May 28, 2010 - National Grid unveils 1 MW rooftop solar in MA

Friday, May 28, 2010

National Grid now operates the largest solar site in Massachusetts, having completed its 1 MW solar generation facility in Whitinsville. Conveniently, National Grid already owned a suitable location: the flat roof of its own New England Distribution Center warehouse.

The development was made possible in part by the 2008 Massachusetts Green Communities Act, which allows utilities to own up to 50 megawatts of solar generation. The National Grid project is the first utility-owned solar project under this new law. National Grid plans several more projects in the coming year, totaling about 5 MW. The cost? Less than $6.5 million, says National Grid; the utility projects that the Whitinsville project will cost an average residential Massachusetts customer approximately one cent per month over the 20-year life of the project.

How about economic development through renewable power? The utility says the project created more than 50 green jobs in Massachusetts. For example, the solar panels themselves were manufactured by Evergreen Solar of Marlborough, and other local vendors and contractors were used where possible.

May 27, 2010 - TransCanada sues Massachusetts over local aspect of renewable portfolio standard

Thursday, May 27, 2010

In Massachusetts: TransCanada has sued the Commonwealth (and named officials) over the Green Communities Act. Specifically, TransCanada is asserting that the statute's requirement that utilities enter into long-term contracts to buy power from Massachusetts generators including local solar PV projects is unconstitutional. TransCanada claims that this discrimination against out-of-state renewable energy producers not only violates the Commerce Clause of the US Constitution, but results in higher prices to ratepayers. The New England Power Generators Association agrees that it is illogical to insist that clean energy originate locally, given our regional transmission grid and unpredictable electron flows.

Massachusetts Attorney General Martha Coakley is trying to negotiate a settlement with TransCanada.

Interestingly, TransCanada is challenging the Green Communities Act: the same statutory framework into which the Cape Wind contract with National Grid fits.

Are electrons a fungible commodity? Are the electrons produced by a renewable project inherently more valuable than electrons produced by (for example) coal-fired generation? Even if they are, doesn't the great mixing bowl that is the transmission grid eliminate any uniqueness those renewable electrons had? Is there any real meaning to the kind of financial (contractual) fictions that Consumer A is buying Generator B's renewable electrons?

Weather news: NOAA predicts an "active" to "extremely active" hurricane season this year, with between 14 and 23 named storms forming in the Atlantic Ocean, Caribbean Sea and Gulf of Mexico.

BP's top kill of the Deepwater Horizon oil well appears to have worked.

May 26, 2010 - Lake Erie to host first freshwater offshore wind farm in USA?

Wednesday, May 26, 2010

General Electric announced this week that it has been selected to provide wind turbines for the Lake Erie Energy Development Corp wind project, which is expected to be the first freshwater wind farm in the United States. The Lake Erie project is under development off the shores of Cleveland, Ohio. GE will initially furnish five 4 MW turbines, which should start operations in 2012. Ultimately, the nonprofit development company wants up to 1,000 MW of installed capacity by 2020.

There's a fair bit of excitement about this project. It will be the first freshwater wind farm in the USA. However, Canada is ahead of us, with the Windstream Wolfe Island Shoals project in Lake Ontario. Windstream is farther along in the development process. Last month, it was awarded a contract by the Ontario Power Authority to buy the 300 MW project's output under a feed-in tariff program, with an initial price of 18.5 cents (CAD) per kWh.

May 25, 2010 - New Mills dam in context

Tuesday, May 25, 2010

Yesterday, I wrote about the Reed & Reed-affiliated company Osprey 1 LLC that has asked FERC for preliminary approval to study powering up the New Mills dam on the Cobbosseecontee in Gardiner, Maine. I'm going to use this space to post some of my notes as I dig into this story.

First, some FERC basics. We're talking about docket number P-13709-000, Notice of Preliminary Permit Application Accepted for Filing and Soliciting Comments, Motions to Intervene, and Competing Applications re Osprey I, LLC under P-13709. Here's the original application for preliminary permit and a link to the FERC notice (3 page PDF).

The existing New Mills Dam is currently not in use for hydropower production and has no FERC license. The last FERC license for New Mills Dam was surrendered 5/16/1996.

The New Mills Dam was originally constructed in the 1840s to provide water to an adjacent mill. The dam impounds water including Pleasant Pond, part of the impoundment area of the Dam, which abuts the City of Gardiner and the Towns of West Gardiner, Richmond, and Litchfield. Pleasant Pond was the primary water source for the Gardiner Water District until the 1950s, when the construction of the Maine Turnpike degraded the water quality. The District switched ultimately switched to two groundwater wells.

In 1974 the District obtained the New Mills Dam from the City of Gardiner, which had operated the Dam for nearly a century. The District constructed a hydro-electric facility at the dam in 1982, and sold its power through a contract with Central Maine Power Company from 1983 to 1994.

1994 brought change to the river. That year, CMP bought out the contract and the project's FERC license was surrendered. In 1997, the District initiated an action under the Maine Dam Abandonment Act to abandon the dam.

The dam was the subject of litigation in the late 1990s.

Is this a good site for the restoration of historic hydropower capacity? What forces and factors led to the dam's abandonment in the 1990s? In the ensuing years, have those forces gone away?

May 24, 2010 - new hydro at old dam in Maine?

Monday, May 24, 2010

A quick look today at a situation taking place at the New Mills dam on Cobbosseecontee Stream in Gardiner, Maine. This small, older non-hydro dam is owned by the municipalities of Gardiner, Litchfield and Richmond. The Gardiner Water District also owns a pump station and associated equipment located at the dam. I wrote about repairs to the New Mills dam last month, which were needed due to ice damage from the past season.

Now, a company called Osprey l LLC has filed a petition with the Federal Energy Regulatory Commission seeking a permit to study the feasibility of a hydroelectric project at the dam. Curiously, Osprey's contact information and address in Woolich is congruent with that of Reed & Reed Inc., a general contracting company. Indeed, Osprey has been described as a wholly-owned subsidiary of Phoenix Renewable Energy, which is an affiliate of Reed & Reed.

So what is Osprey proposing? The proposed project would consist of “an existing 12-foot-high, 91-foot-wide concrete dam with a 58-foot-wide spillway; an existing 140-acre reservoir; an existing powerhouse penstock and outlet structure; new turbine generator units with a total installed capacity of 250 kilowatts; a new transmission line connecting to an existing Central Maine Power distribution line located 3,000 feet downstream of the dam; and appurtenant facilities.” Osprey's application suggests that the project could produce an estimated average annual generation of about 1,300 megawatt-hours.

The municipal dam owners considered a power project in the past year, but ultimately decided that the costs were too high.

Downstream from New Mills, Kruger Energy operates a hydroelectric dam, which it acquired along with other hydroelectric facilities of Ridgewood Maine Hydro Partners LP last November.

The applicant's contact information also overlaps that of another application filed with FERC on April 15 to study the feasibility of a 5,000 megawatt-hour hydroelectric project on the Morgan Dam, on the Sebasticook River in Hartland.

Is this the vanguard of a renaissance of small hydro? Historically, many municipalities owned small dams. Will take-overs of suitable sites by private companies be the next wave of small hydro?

May 21, 2010 - offshore energy in Britain and Canada

Friday, May 21, 2010

Following up on my recent posts about Cape Wind and the price ratepayers may pay for its output:

A new report by the Offshore Valuation Group identifies the size of the opportunity for Great Britain to develop its ocean energy resources. The group concluded that harnessing 29% of the practically tappable wind, wave and tidal resources in the UK would displace all of the electricity generated by oil and gas production in the North Sea, and cumulatively over 40 years save 1.1 billion tons of carbon dioxide. OVG identified two possible price tags: £443bn for 29% of the offshore resources, generating £62bn in annual exports; or £993bn for 76% of available resources, generating £164bn. Floating offshore wind turbines have the largest share of the potential, contributing 1,533 terawatt-hours per year.

Meanwhile, BC Hydro has announced that NaiKun Wind's 396 MW offshore wind energy project was no longer under consideration in the province's Clean Power Call. Back in November 2008, NaiKun Wind had submitted a proposal to BC Hydro to buy the power from an offshore wind energy project to be built in the Haida Energy Field in Hecate Strait off British Columbia's northwest coast. NaiKun has an interesting explanation of why it wasn't selected for inclusion in the Clean Power Call: in the end, price.

May 20, 2010: E2tech forum with Michael Stoddard; Ontario offshore power

Thursday, May 20, 2010

Today, a quick note from the Gilsland Farm property of Maine Audubon in Falmouth, Maine. This morning, Preti Flaherty's Climate Strategies Group sponsored an E2Tech forum on energy efficiency, with Efficiency Maine Trust executive director Michael Stoddard as the special guest. Michael gave a good presentation to a full-house audience on Maine's comprehensive energy efficiency efforts, and on his role as executive director in making that happen.

Thanks to E2Tech for throwing another fine event. It was a great opportunity to learn from Michael about state efficiency policy and programs, while meeting up with clients, friends, and interesting new people.

I'm looking forward to the next E2Tech event, a forum on ocean energy development and policy, to be held June 24 in Falmouth. Here's a link to the registration page.

My fellow LinkedIn Energy & Utilities Network member John de Vellis tipped me off to an interesting offshore wind generation project in Ontario, Canada. Last month, Windstream Wolfe Island Shoals Inc. was awarded a contract by the Ontario Power Authority to buy the output of Windstream's 300-megawatt project off-shore in Lake Ontario. Reports suggest the project will cover about 48,000 acres, generally in water between 10 and 20 feet deep.

This project is a bit farther along than Cape Wind. Recall that Cape Wind has struck a deal with the local utility, but that Massachusetts regulators at the DPU still get to review and approve (or deny) the proposal. In Ontario, the Ontario Power Authority has already performed that review, and -- under a different regulatory structure, namely a feed-in tariff program -- approved the contract at 18.5 cents per kWh.

While Ontario's 18.5 cents/kWh is lower than the Cape Wind proposal of 20.7 cents/kWh, what might be even more interesting is the difference between these contract prices and the market price for basic electricity. Ontario's market price is 3.44 cents per kWh. (American readers, how would you like to pay just 3.44 cents/kWh!) We can argue about whether 3.44 cents is "too low" to include environmental costs, but in the end, the Ontario offshore wind will cost over 5x (five times) what basic electricity costs in Ontario. Cape Wind is closer to 2.5x the local cost per kWh.

Has anyone seen an analysis of the increased adoption of renewables and renewable portfolio standards, and its impact on prices? What really is driving price increases, in your views?

May 19, 2010 - Cape Wind rate impacts

Wednesday, May 19, 2010

One thing to keep in mind as we kick around the question of the value of resources like Cape Wind is that -- at least at first -- these more expensive resources will only be one part of the supply mix. According to National Grid, its Massachusetts operations have a historical peak load of 5,067 MWs. The total project size for Cape Wind is about 468 MW, or just about 9% of the peak load. Although ratepayers' exposure is to MWh from the project, the MW capacity figures give approximate values.

Let's do some rough math. Assume the status quo is sourcing 100% of your power from 8 cent/kWh resources. Now, through the proposed contracts, assume that 10% of the power comes from 21 cent/kWh resources. (Again, this is assuming that these ratepayers are exposed to 100% of the Cape Wind power costs -- when in practice National Grid plans to keep only half of the output for itself.) In such a case, the price of power goes to 9.3 cents/kWh -- a 16% increase in total cost.

Adding more data and specificity: National Grid is expecting to average about 90 MW of production, given the fact that the wind isn't always favorable for maximum production. This lowers the rate impact of blending in the power purchase. In fact, looking at even more specific numbers: analysts predict that an average National Grid ratepayer using 500 kWh/month will see a rate hike of $1.59/month.

While the price per kWh seems high, is it more "worth it" given that the price impacts are tempered by being blended into existing resource costs?

May 18, 2010 - Cape Wind wins FAA approval

Tuesday, May 18, 2010

Significant renewable energy projects like the proposed 130-turbine Cape Wind project in Nantucket Sound tend to raise policy questions cutting across a broad variety of fields. At their heart, perhaps all of these issues can be simplified to one basic question: should we (as a governed society) support this project, after weighing and balancing all of its economic, environmental, and social benefits and costs? On the energy cost side, this question plays out as a query whether the significant price premium agreed to by National Grid and Cape Wind Associates is "worth it".

Different bodies apply this same basic question to other fields: for example, are any negative impacts to aviation outweighed by the societal benefits of the development? Apparently the Federal Aviation Administration believes so. The FAA determined yesterday that the Cape Wind project will not significantly interfere with planes or radar -- a so-called "no hazard" determination.

In reaching this finding, the FAA did impose certain conditions. For example, Cape Wind must upgrade its radar system to ensure it can clearly spot planes flying above the wind farm. The FAA is allowing Cape Wind to try a preliminary $1.5 million radar modification that stands a chance of working. As a backup, Cape Wind must put $15 million in escrow to pay for a more comprehensive digital radar system replacement.

Although the FAA's finding is one of the last remaining permitting hurdles for the innovative offshore wind project, this is not the first time the FAA has performed this evaluation of the project. In fact, before yesterday's finding, the FAA had already reviewed the project three other times. (FAA regulations provide that each determination expires after 18 months.) Interestingly, the FAA's first two determinations were of "no hazard". On the third review, the FAA found that the wind farm was a "presumed hazard" without the radar mitigation measures that will now be required. With Cape Wind having agreed to make the upgrades -- certainly easier now that it has an offtake contract proposed or in place for 100% of the project's energy generation -- this fourth review resulted in the "no hazard" determination that Cape Wind needed.

It can be hard to develop a "grand unified theory of everything", that holy grail of theoretical physicists trying to explain the world around us. When it comes to the policy questions behind energy choices and investment in new projects, a rough draft of that grand unified theory might be: "should we support this project, after weighing and balancing all of its economic, environmental, and social benefits and costs?" To derive the answer, society looks at each of the aspects of the project -- energy costs, aviation, scenic impacts, safety -- and tries to come up with a balanced answer. But can we get it right by taking discrete issue-oriented approval processes, adding them up, and hoping that the summation results in ultimate project approval?

May 17, 2010 - Cape Wind inks another contract

Monday, May 17, 2010

The next chapter in the continuing story of Cape Wind: a mirror contract, and questions about the linkage between renewable portfolio standards and power pricing.

National Grid has signed a second contract with Cape Wind, this time to enable National Grid to assign the remaining 50% of the project's output to another wholesale customer -- a "mirror contract" for National Grid's primary $3 billion, 15-year contract to buy 50 percent of the electricity that will be produced by Cape Wind. This would leave National Grid with rights to the entire output of the Cape Wind project.

Mirror contracts are relatively common in the industry. As a financing tool, them allow the project developer to demonstrate to banks and capital sources that they have a guaranteed offtake for 100% of the project's production. This makes banks more willing to finance the project.

So who did National Grid have in mind as the other wholesale purchaser? If you know the regional market, Boston-based utility NStar jumps out as one potential purchaser, although there are of course other possibilities. In fact, National Grid itself apparently has the rights under the mirror contract to retain 100% of the power for itself -- although doing so magnifies its ratepayers' exposure to the elevated costs, triggering a tough burden on National Grid to demonstrate that this is just and reasonable and in the public interest.

Some commenters are noting that the Cape Wind was made possible by the Commonwealth's Green Communities Act and related legislation establishing a renewable portfolio standard (or renewable electricity standard) for the largest investor-owned utilities. But clearly there's a huge price premium figured in over the existing mix of resources -- about 8 cents for power today, versus 20.7 cents and rising for the Cape Wind output. Is a renewable portfolio standard enough to explain the acceptability of this significant price increase? Other states like Maine have had renewable portfolio standards for years, and although some renewables might be priced higher, there has been enough qualified capacity coming online at near-market costs that Maine has not seen much activity from significantly above-market contracts.

May 11, 2010: more Cape Wind analysis

Tuesday, May 11, 2010

Continuing the analysis from yesterday: Is Cape Wind worth 20.7 cents per kWh? Massachusetts Governor Deval Patrick thinks so. In response to the questioning about whether ratepayers should pay for the project's renewable output at a significant price premium, Governor Patrick has publicly supported the proposed contract between National Grid and the Cape Wind project.

Governor Patrick is touting the value of the contract (or the project?) in securing a "stable, renewable source of energy" as crucial to the state's future. He also notes the value of the project in offsetting consumer price volatility driven by natural gas price spikes.

Reading between the lines, the Governor's message may be that although buying Cape Wind increases costs, it is worth it -- the benefits outweigh the costs. Recall that the contract locks customers in for 15 years at prices starting at 20.7 cents and escalating at 3% annually, adding an estimated $1.50 to the average residential customer's monthly electricity bill and more to industrials' bills.

Cape Wind's regulatory situation illustrates one issue that crops up with higher-priced renewable contracts: although the price paid per kWh under the contract might be high, the expensive renewables make up a fraction of a customer's total power purchase. As long as these expensive contracts are limited to being a small portion of the portfolio of power resources, there is an argument that the benefits are worth it. But what happens as the portion of the power portfolio sourced from expensive renewables increases? At what point do we decide what price impacts are too much?

May 10, 2010: Cape Wind roundup

Monday, May 10, 2010

Are you following the Cape Wind project in Nantucket Sound as it moves forward? Cape Wind is on track to be the nation's groundbreaking (oceanbreaking?) first offshore wind farm. Here's a quick scorecard of some key figures:

$1,000,000,000.00: yes, one billion dollars. That's how much the project is projected to cost.
130 turbines: projected to generate a maximum electric output of 468 MW and an average of 182 MW
25 square miles: the footprint of the project in Nantucket Sound
400 feet: the approximate height of each tower
9 years: how long the project has been studied -- and debated
700,000 tons: estimated annual reduction in carbon dioxide emissions by displacing fossil-fueled units

And a few numbers for consumers to focus on:
20.7 cents: the initial price per kWh, rising 3.5% a year for the 15-year life of the contract
$1.59: the monthly increase in the average residential customer’s monthly bill

Here are good New York Times and Boston Globe stories on the path forward for the project. As I reported last week, the next step is winning approval from the Massachusetts Department of Public Utilities. I have practiced before the DPU, and am confident that the Department will thoroughly evaluate whether the proposed contract meets the statutory standards and is in the public interest.

5/7/10: Cape Wind at 20.7 cents per kWh?

Friday, May 7, 2010

National Grid, one of the largest public utilities serving Massachusetts customers, has agreed to buy electricity from the 130-turbine Cape Wind near-shore wind project in Nantucket Sound. The Boston Herald reports that National Grid has signed a 15-year contract to pay 20.7 cents per kWh -- more than twice the typical market rate for power in New England. The contract provides that the price will escalate 3.5% annually.

As the offshore (or near-shore) wind market becomes a reality, I'm watching with interest (watching might be too passive a word; perhaps "getting involved" makes more sense) as the market seeks price equilibrium. Remember that just over a month ago, the Rhode Island PUC rejected a proposed contract between NGrid and the proposed Deepwater Wind project off Block Island, largely on the grounds that the contract was too expensive. Admittedly, the proposed Deepwater contract had a higher price tag: 24.4 cents per kWh, escalating 3.5% annually for 20 years to a final price of 48.6 cents per kWh. Even that higher price, which NGrid had asked the PUC to approve, was lower than the original Deepwater proposal that NGrid rejected in October 2009.

It's clear that developing offshore wind still costs significantly more than traditional energy resources, at least under current regulatory regimes and fuel costs. (In fact, offshore wind costs significantly more than some other renewable resources, like hydro and onshore wind.) Just because something costs more doesn't mean that it isn't a good deal, or that customers shouldn't have to pay for it. But on the policy level, how will we decide how much is too much?


Wednesday, May 5, 2010

A quick focus on stream erosion today. In Norridgewock, Maine, the Sandy River is encroaching on the dirt Sandy River Road. The town has closed 200 feet of that road, where a 50-foot crack wanders five to ten feet from the edge. Perhaps most affected by the erosion are the people at Hilton Farm, who now have to drive 22 miles round-trip out of their way to access the southern half of the farm - a detour that the farmers estimate costs between $50 and $100 per trip. Federal regulations prohibit reconstruction of the road until after the endangered Atlantic salmon smolting season, which ends July 1.

To the east, on the Sebasticook River where the Fort Halifax dam was removed, the historic Fort Hill Cemetery continues to slide into the river. Resident Mary Ellen Fletcher is quoted as saying, "Now, even the dead cannot rest in peace."


Monday, May 3, 2010

A quick pointer today to a Kennebec Journal article on the gubernatorial candidates and their energy policies.