FERC issues PacWave South wave energy license

US federal hydropower regulators have issued a license to Oregon State University to construct, operate, and maintain a 20-megawatt hydrokinetic wave energy test facility on the Outer Continental Shelf about 6 nautical miles offshore Newport, Oregon, in Oregon territorial waters, and onshore. The Federal Energy Regulatory Commission's March 1, 2021 Order Issuing License in docket P-14606-001 represents a significant step forward for the testing and deployment of wave energy conversion devices in US waters.

Oregon State University applied to the Commission on March 31, 2019, seeking an original license pursuant to Part I of the Federal Power Act, to construct, operate, and maintain the proposed PacWave South Hydrokinetic Project. The project would consist of four offshore test berths containing a maximum of 20 wave energy conversion devices with a maximum total installed capacity of 20 MW, anchoring systems, mooring systems, subsea connectors, five buried subsea transmission cables connecting to five separate onshore landing points, buried terrestrial transmission lines, and other facilities. 

As described in the Order Issuing License:

OSU proposes to develop the PacWave South Project in order to provide a venue for clients to test technologies that generate electricity using wave energy converters (WECs) anchored to the seafloor. Specifically the PacWave South Project would: (1) serve as a facility to allow clients to test the operation of grid-connected WEC devices; (2) refine the deployment, recovery, operations, and maintenance procedures for WEC devices; (3) collect interconnection and grid synchronization data; (4) gather information about environmental, economic, and socioeconomic effects; and (5) provide a source of hydroelectric power. OSU would oversee and manage all activities, and clients deploying WECs at PacWave South would be subject to test center protocols and procedures.

The project would be interconnected to the utility grid of the Central Lincoln People’s Utility District. Up to six WECs will be deployed during initial deployment and a maximum of 20 WECs will be deployed for the full build-out.

Because the Commission considers the Outer Continental Shelf to be "a navigable waterway and reservation of the United States", the Commission views the project as requiring to be licensed under section 23(b)(1) of the Federal Power Act. Through the order, it issued a 25-year license to Oregon State University for the project.

As licensed with mandatory conditions and staff recommended measures, the Commission found that the levelized annual cost of operating the project will be about $11,357,000, or $518.60/MWh. " Based on the same estimated average generation of 21,900 MWh, the project will produce power valued at $3,665,000 when multiplied by the alternative power cost of $167.34/MWh. Therefore, in the first year of operation, project power will cost $7,693,000, or $351.27/MWh, more than the likely cost of alternative power. Although staff’s analysis shows that the project as licensed herein would cost more to operate than the estimated cost of alternative power, it is the applicant who must decide whether to accept this license and any financial risk that entails. Although staff does not explicitly account for the effects inflation may have on the future cost of electricity, the fact that hydropower generation is relatively insensitive to inflation compared to fossil fueled generators is an important economic consideration for power producers and the consumers they serve."

The U.S. Bureau of Ocean Energy Management (BOEM) issued its lease for the PacWave South Project in February 2021, in what has been called the first-ever lease for a wave energy research project in federal waters. The BOEM lease includes 21 general conditions, which are largely administrative in nature. Additionally, the lease includes Addendum A, which describes the leased area, Addendum B, which specifies the amount of financial insurance OSU must provide to meet all lease obligations, and Addendum C, which includes lease-specific terms and conditions related to national security and military operations, archaeological requirements, and reporting and research site access requirements. As described by the Commission:

The lease and its addendums require OSU to: (1) provide and maintain at all times a surety bond or other form of financial assurance; (2) remove or decommission all facility and clear the seafloor of all obstructions within two years following lease termination, in accordance with the Commission license and any subsequent Commission approval; (3) comply with certain requirements pertaining to national security and military operations; (4) ensure that vessel operators, employees, and contractors are briefed on marine trash and debris awareness and elimination; (5) consult with BOEM before conducting any seafloor disturbing activities not authorized by the Commission license; and (6) include BOEM on the distribution of all plans, status reports, monitoring reports, annual reports, incident reports, and other reports required under the Commission license for activities on the OCS.

The project still needs several approvals to advance. OSU reportedly plans to have the facility operational in 2023.

FERC sets conferences on climate change, extreme weather, reliability, and electrification

US electricity regulators have scheduled a series of technical conferences to address specific issues, including a two-day event to explore issues related to "threats to electric system reliability posed by climate change and extreme weather events", and a separate event on "electrification" of sectors like transportation and heating and its implications for the grid.

On March 5, the Federal Energy Regulatory Commission issued a notice of technical conference in its "Climate Change, Extreme Weather, and Electric System Reliability" docket (AD21-13-000).  The technical conference will be held on June 1, 2021 and Wednesday, June 2, 2021 via teleconference (over WebEx).

As noted by the Commission, "Reliable electric service is vital to the nation’s economy, national security, and public health and safety, and prolonged power outages can have significant humanitarian consequences, as the nation recently witnessed in Texas and the south-central United States." The Commission's notice cites a recent report from the National Oceanic and Atmospheric Administration which found that "extreme weather events topping $1 billion in estimated damages and costs are occurring with increasing frequency", as well as the 2017 Quadrennial Energy Review which found that the "leading cause of power outages in the United States is extreme weather, including heat waves, blizzards, thunderstorms, and hurricanes."

According to the Commission, it seeks to use this proceeding "to understand the near, medium and long-term challenges facing the regions of the country; how decisionmakers in the regions are evaluating and addressing those challenges; and whether further action from the Commission is needed to help achieve an electric system that can withstand, respond to, and recover from extreme weather events." The technical conference set for June 1-2 will address "concerns that because extreme weather events are increasing in frequency, intensity, geographic expanse, and duration, the number and severity of weather-induced events in the electric power industry may also increase". 

The notice also frames future discussion of "the specific challenges posed to electric system reliability by climate change and extreme weather, which may vary by region." For example, wildfire pose major reliability challenges in some regions, while weather-driven fuel supply interruptions may be more likely to affect other areas.

In a separate docket focused on "Electrification and the Grid of the Future" (AD21-12-000), the Commission issued a notice that it will hold a technical conference on April 29, 2021, "to discuss electrification—the shift from non-electric to electric sources of energy at the point of final consumption (e.g., to fuel vehicles, heat and cool homes and businesses, and provide process heat at industrial facilities)." According to that notice, the purpose of this technical conference is "to initiate a dialog between Commissioners and stakeholders on how to prepare for an increasingly electrified future" including "projections, drivers, and risks of electrification in the United States; the extent to which electrification may influence or necessitate additional transmission and generation infrastructure; whether and how newly electrified sources of energy demand (e.g., electric vehicles, smart thermostats, etc.) could provide grid services and enhance reliability; and the role of state and federal coordination as electrification advances."

These technical conferences have potential to shape the Commission's development of policies responsive to both reliability and electrification concerns.