FERC 2-year licensing pilot workshop

The regulatory process for Federal Energy Regulatory Commission licensing of hydropower projects can take many years and significant expense -- but can it be improved following a two-year pilot process ordered by Congress?  After running a pilot process for one license application, the Commission has scheduled a workshop to discuss lessons learned from its pilot licensing process.

Under the Federal Power Act, the Commission is responsible for licensing most non-federal hydropower development in the U.S.  Concerned over the duration and expense of the regulatory process, Congress enacted the Hydropower Regulatory Efficiency Act of 2013, section 6 of which directed the Commission to investigate the feasibility of a two-year licensing process, develop criteria for identifying projects that may be appropriate for the process, and develop and implement pilot projects to test the process.

After a January 6, 2014 solicitation for pilot projects, the Commission selected Free Flow Power Project 92, LLC's (FFP) proposed 5-megawatt project at the Kentucky River Authority's existing Lock & Dam No. 11 on the Kentucky River.  The January notice set minimum criteria and a process plan for projects that may be appropriate for licensing within a two-year process, including:

• The project must cause little to no change to existing surface and groundwater flows and uses;
• The project must not adversely affect federally listed threatened and endangered species;
• If the project is proposed to be located at or use a federal dam, the request to use the two-year process must include a letter from the dam owner saying the plan is feasible;
• If the project would use any public park, recreation area, or wildlife refuge, the request to use the two-year process must include a letter from the managing entity giving its approval to use the site; and
• For a closed-loop pumped storage project, the project must not be continuously connected to a naturally flowing water feature.

After trying a two-year pilot to abbreviate its hydropower project licensing process, the Commission has scheduled a workshop to discuss the pilot's effectiveness.

Whitestone hydrokinetic license surrendered

Despite efforts to offer a streamlined regulatory path for some demonstration hydropower projects, earlier this year the holder of a hydrokinetic pilot project license for a project proposed for the Tanana River in Alaska surrendered its license due to an inability to find financing. The case of the Whitestone Poncelet River-In-Stream-Energy-Conversion (RISEC) Pilot Project No. 13305 illustrates the Federal Energy Regulatory Commission’s hydrokinetic pilot project licensing process, the difficulties of testing and developing new hydropower technologies, and how the Commission handles pilot license surrender.

Whitestone Power and Communications, an assumed name of the Whitestone Community Association, had proposed the project as a 100-kilowatt demonstration of its proprietary hydrokinetic prototype technology. It was to be located on the Tanana River at its confluence with the Delta River, about 90 miles southeast of Fairbanks. A Poncelet undershot waterwheel and generator unit mounted on a floating platform, seasonally installed and moored to a cliff. Power produced would be supplied to the Golden Valley Electric Association grid.

The Federal Energy Regulatory Commission granted WPC a five-year pilot project license on October 19, 2012. In processing WPC’s application, the Commission used a hydrokinetic pilot project licensing process derived from from its Integrated Licensing Process. According to the Commission, the hydrokinetic pilot project licensing process was designed “to meet the needs of entities, such as Whitestone, who are interested in testing new hydropower technologies while minimizing the risk of adverse environmental impacts.” The Commission describes the goal of the pilot licensing process as “to allow developers to test new hydrokinetic technologies, to determine appropriate sites for these technologies, and to confirm the technology’s environmental and other effects without compromising the Commission’s oversight of the projects and limiting agency and stakeholder input.”

As outlined in a white paper prepared by Commission staff, a hydrokinetic pilot project should be: (1) small; (2) short term; (3) located in environmentally nonsensitive areas; (4) removable and able to be shut down on short notice; (5) removed, with the site restored, before the end of the license term (unless a new license is granted); and (6) initiated by a draft application in a form sufficient to support environmental analysis. After finding the WPC project met these standards, the Commission issued it a license in 2012. Article 301 of the license required the licensee to commence construction of the project works within two years from license issuance, i.e., by October 19, 2014.

Despite winning a license, the project was never built. In 2014, WPC asked for and received a two-year extension of the start-of-construction deadline, “due to unforeseen setbacks in obtaining the necessary financing to begin construction.” But in that order, the Commission reminded the licensee that, pursuant to section 13 of the Federal Power Act, the deadline for starting construction may only be extended once, for a period not exceeding two additional years. Therefore, the Commission noted its inability to grant any further extensions of time for the commencement of project construction.

But in September 2015 WPC applied to the Commission for surrender of its license. In its surrender application, WPC stated that it was unable to obtain the funding necessary to construct the project and had not constructed any project facilities.

In April 2016, the Commission granted WPC's surrender application without condition, citing the facts that the licensee had not commenced construction and that the project site remained unaltered.

The Whitestone project was among the first to use the Commission’s hydrokinetic pilot project licensing process. But despite receiving expedited regulatory treatment in licensing, financing challenges led the licensee to surrender its license before the project could be constructed. Some other proposed hydrokinetic projects have been canceled or put on hold, following licensure; earlier this year, the Commission accepted license surrender for a Washington tidal power project licensed as a 10-year pilot project, after the public utility district proposing it found it economically infeasible. Another project -- an ocean wave energy farm off the Oregon coast -- surrendered its pilot license
 in 2014.

Maine PUC considers community energy projects

The Maine Public Utilities Commission is evaluating the viability of proposed community-based renewable energy projects that remain under development.

Maine has run a community-based renewable energy program since 2009.  The program gives qualified wind, solar, and other renewable energy projects long-term contracting opportunities to sell the facility’s output to a Maine transmission and distribution utility at attractive rates.

In 2015, the Maine Legislature adopted P.L. 2015 ch. 232, An Act to Amend the Community-based Renewable Energy Program”.  Beyond minor revisions to the law, the act adds strict deadlines for key program milestones: the Public Utilities Commission has until December 31, 2015 to order or allow utilities to enter into long-term contracts under the program, and all projects selected for a contract must become operational and commence generating electricity by December 31, 2018.

Section 5 of the Act also created a new "viability assessment" process designed to make sure the program is as effective as possible.  The program size is capped at 50 megawatts statewide; all of this capacity was quickly claimed by certified projects.  But not all projects that have been certified are operational; some have yet to be built.  Some stakeholders expressed concern over "permit banking" -- developers obtaining and holding onto program capacity, without actively developing it, while other projects would move forward if they could get the capacity.

As a result, the Legislature directed the Commission to review all certified projects that have not yet reached commercial operations, to determine whether the projects are reasonably likely to achieve commercial operations within a 3-year period.   If the Commission determines a project will not be viable by December 31, 2018, the Act directs the Commission to revoke any contract awarded, but such projects will remain certified under the program.   If the removal of nonviable projects frees up program capacity for contracting, the law directs the Commission to conduct an expedited request for proposals to select community-based renewable energy projects to become program participants and enter into long-term contracts.

The Commission's viability assessment process is now ongoing.  A July 13, 2015 procedural order identified six projects as having been either certified or awarded a contract, but not been placed in commercial operation.  Project developers were invited to submit information related to the viability assessment by August 7. 

The Commission meets on September 22 to deliberate on the viability assessments.

FERC tests 2-year hydropower licensing process

Licensing some new hydropower projects in the United States -- traditionally a lengthy process -- may soon become easier, as federal regulators have approved an experimental two-year process that may soon be used to license some projects.

Water spills over a small, non-powered dam in Maine.

The Federal Energy Regulatory Commission regulates most hydropower development in the United States.  Under Part I of the Federal Power Act, the Commission considers applications for hydropower project licenses.  While the traditional licensure process has resulted in the issuance of thousands of licenses, winning a license for a project can take many years -- and some licensure proceedings have stretched toward a decade.

In response to concerns that lengthy licensing procedures stifle hydropower development, last year Congress enacted the Hydropower Regulatory Efficiency Act of 2013.  That law directed the Commission to investigate the feasibility of a two-year licensing process for certain projects, develop criteria for identifying projects that may be appropriate for the process, and develop and implement pilot projects to test the process.

In January 2014, the Commission solicited pilot projects to test a two-year process.  Two kinds of projects were eligible: hydropower development at existing non-powered dams and closed-loop pumped storage projects.  In the notice soliciting pilot projects, the Commission articulated additional criteria for eligibility including:

• The project must cause little to no change to existing surface and groundwater flows and uses;


• The project must not adversely affect federally listed threatened and endangered species;


• If the project is proposed to be located at or use a federal dam, the request to use the two-year process must include a letter from the dam owner saying the plan is feasible;


• If the project would use any public park, recreation area, or wildlife refuge, the request to use the two-year process must include a letter from the managing entity giving its approval to use the site; and


• For a closed-loop pumped storage project, the project must not be continuously connected to a naturally flowing water feature. 

Ultimately, the Commission selected a project proposed by Free Flow Power Project 92, LLC: a 5-megawatt project at the Kentucky River Authority's existing Lock & Dam No. 11 on the Kentucky River in Estill and Madison counties, Kentucky.  Lock and Dam 11 were originally built from 1904-1906 and support a twenty mile long pool of water 201 miles above the mouth of the Ohio River, but have not previously supported a FERC-licensed hydropower project.

The Free Flow Power applicant's request to use the 2-year licensing process was filed on May 5, 2014, so the two years runs through May 5, 2016.  The Commission staff has issued a process plan and schedule with interim milestones through February 2016.  Compared to a traditional licensure process, the proposed schedule is accelerated -- but will this pilot case remain on schedule?  Will the accelerated process satisfy the various stakeholders, including the developer, regulator, neighbors, and public?

Hydrokinetic energy projects in 2014

Hydrokinetic energy projects generate electricity from moving water, capturing the power embodied in tides, waves, and currents without the use of dams.  Hydrokinetic energy resources are estimated to have a tremendous power potential -- according to one U.S. Department of Energy study, approximately 1,420 terawatt-hours per year, or approximately one-third of the nation's total annual electricity usage.  The technologies required are relatively new, do not have decades of operational experience, and remain relatively expensive.  Nevertheless, federal records show growth in hydrokinetic project development.

The Federal Energy Regulatory Commission regulates most hydrokinetic energy projects under its hydropower jurisdiction pursuant to the Federal Power Act.  Project developers may seek preliminary permits granting the right to study a particular site and priority to apply for a project license. 

Relatively few projects have received licenses to date.  In 2012, the Commission issued a pilot project license for the Roosevelt Island Tidal Energy project in the East River near New York City.  Last month, the Commission issued a pilot project license to the Public Utility District No. 1 of Snohomish County for a 600 kilowatt tidal project in Puget Sound, Washington.

As of last month, six projects have been issued preliminary permits that remain in effect:

• Ecosponsible, Inc.'s Niagara Community project, a 1.25 megawatt inland project proposed for the Niagara River in New York
• Ecosponsible, Inc.'s Niagara Community #2 project, a similar 1.25 megawatt inland project proposed for the Niagara River in New York
• Iguigig Village Council's Iguigig RISEC project, a 40 kilowatt inland project proposed for the Kvichak River in Alaska
• The Town of Edgartown, Massachusetts's Muskeget Channel Tidal Energy project, a 4.94 megawatt project proposed for the Muskeget Channel off the island of Martha's Vineyard
• Turnagain Arm Tidal Energy's Turnagain Arm Tidal project, a 240 megawatt tidal project proposed for Cook Inlet, Alaska
• Resolute Marine Energy, Inc.'s Yakutat project, a 750 kilowatt wave project proposed in the Gulf of Alaska

 As of March, another 15 applications for preliminary permits were pending before the Commission.

Snohomish tidal project wins FERC pilot license

Federal regulators have issued a pilot license for a proposed tidal energy project in Washington.

Tidal waters off the Maine coast.

Yesterday, the Federal Energy Regulatory Commission issued a 10-year pilot license to Public Utility District No. 1 of Snohomish County for the proposed Admiralty Inlet Pilot Tidal Project.  The 600-kilowatt hydrokinetic project, to be located in Puget Sound in the state of Washington, is designed as a temporary, experimental project to evaluate the commercial viability of tidal energy development in Puget Sound.

According to the Commission's Order Issuing Pilot Project License (85-page PDF), the proposed project features two tidal turbines to be manufactured by OpenHydro, each measuring 6 meters in diameter, secured to the seabed by the turbines' 414-ton weight.  Peak tidal currents at the site exceed 3 meters per second.  The Public Utility District plans to connect the project to the mainland grid via subsea cables connecting to District-leased land south of the Coupeville Ferry Terminal.

In granting the pilot license, the Commission considered a range of possible resource impacts from the project.  The site lies near key shipping lanes to the ports of Seattle, Tacoma, Olympia, and Everett, and is near a key trans-oceanic fiber optic cable connecting North America to Japan.  To address concerns over impacts to these resources, the Commission imposed conditions and monitoring requirements on the project.

The Commission's pilot licensure program differs somewhat from its general licensing of hydropower projects.  As described in a whitepaper on the pilot project licensing process prepared by Commission staff, pilot projects should be (1) small; (2) short term; (3) located in non-sensitive areas based on the Commission’s review of the record; (4) removable and able to be shut down on short notice; (5) removed, with the site restored, before the end of the license term (unless a new license is granted); and (6) initiated by a draft application in a form sufficient to support environmental analysis. Projects meeting these criteria enjoy a streamlined regulatory review process.

With the pilot license in hand, the Public Utility District may prepare for project development.  But if the project goes forward, the District may have to justify its costs.  As noted in the Commission’s order, the project has relatively high capital, operation, and maintenance costs with respect to the amount of power produced.  According to the Commission’s order, the levelized annual cost of operating the project will be about $1,848,294, or $7,574.98 per megawatt-hour of energy generated -- significantly higher than the estimated $30/MWh cost of alternative power.  Based on an estimated average annual generation of 244,000 kilowatt-hours as licensed, Commission staff projects that in the first year of operation, the project power will cost $1,840,974 more than the cost of alternative power.

Admittedly, the Snohomish project is designed as an experiment -- a pilot project to test technology and project feasibility.  The Snohomish project is among the first hydrokinetic projects in the country to receive a FERC license.  The first pilot project issued for a tidal project, the Roosevelt Island Tidal Energy Project, similarly faces projected above-market energy costs.  Like the Roosevelt Island project, the Snohomish project will be relatively small.  But given its financial picture, will the Snohomish project go forward?

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.

Will Virginia's feed-in tariff work?

Virginia’s largest electric utility is launching a feed-in tariff for solar energy – but will it work?

Feed-in tariffs are a policy tool used to facilitate the production of renewable electricity.  While six states and a handful of utilities have each designed their own programs, in general feed-in tariffs guarantee that customers who own solar panels or eligible renewable electricity generation projects a fixed price to sell the power to their local utility.  Building solar photovoltaic and other renewable generation technologies can have a relatively high capital cost, but the lack of a fuel cost can lead to low operational costs in the long run.  Customers, particularly businesses, say they need certainty about the internal economics of their project – whether revenue streams or savings off existing power bills – prior to committing the capital to actually build it.  Feed-in tariffs are one tool to address this uncertainty. Dominion Virginia Power serves ratepayers in the Commonwealth as Virginia Electric and Power Co.  It is a subsidiary of Dominion Resources Inc.  After securing an approval from the Virginia State Corporation Commission last March, the utility recently proposed a pilot feed-in tariff program for solar resources.  Under the Solar Purchase Program, Dominion will provide five-year contracts to purchase the energy produced by eligible rooftop solar projects and other distributed solar photovoltaic resources.

The program guarantees a price of 15 cents per kilowatt-hour over the contracts’ term. This price paid to solar energy producers is above Dominion’s recent retail average electricity price.  In 2012, Virginia's average retail electricity price was 10.5 cents per kWh for residential customers.  Commercial customers paid an average price of just 7.8 cents per kWh; the increased spread between the feed-in tariff rate for sales to the utility and commercial customers’ average price for purchases from it creates a strong incentive for commercial customers to develop solar projects.

Despite significant interest in Virginia and elsewhere in the development of the feed-in tariff, Dominion’s program is only a pilot project.  It applies only to residential systems up to 20 kilowatts and commercial systems up to 50 kW in size.  Moreover, the feed-in tariff is capped at 3 MW in total participating capacity.  Coupled with solar projects’ capacity factors, this limits the total volume of electricity to be purchased under the program.

Will Dominion’s feed-in tariff work?  The answer depends on what “working” means.  If the price spread between the feed-in tariff rates and retail rates, combined with other incentives such as federal tax credits, the feed-in tariff may be enough to encourage the development of some commercial and residential systems.  The utility and ratepayers may learn more about the costs and benefits of distributed generation.  To some degree, it may incentivize activity and competition in the solar installation business.

But where the program is capped at 3 MW, the current feed-in tariff program alone may neither spur much new investment nor cost ratepayers much.  Dominion’s recent peak loads were about 19,636 MW – so solar purchases would represent just hundredths of a percent by capacity, and an even smaller number by volume of electricity sold.  The entire program cap could be taken up by 60 commercial-scale projects, or even by 750 homes using Dominion’s estimated average of 4 kW per residential project.  It is unclear if this level of volume is enough to lead to a more robust installation services sector, or to lower costs for installed solar projects.

Implementation of Dominion’s solar feed-in tariff program will follow State Corporation Commission review and approval.

Maine considers renewable feed-in tariff

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

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

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

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

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

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

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

Maine offshore wind projects win federal grants

The U.S. Department of Energy has announced an award of funding to seven offshore wind Advanced Technology Demonstration projects totaling $168 million over six years.  These projects are designed to achieve large cost reductions over existing offshore wind technologies and develop viable and reliable options for the United States.  Waters off Maine will be home to two of the projects:

• Statoil North America of Stamford, Connecticut plans to deploy four 3-megawatt wind turbines on floating spar buoy structures in the Gulf of Maine off Boothbay Harbor at a water depth of approximately 460 feet. These spar buoys will be assembled in harbor to reduce installation costs and then towed to the installation site to access the Gulf of Maine's extensive deep water offshore wind resources.
  
  
• The University of Maine, based in Orono, plans to install a pilot floating offshore wind farm off Monhegan Island.  This project will feature two 6-megawatt direct-drive turbines on concrete semi-submersible foundations. These concrete foundations could result in improvements in commercial-scale production and provide offshore wind projects with a cost-effective alternative to traditional steel foundations.
  

Each project will receive up to $4 million to complete the engineering, site evaluation, and planning phase of their project.  Five other projects were also selected for this first phase:

• Baryonyx Corporation, based in Austin, Texas, plans to install three 6-megawatt direct-drive wind turbines in state waters near Port Isabel, Texas. The project will demonstrate an advanced jacket foundation design and integrate lessons learned from the oil and gas sector on hurricane-resistant facility design, installation procedures, and personnel safety.
  
  
• Fishermen's Atlantic City Windfarm plans to install up to six direct-drive turbines in state waters three miles off the coast of Atlantic City, New Jersey. The project will result in an advanced bottom-mounted foundation design and innovative installation procedures to mitigate potential environmental impacts. The company expects this project to achieve commercial operation by 2015.
  
  
• Lake Erie Development Corporation, a regional public-private partnership based in Cleveland, Ohio, plans to install nine 3-megawatt direct-drive wind turbines on "ice breaker" monopile foundations designed to reduce ice loading. The project will be installed on Lake Erie, seven miles off the coast of Cleveland.
  
  
• Seattle, Washington-based Principle Power plans to install five semi-submersible floating foundations outfitted with 6-megawatt direct-drive offshore wind turbines. The project will be sited in deep water 10 to 15 miles from Coos Bay, Oregon. Principle Power's semi-submersible foundations will be assembled near the project site in Oregon, helping to reduce installation costs. 


• Dominion Virginia Power of Richmond plans to design, develop, and install two 6-megawatt direct-drive turbines off the coast of Virginia Beach on innovative "twisted jacket" foundations that offer the strength of traditional jacket or space-frame structures but use substantially less steel.
  

After the first phase, the DOE Wind Program will select up to three of these projects to advance the follow-on design, fabrication, and deployment phases to achieve commercial operation by 2017. These projects will be eligible for up to $47 million over four years, subject to congressional appropriations.

Electric vehicle pilot program proposed in Maine

A pilot program proposed by a Maine utility could lead to more electric vehicles on the road.  Central Maine Power Co. has asked the Maine Public Utilities Commission to approve its Electric Vehicle Pilot Project No. 2, which includes a limited number of grants to help customers purchase or lease an electric vehicle. 

As described in CMP's June 21 filing with the Commission, the electric vehicle pilot project consists of grant funding, CMP promotion of electric vehicles, and the collection of data on vehicle usage.  CMP envisions issuing cash grants of up to $15,000 each to ten selected organizations located in CMP’s service territory.  These organizations, selected through a public solicitation process, could use these grants to help them purchase or lease ten electric vehicles.  Each organization can also apply a portion of the grant toward the purchase and installation of a Level 2 (208V or 240V) rapid charging station, if it so chooses.

The project arises out of a requirement approved by the Commission as part of the settlement of a 2008 case over CMP's Maine Power Reliability Program, or MPRP.  As part of a deal allowing CMP to invest $1.4 billion in transmission infrastructure in its territory, the Commission required CMP to develop a process for pilot projects to facilitate the increased use of hybrid and electric cars in Maine, and to promote the storage of renewable and other energy generated off-peak to replace fuels with greater climate impacts.  Using off-peak electricity to power transportation could both save money for consumers and allow the utility to make more full use of its transmission and distribution grid.

Specifically, the stipulation required CMP to bring forward at least three pilot projects to facilitate the increased use of hybrid and electric cars by the end of 2012.  CMP's first pilot project entails integrating a limited number of electric vehicles into CMP's fleet.  This project, which is currently being implemented, is designed to give the utility first-hand experience with EVs, in a manner that minimizes costs and risks.

If approved, CMP's second project would introduce ten vehicles into the broader community.  The utility has said that its objective is to build awareness and lessen consumers' concerns by getting more of the new EV models into the public's hands.  Its ultimate stated goal is to create interest and "buzz" about EVs, particularly among innovative early adopters who would be most likely to purchase an EV.

A third phase is still under development, but CMP has said it will propose reducing barriers to EV use through education, participate in the development of public charging infrastructure, and assess a lower off-peak rate for EV charging.

The Maine Public Utilities Commission is reviewing CMP's proposal and is expected to issue its decision later this year.

FERC, BOEM marine hydrokinetic guidelines

Two key federal regulators of marine renewable energy production have issued an updated set of guidelines for regulatory aspects of marine and hydrokinetic energy projects.

The document, BOEM / FERC Guidelines on Regulation of Marine and Hydrokinetic Energy Projects on the OCS, is designed to to clarify jurisdictional responsibilities for marine and hydrokinetic projects on the Outer Continental Shelf (OCS) and to foster a cohesive, streamlined process that will help accelerate the development of MHK (i.e., wave, tidal, and ocean current) energy projects.

U.S. Coast Guard icebreaking tug THUNDER BAY at its home berth in Rockland, Maine.

The OCS includes all submerged lands, subsoil, and seabed lying between the seaward extent of the states' jurisdiction (approximately 3 nautical miles from shore, or 3 marine leagues for Texas and the Gulf coast of Florida) and the seaward extent of federal jurisdiction (approximately 200 nautical miles or more from shore).

As described in the guidelines, an MHK project generates electricity from the motion of waves or the unimpounded flow of tides, ocean currents, or inland waterways. (While ocean thermal energy conversion or OTEC projects also fall under the MHK umbrella, the new guidelines focus on ocean wave and ocean current technologies.)

The guidelines cover only MHK projects on the OCS. The guidelines therefore cover neither nearshore MHK projects in state-jurisdictional waters, nor offshore wind projects in federal or state waters. 
 
The guidelines published yesterday fit within the larger context of agreements between previously-sparring federal agencies.  BOEM regulates site leasing, while FERC regulates hydropower.  As marine hydrokinetic technologies improved to the point where developers began proposing commercial projects, tensions and inconsistency developed between how the two agencies regulated and interacted.

This situation led the U.S. Department of the Interior and FERC to execute a Memorandum of Understanding (MOU) in April 2009, recognizing each agency’s respective jurisdiction.  Under the agreement, BOEM has jurisdiction to issue leases on the OCS for MHK projects, while FERC has jurisdiction to issue licenses for these same projects. The agencies felt that the agreement established a cohesive, streamlined process to lease, license and regulate all renewable energy development activities on the OCS, including marine hydrokinetic sources.

FERC and BOEMs’ predecessor Minerals Management Service (MMS) issued the first set of joint guidelines in 2009. As part of MMS’s Guidelines for the Minerals Management Service Renewable Energy Framework, the agencies included an appendix presenting MMS / FERC Guidance on Regulation of Hydrokinetic Energy Projects on the OCS. That document covered procedures for obtaining leases and licenses, municipal preferences, fee structures, and procedures for pursuing hybrid projects (more than one form of renewable energy) or straddle projects (straddling the boundary dividing state waters and the OCS).

Yesterday’s announcement presents a refreshed version of these guidelines. The revised guidelines offer guidance on a number of key regulatory aspects of MHK development process. Since 2009, both FERC and BOEM have changed some of their processes in significant ways – for example, BOEM now allows research leases, and FERC has expedited its pilot project licensure process. The guidelines thus help developers and others in the marine community to understand the legal process for exploration and development of hydrokinetic ocean energy sites.

Maine tidal project wins pilot license

Federal regulators have issued a pilot project license to a tidal energy project proposed in Maine's Cobscook Bay.  Yesterday, the Federal Energy Regulatory Commission issued an order granting Ocean Renewable Power Company Maine, LLC an 8-year pilot project license to construct, operate, and maintain its proposed Cobscook Bay Tidal Energy Project.  As licensed, the 300 kilowatt project will be located in Cobscook Bay north and east of Seaward Neck and west of Shackford Head State Park in Eastport, Maine.

ORPC Maine applied for its pilot license in September 2011.  Last month, FERC issued its Environmental Assessment of the Cobscook project, finding generally that licensing the hydrokinetic project with appropriate environmental protective measures would not constitute a major federal action that would significantly affect the quality of the human environment.

FERC granted the pilot project license just 179 days after the license application was filed, a relatively quick timeline for hydropower permitting made possible by FERC's hydrokinetic pilot project licensing process.  As envisioned by FERC staff, the ideal pilot project should be (1) small, (2) short term, (3) located in non-sensitive areas based on the Commission’s review of the record, (4) removable and able to be shut down on short notice, (5) removed, with the site restored, before the end of the license term (unless a new license is granted), and (6) initiated by a draft application in a form sufficient to support environmental analysis.  In ORPC Maine's case, FERC staff agreed that the Cobscook project was a good fit for pilot project licensing process after reviewing the developer's application.

FERC's order approving the license includes an analysis of the economic benefits of project power. As licensed, FERC found that the levelized annual cost of operating the project would be about $1,419,600, or $1.13/kWh. Based on an estimated average generation of 1,250,000 kWh as licensed, the annual value of alternative grid-based power would be $90,400, or 7.2 cents/kWh.  Therefore, in the first year of operation the project power would cost $1,329,200, or $1.06/kWh, more than the cost of alternative power.

As FERC found, "The project has relatively high capital and operation and maintenance costs with respect to the amount of power produced. Although our analysis shows that the project as licensed herein would cost more to operate than our estimated cost of alternative power, it is the applicant who must decide whether to accept this license and any financial risk that entails. This project’s value, however, lies in its successful testing and demonstration of ORPC Maine’s turbine technology, and the project’s ability to raise the profile of, and advance, the emergent tidal energy industry."

NYC tidal project gets pilot license

Federal regulators have issued a pilot project license to a tidal power proposal to be developed in the East River off New York City.  Yesterday the Federal Energy Regulatory Commission awarded a license to the Roosevelt Island Tidal Energy Project (62-page PDF).

As described in the license, the Roosevelt Island project will start relatively small, and is licensed for additional phases of growth.  The first phase entails deployment of three 35-kW Kinetic Hydropower Systems developed by Verdant Power, LLC.  Each of these units has a 5-meter diameter turbine connected to  generator.  Over time, additional turbine units could be deployed, up to a total of 30 turbines, for a total nameplate capacity of 1,050 kilowatts.

Verdant chose to seek a pilot project license for the Roosevelt Island tidal development.  FERC views its hydrokinetic pilot project licensing process as a variant of its Integrated Licensing Process.  Compared to other paths to FERC hydropower licenses, the pilot project process is designed to allow developers to test new hydrokinetic and hydropower technologies while minimizing both their costs and the risk of adverse environmental impacts.

Commission staff have described the ideal pilot project as (1) small, (2) short term, (3) located in environmentally non-sensitive areas based on the Commission’s review of the record, (4) removable and able to be shut down on short notice, (5) removed, with the site restored, before the end of the license term (unless a new license is granted), and (6) initiated by a draft application in a form sufficient to support environmental analysis.  Based on the Roosevelt Island project's similarity to this conceptual ideal, FERC staff recommended that Verdant pursue a pilot project license.

Verdant's pilot project license includes a variety of conditions and mitigation requirements.  Among these are a requirement that Verdant commence construction of Phase 1 within two years, and to complete construction of Phase 3 within six years of the issuance date of the license.  If Verdant meets these deadlines, the Roosevelt Island could be producing electricity within the next few years.

Other innovative ocean energy projects are pursuing FERC's pilot project licensure path, such as the Cobscook Bay Tidal Energy Project proposed by Ocean Renewable Power Company Maine, LLC.  Verdant's license is the first hydrokinetic pilot project license that FERC has issued; others may follow in its footsteps.

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?

Municipal hydrokinetic energy

Interest is increasing in municipal hydrokinetic energy projects, as cities and towns consider whether they should generate renewable electricity from their water resources.  Hydrokinetics entails generating electricity from moving water such as tides, waves, and free-flowing rivers.  Towns, states, and national governments may not only have an interest in generating power for their citizens, but may also have advantages in project development such as lower financing costs.

For example, the town of Wiscasset, Maine is considering whether to pursue a project togenerate electricity from tidal power in the Sheepscot River. The town thinks that tidal currents and flowing water in the Sheepscot could be used to generate electricity using hydrokinetic technology.  In 2008, the town applied to the Federal Energy Regulatory Commission for a preliminary permit to study the feasibility of the project. Wiscasset proposed to deploy a series of hydrokinetic turbine generating units in the tidal Sheepscot, along with associated transmission facilities. Currently, Wiscasset appears to be considering using the RivGen units under design by ORPC.

In May 2009, the FERC granted Wiscasset its preliminary permit. Preliminary permits confer the right to investigate the feasibility of a hydropower project, typically for a three-year term. Preliminary permits do not authorize actual construction; to actually build and operate a hydrokinetic or hydroelectric project generally requires a FERC license or exemption. The holder of a preliminary permit does have first priority to file for a full license as long as the preliminary permit remains in effect, and FERC expects permittees to make progress toward ultimate licensure. (For example, in September 2011 a company affiliated with ORPC used its preliminary permit priority to file a pilot license application for the Cobscook Bay Tidal Energy Project.)

Next spring, the town faces a key deadline if it chooses to seek a hydrokinetic pilot project license for the project. Wiscasset’s preliminary permit is set to expire on April 30, 2012. Filings in the project’s FERC docket suggest that the town may seek to extend that deadline. For example, in a May 2011 filing, the town said, “we anticipate the Wiscasset Project will apply for a successive Preliminary Permit in May 2012”.

Generally, preliminary permits expire after three years, after which the original permittee has no special rights to the site. In certain circumstances, federal regulators can grant successive preliminary permits. For example, FERC has given several municipal hydroelectric projects successive preliminary permits when the towns need more time. Even this requires a showing of diligent efforts to investigate the project’s feasibility and partial progress toward readiness for a license application.

In Wiscasset’s case, other deadlines within the preliminary permit process have already been extended. For example, the 2009 preliminary permit required the town to submit a Notice of Intent and draft license application in May 2011. Instead of filing these pre-application documents, the town chose to ask FERC for an extension to allow more site studies and stakeholder consultation. FERC allowed the town more time, but only until the preliminary permit expires on April 30, 2012. FERC may give the town similar leniency if it applies for a successive preliminary permit this spring. On the other hand, FERC promotes competition and discourages “site-banking”; if someone else showed interest in developing the Wiscasset site, FERC might be less inclined to issue the town a successive preliminary permit.

Wiscasset has until the end of April 2012 to either file a license or seek its successive preliminary permit.  If Wiscasset moves forward, the Sheepscot hydrokinetic project could be an example of how towns can benefit from their renewable energy resources.

Floating offshore wind in US waters?

US coastal waters may soon see the development of floating offshore wind electric generating projects. Being able to install offshore wind turbines on floating platforms, as opposed to towers fixed to the seabed, may enable projects to tap into the vast deepwater ocean energy resource. This would represent a major step in history and technology, and could provide real data on the actual feasibility and costs of offshore wind in the United States.

The Cuckolds Light off Boothbay Harbor, Maine, with Seguin Island Light in the distance.

2012 may bring the deployment of North America's first floating offshore wind project. The DeepCWind Consortium and the University of Maine plan to test a floating wind turbine several miles off the Maine island of Monhegan next summer. The Monhegan project is designed as a pilot project, not a commercial effort. Nevertheless, the lessons learned off Monhegan could be used to shape a larger commercial project in 2013.

Historically, this project could be the first operating US offshore wind development. As 2011 closes, US waters still host neither operating commercial offshore wind projects, nor installed pilot projects of significant size. This is not for lack of interest. Universities and businesses are investing in offshore wind research and development, while developers eagerly pursue commercial projects in nearly all US jurisdictions. Commercial proposals range from projects fully permitted projects but unbuilt, to concepts still in the formation phase.

Technologically, a floating offshore wind project would demonstrate potential solutions to the engineering challenges posed by deep water sites. At least two floating turbines have recently been deployed around the world. The first, Statoil’s 2.3 megawatt Hywind unit, was installed off Norway in 2010. In November 2011, Portuguese utility Energias de Portugal (EDP) teamed up with Principle Power, Inc. to deploy a 2 megawatt turbine on a WindFloat platform off Portugal. The semisubmersible WindFloat design allows the unit to be towed in a horizontal position to the site, then erected without the use of a lift vessel. These test projects demonstrate some of the technologies required for deepwater offshore wind projects. A US project would represent a similar demonstration of new technology.

Floating offshore wind projects appear to have some momentum in Europe, and are poised to make a splash in US waters in the next year. Whether these efforts take hold depends on broader questions of economics and policy as much as on technology. What will 2012 bring?