Maine's energy legislation carryovers from 2017

When the First Regular Session of the 128th Maine State Legislature adjourned earlier this year, its committees reserved a list of bills for further debate in 2018.  A list of these carryover bills published by the legislative information office includes 16 bills carried over by the Joint Standing Committee on Energy, Utilities, and Technology.  While new legislation may be proposed in the legislature's second session, the committee's work in 2018 will include action on these carried-over bills.

Here's an excerpt from the list of bills carried over, focused on the Energy, Utilities, and Technology committee:

• LD 131, An Act To Protect the Biomass Industry
• LD 140, An Act To Authorize a General Fund Bond Issue To Support Entrepreneurial Activity, Attract Business and Enhance Demographic In-migration by Investing in High-speed Broadband Infrastructure and To Amend the Law Governing the Municipal Gigabit Broadband Network Access Fund
• LD 257, An Act To Enable Municipalities Working with Utilities To Establish Microgrids
• LD 260, An Act to Create the Maine Energy Office
• LD 532, An Act to Remove the 100-megawatt Limit on Hydroelectric Generators under the Renewable Resources Laws
• LD 822, An Act to Ensure Fairness among Large Consumers of Natural Gas
• LD 1176, An Act To Ensure the Safety of Low-income Persons Who Are Deaf and Who Use Video and Captioned Phones by Providing Equitable Access to the Internet
• LD 1224, An Act To Allow for Greater Energy Competition in Maine by Amending the Law Governing Electric Generation or Generation-related Assets by Affiliates
• LD 1372, An Act To Increase Broadband Access for Rural Communities
• LD 1373, An Act To Protect and Expand Access to Solar Power in Maine
• LD 1444, An Act Regarding Large-scale Community Solar Procurement
• LD 1472, An Act To Lower the Costs of Broadband Service by Coordinating the Installation of Broadband Infrastructure
• LD 1487, An Act To Control Electricity Transmission Costs through the Development of Nontransmission Alternatives
• LD 1515, An Act To Reduce Electric Rates for Maine Businesses by Amending the Laws Governing Spending from the Regional Greenhouse Gas Initiative Trust Fund
• LD 1610, An Act To Protect Privacy of Online Customer Personal Information
• LD 1632, An Act To Establish the Manufacturing Jobs Energy Program

Based on these bill titles, the committee will be faced with continuing discussion over broadband; regulation and incentives for renewable energy resources including solar, hydroelectricity and biomass; economic development and reduction of electricity rates.

Maine PUC releases 2015 renewable report

Maine energy regulators have released a report on the state's electricity renewable portfolio standard, presenting data from 2015.  The Maine Public Utilities Commission's Annual Report on New Renewable Resource Portfolio Requirement - Report for 2015 Activity [PDF] provides a look at Maine's renewables law, now in its tenth year on the books.  It may also inform legislative discussions later this spring about the future of Maine's renewable portfolio standard.

In 2007, the Maine legislature enacted a law requiring that specified percentages of electricity that supply Maine’s consumers come from “new” or Class 1 renewable resources, ranging from 1% in 2008 to 10% in 2017.  The law also required the Commission to report annually to the legislative energy committee on the status of this requirement and related compliance matters.

According to the report, Maine suppliers sourced approximately 891,757 renewable energy certificates or RECs, from 30 facilities, to comply with the 2015 requirement.  Of these, 20 facilities were fueled by biomass, 4 by hydropower, 3 by wind and 1 by landfill gas.  25 out of the 30 facilities were located in Maine, with 2 in New York, and one each in Connecticut, Massachusetts, and Vermont.  By REC volume, 99% came from facilities located in Maine.

The report also estimates the cost to Maine ratepayers of Maine's new renewable resource portfolio requirement.  According to the report, the cost of RECs used for compliance in 2015 ranged from "approximately $2.00 per MWh to $42.50 per MWh, with an average cost of $13.16 per MWh and a total cost of $11,738,174."  Adding in $3,018 in alternative compliance payments by one supplier, the report estimates a total cost to ratepayers during 2015 of $11,741,192.  The report translates this total cost into "an average rate impact of about one-tenth of a cent per kWh. This is equivalent to about 55 cents per month, or 1%, for a typical residential customer; $50 per month for a medium commercial customer that uses 50,000 kWh per month; and $500 per month for a large commercial/industrial customer that uses 500,000 kWh per month."

Maine law also includes a Class 2 renewable portfolio standard, requiring an additional 30% of electricity come from existing renewables and other Class 2 resources.  According to the Commission's report, the average cost of a Class 2 REC in 2015 was $0.28 per MWh, with a total cost of $965,818.  The report notes that this is "equivalent to about 5 cents per month for a typical residential customer, and $4 and $40 per month for medium and large commercial/industrial customers with the usage levels described above, respectively."

This session, the 128th Maine Legislature is considering several bills that could affect Maine's renewable energy laws, including LD 532, An Act To Remove the 100-megawatt Limit on Hydroelectric Generators under the Renewable Resources Laws, as well as LD 1185, a concept draft which "proposes to enact measures designed to update Maine's renewable portfolio standards."

Maine biomass commission first meeting

A special commission formed by the Maine Legislature to study the economic, environmental and energy benefits of the state's biomass industry holds its first meeting this week.

The Maine State House, where the 2016 biomass resolve was enacted.

This spring, the Maine legislature enacted a resolve establishing the Commission to Study the Economic, Environmental and Energy Benefits of the Maine Biomass Industry. Known as Resolve 2015, chapter 85, the legislation established a study commission to examine the state's biomass energy resources, as well as public policy and economic proposals to create and maintain a sustainable future for the industry.

The Commission to Study the Economic, Environmental and Energy Benefits of the Maine Biomass Industry holds its first meeting tomorrow.  According to the agenda published for the first meeting, following introductions and a review of the resolve itself, the group will hear presentations from and hold discussion with a variety of people interested in biomass.  Presenters on the agenda include a Commissioner of the Maine Public Utilities Commission, the state's Public Advocate, and the executive director of the Efficiency Maine Trust.  Other speakers represent loggers, the wood pellet fuel industry, users of biomass energy fuels, the pulp and paper industry, and woodlot owners.  The agenda states that the meeting will also include a public comment period.

According to the agenda, possible future meeting dates for the Maine biomass commission include August 16 and August 30, 2016.

Maine biomass commission to meet

A commission charged by the Maine legislature to study the state's biomass energy industry will hold its first meeting next month.  The study committee's work will result in a report to the legislature, and could include recommended changes to state law.

The Maine State House.

At the end of its 2016 session, the Maine legislature enacted a resolve establishing the Commission to Study the Economic, Environmental and Energy Benefits of the Maine Biomass Industry.  The resolve directed the commission to:

1. Review and evaluate the economic, environmental and energy benefits of Maine's biomass resources, as well as public policy and economic proposals to create and maintain a sustainable future for the Maine biomass industry;
2. Consider the interconnection of economic markets for biomass and forest products and the energy policy of the State;
3. Consider whether the environmental, economic and energy benefits of biomass support updating the State's energy policy to strengthen and increase the role that biomass and the forest products industry play throughout the State;
4. Consider the costs of implementing any recommendations and the effect of leaving current policies in place; and
5. Examine any other issues to further the purposes of the study. 

The Maine biomass commission has now been formed, and has scheduled its first meeting for August 2, 2016.  As prescribed by the resolve, its membership includes a mix of legislators and others interested in the state's biomass energy policy.

The resolve directed the biomass study commission to submit a report and any suggested implementing legislation for committee consideration by December 6, 2016.

Biomass was a hot topic in the past legislative session.  On a separate track, this spring the Maine legislature enacted a law establishing a long-term contracting program for biomass-fueled power plants.  The Maine Public Utilities Commission has issued a request for proposals under that program, with contract proposals due on or before July 29, 2016.

Maine biomass resource RFP issued

The Maine Public Utilities Commission has issued an order approving a Request for Proposals for biomass energy resources.  At stake are two-year contracts through which biomass resources may sell energy and related products to Maine transmission and distribution utilities.

Earlier this year, the Maine legislature enacted An Act to Establish a Process for the Procurement of Biomass Resources.  Originally proposed as LD 1676 and enacted as Public Law 2015, Chapter 483, that law requires the Public Utilities Commission to initiate a competitive solicitation for 2-year contracts for up to 80 megawatts of biomass resources. 

By order dated June 17, 2016, the Commission approved a Request for Proposals pursuant to its authority under the Act.  The RFP document -- formally styled a Request for Proposals for the Sale of Energy from Biomass Resources -- was released at the same time. It asks for proposals from Biomass Resources for the sale of energy under one or more two-year contracts; bidders may also offer to sell capacity and/or renewable energy attributes as part of the contract.

The RFP defines a Biomass Resource as "a source of electrical generation fueled by wood, wood waste or landfill gas that produces energy delivered to the ISO-NE or NMISA region."  Additional requirements and criteria apply, including minimum capacity factor thresholds and preferences for creating in-state benefits.  It is possible that no contracts will be awarded, or that there won't be money to pay under those contracts.  If the Commission concludes that this solicitation is not competitive, based either on the solicitation process or the resulting bids, no bidders may be selected.  By law, payments are also contingent on the availability of funding for any above-market portion of the contracts, from a Cost Recovery Fund established by the Act.

Contract proposals are due on or before July 29, 2016. According to the Commission's materials, the RFP and all related documents and information will be available on the Commission's RFP website.

Maine biomass procurement competitive standards

As the Maine Public Utilities Commission prepares for its upcoming procurement of biomass power resources, the Commission has requested public comment on the standards and criteria to be used in evaluating whether the solicitation is "not competitive."

This spring, the Maine State Legislature enacted An Act To Establish a Process for the Procurement of Biomass Resources.  The law directs the Maine Public Utilities Commission to initiate a competitive solicitation as soon as practicable, seeking proposals for 2-year contracts for up to 80 megawatts of biomass resources.  

But largely due to fairness and cost-containment concerns, the legislature created a "safety valve" in case the solicitation turns out to be "not competitive."  The Act specifies that “If the commission concludes that the solicitation ... is not competitive, no bidders may be selected and the commission is not obligated to enter into a contract.”

On May 17, 2016, the Commission issued a request for comment in its Procurement of Biomass Resources docket.  That request describes the Commission's plans to initiate the procurement process "in the near future" through the issuance of a request for proposals or RFP.  But before issuing the RFP, the Commission has requested comment on the standards and criteria to be used to determine whether the solicitation is “not competitive” pursuant to the Act.

Comments are requested by May 30, 2016.

Maine enacts biomass energy support

Maine has adopted a new law to support the state's biomass energy industry.  Governor Paul LePage has signed LD 1676, An Act To Establish a Process for the Procurement of Biomass Resources, as emergency legislation.  As a result, the bill has been enacted into law as Public Law, Chapter 483, from the 127th Maine Legislature.

The Maine State House.

The bill directs the Maine Public Utilities Commission to initiate a competitive solicitation as soon as practicable.  That solicitation will ask for proposals for 2-year contracts for up to 80 megawatts of biomass resources.  To qualify, a biomass resource must be a source of electrical generation fueled by wood, wood waste or landfill gas that produces energy that may be physically delivered to the ISO New England or Northern Maine Independent System Administrator markets.  A resource must also operate at least at a 50% capacity for 60 days prior to the initiation of a competitive solicitation and continues to operate at that capacity except for planned and forced outages.

The law gives the Commission some direction on how to select proposals for contracting.  It requires the Commission to seek to ensure, "to the maximum extent possible" that a contract provides benefits to ratepayers as well as in-state economic development benefits, reduces greenhouse gas emissions, promotes fuel diversity, and supports or improves grid reliability.

The costs of the contracts, other than above-market costs, and all direct financial benefits from the contracts must be allocated to ratepayers according to Maine's statute on allocation of costs and benefits of long-term energy contracts.  Above-market costs will be paid for from a cost recovery fund created by the new law, which allocates up to $13.4 million from the unappropriated surplus of the state's General Fund. 

Maine renewable energy report released

The Maine Public Utilities Commission has issued its latest annual report on Maine's use of renewable electricity, covering the 2014 calendar year.  The report shows the impact of Maine's renewable portfolio standard, a state law requiring electricity suppliers to source specified percentages of their electricity from renewable resources.  The report found that compliance costs have fallen nearly in half since 2013.

The Maine State House.

Since Maine's electric industry restructuring in 2000, state law has required competitive electricity providers -- retail suppliers -- to procure 30% of their load served from "eligible resources." These are generally defined in statute as renewable or cogeneration facilities.  A 2007 act of the Maine legislature added a mandate that specified percentages of electricity that supply Maine’s consumers be sourced from “new” renewable resources.  Generally, these are renewable facilities that have an in-service date, resumed operation or were refurbished after September 1, 2005.  This "Class I" renewable portfolio standard began at one percent of load in 2008, and increases in one percentage point each year until reaching ten percent in 2017.  The older "eligible resource" standard became known as "Class II."

The 2007 renewables law required the Public Utilities Commission to report annually to the legislature on the program and compliance.  Each year's report is based largely on the most recently filed Competitive Electricity Provider (CEP) annual compliance reports, which are filed each July, covering the prior calendar year.  So there is some lag between the events being tracked and the publication of the report.

The Commission has just released its report covering calendar year 2014. The report notes "approximately 75 certified facilities, with a total capacity of approximately 1220 MW," although some are not operating or are eligible for other states' renewable portfolio requirements.

In 2014, most suppliers complied with the Maine renewable portfolio requirement through the use of renewable energy certificates or RECs.  According to the report, RECs from 22 facilities were used by suppliers to comply with the 2014 new renewable resource requirement.  Of these, 18 are biomass, 3 are hydro, and 1 is a wind facility. 20 of the 22 facilities are located in Maine, one is located in Connecticut and one is located in Massachusetts. Maine facilities, mostly refurbished biomass plants, supplied 99% of the approximately 811,476 RECs purchased to meet the 2014 portfolio requirement.

For calendar year 2014, 78.05% of the Class I RPS requirement was satisfied through the purchase of RECs during that year, 0.0004 % was satisfied through an alternative compliance mechanism, 21.88% was satisfied using RECs banked from 2013 and 0.1130 % will be satisfied during a 2015 cure period allowed by rule. On top of this activity, 181,595 RECs were purchased in 2014 and banked for future use and an additional 8 RECs were purchased where the supplier did not indicate whether the certificates were to be banked or would not be used.

As the Commission notes in its report, "the prices for Maine Class I RECs declined substantially over the two years leading up to 2014. This has occurred because Maine’s portfolio requirement includes, as an eligible resource, refurbished biomass facilities (which are not generally eligible in other New England states)."

One result is that the annual cost of Class I compliance fell roughly in half since the last report, with a total cost of $14,296,249 in 2014 compared to just $6,947,269 in 2013.  The report describes the cost of Class I RECs used for compliance in 2014 as ranging from approximately $1.72 per MWh to $22.33 per MWh, with an average cost of $8.56 per MWh.  Adding $198 for one supplier who satisfied a portion of the portfolio requirement through alternative compliance mechanism at the rate of $66.16 per MWh, the report describes a total Class I compliance cost to ratepayers during 2014 of $6,947,269.  The Commission translated this into "an average rate impact of about 0.06 cents per kWh (or about 30 to 35 cents monthly for a typical residential bill). In percentage terms, this translates to a residential customer bill impact of about one half of 1%."

The report also describes the cost of Class II RECs used to satisfy the eligible resource portfolio requirement as ranging from $0.00 per MWh (some RECs were provided for free as part of an energy transaction) to $1.80 per MWh, with an average cost of $0.52 per MWh and a total cost of $1,834,314. According to the Commission, this translates into less than ten cents per month on a typical residential bill.

Energy in Maine's 2016 State of the State

Maine Governor Paul LePage has released his 2016 State of the State remarks in the form of a letter to the state legislature.  Among his top priorities detailed in the letter is addressing the high cost of electricity in the manufacturing and industrial sectors.  The eight-page letter also focuses on themes including welfare reform, lowering the income tax, reducing student debt and attracting youth, and fighting the drug crisis.

Energy issues appear in Governor LePage's letter as a focus for -- or obstacle to -- economic development.  In the letter, he repeats his position that "Maine's electricity prices are not competitive."  The letter criticizes legislative mandates supporting "long-term contracts for above-market rates" as adding $38 million in ratepayer costs.

The letter also addresses Maine's renewable energy policy, calling for support for Maine's biomass energy industry while criticizing the economics of wind and solar energy projects:

Socialists love to subsidize new wind and solar energy projects because they think it will save the earth, but that kind of expensive and inefficient energy benefits only a few wealthy investors, and our electrical generation is already one of the cleanest in the country. Instead, let's support the existing Maine-based biomass infrastructure that is already in place to take advantage of our plentiful natural resource: wood.

Indeed, references to socialism and socialists appear twelve times throughout Governor LePage's 2016 State of the State letter.  (A reference to Senator Bernie Sanders' candidacy for President?)

In his letter, Governor LePage also called for expansion of linear infrastructure like natural gas pipelines into New England and electric transmission lines to hydropower resources in Canada:

Meanwhile, my Administration continues to make progress working with other New England states to expand hydropower and natural gas into our region. Right now there is construction underway to expand our pipelines into New England, and clean and affordable hydropower is right next door in Quebec. It's time to switch off expensive energy. We must plug into the affordable reserves of nearby natural gas and hydropower. We must be willing to transmit hydropower to the states south of us.

These themes of energy infrastructure investment echo those playing out elsewhere in the Northeast U.S., as states explore expanded connections to natural gas from the Marcellus shale and Canadian hydropower.

USDA REAP loan guarantee Maine funding available

Funding is available for energy projects at Maine's rural small businesses and agricultural producers through the USDA Rural Development agency's Rural Energy for America Program (REAP).  At stake is about $200 million in guaranteed loan funds available to finance renewable energy and energy efficiency projects in fiscal year 2016.

Since 2008, the USDA REAP program has provided grants and loan guarantees for renewable and energy efficiency projects at qualifying rural small businesses and agricultural producers.  Its loan program helps finance renewable energy systems and energy efficiency improvements.  Typical projects awarded funding in previous rounds include biomass fueled anaerobic digesters and biodiesel production, solar, wind, geothermal, efficient lighting conversions, motor upgrades, building envelope and HVAC improvements. 

REAP describes its loan guarantee program as lender-driven.  Usually, a qualifying farm or business will approach a lender to discuss financing a proposed project.  That lender then requests the USDA Rural Development loan guarantee, and if approved, makes and services the loan.  Guaranteed loan amounts can range from $5,000 to $25 million.  The guaranteed loan amount can cover up to 75% of the total eligible project cost, while 25% of project costs must come from other sources like business equity or other borrowed funds.

USDA Rural Development provides more information on its website about how to apply for a USDA REAP loan guarantee.  The Preti Flaherty team helps our clients understand how to benefit from REAP funding and other incentive programs for renewable energy and energy efficiency.  Contact Todd Griset to learn more.

U.S. renewable energy share highest since 1930s

In 2014, about 9.8% of the total energy consumed in the U.S. came from renewable energy sources, according to the U.S. Energy Information Administration.  This represents the highest share of total domestic energy supply coming from renewable resources since the 1930s.

Prior to the growth of production and distribution networks for petroleum and other fossil fuels in the early 20th century, many homes used wood for heating as did industry.  This reliance on renewable biomass historically satisfied a significant portion of the total domestic energy demand.  But technological advances and the birth of the electric power industry led to greater use of other fuels.  As a result, the EIA reports that renewable resources' share of total domestic energy supply peaked in the 1930s, then declined.

But recent growth in U.S. renewable energy use has brought the country's energy mix back to nearly 10% renewable.  Indeed, from 2001 to 2014, renewable energy use grew an average of 5% per year, largely through increased use of wind, solar, and biofuels:

• Wind energy grew from 70 trillion Btu in 2001 to more than 1,700 trillion Btu in 2014.
• Solar energy (solar thermal and photovoltaic) grew from 64 trillion Btu to 427 trillion Btu.
• The use of biomass for the production of biofuels grew from 253 trillion Btu to 2,068 trillion Btu.

According to EIA, inn 2014, slightly more than half of all renewable energy was used to generate electricity.  Renewable energy accounted for 13% of energy consumed within the electric power sector, the highest renewable use attributable to any sector.

Report on Maine renewable portfolio standard in 2013

The Maine Public Utilities Commission has issued a report on Maine's use of renewable electricity in 2013.  The report shows the impact of Maine's renewable portfolio standard, a state law requiring electricity suppliers to source specified percentages of their electricity from “new” renewable resources.

Since 2000, Maine law has required electricity suppliers to include renewable energy in their portfolio of supply sources.  Maine’s original electric industry restructuring legislation included a 30% eligible resource portfolio requirement. The eligible resource portfolio requirement, now referred to as Class II, mandated that each retail competitive electricity supplier meet at least 30% of its retail load in Maine from “eligible resources.”  Eligible resources are defined in statute as either renewable resources or efficient resources.  Renewable resources are defined in statute as fuel cells, tidal power, solar arrays, wind power, geothermal installations, hydroelectric generators, biomass generators, and municipal solid waste facilities. Renewable resources may not exceed a production capacity of 100 megawatts. “Efficient” resources are cogeneration facilities that were constructed prior to 1997, meet a statutory efficient standard and may be fueled by fossil fuels.

During its 2007 session, the Maine Legislature enacted an Act to Stimulate Demand for Renewable Energy.  This Act established a new "Class I" standard, requiring Maine electricity suppliers to source specified percentages of their electricity from “new” renewable resources.  Generally, new renewable resources are renewable facilities that have an in-service date, resumed operation or were refurbished after September 1, 2005.  The Act set the initial renewable percentage requirement at 1% in 2008, increasing in annual one percentage point increments to 10% in 2017.  Pursuant to the Act, the renewable requirement will remain at 10% thereafter, unless the Commission suspends the requirement.

The Commission's March 31, 2015 report, Annual Report on New Renewable Resource Portfolio Requirement, reports on renewable portfolio standard compliance activity in calendar year 2013.  This lag between the study period and the report's issuance is driven by the timing of the most recently filed Competitive Electricity Provider (CEP) annual compliance reports, which were filed in July 2014 for calendar year 2013.  In 2013, the Act required suppliers to source 5% of their power from new renewable resources.  Suppliers can comply either by acquiring sufficient renewable energy certificates or RECs to cover their compliance obligation, or by paying an "alternative compliance payment".

According to the report, in 2013 suppliers purchased 727,291 Class I RECs from 21 certified generating facilities to meet the portfolio requirement.  Nearly 97% of these RECs came from biomass facilities located in Maine.  According to the report, 17 of the 21 facilities are biomass, three are hydro, and one is a wind facility.  18 of the 21 facilities are located in Maine, one is located in Connecticut, one is located in Massachusetts and one is located in Vermont.

The Commission's report also documents the cost of compliance in 2013.  During 2013, the cost of RECs used for compliance with the Class I requirement ranged from approximately $1.50 per MWh to $60 per MWh, with an average cost of $19. 8 7 per MWh and a total cost of $14, 292,438.  As noted in the report, the cost of Maine Class I RECs has dropped substantially since 2013, with the report citing a current trading range of $3.00 to $5.00.  With minor use of the alternative compliance mechanism by two suppliers, the total cost to ratepayers during 2013 was $14,296,249, which the Commission's report translates into an average rate impact of about 0.12 cents per kWh (about 60 to 65 cents monthly for a typical residential bill, or a residential customer bill impact of about 1%).

The report also documents the 2013 costs of RECs used to satisfy the "Class II" eligible resource portfolio requirement as ranging from $0.00 per MWh (some RECs were included as part of an energy transaction at no specified extra cost) to $1.00 per MWh, with an average cost of $0.16 per MWh and a total cost of $589,386. This translates into less than three cents per month on a typical residential bill.

2014: natural gas, wind, solar led new projects

Natural gas, wind, and solar power projects dominated the rankings of new U.S. electric generation placed in service in 2014.

According to the Federal Energy Regulatory Commission staff's December 2014 Energy Infrastructure Update, developers placed in service 15,384 megawatts of new utility-scale electric generation capacity in 2014.  This new capacity buildout is within 4% of 2013's figure (15,886 megawatts).

Of 2014's new generating capacity, nearly half (7,485 megawatts, or 49%) is powered by natural gas.  U.S. production of natural gas has increased significantly in recent years, and natural gas prices have decreased in most regions of the country.  At the same time, new environmental regulations have made historically dominant coal relatively more expensive as a fuel source, while relatively low carbon emissions have made natural gas more attractive.  2014 thus continued the trends of coal-fired power plant retirement and the construction of new natural gas-fired generating capacity.

Wind represents the next largest category of new U.S. electric generating capacity placed in service in 2014.  Nearly 27% of 2014's new capacity, or 4,080 megawatts, is powered by wind.  As President Obama noted in his 2015 State of the Union address, the U.S. has more wind energy supplying its electrical grid than any other country.

Solar energy represents the third largest category of new generation placed in service last year.  Over 20% of new 2014 capacity, or 3,139 megawatts, is powered by solar energy.  The rapid growth of solar energy in the U.S. was also featured in President Obama's 2015 State of the Union speech, in which he noted, "Every three weeks, we bring online as much solar power as we did in all of 2008."

Combined, these three energy sources (natural gas, wind, and solar) account for over 95% of all new utility-scale generation capacity placed in service in 2014. Of the remaining capacity, biomass took the largest share (1.6% of total new capacity), with a diverse mix of other sources including water power, coal, and nuclear rounding out the list.  Notably, renewable sources including wind, solar, biomass, and hydropower account for nearly half of all new capacity placed in service in 2014.

What will 2015 bring?

Biofuels lead growth in U.S. biomass energy

The use of energy from biomass resources in the United States grew more than 60% over the decade between 2002 and 2013 -- primarily in the form of increased use of biofuels like ethanol and biodiesel that are produced from biomass.


A fuel pump displays prices for gasoline blended with up to 10% ethanol.

According to the U.S. Energy Information Administration, biomass accounted for about half of all renewable energy consumed in 2013 and 5% of total U.S. energy consumed. The three primary sources of this biomass are wood and forest products byproducts, waste including municipal solid waste and landfill gas, and raw organic feedstocks like corn and soybean oil used to produce biofuels.

Of biomass energy resources, biofuels experienced the greatest growth over the last decade. From 2002 to 2013, biofuels created from biomass grew more than 500%, driven largely by increases in U.S. production of ethanol and biodiesel for blending as transportation fuels. These biofuels are typically produced from feedstocks such as agricultural crops and other plant material, animal byproducts, and recycled waste. For U.S. ethanol production, corn is the dominant feedstock, while biodiesel producers rely on soybean oil for just over half of feedstock needs and an array of biomass resources for the rest. Market demand for these biofuels comes in part from federal mandates such as the U.S. Environmental Protection Agency's Renewable Fuel Standard, which requires the blending of certain volumes of biofuels into gasoline and diesel.

Meanwhile, EIA data shows that consumption of wood and waste energy increased just 4% over the decade. About two-thirds of U.S. wood energy is consumed for industrial processes, while nearly all U.S. waste energy is consumed for electric generation or industrial processes.

If this trend continues, woody biomass and waste energy will continue to hold their positions in our portfolio of energy resources, while continued growth in the conversion of biomass into biofuels for transportation and other needs will increase biofuels' weighting in the nation's energy mix.  At the same time, debates continue over the cost and value of programs encouraging the growth of corn as a biofuel feedstock.  What does the future hold for biomass in the U.S.?

Solar, geothermal led new US capacity in January 2014

Solar and geothermal resources led the new utility-scale electric generating capacity installed in the U.S. in January 2014, according to a report by the staff of the Federal Energy Regulatory Commission.  In all, the report identified 325 megawatts of new generation placed in service in January, substantially all of which is powered by renewable resources.

Old Faithful Geyser erupts in Yellowstone National Park -- a natural geothermal feature.

Solar power contributed the largest share of new generating capacity installed in January, with 287 megawatts of solar projects placed in service.  The largest project, Exelon Corp.'s Antelope Valley Solar Phase II expansion project in Los Angeles County, California, added 130 megawatts of capacity to an existing 230 megawatt project.  The power generated is sold to Pacific Gas and Electric under long-term contract.  Other large new solar projects include MidAmerican Solar’s 61 MW Topaz Solar Farm Phase III expansion project in San Luis Obispo County, California, and two 20 MW projects (Duke Energy Corp.’s Dogwood Solar Power project in Halifax County, North Carolina, and NextEra Energy Inc.’s Mountain View Solar project in Clark County, Nevada).  All of these projects rely on long-term power purchase agreements with utilities.

Geothermal steam power was the second largest category of new electric generating capacity placed in service in January 2014, in the form of Gradient Resources Inc.’s 30 MW Patua Hot Springs Geothermal project in Lyon County, Nevada.  As with the solar projects described above, the power generated by the Patua Hot Springs project is sold to a utility -- in this case, Sacramento Municipal Utility District, under a long-term contract.

Rounding out the new capacity installations in January were 3 small biomass units with a combined capacity of 3 megawatts, and one wind project with an installed capacity of 4 megawatts -- Consolidated Edison Inc.’s 4 MW Russell Point Wind Farm project in Logan County, Ohio.

Despite this growth in solar and geothermal power resources, together these resources account for just over 1% of the nation's total installed operating generating capacity.  Yet the relative growth in solar and geothermal power over the past years has been striking, and is expected to continue for the near term.  Will these resources soon play a larger role in the nation's energy portfolio?

Voluntary renewable power markets small but growing

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?

Master Limited Partnerships for clean renewable energy

An organizational structure called Master Limited Partnerships has the potential to increase private-sector investment in clean energy. Master Limited Partnerships, or MLPs, benefit from a tax structure under which investors are taxed as partners but can trade their ownership stakes on securities exchanges much like corporate stock. Newly proposed federal legislation could extend this treatment to clean energy technologies.

MLPs offer their investors an attractive combination of tax advantages and liquidity. Profit from most publicly traded corporations is taxed twice, at both the corporate level and the shareholder level. By contrast, income from MLPs is taxed only at the shareholder level because it is treated as a partnership for tax purposes. Like Real Estate Investment Trusts or REITs, MLPs thus combine the tax benefits of a limited partnership with the liquidity of publicly traded securities.

Under federal law, MLP treatment is limited to enterprises generating at least 90 percent of their income from qualifying sources. These generally involve the use of natural resources, such as the production, processing or transportation of petroleum, natural gas, coal, timber, and other minerals. Since 1981, the use of the MLP structure has grown; estimates suggest that over 100 MLPs are currently being traded on major exchanges, with a total market valuation of about $445 billion.

Yesterday Congress introduced proposed bipartisan legislation that would extend this tax structure to clean energy technologies. The Master Limited Partnerships Parity Act, formally known as S.795: A bill to amend the Internal Revenue Code of 1986 to extend the publicly traded partnership ownership structure to energy power generation projects and transportation fuels, and for other purposes, is sponsored by Sen. Chris Coons, D-Del., along with co-sponsors Sens. Jerry Moran; R-Kan., Debbie Stabenow, D-Mich.; and Lisa Murkowski, R-Alaska. It has been referred to the Senate Committee on Finance.

The Master Limited Partnerships Parity Act would significantly broaden the scope of projects eligible for MLP treatment to include clean energy resources and infrastructure projects. These projects would include any energy technologies that qualify for the federal production tax credit or investment tax credit, such as wind, closed and open loop biomass, geothermal, solar, municipal solid waste, hydropower, marine and hydrokinetic, fuel cells, and combined heat and power. The bill would also open the MLP structure to advanced transportation fuels such as cellulosic, ethanol, biodiesel, and algae-based fuels, as well as energy-efficient buildings, electricity storage, carbon capture and storage, renewable chemicals, and waste-heat-to-power technologies.

Proponents hope that the act would stimulate investment in clean energy projects much as it has worked for other extractive natural resource infrastructure. At the same time, concern over the federal budget calls for serious consideration of measures that would reduce federal tax revenues. So far, the bill seems to have broad support and little outspoken opposition. If enacted, it could lead to an influx of investment capital into renewable and clean energy technologies.

Maine considers renewable feed-in tariff

The Maine legislature is set to consider a bill that would create a feed-in tariff for renewable energy.  Maine already has a renewable portfolio standard and other incentives for investment in renewable power production.  Will Maine add a feed-in tariff to the mix?

The Maine State House, home to a consideration of feed-in tariffs.

 A feed-in tariff is a policy tool intended to encourage investment in renewable energy technologies.  Feed-in tariffs typically offer long-term contracts under which utilities purchase power fromrenewable energy producers at predictable prices, often based on the cost of generation of each technology.  Where feed-in tariffs exist, developers of renewable energy projects gain certainty about the revenues their projects will create.  This certainty helps developers secure the financing they need to build projects.

A bill proposed by Maine state senator Christopher Johnson would require the state Public Utilities Commission to establish a renewable energy resources feed-in tariff program.  An Act To Establish the Renewable Energy Feed-in Tariff, also known as LD 1085, has the stated purpose of encouraging the rapid and sustainable development of renewable energy resources and technology for environmentally healthy generation of electricity.  Like feed-in tariffs in other jurisdictions, it would require that utilities purchase renewably produced electricity from all qualified suppliers.  It would have the Public Utilities Commission set the rate that electric utilities must pay for such power at a level sufficient to provide revenues to operate and to attract necessary capital and investment for small renewable electric generators.

Qualified suppliers would be limited to certain small renewable electric generators.  As defined in the bill, such generators would be limited to systems up to 500 kilowatts in size, that are majority owned by a person or entity that owns less than 500 kilowatts of electricity generating capacity in Maine, and that use solar photovoltaic panels or solar thermal or concentrating solar systems, generators fueled by methane from sewage treatment facilities, landfills or agricultural waste, generators fueled by combustion of biomass, tidal power projects, or wind energy.

Existing Maine law provides incentives for the generation of electricity from renewable resources.  Like most states, Maine has a renewable portfolio standard which requires electricity suppliers to source a specified portion of their power from renewable generators.  Maine also has a community-based renewable energy pilot program which functions like a feed-in tariff for eligible projects.  A feed-in tariff would add another incentive to build relatively small (non-utility-scale) projects.

LD 1085 has not yet been scheduled for a public hearing.  It will likely come before the Joint Standing Committee on Energy, Utilities and Technology later this spring.

Georgia Power to close many coal-fired plants

Following the current trend of coal-fired power plant closures, electric utility Georgia Power has announced plans to retire 15 coal- and oil-fired generating units by April 2016.

Georgia Power is a vertically-integrated investor-owned public utility serving most of Georgia.  A Southern Company subsidiary, Georgia Power currently has 18,623 MW of generating capacity.  While its portfolio includes nuclear, natural gas and hydro generation, the bulk of Georgia Power's capacity is fueled by coal, with 11,387 MW of coal-fueled generation at 10 plants across Georgia.

This week, Georgia Power announced that it will request approval from the Georgia Public Service Commission to decertify and retire 15 coal- and oil-fired generating units, with a total capacity of 2,061 MW.  The company plans to request decertification of most of the units by April 16, 2015, the effective date of the U.S. Environmental Protection Agency's (EPA) Mercury and Air Toxics (MATS) rule requiring more stringent air emissions controls for fossil fuel-fired plants.  The utility cited factors including the cost to comply with existing and future environmental regulations, recent and forecasted economic conditions, and lower natural gas prices, as contributing to the decision to close these units.

Georgia Power's announcement follows other similar utility decisions to close coal-fired power plants, including Progress Energy Carolinas and Dominion.

From brownfields to renewable energy sites

Contaminated lands, landfills, and mine sites are increasingly being used as sites for renewable energy projects.  For example, many landfills may be suitable for siting solar photovoltaic panels.  Former industrial sites with subsoil contamination may not be suitable for redevelopment with buildings, but may be able to host solar or wind-based electric generation.  According to the U.S. Environmental Protection Agency, renewable energy systems have been installed at 60 such sites in 25 states.  What is the future of this trend?
 
EPA policy encourages renewable energy development on current and formerly contaminated land and mine sites when it is aligned with the community’s vision for the site.  Under EPA's RE-Powering America's Land initiative, EPA identifies the renewable energy potential of these sites and provides resources for communities, developers, industry, state and local governments.

An EPA report released earlier this month describes 60 renewable systems installed on potentially contaminated lands, landfills, and mine sites.  Of these, the majority (49) generate electricity through solar photovoltaic technology.  Seven generate electricity from the wind; biomass, geothermal, hydropower, and combined solar/wind round out the count.  Together, these resources provide 184.7 MW of electric generation capacity.  Most sell their power into the wholesale market, while some use the power on-site.

Host sites are split among private, federal, municipal, and state ownership.  Sites include those regulated under EPA's Comprehensive Environmental Response, Compensation, and Liability Act program (CERCLA, or Superfund), EPA's Resource Conservation and Recovery Act program (RCRA), brownfields, and landfills.

Many more potential sites exist.  Thousands of properties across the country face redevelopment challenges from contamination.  The country is home to over 3,000 active commercial landfills and 10,000 municipal landfills.  While not all may be suitable for renewable energy development, the concept offers the opportunity to create a revenue stream from property otherwise limited in use and saddled with environmental liabilities.  This revenue could be used for remediation of the sites' contamination, as well as for other purposes.  The trend of developing renewable energy facilities on contaminated lands, landfills, and mine sites is likely to continue for the foreseeable future.