US Atlantic offshore wind leasing plan up for comment

U.S. ocean energy regulators have extended a deadline for public comment on a proposed path forward for offshore renewable energy leasing on the Atlantic Outer Continental Shelf. The Bureau of Ocean Energy Management's "Proposed Path Forward for Future Offshore Renewable Energy Leasing on the Atlantic Outer Continental Shelf" lists factors the agency proposes to consider in identifying areas for possible future offshore wind leasing.

BOEM is an agency of the Department of the Interior, charged with advancing the responsible development of offshore energy and marine mineral resources covering over 1.7 billion acres of the Outer Continental Shelf. As of May 2018, BOEM has held seven competitive lease sales, yielding over $68 million in high bids for almost 1.4 million acres in federal waters. BOEM now has 13 offshore wind energy leases, capable of supporting 17 gigawatts of generating capacity, covering every state from Massachusetts to North Carolina (Cape Cod to Cape Hatteras).

On April 6, 2018, BOEM published a Request for Feedback in the Federal Register, presenting the agency's "Proposed Path Forward for Future Offshore Renewable Energy Leasing on the Atlantic Outer Continental Shelf." In that notice, the agency said it is conducting a high-level assessment of all waters offshore the United States Atlantic Coast for potential future offshore wind lease locations, and proposes to rely on specific factors to help it assess which geographic areas along the Atlantic are the most likely to have highest potential for successful offshore wind development in the next three to five years.

BOEM said its intent in publishing the Notice was "to start a conversation surrounding its approach to future renewable energy leasing on the Atlantic OCS." Its proposed factors for identifying offshore wind forecast areas include exclusionary factors (which create "no-go" areas for offshore wind) and positive factors (increasing the likelihood that location would fall within a forecast area). Under BOEM's proposal, exclusionary factors would include areas prohibited by the Outer Continental Shelf Lands Act for leasing, Department of Defense conflict areas, and charted marine vessel traffic routes. Positive factors for an areas include that it has not previously been removed, is greater than 10 nautical miles from shore, is shallower than 60 meters in depth, is adjacent to states with offshore wind economic incentives or with an interest in identifying additional lease areas, or where industry has expressed interest.

Comments on BOEM's proposed path forward for offshore renewable energy leasing on the Atlantic were slated to be due on May 21, but on May 18, 2018, the Bureau of Ocean Energy Management announced that it would accept comments through July 5, 2018.

BOEM says this "Atlantic assessment is intended to inform future area identification processes, not replace them" -- so after reviewing comments it receives, BOEM will coordinate with its intergovernmental renewable energy task forces and conduct additional stakeholder outreach.

Hatteras Island power outage and response

North Carolina's Hatteras Island experienced a power outage last week when construction activity damaged two underground transmission cables serving the island.  While the damage is repaired, residents face mandatory power conservation rules and visitors have been evacuated.

Hatteras Island is a barrier island located in North Carolina's Outer Banks.  While the island is relatively far offshore, it is connected to the northern Outer Banks islands by the Bonner Bridge.  Hatteras Island's roughly 4,000 residents and tens of thousands more seasonal visitors are supplied electricity by Cape Hatteras Electric Cooperative, a member-owned, not-for-profit electric distribution cooperative.

According to the cooperative, on July 27 a contractor building a replacement for the Bonner Bridge "accidentally drove a steel casing through the cooperative’s transmission cables" at the south side of the bridge.  The cooperative says it is taking steps toward both temporary and permanent solutions. For now, it is using a permanent diesel generator in the village of Buxton as well as temporary backup diesels to provide power to the island and is "working to expand the temporary generation service on Hatteras Island in order to accommodate a staged reentry of visitors." Meanwhile, the cooperative is working to splice the damaged underground cable and to build a new overhead transmission line, so permanent transmission service can be restored.

Calling the incident an "unprecedented complete loss of power delivery to Hatteras Island," Dare County issued a mandatory evacuation order for all visitors to Hatteras Island effective July 29, citing "life safety issues from the loss of reliable electrical power on Hatteras Island and growing uncertainty as to when repairs to the main transmission line will be completed to enable restoration of full power to the island."  Estimates suggested over 10,000 visitors have been kept off Hatteras Island as a result of the evacuation order, with proper credentials required for reentry.

According to the county's website, a complete repair might take from one to two weeks.  The county notes that the on-island diesel generators "will only be able to run if load is at minimal levels and everyone is conserving." The county cites mandatory power and water conservation measures in effect, including a requirement to disconnect system circuit breakers for air conditioning systems and hot tub heaters.

US auctions North Carolina offshore wind sites

Yesterday the U.S. Bureau of Ocean Energy Management completed a competitive lease sale for renewable wind energy development in federal waters offshore North Carolina.  Avangrid Renewables, LLC won the auction-based sale with a high bid of $9,066,650.  As a result, it has the right to lease 122,045 areas of ocean space in the designated Kitty Hawk Wind Energy Area.

The Kitty Hawk Wind Energy Area sits 24 nautical miles from shore, off the northeast coast of North Carolina by the Virginia border.  The base roughly triangular area extends 25.7 nautical miles in a general southeast direction, with a seaward apex in the northeast.  Using the National Renewable Energy Laboratory’s estimates of 3 megawatts per square kilometer, the lease area has a potential generating capacity of 1,486 megawatts.

BOEM announced the Kitty Hawk auction in January 2017.  Its conclusion yesterday represents the first federal offshore wind lease sale under the Trump administration.  According to BOEM, three other bidders particiated in the auction: Wind Future LLC, Statoil Wind US LLC, and wpd offshore Alpha LLC.

The North Carolina auction was BOEM's seventh competitive lease sale.  In all, competitive lease sales have raised about $67 million for the federal government.  While no commercial offshore wind projects are currently operating in federal waters, the Deepwater Wind Block Island project off Rhode Island began commercial operation last year.

Kitty Hawk NC offshore wind leasing

The U.S. Department of the Interior has proposed leasing federal ocean space offshore North Carolina for commercial offshore wind development.  On August 12, 2016, the Bureau of Ocean Energy Management announced a proposed lease sale for the 122,405-acre Kitty Hawk Wind Energy Area.  The proposal could lead to leasing of sites offshore North Carolina for one or more marine renewable energy projects.

The path to federal leasing of commercial wind development sites offshore North Carolina began in 2012, when the Bureau of Ocean Energy Management published a Call for Information and Nominations (or “Call”) in the Federal Register, to evaluate industry interest in commercial wind leases in three areas offshore North Carolina and to request comments regarding site conditions, resources and other uses within the Call areas.

In 2014, BOEM announced its identification of three Wind Energy Areas offshore North Carolina, including the Kitty Hawk, Wilmington West, and Wilmington East Wind Energy Areas.

In 2015, BOEM published an Environmental Assessment of potential environmental and socioeconomic impacts associated with issuing commercial wind leases and approving site assessment activities on the lease areas, followed by a revised Environmental Assessment and a "Finding of No Significant Impact."  This so-called FONSI concluded that reasonably foreseeable environmental effects associated with the commercial wind lease issuance and related activities would not significantly impact the environment.

Most recently, BOEM published a Proposed Sale Notice (PSN) and Request for Interest (RFI) for Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore North Carolina in the Federal Register on August 16, 2016.  The notice applies to the Kitty Hawk Wind Energy Area. BOEM has rolled the Wilmington East and Wilmington West areas into its planning and leasing process for Call Areas offshore South Carolina, given their proximity and shared attributes.

If a developer is interested in bidding on the Kitty Hawk site lease rights, it must first submit a qualification package to BOEM.  If BOEM finds the developer to be legally, technically and financially qualified by the time the Final Sale Notice is published, the developer is eligible to participate in the lease sale.  Eligible bidders must notify BOEM within the 60-day comment period established by the notice.

Report: solar panels add home appraisal value

"How will putting rooftop solar panels on my home affect its value?" is a common question among those considering residential-sited solar energy projects. 

It will help, according to a report recently released by the Lawrence Berkeley National Laboratory, finding solar photovoltaic systems add value to homes in a variety of markets under traditional appraisal methodology as well as statistical analysis.

A residential rooftop solar project in Massachusetts.

Intuition and previous studies have shown a "price premium" effect for solar photovoltaic systems in some markets.  Where a price premium applies, a home with a solar PV system can command a higher price than a comparable home without one.

A 2013 study of California using statistical analysis found "clear support that a premium exists in the marketplace; thus, PV systems have value, and their contribution to home values must be assessed."  That study found a strong correlation between premiums and PV system size, and a weak negative correlation with PV system age.  Essentially, "larger systems garner larger premiums and older systems garner smaller premiums," with each 1-kilowatt increase in size estimated as commanding a $5,911 higher premium, while each year of system age yields a $2,411 lower premium.  

A similar 2014 study of eight states found "PV consistently adds value across a variety of states, housing and PV markets, and home types."  Notably, these studies relied heavily on hedonic or regression pricing models to account for characteristics specific to each property (home type, site, neighborhood, market).  While such large-scale statistical analysis is commonly performed in economics, home buying more commonly relies on the appraisal process to support both price formation and financing.  Few previous studies were written by experienced real estate appraisers using paired-sales techniques or other standard appraisal methods.

The Lawrence Berkeley National Laboratory has released a report designed to bridge this gap, featuring a comparison of statistically derived PV premiums and analysis performed by experienced home appraisers.  That report, "Appraising into the Sun: Six-State Solar Home Paired-Sales Analysis", examined 43 pairs of comparable homes that sold with and without PV across seven areas in six state (California, Oregon, Florida, Maryland, North Carolina, and Pennsylvania).  It compared traditional real estate appraisal analysis of these homes to contributory-value estimates based on gross cost, net cost, and income. Overall, it found that under either statistical or appraisal based analysis, PV systems added premiums of $2.68/W to $4.31/W across states, averaging $3.78/W or about $14,000 for an "average-size" system sold in 2011 (3.8 kW).

The study did identify some difficulty in conducting comparable-sales analysis on homes with solar panels.  (It also includes a section titled "Warning to Users of this Study", noting the analysis was limited to specific times and places, only considered host-owned systems with crystalline-silicon panels, and does not address potential sales price implications related to the location of the PV systems.)  However, it found that appraised premiums are in agreement with the hedonic modeling results as well.  Practically speaking, this means cost- and income-based statistical estimates of PV premiums could be reliable when paired-sales analysis is impossible.

Further information about the Lawrence Berkeley National Laboratory report on appraisal value of residential solar PV systems can be found in a November 12, 2015 presentation hosted on its website.

North Carolina offshore wind advances

Federal efforts to lease ocean sites off the North Carolina coast for offshore wind development advanced last week, when the Bureau of Ocean Energy Management issued a report finding that there would be no significant environmental or socioeconomic impacts from issuing wind energy leases in three specific areas.  The determination brings BOEM one step closer to auctioning off leasing rights off North Carolina for offshore wind development.

The Bureau of Ocean Energy Management is part of the U.S. Department of the Interior.  BOEM performs key duties under the Outer Continental Shelf Lands Act, including resource evaluation, planning, and site leasing.  In furtherance of President Obama’s Climate Action Plan, BOEM has auctioned off the rights to lease sites in federal waters for offshore wind development off states including Massachusetts, Maryland, Virginia, and Rhode Island.  Altogether, BOEM has awarded nine commercial wind leases.  Seven of these were awarded through its competitive lease sale process, generating over $14.5 million in high bids for over 700,000 acres in federal waters. 

Federal law prescribes the process BOEM must undertake to lease sites for offshore wind development.  Under the National Environmental Policy Act (NEPA), BOEM must evaluate the environmental and socioeconomic impacts of proposed actions.

For the proposed leasing off North Carolina, in January 2015 BOEM published its Environmental Assessment (EA) of the impacts of granting commercial wind leases and allowing of site characterization and assessment activities on the Atlantic Outer Continental Shelf.  On September 17, BOEM issued a revised Environmental Assessment.  That EA found there would be no significant environmental or socioeconomic impacts from issuing wind energy leases and allowing site characterization activities.  This "Finding of No Significant Impact", or FONSI, enables BOEM to proceed to the next step in the leasing process.

That next step will occur in October, when BOEM will convene a public meeting of the North Carolina Renewable Energy Task Force.  After considering the input from the Task Force, BOEM will publish a “Proposed Sale Notice” in the Federal Register, which will include a 60-day public comment period. That notice would be followed by a lease auction, likely similar to those held for sites off other states.

In addition to its proposed North Carolina activity, BOEM expects to hold a competitive lease sale for sites offshore New Jersey later this year.

North Carolina offshore wind environmental assessment

The U.S. Department of the Interior's Bureau of Ocean Energy Management has released an environmental assessment of the impacts of leasing sites off the North Carolina coast for offshore wind projects.  This milestone supports the Obama administration's plan to offer site leases on the outer continental shelf for renewable energy projects.

Since 2012, BOEM has solicited public comment on the prospect of leasing about 307,590 acres off North Carolina for potential offshore wind development.  BOEM has identified three Wind Energy Areas offshore North Carolina:

• the Kitty Hawk Wind Energy Area (about 122,405 acres), beginning about 24 nautical miles (nm) from shore and extends approximately 25.7 nm in a general southeast direction;
• the Wilmington West Wind Energy Area (about 51,595 acres), beginning about 10 nm from shore and extends approximately 12.3 nm in an east-west direction at its widest point; and
• the Wilmington East Wind Energy Area (about 133,590 acres), beginning about 15 nm from Bald Head Island at its closest point and extends approximately 18 nm in the southeast direction at its widest point.

BOEM's map of North Carolina Wind Energy Areas.

On January 22, 2015, BOEM announced the availability of an environmental assessment for public review and comment.  Under the National Environmental Policy Act or NEPA, an environmental assessment or EA considers the potential impacts of proposed federal action and analyzes reasonable alternatives to the proposed action.  In this case, the action proposed is BOEM's issuance of commercial wind leases and allowing of site characterization and assessment activities on the Atlantic Outer Continental Shelf offshore North Carolina.

BOEM's environmental assessment for North Carolina offshore wind leasing provides the framework for potential federal lease auctions for North Carolina offshore wind sites.  The environmental assessment is available for public comment through February 23, 2015. 

Apple makes California solar deal

Electronics manufacturer Apple has announced an $848 million deal to buy electricity from a solar energy project to be developed in California. Project developer First Solar has described the power purchase agreement as "the largest agreement in the industry to provide clean energy to a commercial end user."

Solar photovoltaic panels in the Utah desert.

Earlier this week, Apple announced the deal with First Solar, Inc., to buy power from First Solar's California Flats Solar Project in Monterey County, California.  Under a 25-year power purchase agreement or PPA, Apple will buy the equivalent of 130 megawatts of the solar project's output. 

First Solar is a vertically-integrated solar company, manufacturing solar photovoltaic panels, developing utility-scale photovoltaic power plants, and providing solar project support services.  First Solar boasts involvement with over 10 gigawatts of installed solar photovoltaic capacity worldwide.  Its resume includes the 550-megawatt Topaz Solar project in California and the 290-megawatt Agua Caliente project, which was once the world's largest operating solar energy project.

First Solar's California Flats Solar Project will occupy a 2,900-acre site on the Jack Ranch in Cholame, California.  Owned by Hearst Corporation, the project site was formerly a dryland farm, and occupies about 3% of the Jack Ranch property.  First Solar expects to begin construction later this year, and to complete the project by the end of 2016.

With a total project capacity of 280 megawatts, Apple's 130-megawatt commitment covers about 46% of the project's output.  The project's remaining 150 megawatts will be sold to utility Pacific Gas & Electric under a separate long-term PPA.

Apple has developed other renewable energy projects, including fuel cells and solar panels at its Maiden, North Carolina data center.  Other high-tech companies have also made significant investments in renewable energy, including Google's commitment of over $1.5 billion to solar and wind projects through power purchase agreements and direct investments.

USDA awards $68 million for energy projects

The U.S. Department of Agriculture has announced $68 million in grants and loan guarantees for renewable energy and energy efficiency projects.  The latest round of awards under the agency's Rural Development arm's Rural Energy for America Program will support 540 projects at farm and rural business sites across the country.

Since its creation in the 2008 Farm Bill, REAP has supported more than 8,800 renewable energy and energy efficiency projects nationwide with over $276 million in grants and $268 million in loan guarantees to agricultural producers and rural small business owners.  Eligible agricultural producers and rural small businesses may use REAP funds to make energy efficiency improvements or install renewable energy systems including solar, wind, biomass and anaerobic digesters, small hydroelectric, ocean energy, hydrogen, and geothermal projects.  (For looks at previous REAP winners, check out these posts from 2011 and 2013.)

In this year's REAP funding round, USDA awarded about $68 million in investment support.  Of this, $12,376,548 will come in the form of grants, while $56,449,244 will come as loan guarantees.  While most grants are under $100,000 per project (with some below $10,000), there were some larger grant awards: for example, a biomass anaerobic digester in California won $290,000, an off-grid solar project in Hawaii won $123,338, and a direct use geothermal heat pump in Oklahoma won $133,250. Of the loan guarantees, $55.3 million will go to support 22 solar photovoltaic projects in North Carolina, mostly ranging between 2 megawatts and 5 megawatts per project. 

In each case, funding is contingent upon the recipients meeting the terms of the loan or grant agreement. USDA's hope is that these grants and loan guarantees will enable American agricultural producers and rural small business owners to reduce their energy costs.

REAP was reauthorized by the 2014 Farm Bill, so expect USDA Rural Development to solicit more REAP projects later this year.  While not all sites may qualify, USDA's definition of eligibility is more broad than many assume.  The Preti Flaherty team helps our clients understand how to benefit from REAP funding and other incentive programs for renewable energy and energy efficiency.  Contact Todd Griset to learn more.

Feds to auction North Carolina offshore wind sites

The U.S. Department of the Interior's Bureau of Ocean Energy Management has announced plans to auction the rights to lease sites off the North Carolina coast for offshore wind projects.

Under the Bureau of Ocean Energy Management's "Smart from the Start" competitive program for leasing sites on the outer continental shelf (OCS) for commercial wind energy development, BOEM conducts a series of stakeholder and environmental review processes.  Through these processes, BOEM identifies areas that are attractive for commercial offshore wind development, while also protecting important viewsheds, sensitive habitats and resources and minimizing space use conflicts with activities such as military operations, shipping and fishing.

For North Carolina, the process began in December 2012 when BOEM published in the Federal Register a Call for Information and Nominations and a Notice of Intent to Prepare an Environmental Assessment.  After considering the public comments and responses, BOEM defined three Wind Energy Areas off North Carolina:

• The Kitty Hawk Wind Energy Area begins about 24 nautical miles (nm) from shore and extends approximately 25.7 nm in a general southeast direction at its widest point. Its seaward extent ranges from 13.5 nm in the north to .6 nm in the south. It contains approximately 21.5 OCS blocks (122,405 acres).
• The Wilmington West Wind Energy Area begins about 10 nm from shore and extends approximately 12.3 nm in an east - west direction at its widest point. It contains just over 9 OCS blocks (approximately 51,595 acres).
• The Wilmington East Wind Energy Area begins about 15 nm from Bald Head Island at its closest point and extends approximately 18 nm in the southeast direction at its widest point. It contains approximately 25 OCS blocks (133,590 acres). 

Map of North Carolina Wind Energy Areas, courtesy of BOEM.

The North Carolina auction will follow a series of similar auctions for East Coast offshore wind sites in federal waters over the past year, including sites off Massachusetts and Rhode Island and Virginia, and will come after the scheduled August 19 auction for sites off Maryland.  To date, BOEM has awarded five commercial wind energy leases off the Atlantic coast: two non-competitive leases (for the proposed Cape Wind project in Nantucket Sound and an area off Delaware) and three competitive leases (two offshore Massachusetts-Rhode Island and another offshore Virginia).  Altogether, the competitive lease sales have generated more than $5 million in high bids for more than 277,500 acres in federal waters.  BOEM expects to hold additional competitive auctions for wind energy areas offshore Massachusetts and New Jersey in the coming year.

When will North Carolina offshore wind sites be auctioned?  Who will bid?  Who will win -- and what will the high bid be?  Perhaps most fundamentally, will the BOEM leasing process lead to anyone developing a offshore wind project off North Carolina?

Solar, geothermal led new US capacity in January 2014

Solar and geothermal resources led the new utility-scale electric generating capacity installed in the U.S. in January 2014, according to a report by the staff of the Federal Energy Regulatory Commission.  In all, the report identified 325 megawatts of new generation placed in service in January, substantially all of which is powered by renewable resources.

Old Faithful Geyser erupts in Yellowstone National Park -- a natural geothermal feature.

Solar power contributed the largest share of new generating capacity installed in January, with 287 megawatts of solar projects placed in service.  The largest project, Exelon Corp.'s Antelope Valley Solar Phase II expansion project in Los Angeles County, California, added 130 megawatts of capacity to an existing 230 megawatt project.  The power generated is sold to Pacific Gas and Electric under long-term contract.  Other large new solar projects include MidAmerican Solar’s 61 MW Topaz Solar Farm Phase III expansion project in San Luis Obispo County, California, and two 20 MW projects (Duke Energy Corp.’s Dogwood Solar Power project in Halifax County, North Carolina, and NextEra Energy Inc.’s Mountain View Solar project in Clark County, Nevada).  All of these projects rely on long-term power purchase agreements with utilities.

Geothermal steam power was the second largest category of new electric generating capacity placed in service in January 2014, in the form of Gradient Resources Inc.’s 30 MW Patua Hot Springs Geothermal project in Lyon County, Nevada.  As with the solar projects described above, the power generated by the Patua Hot Springs project is sold to a utility -- in this case, Sacramento Municipal Utility District, under a long-term contract.

Rounding out the new capacity installations in January were 3 small biomass units with a combined capacity of 3 megawatts, and one wind project with an installed capacity of 4 megawatts -- Consolidated Edison Inc.’s 4 MW Russell Point Wind Farm project in Logan County, Ohio.

Despite this growth in solar and geothermal power resources, together these resources account for just over 1% of the nation's total installed operating generating capacity.  Yet the relative growth in solar and geothermal power over the past years has been striking, and is expected to continue for the near term.  Will these resources soon play a larger role in the nation's energy portfolio?

Wind to power Microsoft's Texas data center

Microsoft has agreed to purchase energy produced by a Texas wind farm to power its data center in San Antonio.  The announcement, posted on the official blog of Microsoft's Sustainability Development Team, describes a 20-year power purchase agreement with RES Americas under which Microsoft will purchase all of the output of the 110 megawatt Keechi Wind project located about 280 miles north.

The power purchase agreement fits with Microsoft's stated commitment to carbon neutrality.  Since 2012, Microsoft has imposed an internal fee on the use of carbon-based forms of energy; Microsoft uses that fee to make investments in alternative or carbon-neutral energy, such as this power purchase agreement.

The Keechi project will be owned and operated by RES Americas, a subsidiary of British company RES Ltd.  RES Americas currently operates over 600 MW of renewable energy projects, and has a renewable energy construction portfolio that exceeds 6,500 MW and 64 projects, as well as 534 miles of transmission lines.  Its Keechi project is expected to cost $200 million, and will feature 55 turbines expected to produce 430,000 megawatt hours of energy per year.  (To put this figure in context, it could power up to 45,000 homes, or cover between 5 and 10 percent of Microsoft's total electricity consumption.)  Construction is expected to begin in 2014, with the project going operational by June 2015.

Microsoft is not alone in promoting its use of renewable or alternative energy to power its data centers.  In 2012 Google entered into an agreement to purchase the output of a wind farm in Oklahoma to power its Pryor data center.  Apple's new data center in Maiden, North Carolina is powered in part by a solar photovoltaic array and a biogas-fed fuel cell.  eBay has proposed siting a 6 megawatt natural gas-fired fuel cell at its Utah data center.  Whether the data center is powered by on-site distributed generation or buys power from a designated off-site renewable resource, the trend is toward promoting cleaner, greener computing through these arrangements.  These choices may help the companies with cost control and power reliability as well as public relations.

Will large consumers of electricity continue to invest in alternative or renewable electric generation?  If so, will they favor arms-length power purchase agreements with developers of remote projects, or will they rely more heavily on on-campus development of distributed generation?  Will this trend spread beyond the big names so far - Microsoft, Apple, Google, and eBay - to the point where smaller or less tech-oriented companies develop or do similar projects and deals?

  Googa 20-year power purchase agreement (PPA) for wind energy in Texas that will be funded in part by proceeds from Microsoft’s carbon fee - See more at: http://blogs.msdn.com/b/microsoft-green/archive/2013/11/04/microsoft-signing-long-term-deal-to-buy-wind-energy-in-texas.aspx#sthash.4l62oNbo.dpuf

a 20-year power purchase agreement (PPA) for wind energy in Texas that will be funded in part by proceeds from Microsoft’s carbon fee - See more at: http://blogs.msdn.com/b/microsoft-green/archive/2013/11/04/microsoft-signing-long-term-deal-to-buy-wind-energy-in-texas.aspx#sthash.4l62oNbo.dpuf

a 20-year power purchase agreement (PPA) for wind energy in Texas that will be funded in part by proceeds from Microsoft’s carbon fee - See more at: http://blogs.msdn.com/b/microsoft-green/archive/2013/11/04/microsoft-signing-long-term-deal-to-buy-wind-energy-in-texas.aspx#sthash.4l62oNbo.dpuf

TVA to lose largest industrial customer

The Tennessee Valley Authority is losing its largest industrial customer, a government-owned uranium enrichment plant.  When the plant near Paducah, Kentucky closes next year, TVA will lose about 5 percent of its electricity sales, resulting in a loss of about $600 million in annual revenue. What does this mean for TVA and for its fleet of coal-fired electric generating facilities?

The Tennessee Valley Authority is the nation's largest public power provider and a corporation of the U.S. government.  TVA provides electricity for about 9 million people in seven southeastern states: Alabama, Georgia, Kentucky, Mississippi, North Carolina, Tennessee, and Virginia.  TVA is independently financed, meaning it neither receives no taxpayer money nor retains any earnings as profits.  It owns the most operating electric capacity of any utility in the U.S. (33,804 MW as of 2011), and leads the nation in both volume of annual energy sales (167,730 million kilowatt-hours) and annual revenue ($11.841 billion).

TVA's largest customer has been the Paducah Gaseous Diffusion Plant.  Originally built by the U.S. Department of Energy to enrich uranium into fuel for U.S. nuclear power plants, the plant has been leased to and managed by USEC, Inc. since 1993.  Paducah has been the nation's only facility for processing low-enriched uranium since 2001.

Last month, USEC announced that it plans to close the Paducah plant in 2014.  When that happens, TVA will face a new, smaller landscape of demand for its power.  As a result, some observers expect TVA to close the nearby Shawnee Fossil Plant.  The Shawnee facility is a 1,200-megawatt coal-fired power plant built at the same time as the Paducah enrichment plant at a site about 2 miles away.

TVA has not yet indicated whether it will close Shawnee, but in recent months it has announced plans to close 3 other older coal-fired power plants: the Widows Creek Fossil Plant in northeast Alabama, and the John Sevier and Johnsonville fossil plants in Tennessee.  On the other hand, TVA continues to modernize and invest in refurbishing other older coal-fired plants, including the Gallatin Fossil Plant near Nashville, Tennessee.  TVA is investing about $1.1 billion in Gallatin to install pollution controls including sulfur dioxide capture technology.

How TVA responds to the loss of the Paducah uranium plant remains to be seen.  TVA's relatively low rates for power may attract another large industrial customer to the region.  If that happens, it may continue to operate the Shawnee facility and other plants that can be made economical.  Otherwise, TVA may find itself faced with choices to mothball Shawnee or to do something else with its newfound surplus power.

Assessing Hurricane Sandy's energy impacts

Yesterday Hurricane Sandy made landfall in New Jersey, but the magnitude of the storm meant that heavy winds, strong rains, and a powerful coastal storm surge affected a broad swath of the mid-Atlantic and northeastern parts of the United States.

One consequence of the storm is widespread power outages.  As of 8:00 AM yesterday, about 36,000 electricity customers had lost power in Connecticut, Delaware, New Jersey, New York, North Carolina, Rhode Island, and Virginia.  By 2:00 PM yesterday, outages were up to over 316,000, in the states listed above as well as in Maryland, Massachusetts, New Hampshire, and Pennsylvania.  At that time, New York had the most outages (105,089 customers, or about 1%), but New Hampshire was the hardest hit in terms of percentage affected (18,190 customers, or about 3%).  These reported outages came six hours before the storm officially made landfall, making outage numbers much higher today -- some reports indicating 8 million customers without power.

[Update: as of 9:00 AM this morning, the Department of Energy reports 8.1 million customers without electricity, including 62% of New Jersey, 31% of Connecticut, and 23% of Rhode Island.]

In addition to these power outages, some electricity generating facilities have shut down.  The U.S. Nuclear Regulatory Commission (NRC) reports three nuclear power units in the Northeastern United States had to shut down and two units reduced as a result of impacts from Hurricane Sandy.  Reasons range from water pump failure to encroaching high water to problems on the external power grid.

Another consequence of the storm is disruption to oil refineries.  By 1:00 PM yesterday, two mid-Atlantic refineries had closed, with four more shutting down part of their production.  In total, 1.1 million barrels per day of refining capacity had been disrupted due to the storm.

Today, as the storm has moved inland, crews are working hard to recover from the storm.  It is still early to assess the total damage from the storm, as well as whether its disruption to energy infrastructure will be temporary or longer-lasting.

Utility coal plants closing, natural gas to replace

A North Carolina utility closed one of its coal-fired power plants this past weekend, to be replaced with a natural gas-fueled combined cycle combustion turbine facility.  Duke Energy subsidiary Carolina Power & Light, which does business as Progress Energy Carolinas, announced on Friday that it would close its coal-fired H.F. Lee facility on September 15.  The Lee Plant closure is part of a broader shift away from utility and non-utility "merchant" use of coal to generate electricity, in favor of natural gas and other fuels.

Progress Energy Carolinas provides electricity to about 1.5 million customers in both North Carolina and South Carolina.  The utility owns more than 12,200 megawatts in generation capacity, and serves a 34,000 square mile territory, including the cities of Raleigh, Wilmington and Asheville in North Carolina and Florence and Sumter in South Carolina.

The Lee Plant's story resembles that of a number of other coal plants across the country.  Built in 1951 on the Neuse River near the town of Goldsboro, the plant was gradually expanded over time.  By the 1960s, the Lee Plant hosted three coal-fired units with a total generating capacity of 382 megawatts.  Four oil-fueled combustion turbine units were also added to the plant, adding another 75 MW of generating capacity, will be retired Oct. 1, 2012.

U.S. energy markets and environmental regulations continued to develop over the ensuing decades.  Most recently, tighter federal air emissions regulations and an abundant supply of low-cost natural gas have made older and smaller coal-fueled power plants uneconomic to operate.  As a result, owners are retiring these plants, and converting others to alternative fuels.  For example, last week utility Dominion Virginia Power announced plans to convert its Bremo Power Station in Virginia from coal to natural gas. 

Progress Energy Carolinas is following this trend.  The utility closed its coal-fired W.H. Weatherspoon power plant near Lumberton, N.C. last year.  It also plans to retire the remainder of its coal-fired plants without advanced environmental controls by the end of 2013: the Cape Fear Plant near Moncure, N.C., the Robinson coal-fired unit near Hartsville, S.C., and the L.V. Sutton Plant near Wilmington, N.C.  These coal-fired unit retirements will represent about a third of the utility's coal-powered fleet, or about 1,600 MW of generating capacity.

To replace the power produced from these closing plants, Progress Energy Carolinas is building new natural gas-fueled combined-cycle units.  Adjacent to the Lee Plant site, the utility is extending an existing natural gas pipeline and building a new, 920-MW natural gas-fueled combined-cycle facility.  This plant, along with the five dual-fueled combustion turbines at the existing Wayne County Energy Complex, will be called the H.F. Lee Energy Complex when complete.

Projections suggest that natural gas will remain available at a relatively low cost for the next twenty years.  At the same time, environmental regulations tend to grow tighter over time.  These two factors suggest that the current trend of utilities switching from coal to natural gas to fuel electric generation may continue for the foreseeable future.

USDA funding for biomass energy crops

The U.S. Department of Agriculture has announced $9.6 million in funding for biomass energy crop production in New York, North Carolina and Arkansas. The funding under the Biomass Crop Assistance Program (BCAP) focuses on expanding the production of non-food energy crops for use in manufacturing liquid biofuels and renewable electricity.

Miscsnthus - the dwarf garden variety, related to the giant hybrid energy crop.

BCAP, created in the 2008 Farm Bill, is run by USDA's Farm Service Agency (FSA). BCAP is designed to help farmers and forest land owners switch to crops that can be used to produce usable energy. In many cases, these new energy crops can have significant start-up costs and can take several years before they are ready for harvest. Developing the facilities need to convert these crops into energy products can also involve significant lead time. To overcome these obstacles, BCAP will pay energy crop producers reimbursement for up to 75 percent of the costs of establishing perennial crops. BCAP will also pay for annual maintenance of these crops, for up to five years for herbaceous crops and eleven years for woody crops.

The funding announced this week includes nearly $4 million to fund the production of up to $4,000 acres of grass crops including miscanthus and switchgrass in North Carolina. These crops will be sent to a refinery proposed by Chemtex International where they will be converted into 20 million gallons of bioethanol per year. The refinery is also expected to produce chemicals and biogas. North Carolina farmers will be paid an initial amount to establish the grass crops, plus five years of annual payments for crop maintenance, on top of their crop sales.

$4.2 million in BCAP funding will also support the establishment of up to 3,500 acres of shrub willow in northern New York. Project sponsor ReEnergy Holdings LLC will buy the willow crop as a fuel for biomass electricity production in the area.

BCAP will also provide an additional $1.2 million in funding for an expansion of miscanthus production in northeast Arkansas. Project sponsor MFA Oil Biomass LLC anticipates using the crop to produce a pelletized fuel for both heating use on the producing farms and sale into pellet fuel markets.

Biogas at Apple's NC data center

Continuing to look at Apple's plans for energy supply at its data center in Maiden, North Carolina:

This spring a series of filings by Apple to the Federal Energy Regulatory Commission gave the public some insight into Apple's planned electric generation facilities at the Maiden data center, home to Apple's iCloud service.  (See Tuesday's blog entry for a look at its solar photovoltaic project, and Wednesday's entry for its fuel cell project.)

Fuel cells convert fuels into electricity through a chemical process that does not rely on combustion.  According to one of Apple's filings with FERC, Apple plans to use biogas to power its fuel cells:

The Systems will be fueled with biogas that will be transported via a natural gas pipeline system.  To be injected into the natural gas pipeline system and qualify as pipeline-grade gas, biogas must meet strict heat content and quality requirements.  Consequently, raw biogas must be upgraded (i.e., cleaned and separated to remove components such as hydrogen sulfide, chlorine, and sulfur and to increase methane content) prior to being injected into a pipeline.  Once injected into the pipeline system, it comingles with conventional natural gas and is indistinguishable from conventional natural gas in terms of safety and burning quality.  The biogas, having been upgraded/cleaned to pipeline-quality and then injected into the natural gas pipeline system displaces a comparable quantity of conventional natural gas.
The volume and heat content of the biogas will be measured at a utility-grade meter at the point of injection.  The biogas will then enter the natural gas pipeline infrastructure that has an established balancing measurement system regulated by the Federal Energy Regulatory Commission (Commission).  The biogas will be nominated for the Facility in accordance with the pipeline’s posted business practices and relevant Commission requirements.  Not only the contract and purchase of biogas, but also the nomination process demonstrates compliance with 18 C.F.R. § 292.204 (b).  A utility-grade meter at the Facility will measure actual gas consumption by the Facility.  A revenue-grade meter will measure electricity generated by the Facility.

Furthermore, because the biogas can be upgraded to flow in a pipeline system and nominated for a particular facility, it allows for flexibility in the location of the generating unit.  This flexibility will provide for increased efficiency (operational and maintenance), enhanced reliability, and improved land use. These benefits were recognized by the North Carolina Utilities Commission (“NCUC”).  The NCUC ruled that biogas fuel, which is derived from a renewable energy resource, cleaned to pipeline quality, injected into the pipeline system and nominated for an electric generation facility within the state of North Carolina, is a renewable energy resource known as “Directed Biogas” (NCUC Order Issued March 21, 2012, in docket SP 100, Sub 29). 

This Facility is in keeping with the stated reasons for the implementation of the Public Utility Regulatory Policies Act of 1978 (PURPA), specifically the increased conservation of electric energy, increased efficiency in the use of facility and resources by electric utilities, and the conservation of natural gas.  In the case of this Facility, the use of biogas, which displaces conventional natural gas, to generate electricity will reduce greenhouse gas emissions and smog forming pollutants while also diversifying the fuel used to generate electricity.  The Systems that make up this Facility consume less fuel and produce less CO2 than other technologies.  Each System emits less than 0.07 lbs/MW-hr of NOx , negligible SOx, less than 0.10 lbs/MW-hr of CO and less than 0.02 lbs/MW-hr of VOC.  Additionally, the Systems require very little water, with an average usage of approximately 0.00001 gallons/kWh. The low carbon footprint, de minimus criteria pollutants, small land use and negligible water use, make this Facility a prime example of an initiative that furthers the Commission’s stated goal of increasing renewable energy and investing in environmentally beneficial technologies.

Apple's Maiden, NC fuel cell project

Following on yesterday's look at Apple's planned solar photovoltaic system for its Maiden, North Carolina data center, here's a look at the fuel cell project Apple is also planning the Maiden facility.

A public filing Apple made last month to the Federal Energy Regulatory Commission describes the Maiden data center's proposed fuel cell system.  The filing represents Apple's self-certification that the fuel cell project meets the standards of the Public Utility Regulatory Policies Act (PURPA) of 1978 as a "qualifying facility", setting the facility up for incentives that could include the right to require Duke Energy Carolinas to buy its output.

Apple's fuel cell self-certification filing, docketed by FERC as QF12-327, describes the project:

The Facility will consist of 24 fuel cell systems (“Systems”) using a patented solid oxide fuel cell technology to generate electricity.  A single fuel cell consists of an anode, a cathode and an electrolyte placed between the two electrodes.  As fuel flows in through the anode side and an oxidant comes in over the cathode, a reaction is triggered that causes electrons to move into the fuel cell’s circuit, producing electricity.

Each System consists of thousands of fuel cells stacked together.  Multiple stacks are aggregated together into a "power module", and then multiple power modules, along with a common fuel input and electrical output are assembled as a complete system.  Each System is approximately the size of a standard parking space and will produce approximately 200 kW of power.  The Systems have a modular design that allows the simultaneous use of multiple Systems in order to achieve the desired electric generation output.  Each 200 kW (AC) System is comprised of six individual direct current (DC) power-producing modules and one input/output module for fuel intake and electricity output.  Each of the six individual DC power producing modules is feeding electricity to the input/output module which converts the DC power into the systems AC power output.  The combination of six DC modules and one input/output module comprise a 200 kW (AC) all-electric System.  Each System has a net baseload generating capacity of 200 kW (AC).  The total generating capacity of the Facility will be approximately 4.8 MW (AC).

The "patented solid oxide fuel cell technology to generate electricity" in this description is reported to be Bloom Energy's Bloom box technology.

Tomorrow, a look at the innovative fuel Apple proposes to use to power these fuel cells.

Apple's Maiden NC solar project

As Apple continues to develop a data center to handle its iCloud service, some details are emerging about the energy infrastructure to be built at the Maiden, North Carolina facility.  Two public filings Apple made last month to the Federal Energy Regulatory Commission describe the Maiden data center's solar photovoltaic and fuel cell systems.

Under federal law, certain efficient or renewable electricity generation facilities can certify themselves as "qualifying facilities" or QFs.  The Public Utility Regulatory Policies Act (PURPA) of 1978 required monopolistic electric utilities to buy power from QFs, as long as that cost was less than the utility's own "avoided cost".  Generally, a utility's avoided cost is the cost of the power the utility would have procured from a source other than the QF in question.  This policy was intended to improve the efficiency of the nation's fleet of electric generation, as lower-cost QFs displaced more expensive traditional utility generation.

In April, Apple submitted two filings to FERC certifying its planned Maiden solar and fuel cell systems as QFs.  These documents provide additional insight into Apple's plans.

In its solar photovoltaic project self-certification, docketed by FERC as QF12-328, Apple described the project:

Each of the photovoltaic installations will consist of multiple 435-watt photovoltaic modules on ground-mounted single-axis tracking systems. The current design includes 57,360 435-watt modules. The modules will be connected in series strings of 10 to achieve the appropriate DC voltage. The modules will track the sun by rotating about a north-south axis. At the current time, we expect 14 photovoltaic installations will make up the solar farm: ten 1.50 MW installations and four 1.25 MW installations. The final number of installations and modules will depend on detailed design considerations in consultation with the utility, the photovoltaic system provider, and local permitting authorities. Each installation will be connected to two 750 kW or two 625 kW inverters. Inverters will convert the DC current produced by the systems to AC current. A step up transformer is installed between the inverter outputs and the point of connection to Duke's distribution system. Each installation has a dedicated transformer. The photovoltaic installations will be installed in a phased manner, whereby the installations will be interconnected as they are completed.

Check out tomorrow's blog entry for a look at Apple's biogas fuel cell facility.

Debate over data center green claims

How green is Apple's iCloud data storage service?  That question provoked debate this week, as environmental activism group Greenpeace released a report critical of Apple's choices of power supply for its data center in Maiden, North Carolina, where the iCloud storage is based.

Greenpeace's report, How Clean is Your Cloud (52-page PDF), notes the explosive growth of cloud-based data and computing services offered by companies like Apple, Facebook, Amazon, Microsoft, Google,
and Yahoo.  These services are made possible by data centers, centralized networks of servers and computer infrastructure.  As Greenpeace put it, "Data centers are the factories of the 21st century information age, containing thousands of computers that store and manage our rapidly growing collection of data for consumption at a moment’s notice."

Data centers can be major consumers of electricity, needing cooling and air handling as well as energy for raw processing operations.  Some data center operators seek out renewable electricity, while others are developing on-site generation.  Most work to improve their energy efficiency, making the best possible use of the energy they need.

Apple has touted the green credentials of its Maiden data center, which was designed to earn LEED Platinum certification from the U.S. Green Building Council.  Apple's Maiden facility will also include a 20 MW solar facility on land adjacent to the data center, as well as a 5 MW biogas-based fuel cell system, systems Apple describes as "the nation’s largest end user-owned solar array" and "the largest nonutility fuel cell installation in the United States."

Greenpeace's report notes that despite these investments, Apple's data center is located in an area where utilities source a significant amount of power from coal-fired power plants.  Greenpeace and Apple dispute how much power the Maiden plant will consume (differing by as much as a factor of 5), and thus what fraction of its electricity will be produced from renewable on-site generation.

Whatever the facts may be, the debate illustrates society's interest in the environmental impacts of our technological choices - as well as the difficulty in evaluating some claims of greenness.