CenterPoint Energy proposed expanding on its green hydrogen blending operations in Minneapolis, one of the first such projects operated by a US gas utility. |
CenterPoint Energy Inc.'s Minnesota subsidiary filed its first natural gas innovation plan, outlining more than two dozen proposals to decarbonize its gas distribution system with clean energy resources and strategies.
The June 28 filing encompassed 18 pilot projects and seven research and development programs, which CenterPoint Energy Resources Corp. would operate during a five-year cycle beginning in July 2024. They would facilitate endeavors including renewable natural gas (RNG) and green hydrogen blending, building electrification, and carbon capture technology deployment (23-215).
The filing represented a milestone for CenterPoint, which proposed the Natural Gas Innovation Act (NGIA) in 2020. Passed in 2021, the law allowed Minnesota's utilities to submit a gas innovation plan to the Minnesota Public Utilities Commission (PUC), providing a pathway to recover the cost of displacing standard gas supplies with low- and zero-carbon alternatives.
Critically, it signaled that Minnesota would explore multiple approaches to decarbonizing the building sector, rather than a more singular focus on electrification that some states have pursued.
"CenterPoint Energy looks forward to the opportunities made possible by NGIA that will allow us to pursue multiple pathways to reduce or avoid emissions while continuing to provide the safe, reliable and cost-effective energy that our customers count on every day, especially during the coldest days," Christe Singleton, CenterPoint's vice president for Minnesota Gas, said in a June 29 news release.
The law is part of Minnesota's efforts to cut greenhouse gas emissions 50% by 2030 from 2005 levels and to achieve carbon neutrality by 2050. CenterPoint estimated that the proposed pilot projects have the potential to cut nearly 1.2 million metric tons of CO2-equivalent greenhouse gas emissions over their lifetime, equal to the annual energy use of about 150,000 homes.
Pilot project categories
CenterPoint proposed pilot projects in six of the eight innovative resource categories outlined in the NGIA: RNG, power-to-hydrogen, carbon capture, strategic electrification, district energy and energy efficiency.
The proposals are skewed toward low-carbon fuel use by design. Under the NGIA, at least half of innovation plan costs must go toward procuring and distributing RNG, biogas, green hydrogen or ammonia produced through a power-to-gas process.
CenterPoint submitted proposals to purchase RNG produced from food waste at facilities across three counties. To expand its RNG purchases, it would put out a request for proposals to potential fuel suppliers. RNG is pipeline-quality gas processed from methane waste captured at farms, landfills and other facilities.
The company put forward a second green hydrogen blending pilot project. In April 2022, CenterPoint became one of the first US gas utility operators to blend small amounts of hydrogen into its gas grid.
CenterPoint would also fund feasibility studies and projects for industrial and large commercial customers interested in installing electrolyzers for producing green hydrogen or carbon capture technology. The company proposed to capture carbon by planting trees, measuring and preventing methane and refrigerant leaks, and installing CleanO2's CarbinX carbon capture units on gas heating equipment.
In line with NGIA requirements, CenterPoint proposed pilots to electrify residential, commercial and industrial gas loads, as well as projects to decarbonize existing district heating systems and fund new ones, including a geothermal system. CenterPoint also fulfilled the NGIA requirement to propose emissions audits for small and large business customers.
Within the energy efficiency category, CenterPoint requested permission to install gas heat pumps, which can be more efficient than furnaces and boilers but are not as widely available as electric heat pumps.
CenterPoint said it would develop most of the pilots at a small scale, but it prioritized spending on the RNG and hydrogen blending, geothermal, and commercial and residential electrification projects "due to their high potential scalability and transformative potential for the gas distribution system."
Research and development
CenterPoint also put forward just over $2 million in R&D initiatives. The company would conduct studies on the potential to develop an RNG production facility within its service territory and pathways to achieve net-zero emissions across its Minnesota gas system by 2050.
It would also research new community-based approaches to marketing its weatherization program.
In the commercial building sector, CenterPoint would study the carbon capture effectiveness and heat recovery efficiency of CarbinX technology and seek to address barriers to integrating high-performance building envelopes in new construction.
The company would also pilot a green ammonia production technology and support research into the fuel's use in industrial operations.
Cost and benefits of decarbonizing
The NGIA allowed utilities to propose a five-year program budgeted at 1.75% of their gross operating revenues generated by in-state gas service. CenterPoint calculated that its annual cost cap would be $18.1 million, or about $90.6 million over five years.
By proposing RNG from food scrap programs, CenterPoint qualified for a 0.25 percentage point increase to its annual cap, or about $3 million in additional allowed spending per year.
The total five-year spending of about $106 million would add less than $1.50 to a typical monthly bill for residential customers, CenterPoint estimated. The company planned to recover costs through a combination of its purchased gas adjustment, its next general rate case and annual adjustments.
CenterPoint expects the PUC to reach a final decision on the proposal in about a year. The PUC will consider whether the plan produces net benefits, reduces or avoids emissions and promotes local economic development. CenterPoint estimated its full proposal would create roughly 2,900 full-time jobs during the five-year cycle.
Among Minnesota's other gas utility operators, Xcel Energy Inc. planned to submit a gas innovation plan in the final quarter of 2023, while WEC Energy Group Inc. did not currently have a timeline for filing, the companies said. MDU Resources Group Inc. did not immediately respond to an email inquiry.
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