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[Senate Report 111-315]
[From the U.S. Government Publishing Office]

                                                       Calendar No. 601
111th Congress                                                   Report
                                 SENATE
 2d Session                                                     111-315

======================================================================

 
                       GAS TURBINE EFFICIENCY ACT

                                _______
                                

               September 27, 2010.--Ordered to be printed

                                _______
                                

   Mr. Bingaman, from the Committee on Energy and Natural Resources, 
                        submitted the following

                              R E P O R T

                         [To accompany S. 2900]

    The Committee on Energy and Natural Resources, to which was 
referred the bill (S. 2900) to establish a research, 
development, and technology demonstration program to improve 
the efficiency of gas turbines used in combined cycle and 
simple cycle power generation systems, having considered the 
same, reports favorably thereon without amendment and 
recommends that the bill do pass.

                                PURPOSE

    The purpose of S. 2900 is to establish a research, 
development, and technology demonstration program to improve 
the efficiency of gas turbines used in combined cycle and 
simple cycle power generation systems.

                          BACKGROUND AND NEED

    Natural gas is used to generate electricity in a variety of 
ways. The first is through a steam generation unit, where 
natural gas is burned in a boiler to heat water and produce 
steam. The steam is then used to turn a turbine to generate 
electricity. The second is through gas turbines where, instead 
of heating steam to turn a turbine, natural gas is mixed with 
air and ignited, which increases the temperature, velocity, and 
volume of the gas flow. The hot gas is then used to turn the 
turbine directly to generate electricity. The final way is 
through combined-cycle units that use both a gas turbine and a 
steam unit. The gas turbine operates in much the same way as a 
normal gas turbine, using the hot gases released from burning 
natural gas to turn a turbine and generate electricity. 
However, in combined-cycle plants, the waste heat from the gas 
turbine process is used to generate steam, which is then used 
to generate electricity much like a steam unit, resulting in 
significantly higher efficiency than simple steam generation or 
gas turbine cycles alone.
    Efficiency enhancements for both combined cycle and simple 
cycle gas turbine units could result in significantly reduced 
natural gas usage and emissions. For example, General Electric 
Company estimates that a one-percentage point improvement in 
efficiency applied to its existing fleet of F-class turbines 
would result in CO2 emission reductions of 4.4 
million tons per year, while also providing savings of more 
than a billion dollars per year in fuel costs. Notably, other 
countries such as Japan are now making significant investments 
in these high efficiency technologies.
    The Department of Energy carries out simple and combined 
cycle gas turbine research programs in two functional program 
offices: The Office of Fossil Energy for large megawatt 
machines for base load and peak power production; and the 
Office of Energy Efficiency and Renewable Energy for smaller 
kilowatt machines typical of distributed power systems.
    S. 2900 proposes a structured research program in combined 
and simple cycle power generation systems found in large 
megawatt class machines so that the United States remains 
globally competitive in these markets.

                          LEGISLATIVE HISTORY

    S. 2900 was introduced by Senator Gillibrand on December 
17, 2009 and is cosponsored by Senators Collins, Hagan, and 
Bill Nelson. The Subcommittee on Energy held a hearing on S. 
2900 on June 15, 2010. The Committee on Energy and Natural 
Resources ordered the bill reported without amendment at its 
business meeting on August 5, 2010.
    A companion measure, H.R. 3029, was introduced in the House 
of Representatives by Representative Tonko on June 24, 2009. It 
was reported by the Committee on Science and Technology, with 
amendments, on December 1, 2009. H. Rept. 111-343. It passed 
the House of Representatives, as amended, on December 1, 2009, 
and was referred to the Committee on Energy and Natural 
Resources.

                        COMMITTEE RECOMMENDATION

    The Senate Committee on Energy and Natural Resources, in 
open business session on August 5, 2010, by a voice vote of a 
quorum present recommends that the Senate pass S. 2900.

                      SECTION-BY-SECTION ANALYSIS

    Section 1 provides a short title.
    Section 2 (a) directs the Secretary of Energy to carry out 
a research, development, and technology demonstration program 
to improve the efficiency of gas turbines used in power 
generation systems and to identify the technologies that will 
lead to gas turbine combined cycle efficiency of 65 percent or 
simple cycle efficiency of 50 percent.
    Subsection (b) requires the program to: (1) Support first-
of-a-kind engineering and detailed gas turbine design for 
megawatt-scale and utility-scale electric power generation; (2) 
include technology demonstration through component testing, 
subscale testing, and full scale testing in existing fleets; 
(3) include field demonstrations of the developed technology 
elements to demonstrate technical and economic feasibility; and 
(4) assess overall combined cycle and simple cycle system 
performance.
    Subsection (c) specifies the following program goals: (1) 
In phase I, to develop the conceptual design of, and to develop 
and demonstrate the technology required for, advanced high 
efficiency gas turbines that can achieve at least 62 percent 
combined cycle efficiency or 47 percent simple cycle efficiency 
on a lower heating value basis; and (2) in phase II, to develop 
the conceptual design for advanced high efficiency gas turbines 
that can achieve at least 65 percent combined cycle efficiency 
or 50 percent simple cycle efficiency on a lower heating value 
basis.
    Subsection (d) further directs the Secretary, in selecting 
program proposals, to emphasize the extent to which the 
proposal will: (1) Stimulate the creation or increased 
retention of jobs in the United States; and (2) promote and 
enhance U.S. technology leadership.
    Subsection (e) requires awards of financial assistance to 
be made on a competitive basis with an emphasis on technical 
merit.
    Subsection (f) provides that the cost-sharing requirements 
of section 988 of the Energy Policy Act of 2005 (42 U.S.C. 
16352) apply to awards.
    Subsection (g) provides that the limits on participation 
under section 999E of the Energy Policy Act of 2005 (42 U.S.C. 
16375) apply to awards.
    Subsection (h) authorizes $85 million to be appropriated to 
carry out the program for each of fiscal years 2011 through 
2014.

                   COST AND BUDGETARY CONSIDERATIONS

    The following estimate of costs of this measure has been 
provided by the Congressional Budget Office.

S. 2900--Gas Turbine Efficiency Act of 2009

    Summary: S. 2900 would authorize the appropriation of $340 
million over the 2011-2014 period for the Department of Energy 
(DOE) to improve the efficiency of turbines that use natural 
gas to generate electricity. Assuming appropriation of the 
authorized amounts, CBO estimates that implementing the 
legislation would cost $327 million over the 2011-2015 period 
and $13 million after 2015. Enacting the legislation would not 
affect direct spending or revenues; therefore, pay-as-you-go 
procedures do not apply.
    S. 2900 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would impose no costs on state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 2900 is shown in the following table. 
The costs of this legislation fall within budget function 250 
(general science, space, and technology).

----------------------------------------------------------------------------------------------------------------
                                                                 By fiscal year, in millions of dollars--
                                                         -------------------------------------------------------
                                                            2011     2012     2013     2014     2015   2011-2015
----------------------------------------------------------------------------------------------------------------
                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level.....................................       85       85       85       85        0       340
Estimated Outlays.......................................       47       72       85       85       38       327
----------------------------------------------------------------------------------------------------------------

    Basis of estimate: For this estimate, CBO assumes the bill 
will be enacted near the beginning of fiscal year 2011 and that 
the authorized amounts will be appropriated each year. 
Estimated outlays are based on historical spending patterns for 
DOE research programs. S. 2900 would authorize the 
appropriation of $85 million a year over the 2011-2014 period 
for research, development, and demonstration activities related 
to gas turbines.
    Intergovernmental and private-sector impact: S. 2900 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would impose no costs on state, local, or 
tribal governments.
    Previous CBO estimate: On August 19, 2009, CBO transmitted 
an estimate for H.R. 3029, a bill to establish a research, 
development, and technology demonstration program to improve 
the efficiency of gas turbines used in combined cycle power 
generation, as ordered reported by the House Committee on 
Science and Technology on July 29, 2009. The two pieces of 
legislation are similar; however, S. 2900 authorizes the 
appropriation of $20 million more each fiscal year and includes 
provisions for simple cycle gas turbines in addition to 
combined cycle gas turbines. The CBO cost estimates reflect 
those differences.
    Estimate prepared by: Federal Costs: Martin von Gnechten; 
Impact on State, Local, and Tribal Governments: Ryan Miller; 
Impact on the Private Sector: Amy Petz.
    Estimate approved by: Theresa Gullo, Deputy Assistant 
Director for Budget Analysis.

                      REGULATORY IMPACT EVALUATION

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee makes the following 
evaluation of the regulatory impact which would be incurred in 
carrying out S. 2900.
    The bill is not a regulatory measure in the sense of 
imposing Government established standards or significant 
economic responsibilities on private individuals and 
businesses.
    No personal information would be collected in administering 
the program. Therefore, there would be no impact on personal 
privacy.
    Little, if any, additional paperwork would result from the 
enactment of S. 2900.

                   CONGRESSIONALLY DIRECTED SPENDING

    S. 2900 does not contain any congressionally directed 
spending items, limited tax benefits, or limited tariff 
benefits as defined in rule XLIV of the Standing Rules of the 
Senate.

                        EXECUTIVE COMMUNICATIONS

    The testimony of the Department of Energy on S. 2900 at the 
Subcommittee on Energy's June 15, 2010, hearing follows.

Statement of Steven G. Chalk, Chief Operating Officer and Acting Deputy 
 Assistant Secretary for Renewable Energy, Office of Energy Efficiency 
               and Renewable Energy, Department of Energy

    Madam Chairman, Ranking Member Risch, and Members of the 
Subcommittee, thank you for the opportunity to appear before 
you today to discuss proposed clean energy legislation.
    The Department and the Subcommittee share common goals of 
strengthening our economy, enhancing our national security, and 
protecting our environment. As part of the Recovery Act, the 
Office of Energy Efficiency and Renewable Energy (EERE), 
oversees a total of $16.8 billion in investments. To date, EERE 
has obligated 96 percent, or $16.07 billion, of its Recovery 
Act funds. The funds are putting America to work laying the 
foundation for our clean energy future. The Department also 
appreciates the authorities you have provided in recent years 
in the Energy Policy Act of 2005 (EPAct) (P.L. 109-58) and the 
Energy Independence and Security Act of 2007 (EISA) (P.L. 110-
140). This year, the Committee has proposed further investment 
and we thank you for all your hard work in reporting the 
American Clean Energy Leadership Act (S. 1462).
    Today, I am pleased to offer the Department's perspective 
on five pending pieces of legislation related to energy 
efficiency and renewable energy. Note that many of the 
authorities outlined in the bills would simply reinforce 
existing authorities, and may not be necessary for the 
Department to carry out the activities in question. I will 
discuss them in the order listed in the hearing invitation 
letter I received from the Subcommittee. These include the 10 
Million Solar Roofs Act of 2010 (S. 3460), the Supply Star Act 
of 2010 (S. 3396), the Improving Energy Efficiency and 
Renewable Energy Use By Federal Agencies Act of 2010 (S. 3251), 
the Heavy Duty Hybrid Vehicle Research, Development, and 
Demonstration Act (S. 679), the Gas Turbine Efficiency Act of 
2009 (S. 2900).

              s. 3460--10 million solar roofs act of 2010

    We thank the subcommittee and the sponsor of this 
legislation for your strong leadership on solar technologies 
over the years. The Department's goals for solar electric 
technologies are to be cost competitive in their respective 
markets by 2015 and to reach a high penetration of solar 
installations. The Department is investing $232 million in 2010 
to support solar research across the development pipeline, from 
basic photovoltaic (PV) cell technologies to manufacturing 
scaleup to total system development. Within the $232 million, 
DOE is investing up to $50 million in concentrated solar power 
technology development and deployment related activities and 
$23 million to understand how solar technologies can be better 
integrated within existing electricity generation and 
transmission systems. In solar hot water heating, DOE is 
investing approximately an additional $6.5 million in 2010.
    The proposed legislation incorporates several significant 
features. We believe that rebates, loan programs, and 
performance based incentives are all effective means of 
stimulating demand. Allowing states to choose between these 
incentives will enable the Act to expand existing state 
programs that have been effective in promoting solar 
installations. In addition, the states' matching funds 
requirements will leverage available federal appropriations and 
increase the resulting deployment of solar technologies, both 
of which are high priorities for the Department.
    To maximize the effectiveness of the proposed legislation, 
we would recommend two changes. First, while we support the 
state match requirement, we propose that the cost share be set 
at 50 percent to increase the potential leverage of federal 
funds. Second, the Secretary should be given the ability to 
reduce this as necessary to increase the overall effectiveness 
of the program. We also believe the program could be designed 
in a creative way such as working with municipalities to 
promote photovoltaic installations through innovative local 
programs.
    We note that by our estimates, the $250 million authorized 
for FY 2012 would yield roughly 100,000 rooftop solar systems, 
and may not be sufficient to put us on a trajectory to meet the 
goal of 10 million solar roofs. With these changes, the 
legislation could be an effective tool in increasing deployment 
of solar electricity technologies Nationwide. We note that 
existing authorities, such as the competitive portion of the 
state energy program, would allow DOE to undertake such a 
program already.

                    s. 3396--supply star act of 2010

    Supply chain energy efforts can make an important 
contribution to overall industrial efficiency and the 
competitive position of domestic suppliers. Analysis suggests 
that a large part of the carbon footprint for many consumer 
products can be attributed to the supply chain--from raw 
materials, transport, and packaging to the energy consumed in 
manufacturing processes--on the order of 40 to 60 percent.\1\
---------------------------------------------------------------------------
    \1\Source: Climate Change and Supply Chain Management, McKinsey 
Quarterly, McKinsey & Company, July 2008.
---------------------------------------------------------------------------
    The Supply Star legislation seeks to build upon existing 
best practices in the industrial community by establishing a 
voluntary recognition program that supports and promotes 
products and companies with highly energy- and resource-
efficient supply chains.
    DOE and the Environmental Protection Agency (EPA) both have 
existing initiatives that address supply chain efficiency, such 
as Save Energy Now at DOE and the Smart Way 
TransportTM program at EPA. The legislation should 
coordinate with and leverage these programs as a structure 
through which Supply Star activities could be conducted. For 
example, through its national Save Energy Now initiative, DOE 
encourages manufacturing companies to engage their supply 
chains in energy and carbon management. Specifically, DOE 
develops processes and resources to assist companies in 
promoting energy management to their industrial suppliers and 
customers. Save Energy Now LEADER Companies make a voluntary 
commitment to reduce their energy intensity by 25 percent in 10 
years. Many of these companies are interested in improving the 
efficiency of their supply chains as well.
    The Supply Star bill also builds upon Superior Energy 
Performance (SEP), a voluntary certification program working to 
provide industrial facilities with a roadmap for achieving 
continual improvement in energy efficiency while maintaining 
competitiveness. A central element of SEP is implementation of 
the forthcoming International Organization for Standardization 
(ISO) 50001 energy management standard, with additional 
requirements to achieve and document energy intensity 
improvements. DOE is working through SEP to bring ISO 50001 to 
the U.S. Upon its expected publication in 2011 this American 
National Standards Institute-accredited program will provide 
companies with a framework for fostering energy-efficiency at 
the plant level and a consistent methodology for measuring and 
validating energy efficiency and intensity improvements. This 
new framework will be an important tool to integrate into 
supply chain efforts.

   s. 3251--improving energy efficiency and renewable energy use by 
                      federal agencies act of 2010

    On October 5th, President Obama signed Executive Order 
13514 requiring Federal agencies to set GHG emission reduction 
targets, increase energy efficiency, reduce fleet petroleum 
use, conserve water, reduce waste and promote environmentally-
responsible produce purchases by federal agencies. With this 
action, the President directed agencies to demonstrate the 
Federal government's commitment, over and above what is already 
being done, to reducing emissions and saving money.
    As a whole, the Federal government has made significant 
progress in meeting the energy requirements of EISA 2007 and 
EPAct 2005. Further progress on these efforts would be 
bolstered by S. 3251. The Department is particularly supportive 
of provisions clarifying the definition of allowable 
``renewable'' energy sources, and authorizing the creation of a 
revolving fund for Federal facility energy efficiency and 
renewable energy projects.
    The Department looks forward to working with the 
Subcommittee on legislation that would provide agencies with 
the flexibility to purchase renewable energy for appropriate 
time periods, that do not exceed asset life, create appropriate 
risk sharing between project developers and taxpayers, and that 
recognize the importance of fiscal responsibility and 
Congressional Budget Office scoring of contracts. This 
authority would provide opportunities for more on-site 
renewable power at Federal agencies and would provide strong 
support for growing our domestic clean energy economy.
    The Department's recommended definition of renewable energy 
follows the definition in section 203 of EPAct 2005, with an 
additional recommendation to allow for both electric energy and 
thermal energy from renewable sources. It is very important to 
allow thermal energy to count as renewable energy, particularly 
because renewable thermal energy sources such as ground source 
heat pumps are often the lowest-cost option for displacing 
purchased energy and are already widely deployed. This approach 
contrasts with the current definition which is limited only to 
``renewable electricity,'' a definition that reduces incentives 
for this valuable and cost-effective form of renewable power.
    The Department fully supports the creation of a revolving 
loan fund based on best practices and subject to appropriate 
interest rates for Federal facility energy efficiency and 
renewable energy projects. There is considerable experience and 
success at the state and local level with using revolving loan 
funds to assist innovative projects to improve energy 
efficiency. In addition, there is Federal experience with a 
similar concept within the General Services Administration 
(GSA) that funds agency relocations, and agencies reimburse the 
fund at slightly above costs to gradually increase the amount 
of funds available for lending.
    Federal agencies are already responding to the requirements 
of EISA Section 432 to survey their facilities for potential 
energy efficiency and renewable energy upgrades, as well as to 
complete energy audits and to report on measures taken. The 
Department recommends that the renewable energy facility 
surveys called for in S. 3251 Section 5 should be included as a 
modification of EISA Section 432.
    DOE's Federal Energy Management Program is already at work 
implementing provisions similar to the Federal energy 
management and data collection standard called for in S. 3251 
Section 7. As required under EISA Section 432, DOE will publish 
overarching guidance for implementation of all Section 432 
requirements in 2010. The Department is also developing a web-
based tracking system for facility-level energy data and 
identified or implemented energy conservation measures per 
EISA. Tasking the GSA to deploy a similar publicly-available 
resource with facility-level energy data would create 
redundancy as the Department's compliance tracking system will 
be deployed for use by all agencies in July 2010.

     s. 679--heavy duty hybrid vehicle research, development, and 
                           demonstration act

    The program authorized by S. 679 would complement several 
of the Department's current activities focused on increasing 
vehicle energy efficiency. One of those programs is the 
SuperTruck Program, in which DOE is seeking to improve the 
freight hauling efficiency of Class 8 trucks by 50 percent. 
Other complementary efforts underway include: (1) The 
development of hybrid school bus technology; (2) research, 
development, and demonstration of medium-duty utility bucket 
trucks and passenger shuttles using a plug-in hybrid electric 
system; and (3) other medium and heavy duty truck deployment 
activities supported by our Clean Cities program. S. 679 has 
the potential to increase the fuel economy attainable by 
vehicles in this sector.
    There are several technical definitions and reporting 
requirements about which we would like to seek clarification, 
and the Department looks forward to working with the 
subcommittee on those provisions.

              s. 2900--gas turbine efficiency act of 2009

    The Gas Turbine Efficiency Act would establish a research, 
development, and technology demonstration program to improve 
the efficiency of gas turbines used in combined cycle and 
simple cycle power generation systems.
    The Department believes that industry has economic 
incentives to invest in research, development and demonstration 
to increase the efficiency of gas turbines. To the extent that 
the private sector underinvests in basic research, DOE has 
sufficient authority and existing programs to improve high 
temperature materials applicable to a range of energy 
technologies.
    The bill is similar to an existing successful program 
within DOE. The Advanced Turbine Systems Program, a research, 
development and demonstration collaborative between the 
Department's Offices of Energy Efficiency and Renewable Energy 
and Fossil Energy, successfully developed and deployed advanced 
turbine material and coating leading to today's turbine 
efficiencies.
    The legislation outlines activities DOE already performs. 
For example, through its Industries of the Future 
(crosscutting) investments, DOE's Industrial Technology Program 
(ITP) aids the development of advanced manufacturing processes 
for the expanded use of lightweight materials such as titanium. 
Those breakthroughs help to drive production cost down and 
market impact up. In other efforts, ITP promoted advanced 
alloys of steel to support many of the new clean energy 
products being developed today. Nanocoating technologies are 
still another group of innovations developed with the 
assistance of ITP that now extend the life of tooling systems 
and provide wear resistance to reduce the cost of manufacture 
and extend the useful life of products. All of these efforts 
support the overarching objective of reducing the energy 
intensity of Industry to help advance the Administration's 
energy security and environmental performance goals.
    The Department is committed to continuing research of high 
temperature materials which will help industry develop more 
efficient energy technologies. Meanwhile, the private sector 
has economic incentive to invest in the development and 
demonstration of efficient gas turbines. Therefore, private 
sector work on later stages of efficient natural gas turbine 
development and demonstration will likely be conducted without 
the need for additional funding authorizations beyond that 
already in place.
    In conclusion, the Department of Energy thanks the 
Subcommittee for the opportunity to comment on these proposed 
initiatives. We look forward to working with Congress to 
develop strong, effective clean energy policy to ensure U.S. 
leadership on these global issues and in the clean energy 
economy.

                        CHANGES IN EXISTING LAW

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the Committee notes that no 
changes in existing law are made by the bill, S. 2900, as 
ordered reported.

                                  
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