Solar energy led new installations in October 2013

Monday, November 25, 2013

Solar-powered projects led new electric generation capacity installed in October 2013.  According to the Federal Energy Regulatory Commission's October 2013 Energy Infrastructure Update, most of the electric generation placed in service in October relies on solar energy technologies.  Developers placed 504 megawatts of solar capacity online in October, out of 699 megawatts of total new capacity for the month.  Solar also led the month in terms of the number of projects installed, accounting for 12 of 21 projects.

Solar photovoltaic panels line the roof of the visitor center at the Parker River National Wildlife Refuge in Massachusetts.

The solar energy projects placed in service last month vary widely in scale and in technology.  The largest, Abengoa SA's Solana Generating Station in Arizona, generates up to 280 megawatts of power using a thermal concentrating solar power technology.  2,700 parabolic trough mirrors focus the sun's rays on a pipe containing a synthetic oil.  This heat transfer fluid can reach 735 degrees Fahrenheit, and is sent to boilers where it produces steam from water.  The steam turns turbines attached to generators, much as in a conventional thermal power plant.  The Solana plant also features energy storage in the form of molten salt tanks that can enable it to generate electricity for up to 6 hours after sunset.

On the other end of the spectrum, Constellation Solar New York LLC placed its 2 MW Owens Corning Delmar Solar photovoltaic project online.  The project, located at an Owens Corning factory in Delmar, New York, consists of about 9,000 ground-mounted, photovoltaic panels covering over 9 acres.  Power produced by the project is sold to Owens Corning under a long-term power purchase agreement for use at the thermal and acoustical insulation factory; the project is expected to cover about 6 percent of the plant's annual electricity need.

While the use of solar energy is increasing rapidly, it remains a relatively small component of the nation's overall energy mix.  Solar powered projects account for 6.79 gigawatts of capacity, just 0.59% of the 1,158 gigawatts of existing electric generation capacity nationwide.  Nevertheless, the relatively small market penetration of solar technologies suggests that rapid growth may continue for the near term.

Federal energy enforcement: $304 million in penalties in 2013

Friday, November 22, 2013

The Federal Energy Regulatory Commission has released its report on its enforcement activities in fiscal year 2013.  The FERC's 2013 Report on Enforcement (69-page PDF) gives the public insight into how the Commission's Office of Enforcement operates.  The report also provides key statistics on the Commission's 2013 enforcement actions, which led to over $304 million in civil penalties and disgorgement of almost $141 million in unjust profits.

In recent years, the Commission has increased its market surveillance and enforcement of federal energy law.  The Commission has explained that conduct involving fraud and market manipulation poses a significant threat to energy markets, and that this in turn harms consumers who are exposed to losses from intentional misconduct.  These concerns, coupled with increased enforcement powers granted in the Energy Policy Act of 2005, have led the Commission to ramp up its enforcement efforts.  Today, the Commission's Office of Enforcement is now structured around four divisions: Investigations, Audits and Accounting, Energy Market Oversight, and Analytics and Surveillance.  These divisions are designed to identify and prosecute violations of federal energy laws and regulations.

The enforcement report describes the Commission's 2013 activity, which includes the largest civil penalty ever assessed by the Commission.  In that case, the Commission found that Barclays Bank PLC and four traders violated the Commission’s rule against market manipulation.  As a result, the Commission assessed civil penalties of $435 million against Barclays and $18 million against the traders, and directed the company to disgorge $34.9 million plus interest in unjust profits.  That case is now before the U.S. District Court for the Eastern District of California.

The report also describes 29 financial and operational audits of public utilities and natural gas pipelines conducted in fiscal 2013.  According to the report, these audits resulted in 360 recommendations for corrective action, and directed the targeted companies to pay $15.4 million in refunds. Other recommendations directed improvements to companies’ internal processes and procedures, enhancements to the accuracy and transparency of reports and web sites, and more efficient and cost-effective operations.

The Commission announced that it does not intend to change its enforcement priorities for 2014.  As described in the report, the Commission will continue to target fraud and manipulation, serious violations of mandatory reliability standards, anticompetitive conduct, and conduct that threatens the transparency of regulated markets.

New England Clean Power Link proposed

Tuesday, November 19, 2013

A developer of electric transmission lines has proposed a new line that would connect New England to Quebec.  The so-called New England Clean Power Link would run about 150 miles from the U.S.-Canadian border to Ludlow, Vermont.  While the line shares some features with other proposed ties to the Canadian power grid -- including its development team -- the New England Clean Power Link differs from prior proposals in several regards.

Demand for electricity in the northeastern United States, and in particular for renewable power, has led to interest in developing several transmission lines to Canada.  Provincial crown corporation Hydro-Quebec has many large hydroelectric dams, and continues to develop Quebec's rivers for power production.  Meanwhile, Newfoundland utility Nalcor is developing gigawatt-scale hydropower on the Churchill River in Labrador, with aims to export the power to eastern Canada and the U.S.

This relative surplus of Canadian hydropower has led developers to propose transmission lines connecting Quebec resources to New England consumers.  These lines include the Champlain-Hudson Power Express from Canada to New York City, and the Northern Pass from Canada into New Hampshire.

The $1.2 billion Clean Power Link would have a capacity of 1,000 megawatts, roughly equal to the size of a nuclear power plant.  Like previous proposals, the newly-proposed line is motivated by the perceived opportunity to sell Canadian power in New England.  The Clean Power Link also shares features in common with other proposals, in that it would be a high-voltage direct current or HVDC line.  Notably, it would also be developed and financed by TDI New England, a Blackstone Group subsidiary led by the team behind the Champlain-Hudson Power Express.

Like that line, it would run about 100 miles under Vermont's Lake Champlain.  South of the lake, the Clean Power Link proposal features lines buried underground.  This contrasts with the Northern Pass, whose traditional wires-on-towers architecture has drawn significant opposition in New Hampshire.

The Clean Power Link faces a regulatory process including environmental and energy permitting, and is also dependent on the market forces that motivated its proposal.  It is unclear whether any of the proposed transmission lines to Canada will actually be built, let alone which one.  For now, TDI aims to build the line and place it in service by 2019.

Google invests in solar energy projects

Monday, November 18, 2013

Google has announced an investment in six solar photovoltaic projects to its portfolio.  The projects, located in California and Arizona, have a combined electric generating capacity of 106 megawatts.  This deal illustrates the trend of renewable energy investments by data centers and other tech companies.

The projects are under development by Recurrent Energy.  Five are located in Southern California, while the sixth is in Arizona.  Google and investment firm KKR invested $400 million in the projects; Google's share is reportedly $80 million.  The partners will sell the power produced by the facilities to local utilities including Southern California Edison.

Google announced that this represents its fourteenth investment in renewable energy since 2011.  In 2010, the Federal Energy Regulatory Commission granted market-based rate authority to Google subsidiary Google Energy LLC, enabling it to sell power at wholesale.  Google has since entered into long-term agreements to purchase power from wind farms and other renewable generators.

Other tech companies are pursuing similar strategies.  Earlier this month Microsoft announced a deal to purchase energy produced by a Texas wind farm for its data center in San Antonio.  In September, eBay received market-based rate authorization from the Federal Energy Regulatory Commission, allowing it to sell surplus power from its generators to the grid.

For consumers like Google with significant demand for power, developing on-site electric generation or entering into a long-term power purchase agreement can be cost-effective, either by reducing the cost of energy or by reducing its exposure to price volatility.  Investments in renewable energy can also position companies for improved sustainability and "green" their public images.  For these reasons, the trend of tech company investment in renewable energy infrastructure will likely continue for the foreseeable future.

Voluntary renewable power markets small but growing

Friday, November 15, 2013

Electricity generated from renewable energy resources continues to grow its share of the U.S. market, according to a recent U.S. governmental report.  While most renewable energy sales are motivated by renewable portfolio standards -- state laws requiring utilities to source specified amounts of energy from renewable resources -- a small but growing amount of electricity is sold in voluntary green power markets.

Consumer demand for renewable-sourced electricity has led to voluntary markets in which consumers and institutions voluntarily purchase renewable energy to meet their electricity needs.  These markets include green power offers, competitive supplies, and over-the-counter renewable energy certificate (REC) sales.  According to the National Renewable Energy Laboratory's report, Status and Trends in the U.S. Voluntary Green Power Market, in 2012 voluntary retail sales of renewable energy represented approximately 1.3% of total U.S. electricity sales, or about 48 million megawatt-hours.  According to NREL, these sales represent the power produced by about 17,000 megawatts of installed renewable capacity.

While the voluntary renewable electricity market remains relatively small in absolute terms, it is growing rapidly.  NREL's report found that from 2010 to 2012, total green power market sales increased by 36%, for a compound annual growth rate of 1%.

In 2012, the resource mix supplying renewable energy to the voluntary renewable market was dominated by wind energy, at 80.1% of total green power sales.  Other resources in the mix include landfill gas and biomass (12.8%), hydropower (6.2%), solar (0.6%), and geothermal (0.3%). Like the entire voluntary market itself, solar power is a small but growing segment, experiencing a tripling of market share between 2010 and 2012.

For now, despite its recent growth, voluntary retail sales of renewable energy represent a small fraction of power sold.  The vast bulk of renewable energy is sold in compliance markets, established pursuant to state renewable portfolio standards or targets.  Will voluntary markets continue to grow?  How will proposals to increase state standards affect the voluntary markets?

Tidal power past, present, and future at Tide Mill Institute 2013

Thursday, November 14, 2013

The Tide Mill Institute held its ninth annual conference this past Friday and Saturday.  About 60 people interested in the past, present, and future of tidal energy gathered at the Topsfield Historical Society's Gould Barn in Massachusetts.  The audience included developers of recreated historic tide mills and modern tidal power projects, inventors of tidal turbine technology, academics, state legislators, historians, architects, and other enthusiasts of tidal power.

Tide Mill Institute's John Goff speaks about historic tide mills in Salem, Massachusetts.
Ocean Renewable Power Company's president and CEO, Chris Sauer, gave the keynote presentation on ORPC's efforts and success in developing modern hydrokinetic tidal power plants in the Gulf of Maine and elsewhere.  Chris described the research and development process that led to ORPC's Turbine Generator Unit or TGU.  He also described the engineering, regulatory, and commercial challenges of developing tidal power plants today, as well as ORPC's approach to overcoming these challenges.

Other presentations included: Professor Kerr Canning's exposition of a tide mill site he discovered on the Apple River in Nova Scotia; Professor Robert Gordon's look at tide mill mechanics at sites in York, Maine; a review of tide mill history on the Gowanus Canal in Brooklyn, New York, by Angela Kramer of the Brooklyn Historical Society and Proteus Gowanus; and a survey by representatives of local historical societies of tide mills on the North Shore of Massachusetts.

Tide Mill Institute members and attendees also enjoyed displays on historic and modern tide power projects, and informal discussions of archaeological discoveries and modern developments. 

The Tide Mill Institute will hold its 10th annual conference in 2014.

Japan's floating offshore wind turbines

Wednesday, November 13, 2013

A recently-installed floating wind turbine off the Japanese coast marks the second operating floating project in Asia.  Located about 12 miles off the coast of the site of the 2011 Fukushima nuclear power disaster, the government-funded project is being developed by a consortium led by Marubeni Corp.  So far, it consists of a single 2-megawatt Hitachi turbine coupled with a floating substation, with near-term plans to add two 7-megawatt Mitsubishi Heavy Industries Ltd. turbines, and a longer-term vision of installing 1,000 megawatts of capacity.

The Fukushima project follows a 2-megawatt floating offshore wind project installed off Nagasaki.  The Nagasaki project is located about 1 kilometer off the island of Kabashima, a 9-sq.-km island with some 110 households, and followed a 100-kilowatt test project deployed in 2012.

Japan's push for offshore wind development is motivated in large part by the Fukushima nuclear disaster.  Before 2011, nuclear power provided about 30% of Japan's electricity, but all 54 of Japan's nuclear reactors were shut down or inoperable after the disaster.

As an island nation with extensive coastal resources and little if any native fossil fuels, offshore wind may be a natural fit for Japan.  Relatively deep waters surrounding Japan make seabed-mounted towers impractical, so floating platforms may enable greater use of renewable wind energy.  The floating pilot projects off Nagasaki and Fukushima are designed in part to test different technologies, and may help reduce the costs of future projects.

Under the Japanese approach, each of these projects is funded by a separate ministry: the Fukushima project is supported by the Ministry of Economy, Trade and Industry, while the Nagasaki project is funded chiefly by the Environment Ministry.

Will Japan continue to develop its deepwater offshore wind resources?  Will floating platforms and turbines play a significant role in powering Japanese society?  Will the pilot projects lead to engineering and manufacturing knowledge that could place Japan at the forefront of the growing deepwater offshore wind industry?

Massachusetts to develop wind energy siting guidance

Tuesday, November 12, 2013

As interest continues to grow in the generation electricity from wind energy, the siting of wind projects is an important issue.  While producing power from wind energy avoids the use of fossil fuel along with the emission of carbon dioxide and other pollutants, society has an interest in ensuring that wind projects are developed responsibly and in appropriate locations.  Regulation of sites for wind energy development generally occurs at the state and local levels, and some observers - both wind developers and opponents of specific wind projects - have complained of bad results from a patchwork of regulations, some of which are not based on good science.

Wind turbines in Ipswich, MA, visible across Plum Island Sound from the Parker River National Wildlife Refuge.

In Massachusetts, the state Department of Public Utilities has launched an initiative to remedy this defect.  On October 31, 2013, the Department opened an investgation into best practices for the siting of land-based wind energy facilities.  According to the Department's notice:
The investigation will result in the development of wind energy facility siting guidance based on sound scientific, technical, and policy information. Specifically, the Department will examine the following topics related to land-based wind energy facilities: design, environmental and human health, safety, construction impacts, socio-economic impacts, decommissioning, and the review process for wind projects.
The Department has docketed this case as D.P.U. 13-165, Investigation into Best Practices for Siting of Land-Based Wind Energy Facilities, and has solicited public comment by December 6. Following receipt and review of the comments, the Department anticipates holding public hearings beginning in January.

The guidelines developed through this process will shape the siting and development of land-based wind projects in Massachusetts.  Massachusetts has a strong commitment to renewable energy, as evidenced in the Green Commnities Act, its renewable portfolio standard, and in public sentiment.  That said, to date most wind power consumed in Massachusetts comes in the form of renewable energy certificates representing power generated from wind facilities in Maine and other states, largely due to the relative difficulty of siting a wind energy project in Massachusetts.  Will this process lead to more wind energy development in Massachusetts?


Yellowstone park proposes utility upgrades

Friday, November 8, 2013

The U.S. National Park Service manages over 84 million acres of land for both conservation and visitor use.  For wilderness parks, these joint objectives lead to the challenge of providing park facilities with electricity despite their remote location.  The Park Service has launched energy efficiency and sustainability programs, but many visitor and administrative facilities still need electricity for safety and comfort.  How should the Park Service balance conservation and development?

Old Faithful geyser erupts in Yellowstone National Park.

Yellowstone National Park, the nation's first park, highlights the difficulty.  Most facilities in the park receive electricity from transmission and distribution lines owned by utility NorthWestern Energy, but the park's rugged environment, challenging climate, and relatively old electrical infrastrucutre lead to frequent power outages - over 250 in 2012.  Unlike much of the electric grid outside the park, facilities in Yellowstone lack modern communication infrastructure - a Supervisory Control and Data Acquisition or SCADA system - that would let the utility diagnose and correct the cause of power outages from the utility's central offices in Montana.

As a result, Yellowstone and NorthWestern Energy have proposed to update the park's electrical distribution system.  Proposed upgrades include an automated, remote monitoring and control system, the installation of equipment buildings, back-up power generators and propane fuel tanks.  The proposed communication system would require the construction of seven towers for radio equipment within the park, generally located at existing electrical substation sites.

Under the National Environmental Policy Act, the Park Service cannot approve the plan without conducting an environmental assessment of the impacts of the proposed development.  The Park Service has released its Environmental Assessment (10.5 megabyte PDF), which is open for public comment until December 6.

The use of national park lands for energy infrastructure can be controversial due to differing philosophies on the level of development desirable in parks.  At the same time, the Park Service notes that the Yellowstone outages have had negative effects on park operations and visitor experience, creating health and safety concerns and lost revenue for concessioners.  How will this balance play out in Yellowstone?

Tide Mill Institute to hold conference November 8-9, 2013

Wednesday, November 6, 2013

The Tide Mill Institute will hold its 9th annual conference this week in Topsfield, Massachusetts.  The event, to be held at the Topsfield Historical Society's Gould Barn on November 8 and 9, brings together people interested in the past, present, and future of tidal energy.

Tidal energy has been used to produce useful power since at least 619, based on archaeological finds at the site of Nendrum Monastery on an island off Northern Ireland.  Tide mills came to the New World along with early European settlers, who captured the energy embodied in the rise and fall of tides and put it to use powering grist mills, lumber mills, and other industries.  According to a 1979 paper, "Early Tide Mills: Some Problems", at one point over 300 tide mills operated in North America.  As their functionality was supplanted by steam engines, electricity, and internal combustion energy, much of society's historic use of tidal energy has been forgotten.

Meanwhile, people still look to the tides to provide useful power.  The Canadian province of Nova Scotia has been home to a 20 megawatt tidal power plant since 1984, and is promoting even more innovative uses of tidal energy resources through incentive programs and policies.  In the United States, the Ocean Renewable Power Company (ORPC) has developed the nation's first major grid-tied tidal electric generator, and has ambitious plans to bring more tidal and hydrokinetic projects online around the country.

This week's Tide Mill Institute event brings these themes together into a continuous narrative, from past through the present to the future.  The Tide Mill Institute's mission is:
  • to advance appreciation of the American and international heritage of tide mill technology;
  • to encourage research into the location and history of tide mill sites;
  • to serve as a repository for tide mill data for students, scholars, engineers and the general public and to support and expand the community of these tide mill stakeholders; and 
  • to promote appropriate re-uses of old tide-mill sites and the development of the use of tides as an energy source. 

The 2013 conference kicks off Friday night with an informal reception, followed by a symposium and dialogues Saturday from 8 AM through 3:30 PM.

For more information about the Tide Mill Institute, please contact:
  • Bud Warren - 207-373-1209
  • Earl Taylor - 617-293-3052
  • Todd Griset - 207-791-3000

Wind to power Microsoft's Texas data center

Tuesday, November 5, 2013

Microsoft has agreed to purchase energy produced by a Texas wind farm to power its data center in San Antonio.  The announcement, posted on the official blog of Microsoft's Sustainability Development Team, describes a 20-year power purchase agreement with RES Americas under which Microsoft will purchase all of the output of the 110 megawatt Keechi Wind project located about 280 miles north.

The power purchase agreement fits with Microsoft's stated commitment to carbon neutrality.  Since 2012, Microsoft has imposed an internal fee on the use of carbon-based forms of energy; Microsoft uses that fee to make investments in alternative or carbon-neutral energy, such as this power purchase agreement.

The Keechi project will be owned and operated by RES Americas, a subsidiary of British company RES Ltd.  RES Americas currently operates over 600 MW of renewable energy projects, and has a renewable energy construction portfolio that exceeds 6,500 MW and 64 projects, as well as 534 miles of transmission lines.  Its Keechi project is expected to cost $200 million, and will feature 55 turbines expected to produce 430,000 megawatt hours of energy per year.  (To put this figure in context, it could power up to 45,000 homes, or cover between 5 and 10 percent of Microsoft's total electricity consumption.)  Construction is expected to begin in 2014, with the project going operational by June 2015.

Microsoft is not alone in promoting its use of renewable or alternative energy to power its data centers.  In 2012 Google entered into an agreement to purchase the output of a wind farm in Oklahoma to power its Pryor data center.  Apple's new data center in Maiden, North Carolina is powered in part by a solar photovoltaic array and a biogas-fed fuel celleBay has proposed siting a 6 megawatt natural gas-fired fuel cell at its Utah data center.  Whether the data center is powered by on-site distributed generation or buys power from a designated off-site renewable resource, the trend is toward promoting cleaner, greener computing through these arrangements.  These choices may help the companies with cost control and power reliability as well as public relations.

Will large consumers of electricity continue to invest in alternative or renewable electric generation?  If so, will they favor arms-length power purchase agreements with developers of remote projects, or will they rely more heavily on on-campus development of distributed generation?  Will this trend spread beyond the big names so far - Microsoft, Apple, Google, and eBay - to the point where smaller or less tech-oriented companies develop or do similar projects and deals?
  Googa 20-year power purchase agreement (PPA) for wind energy in Texas that will be funded in part by proceeds from Microsoft’s carbon fee - See more at:
a 20-year power purchase agreement (PPA) for wind energy in Texas that will be funded in part by proceeds from Microsoft’s carbon fee - See more at:
a 20-year power purchase agreement (PPA) for wind energy in Texas that will be funded in part by proceeds from Microsoft’s carbon fee - See more at:

Will YieldCo structure change energy investments?

Monday, November 4, 2013

A relatively new way some utility companies are structuring their assets is drawing increased investment.  Dubbed the "YieldCo" model, the basic idea is that an established energy and utility companies will create a YieldCo subsidiary as a vehicle for holding investments in assets that produce sustained or increasing cash flow.  The YieldCo then pays out a relatively high percentage of its earnings to its shareholders as dividend yield.  Utility giant NRG Energy Inc. launched NRG Yield, Inc. this July, and other companies and market watchers have hinted that more YieldCo spinoffs may come in the near future.  Will the YieldCo model catch on?  How will it change the flow of money to and from energy projects?

The YieldCo model offers several kinds of benefits.  One is an answer to the question of renewable energy projects can compete during long-term periods of low power prices and reduced demand for electricity?  YieldCos are hoped to offer lower cost of capital for these projects.  Most often, they are conceived of as as holding electric generation projects whose output is fully contracted for, and older renewable and other assets that no longer qualify for special tax benefits.  The structure lets owners monetize assets without giving up control.  Meanwhile, the expected high and consistent yields can also attract capital and new investors, much as real estate investment trusts (REITs) or master limited partnership (MLPs) have done for other sectors

In the case of NRG Yield, its initial asset base featured a mix of conventional and distributed elcetric generation projects.  This mix included eleven utility-scale power plants and renewable projects, plus and two portfolios of distributed solar projects.  NRG Yield appears to have been a success, attracting $430 million in its initial public offering, with shares subsequently rising over 50% more in value. 

But despite NRG Yield's success since July, the structure is relatively novel as applied to electric generating infrastructure.  Downsides to the YieldCo structure include less favorable tax treatment than is available to REITs or MLPs (basically, a higher level of taxation), the cost of establishing a spinoff YieldCo, and increased exposure to interest rate risk.

If the YieldCo structure catches on, it could attract new investment capital to the renewable and conventional electric generation sector.  Will other companies follow NRG Yield's example?  NextEra Energy Inc. (owner of Florida Power & Light) is said to be exploring the concept, and is reportedly considering a portfolio of 1,500 to 2,000 MW of operating assets and another 1,200 MW in the development pipeline for contribution to a YieldCo in the next 4 years.  How big a shift we see to YieldCos remains to be seen, but for now excitement about the possibilities remains high.