FERC denies tidal pilot license extension

U.S. hydropower regulators have denied a request to extend the term of the country's first hydrokinetic project pilot license, instead holding that the original license's 10-year term should be enough time for the developer to complete testing and to decide whether to apply for a subsequent license.

At issue is Verdant Power, LLC's  Roosevelt Island Tidal Energy Project No. 12611 (RITE Project). The 1,050-kilowatt hydrokinetic tidal project site is located in the East River near New York City. In 2012, the Federal Energy Regulatory Commission issued the project a "pilot project license" under a newly developed process designed to allow entities to test new hydrokinetic technologies, identify appropriate sites, and confirm the technology's environmental or other effects. That pilot license allowed the construction, operation, and maintenance of the RITE Project for a 10-year period, expiring on December 31, 2021.

In 2017, the company described plans to install the pilot project's first phase in the 2019-2020 timeframe. On December 29, 2017, Verdant filed a request to extend the term of its pilot license for the RITE project by five years, to give it more time to acquire operational monitoring data that will inform subsequent phases of the pilot project and the relicense application.

But by order dated May 3, 2018, the Commission denied Verdant's request for a license extension. The Commission noted that the pilot license bore a 10-year term, twice as long Commission staff's original conceptions of hydrokinetic pilot project licenses for up to 5-year terms for testing purposes. The Commission noted, "Barring extraordinary circumstances, 10 years – double the period set forth in the white paper – should be enough time to complete a testing program and to make a decision on whether to file an application for subsequent license. Verdant has not demonstrated such circumstances."

Noting the remaining time left on Verdant's license, as well as the time left to Verdant before any application for a new license, the Commission denied the company's request for a license extension.

NY energy storage bill would launch program

The New York legislature has unanimously passed a bill establishing an energy storage deployment program.  The bill, S. 5190, aims to promote the installation of energy storage systems.  The bill now awaits Governor Andrew Cuomo's signature, before it can take effect.

New York is in the midst of major shifts in its energy policy.  Governor Cuomo's "Reforming the Energy Vision" or REV process aims to build a clean, more resilient, and affordable energy system for all New Yorkers.  As part of that process, last year, the Public Service Commission adopted a Clean Energy Standard which requires 50% of New York’s electricity to be generated by renewable sources by 2030, and provides support for 3 nuclear power plants considered at risk of closing.  Meanwhile, the state is also reforming the way energy service companies, or retail electric suppliers, market their services.

In adopting renewable energy procurement mandates as part of the Clean Energy Standard in 2016, the Commission also considered creating specific mandates for energy storage.  As noted in the order adopting the Clean Energy Standard, "Storage is a critically important component of the energy system that is both distributed and increasingly reliant on intermittent resources. Unlike other resources, the load shifting and fast response capabilities of various forms of storage resources allow them to provide simultaneous value as an energy and reliability resource. Storage can also provide value to the distribution based retail and bulk power markets... In short, it is without question that modern markets must sufficiently and accurately value storage as a vehicle to design and optimize network planning and operations."

But in that order, the Commission concluded that "as a reliability support and system optimizing resource, storage is not properly characterized as a standalone renewable energy resource under the CES. That being said, if the various mechanisms that the Commission is pursuing to ensure storage takes it rightful place as a critical resource for the modern grid prove insufficient, this topic will be revisited."

S. 5190 would change New York's position, by requiring that the Commission establish 2030 targets for the installation of qualified energy storage systems.  It defines a qualified system as technology using mechanical, chemical, or thermal processes to absorb, store, and dispatch energy generated from renewable resources or mechanical processes.  The bill's official justification statement cites the increased use of intermittent renewable energy sources, such as solar and wind, in an effort to combat climate change, and the efficiency of using energy storage systems to solve issues relating to changes in how energy supply and demand align in time.

Three other states -- Massachusetts, California, and Oregon -- have adopted energy storage procurement policies, and the Federal Energy Regulatory Commission is exploring how electric storage resources can be integrated into wholesale and regulated markets.

NY considers ESCO reforms

New York utility regulators have launched consideration of reforms to how retail electricity suppliers called energy service companies or ESCOs operate in that state.  A December 2, 2016 notice issued by the New York Department of Public Service describes a history of "substantial overcharges and deceptive practices by the ESCO industry harming New York consumers," and establishes a process to "push ahead with reforms to ensure that ESCOs provide useful, value-added, economical services to New York consumers."  New York's ESCO reform process will play out in conjunction with other state initiatives, such as the Reforming the Energy Vision program.

As described in the Notice of Evidentiary and Collaborative Tracks and Deadline for Initial Testimony and Exhibits, the New York Public Service Commission initially opened up the energy services market to retail competition "to spur innovation in the creation of value-added products, particularly energy efficiency services that regulated rates may not provide, and to create commodity price competition that would result in efficiencies."  The notice summarizes the regulatory philosophies driving the historic decision to separate monopoly services (transmission and distribution) from competitive services (energy commodity), and the expectation that robust competitive markets would yield societal benefits.

But based on its "considerable experience with the offering of retail service to mass market customers by ESCOs," in 2014 the Commission determined "that the retail markets serving mass-market customers are not providing sufficient competition or innovation to properly serve consumers."  In the Commission's view, its subsequent efforts to realign the retail market have not succeeded: "customer abuses and overcharging persist, and there has been little innovation, particularly in the provision of energy efficiency and energy management services.  Commodity price differentiation has not worked, and the market for differentiated services is immature or non-existent."

For these reasons, on December 2, 2016, the Commission gave public notice that it "continues to examine measures that must be taken to ensure that these customers receive valuable services and pay just and reasonable rates for commodity and other services."  Among the measures identified for consideration by the Commission are:

• whether ESCOs should be completely prohibited from serving their current products to mass-market customers;
• whether the regulatory regime, rules and Uniform  Business Practices (UBP) applicable to ESCOs need to be modified to implement such a prohibition, to provide sufficient additional guidance as to acceptable rates and practices of ESCOs, or to create enforcement mechanisms to deter customer abuses and overcharging, including whether the Commission decision not to subject ESCOs to Article 4 of the Public Service Law should be revisited; and
• whether new ESCO rules and products can be developed that would provide sufficient real value to mass-market customers such that new products could be provided to them by ESCOs in the future in a manner that would ensure just and reasonable rates.

To pursue these efforts, the Commission established two procedural tracks.  An evidentiary track will consider the first two bullets listed above, while a "collaborative" track will focus on the third bullet. 

The Commission has previously described ESCO reforms as supportive of New York's Reforming the Energy Vision initiative, a comprehensive revisioning of the state's electricity sector.  In a February 2016 order, the Commission noted, "Development of markets in which vendors offer innovative services of value to consumers, and in which consumers can participate with confidence, is critically important to the success of the Reforming the Energy Vision (REV) initiative. Retail energy markets focused on commodity-only products, and in which ESCOs do not meet expectations of many customers, will thwart these objectives."

Initial pre-filed testimony and exhibits for the Track I evidentiary case on ESCO reforms are due on or before April 7, 2017.

NY offshore wind lease auction set

The U.S. Bureau of Ocean Energy Management has issued a Final Sale Notice, setting December 15 as the date for auctioning the right to lease sites in federal waters off New York for commercial offshore wind development.

The U.S. federal government is pursuing a national strategy to facilitate the domestic development of offshore wind energy.  Under federal law, the Bureau of Ocean Energy Management is responsible for administering renewable energy project development on the offshore Outer Continental Shelf.  The strategy calls for BOEM to identify areas suitable for wind energy leasing, and to then offer leases through auctions or other sales.

BOEM is now moving forward with plans to auction leasing rights for an area offshore New York.  In June 2016, BOEM first issued a Proposed Sale Notice for leasing rights off New York.  BOEM solicited public comment on its proposal over the summer.

On October 27, 2016, BOEM announced the designation of a final New York Wind Energy Area, starting approximately 11.5 nautical miles from Jones Beach, NY, and running approximately 24 nm southeast.  The final New York Wind Energy Area differs from BOEM's earlier leasing proposal primarily in its removal of about 1,780 acres due to environmental concerns over sensitive habitat on a feature called Cholera Bank.

BOEM's announcement also identified 14 companies that it has deemed legally, technically and financially qualified to participate in the New York lease sale:

• Avangrid Renewables, LLC
• CI-II NY Inc.
• DONG Energy Wind Power (U.S.) Inc.
• Innogy US Renewable Projects LLC
• wpd offshore Alpha LLC
• Deepwater Wind Hudson Canyon, LLC
• Energy Management, Inc.
• Convalt Energy LLC
• Clean Power Northeast Development Inc.
• New York State Energy Research and Development Authority
• Statoil Wind US LLC
• EDF Renewable Development, Inc.
• Fishermen’s Energy, LLC
• Sea Breeze Energy LLC 

BOEM will offer the lease as Lease OCS-A 0512, using a multiple-factor auction format.  Changes to the auction rules originally proposed include a 10% bidding credit for entities that establish that they are a “government authority” as defined in the Final Sale Notice, along with an adaptation to the auction format allowing bidders a “limited opportunity to revoke” a provisionally winning bid without penalty if the next-highest bid was submitted by a governmental entity.

Meanwhile, state energy agency NYSERDA is pursuing the New York State Offshore Wind Master Plan to advance offshore wind development in the state.  NYSERDA has expressed interest in bidding in a BOEM auction for project leasing rights, and was included in BOEM's list of entities qualified for the December 15 auction. Moreover, NYSERDA could be a beneficiary of the "government authority" provision in BOEM's Final Sale Notice; if so, it could receive a 10% credit on top of its cash bid.

BOEM will conduct the auction electronically, through a contractor, starting at 8:30 EST on December 15, 2016.

NY blueprint for offshore wind master plan

A New York state energy office has released its Blueprint for the New York State Offshore Wind Master Plan.

The New York State Energy Research and Development Authority, known as NYSERDA, promotes energy efficiency and the use of renewable energy sources.  It mission is to advance innovative energy solutions in ways that improve New York's economy and environment.

New York recently adopted a Clean Energy Standard, which will require that 50% of New York State’s electricity come from renewable resources by 2030.  NYSERDA has described offshore wind as playing "a critical role in turning this aggressive goal into a reality."  NYSERDA has been tasked with leading the state's development of a master plan for New York offshore wind development.

On September 15, 2016, NYSERDA released its Blueprint for the New York State Offshore Wind Master Plan.  The Blueprint presents NYSERDA’s vision of the process, steps, and timeline to develop the master plan.  While the Master Plan's release is scheduled for 2017, NYSERDA noted that releasing an initial Blueprint serves to outline New York State’s comprehensive offshore wind strategy and advance the State’s Reforming the Energy Vision (REV) strategy to build a cleaner, more resilient, and affordable energy system for all New Yorkers.

NYSERDA has also expressed interest in bidding in an auction to be held by the U.S. Bureau of Ocean Energy Management, for the right to lease offshore wind development sites in federal waters over the Outer Continental Shelf.  The 81,000-acre lease area is located south of Long Island, off the Rockaway Peninsula.  BOEM is expected to hold the lease sale later this year.

NY Clean Energy Standard adopted

The New York Public Service Commission has issued an order adopting a clean energy standard.  The standard will require 50% of New York’s electricity to be generated by renewable sources by 2030.  This so-called "50 by 30" mandate is consistent with the State Energy Plan's strategy to reduce statewide greenhouse gas emissions by 40% by 2030.  It will also provide support for existing nuclear power plants said to be at risk for closure without state support.  This is a time of change for the New York energy industry, as the Clean Energy Standard adds to the regulatory and retail market changes that the state is already pursuing under its Reforming the Energy Vision or REV program.

The New York commission noted that the state has adopted "strongly proactive policies to combat climate change and modernize the electric system to improve the efficiency, affordability, resiliency, and sustainability of the system." The state's 2015 State Energy Plan called for the "50 by 30" goal for renewable energy.

In the Commission's words, it determined "that a series of deliberate and mandatory actions to build upon and enhance opportunities for consumer choice are necessary to achieve State environmental, public health, climate policy and economic goals; to enhance and animate voluntary retail markets for energy efficiency, clean energy and renewable resources; to preserve existing zero-emissions nuclear generation resources as a bridge to the clean energy future; to ensure a modern and resilient energy system; and to accomplish its objectives in a fair and cost-effective manner."

As a result, the Commission adopted a Clean Energy Standard or CES consisting of a Renewable Energy Standard and a Zero-Emissions Credit Requirement program.  The Commission also adopted supporting structures, which it describes as including:

(a) program and market structures to encourage consumer-initiated clean energy purchases or investments; (b) obligations on load serving entities to financially support new renewable generation resources to serve their retail customers; (c) a requirement for regular renewable energy credit (REC) procurement solicitations; (d) obligations on distribution utilities on behalf of all retail customers to continue to financially support the maintenance of certain existing at-risk small hydro, wind and biomass generation attributes; (e) a program to maximize the value potential of new offshore wind resources; and (f) obligations on load serving entities to financially support the preservation of existing at- risk nuclear zero-emissions attributes to serve their retail customers.

As described by Governor Andrew Cuomo, the program will feature a ramp-up of renewable power sourcing.  Utilities and other energy suppliers will be initially required to procure 26.32 percent of the state's total electricity load from renewable sources in 2017, increasing to 30.54 percent by 2021.  The Commission described the 50 by 30 goal as "not only part of a larger greenhouse gas goal, it is part of the State’s sweeping initiative to transform the way energy is produced, delivered, and consumed" through the REV process.

The Clean Energy Standard order also creates a Zero-Emissions Credit or ZEC requirement, along with a process through which state energy agency NYSERDA will offer qualifying nuclear facilities a multi-year contract for the purchase of ZECs, at a price ultimately derived from the calculations of "social cost of carbon."  NYSERDA will ultimately resell the ZECs to New York load serving entities, who will recover costs from ratepayers through commodity charges on customer bills.  The Commission described the ZEC mechanism as "the best way for the State to preserve the nuclear units’ environmental attributes while staying within the State’s jurisdictional boundaries. "

As described in the order, the Renewable Energy Standard and ZEC components "are interrelated but the goals are additive," meaning efforts to comply with the RES will not count toward the ZEC requirement, even if the combination will "contribute toward the State's comprehensive greenhouse gas reduction goals."

NY offshore wind zone announced

U.S. ocean energy regulators are advancing plans to lease sites off New York for potential commercial wind energy development.  The federal Bureau of Ocean Energy Management's designation of a Wind Energy Area could ultimately lead to the development of one or more offshore wind energy projects off Long Island.

While the U.S. still is not home to any operating commercial offshore wind projects, BOEM has issued 11 commercial wind energy leases off the Atlantic coast.  Leases awarded include two offshore New Jersey, two offshore Rhode Island-Massachusetts, another three offshore Massachusetts, one offshore Delaware, two offshore Maryland and one offshore Virginia.

In 2011, the New York Power Authority (NYPA) applied to BOEM for a commercial wind lease.  At that time, the public power authority proposed installing up to 194 wind turbines, each generating 3.6 megawatts, for a total project capacity of nearly 700 megawatts.

In January 2013, BOEM issued a Request for Interest to assess whether any other entities were parties interested in developing commercial wind facilities in the same area.  BOEM's review of the nominations of interest it received in response, including indications of interest from Fishermen’s Energy, LLC and Energy Management, Inc., led the agency to determine that there was competitive interest in the area.  As a result, BOEM initiated its competitive leasing process.

In 2014, BOEM published in the Federal Register a Call for Information and Nominations and a Notice of Intent to Prepare an Environmental Assessment, and has held stakeholder meetings.

The process took a step forward on March 16, 2016, when BOEM announced that it had completed the Area Identification process to delineate a Wind Energy Area (WEA) offshore New York. The wedge-shaped area covers approximately 127 square miles (81,130 acres, or 32,832 hectares), beginning about 11 nautical miles south of Long Beach, and extending about 26 nautical miles southeast along its longest portion.

Next steps in the offshore wind leasing process might include BOEM's publication of a Proposed Sale Notice for public comment, along with environmental assessment (EA) and agency consultations, followed by publication of a Final Sale Notice that announces the date, time, and specific conditions of the auction.  According to BOEM, its environmental review is expected to be completed later this year.

Flywheel co Beacon Power sold

Flywheel-based energy storage developer Beacon Power Corp. may have a new lease on life, as private equity firm Rockland Capital proposes to buy the bankrupt company for $30.5 million.

Beacon Power patented a composite flywheel technology for use in balancing supply and demand on the nation's electric grid, an application known as frequency regulation.  Unless this balance is maintained in real-time, problems can arise ranging from poor power quality to blackouts and safety hazards.  Historically, grid operators controlled the output of electric generators to maintain this balance, but flywheels and other energy storage technologies may be able to smooth out disturbances on the grid more , more cost-effectively, and with fewer environmental impacts.

Beacon Power's business model has involved building, owning, and operating flywheel-based frequency regulation plants on a merchant basis.  Indeed, Beacon Power describes itself as "a global leader in the development and commercialization of flywheel-based energy storage solutions for grid-scale frequency regulation services and other utility-scale and unitary energy storage applications."

In August 2010, Beacon Power received a $43 million loan guarantee through the U.S. Department of Energy's loan program office.  That financing helped Beacon Power develop its 20 MW flywheel project in Stephentown, NY.  But in October 21, Beacon Power filed for Chapter 11 in federal bankruptcy court.

At about the same time, federal regulators changed the way grid operators pay for frequency regulation.  FERC Order No. 755 required grid operators to pay more for fast-responding frequency regulation -- just the kind of service that flywheel operators like Beacon Power may be able to provide best.

Now, Rockland Power proposes to pick up where Beacon left off, buying Beacon's assets for $5.5 million cash and a $25 million promissory note to the DOE.  Rockland says that it intends to continue operating the Stephentown plant and developing a second facility in Hazle Township, Pennsylvania.  Order 755 has given the energy storage industry a needed boost, which may be enough to let Rockland succeed with flywheel energy storage.