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The Large Scale Combined Heat and Power (CHP) Fuel Cells Program (2.

0)

CHP Technical Application and Instructions

The New Jersey Board of Public Utilities (BPU) Funding Opportunity Administered by the New Jersey Economic Development Authority (EDA)
____________________________________________

Thank you for your interest in the Large Scale Combined Heat and Power (CHP) Fuel Cells (FC) Program. The Funds awarded through this program are public funds. Therefore, any information submitted to the EDA by the Applicant in response to this Program is subject to public disclosure requirements.

Note: The CHP Technical Application Form requires the signature and certification of a NJ Licensed Professional Engineer. Before proceeding to complete this Technical Application and the related technical w orksheets, please check that you have caref ully read all of the inf ormation assoc iated w ith completing the f orms as w ell as the requirements and conditions stated w ithin the Solicitation.

APPENDIX A: DUE DILIGENCE CHECKLIST


The Due Diligence checklist and related attachments must be fully completed and submitted as part of the technical application. The EDA online application and related components should be submitted after receiving technical approval.
Exhibit Letter Description Completed Technical Application A B C D E Completed Due Diligence Checklist Cover Sheet Abstract Eligibility Requirements Applicant Information 1. Business Description 2. Financials* 3. Legal & Regulatory 4. Contracts & Agreements 5. Human Resources 6. Other Contacts Project Information 1.Project Description 2. Project Timeline 3. Statement of Work 4. Project Economics and Operating Cost 5. Project Team Project Technical Worksheets Form 1: Basic Technical Information Form 2. Proposed CHP-FC System Performance Form 3. Air Emissions Data Form 4. CHP-FC System Costs Table Form 4A. CHP-FC System Service and Maintenance Costs Form 5. Incentive Request Calculation Technical and Business Certifications (Signed and Dated as appropriate): Clean Air and Water Certification Independent Engineer Certification Verification of Application Information* Historic Sites and Waste Management Certification Certification of Application Certification Regarding Debarment, Suspension or Ineligibility for Award Application for Tax Clearance* Development Subsidy Job Goals Accountability Form* Completed EDA Online Application* Submission Status Yes/No; Page Number Comments If not applicable, then provide reason

*EDA Online Application Component -- to be submitted after technical approval.

APPENDIX B: CONTENTS OF PROPOSAL


This section of the Solicitation is designed to guide Applicants in organizing their proposals in a consistent fashion to facilitate evaluation. Applicants should demonstrate within the relevant sections how their proposed Project meets or exceeds the program objectives. The technical section and engineering economic analysis of the Application must be signed and sealed by a New Jersey licensed Professional Engineer. Each Application must include the following sections and be in the order presented below: Completed Technical Application Completed Due Diligence Checklist (See Appendix A) Cover sheet (1 page) Abstract (1 page) Eligibility Requirements Applicant Information Project Description Timeline of Project Related Milestones Statement of Work Project Economics and Operating Cost Project Team Completed CHP-Fuel Cells Technical Worksheets APPENDIX C Certifications

Completed EDA Online Application for Financial Assistance TO BE COMPLETED AFTER RECEIVING TECHNICAL APPLICATION APPROVAL. http://application.njeda.com/account.asp Specific documentation requirements for each of these sections are provided below.

B. COVER SHEET
Name of Application (assigned by the project team to be used for reference purposes) Name of Primary Contact Name of Primary Applicants Organization Mailing Address, Phone Number, Fax Number, Email Address, and Web Address of the Primary Applicant Specific location of the proposed facilities including point(s) of interconnection with the electric distribution system Number and type of proposed prime movers and generators with associated capacity of each expressed in megawatts Expected annual electricity production in megawatt hours Expected annual thermal energy production expressed in mmbtu Total amount of grant requested Contact Person and Affiliation of all partnering organizations

Applications that do not include the material information above will be disqualified from further consideration. Further descriptions of these items are also required in the subsections below.

C. ABSTRACT (limit 2 pages)


An Executive Summary of the CHP or Fuel Cell project which includes the CHP or Fuel Cell technologies including waste heat utilization to be funded and the specific location(s). This should also include: the name of the Applicant, the proposed status of project development, proposed operation date (start and finish) and key project milestones, number of CHP or Fuel Cell units proposed including aggregate project megawatt capacity and location of all points of interconnection with the electric distribution system, and a general site description. Project Type (Technology or technologies), Project Capacity, Total Project Size (MW), Capacity by technology type (if multiple types), Annual Generation, Annual Generation (by technology if more than one), Project Operating Fuel, Total Grant Incentive Requested and anticipated dates of drawdown, Total Incentive as a Share of Total Project Cost (%), Project Cost ($), Estimated Rate of Return, IRR (%). Additionally, project expected benefits (e.g., Amount of Annual Energy Savings or Energy Generation Anticipated from the Project, Amount of Annual Cost Savings Anticipated from the Project, Number and types of Jobs Anticipated to be Created and/or Retained from the Project (both temporary construction jobs and permanent jobs if applicable). 3

D. ELIGIBILITY REQUIREMENTS
A FINDING OF ELIGIBILITY IS NOT A GUARANTEE OF FUNDING BY THE NEW JERSEY BOARD OF PUBLIC UTILITIES (BPU). The BPU and the EDA reserve the right to request any additional information deemed necessary to complete the review process. PROJECTS MUST MEET THE FOLLOWING ELIGIBLITY REQUIREMENTS Please check that the proposed CHP project meets all of the following eligibility requirements: The CHP or Fuel Cell Project shall serve a governmental, commercial, institutional, or industrial electricity customer in this State. The CHP or Fuel Cell Project shall establish by contract or other arrangement that the electric output generated at a CHP Project shall, to the maximum extent feasible, be consumed at the project site by a facility located at the site and that any surplus power produced that is not needed by that facility may be sold into the interstate PJM grid. The CHP or Fuel Cell Project shall have an electric generating capacity of greater than one MW. CHP systems with waste heat utilization must achieve annual system efficiency of at least 65% (LHV) and fuel cells without heat recovery must achieve annual system efficiency of at least 45% (HHV). Will this be a new installation or expansion of an existing facility? New Installation Expansion of an Existing facility (only the incremental expansion will be eligible for the incentive) List all New Jersey State and Federal funding sources that have been or intend to be applied for in support of this proposed project.

Has the applicant or owners with a 10% or more interest ever received any type of financial assistance (e.g., loan, grant) from the EDA or any other state agency? If yes, please list agency and describe type of assistance.

Has the applicant, or any related individual or entity: been, within the last five years, a party in litigation involving laws governing hours of labor, minimum wage standards, discrimination in wages or child labor?
Yes No

been, or is now, charged with, convicted of, under indictment, on parole, on probation or a plaintiff in, any criminal or civil offense other than a minor motor vehicle violation?
Yes No

been, or is now, subject to, or has pending, any disciplinary action by any administrative, governmental or regulatory body?
Yes No

been, or is now, subject to any order resulting from any criminal, civil or administrative proceedings brought against such persons or parties by any administrative, governmental, or regulatory agency?
Yes No

been, or is now, denied any license by any administrative, governmental or regulatory agency on the grounds of moral turpitude?
Yes No

been, or is now, informed of any current or on-going investigation with respect to possible violations by such persons or parties of state or federal securities, anti-trust or criminal laws?
Yes No

been, or is now, denied a business-related license or had it suspended or revoked by any administrative, governmental or regulatory agency?
Yes No

been, or is now, disbarred, suspended or disqualified from contracting with any federal, state or municipal agency?
Yes No

been, or is now, in receivership or adjudicated bankrupt?


Yes No

been, or is now, in default on a personal or business loan?


Yes Yes No No

been, or is now, in default on any tax payments? If Yes to any of the above, please provide explanation below:

E. APPLICANT INFORMATION 1. Business Description


Detailed description of business (corporate and ownership structure, history, experience) Description of any liens, judgments, pending lawsuits or other legal claims, tax claims or other outstanding financial claims against the Applicant, its parent or any of its related entities Description of products and services and customer base Description of intangibles and goodwill, if applicable Organizational Chart including senior management

2. Financials (To be provided with EDA Online Application)


Company Business plan including actual current financial and financial projections, as in: Financial Statements (income statement, balance sheet, cash flow) - historical year end for two years, (if available), preferably certified public accountant prepared, in accordance with GAAP and to include detailed footnotes and YTD interim management prepared financials less than 90 days old (income statement, balance sheet, cash flow) o If the Applicant is a special purpose and/or newly created entity, provide the (3) three most recent years of financial statements for each sponsor and/or operating entity with ownership greater than or equal to ten percent (10%). Detailed description of all debts and liabilities presently owed by the applicant (debt amount, how secured, terms of repayments, lender contact information)

3. Legal & Regulatory:


Articles of incorporation or certificate of formation and amendments Certificate to conduct business in New Jersey

4. Contracts & Agreements:


Financing agreements including, but not limited to, grant agreements for sources of project funding Listing and detail of all corporate entities and subsidiaries If co-Applicants, an executed Memorandum of Understanding or joint venture agreement must be supplied, detailing the roles of each entity

5. Human Resources:
Corporate and Ownership Structure Details of current payroll and future hiring plan including positions, responsibilities, and salaries Complete bios of management team and board members, including any voting rights and current contact information (if not included in business plan)

6. Other Contacts:
Legal Counsel Accountant

F. PROJECT INFORMATION
General Notes: In these sections to follow, applicants must demonstrate how their proposed CHP or Fuel Cells Project will meet or exceed the criteria set forth in the Program Solicitation by providing the following additional technical information: A. Total installed capacity in megawatts for the entire CHP or Fuel Cells Project, total thermal energy capacity, expected annual energy production in megawatt hours and mmbtu for the CHP or Fuel Cells Project is required to be fully documented to enable adequate review of the project size in relation to the amount of the Grant requested. The total amount of energy being generated over the term of the Grant and the life of the CHP or Fuel Cells Project should also be provided. Applicants should demonstrate applicable experience in projects of the size and scope proposed. Applications must include a comprehensive business plan with fully documented estimates of all associated and relied upon revenue and expense projections expressly and explicitly defined. The Application must list all team members and include a description of the experience of the team in construction and operation of power plants of similar size and scope. The Application must also contain the number of construction jobs and permanent jobs which the development and operation of the CHP or Fuel Cells Project will create in New Jersey, as well as the number of jobs retained. Applications must demonstrate that the CHP or Fuel Cell Project capacity will have an aggregate capacity of not less than one megawatt. The Application must specify the expected project time requirements in the aggregate from start to finish, as well as the time required to accomplish each specific activity related to project design, permitting, construction, and commissioning activities with associated milestones delineated for each category of activity. Applications must estimate an expected useful economic life of the CHP or Fuel Cell Project, including engines, generators and heat recovery equipment. The Application must demonstrate that cogeneration equipment will have a minimum useful service life of twenty (20) years subject to necessary major maintenance including engine core change out and rebuild. Applications must include a calculation of the maximum amount of the Grant which the Applicant will be entitled to receive for the CHP or Fuel Cells Project, assuming that the CHP or Fuel Cells Project meets the requirements as specified in the Program Solicitation. The development and production of goods and services in the State is encouraged. To that end, the Application should include the extent to which the technology and project 8

B.

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D. E.

F.

G.

H.

proposed will be manufactured or supported in the State and constructed by New Jerseybased businesses.

1.

PROJECT DESCRIPTION

Applicants must provide the following information with the associated descriptive headings in bold below:
A. Projects Goals and Objectives: The Applicant must describe the overall goals and objectives to be achieved by successful completion of this project. Include projects success metrics and how defined. Also describe how this project is consistent with and will help further the program goals, namely: to commence work quickly and complete the project within a reasonable time period; the projects ability to create or maintain jobs; the projects ability to reduce greenhouse gas emissions and criteria pollutants; and the projects ability to create or save energy.

B.

Previous Experience. The Applicant must describe the work done to date by the project team members in developing projects of similar scope. If the work described was not performed by the entire team, delineate the experience or work performed by team members. Site Location and Description The Application must indicate the site for project development and the basis for site selection including, the location of transmission lines and all points of interconnection to the distribution system serving New Jersey. The Application must also indicate the location and connection point to any regulated natural gas utility or interstate pipeline. Applications must include a map with the location of the site(s) clearly marked with the location of the CHP or Fuel Cells Project and must include a description of the current uses, conflicts, or characteristics of the site location under consideration. The Application should define the attributes which make the site attractive and list any potential problems, constraints or limitations with siting an energy facility at that location, including but not limited to environmental, economic, or energy production characteristics. Site Ownership or Control The Application must identify the nature of land ownership or lease arrangements for all aspects of the CHP or Fuel Cells Project including all required interconnection areas. The Application should describe progress in securing leases, easements and land required for the CHP or Fuel Cells Project and propose a plan for accomplishing remaining steps toward acquiring leases or land ownership. The Application must indicate that the Applicant will have site control at the time of the Application, or demonstrate the ability to have site control within 90 days after the date of the executed Grant Agreement.
Environmental, Energy and Economic Impacts and Benefits. The Application must include a description of potential impacts including, but not limited to, air emissions, waste water discharges, noise, aesthetics, during construction and post-constructional operations. Applicants should address in the Application all anticipated or likely environmental, energy or economic issues. (e.g., if on a US or NJ Registered Historic Site, applicant must certify NJDEP

C.

D.

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determination that project complies with all applicable requirements of N.J.A.C. 7:4-2. Also Applicant must certify that all applicable requirements of the NJDEPs Solid Waste rules at N.J.A.C. 7:26 will be met).

F.

Permits. The Application must identify all local, State and/or federal permits and/or approvals required for building and operating the CHP or Fuel Cell Project and the expected time to obtain such permits and/or approvals. Information on all NJDEP permits is available from the Office of Permit Coordination and Environmental Review through the One Stop program which can be accessed from the NJDEP website at http://www.nj.gov/dep/opppc/permitcoor.htm Schedule. The Application must identify the expected duration of the permitting, design and construction phases of the CHP or Fuel Cell Project. Electric Interconnection. The Application must document tasks required and discuss issues associated with electrical interconnection, including reverse power protection and, if utilized, export power requirements. This section should include a description of each proposed point of interconnection as well as a letter from the utility stating that it is interconnectable. Equipment. To the fullest extent possible, the Application must indicate the major types of equipment that will be installed. If not yet selected, indicate the candidate equipment suppliers and the characteristics specified. Indicate whether the project team plans to own or lease equipment. Describe the equipment, the specifications, warranties, how long it has been commercially available, approximately how many are currently in service, and where they are installed. For actual construction of the CHP or Fuel Cell Project if approved for a Grant, equipment which is identified in the Application may be replaced or updated with more technologically advanced equipment that is equal to or better than the equipment identified in the Application. Project Capacity and Energy Production. The Application must indicate the proposed nameplate capacity for the entire CHP or Fuel Cell Project and the anticipated number of individual generating and heat recovery units. The total nameplate capacity that is being proposed for the site must be included. Based on each CHP or Fuel Cell technology proposed, there must also be an estimate of the net yearly energy output for the CHP or Fuel Cell Project, accounting for parasitic losses, and any assumptions that are the basis for the estimate. The Application must account, to the fullest extent possible, the coincidence between time of generation for the CHP or Fuel Cell Project and peak electricity demand. An estimate of the amount of energy being generated over the life of the CHP or Fuel Cell Project must be included. The Application must also include an estimate, to the best of the Applicants ability, the level of generation that the CHP or Fuel Cell Project will be able to provide over the life of the equipment, assuming the CHP or Fuel Cell Project runs for the equipments full life.

G. H.

I.

J.

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K.

Operation and Maintenance. The Application must include a complete operation and maintenance plan for the term of the Grant, including any estimated increases resulting from additional fuel costs. Application Information and Signatures. The Application must include the full business address of the Applicant or lead team member and the names and phone numbers of authoritative and technical contact persons. A principal of the lead firm must sign the attached statement of Verification of Application Information (See Appendix C) and of the Applicants intent to abide by the protocols of the Application and the structure of the Grant as described. The name and title (if any) of the person that signs the Application shall be typed or printed below their signature and the signature shall be witnessed. Satisfactory evidence of authority of each person signing the Application shall be furnished to the EDA upon request.

L.

2. Timeline of Project-Related Milestones


Proposals must include a detailed timeline for undertaking the Project, including projected dates for commencement of the Project and completion, as well as all major project milestones for anticipated events and deliverables from the date of submission of the Application through commissioning and operation of the CHP or Fuel Cells Project and the payment period of the Grant. The project plan should outline the chronological schedule of activities and key milestones. The Project Plan must indicate amount of time needed to commence work on the Project and amount of time needed to complete the Project (in weeks or months). The project plan schedule can take the form of a Gantt chart or similar chart type. The project-related milestones will include, but not be limited to, all the necessary State and municipal code requirements. Minimum milestones shall include: Air Emissions Permit Application Project Financing NonRefundable Deposit on Equipment Equipment Procurement Construction Permits Equipment Delivered to site System Installation Complete Installed System Shakedown Complete Full Scale System Verification (commercial operation) minimum 48 continuous hours CHP Project Complete
If partnering entities/teaming in application submission, project plan must also evidence the roles and responsibilities of each entity throughout the lifecycle of the project, from planning, through execution and post-award reporting responsibilities.

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3. Statement of Work
The Statement of Work outlines work activities. It specifically delineates each step or procedure required to accomplish the objectives of the CHP or Fuel Cells Project. Therefore, each action shall be identified, indicating who will perform it, how it will be performed and its intended result. Be clear and specific; concentrate on how and not why. Use the following guidelines as the basis for the Statement of Work; modify it as necessary to fit the CHP or Fuel Cells Project. Additional information should be provided if deemed necessary. This section should clearly identify what has been done and present the results to date, and what still needs to be done and how it will be done.

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The Statement of Work must be structured as an ordered set of tasks and attachments as follows: Introduction: Briefly and clearly state the overall technical goals of the CHP or Fuel Cells Project. Task 1: Project Management Subcontractor Coordination State how activities will be coordinated between the Applicant and any partners, any subcontractors, and related entities. A discussion of subcontracting arrangements should also be included. Project Management Meetings Plan a kickoff meeting, an acceptance meeting, and a wrap-up meeting. Identify parties to participate at each meeting. Identify parties responsible for scheduling the meeting, providing the agenda (in advance), and issuing minutes. Task 2: Reporting If awarded a Grant, the Awardee shall submit at a minimum, quarterly reports by the 15th of the month following the reporting period. Semi annual reports shall summarize progress, difficulties, and planned solutions associated with developing and installing the CHP or Fuel Cells Project. The PJM Generator Attribute Tracking System (PJMGATS) will be utilized to report the electrical production of the CHP or Fuel Cells units and onsite metering will be utilized for the purpose of reporting thermal energy production. All reports which are utilized for the purpose of submitting invoices for payment related to equipment delivery and setup under the Grant will be auditable. Any operational problems and actions taken to fix any problems which might affect the term of the Grant should be addressed.

. PROJEC\ T ECONOMICS AND OPERATING COST 4. PROJECT ECONOMICS AND OPERATING COSTS

Applicants must discuss and justify their funding (capital) needs in their Application. The following must specifically be included in the Application: A. An estimate of all costs and revenues including plans for selling or using energy from the CHP or Fuel Cells Project and the production incentive in $/kWh and $/mmbtu being requested. Project must contain a detailed budget that clearly describes the sources and schedule of all project financing and how the Grant funds from this Solicitation will be used. Indicate any private, venture, or existing project financing and the total amount of bond financing required for the project and any other incentives, subsidies or other funding associated with the project and projected internal rate of return or other industry-relevant measure of return. Include all assumptions associated with data provided. The project budget 13

estimated by the Applicant is expected to include expenses to be incurred during the course of the project, including direct labor, overhead, materials, subcontractors, consultants, travel, and selling, general, and administrative expenses related to the project. The grant agreements will be structured to take into account capital limitations. B. The plans for utilizing or marketing energy from the CHP or Fuel Cells Project and the status of negotiations with potential purchasers or users of the energy. If applicable, include Applicants production of renewable electricity generation to fulfill BPUs Renewable Portfolio Standards (RPS) requirements and other green power pricing options. For information on New Jerseys Independent System Operator, visit the PJM website at www.pjm.com. C. A cash flow analysis over the lifetime of the CHP or Fuel Cells Project. Included should be any private, venture or existing project financing, the total amount of tax-exempt bond financing or taxable bond financing required for the CHP or Fuel Cells Project and any other incentives, subsidies or other funding associated with the CHP or Fuel Cells Project and projected internal rate of return or other measure of return compared to industry averages. A discussion of the proposed treatment of all secondary environmental attributes associated with the onsite generation, such as SO2, NOx, CO2 emission credit allowances and renewable energy certificates. A business plan, which must include a description of the CHP or Fuel Cells Project, estimated construction schedule, ownership structure, and management team, including annual financial projections with detailed assumptions for at least (3) three years, total project cost with all sources and uses of funds including grants, private investment, loans and any public financing, including other supplemental funding sources obtained or anticipated (including amount already budgeted, use of Federal or Clean Energy Program funding already committed or anticipated, etc.). If the Applicant is a special purpose and/or newly created entity, provide the (3) three most recent years of financial statements for each sponsor and/or owner with ownership greater than or equal to ten percent (10%). Plan must also identify Grant Funding Amount Requested and Justification, with the desired drawdown schedule for the Grant indicate % of Grant desired to be disbursed at various time points or milestones.

D.

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5. PROJECT TEAM
Proposals must include specific information as follows for the project technical and business teams:
A. Organizational Chart. Include an organizational chart listing all team members, including the project manager and any subcontractors and other sponsors involved in the CHP or Fuel Cells Project, showing their roles and responsibilities, and indication of how the Applicant will procure the necessary contractors and subcontractors to undertake the project if/as necessary. If there is job creation associated with this project, Applicant must detail the number and types of jobs to be created, including duration of employment and average salary. If there are jobs to be retained as a result of this project, identify specifics around same.

B.

Qualifications. Describe the qualifications of the Applicants individual and combined expertise that will enable successful completion of the CHP or Fuel Cells Project. Describe sources of private financing that will be used by the Applicant to perform the proposed work. Submit resumes of all key project team members, including those of proposed subcontractors. Include education and experience that are relevant to the proposed work. Previous CHP or Fuel Cells Development Experience. Describe the proposing teams experience in developing and operating conventional or renewable energy plants, marketing power, and other relevant areas. List related projects that have been undertaken and successfully completed by the Applicant and/or subcontractors. For each project, provide a brief project summary and the name and phone number of a client contact. The EDA reserves the right to contact any reference listed.

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G. PROJECT TECHNICAL WORKSHEETS


The following includes the Technical Requirements, Instructions , and Terms and Conditions for Combined Heat & Power projects eligible under the Large Scale CHP-Fuel Cell s Grant Program. Before completing the forms and the related technical worksheets, please carefull y read all of the information associated with A) Incentive Qualification Requirements, B) Instructions for Completing the Incentive Forms, and C) Important Te rms and Conditions.

INCENTIVE QUALIFICATION REQUIREMENTS:


This is a Competitive Grant Solicitation. The BPU has the right to change/modify or discontinue the program without notice. The program will cease when commitments exhaust allocated funding.
1. The system must be greater than one MW. The system must be installed in New Jersey. The applicant must serve a governmental, commercial, institutional, or industrial electricity customer in this State. Only stationary CHP equipment installed on the customer side of the meter is eligible. This is inclusive of prepackaged generating systems. 2. The proposed system must be capable of meeting all requirements of the NJ DEP for the proposed equipment and be in the process of obtaining an air permit. All accessory and exhaust after treatment equipment and associated capital and operating costs required to meet emissions limits must be included in the proposal. 3. The project shall establish by contract or other arrangement that the electric output generated at a CHP facility shall, to the maximum extent feasible, be consumed at the project site by a facility located at the site and that any surplus power produced that is not needed by that facility may be sold into the interstate PJM grid. 4. Equipment must be new, commercially available and permanently installed. Equipment must be sized to serve all or a portion of the electrical load at the customer site. The proposed generating system is sized to meet the customers electrical loads for demand-metered customers no more than 100% of historical annual consumption or peak demand. Historical annual consumption is for the most recent twelve (12) month period. New additions or expansions to existing facilities will be considered , detailed information of load assumptions must be submitted with the application. 5. Expansion of an existing facility with new equipment is also eligible for incentives, however, only the incremental expansion would be eligible for the incentive. 6. CHP systems with waste heat utilization must achieve annual system efficiency of at least 65% (LHV) and fuel cells without heat recovery must achieve annual system efficiency of at least 45% (HHV). The annual system efficiency shall be based on higher heating value and calculated from the total prime mover output in Btu plus the total heat recovered for useful purposes in Btu divided by the higher heating value of the fuel input in Btu. Mechanically-developed energy may be included in the efficiency evaluation. 7. The system must have a warranty to be all-inclusive for at least 10 years. The cost of ten year warranty may be considered as part of the cost of the project. 8. Incentives will not be processed without a Federal Tax Identification number, Proof of Purchase (receipt), and authorized signatures from the Applicant and Installer.

INSTRUCTIONS FOR COMPLETING THE INCENTIVE FORMS:


1. Complete all of Sections A through E of Form 1, all sections of the Technical worksheets (Forms 2, 3, 4, 4a, and 5), and a detailed feasibility analysis. All information is necessary for processing applications and incentives. Illegible or incomplete Application Forms and/or Technical Worksheets will not be considered. 2. Deliver or mail 2 CD ROM copies or USB flash drives of the fully completed Application, appropriate Technical Worksheets, and a detailed feasibility analysis to the EDA and be sure to retain a copy for your files. 3. Any changes between the initially proposed system and the installed system must be fully documented and are subject to EDA and BPU approval. 4. After the approved system is installed, the Applicant (or Installation Contractor) must submit the following to the EDA: a completed Notification of Commercial Operations full scale system verification; proof of purchase; proof of warranty; completed W9 Taxpayer ID and certification form; a copy of the Electrical Code Inspection Certificate; and a completed Interconnection Application.

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IMPORTANT TERMS AND CONDITIONS:


1. To receive an incentive, Applicant must agree to an inspection by the BPU, a BPU/EDA representative, or a BPU/EDA-designated contractor. The applicant must also agree to allow the BPU to monitor the facility's energy production to verify meeting efficiency requirements and energy production for grant performance payments. 2. The BPU reserves the right to modify or withdraw this program. Program procedures and incentive levels are subject to change or cancellation without notice. Approved projects will be honored under the terms stated in the commitment letter. 3. Installation must comply with the host utility's Interconnection Requirements, which are available from the respective electric utility. These include Operation/Disconnection Procedures, Liability/Indemnity and Insurance Requirements according to the size of the project. 4. All required permits must be properly obtained and posted. 5. Equipment must be new, commercially available and permanently installed. The following are not eligible for incentives: renewable source-fueled systems (Renewable fueled projects must be submitted to the Renewable Energy market Manager through the REIP program under the NJCEP); portable and emergency backup power systems; used, refurbished, temporary, pilot or demonstration equipment; systems that use diesel fuel, other types of oil or coal for continuous operation. 6. Construction projects will be subject to prevailing wage requirements pursuant to P.L. 2009, c. 203, which amends P.L. 2009, c. 89, as well as the prevailing wage regulations promulgated by the New Jersey Department of Labor and Workforce Development pursuant to P.L. 1963 c. 150 as amended, and N.J.A.C. 17:27-1.1 et seq. and Affirmative Action rules. 7. All projects must be in compliance with all applicable laws. Applicants may not have any unresolved environmental violations, past due unresolved Federal financial obligations, past due unresolved financial obligations to the State of New Jersey, and must be current in all payment of all state and local taxes at time of application submittal and through the entire duration of project funding received by Applicant.

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FORM 1: CHP BASIC REFERENCE INFORMATION


A. CUSTOMER INFORMATION:
Electric Utility: Atlantic City Electric Gas Utility: Elizabethtown Gas
Jersey Central Power & Light New Jersey Natural Gas PSE&G PSE&G Rockland Electric Company South Jersey Gas

Electric Utility Account Number: ____________________________ Gas Utility Account Number: _________________________ Federal Tax I.D. Number: ____________________________________________________________________________________ First Name:____________________________________________ Last Name: _____________________________________________ Company Name (if applicable): ____________________________________________________________________________ Daytime Phone Number: _________________________________ Email: ____________________________________________ Installation Address: ___________________________________________________________________________________ City: _____________________________________________________ State: ______ Zip Code: ________________________ Mailing Address (if different from above): ___________________________________________________________________ City: _____________________________________________________ State: ______ Zip Code: ________________________ Will the Combined Heat and Power Project be used as an Emergency Management Facility? (Please check one): Yes (If yes, please provide appropriate documentation.)
No

B . AWARD RECIPIENT -

If Grant check is to be issued to a company other than above, issue Grant check to:

First Name:____________________________________________ Last Name: _____________________________________________ Company Name (if applicable): ___________________________________________________________________________ Daytime Phone Number: _________________________________ Email: _____________________________________________ Address: ______________________________________________________________________________________________ City: _______________________________________________________ State: ______ Zip Code: _________________________ Federal Tax I.D. Number: _____________________________________________________________________________________ Customer Signature: _______________________________________________________________________________________

C . C ONTRACTOR/INSTALLER/DESIGN PROFESSIONAL completed:

All fields must be

First Name:____________________________________________ Last Name: _____________________________________________ Company Name (if applicable): ___________________________________________________________________________ Daytime Phone Number: ______________________________________ Email: __________________________________________ Address: __________________________________________________________________________________________________ City: _______________________________________________________ State: _______ Zip Code: ________________________

D. EQUIPMENT INFORMATION:
Equipment Type: Boiler Steam Turbines
Gas Engines Gas Turbines Heat Recovery Equipment Other

Manufacturer: ____________________________________________ Model: ____________________ Installed Capacity (in kW, as calculated in the Technical Worksheets): ___________________________________________

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E. CUSTOMER AND INSTALLER INFORMATION:


The undersigned warrants, certifies and represents that as part of the design study requirement; 1) the information provided in this entire Form is true and correct to the best of my knowledge; 2) the Installer/Contractor will explain and provide manuals related to the system operation and maintenance to the customer (Applicant); and 3) the installation will meet all of the Combined Heat and Power-Fuel Cells Program requirements. This Application attachment form also requires the signature and certification of a NJ Licensed Professional Engineer.

Customer (Applicant)

Con tra cto r/In s tal ler

Signature: ______________________________________________ Signature: ___________________________________________ Print Name: __________________________________________________ Print Name: _________________________________________ Date: _________________________________________________ Date: _______________________________________________

Design Professional Name: ___________________________ Design Professional Signature: __________________________ NJ Professional Engineers License Number _________________

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Large Scale Combined Heat & Power (CHP)-Fuel Cells Program Technical Worksheets for CHP Equipment
Before completing the attached Technical Worksheets for the CHP-FC Program, please carefully read all of the information in Sections A, B and C below.

A. INSTALLATION REQUIREMENTS:
Equipment installation must meet the following requirements in order to qualify for the Large Scale Combined Heat and Power-Fuel Cells program:
1. CHP systems with waste heat utilization must achieve annual system efficiency of at least 65%(LHV) and fuel cells without heat recovery must achieve annual system efficiency of at least 45% (HHV). 2. An expected completion date. The Applicant should submit documentation from manufacturers and contractors which state the expected equipment delivery and installation dates. 3. Equipment must be commercially available and permanently installed. The following are not eligible for incentives: portable and emergency backup power systems, temporary, pilot, or demonstration equipment; systems that use petroleum diesel fuel, other types of petroleum oil or coal
for continuous operation.

4. The installation must comply with manufacturer's instructions. 5. The installation must comply with the interconnection and protection requirements of the local electric distribution company. 6. The installation must comply with provisions of these standards, as appropriate: NFPA 853 Stationary Fuel Cell, and all codes governing the installation of Combined Heat and Power equipment; Power Plants, IEEE 519 Recommended Practices and Requirements for Harmonic Control in Electrical Power Systems; ANSI Z21.83-1998 Fuel Cell Power Plants, and input and output protection functions should be in compliance with ANSI C37.2 Device Function Number specifications. 7. The system should be equipped with the following capabilities, indicators and/or controls: On/off control on site Operating mode setting indication - parallel vs. stand-alone AC & DC overcurrent protection or equivalent Operating status indication Remote control and data acquisition capable Electric load-following capable

8. Warning labels must be posted on the control panels and junction boxes indicating that the circuits are energized by an alternate power source independent of utility-provided power. 9. All interconnecting wires must be copper. (Some provisions may be made for aluminum wiring; approval must be received from utility engineering departments prior to acceptance.) 10. All wiring splices must be contained in UL-approved workboxes. 11. Operating instructions must be posted on or near the system, or on file with facilities operation and maintenance documents. Proposed changes to the requirements will be considered, but they must be documented by the Applicant or Installation Contractor and approved by EDA. These requirements are not all-encompassing and are intended only to address certain minimum safety and efficiency standards.

B. CODE REQUIREMENTS:
1. The installation must comply with the provisions of the National Electrical Code and all other applicable local, state, and federal codes or practices. 2. All required permits must be properly obtained and posted. (e.g., . Title V) 3. All required inspections must be performed (i.e., Electrical/NEC, Local Building Codes Enforcement Office, etc.). In order to ensure compliance with provisions of the NEC, an inspection by a state-licensed electrical inspector is mandatory.

C. INSTRUCTIONS:
The information below must be supplied in the detailed feasibility analysis. Provide a brief narrative describing the facility and the project including (but not limited to) the following.
System Type and Mode of Operation:

Grid-connected Operating mode (parallel/capable of synchronizing with the electric grid; capable of automatically reducing load to prevent backfeeding the meter) 1. Grid-connected/grid-independent operating mode (parallel/capable of synchronizing with the electric grid and capable of switching automatically to independent, loadfollowing operation when the grid is unavailable; automatic operation and synchronization of multiple power plants connected in parallel) 2. Stand-alone load-following operation (system confined to an independent circuit, no utility backup) 3. Battery interactive capabilities, if applicable

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C. INSTRUCTIONS
System Information:

Large Scale Combined Heat & Power (CHP)-Fuel Cells Program Technical Worksheets for CHP Equipment
(continued from previous page)

1. Complete Form #2 in its entirety. 2. The type and rating of the prime mover and an energy balance around the prime mover. The energy balance must be applied to a schematic of the system showing all major components, including the uses for the recovered heat. Annual totals for each energy input/output must be shown along with maximum, minimum, and average instantaneous values. Temperatures for each waste heat transfer fluid and sink must also be indicated. 3. Fuel conversion efficiency (FCE) for the prime movers must be provided. FCE is defined as the ratio expressed as a percentage of the total usable energy produced by a technology to the sum of all fuel or other energy inputs to the technology measured at each fuel's higher heating value. 4. The description of the proposed system must include a floor plan indicating equipment location and tie-in to existing building systems. Any structural modifications must be included in the capital cost of the system. This document must indicate the location of the Combined Heat and Power system, batteries (if any), lockable disconnect switch (unless otherwise approved by the electric utility, the disconnect switch shall be installed at the electric utility meter location), and point of connection with the utility system. The installation address, current account number at that address (gas and electric), and the installer's name and telephone number must also be included on the site map. 5. The pressure and availability of gas must be described in the study. 6. An operational sequence must be included that specifies the control system to be used along with a discussion of its integration with other on-site controls systems and who will have the responsibility for system operation. 7. A construction schedule that includes engineering, permitting, construction, start-up and commissioning must be provided.
Economic Evaluation: Complete Form 4 and Form 4a in their entirety

CHP System Economic Evaluation Requirements: Simple payback, 10 year cash flow analyses, and IRR analysis are required for purposes of this Application Attachment. Although the format of these analyses is at the discretion of the applicant, the following inputs must be considered and shown within these analyses: 1. Total CHP system capital cost (from Form 4) 2. CHP system operating hours, load factor, and availability factor 3. Total service and maintenance costs (from Form 4a) 4. CHP system heat rate/ fuel consumption 5. Efficiency of current boiler plant, chiller plant, etc. for which recovered waste heat will supplement. 6. Clearly state energy savings or increased use of energy; and the demand savings. The savings, or the increase, should be stated in terms of KW, kWh and in MMBtu. 7. Fuel cost commodity and delivery 8. Offset electricity quantity and value customer charge, demand charge, commodity charge, TOU where applicable, any unavoidable charges 9. Offset thermal energy quantity and value commodity and delivery 10. Changes to tariffs due to CHP, including supplemental electricity tariffs, standby rates 11. Fuel and electricity escalation rates for cash flow analysis 12. Financing options and assumptions, such as the discount rate and interest rate for cash flow analysis 13. Any additional costs or credits, including incentives, the value of reliability, emission credits, HVAC equipment offsets
Tariff Impacts and Interconnections:

1. In addition to inclusion in the economic analysis described above, a detailed description of the relationship between the proposed CHP facility and the customer's existing energy tariffs must be included. Contract dates and dates of potential tariff rule changes must be included. In the case where such future changes would significantly impact the economics of the project, sensitivity analysis must be presented assuming the potential tariff or contract changes occurred. 2. Site-specific grid interconnection issues and costs must be discussed. A brief, clear plan for if and how the system will be properly interconnected to the grid and/or natural gas pipelines must be presented.
Permitting:

1. A brief description of the necessary environmental and building permits or certificates that the customer needs to obtain must be provided. The permit determination should be based on a detailed emissions inventory developed from the hourly spreadsheet based model. A schedule of realistic permit receipt dates must be included in the schedule described above.
System Reliability and Availability:

1. The reliability and availability of the CHP system must be quantified (e.g. number of hours the system would be available at less than full capacity).
Supporting Documentation Should Include the Following:

1. Self-generation and waste heat recovery equipment specifications 2. New and existing facility equipment (both thermal and electric) annual operating schedules 3. At least twelve months of the most recent electric bill(s) for the facility served by the CHP system 4. At least twelve months of the most recent bills for natural gas, fuel oil and/or other fuels used in the facility served by the CHP system. If you plan to use an absorption chiller to offset cooling load, provide cooling load calculations.

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FORM 2: PROPOSED CHP SYSTEM PERFORMANCE


With the help of your installation contractor, fully complete the technical worksheets for CHP equipment.
Proposed System overview (Annual) Rated System Information

Prime Mover Type Energy Input Electric Output Recoverable Thermal Output Utilized Thermal Output
1

Prime Mover Model Info (MMBtu) (kWh) (MMBtu) (MMBtu) (MMBtu) (%)

1 kWh = 0.003412 MMBtu

Energy Input Rated Electric Output Total Thermal Output Recoverable Thermal Output Fuel Conversion Efficiency3

(MMBtu) (kW) (MMBtu/h) (MMBtu/h) (MMBtu/h) (%)

Annual System Efficiency2

1 Heat used from the CHP systems for the purpose of heating and cooling 3 Fuel Conversion Efficiency = (Rated Electric output + Recoverable Thermal Output)/Energy Input 2 Annual System efficiency = (Electric output + Utilized Thermal Output)/Energy Input

Proposed System Overview Anticipated operating hours Input Fuel (MMBtu) Output Electricity (MMBtu) Recoverable Thermal output (MMBtu) (MMBtu) Utilized Thermal output (MMBtu) Electric Efficiency (%) Thermal Efficiency (%) Annual Efficiency (%)

Month

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

0.00

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Breakdown of Recovered Thermal Output (Indicate in the detailed feasibility analysis the fuels that are being displaced and t he respective equipment efficiency) Process Process Space Space Domestic Hot Other Heating Cooling Heating Cooling Water Total (MMBtu) (MMBtu) (MMBtu) (MMBtu) (MMBtu) (MMBtu) Month (MMBtu)

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total

0.00

0.00

0.00

0.00

0.00

0.00

0.00

Unit Cost of Gas Unit Cost of Electricity Rate Schedule Electricity Gas

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FORM 3: CHP AIR EMISSIONS DATA


With the help of your Installation Contractor, fully complete the Technical Worksheets for CHP Equipment.
This form reports anticipated annual emissions of the six (6) pollutants due to the CHP System. The first table should include vendor supplied data on the emissions from the prime mover to be installed. The second two sections will show what fraction of those new emissions is displacing current system emissions. Yearly Grid Supplied Electricity (Pre-Installation) (MWh/year) Yearly CHP System Supplied Electricity (MWh/year) Yearly Grid Supplied Electricity (Post-Installation) (MWh/year)
Vendor Supplied CHP System Emissions

NOx SOx PM-10 CO2 CO VOC


Estimates of "Displaced" Emissions

lbs/MWh lbs/MWh lbs/MWh lbs/MWh lbs/MWh lbs/MWh

The following two tables should be completed if data or information exists. By reporting on the emissions of the facility both before and after installation of the CHP system, the net impact of the new system can be estimated. If insufficient data exists, leave the tables blank. For systems greater than 2 MW, both tables must be completed prior to the release of the committed incentive.
Calculated Annual Boiler/Furnace Emissions (lbs)

Pre-CHP Installation

Post Installation D

Difference

NOx SOx PM-10 CO2 CO VOC


Annual Site Emissions (lbs)

Pre-CHP Installation

Post Installation D

Difference

NOx SOx PM-10 CO2 CO VOC

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FORM 4: CHP SYSTEMS COST TABLE


With the help of your Installation Contractor, fully complete the Technical Worksheets for CHP Equipment.

Directions: Please enter all CHP system capital costs in the table below. Break out costs should add up to total CHP system tur nkey cost. Turnkey line item costs should include any administrative and markup costs. Where a component or construction cost is not included in CHP project design enter N/A. Where a component or construction cost is provided within another line item, please enter included.

CHP System Component Cost Prime Mover Fuel Compressor Black Start Capability Generator Heat Recovery Cooling Tower or other Heat Dump Absorption Chiller Desiccant Controls Sound Attenuation Inlet Air Handling Vibration Isolation Emission Controls

($)

Design/Construction/Labor and Materials Cost Engineering Site Preparation Buildings Construction Labor Materials Exhaust Stack Electrical Tie-in Mechanical Tie-in Grid Interconnection Devices Permitting Fees Contingency

($)

Total CHP System Turnkey Cost

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FORM 4a: CHP SYSTEM SERVICE AND MAINTENANCE COSTS


With the help of your Installation Contractor, fully complete the Technical Worksheets for CHP Equipment.

Directions: Please enter annual costs for system service and maintenance, including parts, labor and all major equipment overhauls. Include fixed costs for

extended service warranty where applicable. If multiple rows are included in a fixed maintenance cost, please enter included or N/A in that row as applicable.

YR 1

YR 2

YR 3

YR 4

YR 5

YR 6

YR 7

YR 8

YR 9

YR 10

Prime Mover/Heat Recovery

Thermal Equipment Emissions Control

Remote Monitoring/Control

Warranty/Service Contracts

Total Service/Maintenance Costs

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FORM 5: CHP INCENTIVE REQUEST CALCULATION


Total system rated Electric Capacity AC Kilowatts.________ Note: The maximum % of project cost for all state and federal funding can not exceed 50%. An applicant can not receive both a Clean Energy CHP rebate and a performance grant. The applicant may apply for both however only one incentive can be applie d to each project. The applicant may qualify for other financial assistance through BPU and or other State or federal programs *Spreadsheets provided by link with examples below may be used at the discretion of the Applicant. It is the sole responsibi lity of the applicant to produce and submit project specific calculations. Incentive Calculations 1. 2. CHP with generation less than or equal to 20 MW Electric Capacity (minimum 65% combined electrical and thermal efficiency) CHP with generation greater than 20 MW Electric Capacity (minimum 70% combined electrical and thermal efficiency) Combustion Turbine Electric Capacity (KW) = ISO Power rating x 0.93 _________KW Internal Combustion Engine Electric Capacity (KW) = Continuous Duty Rating x .96 ________KW Grant total amount ($) = Electric Capacity kw x $550/kw (first 3 kW) $__________ kw x $350/kw (above 3 kw) $ __________

I hereby submit that all of the provided information is true to the best of my knowledge. Customer Name: _____________________________

Customer Signature: _________________________________________

I hereby submit that all of the provided information is true to the best of my knowledge. Design Professional Name: ___________________________

Design Professional Signature: _________________________________________ NJ Professional Engineers License Number _________________

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Independent Engineer Certification


I hereby certify that the information provided herein is true and correct to the best of my knowledge. I understand that this application may be disqualified if the information provided is incorrect and/or does not contain all required information. I hereby agree to keep all supporting documentation and attachments for the life of the financial assistance and agree to provide this information to EDA upon request. I understand that all materials submitted as part of the Application are subject to disclosure. I certify that I am a Professional Engineer, licensed in the State of New Jersey.

____________________________________________ (Signature and Title) ____________________________________________ (Name, please print) ____________________________________________ (Professional Engineer License #) ____________________________________________ (License Expiration Date) ____________________________________________ (Date of Certification)

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Certification Regarding Debarment, Suspension or Ineligibility for Award


The Applicant certifies, to the best of its knowledge and belief, that: (1) The Applicant and/or any of its principals ___ are, ___ are not presently debarred, suspended, proposed for debarment, or declared ineligible for the award of contracts by any federal or state agency, and (2) The Applicant and/or any of its principals ____ have, ___ have not, within a three-year period preceding this offer, been convicted of or had a civil judgment rendered against them for: commission of fraud or a criminal offense in connection with obtaining, attempting to obtain or performing a federal, state, or local government contract or subcontract; violation of federal or state antitrust statutes relating to the submission of offers; or commission of embezzlement, theft, forgery, bribery, falsification or destruction of records, making false statements, tax evasion, or receiving stolen property; and ___ are, ___ are not presently indicted for, or otherwise criminally or civilly charged by a government entity with commission of any of those offenses. ____________________________________________ (Signature and Title) ____________________________________________ (Name, please print) ____________________________________________ (Date)

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CERTIFICATION OF APPLICATION
PLEASE NOTE: Eligibility of financial assistance by the New Jersey Board of Public Utilities is determined by the information presented in this application and the required attachments and schedules. Any changes in the status of the proposed project from the facts presented herein could disqualify the project, including but not limited to, the commencement of construction or the acquisition of assets such as land or equipment. Please contact the staff of the EDA before taking any action which would change the status of the project as reported herein. Please consult with the EDA staff for details concerning these matters.
Only the BPU Board may take action to determine project eligibility and to authorize the issuance of funds. I, THE UNDERSIGNED, BEING DULY SWORN UPON MY OATH SAY: 1. I am aware of the BPU Prevailing Wage Requirement P.L. 2009, c. 203 and the Affirmative Action Regulation N.J.A.C. 17:27 and am prepared to comply with the requirements contained therein.

2. I affirm, represent, and warrant that the applicant has no outstanding obligations to any bank, loan company, corporation, or individual not mentioned in the above application and attachments; that the information contained in this application and in all attachments submitted herewith is to the best of my knowledge true and complete and that the grant/loan applied for herein is not for personal, family, or household purposes. 3. I understand that if such information is willfully false, I am subject to criminal prosecution under N.J.S.A. 2C:282 and civil action by the Agency which may at its option terminate its financial assistance. 4. I authorize the New Jersey Department of Law and Public Safety to verify any answer(s) contained herein through a search of its records, or records to which it has access, and to release the results of said research to the Agency. 5. I authorize the Agency to obtain such information including, but not limited to, a credit bureau check as it may require, covering the applicant and/or its principals, stockholders and/or investor. 6. I authorize the Agency to provide information submitted to it by or on behalf of the applicant to any bank which might participate in the requested financing with the BPU. I am an Authorized Signer and I accept the terms and conditions. Signature of Authorized Signer Printed Name and Title Date

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Clean Air and Water Certification


The Applicant certifies that: (1) Any facility to be used in the performance of this proposed project is ___ is not ___ listed on the Environmental Protection Agency (EPA) List of Violating Facilities. (2) The Applicant will immediately notify the EDA, before award, of the receipt of any communication indicating that the site the Applicant plans to use for the performance of the contract is under consideration to be listed on the EPA List of Violating Facilities. (3) The Applicant will include a certification substantially the same as the certification, including this paragraph, in every nonexempt subcontract. (4) The Applicant will notify the EDA if the site is in violation of any NJDEP regulations. ____________________________________________ (Signature and Title) ____________________________________________ (Name, please print) ____________________________________________ (Date)

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Historic Sites and Waste Management Certifications


Historic Sites Certification a. The property which is the site of the project covered by this grant application is a US or NJ Registered Historic Site under N.J.A.C. 7:4-2. Yes_________ No ____________

b. If the property upon which the project covered in this grant application is located is a US or NJ Registered Historic Site, the property owner has received from NJDEP a determination that the project complies with all applicable requirements of N.J.A.C. 7:4. Yes_________ No ____________

____________________________________________ (Signature and Title) ____________________________________________ (Name, please print) ____________________________________________ (Date)

Waste Management Certification By signing this application, the applicant certifies that all applicable requirements of the NJDEPs Solid Waste rules at N.J.A.C. 7:26 will be met. ____________________________________________ (Signature and Title) ____________________________________________ (Name, please print) ____________________________________________ (Date)

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APPENDIX E: NEW JERSEY PROTOCOLS

Combined Heat and Power (CHP) Program

Protocols
The measurement of energy and demand savings for Combined Heat and Power (CHP) systems is based primarily on the characteristics of the individual CHP systems subject to the general principles set out below. The majority of the inputs used to estimate energy and demand impacts of CHP systems will be drawn from individual project applications. CHP systems typically use fossil fuels to generate electricity that displaces electric generation from other sources. Therefore, the electricity generated from a CHP system should not be reported as either electric energy savings or renewable energy generation. Alternatively, electric generation and capacity from CHP systems should be reported as Distributed Generation (DG) separate from energy savings and renewable energy generation. However, any waste heat recaptured and utilized should be reported as energy savings as, discussed below. Distributed Generation Electric Generation (MWh) = Estimated annual and lifetime electric generation in MWh provided on the project application, as adjusted during the project review and approval process. Electric Demand (kW) = Electric capacity of the CHP system in kW provided on the project application, as adjusted during the project review and approval process. Energy Savings Gas Energy Savings: Gas savings should be reported on a consistent basis by all applicants as the reduction in fuel related to the recapture of thermal energy (e.g., reduction in boiler gas associated with the recapture of waste heat from the CHP engine or turbine) Electric Energy Savings: Electric energy savings should be reported only in cases where the recapture of thermal energy from the CHP system is used to drive an absorption chiller that would displace electricity previously consumed for cooling. Emission Reductions For many CHP applications there can be substantial emission benefits due to the superior emission rates of many new CHP engines and turbines as compared to the average emission rate of electric generation units on the margin of the grid. However, CHP engines and turbines produce emissions, which should be offset against the displaced emissions from the electricity that would have been generated by the grid.1 The New Jersey Department of Environmental Protection (DEP) has provided the BPU with emission factors that are used to calculate the emission savings from energy efficiency and renewable energy projects. These factors should be used to calculate the base emission factors which the CHP system emission factors would be compared to. The emissions from the CHP system would be subtracted from the base emissions to determine the net emission changes as follows:

Summit Blue, Draft Energy Efficiency Market Assessment of New Jersey Clean Energy Program, Book III, Page 196, May 26, 2006

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Base Emission Factors

DEP Emissions Reduction Factors for electric programs are as follows: - CO2 (Carbon Dioxide) emissions are reduced by 1172 lbs per MWh saved - NOx (Nitric Oxide) emission reductions are 2.8 lbs per MWh saved - SO2 (Sulfur Dioxide) emission reductions are 6.5 lbs per MWh saved

CHP Emission Reduction Algorithms CO2e ER (lbs) = (1172 lb/MWh* Electrical Output (MWh)) + (Thermal Output (MMBtu) * 115 (lb/MMBtu)) (CHP CO2EF * Electrical Output (MWh)) Assuming that the thermal output will replace the use of natural gas (CO2 emission coefficient of 115 lb/MMBtu) that would have been used to fuel a boiler or absorption chiller. NOx ER (lbs) = (2.8 * Electrical Output (MWh)) + (Thermal Output (MMBtu) * ECNG (lb/MMBtu)) (CHP NOxEF * Electrical Output (MWh)) SO2 ER (lbs) = (6.5 * Electrical Output (MWh)) + (Thermal Output (MMBtu) * ECNG (lb/MMBtu)) (CHP SO2EF * Electrical Output (MWh)) Definitions ER = Emission reductions in pounds CHP EF = the emission factors of the CHP system in pounds per MWh for each type of emission MWh = the estimated annual and lifetime generation from the CHP system Emission reductions from any CHP system energy savings, as discussed above, would be treated the same as any other energy savings reported.

33