October 20, 2010 - renewable energy certificates

Busy harbor in Norfolk, VA, with ships old and new.

I'm back from the TAPPI PEERS conference in Norfolk, Virginia.  TAPPI put on a great show, and the participants were very enthusiastic about the technical aspects of the pulp and paper industry.  I offered a presentation about renewable energy certificates (also known as renewable energy credits in some states - either way, RECs). A REC is a non-tangible trad\able commodity representing a set of the environmental, social and other non-power attributes of renewable electricity generation.
In the United States, federal and state policies favor renewable energy production by providing incentives for the development of renewable power resources. One primary state-level mechanism for rewarding renewable generators is the Renewable Energy Certificate (REC) market. In many states, laws and regulations require utilities to source a specified portion of their power from qualified renewable resources. Utilities satisfy this compliance obligation by purchasing or otherwise obtaining RECs to cover this load. In addition, a variety of voluntary markets exist for RECs.

Pulp and paper mills are well-positioned to participate in the REC market as sellers. As shaped by the forces of history and economics, today's mills often operate renewable generation such as a hydroelectric generation station or a biomass-fired steam turbine generator. For each megawatt-hour of qualified renewable power generated at a mill, a certified resource's owner will receive one REC. Owners can then sell these RECs in voluntary or compliance markets. The opportunity to sell RECs can enhance the economics of a mill and its renewable generation.

August 16, 2010 - renewable energy standards and goals

NPR has an interesting set of graphics today illustrating the diversity of U.S. states' policies on renewable energy.  As we saw last month, the U.S. does not have a federal-level renewable energy standard, or even a specific goal for renewable development defined in terms of capacity (megawatts, or more realistically gigawatts).

The first factory built-to-order solar-powered integrated electric-vehicle charging station has been unveiled in Korea: the SunPods SP-300.  The unit, also known as the "EV Plug-N-Go", was first displayed at International Green Energy Expo Korea 2010 in Deagu, South Korea.

July 26, 2010 - Energy department blogs; Senate energy bill

First, today's picture (from several days ago): the view from the Maine island of Islesford (Little Cranberry Island), across the town field:




Blogging is hot these days, so hot in fact that the U.S. Department of Energy has unveiled its own blog: "Energy Blog". (Perhaps a contest could be held to suggest a more distinctive name?)

Those of us looking for a Senate energy bill are expecting to see more details today. While it seems nearly certain that this draft won't include a renewable portfolio standard (or as federal types seem to prefer, a renewable energy standard), a broad coalition sent a letter to Senator Reid on Friday asking for a national renewable minimum standard (hosted at the American Wind Energy Association's blog). The letter was signed by diverse parties such as:

• labor representatives (Blue Green Alliance, United Steelworkers, Utility Workers Union of America)
• environmentalists (Environment America, League of Conservation Voters, Natural Resources Defense Council, Pew Environment Group)
• renewable energy groups (American Wind Energy Association, Biomass Power Association, Energy Recovery Council, National Hydropower Association, RES Alliance for Jobs), and
• utilities (AES Corporation, NextEra Energy Resources, Inc., Xcel Energy)

The United Kingdom has set ambitious renewable energy targets: to hit a 30% renewable portfolio standard by 2020, the UK will need to install 27 more gigawatts of renewables, half of which they want to come from offshore wind.  How much will it cost?  According to a new report, too much: accounting firm PricewaterhouseCoopers says that the United Kingdom will fall £10 billion short of the £75 billion it will need to develop its offshore wind resource up to the level of the renewable energy targets.  To meet that target, the UK will need to add 1.1 GW of new capacity per year -- but in 2009, only half of that was rolled out.  Critics point to a severe lack of pre-construction finance.  Could a different mix of resources -- perhaps one picked not in advance based on specific technologies, but competing on their economics -- result in a lower cost exposure to the British ratepayer?

As the Senate has dropped its current consideration of a climate bill, Senator John Kerry has apparently predicted "an ice-free Arctic" in "five or 10 years."

May 17, 2010 - Cape Wind inks another contract

The next chapter in the continuing story of Cape Wind: a mirror contract, and questions about the linkage between renewable portfolio standards and power pricing.

National Grid has signed a second contract with Cape Wind, this time to enable National Grid to assign the remaining 50% of the project's output to another wholesale customer -- a "mirror contract" for National Grid's primary $3 billion, 15-year contract to buy 50 percent of the electricity that will be produced by Cape Wind. This would leave National Grid with rights to the entire output of the Cape Wind project.

Mirror contracts are relatively common in the industry. As a financing tool, them allow the project developer to demonstrate to banks and capital sources that they have a guaranteed offtake for 100% of the project's production. This makes banks more willing to finance the project.

So who did National Grid have in mind as the other wholesale purchaser? If you know the regional market, Boston-based utility NStar jumps out as one potential purchaser, although there are of course other possibilities. In fact, National Grid itself apparently has the rights under the mirror contract to retain 100% of the power for itself -- although doing so magnifies its ratepayers' exposure to the elevated costs, triggering a tough burden on National Grid to demonstrate that this is just and reasonable and in the public interest.

Some commenters are noting that the Cape Wind was made possible by the Commonwealth's Green Communities Act and related legislation establishing a renewable portfolio standard (or renewable electricity standard) for the largest investor-owned utilities. But clearly there's a huge price premium figured in over the existing mix of resources -- about 8 cents for power today, versus 20.7 cents and rising for the Cape Wind output. Is a renewable portfolio standard enough to explain the acceptability of this significant price increase? Other states like Maine have had renewable portfolio standards for years, and although some renewables might be priced higher, there has been enough qualified capacity coming online at near-market costs that Maine has not seen much activity from significantly above-market contracts.

4/8/10

These are wild times for those of us involved with the Maine legislature, as they worked well past midnight last night... and didn't quite finish up their session. Everyone returns Monday for the final push. The House passed the $85 million bond package, but the Senate came up several votes short. Sadly, despite advocacy from Efficiency Maine Trust executive director Michael Stoddard and industrial energy consumers, the bonding for energy efficiency spending was stripped out of the package. Moving forward, one of the big issues with the bond package is that if it doesn't pass, dozens of businesses in Aroostook County, the largest county east of the Mississippi, will soon be without rail access, when the Montreal, Maine & Atlantic Railway will abandon 230 miles of track, unless the state can raise the funds to buy it. (The head of the Federal Railroad Administration Joe Szabo is coming to Maine to investigate the issue.) The vote may be based on principles, but it is also largely a partisan issue.

Also in Maine news: a good editorial by my friend Gordon Weil, arguing that Maine's Public Advocate -- the executive office tasked with looking out for the interests of utility ratepayers before the PUC and legislature -- should have more independence from the Governor. Gordon gives a first-hand account of how, in 1981, Governor Brennan created the office, and named Gordon as the first Public Advocate. Gordon also describes how in recent years, the public advocate has served more as an advocate for longer-term policies pushed by the Governor, as opposed to looking out for keeping rates low; indeed, in several contexts recently, organized industrial energy consumers have served as the sole advocates for low rates, in the face of proposals that would significantly increase all ratepayers' expenses.

Did Connecticut set its renewable portfolio standard too high? The energy committee has approved legislation that would halve Connecticut's goal of obtaining 20 percent of its electricity from renewable sources by 2020. Connecticut is nowhere near on track to meet this goal; renewable developers point to a lack of financing as the problem. What can policymakers do to address the capital and credit crunches?

On the federal level, as we move closer to legislation that will promote significantly larger deployment of grid-scale renewables, there is concern about the lack of transmission development -- and federal transmission oversight -- that may be needed to connect generation to load.

3/16/10

Maine news in brief:
Governor Baldacci names a new LURC commissioner and reappoints 6 current members. LURC is Maine's Land Use Regulatory Commission, which rules on development plans in Maine's unorganized territory -- including the proposed Plum Creek development, and wind-power projects.

University of Maine names a new distance-learning director: Curt Madison, who has served at the University of Alaska - Fairbanks. Curious to see how this fits with the University's broadband plan.

Meanwhile Portland has applied to Google to be a test site for full-penetration super-fast internet.

Maple season is here, with Governor Baldacci tapping the ceremonial first tree.

Elsewhere:
29 governors "demand" a national renewable energy standard (or renewable portfolio standard). 10% by 2012? Many states, such as Maine, are already doing more.