Auction set for NJ offshore wind sites

The U.S. government has scheduled an auction for the rights to lease two areas of federal ocean space off New Jersey for offshore wind energy development.  The auction, to be held November 9, 2015, will be the fifth competitive lease sale for renewable energy on the outer continental shelf.

Under the Outer Continental Shelf Lands Act, the Department of the Interior has responsibility for managing use and development of the federally controlled outer continental shelf and the waters above it.  The Bureau of Ocean Energy Management exercises key functions in support of this role, managing resource evaluation, planning, and site leasing for energy activities ranging from oil and natural gas exploration and production to hydrokinetic, offshore wind, and other renewable ocean energy projects.

Since early in the Obama administration, BOEM has worked to offer leases to federal ocean sites for offshore wind development or related activities.  To date, BOEM has awarded seven offshore wind site leases through competitive lease sales, plus two more commercial wind leases offshore New Jersey awarded through earlier interim policies.  BOEM's competitive processes have generated over $14.5 million in high bids for over 700,000 acres in federal waters off states including Massachusetts, Maryland, Virginia, and Rhode Island.

Since at least 2009, BOEM has been involved in efforts to lease sites off New Jersey for offshore wind development, including multiple task force meetings, a 2011 Call for Information and Nominations – Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore New Jersey, and a 2014 Proposed Sale Notice.  That notice described a 343,833-acre Wind Energy Area split in two parts, known for leasing as OCS-A 0498 and OCS-A 0499:

BOEM has now announced that it will publish a Final Sale Notice setting a commercial lease sale for November 9, 2015, for the Wind Energy Area offshore New Jersey.  Similar in format to other recent BOEM offshore wind site auctions, the New Jersey sale will include consideration of both monetary factors (the bid) and nonmonetary factors (i.e., whether a bidder has obtained a Power Purchase Agreement or New Jersey Offshore Renewable Energy Certificate award).

No offshore wind projects are in commercial operation in the U.S., although Deepwater Wind is currently constructing its Block Island Wind Farm in state waters offshore Rhode Island.

Propane inventory in US sets new record

As the U.S. prepares for another winter, government records show stockpiles of propane have reached record levels.  What's in store for propane markets?

Propane is a hydrocarbon gas liquid used mostly for space heating and as a feedstock for other chemicals like ethylene and propylene, as well as for drying agricultural crops.   Natural gas processing plants and petroleum refineries are the two largest sources of propane. 

The U.S. Energy Information Administration has collected weekly propane inventory data for 22 years.  According to its most recent report, U.S. inventories of propane and propylene reached 97.7 million barrels as of September 11.  EIA describes this as the highest level of propane inventory on record.

What explains the buildup of propane in storage?  Record high propane inventories are partly due to seasonal dynamics in supply and demand.  Demand for propane for heating and agricultural uses is highly seasonal, while demand for propane as a chemical feedstock lacks strong seasonality.  Over recent years, propane and propylene stocks are typically drawn down during the winter heating and agricultural drying season (October to March), and then rebuild from early April through September. 

This year, EIA data shows inventories began increasing in mid-February.  EIA notes that domestic consumption is relatively flat, but found increases in propane production.  In particular, EIA's latest data shows that natural gas processing plants are producing a greater share of propane than in previous years (rising from 62% in 2008 to 76% in 2014), while propane production at refineries has remained relatively constant.

Maine considers net metering alternative

The Maine Office of the Public Advocate has proposed a new mechanism to encourage the development of solar energy capacity in the state.

Under Maine’s existing law, customers with onsite generation may choose “net energy billing” treatment. Similar to “net metering” policies in other states, Maine’s program gives eligible consumers credit for the power they send back to the grid from their onsite generation. Presently, the value of that credit varies with the applicable retail electricity rate.

But according to the Public Advocate, Maine’s version of net metering raises concerns including net metering customers’ uncertainty over the future value of power, the potential for cost-shifting to non-net metered customers, and a lack of transparency.

In its white paper, “A Ratepayer Focused Strategy for Distributed Solar in Maine”, the Office of the Public Advocate offers an alternative to Maine’s existing net metering program. It envisions policies to support development of two types of solar energy projects in Maine: customer-sited systems and wholesale systems.

For customer-sited systems, the white paper proposes a “Solar Standard Buyer” to serve as an aggregator of the attributes solar energy can provide. Customers would enter into a Customer-sited Solar Contract or CSC, a fixed-price, 20-year contract with the solar aggregator. As under Maine’s existing net metering structure, the “payment” to customers would be based on a per kWh rate that would appear as a monthly bill credit on the customer’s bill. Under the Public Advocate’s vision, the level of compensation would be capped at $0.20/kWh.

As more solar capacity comes online in Maine, the Public Advocate proposes incremental “step downs” in the CSC contract price paid to solar customers. Both the payments to customers under a CSC and the revenues received through this aggregation and sale would be credited to all customers through transmission and distribution utilities’ existing stranded cost mechanisms.

For wholesale systems between 1 megawatt and 5 megawatts in scale, the white paper envisions that the Commission would solicit competitive bids, with the ultimate purchaser being the Solar Standard Buyer. The white paper notes an expectation that economies of scale will enable these larger, utility-side solar projects to reduce the price per kilowatt-hour to Maine’s non-participating ratepayers. It proposes to compensate developers of wholesale systems at a fixed rate, with contracts procured by the state’s utilities through bi-annual competitive processes.

The Public Advocate suggests that its proposal is consistent with recent analysis of the value of solar energy in Maine. Pursuant to the 2014 “Act to Support Solar Energy Development in Maine”, the Maine Public Utilities Commission developed a methodology for determining the value of distributed solar energy generation in the state. Its Maine Distributed Solar Valuation Study, released this spring, provided a methodology for estimating the cost and benefits of solar, values for each cost and benefit, and options to encourage solar adoption within Maine’s existing utility framework.

According to the Public Advocate’s white paper, its proposal could drive up to 300 MW of new solar capacity in Maine by 2025.  It has been characterized as an addition to net metering, not a replacement.  But the Maine Public Utilities Commission continues to evaluate Maine’s solar energy policies.  Its process could have outcomes ranging from continuation of Maine's net energy billing programs to the creation of some new mechanism to address solar and distributed generation's integration into the grid.

North Carolina offshore wind advances

Federal efforts to lease ocean sites off the North Carolina coast for offshore wind development advanced last week, when the Bureau of Ocean Energy Management issued a report finding that there would be no significant environmental or socioeconomic impacts from issuing wind energy leases in three specific areas.  The determination brings BOEM one step closer to auctioning off leasing rights off North Carolina for offshore wind development.

The Bureau of Ocean Energy Management is part of the U.S. Department of the Interior.  BOEM performs key duties under the Outer Continental Shelf Lands Act, including resource evaluation, planning, and site leasing.  In furtherance of President Obama’s Climate Action Plan, BOEM has auctioned off the rights to lease sites in federal waters for offshore wind development off states including Massachusetts, Maryland, Virginia, and Rhode Island.  Altogether, BOEM has awarded nine commercial wind leases.  Seven of these were awarded through its competitive lease sale process, generating over $14.5 million in high bids for over 700,000 acres in federal waters. 

Federal law prescribes the process BOEM must undertake to lease sites for offshore wind development.  Under the National Environmental Policy Act (NEPA), BOEM must evaluate the environmental and socioeconomic impacts of proposed actions.

For the proposed leasing off North Carolina, in January 2015 BOEM published its Environmental Assessment (EA) of the impacts of granting commercial wind leases and allowing of site characterization and assessment activities on the Atlantic Outer Continental Shelf.  On September 17, BOEM issued a revised Environmental Assessment.  That EA found there would be no significant environmental or socioeconomic impacts from issuing wind energy leases and allowing site characterization activities.  This "Finding of No Significant Impact", or FONSI, enables BOEM to proceed to the next step in the leasing process.

That next step will occur in October, when BOEM will convene a public meeting of the North Carolina Renewable Energy Task Force.  After considering the input from the Task Force, BOEM will publish a “Proposed Sale Notice” in the Federal Register, which will include a 60-day public comment period. That notice would be followed by a lease auction, likely similar to those held for sites off other states.

In addition to its proposed North Carolina activity, BOEM expects to hold a competitive lease sale for sites offshore New Jersey later this year.

NH regulation of solar PPAs, leases

If a solar energy company installs solar panels on its customers' roofs, and sells those customers the power they produce, will it be regulated like a public utility under state law?  A petition by Vivint Solar, Inc. has asked the New Hampshire Public Utilities Commission to declare that it will not regulate Vivint Solar as a public utility, competitive electric power supplier, or limited producer of electrical energy under state law.

Vivint Solar describes itself as the second largest installer of residential solar energy systems in the U.S. residential market, with approximately 42,000 residential customers and 274 megawatts of solar systems installed.  The company describes two primary business structures for residential solar projects: long-term power purchase agreements or PPAs, under which a customer agrees to purchase all of the power generated by a solar energy system installed on the customer’s rooftop; and solar leases, under which a customer leases the solar energy system which is installed at the customer’s site. In either case, the solar facilities are owned by Vivint Solar’s affiliates and financing parties to enable efficient use of tax benefits and low-to-no upfront costs for customers.

In its August 14, 2015 petition, Vivint Solar asked New Hampshire regulators for “regulatory clarity on how it may be regulated” if it enters the state to offer its PPAs and solar leases to New Hampshire customers. In particular, Vivint Solar argues that because it would not sell the electricity generated by its solar energy systems to the broad “public,” it is not a public utility under New Hampshire law. Vivint Solar also argues that its contractual relationship with residential customers is fundamentally different from the relationship between a competitive electric power suppliers and its customers, largely because Vivint Solar’s activity occurs on the customer’s side of the utility meter. The company  also asks the Commission to declare that it would not be a limited producer of electric energy, a kind of generator regulated lightly by the Commission. Vivint Solar also notes that its PPAs and solar leases promote New Hampshire’s goal of encouraging competition for retail access, and customer choice for more affordable electricity, as well as New Hampshire’s renewable portfolio standard and other clean energy policies.

The New Hampshire Public Utilities Commission has issued an Order of Notice in the case, with interventions due and a prehearing conference scheduled for early October.

NH explores electric grid modernization

New Hampshire regulators are considering whether and how to modernize the state’s electric grid. In a recently opened investigation, the New Hampshire Public Utilities Commission seeks to educate stakeholders about grid modernization and to explore to what extent that grid modernization is workable in New Hampshire.

Last year, the New Hampshire Office of Energy & Planning issued its 10-Year State Energy Strategy.  In that document, the administration called for "a more flexible and resilient electric grid to support new technologies, increase consumer participation in energy management, and fortify our resiliency in the face of price and supply volatility and extreme weather events."  The first step identified in the Energy Strategy was to open a PUC docket on grid modernization:

The electric grid is aging, and changing consumer use patterns, a new generation mix, and increased threats from severe weather events require a more modern system. The New Hampshire Public Utilities Commission should open a docket to determine how to advance grid modernization in the state. In light of the potential breadth of the topic, which could include dynamic pricing, better consumer access to technology, and even rethinking the role of utilities, an investigation or information ‐ gathering proceeding may be an appropriate first step. This less formal proceeding would give all stakeholders a chance to learn about grid modernization and could inform the specific areas that should be pursued within future dockets. This would allow the PUC and stakeholders to determine which approaches will benefit New Hampshire consumers, and when and how they should be implemented.

Earlier this summer, the New Hampshire legislature enacted House Bill 614, implementing the recommendations in the Energy Strategy.  As Governor Hassan noted in her signing statement, the bill requires the Public Utilities Commission to "begin a process focused on modernizing our electric grid to ensure that we are prepared for an innovative energy future and to set an electricity peak time reduction goal, which can help lower the high costs of producing electricity when demand is greatest."

That process is now underway.  The New Hampshire Public Utilities Commission opened its investigation by order dated July 30, 2015.  The Commission gave interested parties until September 17, 2015 to provide comment on the definition, or elements, of grid modernization that should be included in its investigation.  The Commission directed its staff to schedule a technical session following a review of comments submitted, and to develop a procedural schedule for the rest of the case.

Maine PUC considers community energy projects

The Maine Public Utilities Commission is evaluating the viability of proposed community-based renewable energy projects that remain under development.

Maine has run a community-based renewable energy program since 2009.  The program gives qualified wind, solar, and other renewable energy projects long-term contracting opportunities to sell the facility’s output to a Maine transmission and distribution utility at attractive rates.

In 2015, the Maine Legislature adopted P.L. 2015 ch. 232, An Act to Amend the Community-based Renewable Energy Program”.  Beyond minor revisions to the law, the act adds strict deadlines for key program milestones: the Public Utilities Commission has until December 31, 2015 to order or allow utilities to enter into long-term contracts under the program, and all projects selected for a contract must become operational and commence generating electricity by December 31, 2018.

Section 5 of the Act also created a new "viability assessment" process designed to make sure the program is as effective as possible.  The program size is capped at 50 megawatts statewide; all of this capacity was quickly claimed by certified projects.  But not all projects that have been certified are operational; some have yet to be built.  Some stakeholders expressed concern over "permit banking" -- developers obtaining and holding onto program capacity, without actively developing it, while other projects would move forward if they could get the capacity.

As a result, the Legislature directed the Commission to review all certified projects that have not yet reached commercial operations, to determine whether the projects are reasonably likely to achieve commercial operations within a 3-year period.   If the Commission determines a project will not be viable by December 31, 2018, the Act directs the Commission to revoke any contract awarded, but such projects will remain certified under the program.   If the removal of nonviable projects frees up program capacity for contracting, the law directs the Commission to conduct an expedited request for proposals to select community-based renewable energy projects to become program participants and enter into long-term contracts.

The Commission's viability assessment process is now ongoing.  A July 13, 2015 procedural order identified six projects as having been either certified or awarded a contract, but not been placed in commercial operation.  Project developers were invited to submit information related to the viability assessment by August 7. 

The Commission meets on September 22 to deliberate on the viability assessments.

CT examines energy storage, grid improvements

The Connecticut Department of Energy and Environmental Protection has opened a proceeding to implement a state law advancing energy storage systems and other improvements to the electric grid.  The Distributed Energy Resource Integration Demonstration Project program is designed to find best practices on how different grid-side system enhancements can be reliably and efficiently integrated into the grid in a manner that is cost-effective for all ratepayers.  The recently opened case has the potential to lead to significant investment in energy storage in Connecticut and other grid advancements.

The Department of Energy and Environmental Protection, or DEEP, was established on July 1, 2011 as a combination of the Department of Environmental Protection, the Department of Public Utility Control as well as other state energy policy staff.  DEEP has a dual mandate of conserving, improving and protecting Connecticut's natural resources and environment, as well as supporting economic development by making cheaper, cleaner and more reliable energy available.

In June 2015, the Connecticut legislature passed a sweeping bill formally known as June Special Session Public Act 15-5, An Act Implementing Provisions of the State Budget for the Biennium Ending June 30, 2017, Concerning General Government, Education, Health and Human Services and Bonds of the State (“the Act”).  Section 103 of the Act requires Connecticut electric distribution companies to submit a proposal or proposals to DEEP for demonstration projects to build, own, or operate grid-side system enhancements, such as energy storage systems.  Proposals are supposed to:

• Demonstrate and investigate how distributed energy resources (DER) can be reliably and efficiently integrated into the electric distribution system;
• Maximize the value provided to the electric grid, electric ratepayers, and the public from distributed energy resources; and
• Complement and enhance the programs, products, and incentives available through the Connecticut Green Bank, the Connecticut Energy Efficiency Fund, and other similar programs.

As an initial step in the implementation of this program, DEEP has opened a proceeding to establish priority goals and objectives for the DER Integration Demonstration Projects.  The proceeding includes opportunity for public comment, as well as a stakeholder workshop scheduled for October 5.

Ultimately, Connecticut's electric distribution companies will propose specific demonstration projects for approval first by DEEP, then by the Connecticut Public Utilities Regulatory Authority or PURA.  Much emphasis has been placed on energy storage systems as a likely beneficiary of the program.  Other grid-side system enhancements could include distribution system automation and controls, intelligent field systems, advanced distribution system metering, communication, and systems that enable two-way power flow.  DEEP has until January 1, 2017 to evaluate the approved proposals and report to the state's legislative committee with jurisdiction over energy.

Energy Dept 2015 Quadrennial Technology Review

The U.S. Department of Energy has released its second Quadrennial Technology Review, a 505-page report describing the nation’s energy landscape and the dramatic changes that have taken place over the last four years.

The 2015 Quadrennial Technology Review examines the current status of energy technologies and research opportunities to advance them in addition to key enabling science and energy capabilities.  The updated report comes four years after the Energy Department's original Quadrennial Technology Review, issued in 2011.

The 2015 report notes, "The last four years have been defined by dramatic change in the nation’s energy landscape." Huge growth in domestic production of oil and natural gas has made the U.S. the world leader in combined oil and natural gas production for the last three consecutive years. Wind energy capacity has increased by 65 percent and wind energy generation has nearly doubled; solar capacity has increased 9 fold and solar photovoltaic generation over tenfold; old, inefficient power plants are being replaced by cleaner, more efficient ones; transportation efficiencies continue to improve.

It also highlights the Energy Department's view of "the most promising research, development, demonstration, and deployment (RDD&D) opportunities across energy technologies to effectively address the nation's energy needs. Specifically, this analysis identifies the important technology RDD&D opportunities across energy supply and end use in working toward a clean energy economy in the United States."  Individual chapters focus on specific technology types, including grid modernization, clean power, buildings, manufacturing, fuels, and transportation. 

The report also draws some overarching conclusions:

• Energy systems are increasingly interconnected through the internet and other technologies, which could enable new paradigms for cost and emissions reduction. 
• Increasingly diverse options are available to meet the nation’s energy needs is increasing, creating a more dependable and flexible energy system for consumers.
• Substantial energy efficiency opportunities remain untapped.
• More research and development could lead to innovation and breakthroughs in how to deliver clean energy cheaper and faster.

Maine PUC solicits standard offer proposals

The Maine Public Utilities Commission has issued Requests for Proposals for retail electricity standard offer service.  At stake is the right to supply default electricity service to customers of Maine's two largest utilities -- as well as the price those customers will pay for power.

Maine restructured its electricity sector in the late 1990s.  Formerly, utilities owned both power plants and the wires and other infrastructure needed to supply consumers with electricity.  But as of March 1, 2000, investor-owned transmission and distribution utilities may own and operate wires, but generally cannot have a financial interest in or otherwise control generation or generation-related assets.  Power plants became "deregulated" from the perspective of state retail rate regulation, and were sold off by the utilities.  At the same time, Maine law created a new kind of entity called a "competitive electricity provider" to perform the role of supplying electricity as a commodity.

Customers can choose among supply offers from competitive electricity providers.  Suppliers can offer specific types of product (e.g. 100% renewable power, locally-sourced) or particular contract terms (e.g. pricing schedules, payment terms).  Most large industrial energy consumers choose competitive electricity supply under this option, as do many commercial accounts and some homes.

If a customer does not choose a competitive electricity provider, that customer is placed on "standard offer service" by default.  Maine law requires the Maine Public Utilities Commission to arrange for standard offer service though a competitive bid process, and to ensure that standard offer service is available to all customers in Maine.

The pending RFPs cover retail electricity standard offer service for calendar year 2016 for all customer classes in the territories of Central Maine Power (CMP) and Emera Maine-Bangor Hydro District.  Collectively, CMP and Emera Maine deliver approximately eleven million megawatt hours annually, of which about 45% currently comes from standard offer service.

The RFPs and related materials are available on the MPUC website.  Initial proposals are due on October 6, 2015. Following negotiation of non-price terms and a submission of final bid prices, the Commission is expected to select one or more proposals,  Service terms will begin on January 1, 2016.

DOE report finds Solyndra gave "false and misleading" info

The Department of Energy's Office of Inspector General has released a special report finding that failed solar panel maker Solyndra, Inc. provided the Department with inaccurate and misleading information during the application process for a $535 million loan guarantee.  The report summarizes the results of a 4-year investigation into what went wrong with the Solyndra matter, and what lessons the Department can learn as it proceeds to exercise its authority to grant an additional $40 billion in loan guarantees.

In 2005, Congress established a federal loan guarantee program for eligible energy projects that employed innovative technologies. Title XVII of the Energy Policy Act of 2005 authorized the Secretary of Energy to make loan guarantees for a variety of types of projects, including those that “avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases; and employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time the guarantee is issued.”

The Department of Energy loan guarantee program was expanded by the American Recovery and Reinvestment Act of 2009, which added billions of dollars of new authority to support renewable energy, electric transmission, and advanced biofuels projects.  The Department's Loan ProgramsOffice has supported a portfolio of more than $30 billion in loans, loan guarantees, and commitments covering more than 30 projects across the United States.

The Department made its first award under this program in September 2009, approving a $535 million loan guarantee to a company called Solyndra, Inc.  Solyndra said it would build a solar photovoltaic equipment manufacturing facility in Fremont, California.  The Energy Department disbursed over $500 million to Solyndra through the program.  But just two years later, Solyndra showed signs of failure, as it ultimately stopped operations and manufacturing, let 1,100 employees go, and filed for bankruptcy.  U.S taxpayers lost over $500 million.

The Solyndra matter drew significant public attention, with even the Department calling it an "ordeal" and many labeling it a scandal.  What went wrong?  Should the government have guaranteed Solyndra's loans?  Was the loan guarantee program flawed?  Or was it acceptable bad luck that the first awardee failed?

Since 2011, the Department of Energy's Office of Inspector General has investigated the Solyndra matter.  Its special report released August 24, 2015, describes the Inspector General's findings:

Our investigation confirmed that during the loan guarantee application process and while drawing down loan proceeds, Solyndra provided the Department with statements, assertions , and certifications that were inaccurate and misleading , misrepresented known facts , and, in some instances, omitted information that was highly relevant to key decisions in the process to award and execute the $535 million loan guarantee. In our view, the investigative record suggests that the actions of certain Solyndra officials were, at best, reckless and irresponsible or, at worst, an orchestrated effort to knowingly and intentionally deceive and mislead the Department.

In particular, the report identified "notable misrepresentations and omissions made to the Department by Solyndra" relating to Solyndra's sales contract commitments and ability to command a premium market price for its panels.  The report suggests this false and misleading information led the Department to approve the loan guarantee, when it might not have done so with the right information.  The report found that Solyndra failed to meet contractual obligations from the loan guarantee documents relating to truth and full disclosure.

The Inspector General's special report also found that the Energy Department's due diligence efforts were "less than fully effective", with missed opportunities to detect and resolve indicators that portions of the data provided by Solyndra were unreliable.  Nevertheless, the report concludes that ultimate blame should fall on the company: "the actions of the Solyndra officials were at the heart of this matter, and they effectively undermined the Department’s efforts to manage the loan guarantee process. In so doing, they placed more than $500 million in U.S. taxpayers’ funds in jeopardy."

The Department of Energy continues to offer loan guarantees for a variety of technologies and projects.  The report suggests that the Department strengthen its due diligence process, and reemphasize to loan applicants their absolute obligation to be truthful, complete, timely and transparent.