Apple makes California solar deal

Electronics manufacturer Apple has announced an $848 million deal to buy electricity from a solar energy project to be developed in California. Project developer First Solar has described the power purchase agreement as "the largest agreement in the industry to provide clean energy to a commercial end user."

Solar photovoltaic panels in the Utah desert.

Earlier this week, Apple announced the deal with First Solar, Inc., to buy power from First Solar's California Flats Solar Project in Monterey County, California.  Under a 25-year power purchase agreement or PPA, Apple will buy the equivalent of 130 megawatts of the solar project's output. 

First Solar is a vertically-integrated solar company, manufacturing solar photovoltaic panels, developing utility-scale photovoltaic power plants, and providing solar project support services.  First Solar boasts involvement with over 10 gigawatts of installed solar photovoltaic capacity worldwide.  Its resume includes the 550-megawatt Topaz Solar project in California and the 290-megawatt Agua Caliente project, which was once the world's largest operating solar energy project.

First Solar's California Flats Solar Project will occupy a 2,900-acre site on the Jack Ranch in Cholame, California.  Owned by Hearst Corporation, the project site was formerly a dryland farm, and occupies about 3% of the Jack Ranch property.  First Solar expects to begin construction later this year, and to complete the project by the end of 2016.

With a total project capacity of 280 megawatts, Apple's 130-megawatt commitment covers about 46% of the project's output.  The project's remaining 150 megawatts will be sold to utility Pacific Gas & Electric under a separate long-term PPA.

Apple has developed other renewable energy projects, including fuel cells and solar panels at its Maiden, North Carolina data center.  Other high-tech companies have also made significant investments in renewable energy, including Google's commitment of over $1.5 billion to solar and wind projects through power purchase agreements and direct investments.

Wind to power Microsoft's Texas data center

Microsoft has agreed to purchase energy produced by a Texas wind farm to power its data center in San Antonio.  The announcement, posted on the official blog of Microsoft's Sustainability Development Team, describes a 20-year power purchase agreement with RES Americas under which Microsoft will purchase all of the output of the 110 megawatt Keechi Wind project located about 280 miles north.

The power purchase agreement fits with Microsoft's stated commitment to carbon neutrality.  Since 2012, Microsoft has imposed an internal fee on the use of carbon-based forms of energy; Microsoft uses that fee to make investments in alternative or carbon-neutral energy, such as this power purchase agreement.

The Keechi project will be owned and operated by RES Americas, a subsidiary of British company RES Ltd.  RES Americas currently operates over 600 MW of renewable energy projects, and has a renewable energy construction portfolio that exceeds 6,500 MW and 64 projects, as well as 534 miles of transmission lines.  Its Keechi project is expected to cost $200 million, and will feature 55 turbines expected to produce 430,000 megawatt hours of energy per year.  (To put this figure in context, it could power up to 45,000 homes, or cover between 5 and 10 percent of Microsoft's total electricity consumption.)  Construction is expected to begin in 2014, with the project going operational by June 2015.

Microsoft is not alone in promoting its use of renewable or alternative energy to power its data centers.  In 2012 Google entered into an agreement to purchase the output of a wind farm in Oklahoma to power its Pryor data center.  Apple's new data center in Maiden, North Carolina is powered in part by a solar photovoltaic array and a biogas-fed fuel cell.  eBay has proposed siting a 6 megawatt natural gas-fired fuel cell at its Utah data center.  Whether the data center is powered by on-site distributed generation or buys power from a designated off-site renewable resource, the trend is toward promoting cleaner, greener computing through these arrangements.  These choices may help the companies with cost control and power reliability as well as public relations.

Will large consumers of electricity continue to invest in alternative or renewable electric generation?  If so, will they favor arms-length power purchase agreements with developers of remote projects, or will they rely more heavily on on-campus development of distributed generation?  Will this trend spread beyond the big names so far - Microsoft, Apple, Google, and eBay - to the point where smaller or less tech-oriented companies develop or do similar projects and deals?

  Googa 20-year power purchase agreement (PPA) for wind energy in Texas that will be funded in part by proceeds from Microsoft’s carbon fee - See more at: http://blogs.msdn.com/b/microsoft-green/archive/2013/11/04/microsoft-signing-long-term-deal-to-buy-wind-energy-in-texas.aspx#sthash.4l62oNbo.dpuf

a 20-year power purchase agreement (PPA) for wind energy in Texas that will be funded in part by proceeds from Microsoft’s carbon fee - See more at: http://blogs.msdn.com/b/microsoft-green/archive/2013/11/04/microsoft-signing-long-term-deal-to-buy-wind-energy-in-texas.aspx#sthash.4l62oNbo.dpuf

a 20-year power purchase agreement (PPA) for wind energy in Texas that will be funded in part by proceeds from Microsoft’s carbon fee - See more at: http://blogs.msdn.com/b/microsoft-green/archive/2013/11/04/microsoft-signing-long-term-deal-to-buy-wind-energy-in-texas.aspx#sthash.4l62oNbo.dpuf

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.

Biogas at Apple's NC data center

Continuing to look at Apple's plans for energy supply at its data center in Maiden, North Carolina:

This spring a series of filings by Apple to the Federal Energy Regulatory Commission gave the public some insight into Apple's planned electric generation facilities at the Maiden data center, home to Apple's iCloud service.  (See Tuesday's blog entry for a look at its solar photovoltaic project, and Wednesday's entry for its fuel cell project.)

Fuel cells convert fuels into electricity through a chemical process that does not rely on combustion.  According to one of Apple's filings with FERC, Apple plans to use biogas to power its fuel cells:

The Systems will be fueled with biogas that will be transported via a natural gas pipeline system.  To be injected into the natural gas pipeline system and qualify as pipeline-grade gas, biogas must meet strict heat content and quality requirements.  Consequently, raw biogas must be upgraded (i.e., cleaned and separated to remove components such as hydrogen sulfide, chlorine, and sulfur and to increase methane content) prior to being injected into a pipeline.  Once injected into the pipeline system, it comingles with conventional natural gas and is indistinguishable from conventional natural gas in terms of safety and burning quality.  The biogas, having been upgraded/cleaned to pipeline-quality and then injected into the natural gas pipeline system displaces a comparable quantity of conventional natural gas.
The volume and heat content of the biogas will be measured at a utility-grade meter at the point of injection.  The biogas will then enter the natural gas pipeline infrastructure that has an established balancing measurement system regulated by the Federal Energy Regulatory Commission (Commission).  The biogas will be nominated for the Facility in accordance with the pipeline’s posted business practices and relevant Commission requirements.  Not only the contract and purchase of biogas, but also the nomination process demonstrates compliance with 18 C.F.R. § 292.204 (b).  A utility-grade meter at the Facility will measure actual gas consumption by the Facility.  A revenue-grade meter will measure electricity generated by the Facility.

Furthermore, because the biogas can be upgraded to flow in a pipeline system and nominated for a particular facility, it allows for flexibility in the location of the generating unit.  This flexibility will provide for increased efficiency (operational and maintenance), enhanced reliability, and improved land use. These benefits were recognized by the North Carolina Utilities Commission (“NCUC”).  The NCUC ruled that biogas fuel, which is derived from a renewable energy resource, cleaned to pipeline quality, injected into the pipeline system and nominated for an electric generation facility within the state of North Carolina, is a renewable energy resource known as “Directed Biogas” (NCUC Order Issued March 21, 2012, in docket SP 100, Sub 29). 

This Facility is in keeping with the stated reasons for the implementation of the Public Utility Regulatory Policies Act of 1978 (PURPA), specifically the increased conservation of electric energy, increased efficiency in the use of facility and resources by electric utilities, and the conservation of natural gas.  In the case of this Facility, the use of biogas, which displaces conventional natural gas, to generate electricity will reduce greenhouse gas emissions and smog forming pollutants while also diversifying the fuel used to generate electricity.  The Systems that make up this Facility consume less fuel and produce less CO2 than other technologies.  Each System emits less than 0.07 lbs/MW-hr of NOx , negligible SOx, less than 0.10 lbs/MW-hr of CO and less than 0.02 lbs/MW-hr of VOC.  Additionally, the Systems require very little water, with an average usage of approximately 0.00001 gallons/kWh. The low carbon footprint, de minimus criteria pollutants, small land use and negligible water use, make this Facility a prime example of an initiative that furthers the Commission’s stated goal of increasing renewable energy and investing in environmentally beneficial technologies.

Apple's Maiden, NC fuel cell project

Following on yesterday's look at Apple's planned solar photovoltaic system for its Maiden, North Carolina data center, here's a look at the fuel cell project Apple is also planning the Maiden facility.

A public filing Apple made last month to the Federal Energy Regulatory Commission describes the Maiden data center's proposed fuel cell system.  The filing represents Apple's self-certification that the fuel cell project meets the standards of the Public Utility Regulatory Policies Act (PURPA) of 1978 as a "qualifying facility", setting the facility up for incentives that could include the right to require Duke Energy Carolinas to buy its output.

Apple's fuel cell self-certification filing, docketed by FERC as QF12-327, describes the project:

The Facility will consist of 24 fuel cell systems (“Systems”) using a patented solid oxide fuel cell technology to generate electricity.  A single fuel cell consists of an anode, a cathode and an electrolyte placed between the two electrodes.  As fuel flows in through the anode side and an oxidant comes in over the cathode, a reaction is triggered that causes electrons to move into the fuel cell’s circuit, producing electricity.

Each System consists of thousands of fuel cells stacked together.  Multiple stacks are aggregated together into a "power module", and then multiple power modules, along with a common fuel input and electrical output are assembled as a complete system.  Each System is approximately the size of a standard parking space and will produce approximately 200 kW of power.  The Systems have a modular design that allows the simultaneous use of multiple Systems in order to achieve the desired electric generation output.  Each 200 kW (AC) System is comprised of six individual direct current (DC) power-producing modules and one input/output module for fuel intake and electricity output.  Each of the six individual DC power producing modules is feeding electricity to the input/output module which converts the DC power into the systems AC power output.  The combination of six DC modules and one input/output module comprise a 200 kW (AC) all-electric System.  Each System has a net baseload generating capacity of 200 kW (AC).  The total generating capacity of the Facility will be approximately 4.8 MW (AC).

The "patented solid oxide fuel cell technology to generate electricity" in this description is reported to be Bloom Energy's Bloom box technology.

Tomorrow, a look at the innovative fuel Apple proposes to use to power these fuel cells.

Apple's Maiden NC solar project

As Apple continues to develop a data center to handle its iCloud service, some details are emerging about the energy infrastructure to be built at the Maiden, North Carolina facility.  Two public filings Apple made last month to the Federal Energy Regulatory Commission describe the Maiden data center's solar photovoltaic and fuel cell systems.

Under federal law, certain efficient or renewable electricity generation facilities can certify themselves as "qualifying facilities" or QFs.  The Public Utility Regulatory Policies Act (PURPA) of 1978 required monopolistic electric utilities to buy power from QFs, as long as that cost was less than the utility's own "avoided cost".  Generally, a utility's avoided cost is the cost of the power the utility would have procured from a source other than the QF in question.  This policy was intended to improve the efficiency of the nation's fleet of electric generation, as lower-cost QFs displaced more expensive traditional utility generation.

In April, Apple submitted two filings to FERC certifying its planned Maiden solar and fuel cell systems as QFs.  These documents provide additional insight into Apple's plans.

In its solar photovoltaic project self-certification, docketed by FERC as QF12-328, Apple described the project:

Each of the photovoltaic installations will consist of multiple 435-watt photovoltaic modules on ground-mounted single-axis tracking systems. The current design includes 57,360 435-watt modules. The modules will be connected in series strings of 10 to achieve the appropriate DC voltage. The modules will track the sun by rotating about a north-south axis. At the current time, we expect 14 photovoltaic installations will make up the solar farm: ten 1.50 MW installations and four 1.25 MW installations. The final number of installations and modules will depend on detailed design considerations in consultation with the utility, the photovoltaic system provider, and local permitting authorities. Each installation will be connected to two 750 kW or two 625 kW inverters. Inverters will convert the DC current produced by the systems to AC current. A step up transformer is installed between the inverter outputs and the point of connection to Duke's distribution system. Each installation has a dedicated transformer. The photovoltaic installations will be installed in a phased manner, whereby the installations will be interconnected as they are completed.

Check out tomorrow's blog entry for a look at Apple's biogas fuel cell facility.

Debate over data center green claims

How green is Apple's iCloud data storage service?  That question provoked debate this week, as environmental activism group Greenpeace released a report critical of Apple's choices of power supply for its data center in Maiden, North Carolina, where the iCloud storage is based.

Greenpeace's report, How Clean is Your Cloud (52-page PDF), notes the explosive growth of cloud-based data and computing services offered by companies like Apple, Facebook, Amazon, Microsoft, Google,
and Yahoo.  These services are made possible by data centers, centralized networks of servers and computer infrastructure.  As Greenpeace put it, "Data centers are the factories of the 21st century information age, containing thousands of computers that store and manage our rapidly growing collection of data for consumption at a moment’s notice."

Data centers can be major consumers of electricity, needing cooling and air handling as well as energy for raw processing operations.  Some data center operators seek out renewable electricity, while others are developing on-site generation.  Most work to improve their energy efficiency, making the best possible use of the energy they need.

Apple has touted the green credentials of its Maiden data center, which was designed to earn LEED Platinum certification from the U.S. Green Building Council.  Apple's Maiden facility will also include a 20 MW solar facility on land adjacent to the data center, as well as a 5 MW biogas-based fuel cell system, systems Apple describes as "the nation’s largest end user-owned solar array" and "the largest nonutility fuel cell installation in the United States."

Greenpeace's report notes that despite these investments, Apple's data center is located in an area where utilities source a significant amount of power from coal-fired power plants.  Greenpeace and Apple dispute how much power the Maiden plant will consume (differing by as much as a factor of 5), and thus what fraction of its electricity will be produced from renewable on-site generation.

Whatever the facts may be, the debate illustrates society's interest in the environmental impacts of our technological choices - as well as the difficulty in evaluating some claims of greenness.

Community-based renewable energy in Maine

An innovative program in Maine seeks to facilitate the development of community-based renewable energy projects.  The program offers significant incentives for the development of qualified electric generation projects of up to 10 MW in size.

In 2009, the Maine legislature enacted a law establishing the Community-Based Renewable Energy Pilot Program to encourage the sustainable development of community-based renewable energy.  By community-based, Maine's program targets locally-owned community-scale projects (as opposed to large-scale renewable projects owned primarily by out-of-state entities).

Under the program, qualified renewable energy projects can receive significant incentives including a long-term contract to sell the facility’s output to a Maine transmission and distribution utility for up to 20 years at average prices up to $100 per MWh (equivalent to 10¢ per kWh). This incentive is attractive because not only can the contract prices be above average market prices, but also the long-term power purchase agreement makes projects easier to finance by enhancing revenue certainty.

Eligible projects can apply to the Maine Public Utilities Commission for certification as community-based renewable energy projects. This process involves making public filings, negotiating with Commission staff, and demonstrating that the project meets the program’s qualification requirements. These include restrictions on resource type, nameplate capacity, and ownership.

Under the pilot program, eligible resources include:

• fuel cells
• tidal power
• solar energy
• wind systems
• geothermal systems
• hydroelectric generators
• generators fueled by landfill gas
• biomass generators whose fuel includes anaerobic digestion of agricultural products, byproducts or wastes.

Each individual project must not exceed 10 MW in nameplate capacity. Projects must also be primarily locally owned, meaning that 51% or more of the facility must be owned by Maine residents, governmental entities, businesses, or other qualifying local owners.

Once certified, a qualified project can choose either of two incentives: a long-term contract for the output of the facility with a transmission and distribution utility, or a renewable energy credit (REC) multiplier giving a 50% bonus in the amount of RECs produced.

To date, most have viewed the long-term contract as the more attractive option. Under this incentive, projects meeting the program’s requirements can obtain a contract at a fixed or variable price, provided that two criteria are met. First, the average price per kilowatt-hour must not exceed 10 cents. Second, the cost of the contract must not exceed the cost of the project plus a reasonable rate of return on investment as determined by the Commission. These contracts may be approved for up to 20 year terms.  Projects smaller than 1 MW can contract directly with the utility, while larger projects go through a competitive process held periodically by the Commission.

What will 2012 bring for Maine's community-based renewable energy pilot program?

Demand response, customer-provided grid support

This summer, the electric grid has largely weathered the increased demand for power during heat waves.  Grid operators have a variety of tools to ensure sufficient energy supply to meet peak demands.  In recent years, the smart-grid star in the grid's toolkit has been demand response: programs that allow customers to respond to signals about the scarcity of electricity by temporarily reducing their consumption from the grid.  This summer, customer-provided demand response has not only kept the lights on, but has also reduced society’s energy costs by reducing the need for the most expensive marginal peaking generation units.

Last March, the Federal Energy Regulatory Commission issued a landmark ruling that demand response should be compensated fairly.  In this ruling – Order No. 745 – FERC held that demand resources should be paid at market-based prices when two criteria are met: capability and cost-effectiveness.  When demand resources can displace the need for bringing additional generation online, and when doing so lowers our grid costs, Order No. 745 requires organized wholesale energy market operators to pay demand response resources for the full value they provide to the grid.

Now, some regional grid operators are proposing major changes to their demand response programs.  While some of these changes are designed to comply with Order No. 745, other changes seek to place new limits on who can participate in demand response.  For example, northeastern grid operator ISO New England has asked FERC to approve its proposal to eliminate the demand response value provided by consumers capable of using existing on-site generation to produce power to support the grid during times of crisis.

Decades of federal and state policy have supported investment in distributed generation projects, ranging from micro-combined heat and power (micro-CHP) and cogeneration to small and medium-sized wind, rooftop solar photovoltaic systems and even fuel cells.  Distributed generation has a strong history of policy support, but if FERC accepts ISO New England’s proposal to limit behind-the-meter generation’s ability to provide demand response, the region will need other resources to keep the lights on during times of peak demand – new generating units, transmission lines, and substations.

FERC has docketed ISO New England’s request as Docket No. ER11-4336-000, and is accepting public comment through 5:00 pm Eastern time on Friday, September 09, 2011.

July 29, 2011 - President Obama promotes vehicle energy efficiency

From the vehicle energy efficiency department: today President Obama announced a new fuel efficiency standard for motor vehicles.  The Corporate Average Fuel Economy or CAFE standard, developed by the Environmental Protection Agency and the Department of Transportation after input from stakeholders, sets a fleet-wide average standard of 54.5 miles per gallon by 2025.  According to the White House, this standard will save consumers money – $8,000 per vehicle – while also reducing greenhouse gas emissions by 6 billion metric tons and and oil consumption by 2.2 million barrels a day by 2025.

This fuel economy standard raises the bar significantly.  Existing fuel economy rules require cars and light-duty trucks to average 35.5 mpg by 2016.

Meeting today’s stepped-up fuel efficiency standards may not be easy for auto manufacturers, so it is notable that the standard has won the support of leading vehicle makers.  Two compromises may have won automakers over.

First, while 54.5 mpg is significantly higher than the current CAFE standard, it is nevertheless lower than either the 60 mpg promoted by environmental groups or the 56.2 mpg initially proposed by the administration.

Second, the agreement includes incentives and credits for advanced vehicles and technologies that reduce emissions.  EPA and the National Highway Traffic Safety Administration are considering incentive programs for market-changing technologies such as plug-in hybrid electric vehicles, fuel cell-based vehicles, and compressed natural gas (CNG) vehicles.

These incentive programs will follow on the heels of other federal grant programs for advanced vehicle efficiency R&D and commercialization, such as the $184 million Department of Energy research and development program announced last December.

April 12, 2011 - Google invests in Ivanpah solar

Google has committed $168 million in funding for what might be the world's largest solar project, proposed for construction in California's Mojave Desert.

Water spills over a dam near a paper mill on a river in Maine.

This story ties together several threads that run through this blog.  In February 2010, I wrote about the 392 MW Ivanpah solar project, and how it benefited from $1.6 billion in Department of Energy loan guarantees (the same program now at risk of being cut from the federal budget).  If built as proposed by developer Bright Source Energy, the large solar thermal project would the world's largest solar complex, featuring up to three thermal generation units.  Coincidentally (or not), that same day I followed up on an earlier look at Google's nascent interest in energy markets after it obtained market-based rate authority from the Federal Energy Regulatory Commission.

In the ensuing months, Google has emerged as a sophisticated player in the energy world - investing in underwater transmission infrastructure to connect regions and support ocean energy projects, buying power directly from a wind project, investing in fuel cell research and development, and promoting real-time electricity pricing and programs.  Now, Google can add an investment in utility-scale solar thermal projects to its portfolio.

Meanwhile, the fate of DOE's loan program remains uncertain; reports suggest that the energy portion of the budget is still being finalized, with a vote possible as early as Thursday.