FERC relicenses Poe hydro project

The Federal Energy Regulatory Commission has issued an order issuing a new hydropower license to utility Pacific Gas & Electric Company for its Poe Hydroelectric Project.

The 143-megawatt project is located on the North Fork Feather River in northern California, and includes land within the Plumas National Forest. Originally licensed in 1953, the project includes two dams impounding reservoirs, a 33,000-foot-long pressure tunnel bypassing about 7.6 miles of the river, and a powerhouse with two turbines.

The Commission issued a new 40-year license for the Poe project to PG&E on December 17, 2018. In relicensing proceedings, the Commission considers a number of public interest factors, including the economic benefits of project power. In general, the Commission evaluates the economics of a hydropower project by comparing the current costs of the project to likely alternative power, without considering forecasts concerning potential future inflation, escalation, or deflation beyond the license issuance date. The Commission says the basic purpose of its economic analysis is to provide a general estimate of the potential power benefits and the costs of a project, and of reasonable alternatives to project power.

In the Poe project's case, the Commission noted that after considering mandatory conditions and other measures suggested by Commission staff, PG&E's annual cost of operating the project would be about $9,590,000. Assuming that the project would generate an average of 498,113 megawatt-hours of energy annually, this works out to $19.3 per megawatt-hour. By comparison, the Commission found that the project's the corresponding alternative energy cost plus the value of its dependable capacity gave this power a value of $50,800,000, or $102 per megawatt-hour in the first year of operation, the project would cost $41,210,000 or $82.7 per megawatt-hour less than the likely alternative cost of power.

Value of distributed solar energy

What is the value of distributed solar photovoltaic electric generation?  An investigation by the Maine Public Utilities Commission into this question is ongoing, and will culminate in a report to the state legislature this winter.  At stake are policies and incentives to foster the growth of solar energy in Maine.

Distributed solar generation -- such as solar panels on rooftops and ground-mounted solar arrays -- is a small but rapidly growing sector of the U.S. energy mix.  Solar panels can produce renewable electricity, with no direct fuel use, emissions, or reliance on foreign energy sources.  Customer-sited and other distributed generation resources can also enhance the reliability of the local electric grid, and reduce the need for more expensive transmission and distribution upgrades.  The growing shift to solar energy is also seen as a driver of jobs and economic development.

Rooftop solar photovoltaic panels on a business in Patten, Maine.

In recognition of these benefits, states and the federal government have enacted a variety of policies and incentives for solar power development and use.  These policies include renewable portfolio standards which mandate that utilities source certain amounts of their power from renewable resources, as well as net metering policies which allow a customer to offset its power bill with energy produced from on-site solar panels.

But what is the true value of distributed solar energy resources?  In an effort to find out, in 2014 the Maine Legislature enacted An Act To Support Solar Energy Development in Maine.  This law is also known as the Maine Solar Energy Act, P.L 2013 Chapter 562 (codified at 34-B M.R.S. §§ 3471-3473).  The law expresses the legislative finding that Maine's solar energy resources "constitute a valuable indigenous and renewable energy resource."  Moreover, the law is predicated on the findings that solar energy development is unique in its benefits to and impacts on the climate and the natural environment, and that it can help Maine because it can displace fossil fuel combustion and associated air pollution and greenhouse gas emissions.   The Act set a state policy "to encourage the attraction of appropriately sited development related to solar energy generation, including any additional transmission, distribution and other energy infrastructure needed to transport additional solar energy to market, consistent with all state environmental standards; the permitting and financing of solar energy projects; appropriate utility rate structures; and the siting, permitting, financing and construction of solar energy research and manufacturing facilities for the benefit of all ratepayers."

With these findings noted, the Act directed the Maine Public Utilities Commission to construct a report by February 15, 2015 on the value of distributed solar energy generation in Maine.  In so doing, the Act requires the Commission to develop a method for valuing distributed solar energy generation.   By statute, this method must, at a minimum, account for:

• the value of the energy;
• market price effects for energy production;
• the value of its delivery, generation capacity, transmission capacity and transmission and distribution line losses; and
• the societal value of the reduced environmental impacts of the energy.

The also Act requires the Commission's report to include a summary of options for increasing investment in or deployment of distributed solar energy generation, which may include recommendations for what Maine should do.

The Commission's investigation is ongoing.  On October 23, 2014, the Commission released a draft of its consultants' initial report, "Maine Distributed Solar Valuation Methodology."  That document is designed as a draft of the methodology to be used in the valuation phase, offered for public review and comment.

The Commission will accept written comments on the draft report until November 12, 2014.  In addition, the Commission and its consultant, Clean Power Research, will hold a work session on the Draft Methodology on October 30, 2014.

Following the first phase to establish the valuation methodology, the Commission and its consultants will conduct a second phase in which the methodology will be applied to Maine to calculate the value of distributed solar generation.  The Commission's work will be summarized in its report to the legislative energy committee, a draft of which the Commission plans to release in January 2015.

June 1, 2010 - market theory of policy, and the madness of crowds; FPL's 75 MW solar thermal

BP shares are taking a hit today. One estimate suggests BP has lost $50 billion in market value based on share price. Meanwhile, another estimate suggests the true cost to BP of the massive oil release from its Deepwater Horizon well is on the order of $20 billion.

From the policy level, it's interesting to observe the market perform its assessment of BP's liabilities. If the large-cap stock market is the product of the "madness of crowds", what is the gap between share price and true value? How does the size of this gap vary with time and conditions?

This inquiry has implications for the policy world as well. What is the absolute value, in economic or preferential terms, of a given policy outcome -- for example, affordable electricity, or reduced CO2 emissions? How does society value that policy outcome? What is the size of the gap between the value we place on an outcome, and its true value? What choices should we as a society be making that we don't find "worth it", but that are truly the lowest-cost and best path forward?



More grid-scale solar: FPL is building a massive solar thermal plant near Lake Okeechobee, Florida. At up to 75 MW, FPL's Martin Next Generation Solar Energy Center is on track to be the second-largest solar plant in the world. This solar thermal plant has a unique design. The plant will use mirrors to concentrate the sunlight 80 times, and then heat water up to 700 degrees. To get over the limitations of Florida's humid and often cloudy weather, the Martin facility is unique because it is co-located with an energy campus that already has 13 oil and gas-fueled generators. The heat exhaust steam from four natural-gas generators will be combined with the solar plant's steam to spin an existing generator. This saves the significant capital cost of installing a new generator, and seems like an efficient use of existing untapped capacity.

What's the cost? About $420 million, or about 16 cents a month to the average FPL residential bill.