California Energy Commission Research Development Research Development Food

California Energy Commission Research && Development Research Development Food Production Investment Program (FPIP) TITLE OF PRESENTATION Staff Draft Guidelines Name of Presenter Energy Research and Development Division April 30, 2018 Title of conference/meeting Location presentation was given Date of meeting

Purpose of Power Point Comments received and Energy Commission staff responses Schedule for FPIP Guideline approval 2

Summary and Responses to Public Comments Project Eligibility Comment CEC Staff Response Allow projects that reduce other fossil fuels or use of low global warming refrigerants. Agree Tier I projects should be expansive and not limited to a specific list. • Included flexibility in the guidelines to allow Tier I projects that are not specifically listed to be added if it meets all of the following criteria: 1) Commercially available technology 2) Energy efficient equipment that is a drop-in replacement or addition to current systems 3) Result in greater GHG emission reductions than current best practices or industry standard equipment. • • Have added controls into Tier I. CEC reserves the right to narrow pool of eligible projects to a prescriptive list for a particular grant solicitation. 3

Summary and Responses to Public Comments Applicant Eligibility Comment CEC Staff Response Some asked for expansion to other NAICS codes and others said to keep the current designation at 311 or 312. Limit eligibility to only those covered by NAICS codes 311 or 3121. This is consistent with CARB’s mandatory reporting list which identifies these as the main NAICs codes. Open Tier I eligibility to all food processing facilities—including those that emit < 25, 000 MT of CO 2 e. Tier I open to all food processors that fall within the NAICS codes 311 or 3121. Allow Tier II applicants to be technology companies. Applicants are limited to only food processors because they are the target audience and will simplify the application process. 4

Summary and Responses to Public Comments Funding Eligibility-Priority for Funding Comment • • CEC Staff Response Capped entities and any of their CA • facilities should have priority for funds in Tiers I and II. • Tiers I and II should be open to all food processors with priority given to capped entities. • The FPIP is open all food processors that are covered by NAICS codes 311 or 3121. Priority for funding for Tier I: 1. 2. Capped facility(ies) can be bundled with facilities under the same ownership in one application. Facility(ies) that are required to report GHG emissions (CARB’s mandatory reporting) can be bundled with facilities under the same ownership in one application. Priority for funding Tier II: 1. 2. Capped facility Facilities that are required to report GHG emissions. 5

Summary and Responses to Public Comments Funding Eligibility – Eligible Costs Comment • • Allow labor costs Labor supplied by the vendor/ manufacturer that is included as part of the “equipment cost” should be eligible as equipment cost for Tiers I and II. CEC Staff Response • No installation costs will be allowed for Tiers I and II for the following reasons: • • • Allowing labor costs can result in more complication applications, requiring employee information (e. g. , hourly rates & fringe benefits). This results in more complicated budgets to prepare, review and develop into agreements and could delay agreement approval. Could result in more complicated invoices since reimbursements must match the individual and labor rate identified and could delay invoice processing. CEC has minimal staff allowed for this program but want to ensure speedy evaluations and processing applications and invoices. Tier I eligible cost items: equipment and M&V; grant amount increased to 65% of eligible costs Tier II eligible cost items: equipment, M&V and engineering design; grant amount increased to 85% of eligible costs 6

Summary and Responses to Public Comments Bundling Comment • • Bundling to be allowed in Tier I across multiple facilities owned by the same company No bundling for Tier II CEC Staff Response • Priority for funding for Tier I (Bundling allowed): 1. 2. • Capped facility(ies) can be bundled with facilities under the same ownership in one application. Facility(ies) that are required to report GHG emissions (CARB’s mandatory reporting) can be bundled with facilities under the same ownership in one application. Priority for funding Tier II (No Bundling): 1. 2. Capped facility Facility that is required to report GHG emissions. 7

Summary and Responses to Public Comments Match Funding and Award Sizes Comment • • • CEC Staff Response No change to match percent for Tier I Reduce match for Tier II to 20% Increase Tier II award size to $8 million Because no installation costs will be covered by the grant, the match requirements for Tiers I and II were decreased: • Tier I match requirement decreased to 35% of the eligible costs • Tier II match decreased to 15% of the eligible costs; maximum for Tier II increased to $8 million. Can IOU GGRF dollars or IOU incentives funds be used to match FPIP? Who is the author of the letter of commitment for match funds? • • • Don’t limit the award size/projects per entity. CEC is awaiting clarification from the CPUC Match funds can come from any source Letter of commitment comes from the entity providing the match. If the IOU is providing rebates/incentives, then the letter needs to come from the IOUs. There will be a maximum award size per company. 8

Summary and Responses to Public Comments Evaluation Criteria Comment • • • CEC Staff Response Remove the requirement that technologies must reduce GHG emissions by 5% facility-wide Focus on GHG reductions and dollars awarded for both Tiers. • • Removed the 5% facility wide criteria. Will include criteria that compares CEC dollars spent per ton of GHG emissions reduced. Provide higher priority for AB 1550 communities. Provide higher points for match Preference points not needed for purchases made from CA vendors. • Will provide higher preference for projects located and benefiting priority populations Reduce preference for purchases made to CA vendors Eliminated preference for increased match Provide preference points for water saving projects. Water saving projects not included unless it results in direct on-site energy savings and the project is the subject of the grant. • • 9

Summary and Responses to Public Comments Solicitation Process Comment • • Both Tiers should be solicited at the same time All funds should be available during the initial solicitation. CEC Staff Response • • Will release both tiers at the same time If there are left-over funds, will run a second round in the same solicitation. Quantification Methodology and Monitoring &Verification Process Comment • • • Concerned that CEC M&V method is not consistent with CARB method How will the CARB methodology be applied if it occurs after projects have been selected? Allow self-certification. CEC Staff Response • • CARB staff have reviewed CEC M&V and has no issues. CARB requires use of correct emission factors. Draft guidelines allow multiple approaches for conducting M&V methods-including selfcertification. CEC will review reasons for differences in actual versus estimated. 10

Summary and Responses to Public Comments Prevailing Wage Comment • CEC Staff Response Applicants not subject to prevailing wage • The CEC is not in a position to decide on whether applicants and their projects are subject to prevailing wage. The responsibility is on the applicant to selfcertify. Confidentiality Comment • • Use CARB confidentiality provisions Grant recipients should be able to request confidentiality (Title 20, California Code of Regulations, Section 2505) CEC Staff Response • • Evaluation process from receipt of applications to posting of Notice of Proposed Award (NOPA) is confidential. Once NOPA is posted, all project documents are considered public records Applicant may request confidential/proprietary information designation CEC and other state agencies may use submitted documents for any purpose. 11

Summary and Responses to Public Comments Miscellaneous Comment CEC Staff Response Clarify difference between Tier I and Tier II Tier I: Projects that meet all of the following criteria: • Commercially available technology • Energy efficient equipment that is a drop-in replacement or addition to current systems • Result in greater GHG emission reductions and higher efficiency than current best practices or industry standard equipment. Tier II: Projects that meet all of the following criteria: • Cutting-edge and emerging technology • Technology is not widely used in California • Not drop-in ready equipment replacement or addition • Proven elsewhere to reduce greenhouse gas emissions Who is on the evaluation committee? CEC staff with energy or food processing expertise. 12

FPIP Draft Guidelines 13

Eligibility for FPIP Food Processors Defined as NAICS codes 311 -3121* (Food & Beverage Manufacturing) Facility must be located in California Projects must have GHG emission reductions Meet other eligibility criteria defined in the Guidelines * North American Industry Classification System: https: //www. census. gov/eos/www/naics/2017 NAICS/2017_NAICS_Manual. pdf 14

Proposed Project Funding Categories Tier I: • Commercially available technology • Energy efficient equipment that is a drop-in replacement or addition to current systems • Result in greater GHG emission reductions and higher efficiency than current best practices or industry standard equipment. Tier II: • Cutting-edge and emerging technology • Technology is not widely used in California • Not drop-in ready equipment replacement or addition • Proven elsewhere to reduce greenhouse gas emissions 15

Proposed Tier I Attributes Eligibility: All food processors defined as NAICS codes 311 -3121* (Food & Beverage Manufacturing) Match Level Required: 35% of eligible cost Eligible Costs: Major Equipment Required M&V Projects eligible for Tier I are not eligible for Tier II 16

Tier I – Proposed List of Eligible Projects Tier I • • • Compressor controls and system optimization Machine Drive controls and upgrades Mechanical dewatering Advanced motors and controls including variable frequency drives Refrigeration optimization Drying equipment Process equipment insulation Boilers, economizers Steam traps, condensate return, heat recovery Evaporators Alternatives to natural gas • • • Internal metering and software to manage and control electricity and natural gas use if part of a larger project that reduces energy usage Other types of controls, such as compressed air, automatic blow down for boilers and system optimization Other projects not specifically listed above that meet all of the following criteria: • Commercially available technology • Energy efficient equipment that is a dropin replacement or addition to current systems • Result in greater GHG emission reductions than current best practices or industry standard equipment. 17

Proposed Tier II Attributes Eligibility: All food processors defined as NAICS codes 3113121* (Food & Beverage Manufacturing) Match Level Required: 15% of eligible costs Eligible Costs: Major Equipment Engineering & Design Required M&V Projects eligible for Tier II are not eligible for Tier I 18

Tier II – Proposed List of Eligible Projects Tier II • • • Solar thermal Renewable energy generation, including biogas production Microgrids Fuel Switching Other projects not specifically listed above that meet all of the following criteria: • Cutting-edge and emerging technology • Technology is not widely used in California • Not drop-in ready equipment replacement or addition • Proven elsewhere to reduce greenhouse gas emissions 19

Proposed Funding Levels Tier I II Percent of FPIP Funds (less Energy Commission Administrative expenses) Up to 100% Up to 50% Estimated Award Size Minimum Match Requirement $100, 000 to $3 million (Major equipment and M&V) 35% of eligible costs $2 million to $8 million (Major equipment, engineering & design, and M&V) 15% of eligible costs 20

Proposed Funding Requirements Bundling of projects and facilities Ø Bundling of technologies and facilities under the same company allowed under Tier I Ø No bundling allowed in Tier II Match funds Ø May come from internal or external funds Ø Match fund commitment letter required from the entity providing the match Preference points Ø Located in and benefiting priority populations Ø Equipment to be installed is purchased in California The Energy Commission reserves the right to do any of the following: Ø Solicit proposals/applications for each tier separately or together in a solicitation Ø Limit the number/amount of awards per entity Ø Limit the number of applications per organization for each grant solicitation or for each tier Ø Narrow the specific pool of eligible projects for a particular solicitation 21

Proposed Technical Evaluation Technical Merit and Need Technical Approach Impacts and Benefits Capped and Uncapped Facilities Preference Points Proposals that meet all requirements of being located in and benefiting priority populations Equipment selected purchased from a CA-based vendor 22

Tentative Schedule Date Event May 2, 2018 Release final guidelines May 9, 2018 Consider adoption of guidelines at Energy Commission Business Meeting May 2018 Release grant solicitation (GFO) August 2018 Grant applications due September 2018 Post Notice of Proposed Award (NOPA) November 2018 Grant awards to Business Meeting for consideration December 2018 Anticipated first round projects start date* * A second round or additional rounds may be held if funds remain from the first round or if there additional funds in the future. 23

FPIP Contact: Cyrus Ghandi Email: Cyrus. Ghandi@energy. ca. gov Phone: (916) 327 -1506 Information on the FPIP and to subscribe to the listserv: http: //www. energy. ca. gov/research/fpip/index. html Public comments, guidelines, and other FPIP documents can be viewed at: https: //efiling. energy. ca. gov/Lists/Docket. Log. aspx? docketnumber=18 MISC-01 Workshop documents can be viewed at: http: //www. energy. ca. gov/research/fpip/documents/ 24