Wednesday, December 23, 2009

This week the New Mexico Public Regulation Commission issued an order that will lead to third-party power purchase agreements between consumers and renewable energy developers.
The PRC upheld an earlier ruling by a hearing examiner, who found developers are not considered public utilities if they install, own and operate renewable energy generation equipment — e.g. solar panels, wind turbines — on a customer's property and sell the power to the customer. Like the hearing examiner, the PRC decided such third-party agreements are legal and developers are not subject to state utility regulations because the deal involves only a single customer.

Duke Energy will pay a $93 million settlement over clean air violations at a southern Indiana power plant. States, the Justice Department and environmental groups sued Duke over the violations. Pursuant to the consent decree filed Tuesday, Duke will spend $85 million to cut sulfur dioxide emissions by almost 35,000 tons per year at its coal-fired plant along the Ohio River. Duke will also fund energy conservation and air pollution reduction measures in affected states, including New York.

Rhode Island's Department of Environmental Management (DEM) is negotiating with Chevron to install wind turbines on state and town lands in Narraganset, RI. No state or municipal funds are required to site and construct the wind turbines. The DEM will use the energy produced to support DEM's operations at the Port of Galilee, and state parks in Narragansett, while the town's share of the energy will go to the sewage treatment plant and other municipal needs.

California solar developer SolarReserve LLC has signed power purchase agreements with two utilities for the sale of electricity from its projects. Pacific Gas and Electric Co. (PG&E) will purchase power from the 150 MW Rice Solar Energy Project, to be located in eastern Riverside County as early as 2011. SolarReserve also signed a 25-year power purchase agreement with NV Energy for the sale of electricity from the 100 MW Crescent Dunes Solar Energy Project.

12/22/09: BCAP, Chinese RPS

Tuesday, December 22, 2009

In Maine news, the USDA Biomass Crop Assistance Program (BCAP) continues to make news. This is "news" because the story is in the news media today. What's not in the news story is that the BCAP notice of funds for availability (NOFA) came out back in June. (In fact, this fall, I attended the FSA's presentation of BCAP to the Forest Resources Association of Maine (FRA), a group of landowners, managers, loggers, and fiber purchasers.)

Also not in the news is that this is more like the production tax credit than it is like broadband funding, in that it is an entitlement as opposed to a competitive program. Once both buyer and seller are registered under BCAP, the seller is entitled to a matching payment from USDA of up to $45 per dry ton of eligible material delivered. (Example: Joey has been selling wood to BioBuyer at $50 per dry ton. With BCAP, Joey can sell the wood to BioBuyer for $25/ton and get a check from Uncle Sam for $25/ton, keeping Joey whole and making BioBuyer happy. In practice, the savings can be split between buyer and seller.) Note that eligible generally means sustainably harvested and without a "higher use".

You can see who's registered as a buyer here.

In Maine, BCAP buyers include LP&T, Katahdin Paper, Corinth Wood Pellets, Greenville Steam, Verso Bucksport and Andro, Boralex (multiple), Domtar, Covanta (multiple), Redshield, Maine Wood Pellets, Rumford Paper, Sappi (both mills), Louisiana Pacific, Lucerne Farms, and Irving Forest Products.

Meanwhile, the Chinese legislature is considering a renewable portfolio standard -- but it sounds like it is at a very preliminary stage.


Monday, December 21, 2009

The Maine roundup:

Sunday River Ski Resort turns 50 years old this weekend.

USDA's Farm Services Agency makes yet another announcement about BCAP -- the "biomass crop assistance program", which makes matching payments to owners and handlers of eligible biomass (sustainably harvested, mostly) making deliveries to registered processors. This time they're "announcing" $150 million in funding to Maine -- which isn't new, but is exciting all the same.

In the continuing battle between aesthetics and our need for infrastructure, US Customs and Border Protection scrapped its plans to install an 80' communications tower on Cadillac Mountain, the highest and most popular point in Acadia National Park.

Industrial shutdowns: Symmetry Medical Inc. has announced that it close its Auburn, Maine manufacturing facility to cut costs. Symmetry plans to transfer the production equipment to its other facilities. Rockland, ME seafood processor Oak Island Seafood has also laid off its 20-person workforce and is ceasing operations.

German utility E.ON is considering a wind farm in eastern Indiana, and recently met with landowners to dangle the prospect of lease payments of $7,000 to $9,000 per turbine.

Federal news:
FERC (and every other DC agency) is closed today due to the snowstorm.

12/18/09: ME CA transmission lines approved, bumpy roads, no more Candu reactors

Friday, December 18, 2009


The PUC (press release) has approved Bangor Hydro's 42-mile 115 kV electric transmission line between Ellsworth and Harrington, noting that the line will improve the reliability and increase grid capacity in Hancock and Washington Counties. BHE projects construction to run from 2011-2012. An order will follow soon.


The Cal. PUC has approved construction of the last component of So. Cal. Edison's $1.8 billion Tehachapi project transmission lines required to interconnect new wind capacity with the grid. Construction will start in 2010, with the line expected to be energized in 2014.


The AP reports that counties and towns are letting paved roads revert to gravel to save money -- a good example of reevaluating just how good an infrastructure we're willing to buy.

Ottawa announced that it will privatize the nuclear power unit of Atomic Energy of Canada -- the maker of the Candu reactors. Ontario was the primary market for Candus, but this summer the province declined to order more Candus due to cost -- even though Ontario is phasing out coal-fired electric power. Areva, Hitachi, and Westinghouse/Toshiba are potential buyers, all of whom are more likely interested in AEC's market, not the Candu design.

12/17/09: FERC news and more

Thursday, December 17, 2009

A few tidbits from FERC:

Implementing its new smart grid policy for the first time, the Commission approved PG&E's recovery a portion of its costs in transmission rates for a regional project that will ensure electric power reliability for consumers and integrate variable renewable resources into its system.

In LNG news, FERC approved the 1 Bcf/day Jordan Cove LNG facility to be located in the North Spit of Coos Bay in Coos County, Oregon. The Commission also reaffirmed its approval of the AES Sparrows Point facility in Maryland, despite late-filing interveners' attempt to require a supplemental environmental impact statement. Notably, the votes on both docket items were 3-1 in favor, with Chairman Wellinghoff dissenting.

FERC continues to refine its enforcement procedures. The Commission released its 2009 Report on Enforcement (42 page PDF), noting that its 2010 enforcement priorities include fraud, market manipulation, and reliability. FERC also improved transparency in enforcement, by authorizing the Secretary of the Commission to issue a “Staff’s Preliminary Notice of Violations” after the subject of an investigation has had an opportunity to respond to staff’s preliminary findings letter. The Commission hopes this will provide feedback to both the regulated community and the public on what kinds of things the Commission is investigating.

Vice President Biden continues to take the lead on energy policy matters. He is promoting a $5 billion increase in tax breaks established last February for clean energy manufacturing. The program would award a 30% tax credit to new or expanded factories that make products such as wind turbines, solar panels, and electric vehicles. Will Congress go for this?


Wednesday, December 16, 2009

More businesses are shifting to energy-related industries. MPBN reports that Bath Iron Works is pursuing zoning changes to allow it to increase the size of its Ultra Hall indoor facility -- a move that will help with both traditional shipbuilding, as well as a possible switch to production of parts for offshore wind turbines. MPBN quotes BIW's Director of Fabrications, Jim Favreau, as saying, "We're always open to opportunities and if the energy field or windmill market opens up for us we'd certainly look for that synergy with our shipbuilding."

Simultaneously, General Electric is refocusing on energy and health care sectors, reducing exposure to finance and entertainment.

Using electricity as efficiently as possible means reducing waste heat from lighting appliances, but this may have its downsides, as the season's snows are starting to show. Some reports suggest that efficient LED traffic lights might not generate enough heat to melt snow, reducing the lights' effectiveness. Sounds like a good argument for redesigning the enclosure while keeping the LEDs.

In New York, Governor Patterson accepted the final 2009 State Energy Plan from the New York State Energy Planning Board. The plan provides a blueprint to continue the transition to a clean energy economy over a 10 year period.

Following on yesterday's selection by the Maine Ocean Energy Task Force of three offshore wind test sites: the Monhegan site will be developed by Dr. Habib Dagher and his team at the University of Maine. The University-led public/private consortium recently received an $8 million grant from the U.S. Department of Energy for this project.

In international carbon news, NYT reports that Australian company Cool nrg International will distribute 30 million CFLs to poor and middle-income families in Mexico. Cool nrg's program has been approved under the Clean Development Mechanism, meaning that for every ton of carbon saved by the lights Cool nrg will earn a U.N.-certified carbon credit. Dutch utility Eneco Energie has agreed to purchase the credits generated by the already-deployed pilot program, with an option to buy more. Is it economic? Current prices are about 13 EURO per ton, while the program costs about 18 EURO/ton -- meaning Mexico is funding about 30% of the project on its own dime.

NYT also reports of concerns raised over smart meter implementation. The article cites complaints by ratepayers that the new meters are measuring significantly more consumption than the ones they replaced, despite no other changes to customer load. Utility PG&E counters that the anomalies are caused by the rate structure that gives tiered rates for incremental usage beyond the first few hundred kWh, meaning small kWh increases lead to large bill increases. (It isn't clear why smart metering is implicated in this.)

States might follow the example of Texas, where the public utility counsel forced utilities to agree to pay for public education and to subsidize the installation of in-home displays to give an instantaneous price in low-income households -- the "Prius effect" in action.

December 15, 2009 update

Tuesday, December 15, 2009

The financial world is buzzing about ExxonMobil's purchase of XTO Energy for $31 billion dollars in cash and the assumption of $10 billion is debt. What makes XTO so attractive? Its holdings and capabilities regarding shale deposit gas. While this is traditionally costly to produce, XTO uses directional drilling and "fracking" to profitably exploit these resources.

What's the real significance of this move? It means ExxonMobil is betting that natural gas will rise in importance in our energy future.

This is consistent with the findings of the 2005 New England Governors' Conference report "Meeting New England's Future Natural Gas Demands" (78 pg. PDF), which noted that the existing gas infrastructure would reach its capacity limits by 2010. (This has been mitigated in part by declining industrial consumption.) In 2005, natural gas accounted for over 30% of electricity production, and the majority of new plants built in New England after 1999 are gas-fired -- 10,000 MW of them. In other regions of the country, for example where coal is abundant and regulations are favorable to burning coal (e.g. the Southeast), gas is currently less important. Perhaps ExxonMobil is betting that as states (or the feds) tighten down on coal, gas will be the fuel of the next decade.

Meanwhile, the Federal Reserve announced an almost 1% increase in industrial production in November, with a 71.3% production capacity factor -- down from the 80% average for 1972-2008, but above projections. Utility production dropped nearly 2%, primarily due to milder temperatures and less demand.

President Obama is calling for an upscaled federal residential energy efficiency program. Interestingly, he's making the announcement at a Home Depot in Virginia. Unless he can convince Congress, though, this concrete might not set. Still, I'm considering putting off a furnace replacement and some insulation projects just in case anything does materialize.

The Maine Ocean Energy Task Force selected 3 out of 4 test sites for offshore wind: offshore of Boon Island, Damariscove Island, and Monhegan Island. Cutler didn't make the cut.

The Maine Department of Conservation issued a notice of draft rulemaking (PDF) today, seeking public comment on “Designated scenic viewpoints of state or national significance, located on Public Reserved Land or on a publicly accessible trail used exclusively for pedestrian use, for consideration in the permitting of expedited wind energy development.” This rule designates scenic viewpoints of state or national significance on Public Reserved Lands and trails within an 8 mile buffer of the expedited permitting area. Under the draft rule, if a wind energy development is proposed up to 3 miles from a listed viewpoint, the applicant must provide a visual impact assessment; the Department may required one if the development is within 8 miles of the buffer. MDOC will hold a public hearing on January 12, 2010 at 10am (Maine Department of Conservation, Harlow Building Room 109, Augusta). Written comments will be received through January 25.

Brief update for December 14, 2009

Monday, December 14, 2009

Tomorrow the Maine Ocean Energy Task Force will release its final recommendations for up to four sites for demonstration offshore wind energy projects. The short list of potential sites:
  • near Boon Island off York in southern Maine
  • near Damariscove Island south of Boothbay Harbor
  • beyond Monhegan Island off Port Clyde
  • off Cutler in eastern Maine

In Copenhagen, U.S. Secretary of Energy Chu will announce a $350 million plan ($85 million of which will come from the US) — to spread renewable and non-polluting energy technologies in developing countries. The Renewables and Efficiency Deployment Initiative (REDI) will have four components:
  • Solar and LED Energy Access Program (eliminate kerosene lamps where there is no electricity supply)
  • Super-efficient Equipment and Appliance Deployment Program (promote high-efficiency appliances)
  • Clean Energy Information Platform (information exchange to spread clean energy technologies)
  • Scaling-up the Renewable Energy Program (policy support and technical assistance to low-income countries to cover capital costs associated with renewable energy investment)

Check out this Maine Sunday Telegram article suggesting wind power might not be as promising in southern Maine as expected. The article quotes Habib Dagher, director of the University of Maine's Advanced Structures and Composites Center, as emphasizing that siting of projects must be done based on wind potential, as opposed to whatever municipal land is available. Failing to do so can be costly: Kittery and Saco each paid $200,000 for turbines from PEI's Entegrity Wind Systems. Each was promised 90,000 kWh per year, with Entegrity promising to reimburse the towns for any shortfall. Over a year later, Kittery has produced only about 35,000 kWh, with Saco producing only 16,000 kWh in 18 months. Compounding the disappointment, Entegrity is being liquidated by a Canadian bankruptcy court and is unlikely to be able to cover the towns' losses.

This Village Soup / Capital Weekly article describes the fate of the former American Tissue mill site in Augusta, Maine. What will come in next?

Meanwhile, on the climate front, this Science Daily article reports on a study that suggests that a forest's capacity to regenerate after disturbance (e.g. harvesting) is affected by the ambient climate. (The study found that trillium regenerated after disturbance in the Smoky Mountains, but not in Oregon.) Could similar factors be affected Maine's deer hunt?

Thomas Casten on CHP

I recently read an interesting article which aims to identify obstacles to broader use of combined heat and power (CHP) in the Nov.-Dec. issue of Cogeneration and On-Site Power Production. The article by Thomas Casten notes that despite the potential to cut US emissions by 20% and save consumers $80 to $100 billion per year, US markets remain dominated by the central generation plant model - a model whose overall generation efficiency is about 33%.

Casten points to ratemaking policy for the electric industry as a cause of this resistance: the regulator-approved electricity rate structure drives utilities to want to maximize their sales, which leads to utility opposition to broader implementation of local generation.

Casten gives an overview of recent history. In 1978, PURPA allowed efficient cogenerators to sell to their local distribution utilities at avoided cost. PURPA may have broken the monopoly on generation, but it preserved utilities' monopoly on distribution. In response, utilities set high rates for back-up service to make self-generation less attractive; because cogenerators had no alternative options for back-up distribution service, utilities could force customers to pay this higher price. Likewise, utilities began making the interconnection process more onerous by requiring extensive studies, and by requiring interconnections to be at transmission-level voltages.

We have seen utilities interpose these obstacles. For example, one local distribution company attempted to shift its rate structure to recover more from customers based on their peak demand using a "demand ratchet". Although this reduced the volumetric energy component of the utility's rates, the effect on a customer who had recently installed self-reliant cogeneration was to require that customer to pay nearly the same amount for backup service as it had been paying for full-requirements service. Only through a rate case before the Public Utilities Commission did we push the utility back.

The 1992 Energy Policy Act is Casten's next milepost. EPAct 1992 broadened the right to sell power at wholesale, while eliminating the cogeneration requirement. In the ensuing decade, over 120,000 MW of merchant gas-fired generation was built, and coal and nuclear plants increased their run-time. Meanwhile, many states forced utilities to divest their generation.

Other highlights include:
  • US T&D line losses average 9%, and can reach 25% at peak. By contrast, local generation losses might be 2%.
  • T&D development is expensive, and has a high capital cost. Local generation requires little to no T&D build-out.
  • Nearly half of the average 10 cents per kWh customers pay in the US goes to pay for line losses, return on T&D capital, and operations. Local generation incurs none of these costs.
Casten concludes that the US should establish enhanced incentives for clean generation including CHP. Specifically, Casten proposes a federal requirement that utilities develop a clean standard offer which includes distribution costs. Casten estimates that this would result in a 15% decrease in rates paid by consumers.

Casten also dips into climate change issues. He proposes an "output-based pollution allowance system", under which a decreasing number of allowances are allocated to generators to be credited against MWh generation and Btu conversion.

Personally, I see CHP as a significant opportunity for the future. I'd even consider installing CHP units in new residential construction. Particularly once the installed price goes down, we can achieve both environmental and financial goals through efficient cogeneration.

Energy efficiency can save up to 30%, study says

Friday, December 11, 2009

We all know that doing more with less makes sense. A recent report released by the National Research Council (summary) (full report) emphasizes the value of energy efficiency measures:

Energy efficiency technologies that exist today or that are likely to be developed in the near future could save considerable money as well as energy, says a new report from the National Research Council. Fully adopting these technologies could lower projected U.S. energy use 17 percent to 20 percent by 2020, and 25 percent to 31 percent by 2030.

Specifically, replacing home and commercial appliances with more efficient models can save up to 30% of energy use, while industrial measures can save 14 to 22% by 2020 -- perhaps a smaller percentage of savings, but representing a far larger total volume of kWh.

The report identified barriers to full deployment including:
  • high up-front costs (particularly tough for companies requiring a quick return on their capital investment)
  • volatility of energy pricing, leading to inefficient signaling of the need for efficiency
  • limited awareness of the costs and benefits of efficiency measures
Notably, the report observed that investments in energy infrastructure can lock in patterns of energy use for decades. For example, choosing to build major new transmission infrastructure connecting to Canada such as the Hydro-Quebec/Northern Utilities HVDC line would enshrine a pattern of importing energy from Canada, to the detriment of the development of both new generation and efficiency measures in New England.

Questions for the future include:
  • How long do the benefits of efficiency projects last? If we create a policy incentive to promote efficiency, should implementers be rewarded solely in the year of project deployment, or should the rewards extend for a period of years?

FERC Chairman Wellinghoff testifies before Senate Committee on Energy and Natural Resources

Thursday, December 10, 2009

This morning, Chairman Wellinghoff testified before the Senate Committee on Energy and Natural Resources on the role of grid-scale energy storage as it relates to U.S. energy and climate goals. You can find his testimony here (11 page PDF).

Highlights of Chairman Wellinghoff's testimony include:

  • As more states (and the federal government) adopt renewable energy standards (RES), we need to integrate new energy resources into the transmission grid. Many of these new resources have a lower capacity factor than traditional generation -- meaning they do not produce energy as constantly as other sources. (For example, the wind doesn't always blow, but coal supplies and feed rates can be constant.)
  • One approach involves matching load and generation variations through demand response and other distributed resources such as energy storage. Storage can be charged or filled off-peak by renewable energy and later provide a source of power during peak demand periods or periods when the sun or wind is not available, either through direct injection of energy into the grid or by enabling demand response.
  • Storage can also provide ancillary services to the grid, which adds the most value to the integration of variable resources such as wind and solar. For example, storage can provide regulation service, which means finely following load and matching generation exactly to tiny shifts in demand. This is traditionally done through combustion-turbine gas-fired generators, but storage will be a faster and cheaper solution with a lower carbon footprint.
  • Pumped storage is the most-used bulk electricity storage. Lower-cost energy is used to pump water uphill during off-peak times. When the water flows back downhill during peak demand, it flows through turbines which can generate electricity whose value is higher because it is available to satisfy peak demand. Currently 24 pumped storage projects in the USA have an installed capacity of over 19,500 MW -- just about 2% of total USA installed capacity. FERC has issued preliminary permits for another 27,000 MW of pumped storage capacity.
  • New technologies represent improvements, such as closed-loop pumped storage. These systems use two reservoirs that are disconnected from natural aquatic ecosystems, avoiding some environmental concerns. Flywheels may also be able to provide regulation service, as might grid-scale batteries or even the distributed fleet of batteries onboard electric vehicles.
  • Various RTOs are developing energy storage paradigms. FERC recently accepted a NYISO proposal to integrate energy storage devices into its day-ahead and real-time regulation service markets. (127 FERC ¶ 61,135). MISO, ISO-NE, and PJM are also exploring the issue.
  • FERC will continue to monitor the development of storage technologies to ensure that they receive tariff treatment comparable to other resources and receive compensation commensurate with the value of the services they provide to wholesale markets and the grid. Storage technologies which provide a more accurate and nearly instantaneous response to regulation signals can reduce the size, and hence overall expense, of the regulation market. It may make sense to compensate such resources for their superior speed or accuracy in the future.
How can we identify good options for energy storage?