The information provided below will help you understand and navigate through the regulatory environment in Texas.
Number of CHP Sites: 137
Installed Megawatts: 16.7 GW
Sample Texas Organizations Using CHP
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Industrial
- BP Texas City Refinery
- Domain Industrial Park
- Shell Chemical Company
- Citgo Refining
- Baytown Energy Center LP
Commercial/Institutional
- Rebekah Baines Johnson Health Center
- R.E. Thomason Hospital
- City of Lubbock
- Vista Hills Medical Center
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Education
- University of Texas at Austin
- University of Texas at San Antonio
- University of Texas at Dallas
- Texas A&M University
- Rice University
- Texas State University
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Electric Industry Restructuring Status
In June 1999, restructuring legislation, Senate Bill 7 (The Texas Electric Restructuring Act), was enacted to restructure the Texas electric industry to allow for retail competition. Municipals and cooperatives are not affected by this law, unless they chose to open their territories to competition after January 2002. The law also required an increase in renewable generation and 50 percent of new capacity to be natural gas-fired.
Interconnection Regulations
A facility may choose to utilize the electric grid for back-up power in case its CHP system goes offline. Connecting to the grid requires the facility to enter into an interconnection agreement with the utility providing the backup support. Interconnection is a problem because most states lack standardized processes. In Texas, however, the Public Utility Commission designed an interconnection process that specifies the appropriate level of review and the associated technical and equipment requirements for each DG project. Consequently, the review of small, low-impact DG projects are simpler and less costly in terms of both money and time.
Net Metering
One way to improve the economics of a CHP system using a renewable energy fuel source is to enter into a net metering arrangement with the utility to sell back any excess electricity produced by the system.
The net metering policy in Texas was established by the Public Utility Commission of Texas (PUCT) to promote the generation of electrcitiy by small wind and photovoltaic systems. The PUCT requires certain utilities to offer net metering to qualified facilities 50 kW or less that use renewable resources. The rule applies to all Texas price-to-beat retail electric providers (PTB REPs), transmission and distribution utilities (TDUs), and integrated investor-owned utilities that have not unbundled in accordance with Public Utility Regulatory Act §39.051. This rule does not apply to municipal utilities, river authorities or electric cooperatives.
Exit Fees/Stranded Costs
There are no exit fees for DG applications smaller than 10 MW. The Texas Restructuring Act does allow for stranded cost recovery for applications greater than 10 MW. However, the Public Utility Commission made the determination in June 2003 that utilities have recovered their stranded costs. This may change after the final market evaluation.
Siting Requirements
All self-generating energy facilities must register with the Public Utility Commission of Texas pursuant to Senate Bill 7 Sec. 29.2351 - Registration of Power Generation Companies.
Air Emissions Regulations
Minor Source Permitting
Minor source turbines and internal combustion engines are eligible for the Air Quality Standard Permit for Electric Generating Units. Most new units opt for the standard permit; however the state does have a program for issuing a construction permit as part of state new source review. Units being permitted through this method are required to do Best Available Control Technology for all criteria pollutants, but for most pollutants that just means complete combustion. The processing time for this permit can range from 4-12 months. There is a 30-day public comment period as well.
The requirements for East Texas (includes all counties east of Highway 35 or 37) are much more stringent than those of West Texas due to the local ozone attainment problems. The standards are as follows:
NOx Emission Standards for Units <10 MW
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Installed Prior to 2005 |
Installed In 2005 or Later |
| Operates 300 hrs/yr |
0.47 lb/MWh |
0.14 lb/MWh |
| Operates less than 300 hrs/yr |
1.65 lb/MWh |
0.47 lb/MWh |
| Operates 300 hrs/yr |
3.11 lb/MWh |
3.11 lb/MWh |
| Operates less than 300 hrs/yr |
21 lb/MWh |
21 lb/MWh |
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Special Considerations
- Units using combined heat and power (CHP) are eligible for credit from the heat recovered at a rate of 1 MWh for each 3.4 MMBtu of heat recovered. The heat recovered must also be a minimum of 20% of total energy output by the unit.
- East Texas units burning landfill gas, digester gas or oil field gas with <1.5 grains hydrogen sulfide or 30 grains sulfur compounds shall meet a NOx emission rate of 1.77lb/MWh.
- All units in the Houston area must also participate in the cap and trade program if the source has an uncontrolled potential to emit greater than 10 tons per year of NOx or VOC. Controlling emissions to less than 10 tons per year does not exempt a unit from participating in this program.
Major NSR/PSD Permitting
A potential to emit 250 tons of any criteria pollutant in attainment areas triggers a Prevention of Significant Deterioration(PSD). 25 tons of NOx or VOCs in severe nonattainment areas and 50 tons in serious nonattainment areas triggers New Source Review (NSR). 100 tons of NOx, VOCs, PM or CO triggers NSR in moderate nonattainment areas.