II 113th CONGRESS 1st Session S. 1205 IN THE SENATE OF THE UNITED STATES June 20, 2013 Mr. Franken introduced the following bill; which was read twice and referred to the Committee on Energy and Natural Resources A BILL To reduce energy waste, strengthen energy system resiliency, increase industrial competitiveness, and promote local economic development by helping public and private entities to assess and implement energy systems that recover and use waste heat and local renewable energy resources.

1. Short title This Act may be cited as the Local Energy Supply and Resiliency Act of 2013 . 2. Findings and purposes (a) Findings Congress finds that— (1) a quantity of energy that is more than— (A) 27 percent of the total energy consumption in the United States is released from power plants in the form of waste heat; and (B) 36 percent of the total energy consumption in the United States is released from power plants, industrial facilities, and other buildings in the form of waste heat; (2) waste heat can be— (A) recovered and distributed to meet building heating or industrial process heating requirements; (B) converted to chilled water for air conditioning or industrial process cooling; or (C) converted to electricity; (3) renewable energy resources in communities in the United States can be used to meet local thermal and electric energy requirements; (4) use of local energy resources and implementation of local energy infrastructure can strengthen the reliability and resiliency of energy supplies in the United States in response to extreme weather events, power grid failures, or interruptions in the supply of fossil fuels; (5) use of local waste heat and renewable energy resources— (A) strengthens United States industrial competitiveness; (B) helps reduce reliance on fossil fuels and the associated emissions of air pollution and carbon dioxide; (C) increases energy supply resiliency and security; and (D) keeps more energy dollars in local economies, thereby creating jobs; (6) district energy systems represent a key opportunity to tap waste heat and renewable energy resources; (7) district energy systems are important for expanding implementation of combined heat and power (CHP) systems because district energy systems provide infrastructure for delivering thermal energy from a CHP system to a substantial base of end users; (8) district energy systems serve colleges, universities, hospitals, airports, military bases, and downtown areas; (9) district energy systems help cut peak power demand and reduce power transmission and distribution system constraints by— (A) shifting power demand through thermal storage; (B) generating power near load centers with a CHP system; and (C) meeting air conditioning demand through the delivery of chilled water produced with heat generated by a CHP system or other energy sources; (10) evaluation and implementation of district energy systems— (A) is a complex undertaking involving a variety of technical, economic, legal, and institutional issues and barriers; and (B) often requires technical assistance to successfully navigate these barriers; and (11) a major constraint to the use of local waste heat and renewable energy resources is a lack of low-interest, long-term capital funding for implementation. (b) Purposes The purposes of this Act are— (1) to encourage the use and distribution of waste heat and renewable thermal energy— (A) to reduce fossil fuel consumption; (B) to enhance energy supply resiliency, reliability, and security; (C) to reduce air pollution and greenhouse gas emissions; (D) to strengthen industrial competitiveness; and (E) to retain more energy dollars in local economies; and (2) to facilitate the implementation of a local energy infrastructure that accomplishes the goals described in paragraph (1) by— (A) providing technical assistance to evaluate, design, and develop projects to build local energy infrastructure; and (B) facilitating low-cost financing for the construction of local energy infrastructure through the issuance of loan guarantees. 3. Definitions (1) Combined heat and power system The term combined heat and power system or CHP system means generation of electric energy and heat in a single, integrated system that meets the efficiency criteria in clauses (ii) and (iii) of section 48(c)(3)(A) of the Internal Revenue Code of 1986, under which heat that is conventionally rejected is recovered and used to meet thermal energy requirements. (2) District energy system The term district energy system means a system that provides thermal energy to buildings and other energy consumers from 1 or more plants to individual buildings to provide space heating, air conditioning, domestic hot water, industrial process energy, and other end uses. (3) Loan guarantee program The term Loan Guarantee Program means the Local Energy Infrastructure Loan Guarantee Program established under section 5. (4) Local energy infrastructure The term local energy infrastructure means a system that— (A) recovers or produces useful thermal or electric energy from waste energy or renewable energy resources; (B) generates electricity using a combined heat and power system; (C) distributes electricity in microgrids; (D) stores thermal energy; or (E) distributes thermal energy or transfers thermal energy to building heating and cooling systems via a district energy system. (5) Microgrid The term microgrid means a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that— (A) acts as a single controllable entity with respect to the grid; and (B) can connect and disconnect from the grid to enable the microgrid to operate in both grid-connected or island-mode. (6) Renewable energy resource The term renewable energy resource means— (A) closed-loop and open-loop biomass (as defined in paragraphs (2) and (3), respectively, of section 45(c) of the Internal Revenue Code of 1986); (B) gaseous or liquid fuels produced from the materials described in subparagraph (A); (C) geothermal energy (as defined in section 45(c)(4) of such Code); (D) municipal solid waste (as defined in section 45(c)(6) of such Code); or (E) solar energy (which is used, undefined, in section 45 of such Code). (7) Renewable thermal energy The term renewable thermal energy means— (A) heating or cooling energy derived from a renewable energy resource; (B) natural sources of cooling such as cold lake or ocean water; or (C) other renewable thermal energy sources, as determined by the Secretary. (8) Secretary The term Secretary means the Secretary of Energy. (9) Thermal energy The term thermal energy means— (A) heating energy in the form of hot water or steam that is used to provide space heating, domestic hot water, or process heat; or (B) cooling energy in the form of chilled water, ice or other media that is used to provide air conditioning, or process cooling. (10) Waste energy The term waste energy means energy that— (A) is contained in— (i) exhaust gases, exhaust steam, condenser water, jacket cooling heat, or lubricating oil in power generation systems; (ii) exhaust heat, hot liquids, or flared gas from any industrial process; (iii) waste gas or industrial tail gas that would otherwise be flared, incinerated, or vented; (iv) a pressure drop in any gas, excluding any pressure drop to a condenser that subsequently vents the resulting heat; (v) condenser water from chilled water or refrigeration plants; or (vi) any other form of waste energy, as determined by the Secretary; and (B) (i) in the case of an existing facility, is not being used; or (ii) in the case of a new facility, is not conventionally used in comparable systems. 4. Technical assistance program (a) Establishment (1) In general The Secretary shall establish a program to disseminate information and provide technical assistance, directly or through grants provided so that recipients may contract to obtain technical assistance, to assist eligible entities in identifying, evaluating, planning, and designing local energy infrastructure. (2) Technical assistance The technical assistance under paragraph (1) shall include assistance with 1 or more of the following: (A) Identification of opportunities to use waste energy or renewable energy resources. (B) Assessment of technical and economic characteristics. (C) Utility interconnection. (D) Negotiation of power and fuel contracts. (E) Permitting and siting issues. (F) Marketing and contract negotiations. (G) Business planning and financial analysis. (H) Engineering design. (3) Information dissemination The information dissemination under paragraph (1) shall include— (A) information relating to the topics identified in paragraph (2), including case studies of successful examples; and (B) computer software for assessment, design, and operation and maintenance of local energy infrastructure. (b) Eligible entity Any nonprofit or for-profit entity shall be eligible to receive assistance under the program established under subsection (a). (c) Eligible costs On application by an eligible entity, the Secretary may award grants to an eligible entity to provide funds to cover not more than— (1) 100 percent of the cost of initial assessment to identify local energy opportunities; (2) 75 percent of the cost of feasibility studies to assess the potential for the implementation of local energy infrastructure; (3) 60 percent of the cost of guidance on overcoming barriers to the implementation of local energy infrastructure, including financial, contracting, siting, and permitting issues; and (4) 45 percent of the cost of detailed engineering of local energy infrastructure. (d) Applications (1) In general An eligible entity desiring technical assistance under this section shall submit an application to the Secretary at such time, in such manner, and containing such information as the Secretary may require under the rules and procedures adopted under subsection (f). (2) Application process The Secretary shall seek applications for technical assistance under this section— (A) on a competitive basis; and (B) on a periodic basis, but not less frequently than once every 12 months. (e) Priorities In evaluating projects, the Secretary shall give priority to projects that have the greatest potential for— (1) maximizing elimination of fossil fuel use; (2) strengthening the reliability of local energy supplies and boosting the resiliency of energy infrastructure to the impact of extreme weather events, power grid failures, and interruptions in supply of fossil fuels; (3) minimizing environmental impact, including regulated air pollutants, greenhouse gas emissions, and use of ozone-depleting refrigerants; (4) facilitating use of renewable energy resources; (5) increasing industrial competitiveness; and (6) maximizing local job creation. (f) Rules and procedures Not later than 180 days after the date of enactment of this Act, the Secretary shall adopt rules and procedures for the administration of the program established under this section, consistent with the provisions of this Act. (g) Authorization of appropriations There is authorized to be appropriated to carry out this section $150,000,000 for the period of fiscal years 2014 through 2018, to remain available until expended. 5. Loan guarantees for local energy infrastructure (a) Local energy infrastructure loan guarantee program (1) In general Title XVII of the Energy Policy Act of 2005 (42 U.S.C. 16511 et seq.) is amended by adding at the end the following: 1706. Local energy infrastructure loan guarantee program (a) In general The Secretary may make guarantees under this section for commercial or innovative projects defined as local energy infrastructure in section 3 of the Local Energy Supply and Resiliency Act of 2013 . (b) Modification of existing authority The Secretary shall reserve $4,000,000,000 of the loan guarantee authority remaining under section 1703 to provide loan guarantees under this section. (c) Use of other appropriated funds To the maximum extent practicable, the Secretary shall use funds appropriated to carry out section 1703 that remain unobligated as of the date of enactment of this section for the cost of loan guarantees under this section. . (2) Table of contents amendment The table of contents for the Energy Policy Act of 2005 ( 42 U.S.C. 15801 et seq. ) is amended by inserting after the item relating to section 1705 the following new item: Sec. 1706. Local energy infrastructure loan guarantee program. . 6. Definition of investment area Section 103(16) of the Community Development Banking and Financial Institutions Act of 1994 ( 12 U.S.C. 4702(16) ) is amended— (1) in subparagraph (A)(ii), by striking or at the end; (2) in subparagraph (B), by striking the period at the end and inserting ; or ; and (3) by adding at the end the following: (C) has the potential for implementation of local energy infrastructure as defined in the Local Energy Supply and Resiliency Act of 2013 . .