regional School District
Financing Energy Efficiency and Renewable Energy
One challenge for municipalities is often finding the upfront capital to undertake projects. Although the projects will ultimately result in significant operational savings over time, the entire cost of a project must be covered up front. In addition to traditional bonds and bank loans, one way to overcome this challenge is by using Energy Savings Performance Contracts. Under this structure, a third party Energy Services Company (ESCO) finances and manages the project (typically energy efficiency projects), and guarantees the resulting energy savings. The municipality then repays the ESCO with the cost savings from the avoided energy usage allowing the municipality to reap savings in reduced energy costs over a long time horizon, with no up-front costs.
Funding Sources for Municipalities
For solar electric installations, municipalities may want to consider a Power Purchase Agreement (PPA). Under the PPA model, a third party owns the solar energy system located on the property of a host customer, such as a local government entity, and sells the electricity produced by the facility to the customer under a contract designed to provide long-term electricity cost savings. For public entities, the PPA model delivers long-term energy cost savings without requiring large up-front capital expenditures.
The New Hampshire Community Development Finance Authority (CDFA) was awarded $1.5 million in funding from the RGGI, through the PUC, to capitalize a revolving loan fund, the Municipal Energy Reduction Fund (MERF). MERF can be used to finance energy efficiency improvements and renewable energy systems for municipal buildings, thereby lowering the overall energy costs and the associated carbon emissions. Eligible activities include, but are not limited to:
- Improvements to the buildings envelope including air sealing and insulation in the walls, attics, and foundations;
- Improvements to HVAC equipment inside conditioned space
- Installation of sealed combustion, high efficiency condensing boilers with AFUE>97% Hydronic Systems or other high efficiency systems; and
- Installation of renewable energy sources.
Loans are structured out of energy savings, and leveraging with the utility rebates and other loan programs is encouraged. Please note school districts are ineligible for this program.
Energy efficiency improvements and renewable energy systems are becoming more affordable and financing mechanisms are available to reduce or eliminate upfront capital investments. By taking advantage of available programs and installing energy efficiency measures and renewable energy systems, towns and cities can help New Hampshire achieve its energy goals. When our municipalities invest in efficiency and clean technologies, our energy costs are reduced and our property taxes lowered. In turn, the state of New Hampshire sees a reduced reliance on imported fuels, a boost in our state economy, and the benefits from a healthier, more sustainable environment.
Additional Resources for Municipalities
Karen Cramton is Director of the Sustainable Energy Division of the New Hampshire Public Utilities Commission. She may be reached at 603.271.2431 or by email, karen.cramton@puc.nh.gov.