NJ regulators reject offshore wind project

The New Jersey Board of Public Utilities has voted against extending ratepayer subsidies to an offshore wind project proposed by developer Fishermen's Energy, challenging the project's financial viability.

The New Jersey coast near Atlantic City, seen from above.

Back in 2011, Fishermen's Energy proposed a 25-megawatt offshore wind pilot project to be located off Atlantic City.  The developer applied to the Board of Public Utilities for ratepayer support under New Jersey's Offshore Wind Economic Development Act of 2010.  That law directed the Board of Public Utilities to develop a program to require utilities to source a percentage of the electricity they sell in New Jersey from one or more qualified offshore wind projects.  To track energy from offshore wind, the law envisioned the creation of offshore renewable energy certificates, or ORECs, that could be sold by qualified offshore wind projects to the load-serving utilities.  The concept was that given the relatively high costs and uncertainty of offshore wind, no project could be financed or built without a steady revenue stream from OREC sales.

But the New Jersey project appeared to stall before the Board.  Charged with creating the OREC program and evaluating whether the Fishermen's Energy project could qualify to produce ORECs, the Board was faced with serious technical tasks.  As the regulatory process for the Fishermen's Energy project lengthened -- ultimately stretching to over 1,000 days -- Board staff raised concerns over the financial viability of the project, as well as over the impact of the requested subsidy to ratepayer costs.  Despite trimming the project's estimated costs to $188 million, these concerns remained, leading Board staff to recommend denial of Fishermen's Energy's request for OREC certification.
  
Yesterday, the Board of Public Utilities rejected Fishermen’s Energy’s proposal by a unanimous 4-0 decision.  While the Board's formal written order has not yet been released, expect it to explain the Board's reasoning in more detail when it surfaces next week.  In the meantime, Fishermen’s Energy is undoubtedly considering its options, which may include dropping the project, appealing the Board's rejection, or finding alternative ways to de-risk and finance the project.

March 11, 2011 - powering data centers with renewable energy

What happens when you combine customer choice, voluntary renewable power markets, and electricity-hungry data center?

Data centers house computer systems for things like telecommunications and storage of large amounts of digital information.  I've written before about how much energy data centers can consume: in the case of the National Security Agency's Utah Data Center, estimates suggest up to 65 megawatts of electricity at any given time.  This demand for electricity can drive data centers to locate or relocate themselves in areas of lower power pricing.

Another possibility is for data centers to choose their electricity sources not based on pricing but on other characteristics, such as the sustainability of the power generated.  For example, IT services company Datapipe, Inc. recently chose to buy all its power for its US facilities from renewable sources.  This won them Leadership Club status in EPA's Green Power Partners program.  Datapipe buys almost 56,000,000 kilowatt-hours per year, all of which it now sources from renewable generation.  Assuming they run at an even electricity load 24 hours a day, 7 days a week, that's an average of 6.4 megawatts of demand.  While that's less than the Utah Data Center's anticipated consumption, it's impressive to see a consumer choosing to buy 100% renewable electricity.

March 8, 2011 - Maryland's long-term contracting for offshore wind

Offshore wind development in the mid-Atlantic states is moving forward - what will it cost?  The Maryland legislature is considering a plan by Governor Martin O'Malley to kickstart offshore wind development.  The Governor has said that offshore wind projects are a critical part of how Maryland can meet the state's renewable energy goal of sourcing 20 percent of its electricity from renewable sources by 2022, but without long-term contracts, it is unclear whether enough (or any) projects would be built.  To get over this hurdle, Governor O'Malley's plan would require Maryland utilities to sign long-term contracts to buy offshore wind power at prices above the current market rate.  Project developers view the contracts, lasting up to 25 years, as essential to getting the projects financed and built. 

So how much will this cost?  Figures diverge by a factor of more than sixfold.  Governor O'Malley's estimates are that the plan will cost the average ratepayer $1.44 per month, but that figure has been called into question by other more recent analyses.  The Maryland legislature's budget analyst's has concluded that the monthly cost to average ratepayers will be $3.61, while Maryland's Public Service Commission has predicted a range of monthly costs between $2.16 and $8.70.

August 30, 2010 - Cape Wind; German solar to beat wind?

The dome at the Maine State House - currently netted for construction.

The Boston Globe editorial team has come out in qualified support of utility National Grid's proposed long-term contract with Cape Wind.  The editors note that consumers are correct to consider whether it is appropriate for them to be required pay more than 25% more for energy from renewable sources than for energy as a commodity.  They do note that because the Cape Wind contract represents about 3.5% of National Grid's load, the impact on ratepayers will be diluted -- about $1.24 per month for the average residential consumer.  After a close examination, should the Department of Public Utilities approve the deal?  The editors' answer: "no if the goal is simply to keep utility costs as low as possible in 2010 — but yes if Massachusetts wants to be a future leader in renewable technology."

Meanwhile, Germany has announced that its solar PV capacity may exceed its wind capacity by 2020.  A state energy adviser has projected that Germany will have 42 GW of installed capacity from solar photovoltaics by 2020 -- just enough to topple wind power, which is projected to reach 41.9 GW installed capacity.  Germany produces more electricity than any other nation in Europe.

August 26, 2010 - more tidal; subsidies in question

I'm continuing to follow the successes of tidal energy developer ORPC.  This article quotes ORPC President and CEO Chris Sauer as calling Eastport the “Kitty Hawk” of the tidal power industry.  (Add this to Maine's list of comparative titles, including the Saudi Arabia of wind, the Saudi Arabia of biomass and forestry and the Silicon Valley of ocean energy.)


Here's a letter to the editor of the Bangor Daily News pointing out the subsidies applied to fossil fuels versus renewables.  The author agrees with a previous editorial's claim that fossil fuel subsidies were 12 times higher than alternative energy subsidies, but adds additional figures from the Energy Information Agency.  The author claims that natural gas or petroleum-produced electricity gets a subsidy of $0.25 for every million megawatt hours produced -- yes, that's a reward of one shiny coin per million MWh produced -- while wind gets a subsidy of $23.37 per MWh.  (I suspect there is a typo here, because the author concludes that the wind subsidy is "100 times more than fossil fuels", whereas these numbers would appear to support a less credible claim of wind being subsidized "100 million times more" than gas/oil.  The author then claims that recent home weatherization and efficiency improvements have been made "without government subsidies but with free market forces."

I suspect quasi-governmental entities like the Efficiency Maine Trust and the Maine State Housing Authority might argue that subsidies, incentives, and other state government spending programs deserve significant credit for residential efficiency improvements.  Rather than argue those points here, it's worth noting that the author of the editorial raises interesting policy questions about which tools are appropriate to achieve state energy, environmental and social goals.  Due to the complex layering of both energy production businesses and federal and state governments, an exact calculation of the subsidies available for various resources can prove challenging.  This debate is a fine illustration of the challenges of an apples-to-apples comparison of various resources' costs to society.


It's great to hear that here in Augusta, three hiking trail systems are about to be interconnected:
the Augusta Greenway Trail running along the Kennebec River's east bank, the Kennebec River Rail Trail along the river's west bank, and ultimately the Viles Arboretum trails on the east side.

June 2, 2010 - Integrated Solar Combined Cycle: piggybacking of solar thermal onto combustion

Yesterday I wrote about FPL's Martin Next Generation Solar Energy Center, which uses "Integrated Solar Combined Cycle" technology. FPL describes the Martin plant as the "first hybrid solar facility in the world to connect to an existing combined-cycle power plant". The idea is to use parabolic trough reflectors to concentrate sunlight to help heat a special heat-transfer fluid that will be used to make steam -- steam that will be mixed with the steam produced by gas- and oil-fired boilers, and used to power generators.

Through discussions, I learned that others are experimenting with integrated solar combined cycle technology. In August 2009, Abengoa Solar announced its plans to build the first CSP installation integrated with a coal-fired plant. The Abengoa modification to Xcel Energy's existing Cameo plant, located near Grand Junction, Colorado, could add up to 4 MW equivalent (MWe) to the installed capacity.

The ISCC plant that is farthest along appears to be a 470 MW plant located at Ain Beni Mathar, Morocco. To be operated by nationalized utility Office National de l'Electricité (ONE), the Ain Beni Mathar plant combines parabolic trough solar technology and a conventional gas-fired power plant. Projections suggest that the solar component will supply 20 MWe, with the remaining 450 MW coming from the conventional thermal plant. On a production basis, the solar output is projected to be about 40 GWh, or just over 1% of the project's annual net production of 3538 GWh per year. Ain Beni Mathar is just one part of an ambitious 2000 MW solar program underway in sunny Morocco.

Here's a link to the Ain Beni Mathar project page on the African Development Bank Group site. The site lists a project cost of 179,073,180 Euro -- or about $218 million in US dollars at today's exchange rates.

Yesterday, we looked at the price tag of FPL's Martin plant: $420 million for 75 MW of solar. Dividing this linearly, we get a cost of $5.6 million per MW installed solar capacity. By comparison, Ain Beni Mathar offers about 20 MW of solar equivalent, or $10.9 million per MW.

Can these numbers be right? From the technology perspective, this is really neat stuff -- but are these prices reasonable?

May 11, 2010: more Cape Wind analysis

Continuing the analysis from yesterday: Is Cape Wind worth 20.7 cents per kWh? Massachusetts Governor Deval Patrick thinks so. In response to the questioning about whether ratepayers should pay for the project's renewable output at a significant price premium, Governor Patrick has publicly supported the proposed contract between National Grid and the Cape Wind project.

Governor Patrick is touting the value of the contract (or the project?) in securing a "stable, renewable source of energy" as crucial to the state's future. He also notes the value of the project in offsetting consumer price volatility driven by natural gas price spikes.

Reading between the lines, the Governor's message may be that although buying Cape Wind increases costs, it is worth it -- the benefits outweigh the costs. Recall that the contract locks customers in for 15 years at prices starting at 20.7 cents and escalating at 3% annually, adding an estimated $1.50 to the average residential customer's monthly electricity bill and more to industrials' bills.

Cape Wind's regulatory situation illustrates one issue that crops up with higher-priced renewable contracts: although the price paid per kWh under the contract might be high, the expensive renewables make up a fraction of a customer's total power purchase. As long as these expensive contracts are limited to being a small portion of the portfolio of power resources, there is an argument that the benefits are worth it. But what happens as the portion of the power portfolio sourced from expensive renewables increases? At what point do we decide what price impacts are too much?

May 10, 2010: Cape Wind roundup

Are you following the Cape Wind project in Nantucket Sound as it moves forward? Cape Wind is on track to be the nation's groundbreaking (oceanbreaking?) first offshore wind farm. Here's a quick scorecard of some key figures:

$1,000,000,000.00: yes, one billion dollars. That's how much the project is projected to cost.
130 turbines: projected to generate a maximum electric output of 468 MW and an average of 182 MW
25 square miles: the footprint of the project in Nantucket Sound
400 feet: the approximate height of each tower
9 years: how long the project has been studied -- and debated
700,000 tons: estimated annual reduction in carbon dioxide emissions by displacing fossil-fueled units

And a few numbers for consumers to focus on:
20.7 cents: the initial price per kWh, rising 3.5% a year for the 15-year life of the contract
$1.59: the monthly increase in the average residential customer’s monthly bill

Here are good New York Times and Boston Globe stories on the path forward for the project. As I reported last week, the next step is winning approval from the Massachusetts Department of Public Utilities. I have practiced before the DPU, and am confident that the Department will thoroughly evaluate whether the proposed contract meets the statutory standards and is in the public interest.

5/7/10: Cape Wind at 20.7 cents per kWh?

National Grid, one of the largest public utilities serving Massachusetts customers, has agreed to buy electricity from the 130-turbine Cape Wind near-shore wind project in Nantucket Sound. The Boston Herald reports that National Grid has signed a 15-year contract to pay 20.7 cents per kWh -- more than twice the typical market rate for power in New England. The contract provides that the price will escalate 3.5% annually.

As the offshore (or near-shore) wind market becomes a reality, I'm watching with interest (watching might be too passive a word; perhaps "getting involved" makes more sense) as the market seeks price equilibrium. Remember that just over a month ago, the Rhode Island PUC rejected a proposed contract between NGrid and the proposed Deepwater Wind project off Block Island, largely on the grounds that the contract was too expensive. Admittedly, the proposed Deepwater contract had a higher price tag: 24.4 cents per kWh, escalating 3.5% annually for 20 years to a final price of 48.6 cents per kWh. Even that higher price, which NGrid had asked the PUC to approve, was lower than the original Deepwater proposal that NGrid rejected in October 2009.

It's clear that developing offshore wind still costs significantly more than traditional energy resources, at least under current regulatory regimes and fuel costs. (In fact, offshore wind costs significantly more than some other renewable resources, like hydro and onshore wind.) Just because something costs more doesn't mean that it isn't a good deal, or that customers shouldn't have to pay for it. But on the policy level, how will we decide how much is too much?

4/28/10: dam repair and communications; from wood mill to energy plant

Dam news: repairs to the New Mills Dam in Gardiner, Maine. In order to repair two uprights on the New Mills Dam in Gardiner, the Cobbossee Watershed District has drawn down Cobbosseecontee Stream and attached Pleasant Pond by almost a vertical foot, exposing more pond and stream bottom than in the past six years. The two wooden uprights of the dam were damaged by high water and bashed by ice in late February. Kruger Energy, which also operates a hydroelectric dam downstream that it acquired last November from Ridgewood Maine Hydro Partners LP, is performing the repairs, which are expected to take one day.

The New Mills Dam demonstrates one relatively common form of small dam ownership in New England. In this case, the dam is owned by the municipalities of Gardiner, Litchfield and Richmond. These three owners pay for the upkeep, while Kruger Energy is contracted out to manage maintenance and repairs.

Here, the drawdown has concerned some people who live along the impoundment. They are concerned about erosion, nesting ducks, fish, and in general about the management of the impoundment. While the drawdown is required for safety during the dam repairs, this situation demonstrates the importance of communication and collaboration between dam owners and neighboring abutters.



From a forest products mill to an energy facility! The town of Madison is considering the potential transformation of the former Anson Stick Mill into an energy-producing facility. The town acquired the abandoned mill and its biomass boiler from Downeast Woodcrafters, and now is exploring creating a municipal heating district within the downtown area. While municipal heating districts are common in Europe, as well as on American institutional campuses (e.g. universities), the practice is not widely deployed in New England. Madison Economic Development Director Joy Hikel said the goal behind a potential energy-producing facility is twofold: to reduce heating or electricity costs for the owners of the downtown buildings by 40 to 50 percent, and to provide local utility Madison Electric Works with an affordable source of energy to sell to consumers.