3. Discussion

As noted in the attached report, Mafi-Trench's responses to our questions are very cursory. Nonetheless, they present a picture of a waste heat recovery technology that is a project component of natural gas production and transmission facilities. That is, turbo-expanders consume waste heat that is only made available through the generation and transmission of natural gas from other sources. While this may make turbo-expanders an advantageous waste heat recovery technology to a limited number of industrial users, it does not make it a stand-alone self-generation technology as contemplated under our AB 970 incentives program. We also note (as Energy Division does) that this project component appears to be quite expensive, relative to the total costs of non-renewable Level 3 self-generation technologies.

In its response to our question concerning energy efficiency, Mafi-Trench ignores our concerns over considering turbo-expanders in isolation by arguing that "the normal consideration of efficiency is not necessary."⁴ However, for the reasons stated in D.03-01-006, we believe that the energy inputs required to produce the pressure differential should be taken into account when evaluating the eligibility of this technology for self-generation incentives:

"In practice, turbo-expanders allow for the recovery of excess pressure in natural gas transmission to produce electrical power much in the same way (although by different processes) as co-generation units allow for the recovery of waste or process heat to produce electrical power. Both increase the efficiency with which fossil fuel inputs are utilized. However, neither technology can generate electricity in isolation, i.e., without fossil fuel inputs somewhere down the line. Natural gas pipelines require fossil-fueled compressors approximately every 50 to 100 miles to boost and maintain the high-pressure transmission that creates the pressure differential used to produce electrical power via turbo-expanders. Were we to consider this technology eligible for self-generation incentives, we believe it is necessary to consider additional data on efficiency based on a broader definition of the energy inputs involved."⁵

By ignoring this fundamental issue, Mafi-Trench fails to present the information that we require in order to consider whether turbo-expanders qualify for Level 3 incentives. As we stated in D.01-03-073:

"The record lacks any data on the relative emissions of fuel cells (the only Level 1 technology with operational emissions) and turbo-expander generation when taking the fuel input requirements of compression stations into consideration. Therefore, nothing in the record compels us to equate turbo-expander generation in terms of air emissions with Level 1, Level 2 or Level 3 renewable technologies. However, this technology could be considered eligible for Level 3 non-renewable incentives depending on the efficiency characteristics of turbo-expander generation and the project costs. As discussed above, we require additional information on these issues."⁶

In conclusion, we find that turbo-expanders represent a waste heat recovery technology that cannot be considered in isolation for the purpose of evaluating its eligibility under our AB 970 self-generation incentives program. As Energy Division points out in its comments, including a discrete component of energy production projects in the self-generation incentives program would not be consistent with our policy to exclude the costs of other project components, such as processing equipment for renewable materials and nonrenewable fuels, fuel cleanup for nonrenewable fuels, and thermal load equipment that utilizes waste heat.⁷

Moreover, Mafi-Trench has not demonstrated that turbo-expanders qualify for Level 3 incentives based on the efficiency of the technology when it is not considered in isolation, i.e., in terms of total energy inputs, as D.03-01-006 requires. In addition, the information presented by Mafi-Trench indicates that the application of turbo-expanders is relatively limited. There is also very little data available to allow us to assess the costs, performance and benefits of completed projects. Considering the limited funding available for self-generation incentives, we concur with Energy Division's assessment that it is not advisable to expend program funds for a technology that utilizes nonrenewable fuel and has relatively high costs per watt.

For the above reasons, we deny Mafi-Trench's Petition to include turbo-expanders as an eligible project at any incentive level under our AB 970 self-generation incentive program.