Can challenges or prize competitions solve water supply problems?

How can challenges or prize competitions help society address barriers that may prevent long-term access to low-cost water supplies?

The U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy (EERE) has published a Request for Information, seeking information from the public to understand the key technical and other barriers that may prevent long-term access to low-cost water supplies that could be best addressed through challenges and prize competitions.

Water is essential for human health, economic growth, and agricultural productivity, and plays significant roles in the U.S. energy sector. The Department of Energy uses the term "energy-water nexus" to describe the interconnected nature of energy and water systems. While the U.S. has generally benefited from access to low-cost water supplies, according to the Energy Department, "new challenges are emerging that, if left unaddressed, could threaten this paradigm" including competing uses and water quality problems.

The Energy Department operates a variety of programs to advance domestic energy policy, including programs focused on research and development and grant funding. But could the Department of Energy be more effective by offering challenges or prize competitions? Unlike traditional R&D funding in which participants are selected up front with funding provided at the beginning in order to pursue a target or goal, challenges and prize competitions typically define a problem and offer a reward to anyone finding a solution.

Challenges and prize competitions have been adopted by the federal government as well as private actors. Since 2010, federal entities have awarded millions of dollars in prize money and other incentives through over 740 challenges and prize competitions, and nonprofits and private companies have launched many more.

In a Request for Information published in the Federal Register on March 19, 2018, the Energy Department identified challenges and prize competitions as "tools and approaches the Federal government and others can use to engage a broad range of stakeholders, including the general public, to develop solutions to difficult problems. Challenges and prize competitions rely on competitive structures to drive innovation among participants and usually offer rewards (financial and/or other) to winners and/or finalists."

Through the request, the Energy Department asks for public feedback on a variety of issues relating to using prizes and challenges to solve problems around the energy-water nexus, including an identification of challenges whose solution would allow for a significant increase in the volume of available water produced from non-traditional sources, significant improvements in industrial and power-sector water efficiency, or reductions in the cost to treat and deliver drinking water and wastewater to consumers without harming water quality.

Responses to the Request for Information are due no later than 5:00 p.m. (ET) on May 14, 2018.

EPA FAQ on dam removal projects

The U.S. Environmental Protection Agency has released a document answering "Frequently Asked Questions" about the removal of obsolete dams. 

As noted by EPA, dams "provide important societal functions for drinking water supply, flood control, hydropower generation, and recreation."  EPA estimates that the U.S. is home to between 2,000,000 and 2,500,000 dams -- but that between 75% and 90% of these dams "no longer serve a functional purpose."  Given the expense of maintaining dams and their safety, and some negative social and environmental impacts of dams, there is some pressure to remove obsolete dams.  According to EPA, over 1,300 dams have been removed in the U.S. since the early 1900s, with over 60 removals in 2015 alone.

EPA framed its dam removal FAQ in this context, noting that its answers to these questions would support dam removal efforts.  The FAQ addresses 20 distinct topics, ranging from dams' impacts on water quality, permitting issues related to dam removal, and EPA-related funding that could be used to support dam removal.

For example, the FAQ discusses permitting under Section 404 of the Clean Water Act, including the use of individual permits or general permits, including Nationwide Permits.  The FAQ encourages project proponents to work closely with the Army Corps of Engineers regarding Section 404 permitting.  It describes how EPA would evaluate specific requirements for monitoring or testing, such as in the case of contaminated sediments behind the dam.  The FAQ also discusses other permitting requirements, such as state-issued water quality certifications pursuant to Section 401 of the Clean Water Act, and evaluations of consistency with coastal zone management plans under the Coastal Zone Management Act.

The FAQ also notes that various grants may be available for dam removal projects.  For example, grants under Section 319 of the Clean Water Act can be issued to states, territories, and tribes for dam removals.  EPA's Five Star Wetland and Urban Water Restoration Grant Program could also provide funding for river, wetlands, riparian, forest and coastal restoration, and wildlife conservation.  Other funding, such as under the Wetland Program Development Grant program, is available to build technical and programmatic capacity of state and tribal water agencies.  Finally, the FAQ notes that dam removals could be part of a Supplemental Environmental Project proposed in settlement of an environmental enforcement action.

As noted by EPA, the FAQs released in December 2016 do not impose legally binding requirements on anyone, and EPA retains the discretion to adopt approaches on a case-by-case basis that differ from those described in these FAQs where appropriate.  Nevertheless the document provides dam owners, regulators, and communities guidance on how EPA views dam removal proposals.

Energy Department to fund low-impact hydropower R&D

The U.S. Department of Energy has announced $7 million in funding for the research and development of advanced low-impact hydropower systems.  The Energy Department's competitive solicitation is designed to fund projects that help advance hydropower drivetrains -- the systems passing turbines' rotational energy along to their attached generators -- and structural foundations enabling low environmental impacts and reduced lifetime operating and maintaining costs.

The funding is available from the Energy Department's Office of Energy Efficiency and Renewable Energy.  This office, known as EERE, runs programs designed to speed up the development and deployment of energy efficiency and renewable energy technologies and market-based solutions.  hydropower manufacturing. 

This funding opportunity is designed to attract innovations that enable rapidly built, removable, and replaceable hydropower systems.  It solicits proposals to develop alternative hydropower systems with low civil infrastructure development costs, deployable within 2 years with relatively low environmental impacts, and which can be removed or replaced after their intended life is completed.  According to the funding opportunity announcement, these concepts and systems will be able to operate at a cost that is competitive with traditional sources of generation.

The complete funding opportunity announcement -- DE-FOA-0001286: RESEARCH AND DEVELOPMENT OF INNOVATIVE TECHNOLOGIES FOR LOW IMPACT HYDROPOWER DEVELOPMENT -- is available through the Office of Energy Efficiency and Renewable Energy's Funding Opportunity Exchange.

While this funding opportunity supports a wide variety of technological innovations for new hydropower development, specific areas of interest include:

• New, rapidly deployable and removable hydropower technologies, such as innovative prefabricated structures, water impoundment structures, and water conveyance systems.
• Innovative methods and materials for the construction of conventional hydropower facilities, including, but not limited to, concrete alternatives, in-water construction, and innovative advanced tunneling methods.
• Design and lab testing of innovative conventional hydropower powertrain and generator components, such as advanced composite materials and replaceable blade technologies for turbine runners, new generator technologies, and materials and coatings for powertrain components.

The Energy Department will hold a webinar on this funding opportunity announcement on Tuesday, April 21, 2015 at 3:00 pm (ET).  Applicants must first submit a concept paper (currently due no later than 5:00 PM (ET) on May 7), with full applications currently due by 5:00 PM (ET) on June 15, 2015.

Virginia offshore wind research lease

The U.S. federal agency responsible for leasing offshore wind sites on the outer continental shelf has executed its first wind energy research lease, giving Virginia's state energy agency the right to pursue the Virginia Offshore Wind Technology Advancement Project (VOWTAP), a 12-megawatt offshore wind test facility to be located in federal ocean waters.

Offshore wind energy offers the potential to generate large amounts of electricity from a renewable resource, but to date no commercial grid-tied U.S. offshore wind projects are operating.  The U.S. Bureau of Ocean Energy Management is responsible for leasing sites on the outer continental shelf for energy projects, including offshore wind and other renewable energy developments.  BOEM has auctioned off sites for offshore wind projects off several East Coast states, including Virginia, but had not previously issued a research lease.

On March 24, BOEM announced the execution of a wind energy research lease with the Commonwealth of Virginia’s Department of Mines, Minerals and Energy (DMME).  Under research lease OCS-A 0497 (35 pages), the Virginia agency proposes to design, develop and demonstrate a grid-connected, 12-megawatt offshore wind test facility on the Outer Continental Shelf off the coast of Virginia, in partnership with a local utility affiliated with Dominion Resources, Inc.

The 30-year lease covers approximately 2,135 acres of sea space east of Virginia Beach, adjacent to the Wind Energy Area leased to Virginia Electric and Power Company (dba Dominion Virginia Power) for commercial development since 2013.  The lease describes the project as "a research project to generate energy using wind turbine generators and conduct any associated resource assessment activities, as well as install associated offshore substation platforms, inter-array cables, and subsea export cables."  As a research lease, the Virginia agreement does not include any fees payable from DMME to BOEM "for the purpose of ensuring a fair return for the use of this lease area."

As is standard for BOEM's offshore wind site leases, the lease itself does not give the lessee the right to build or operate an offshore wind project.  Rather, the lease gives the Virginia DMME the exclusive right to submit to BOEM for approval a Site Assessment Plan and a Research Activities Plan, and then to allow a designated operator to conduct whatever activities are described in those plans once they are approved by BOEM. 

In this case, DMME has designated Dominion subsidiary Virginia Electric and Power Company as the lease operator.  Dominion's partnership with DMME on offshore wind dates back at least to 2012, when the U.S. Department of Energy announced funding awards for seven proposed Offshore Wind Advanced Technology Demonstration Projects.  Dominion won one of these 2012 awards, and partnered with DMME and others to establish VOWTAP.  VOWTAP won a second funding award from DOE in 2014 for deployment activities.

Dominion and DMME have already filed a Research Activities Plan for VOWTAP.  With the research lease in hand, the path forward includes approval of that plan and a Site Assessment Plan by BOEM.  If the VOWTAP project is built, the data obtained and lessons learned from this project will be made publicly available and inform the future production of renewable energy within the adjacent commercial Wind Energy Area leased to Dominion.

USDA awards $68 million for energy projects

The U.S. Department of Agriculture has announced $68 million in grants and loan guarantees for renewable energy and energy efficiency projects.  The latest round of awards under the agency's Rural Development arm's Rural Energy for America Program will support 540 projects at farm and rural business sites across the country.

Since its creation in the 2008 Farm Bill, REAP has supported more than 8,800 renewable energy and energy efficiency projects nationwide with over $276 million in grants and $268 million in loan guarantees to agricultural producers and rural small business owners.  Eligible agricultural producers and rural small businesses may use REAP funds to make energy efficiency improvements or install renewable energy systems including solar, wind, biomass and anaerobic digesters, small hydroelectric, ocean energy, hydrogen, and geothermal projects.  (For looks at previous REAP winners, check out these posts from 2011 and 2013.)

In this year's REAP funding round, USDA awarded about $68 million in investment support.  Of this, $12,376,548 will come in the form of grants, while $56,449,244 will come as loan guarantees.  While most grants are under $100,000 per project (with some below $10,000), there were some larger grant awards: for example, a biomass anaerobic digester in California won $290,000, an off-grid solar project in Hawaii won $123,338, and a direct use geothermal heat pump in Oklahoma won $133,250. Of the loan guarantees, $55.3 million will go to support 22 solar photovoltaic projects in North Carolina, mostly ranging between 2 megawatts and 5 megawatts per project. 

In each case, funding is contingent upon the recipients meeting the terms of the loan or grant agreement. USDA's hope is that these grants and loan guarantees will enable American agricultural producers and rural small business owners to reduce their energy costs.

REAP was reauthorized by the 2014 Farm Bill, so expect USDA Rural Development to solicit more REAP projects later this year.  While not all sites may qualify, USDA's definition of eligibility is more broad than many assume.  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.

Washington tidal energy project cancelled

A tidal energy project proposed off the Washington coast will be scrapped due to cost overruns, according to the project developer.

Public Utility District No. 1 of Snohomish County's proposed Admiralty Inlet Pilot Tidal Project was envisioned as a temporary, experimental project to evaluate the commercial viability of tidal energy development in Puget Sound.  The 600-kilowatt hydrokinetic project would have generated electricity from the force of water moving through turbines mounted in tidal currents.  Earlier this year, the project won a pilot license from the Federal Energy Regulatory Commission, making it among the first tidal projects to qualify for the Commission's pilot licensure program.

But the estimated costs of the project were significant relative to its projected energy output.  Since it was first proposed in 2006, the Public Utility District estimated that the project would cost $20 million to build.  Based on these numbers, the Commission estimated that the levelized annual cost of operating the project would be about $1,848,294.  Dividing this by the project's expected production of energy, the power could cost $7,574.98 per megawatt-hour of energy generated -- an amount over 250 times higher than the estimated $30/MWh cost of alternative power.

Nevertheless, the PUD had designed the project's finances to avoid the need for ratepayer financing.  Rather, the project relied on funding from federal grants and in-kind contributions from project partners, as well as some money from the sale of excess renewable energy credits from the District's wind power projects.  To date, the District has invested about $3.5 million in the effort, over the past 8 years.

With the FERC license in hand, the District moved forward to solicit bids for project engineering and construction.  When those bids came in, the District realized the project would likely cost closer to $37 million, or $17 million more than previously expected.  According to a September 30 announcement by the Public Utility District, the District tried to seek more funding for the project from the U.S. Department of Energy and other project partners, but did not succeed.  As a result, the District has announced that it will not move forward with the project.

While the District is no longer actively pursuing the Admiralty Inlet Pilot Tidal Project, some other developer may try to pick up where the District left off.  Indeed, the District's announcement notes that the project "remains worthwhile to pursue on behalf of the nation to further the potential development of marine renewable energy."  Will another developer seek to advance the Admiralty Inlet Pilot Tidal Project?  Will other tidal current and marine hydrokinetic projects be developed given the challenges of ocean energy project economics?

Federal grants support microgrids

The U.S. Department of Energy has awarded over $8 million in funding for 7 microgrid projects.  Will microgrids play an increasing role in the U.S. electricity industry?

Solar photovoltaic panels can serve as distributed generation for microgrids.

Microgrids -- localized grids capable of operating as energy islands using distributed generation, energy storage, and distribution wires, as well as able to connect to the broader utility grid -- can offer participants and society at large significant value.  These benefits can include increased reliability against storm damage and infrastructure damage, reduced emissions of carbon and other pollutants, and reduced costs.

The Energy Department runs a portfolio of microgrid activities ranging from direct research and development to building community support.  Most recently, the Department announced over $8 million in grant funding to support 7 microgrid projects.  The Department selected these projects based on their ability to develop advanced microgrid controllers and system designs for microgrids less than 10 megawatts:

• ALSTOM Grid, Inc.: about $1.2 million to research and design community microgrid systems for the Philadelphia Industrial Development Corporation and the Philadelphia Water Department, using portions of the former Philadelphia Navy Yard. 
• Burr Energy, LLC: about $1.2 million to design and build a resilient microgrid to allow the Olney, Maryland Town Center to operate for weeks in the event of a regional outage, and a second microgrid for multi-use commercial development in Maryland. 
• Commonwealth Edison Company (ComEd): about $1.2 million to develop and test a commercial-grade microgrid controller capable of controlling a system of two or more interconnected microgrids, serving civic infrastructure including police and fire department headquarters, transportation and healthcare facilities, and private residences. 
• Electric Power Research Institute (EPRI): about $1.2 million to develop a commercially-viable standardized microgrid controller that can allow a community to provide continuous power for critical loads. 
• General Electric Company (GE): about $1.2 million to develop an enhanced microgrid control system in Potsdam, New York, by adding new capabilities, such as frequency regulation. 
• TDX Power, Inc.: about $1.2 million to engineer, design, simulate, and build a microgrid control system on remote Saint Paul Island, an island located in the Bering Sea off mainland Alaska. 
• The University of California, Irvine (UCI): about $1.2 million for the Advanced Power and Energy Program at UCI to develop and test a generic microgrid controller intended to be readily adapted to manage a range of microgrid systems, and supporting the development of open source industry standards.

Each project also includes an awardee cost share ranging from 20 percent to about 50 percent.  Will the DOE funds lead to better and more widely adopted microgrids?

FERC authorizes mine drainage microhydro

The Federal Energy Regulatory Commission has issued a hydropower license to a project whose turbines generate electricity from acid mine drainage. The micro-hydropower license issued to the Antrim Treatment Trust illustrates this unusual approach to the twin challenges of mine remediation and renewable energy.

The power of falling water, in the White Mountain National Forest in New Hampshire.

In the 1980s, Antrim Mining, Inc. operated a surface bituminous coal mine in Pennsylvania.  When water draining through the mine and into streams and rivers was found to exceed pollution limits, the Commonwealth of Pennsylvania charged the company with violations of mining and reclamation law.  The charges led to a series of settlements through which Antrim agreed to improved water treatment facilities, including an off-the-grid hydroelectric facility.  This micro-hydro plant would be powered by treated effluent flowing downhill out of lagoons.  Antrim created the Antrim Treatment Trust to manage treatment of the mine water in 1991, then went out of business.

In an attempt to reduce the cost of treating the site's severe acid mine drainage, the Babb Creek Watershed Association identified micro-hydropower as an option for the site.  In 2008, the association received an Energy Harvest Grant from the Pennsylvania Department of Environmental Protection.  This $428,710 award was designed to support the installation of two hydroelectric turbines on the treatment plant's discharge, which was completed in 2012.

While the Federal Power Act requires most hydropower projects to secure a license from the Federal Energy Regulatory Commission, some off-grid hydropower projects that do not use the waters of the United States do not require licensure.  In 2010, the Antrim Treatment Trust filed a Declaration of
Intent for a 40-kilowatt grid-connected project, but quickly revised its project to be off-grid after the Commission issued an order finding that a license was required for the grid-connected project.  Once the project was off-grid, the Commission ruled that no license was required.

The Antrim treatment plant seems to have then operated one turbine, but left the second turbine non-operational. A 2012 article in the Williamsport Sun-Gazette suggested that with both turbines running and selling power into the electricity grid, the treatment plant could cut $12,000 in annual power costs and make $10,000 per year in new revenue.  But this could require a FERC license, because the project would become connected to the utility grid.

The Trust appears to have decided that these economics were worth pursuing, because in 2013 it filed an application for a project license for a 40-kilowatt project.  In the application, Antrim Trust proposed to bring a second identical turbine (currently in place but non-operational) online by installing additional indoor wiring with appurtenances within the existing powerhouse and treatment plant, and operate both turbines as a grid-connected project using the treated and/or untreated water.

As licensed, the Commission estimates the annual cost to develop and maintain the proposed 40-kW project is $9,356 or $37.42/megawatt-hour (MWh).  The project will generate an estimated average of 250 MWh of energy annually.  Based on Commission staff’s view of the alternative cost of power ($56.93/MWh), the total value of the project’s power is $14,233 in 2013 dollars.  To determine whether the proposed project is currently economically beneficial, staff subtracts the project’s cost from the value of the project’s power. Therefore, in the first year of operation, the project is expected to cost $4,877 or $19.51/MWh less than the likely alternative cost of power - demonstrating economic benefit.

Micro-hydropower projects can make economic sense in some mine drainage situations and other places where water treatment is required and a suitable vertical drop or pressure is available.  In Antrim's case, the project's success can partially be explained by the existence and purpose of the Trust, as well as the DEP grant to support project construction.  If treated and untreated mine drainage can be used to generate hydroelectricity, what other unusual sources of power will arise?

NJ offshore wind project faces dilemma

Fishermen's Energy's proposed offshore wind project off the New Jersey coast has essentially all its permits in place to start construction -- but the project's future is in doubt over a question of financial support from electricity ratepayers.

Fishermen's Energy has proposed building a 25-megawatt wind project about 2.8 miles off the coast of Atlantic City.  The $200 million project would be connected to the mainland electricity grid, enabling the power it produces to be sold to New Jersey electric customers.  The project has already received key permits, such as approval by the Army Corps of Engineers to begin construction.

Building what could be the nation's first commercial offshore wind project will be expensive.  While future offshore wind projects could be cost-competitive against more traditional electric generation resources, the New Jersey pilot project's finances rely on a portfolio of federal and state financial incentives.  These include federal tax credits, a grant from the U.S. Department of Energy, and a state commitment that utility ratepayers will shoulder above-market costs.

A 2010 New Jersey law established an offshore wind renewable energy certificate program known as OREC that was designed to provide that ratepayer commitment.  For over a year, Fishermen's Energy has been waiting for the New Jersey Board of Public Utilities to decide whether to require mainland utilities to purchase the project’s renewable energy output.  But that case remains pending, with no clear state-law timeline for its resolution.  Issues in play include the project's cost to ratepayers, particularly if the project fails to win further competitive grants from the federal Department of Energy.

In the meantime, Fishermen’s Energy needs to spend at least $10 million on the project this year to remain eligible for the federal investment tax credit.  Yet the developer is presumably reluctant to commit those funds before learning whether it will also win ratepayer support.  As December 31 draws nearer, this dilemma makes it more challenging for Fishermen's Energy to sustain project development efforts.

Maine launches first grid-connected floating offshore wind turbine

The U.S. renewable ocean energy industry achieved a milestone last week with the launch of the nation's first grid-connecting floating offshore wind turbine.  A consortium led by the University of Maine developed and deployed a 1:8-scale prototype in the Gulf of Maine.  What does it mean for ocean energy?

A sailboat catches the wind off the Maine coast.

Offshore wind presents a significant energy resource.  The National Renewable Energy Laboratory has estimated that U.S. waters could host a gross wind power resource of 4,223 gigawatts -- about four times as much generating capacity as the current U.S. electric grid.  If even a fraction of this can be developed in a cost-effective and environmentally friendly way, it could power a significant portion of our electricity needs.

While land-based wind projects represent a relatively established technology -- with over 60,000 megawatts installed in the U.S. by the end of 2012 -- and European waters are home to over 5,000 megawatts of offshore wind, no commercial offshore wind projects have been built in the U.S.  The rigors of the ocean environment create engineering challenges for offshore wind, which drives costs up.  Particularly in U.S. waters, the best wind resources are located in deeper waters farther offshore.  This means that floating wind turbines may be the most cost-effective way to harness offshore winds.

While several prototype floating offshore wind systems have been deployed off Europe, no grid-connected projects have been deployed in U.S. waters.  Using $12 million in funding from the U.S. Department of Energy, the University of Maine and its project partners have developed the VolturnUS prototype.  This unit has several features that may lead to a breakthrough in the cost curve of floating offshore wind.  While most models to date have relied on steel, the VolturnUS semi-submersible platform uses a concrete foundation and composite tower.  While the prototype is just 65 feet tall, its design characteristics are hoped to lead to lower construction costs for larger-scale units closer to 500 feet tall.

The University of Maine is also planning a larger offshore wind demonstration called Aqua Ventus I.  Using a separate $4 million Energy Department grant, the University is engineering and designing a pilot floating offshore wind farm with two 6-megawatt direct-drive turbines on concrete semi-submersible foundations near Monhegan Island. If selected for further funding in 2014, the Aqua Ventus I project could be constructed and installed in several years.

Funding to reduce barriers to marine, hydrokinetic energy

The U.S. Department of Energy has announced a competitive funding opportunity designed to support the growing marine hydrokinetic energy industry.  $1.9 million is available for projects that will improve the collection and analysis of environmental monitoring and experimental data from marine hydrokinetic devices. 

Looking east from Griffith Head, Reid State Park, Maine.  Damariscove Island, a proposed offshore wind site, sits on the right horizon.

Marine hydrokinetic energy technologies capture the energy embodied in moving ocean water such as tides, currents, and waves.  While the marine hydrokinetic industry is relatively young, at least one project has been licensed by the Federal Energy Regulatory Commission and built off the Maine coast.  Research and development efforts are ongoing regarding a variety of marine hydrokinetic technologies and devices, and their environmental impacts continue to be studied.

The recently-announced federal funding aims to support that environmental evaluation.  Working with the National Oceanographic Partnership Program, the Department of Energy's Office of Energy Efficiency and Renewable Energy Wind and Water Power Technologies Office has issued a Funding Opportunity Announcement entitled “Marine and Hydrokinetic (MHK) Environmental Effects Assessment and Monitoring.”

Under that Funding Opportunity Announcement, the Department of Energy offers $1.9 million in funding to be split by up to 11 recipients.  Specific project areas include studies of fish behavior and mortality around hydrokinetic turbines, improved environmental monitoring of marine hydrokinetic projects, and predictive modeling of marine hydrokinetic projects' environmental impacts based on surrogate technologies with stressors and receptors similar to those expected from marine hydrokinetic technologies.

Under the competitive solicitation, the Department of Energy requested Letters of Intent to be submitted by 11:59 Eastern Time on April 18, 2013. Full applications, which must include specified documents, must be submitted by 5:00 PM ET on May 16, 2013.  For more information, visit the Department of Energy's official Funding Opportunity Announcement website or contact Todd Griset at Preti Flaherty.

USDA announces renewable and energy efficiency funding

The United States Department of Agriculture has announced a new round of funding for assistance to agricultural producers and rural small businesses for energy efficiency and renewable energy projects.  USDA's Rural Energy for America Program (REAP) offers eligible farms and businesses incentives to improve their energy efficiency or produce energy from renewable sources.

USDA's mission includes revitalization of rural economies to create opportunities for growth and prosperity, support innovative technologies, identify new markets for agricultural producers, and make better use of natural resources. Authorized by the 2008 farm bill (formally the Food, Conservation, and Energy Act of 2008), the USDA REAP program's goals are to help agricultural producers and rural small businesses reduce energy costs and consumption and help meet the nation's critical energy needs.  Through the end of the 2012 fiscal year, REAP has funded over 6,800 renewable energy and energy efficiency projects, feasibility studies, energy audits, and renewable energy development assistance projects.

Today USDA announced that it will accept applications for three REAP program categories:

• Renewable energy system and energy efficiency improvement grant applications and combination grant and guaranteed loan applications until April 30, 2013
• Renewable energy system and energy efficiency improvement guaranteed loan only applications until July 15, 2013
• Renewable energy system feasibility study grant applications through April 30, 2013

USDA plans to make funding available despite the current federal budget sequestration, which appears to have cut REAP funding by at least $2 million in fiscal year 2013. 

Application requirements for REAP assistance vary depending on the type of assistance sought.  Those interested in applying for assistance can contact their local USDA office for more information, or consult a professional with experience working with the REAP program.

Preti Flaherty helps our clients evaluate whether REAP assistance is a good match for their businesses; I have assisted my clients in securing REAP funding for their energy projects.  Please contact us at 207-791-3000 for more information.

Monhegan island electricity grid updates

Residents of the Maine island of Monhegan will soon benefit from upgraded electricity infrastructure, thanks to a grant from the U.S. Department of Agriculture.

Supplying electricity and other forms of energy on remote islands offers a unique set of challenges.  For islands too far from the mainland grid to be connected by undersea transmission cables, island utilities must both produce the power and distribute it to homes and businesses.  On small, remote islands, the lack of economies of scale can lead to very high electricity costs.  About 12 miles offshore, Monhegan one of those islands.  In recent years, customers served by the Monhegan Plantation Power District have paid electricity prices about 5 times higher than those on the mainland.

Propane tanks sit by the dock on Monhegan Island, Maine.

Yesterday the U.S. Department of Agriculture announced that the Monhegan Plantation Power District has won $420,154 from the USDA's High Energy Cost Grant Program.  That program provides competitively-awarded grants to improve and provide energy generation, transmission and distribution facilities serving communities with average home energy costs exceeding 275% of the national average. Grant funds may be used for on-grid and off-grid renewable energy projects, energy efficiency and energy conservation projects serving eligible communities.

On Monhegan, the grant will be used to replace the current switchgear, add a smaller, 40 kW generator to the power station's fleet, and add a 13 kW solar photovoltaic array to the power station's roof.  Currently, electricity is provided to about 100 accounts on Monhegan from a 300 kW diesel generator.  Demand for electricity on Monhegan varies seasonally, with many fewer consumers on the island during the winter months.  The new 40 kW generator and solar array are expected to be able to cover the winter load more efficiently than using the existing larger generator.

While Monhegan typifies the remote, inhabited small island, other islands face similar energy challenges.  Will Monhegan serve as an example for other island communities?

NJ declares NRG Bluewater abandoned offshore wind project

Finding that the developer has abandoned the project, New Jersey regulators have withdrawn $3 million in financial support for an offshore wind project proposed by NRG Bluewater Wind. 

The U.S. and New Jersey flags, flying in the sea breeze at Cape May, NJ.

Bluewater Wind New Jersey Energy LLC proposed a 350 megawatt wind project off the New Jersey coast.  In 2008, the company won a $4 million grant from the state to install an offshore meteorological tower as part of a state-sponsored offshore wind grant solicitation.  The grant agreement required Bluewater to install the tower by 2010, and took the form of a rebate: if Bluewater installed the tower by the deadline, it would receive $4 million back from the state.

NRG Energy - a Fortune 250 wholesale power generation company controlling nearly 26 gigawatts of capacity - acquired Bluewater in 2009.  Also in 2009, Bluewater asked for and received a one-year extension of the met tower deadline.

In October 2010, Bluewater requested another extension, this time for two years.  Bluewater pointed to difficulties in obtaining federal permits for the project.  The NJ BPU granted the extension on April 27, 2011, requiring regular progress reporting and installation of the met towers by January 9, 2013.  The BPU also lowered the rebate amount to $3 million.

According to the BPU's October 4, 2012 order cancelling the rebate, Bluewater filed progress reports with the BPU in 2011 and January 2012, but ultimately stopped reporting.  But in December 2011, NRG announced that it was putting active development of offshore wind projects on hold.  By September 2012, BPU staff put NRG on notice that they planned to recommend that the Board cancel its rebate commitment "due to project abandonment and lack of reporting".  According to the BPU's order, "the company did not object or otherwise respond when advised of staff's recommendation to withdraw the rebate commitment".

As a result, last week the BPU found that the company had not complied with the order requiring status updates, and thus "that NRG Energy and Bluewater have abandoned the project and will not meet the rebate commitment requirements."  The Board cancelled the met tower rebate, and directed BPU staff to reallocate the funding to other New Jersey Clean Energy Programs.

Deadline for offshore wind grants

Today marks the deadline for applicants to submit letters of intent to the U.S. Department of Energy seeking funding for offshore wind energy development.  On March 1, 2012, Secretary of Energy Steven Chu announced a six-year $180 million initiative to deploy offshore wind projects in U.S. waters.  Subject to congressional appropriations, this program includes $20 million available this year to support up to four innovative offshore wind energy installations across the United States.

The U.S. Department of Energy believes that the U.S. is rich in offshore wind resources.  Some reports have identified over 4,000 gigawatts of potential capacity, which adds up to several percent of the U.S.'s existing electric generation capacity across all fuels and resources.

To speed the development of this resource, DOE has proposed a competitive solicitation for grant funding for "Advanced Technology Demonstration Projects".  The goal is to install innovative offshore wind systems in U.S. waters in the most rapid and responsible manner possible, and expedite the development and deployment of innovative offshore wind energy systems with a credible potential for lowering the levelized cost of energy (LCOE) below 10 ¢/kWh or the local "hurdle" price at which offshore wind can compete with other regional generation sources without subsidies.

Applications must include certain materials as specified in the Funding Opportunity Announcement (docketed as DE-FOA-0000410).  The Department has stated that it expects applications to come from world-class multi-sector consortia, including energy project developers, equipment suppliers, research institutions and marine installation specialists.  Grant funds may be used to cover up to 80 percent of a project’s design costs and 50 percent of the hardware and installation costs. Letters of intent are due on March 30 and applications are due on May 31, 2012.

Ener1 bankruptcy and DOE grant

Battery maker Ener1 is in news for yesterday's Chapter 11 bankruptcy filing, two years after its subsidiary was awarded a $118.5 million grant from the U.S. Department of Energy.

Ener1 Inc. holds several operating companies.  Its subsidiary EnerDel produces automotive-industry thin cell lithium-ion batteries in Indiana.  Other subsidiaries focus on fuel cells and nanotechnology, as well as manufacturing automotive-grade lithium-ion batteries in South Korea.

Battery making unit EnerDel won the $118.5 federal grant in 2009 for its proposal to expand two battery factories in Indiana and add a third facility.  Many of the details of the proposal are available in the final Environmental Assessment prepared by the Department of Energy in support of the incentive:

The proposed financial assistance would help EnerDel expand its manufacturing and testing capabilities at two existing facilities and start up a third facility for future development into a complete lithium-ion battery manufacturing plant. The existing EnerDel facilities consist of a 92,000-square-foot building in Indianapolis and a 32,000-square-foot building in Noblesville, just north of Indianapolis. The lithium-ion battery manufacturing capacity of the Indianapolis facility would increase through the addition of equipment, and the Noblesville location would transition into full use as a prototype development and battery testing facility through the addition and change-out of equipment. The exteriors of the Indianapolis and Noblesville facilities would be unchanged. The third facility is a newly acquired vacant warehouse near Greenfield, Indiana, just east of Indianapolis. This 423,000-square-foot building would require minor construction and equipment installation on the exterior of the building; however, essentially all of the work necessary to transform it into a manufacturing plant would consist of installation of equipment inside the building.

EnerDel received a $118.5 grant pursuant to a cost-sharing arrangement.  Ener1 has since said that electric vehicles haven't caught on with drivers as quickly as it expected.  Key customer, Norwegian electric vehicle maker Think Global, went bankrupt in June 2011. 

Yesterday's bankruptcy filing by Ener1 comes at a time when policymakers are scrutinizing the energy department's grant and loan programs.  Following the recent failures of other DOE loan guarantee and grant recipients such as Solyndra LLC and flywheel energy storage developer Beacon Power, Ener1's bankruptcy will likely add to the debate over the proper model for federal investment in the private sector energy industry.

USDA funds energy projects

Businesses are taking advantage of incentives to reduce their consumption of energy from the utility grid through both energy conservation and distributed renewable generation.  A number of programs provide grant funding for part or all of these projects, on top of other incentives like tax benefits.

The U.S. Department of Agriculture runs several energy incentive programs under the Rural Energy for America Program (REAP).  These programs take different shapes; some offer payments or grants, while others offer loans and loan guarantees.  All are designed to promote the development and commercialization of renewable energy sources including wind, solar, geothermal, hydrogen, ocean waves, hydroelectric, biomass, and biofuel (ethanol, biodiesel, etc.)

REAP’s Renewable Energy Systems/Energy Efficiency Improvement grant program is one funding source for farm and commercial projects.  REAP conducts periodic solicitations for project proposals, and awards grants on a competitive basis.  Grant winners can receive up to 25% of their total eligible project costs, capped at $500,000 per project for renewable energy systems and $250,000 per project for energy efficiency improvements. 

When USDA published its Notice of Funds Availability for REAP this spring, an estimated $70 million in REAP funding was expected this year, based on the allocations in the 2008 Farm Bill.  In response to the request for applications, projects were proposed and selected in every state.

In August 2011, the USDA announced $183,339 in grant funding for 8 Maine projects.  Most of these grant awards were for solar energy projects; two projects included solar and energy efficiency, while one focused on a biomass project.  For example, the Bancroft Contracting Corporation in South Paris won $40,000, split between a rooftop solar array expected to produce 270,050 kilowatt-hours per year and energy efficiency improvements.

USDA’s REAP program is one tool businesses can use to help finance innovative and cost-effective energy efficiency and renewable energy projects.

April 19, 2011 - 400 MW solar project proposed in California

Last week I noted Google's investment in the 392 megawatt Ivanpah solar project in California.  That project, which is currently under construction in the Mojave Desert, is on track to be the world's largest solar thermal project.  Ivanpah uses heliostat mirrors to focus sunlight on centrally located solar power towers.  The towers use the solar energy to generate steam.  The steam runs through steam turbines and a generator to produce electricity.

"Turn your grocery bags into green energy" - seen at a Vermont market

Now an even larger solar project has been proposed for California -- this time solar photovoltaic.   Developer Pegasus Energy has proposed a 400 MW solar PV power plant on about 2,000 acres in Alameda County California.  The Mountain House Solar Farm would sell power to local utility PG&E, and might break ground in early 2013.

As we often see, the twin challenges of financing and regulatory uncertainty team up to add a wrinkle to these plans.  The developer has built a financing model based on using an incentive authorized by the American Recovery and Reinvestment Act: a cash grant in lieu of the federal 30% business energy investment tax credit (ITC).  That incentive program, known as the 1603 grant program, is currently slated to end this year.  The developer is reportedly hopeful that grant funds will be extended until January 1, 2013, and would be available to help finance the project.  This may be a realistic hope, as the 1603 program has already been extended once (by Section 707 of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010), so renewal is possible.  On the other hand, recent struggles over the federal budget do call into question the continued survival of any given clean energy incentive programs.  Will Congress renew the 1603 energy grant program?

March 23, 2011 - energy grants for schools

Schools can participate in grant and incentive programs to help them develop energy efficiency and renewable energy projects.  The possibilities are as varied as are the programs, combining federal incentives, state-level programs in most areas, and even utility-specific efficiency programs.  If it puts together a winning application, a school could receive anything from technical assistance to cash to support these projects.

The University of New England in Biddeford, Maine, serves as an example. Last year, the University's Sustainability Office received a $50,000 grant from Efficiency Maine, Maine's one-stop shopping point for energy efficiency efforts.  The University is using the grant to install a solar hot water system, along with a display to monitor the system's performance.  Due to their core mission of education, schools often combine energy efficiency and renewable technologies with educational tools about projects' value and technology.

Across the country, at any given time, a number of open requests for proposals and prescriptive incentives are available to help schools save or harness renewable energy.  Particularly when the economic value of these projects is coupled with their educational value, schools are taking a broader look at their options.

February 24, 2011 - Maine offshore wind research

Collaboration between academia and industry is key to tackling the significant technical and legal challenges associated with the development of offshore wind potential.  This symposium held this week by the University of Maine and the DeepCWind Consortium gives project developers the research results they will need to make more informed bids for offshore wind development in the Gulf of Maine.

The report gives key data useful to any developer of a successful offshore wind project in the Gulf of Maine: data on "met-ocean conditions" (wind and wave data, weather information), the results of seabed characterization studies, electric interconnection and grid data, and information about the impacts of a given project on both the physical environment and stakeholder interests.  The compilation of this information entailed a massive undertaking, performed by the University and its research partners through a federal Department of Energy-funded grant.

This report dovetails with the Maine Public Utilities Commission’s request for proposals for long term contracts for deep water offshore wind energy pilot projects.  That RFP calls for initial responses from interested developers by May 1, 2011. The RFP solicits proposals to sell renewable energy, capacity, and RECs from one or more floating deepwater offshore wind energy pilot projects, with a possible carveout for tidal projects.  Last year's Ocean Energy Task Force bill gives the Maine PUC authority to approve one or more long term contracts for up to 30 megawatts of installed capacity and associated renewable energy and renewable energy credits from such projects.

Who will bid in response to the RFP?  Will there be a truly competitive process?  What will the responsive projects cost?  Will the incentives for developing these pilot projects be sufficient to attract concrete proposals?