Rob Boteler
Confluence Energy, LLC
The United States Congress passed long-awaited energy legislation as part of the economic stimulus bill approved in late December 2020 (Division Z in the bill). The energy bill has two distinct areas that will affect EASA members.
The first includes several sections that will create opportunities for EASA members through their effect on customers and markets. These sections provide incentives, programs and grants for various customer groups, including schools, commercial buildings, water utilities, microgrids, renewables, technology commercialization, industrial businesses, smart manufacturing, agriculture, data centers, technology transfer and research projects. The breadth of these programs and the associated funding should create opportunities for many years to come for the motor and drive community. In general, the act seeks to create a long-term path to address decarbonization. The bill looks to reduce fossil fuel use through electric devices powered by renewable sources, thus creating opportunities for companies that sell and repair electric motors and controls.
The second opportunity is found in the motor and drive incentive section of the bill (1005) and provides a much more specific motor and control program.
NEMA and ACEEE (American Council for an Energy-Efficient Economy) joined forces in 2015 to draft legislative language for the energy bill to authorize incentivizing the use of a power drive system (PDS) to replace a fixed speed electric motor from 1 to 500 horsepower. This language has been included verbatim in section 1005 of the bill.
This language intends to promote the extended product approach, incorporating a PDS rebate program enabling greater energy savings in industrial and commercial applications by adopting an “extended product system.” The extended product system delivers significant energy and cost savings using electric motors and controls that precisely manage the energy required for industrial/municipal and commercial applications by replacing mechanical speed control devices with the latest motor and power electronics technologies. Over the past few years, the cost delta between a general-purpose VFD and a standard motor starter has diminished, making the PDS much more competitive.
Reducing the amount of input power needed to operate will reduce energy and production costs for those businesses that install such systems. This allows them to be more competitive in the marketplace and supports good-paying manufacturing jobs. This bill directs the Secretary of Energy to draft a program within 180 days that incentivizes these variable speed systems, regardless of the motor technology (induction, synchronous, permanent magnet, switched reluctance). This incentive includes a $25/horsepower rebate that can be paid if an entity (taxpayer) demonstrates a minimum energy input savings of at least five percent.
The provision authorizes a rebate program for two years and caps the rebate per entity at $25,000. The intent is to assist small and medium original equipment manufacturers (OEMs) or end users by offsetting a portion of the non-reoccurring engineering (NRE) costs they encounter when changing their fixed speed motor-driven equipment to utilize these emerging technologies. The amount was intentionally limited to assure it did not become viewed as a source of ongoing corporate welfare.
The initial estimates of energy savings resulting from the proposed $5 million-per-year investment will result in an estimated savings of 30 gigawatt-hours. In comparison, a motor-specific program limited to motor only efficiency gains would save only five gigawatt-hours at most.
Conclusion
While the PDS provision might seem complicated, it is very straightforward in its method, encouraging the combined components to work together for the best results regardless of motor technology. The principles and methodology in the energy act's provision have been vetted and confirmed with the manufacturers, energy efficiency advocacy groups and the Department of Energy. The program's success will depend on groups like EASA members for technical and inventory support for implementation in the field. Members may gain the most significant benefit by introducing the rebate program to several customers, each of which can apply for the $25,000 maximum benefit. There will be a committee established to draft the details for the program. Once more is known, EASA will provide additional information.
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