Monhegan island electricity grid updates

Residents of the Maine island of Monhegan will soon benefit from upgraded electricity infrastructure, thanks to a grant from the U.S. Department of Agriculture.

Supplying electricity and other forms of energy on remote islands offers a unique set of challenges.  For islands too far from the mainland grid to be connected by undersea transmission cables, island utilities must both produce the power and distribute it to homes and businesses.  On small, remote islands, the lack of economies of scale can lead to very high electricity costs.  About 12 miles offshore, Monhegan one of those islands.  In recent years, customers served by the Monhegan Plantation Power District have paid electricity prices about 5 times higher than those on the mainland.

Propane tanks sit by the dock on Monhegan Island, Maine.

Yesterday the U.S. Department of Agriculture announced that the Monhegan Plantation Power District has won $420,154 from the USDA's High Energy Cost Grant Program.  That program provides competitively-awarded grants to improve and provide energy generation, transmission and distribution facilities serving communities with average home energy costs exceeding 275% of the national average. Grant funds may be used for on-grid and off-grid renewable energy projects, energy efficiency and energy conservation projects serving eligible communities.

On Monhegan, the grant will be used to replace the current switchgear, add a smaller, 40 kW generator to the power station's fleet, and add a 13 kW solar photovoltaic array to the power station's roof.  Currently, electricity is provided to about 100 accounts on Monhegan from a 300 kW diesel generator.  Demand for electricity on Monhegan varies seasonally, with many fewer consumers on the island during the winter months.  The new 40 kW generator and solar array are expected to be able to cover the winter load more efficiently than using the existing larger generator.

While Monhegan typifies the remote, inhabited small island, other islands face similar energy challenges.  Will Monhegan serve as an example for other island communities?

Maine ocean energy roadmaps

A coalition of Maine trade groups has released a pair of comprehensive permitting and regulatory road maps for developers of offshore wind, wave and tidal projects in Maine. The Maine Composites Alliance, Maine Wind Industry Initiative, and Environmental and Energy Technology Council of Maine (E2Tech) prepared these road maps to help steer potential developers and interested parties through federal, state and local laws and regulations applicable for ocean energy projects.

The documents can be obtained here:

• Permitting and Leasing for Maine Marine Hydrokinetic (MHK) Power Projects (14-megabyte PDF)
• Permitting and Leasing for Maine Offshore Wind Energy Projects (11-megabyte PDF)

Maine Composites Alliance is an alliance of composite businesses that work together to promote Maine's leadership in the international composites industry.  Maine Wind Industry Initiative is a collaborative created to organize Maine wind industry interests, link opportunities to Maine companies, relate industry needs to the state and federal government and act as a communication hub for Maine-based industrial partners in the wind energy industry. E2Tech seeks to build and expand the State's environmental, energy and clean technology sectors through networking and educational events, business development and sustainable job growth projects, and research, development and commercialization initiatives.

Waters off Maine are considered to be home to significant renewable energy resource potential.  Ocean Renewable Power Company has developed a marine hydrokinetic project off Eastport, and Statoil has proposed an offshore wind project off the Maine coast.  The roadmaps released today are designed to illustrate the path forward for offshore wind or MHK projects.  Developing renewable ocean energy projects requires developers to compile permits and approvals under over a dozen federal and state statutes.  Will the current regulatory structures lead to the development of more ocean energy projects off Maine and other U.S. coasts?

New England energy efficiency grows, saves

Energy efficiency in New England has saved consumers significant money in recent years, and is changing the energy landscape in the northeastern U.S.  At a briefing yesterday, the region's electric grid operator announced that continued investment in electric energy efficiency has changed its load projections from modest growth to a flat forecast through 2021. 

ISO New England manages the energy markets and transmission grid in the six New England states.  ISO New England plans for future electricity needs, and develops forecasts for electricity consumption for the next decade.  In recent years, the adoption of energy efficiency measures has reduced society's demand for electricity.  From 2008 to 2011 New England spent $1.2 billion on energy efficiency through programs like Efficiency Maine and Mass Save.  ISO New England said that it expects spending on energy efficiency is expected to increase to $5.7 billion from 2015 to 2021.  As a result, electricity use previously projected to rise by 0.9 percent annually between 2012 and 2021 will instead be flat.

Customers win through energy efficiency in several ways.  Direct savings include the money they would have spent on electricity but for their efficiency increases.  The overall wholesale price of energy and capacity can also be reduced through greater adoption of energy efficiency.  Efficiency can also eliminate the need for some transmission upgrades; according to ISO New England, 10 transmission upgrades that earlier studies showed were needed to ensure reliability can be deferred until after 2020, saving consumers an estimated $260 million more.

Maine offshore wind projects win federal grants

The U.S. Department of Energy has announced an award of funding to seven offshore wind Advanced Technology Demonstration projects totaling $168 million over six years.  These projects are designed to achieve large cost reductions over existing offshore wind technologies and develop viable and reliable options for the United States.  Waters off Maine will be home to two of the projects:

• Statoil North America of Stamford, Connecticut plans to deploy four 3-megawatt wind turbines on floating spar buoy structures in the Gulf of Maine off Boothbay Harbor at a water depth of approximately 460 feet. These spar buoys will be assembled in harbor to reduce installation costs and then towed to the installation site to access the Gulf of Maine's extensive deep water offshore wind resources.
  
  
• The University of Maine, based in Orono, plans to install a pilot floating offshore wind farm off Monhegan Island.  This project will feature two 6-megawatt direct-drive turbines on concrete semi-submersible foundations. These concrete foundations could result in improvements in commercial-scale production and provide offshore wind projects with a cost-effective alternative to traditional steel foundations.
  

Each project will receive up to $4 million to complete the engineering, site evaluation, and planning phase of their project.  Five other projects were also selected for this first phase:

• Baryonyx Corporation, based in Austin, Texas, plans to install three 6-megawatt direct-drive wind turbines in state waters near Port Isabel, Texas. The project will demonstrate an advanced jacket foundation design and integrate lessons learned from the oil and gas sector on hurricane-resistant facility design, installation procedures, and personnel safety.
  
  
• Fishermen's Atlantic City Windfarm plans to install up to six direct-drive turbines in state waters three miles off the coast of Atlantic City, New Jersey. The project will result in an advanced bottom-mounted foundation design and innovative installation procedures to mitigate potential environmental impacts. The company expects this project to achieve commercial operation by 2015.
  
  
• Lake Erie Development Corporation, a regional public-private partnership based in Cleveland, Ohio, plans to install nine 3-megawatt direct-drive wind turbines on "ice breaker" monopile foundations designed to reduce ice loading. The project will be installed on Lake Erie, seven miles off the coast of Cleveland.
  
  
• Seattle, Washington-based Principle Power plans to install five semi-submersible floating foundations outfitted with 6-megawatt direct-drive offshore wind turbines. The project will be sited in deep water 10 to 15 miles from Coos Bay, Oregon. Principle Power's semi-submersible foundations will be assembled near the project site in Oregon, helping to reduce installation costs. 


• Dominion Virginia Power of Richmond plans to design, develop, and install two 6-megawatt direct-drive turbines off the coast of Virginia Beach on innovative "twisted jacket" foundations that offer the strength of traditional jacket or space-frame structures but use substantially less steel.
  

After the first phase, the DOE Wind Program will select up to three of these projects to advance the follow-on design, fabrication, and deployment phases to achieve commercial operation by 2017. These projects will be eligible for up to $47 million over four years, subject to congressional appropriations.

Maine utility launches time-of-use rates

A Maine electric utility has launched a program to offer residential consumers rates that vary depending on whether the consumption occurs during times of peak demand on the electric grid.  Central Maine Power Company's residential time-of-use rates are designed to encourage consumers to shift their use of electricity-intensive equipment to off-peak hours, generally between 8:00 p.m. and 7:00 a.m. and on weekends. How many customers will choose this option?  What effects will it have, both for the consumers opting in and for society as a whole?

Traditionally, electric ratepayers pay the same price for every kilowatt-hour of energy they consume, without regard to the time of consumption or to conditions on the grid.  But the cost of producing a given kilowatt-hour of electricity depends on factors including the portfolio of generators operating at the time, as well as on the instantaneous demand for electricity in the overall regional market.  Because they are not directly exposed to the real-time price of power, consumers individually and collectively may not make efficiency choices about how much power they consume, and when they consume it.  For example, energy prices are typically lower at night, when demand is reduced, but consumers have not traditionally had any incentive to shift their consumption to lower-priced nighttime hours.  Some utilities have offered industrial and commercial businesses time-of-use rates to encourage efficiency, but most residential ratepayers have not had this option in recent years.

Central Maine Power now offers residential consumers the option to choose time-of-use rates.  Prices during peak hours will be about 15 percent higher than under the default rate schedule, with off-peak prices about 20 percent below the default rates.  The structure offers the opportunity for consumers to choose to shift heavy-consuming applications like air conditioning and heating to off-peak hours.  This could save these consumers money - but it would require them to modify their behavior, invest in new "smart" technology, or both.  Will consumers find the opportunity for savings to be worth these changes?

The current enrollment window is open through January 31, 2013.

Civil engineers grade Maine dams D+

A group of civil engineers have released a report card for Maine infrastructure, giving Maine a C- overall and giving Maine's dams a D+.

ASCE's 2012 Report Card for Maine's Infrastructure (71-page PDF) comes four years after its first Report Card was issued in 2008.  The Report Card covers infrastructure including roads, bridges, railroads, ports and waterways, passenger transportation, airports, dams, municipal wastewater, municipal drinking water, contaminated site remediation, solid waste, schools, energy, and state parks.  It was prepared by a team of nineteen ASCE infrastructure leaders who analyzed issues including existing conditions, capacity, operations & maintenance or deferred maintenance, public safety & security, risk and consequences of failure, and current and projected levels of funding.

As the report notes, Maine has over a 1,000 dams, mostly privately owned.  153 of Maine's dams are classified as high- or significant-hazard-potential.  Dam safety is an important issue, both for dam owners and from a public policy perspective.  When dams fail, they can pose risks to people, communities, properties, and the environment.  According to the report, 131 federally regulated dams are in good repair, but most non-hydropower dams are subject only to state regulation.  Most of Maine’s dams are low-hazard potential, but are more than 50 years old.  Moreover, most of these dams do not generate revenues, making it harder to fund their upkeep even though they may provide values like maintaining lake environments for people and wildlife.

The ASCE report finds that Maine continues to fall well below the needed funding for dam safety inspectors and ranks near the bottom nationally for dam safety program funding.  The report critiques Maine’s Dam Safety Program, which spends much less than the other Northern New England states, is understaffed and has no enforcement division.

Will the ASCE report card lead to changes in how Maine regulates dams?  What funding sources are available to help private dam owners maintain their facilities in safe condition?  Will the state respond by revamping its dam safety program?

IRS reverses tax ruling on wind PPAs

The U.S. Internal Revenue Service has reversed its previous position on how it will treat power purchase agreements from wind energy facilities. 

Earlier this year, IRS issued a private letter ruling addressing a tax issue arising when a taxpayer purchases wind energy facilities operating under facility-specific power purchase agreements.  Under Section 167 of the Internal Revenue Code, which establishes how depreciation works under tax law, the computation of an adjusted basis for an asset is essential to calculating tax values and liabilities.  What happens when a taxpayer purchases a wind project that operates under one or more PPAs?  Should the purchase price affect the basis of the facilities, or should part of the purchase price be allocated to the PPAs?

In January 2012, in Private Letter Ruling 201214007, the IRS concluded that the purchase price should be included in the adjusted basis of the facilities, rather than allocating any portion of it to the PPAs.  Last week, the IRS issued Private Letter Ruling 201249013, which revokes its previous private letter ruling.  According to the new ruling, "the Service has determined that Private Letter Ruling 201214007 is not in accord with the current views of the Service."  Rather, the IRS now holds that the portion of the purchase price paid by the taxpayer that is attributable to the PPAs is to be allocated to the PPAs and not to the wind energy facilities.

While private letter rulings are directed to the specific taxpayers involved and may have limited precedential value, the ruling indicates a shift in the IRS's thinking about the tax treatment of transactions involving operating renewable energy generation projects.