US EPA sets renewable fuel standard for 2019

U.S. environmental regulators have established renewable fuel standards for 2019, calling for a 3% increase in renewable fuel volumes over 2018, but have continued to waive statutory requirements targeting even larger volumes of renewable fuel.

Congress created the Renewable Fuel Standard or RFS program through the Energy Policy Act of 2005, and expanded the program through the Energy Independence and Security Act of 2007. Administered by the U.S. Environmental Protection Agency, the RFS requires a certain volume of renewable fuel to be used in transportation (motor vehicles and jets) and heating. Refiners and importers of gasoline or diesel, along with other market participants like fuel producers and exporters, track and trade renewable fuel credits called Renewable Identification Numbers or RINs.

The RFS includes four categories of renewable fuel: cellulosic biofuel, biomass-based diesel, advanced biofuel, and total renewable fuel. By statute, Congress prescribed specific volumes of these four categories of renewable fuel for each year through 2022, and required the EPA to set RFS volume requirements annually based on these statutory targets. The statute also allows the EPA Administrator to waive these volumetric requirements, based on a determination that implementation of the program is causing severe economic or environmental harm, or based on inadequate domestic supply.

On November 30, 2018, the EPA issued its final rule for the 2019 RFS program. The 2019 final rule sets the total U.S. renewable fuel volume requirements for 2019 at 19.92 billion gallons, including 4.92 billion gallons of advanced biofuel, 2.1 billion gallons of biomass-based diesel, and just 418 million gallons of cellulosic biofuel. The rule also sets a 2020 volume requirement for biomass-based diesel of 2.43 billion gallons.

The EPA noted that "the market has fallen well short of the statutory volumes for cellulosic biofuel, resulting in shortfalls in the advanced biofuel and total renewable fuel volumes." Based on this observation, EPA exercised its waiver authority to finalize the cellulosic biofuel volume requirement at the level EPA projects to be available for 2019. This is consistent with EPA's past practice, through which it has set the cellulosic biofuel requirement lower than the statutory volume for each year since 2010.

FERC 2015 report on demand response, advanced metering

Staff of the Federal Energy Regulatory Commission have released their tenth annual report on demand response and advanced metering.  The FERC staff report, 2015 Assessment of Demand Response and Advanced Metering, provides an update on deployment of demand response and advanced metering.

Section 1252(e)(3) of Energy Policy Act of 2005 (EPAct 2005) directed the FERC to prepare and publish an annual report covering six sets of items:

• saturation and penetration rate of advanced meters and communications technologies, devices and systems;
• existing demand response programs and time-based rate programs;
• the annual resource contribution of demand resources;
• the potential for demand response as a quantifiable, reliable resource for regional planning purposes;
• steps taken to ensure that, in regional transmission planning and operations, demand resources are provided equitable treatment as a quantifiable, reliable resource relative to the resource obligations of any load - serving entity, transmission provider, or transmitting party; and
• regulatory barriers to improved customer participation in demand response, peak reduction and critical period pricing programs.

Previous reports have noted growth in the penetration of advanced metering and the value of demand response.  As in recent years, the 2015 FERC demand response report notes a continued increase in advanced meter penetration rates and the number of advanced meters in operation in the United States.

Based on 2013 data from the Energy Information Administration, the report suggests a 37.6 percent overall penetration rate.  It also shows a slightly higher percentage of residential customers have an advanced meter (37.8 percent) than do customers in the commercial (36.1 percent) or industrial (35.2 percent) customer classes.

At the same time, the FERC report shows a 4.9 percent drop in nationwide total potential peak reduction from retail demand response programs between 2012 and 2013, or a drop of 1,408 MW of demand response capability.  It also notes legal uncertainty over FERC’s final rule on demand response compensation in organized wholesale electric markets, Order No. 745, given that the U.S. Court of Appeals for the D.C. Circuit vacated and remanded that order in Electric Power Supply Association v. FERC, No. 11-1486 (D.C. Cir. May 23, 2014).  FERC's appeal of the EPSA v. FERC decision is now pending before the U.S. Supreme Court, with a final decision expected in early 2016.

Section 242 hydroelectric incentive program funding

For the first time, the U.S. Department of Energy has funding for its Section 242 hydroelectric incentive program.  The program, arising from Section 242 of the Energy Policy Act of 2005,  provides incentive payments for adding new turbines or other hydroelectric generating devices to existing sites. The Department is accepting applications for the incentive payments through February 1, 2016.

In 2005, as part of the Energy Policy Act of 2005, Congress created the Section 242 hydroelectric incentive program to support the expansion of hydropower energy development at existing dams and impoundments.  Section 242 establishes an incentive for qualified hydroelectric facilities, defined as "a turbine or other generating device owned or solely operated by a non-Federal entity which generates hydroelectric energy for sale and which is added to an existing dam or conduit."  The incentive is set at up to 1.8 cents per kilowatt-hour of net electric energy generated and sold by a qualified hydroelectric facility, indexed for inflation (about 2.3 cents per kilowatt-hour today) up to a maximum of $750,000 per year, for a specified 10-year period.

To get this money, an owner or operator must apply for the incentive payments.  An application for an incentive payment for electric energy generated and sold in a calendar year must be filed during the applications period defined by the Department of Energy in the Federal Register.  But according to the Energy Department's final guidance for the Section 242 program, "DOE will accept applications and make payments to qualified hydroelectric facilities in years when appropriations are available for this purpose."  Until recently, no such appropriations were available.

In Congressional appropriations for Federal fiscal year 2015, the Department of Energy received funds to support this hydroelectric incentive program for the first time. As shown in the conference report to the law that made appropriations for Fiscal Year 2015, Congress appropriated $3,960,000 for conventional hydropower under section 242 of EPAct 2005.

With funding now available, the Energy Department is only accepting applications from owners and authorized operators of qualified hydroelectric facilities for hydroelectricity generated and sold in calendar year 2014. Applications for this round of Section 242 funding are due by February 1, 2016.

FERC releases report on demand response

Demand response is an innovative smart-grid approach to meeting society's electricity needs. As customer demands on electric grids increase, the generating resources needed to meet higher and higher peak demands are typically more expensive to run and have more adverse environmental impacts.  In essence, demand response means covering electric load by having individuals or companies agree to temporarily cut back on electricity consumption in response to peak demand conditions.  When customers are willing to provide this service at a lower cost than generation, demand response can be a decentralized, crowd-sourced alternative to peaking power plants.

U.S. federal regulatory staff released a report this week assessing the nation's demand response and smart  meter resources.  The Federal Energy Regulatory Commission staff report is the sixth annual briefing since the enactment of the Energy Policy Act of 2005, which contained provisions promoting the development of demand response resources and markets.

The report notes that more and more customers have access to the kind of advanced meters that facilitate demand response participation.  These smart meters can not only measure instantaneous electricity demand, but typically report back to a utility automatically using radio frequency communications.  Since 2009, advanced meters have risen from 8.7% to a 13.4% share of all installed meters.  The report suggests that the actual penetration rate of advanced meters may be even higher if it includes meters that are installed but whose advanced features have not yet been activated.

The report also notes that in 2010, the grid operators it surveyed had a total of 31,702 MW of demand response resource potential, or enough to cover about 7% of the total 2010 peak demand.  Regional demand response capacities ranged from as low as 2.3% of peak load in the Electric Reliability Council of Texas to as high as 10.5% in the mid-Atlantic region's PJM Interconnection.  The report noted that demand response resourcs "made significant contributions to balancing supply and demand during system emergencies" in 2011.