As the state's largest gas utility CenterPoint Energy is required by state law to file a Natural Gas Innovation Act Plan. Within it, CenterPoint has proposed 18 different pilot projects to make customer homes and businesses less reliant on fossil gas. While some of the pilots merit support and PUC approval (particularly Pilots L, N and I), other NGIA pilots should be opposed (Pilot P) or modified to be in the public interest.
What is at Stake?
Because CenterPoint customers will be asked to pay for the NGIA pilots through a rider on our utility bills, it is important that we avoid Innovation Act Plan that commits customers to paying for diversionary solutions for decades.
In 3 easy steps, you can submit a Comment by March 15th (Final Deadline May 15th).
1: Send an email to [email protected]
2: Reference "Docket 23-215" in the subject line
3: Deadline 4:30 p.m. on 3/15/24
For a deeper guide for crafting your comments, here are some that the City of Minneapolis and the Citizens Utility Board have submitted as well as the Clean Heat Fact Sheet.
Click below to see more.
In general, electrification of gas end uses, deep energy efficiency retrofits, electric air source heat pumps and networked geothermal are all needed solutions to reduce dependency on fossil gas (aka "natural" gas) which is now the largest source of greenhouse gas (GHG) emissions in Minneapolis and still growing. We urge the MN PUC to support pilots in these areas so that we do not miss a huge opportunity to learn about applying important solutions.
Here are some ones that merit support:
1) Electrification: (Pilot L) is a proven pathway for reducing GHG emissions. There has already been a lot of study devoted to this including the E 21 Report on Decarbonizing Gas End Uses, which compared the effectiveness of Renewable Natural Gas and Hydrogen with electrification and energy efficiency. Electrification would improve community and indoor air quality by eliminating gas end-use indoor sources of PM, NOx and CO pollution.
2) Deep Energy Efficiency Retrofits with Electric Air Source Heat Pumps: (Pilot N) holds the most promise for reducing GHG emissions & creating opportunities for participating customers to save money. Heat pumps work in all seasons, provide heating in the winter and cooling in the summer and are up to 300-400% efficient. There is more info on the Clean Heat Fact Sheet.
Clean heating, or more specifically moving gas customers over to electric heat pumps, is a growing movement. 25 governors, including Governor Walz, pledged back in September to install 30 million heat pumps by 2030. It is good to help people get air source heat pumps as quickly as we can because they could use it to plug into a networked geothermal system later.
One pilot that there is broad consensus to oppose is Pilot P, for Gas Heat Pumps because it is inconsistent with the spirit of the NGIA as well as state and local climate goals. Electric Air Source heat pumps are cheaper, more efficient and should therefore be encouraged instead.
3) Networked Geothermal / thermal energy networks: (Pilot I) is a healthy and promising solution for reducing emissions from heating and cooling. When a group of buildings share energy thermal loops, it reduces the marginal cost of each individual building switching to the heat pumps as described above, making it more accessible. Rather than methane, it involves pipes that carry ambient temperature liquid to transfer energy when and where it’s needed. Ground Source heat pumps located in each building could use this energy for space and water heating and cooling. 
(Image credit: Eversource video)
It the currently known solution that needs to be scaled up quickly in order to accommodate electrification efforts. If we were to instead rely upon electric resistance heating for electrification, then we would have to overbuild far more new electricity generation, something which would drastically raise electric bills.
That being said, this is a new technology which we need to learn more about. So, this is exactly the kind of scenario the NGIA was designed for.
To conclude this section, each of these 3 NGIA pilot projects (L, N and I) has a special synergy with each other. If everyone has a heat pump, then networking it into a system makes sense. When someone does home energy efficiency improvements such as air sealing and insulation then it saves on cost and coordination to have electrification (such as induction stoves) and air source heat pumps come at the same time rather than operating in a different silo.
Pilots A - D involving hydrogen and renewable gas must be structured very carefully so that they do not come at the expense of clean electricity and networked geothermal for homes and buildings.
These projects involve CenterPoint blending Renewable Natural Gas (RNG) and Hydrogen (H2) into their existing gas distribution system should be reserved for dedicated industrial users as a way to decarbonize any hard-to-electrify industrial operations.
Both, H2 and RNG are currently limited in supply and would thereby be an expensive procurement measure for widespread residential and commercial use. Furthermore, blending RNG and hydrogen into the gas distribution system does not reduce the harm to customers associated with combusting natural gas in buildings and competes with more appropriate uses of these limited resources.
What makes RNG worth exploring is that it is generally good to look for circular economy opportunities to capture a waste stream and turn it into a resource. Contracts under the Renewable Natural Gas Pilot should be evaluated to see if the source is reasonably cost-effective in terms of life cycle GHG emissions reductions. Among the various feedstocks for RNG, the Natural Resources Defense Council is most supportive of wastewater. A big reason why green hydrogen should be reserved for a dedicated industrial use is that hydrogen is prone to leaking in the current pipe system. The pilot would need some way to mitigate safety and climate risks that proposes.
In principle, the reason for undertaking pilot projects is to learn along the way about how to deploy a new technology, or a new financial mechanism for doing so. While it is good to err on the side of “lets try it out and see how it works”, there is one chief overriding concern about the precedent that pilots A-D could set. CenterPoint’s proposal to add H2 and RNG to their existing gas system could serve as a greenwashed pretext for CenterPoint (and similar gas utilities) to keep investing in their gas distribution infrastructure. If we take this arrangement to its logical conclusion, it could lock us into relying upon climate-polluting methane gas as a primary fuel source for decades to come.
(Image from Shut the Fossils Up)
Networked geothermal, in contrast, would leverage avoided costs of gas system investment to make it a financially viable pathway for utilities.
Interaction with the City of Minneapolis
When the city of Minneapolis asked CenterPoint to contribute solutions to help meet the city’s climate goals in the Minneapolis Clean Energy Partnership space (prior to their NGIA filing in June of 2023), it is no surprise that blending in RNG and H2 were the only alternatives that CenterPoint initially expressed eagerness for. This is because CenterPoint gets guaranteed profits for making continued investments in their gas infrastructure in the same way that electric utilities do for adding new transmission and generation infrastructure.
More recently however, CenterPoint did propose Networked Geothermal and a broader array of solutions to the Minneapolis Clean Energy Partnership in response to NGIA requirements. . Overall, CenterPoint should prioritize customer-facing benefits rather than relying on such procurement measures that will drive up costs for individual consumers without many opportunities for us to participate.
Important note to conclude upon
The NGIA state statute requires 50% of the first NGIA plan budget be dedicated to alternative fuels like RNG and Hydrogen. Unless the statute is amended, there is no real way all pilots regarding fuels like H2 and RNG could be opposed. The NGIA statute also places a ceiling of 20% on how much can be used for district energy solutions which present a much more viable path for widespread basis. To make it the central focus on how gas utilities in Minnesota should innovate would be to essentially advocate for amending the statute, to unstack the playing field, beyond what the MN Public Utilities Commission could do. That being said, intentional efforts should be made to explore how to direct H2 and RNG to dedicated industrial uses and avoid setting a precedent for deploying these niche fuels for widespread use in a way that comes at the expense of electrification, deep energy efficiency, electric heat pumps and networked geothermal.
Additional points on Networked Geothermal
Networked geothermal needs to start with one project doing it first then more people will get sold on it. If a building is over a certain size, then networked geothermal will pencil on day 1. If we can get someone to be the hub of a networked geothermal system, then the system could spread to other buildings nearby. What we need is a foresighted property developer who starts a networked geothermal hub either in one big downtown building renovation, some government building, or with the construction of a big building elsewhere. The Upper Harbor Terminal would be an example of an idea place for this because the city of Minneapolis has site control. As more people will see a demonstration of networked geothermal then it is no longer pie-in-the-sky hypothetical. You can then introduce it to a neighbor who could also have the system and not heat and cool this building with gas. More developers get sold on the idea when they see the finances of networked geothermal pencils.
If someone builds the system, then it becomes easier to ask the later developers who are building more buildings nearby to join it as part of their projects. The big selling point that developers will hear and understand is that, “there is no risk in this project, you will save money immediately on day one, and you will save even more money over time because the cost of renewables are more locked in than rising prices for fossil (natural) gas that CenterPoint can’t control, and I can market my building as a green building that is better for our environment and nicer to live in.”
The heat pumps work really well most of the time for air conditioning, and for heating except for when it is really cold. This will mean people will only use their gas furnace during the coldest days of the year and all other days will be getting heating and cooling from low carbon sources. The nice thing about it is that if you have an air source heat pump then it could easily become a water source heat pump if we have the geothermal system. The heat pump technology itself does not care whether it is air or water. It can use either of those things. If those who have heat pumps can get themselves hooked up to networked geothermal then gas furnaces are no longer needed as backup. So then when we have the networked geothermal ready to go, it can be a water source heat pump not just an air source pump.