[Senate Report 111-315]
[From the U.S. Government Publishing Office]
Calendar No. 601
111th Congress Report
SENATE
2d Session 111-315
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GAS TURBINE EFFICIENCY ACT
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September 27, 2010.--Ordered to be printed
_______
Mr. Bingaman, from the Committee on Energy and Natural Resources,
submitted the following
R E P O R T
[To accompany S. 2900]
The Committee on Energy and Natural Resources, to which was
referred the bill (S. 2900) to establish a research,
development, and technology demonstration program to improve
the efficiency of gas turbines used in combined cycle and
simple cycle power generation systems, having considered the
same, reports favorably thereon without amendment and
recommends that the bill do pass.
PURPOSE
The purpose of S. 2900 is to establish a research,
development, and technology demonstration program to improve
the efficiency of gas turbines used in combined cycle and
simple cycle power generation systems.
BACKGROUND AND NEED
Natural gas is used to generate electricity in a variety of
ways. The first is through a steam generation unit, where
natural gas is burned in a boiler to heat water and produce
steam. The steam is then used to turn a turbine to generate
electricity. The second is through gas turbines where, instead
of heating steam to turn a turbine, natural gas is mixed with
air and ignited, which increases the temperature, velocity, and
volume of the gas flow. The hot gas is then used to turn the
turbine directly to generate electricity. The final way is
through combined-cycle units that use both a gas turbine and a
steam unit. The gas turbine operates in much the same way as a
normal gas turbine, using the hot gases released from burning
natural gas to turn a turbine and generate electricity.
However, in combined-cycle plants, the waste heat from the gas
turbine process is used to generate steam, which is then used
to generate electricity much like a steam unit, resulting in
significantly higher efficiency than simple steam generation or
gas turbine cycles alone.
Efficiency enhancements for both combined cycle and simple
cycle gas turbine units could result in significantly reduced
natural gas usage and emissions. For example, General Electric
Company estimates that a one-percentage point improvement in
efficiency applied to its existing fleet of F-class turbines
would result in CO2 emission reductions of 4.4
million tons per year, while also providing savings of more
than a billion dollars per year in fuel costs. Notably, other
countries such as Japan are now making significant investments
in these high efficiency technologies.
The Department of Energy carries out simple and combined
cycle gas turbine research programs in two functional program
offices: The Office of Fossil Energy for large megawatt
machines for base load and peak power production; and the
Office of Energy Efficiency and Renewable Energy for smaller
kilowatt machines typical of distributed power systems.
S. 2900 proposes a structured research program in combined
and simple cycle power generation systems found in large
megawatt class machines so that the United States remains
globally competitive in these markets.
LEGISLATIVE HISTORY
S. 2900 was introduced by Senator Gillibrand on December
17, 2009 and is cosponsored by Senators Collins, Hagan, and
Bill Nelson. The Subcommittee on Energy held a hearing on S.
2900 on June 15, 2010. The Committee on Energy and Natural
Resources ordered the bill reported without amendment at its
business meeting on August 5, 2010.
A companion measure, H.R. 3029, was introduced in the House
of Representatives by Representative Tonko on June 24, 2009. It
was reported by the Committee on Science and Technology, with
amendments, on December 1, 2009. H. Rept. 111-343. It passed
the House of Representatives, as amended, on December 1, 2009,
and was referred to the Committee on Energy and Natural
Resources.
COMMITTEE RECOMMENDATION
The Senate Committee on Energy and Natural Resources, in
open business session on August 5, 2010, by a voice vote of a
quorum present recommends that the Senate pass S. 2900.
SECTION-BY-SECTION ANALYSIS
Section 1 provides a short title.
Section 2 (a) directs the Secretary of Energy to carry out
a research, development, and technology demonstration program
to improve the efficiency of gas turbines used in power
generation systems and to identify the technologies that will
lead to gas turbine combined cycle efficiency of 65 percent or
simple cycle efficiency of 50 percent.
Subsection (b) requires the program to: (1) Support first-
of-a-kind engineering and detailed gas turbine design for
megawatt-scale and utility-scale electric power generation; (2)
include technology demonstration through component testing,
subscale testing, and full scale testing in existing fleets;
(3) include field demonstrations of the developed technology
elements to demonstrate technical and economic feasibility; and
(4) assess overall combined cycle and simple cycle system
performance.
Subsection (c) specifies the following program goals: (1)
In phase I, to develop the conceptual design of, and to develop
and demonstrate the technology required for, advanced high
efficiency gas turbines that can achieve at least 62 percent
combined cycle efficiency or 47 percent simple cycle efficiency
on a lower heating value basis; and (2) in phase II, to develop
the conceptual design for advanced high efficiency gas turbines
that can achieve at least 65 percent combined cycle efficiency
or 50 percent simple cycle efficiency on a lower heating value
basis.
Subsection (d) further directs the Secretary, in selecting
program proposals, to emphasize the extent to which the
proposal will: (1) Stimulate the creation or increased
retention of jobs in the United States; and (2) promote and
enhance U.S. technology leadership.
Subsection (e) requires awards of financial assistance to
be made on a competitive basis with an emphasis on technical
merit.
Subsection (f) provides that the cost-sharing requirements
of section 988 of the Energy Policy Act of 2005 (42 U.S.C.
16352) apply to awards.
Subsection (g) provides that the limits on participation
under section 999E of the Energy Policy Act of 2005 (42 U.S.C.
16375) apply to awards.
Subsection (h) authorizes $85 million to be appropriated to
carry out the program for each of fiscal years 2011 through
2014.
COST AND BUDGETARY CONSIDERATIONS
The following estimate of costs of this measure has been
provided by the Congressional Budget Office.
S. 2900--Gas Turbine Efficiency Act of 2009
Summary: S. 2900 would authorize the appropriation of $340
million over the 2011-2014 period for the Department of Energy
(DOE) to improve the efficiency of turbines that use natural
gas to generate electricity. Assuming appropriation of the
authorized amounts, CBO estimates that implementing the
legislation would cost $327 million over the 2011-2015 period
and $13 million after 2015. Enacting the legislation would not
affect direct spending or revenues; therefore, pay-as-you-go
procedures do not apply.
S. 2900 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 2900 is shown in the following table.
The costs of this legislation fall within budget function 250
(general science, space, and technology).
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By fiscal year, in millions of dollars--
-------------------------------------------------------
2011 2012 2013 2014 2015 2011-2015
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CHANGES IN SPENDING SUBJECT TO APPROPRIATION
Authorization Level..................................... 85 85 85 85 0 340
Estimated Outlays....................................... 47 72 85 85 38 327
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Basis of estimate: For this estimate, CBO assumes the bill
will be enacted near the beginning of fiscal year 2011 and that
the authorized amounts will be appropriated each year.
Estimated outlays are based on historical spending patterns for
DOE research programs. S. 2900 would authorize the
appropriation of $85 million a year over the 2011-2014 period
for research, development, and demonstration activities related
to gas turbines.
Intergovernmental and private-sector impact: S. 2900
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Previous CBO estimate: On August 19, 2009, CBO transmitted
an estimate for H.R. 3029, a bill to establish a research,
development, and technology demonstration program to improve
the efficiency of gas turbines used in combined cycle power
generation, as ordered reported by the House Committee on
Science and Technology on July 29, 2009. The two pieces of
legislation are similar; however, S. 2900 authorizes the
appropriation of $20 million more each fiscal year and includes
provisions for simple cycle gas turbines in addition to
combined cycle gas turbines. The CBO cost estimates reflect
those differences.
Estimate prepared by: Federal Costs: Martin von Gnechten;
Impact on State, Local, and Tribal Governments: Ryan Miller;
Impact on the Private Sector: Amy Petz.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
REGULATORY IMPACT EVALUATION
In compliance with paragraph 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee makes the following
evaluation of the regulatory impact which would be incurred in
carrying out S. 2900.
The bill is not a regulatory measure in the sense of
imposing Government established standards or significant
economic responsibilities on private individuals and
businesses.
No personal information would be collected in administering
the program. Therefore, there would be no impact on personal
privacy.
Little, if any, additional paperwork would result from the
enactment of S. 2900.
CONGRESSIONALLY DIRECTED SPENDING
S. 2900 does not contain any congressionally directed
spending items, limited tax benefits, or limited tariff
benefits as defined in rule XLIV of the Standing Rules of the
Senate.
EXECUTIVE COMMUNICATIONS
The testimony of the Department of Energy on S. 2900 at the
Subcommittee on Energy's June 15, 2010, hearing follows.
Statement of Steven G. Chalk, Chief Operating Officer and Acting Deputy
Assistant Secretary for Renewable Energy, Office of Energy Efficiency
and Renewable Energy, Department of Energy
Madam Chairman, Ranking Member Risch, and Members of the
Subcommittee, thank you for the opportunity to appear before
you today to discuss proposed clean energy legislation.
The Department and the Subcommittee share common goals of
strengthening our economy, enhancing our national security, and
protecting our environment. As part of the Recovery Act, the
Office of Energy Efficiency and Renewable Energy (EERE),
oversees a total of $16.8 billion in investments. To date, EERE
has obligated 96 percent, or $16.07 billion, of its Recovery
Act funds. The funds are putting America to work laying the
foundation for our clean energy future. The Department also
appreciates the authorities you have provided in recent years
in the Energy Policy Act of 2005 (EPAct) (P.L. 109-58) and the
Energy Independence and Security Act of 2007 (EISA) (P.L. 110-
140). This year, the Committee has proposed further investment
and we thank you for all your hard work in reporting the
American Clean Energy Leadership Act (S. 1462).
Today, I am pleased to offer the Department's perspective
on five pending pieces of legislation related to energy
efficiency and renewable energy. Note that many of the
authorities outlined in the bills would simply reinforce
existing authorities, and may not be necessary for the
Department to carry out the activities in question. I will
discuss them in the order listed in the hearing invitation
letter I received from the Subcommittee. These include the 10
Million Solar Roofs Act of 2010 (S. 3460), the Supply Star Act
of 2010 (S. 3396), the Improving Energy Efficiency and
Renewable Energy Use By Federal Agencies Act of 2010 (S. 3251),
the Heavy Duty Hybrid Vehicle Research, Development, and
Demonstration Act (S. 679), the Gas Turbine Efficiency Act of
2009 (S. 2900).
s. 3460--10 million solar roofs act of 2010
We thank the subcommittee and the sponsor of this
legislation for your strong leadership on solar technologies
over the years. The Department's goals for solar electric
technologies are to be cost competitive in their respective
markets by 2015 and to reach a high penetration of solar
installations. The Department is investing $232 million in 2010
to support solar research across the development pipeline, from
basic photovoltaic (PV) cell technologies to manufacturing
scaleup to total system development. Within the $232 million,
DOE is investing up to $50 million in concentrated solar power
technology development and deployment related activities and
$23 million to understand how solar technologies can be better
integrated within existing electricity generation and
transmission systems. In solar hot water heating, DOE is
investing approximately an additional $6.5 million in 2010.
The proposed legislation incorporates several significant
features. We believe that rebates, loan programs, and
performance based incentives are all effective means of
stimulating demand. Allowing states to choose between these
incentives will enable the Act to expand existing state
programs that have been effective in promoting solar
installations. In addition, the states' matching funds
requirements will leverage available federal appropriations and
increase the resulting deployment of solar technologies, both
of which are high priorities for the Department.
To maximize the effectiveness of the proposed legislation,
we would recommend two changes. First, while we support the
state match requirement, we propose that the cost share be set
at 50 percent to increase the potential leverage of federal
funds. Second, the Secretary should be given the ability to
reduce this as necessary to increase the overall effectiveness
of the program. We also believe the program could be designed
in a creative way such as working with municipalities to
promote photovoltaic installations through innovative local
programs.
We note that by our estimates, the $250 million authorized
for FY 2012 would yield roughly 100,000 rooftop solar systems,
and may not be sufficient to put us on a trajectory to meet the
goal of 10 million solar roofs. With these changes, the
legislation could be an effective tool in increasing deployment
of solar electricity technologies Nationwide. We note that
existing authorities, such as the competitive portion of the
state energy program, would allow DOE to undertake such a
program already.
s. 3396--supply star act of 2010
Supply chain energy efforts can make an important
contribution to overall industrial efficiency and the
competitive position of domestic suppliers. Analysis suggests
that a large part of the carbon footprint for many consumer
products can be attributed to the supply chain--from raw
materials, transport, and packaging to the energy consumed in
manufacturing processes--on the order of 40 to 60 percent.\1\
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\1\Source: Climate Change and Supply Chain Management, McKinsey
Quarterly, McKinsey & Company, July 2008.
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The Supply Star legislation seeks to build upon existing
best practices in the industrial community by establishing a
voluntary recognition program that supports and promotes
products and companies with highly energy- and resource-
efficient supply chains.
DOE and the Environmental Protection Agency (EPA) both have
existing initiatives that address supply chain efficiency, such
as Save Energy Now at DOE and the Smart Way
TransportTM program at EPA. The legislation should
coordinate with and leverage these programs as a structure
through which Supply Star activities could be conducted. For
example, through its national Save Energy Now initiative, DOE
encourages manufacturing companies to engage their supply
chains in energy and carbon management. Specifically, DOE
develops processes and resources to assist companies in
promoting energy management to their industrial suppliers and
customers. Save Energy Now LEADER Companies make a voluntary
commitment to reduce their energy intensity by 25 percent in 10
years. Many of these companies are interested in improving the
efficiency of their supply chains as well.
The Supply Star bill also builds upon Superior Energy
Performance (SEP), a voluntary certification program working to
provide industrial facilities with a roadmap for achieving
continual improvement in energy efficiency while maintaining
competitiveness. A central element of SEP is implementation of
the forthcoming International Organization for Standardization
(ISO) 50001 energy management standard, with additional
requirements to achieve and document energy intensity
improvements. DOE is working through SEP to bring ISO 50001 to
the U.S. Upon its expected publication in 2011 this American
National Standards Institute-accredited program will provide
companies with a framework for fostering energy-efficiency at
the plant level and a consistent methodology for measuring and
validating energy efficiency and intensity improvements. This
new framework will be an important tool to integrate into
supply chain efforts.
s. 3251--improving energy efficiency and renewable energy use by
federal agencies act of 2010
On October 5th, President Obama signed Executive Order
13514 requiring Federal agencies to set GHG emission reduction
targets, increase energy efficiency, reduce fleet petroleum
use, conserve water, reduce waste and promote environmentally-
responsible produce purchases by federal agencies. With this
action, the President directed agencies to demonstrate the
Federal government's commitment, over and above what is already
being done, to reducing emissions and saving money.
As a whole, the Federal government has made significant
progress in meeting the energy requirements of EISA 2007 and
EPAct 2005. Further progress on these efforts would be
bolstered by S. 3251. The Department is particularly supportive
of provisions clarifying the definition of allowable
``renewable'' energy sources, and authorizing the creation of a
revolving fund for Federal facility energy efficiency and
renewable energy projects.
The Department looks forward to working with the
Subcommittee on legislation that would provide agencies with
the flexibility to purchase renewable energy for appropriate
time periods, that do not exceed asset life, create appropriate
risk sharing between project developers and taxpayers, and that
recognize the importance of fiscal responsibility and
Congressional Budget Office scoring of contracts. This
authority would provide opportunities for more on-site
renewable power at Federal agencies and would provide strong
support for growing our domestic clean energy economy.
The Department's recommended definition of renewable energy
follows the definition in section 203 of EPAct 2005, with an
additional recommendation to allow for both electric energy and
thermal energy from renewable sources. It is very important to
allow thermal energy to count as renewable energy, particularly
because renewable thermal energy sources such as ground source
heat pumps are often the lowest-cost option for displacing
purchased energy and are already widely deployed. This approach
contrasts with the current definition which is limited only to
``renewable electricity,'' a definition that reduces incentives
for this valuable and cost-effective form of renewable power.
The Department fully supports the creation of a revolving
loan fund based on best practices and subject to appropriate
interest rates for Federal facility energy efficiency and
renewable energy projects. There is considerable experience and
success at the state and local level with using revolving loan
funds to assist innovative projects to improve energy
efficiency. In addition, there is Federal experience with a
similar concept within the General Services Administration
(GSA) that funds agency relocations, and agencies reimburse the
fund at slightly above costs to gradually increase the amount
of funds available for lending.
Federal agencies are already responding to the requirements
of EISA Section 432 to survey their facilities for potential
energy efficiency and renewable energy upgrades, as well as to
complete energy audits and to report on measures taken. The
Department recommends that the renewable energy facility
surveys called for in S. 3251 Section 5 should be included as a
modification of EISA Section 432.
DOE's Federal Energy Management Program is already at work
implementing provisions similar to the Federal energy
management and data collection standard called for in S. 3251
Section 7. As required under EISA Section 432, DOE will publish
overarching guidance for implementation of all Section 432
requirements in 2010. The Department is also developing a web-
based tracking system for facility-level energy data and
identified or implemented energy conservation measures per
EISA. Tasking the GSA to deploy a similar publicly-available
resource with facility-level energy data would create
redundancy as the Department's compliance tracking system will
be deployed for use by all agencies in July 2010.
s. 679--heavy duty hybrid vehicle research, development, and
demonstration act
The program authorized by S. 679 would complement several
of the Department's current activities focused on increasing
vehicle energy efficiency. One of those programs is the
SuperTruck Program, in which DOE is seeking to improve the
freight hauling efficiency of Class 8 trucks by 50 percent.
Other complementary efforts underway include: (1) The
development of hybrid school bus technology; (2) research,
development, and demonstration of medium-duty utility bucket
trucks and passenger shuttles using a plug-in hybrid electric
system; and (3) other medium and heavy duty truck deployment
activities supported by our Clean Cities program. S. 679 has
the potential to increase the fuel economy attainable by
vehicles in this sector.
There are several technical definitions and reporting
requirements about which we would like to seek clarification,
and the Department looks forward to working with the
subcommittee on those provisions.
s. 2900--gas turbine efficiency act of 2009
The Gas Turbine Efficiency Act would establish a research,
development, and technology demonstration program to improve
the efficiency of gas turbines used in combined cycle and
simple cycle power generation systems.
The Department believes that industry has economic
incentives to invest in research, development and demonstration
to increase the efficiency of gas turbines. To the extent that
the private sector underinvests in basic research, DOE has
sufficient authority and existing programs to improve high
temperature materials applicable to a range of energy
technologies.
The bill is similar to an existing successful program
within DOE. The Advanced Turbine Systems Program, a research,
development and demonstration collaborative between the
Department's Offices of Energy Efficiency and Renewable Energy
and Fossil Energy, successfully developed and deployed advanced
turbine material and coating leading to today's turbine
efficiencies.
The legislation outlines activities DOE already performs.
For example, through its Industries of the Future
(crosscutting) investments, DOE's Industrial Technology Program
(ITP) aids the development of advanced manufacturing processes
for the expanded use of lightweight materials such as titanium.
Those breakthroughs help to drive production cost down and
market impact up. In other efforts, ITP promoted advanced
alloys of steel to support many of the new clean energy
products being developed today. Nanocoating technologies are
still another group of innovations developed with the
assistance of ITP that now extend the life of tooling systems
and provide wear resistance to reduce the cost of manufacture
and extend the useful life of products. All of these efforts
support the overarching objective of reducing the energy
intensity of Industry to help advance the Administration's
energy security and environmental performance goals.
The Department is committed to continuing research of high
temperature materials which will help industry develop more
efficient energy technologies. Meanwhile, the private sector
has economic incentive to invest in the development and
demonstration of efficient gas turbines. Therefore, private
sector work on later stages of efficient natural gas turbine
development and demonstration will likely be conducted without
the need for additional funding authorizations beyond that
already in place.
In conclusion, the Department of Energy thanks the
Subcommittee for the opportunity to comment on these proposed
initiatives. We look forward to working with Congress to
develop strong, effective clean energy policy to ensure U.S.
leadership on these global issues and in the clean energy
economy.
CHANGES IN EXISTING LAW
In compliance with paragraph 12 of rule XXVI of the
Standing Rules of the Senate, the Committee notes that no
changes in existing law are made by the bill, S. 2900, as
ordered reported.