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.

Maine bond hold affects offshore wind R&D, energy efficiency

Maine Governor Paul LePage has placed a hold on $40 million in bonding, including a bond approved by Maine voters in 2010 to develop an off-shore wind energy demonstration site and related manufacturing and make energy improvements at state university and college campuses.

Damariscove Island, a designated offshore wind energy site off Boothbay Harbor, Maine.

On June 8, 2010, Maine voters passed a measure approving a $26,500,000 bond issue "that will create jobs through investment in an off-shore wind energy demonstration site and related manufacturing to advance Maine’s energy independence from imported foreign oil".  The measure was designed to "leverage $24,500,000 in federal and other funds and for energy improvements at campuses of the University of Maine System, Maine Community College System and Maine Maritime Academy in order to make facilities more efficient and less costly to operate".

Funding under this bond measure was split between energy efficiency and infrastructure upgrades at state higher education facilities and offshore wind research and development.  $9.5 million was designated for energy and infrastructure upgrades at all campuses of University of Maine System, $5 million for similar upgrades throughout the Maine Community College System, and $1 million for upgrades for the Maine Maritime Academy.

The remaining $11 million was designated for the University of Maine System's Maine Marine Wind Energy Fund, which provides funds for research, development and product innovation associated with developing one or more ocean wind energy demonstration sites.

Under Maine law, voters can authorize the government to issue bonds, but exactly when the money is borrowed can be determined by the governor and state treasurer.  Governor LePage has previously expressed his opposition to the state borrowing more money through bonding.  Today, the Kennebec Journal reports that Governor LePage has placed $40 million in bonding on hold, including the campus energy upgrades and the Maine Marine Wind Energy Fund.  The governor reportedly told project sponsors that while "[e]ach project that these bonds provide for may be worthwhile", the earliest he believes it would be prudent to issue new bonds is January 2014.

What does this mean for ocean energy R&D and school campus energy upgrades?  According to the KJ, the issuance of these bonds would have given the Maine Marine Wind Energy Fund $7.3 million, and college campuses $3.6 million. While the affected projects may still move forward, particularly if the projects can continue to move forward without relying on further bonding or state debt, the timing of their funding has been placed into question.

Penobscot River dam removal starts

Demolition of the Great Works dam on Maine's Penobscot River began this morning.  The dam removal marks the first major physical change to the Penobscot riverscape following the 2004 Lower Penobscot Basin Comprehensive Settlement Accord.  This landmark agreement led the Penobscot River Restoration Trust to acquire two dams on the river for $24 million - the Great Works and Veazie dams - and ultimately to the dams' removal.

The Great Works dam was originally built in the late 1800s to provide water and waterpower to a series of lumber and paper mills.  Over time, hydroelectric facilities were added to the dam.  By its end, the facility included a powerhouse containing 11 turbine-generator units totaling about 8 MW of installed capacity.

Although the dam included several fish passage facilities, environmentalists and fishery agencies considered the river's overall fish passage structures and accessible habitat inadequate.  After years of advocacy and negotiations, in 2004 seven conservation groups, the Penobscot Indian Nation, state and federal agencies and then-dam owner PPL agreed to a comprehensive settlement that would remove the Great Works and Veazie dams but allow six other dams that will remain on the Penobscot and its tributaries to produce more electricity.

After the Great Works dam removal is complete, the Veazie dam 7 miles downstream will be next to be removed, the Howland Dam on the upstream tributary Piscataquis River will be decommissioned and bypassed, and a fish lift will be installed at the Milford Dam.  Overall, the project is estimated to cost $62 million.

Farm waste anaerobic digestion

Yesterday I attended a celebration at Stonyvale Farm in Exeter, Maine, where an innovative anaerobic digester system is now producing renewable electricity from cow manure and other organic waste.  The project demonstrates both a promising technology and an opportunity for farms to produce and market new products.

Two anaerobic digesters at Stonyvale Farm in Exeter, Maine.

Stonyvale Farm is a fifth-generation family dairy farm.  Today the farm is home to 1,000 milk cows and 800 calves.  Several years ago, the family decided to explore the development of an anaerobic digestion system to convert manure and other farm waste to usable biogas.  This led to the creation of Exeter Agri-Energy, a renewable energy company that built and operates a 1-megawatt generator fueled by methane produced through anaerobic digestion at Stonyvale Farm.

Exeter Agri-Energy's digester and generator came online in late 2011.  Today the project converts cow manure and off-farm organic waste from a variety of sources into biogas.  EAE is permitted to accept a variety of food-based and organic wastes from off-farm for conversion into biogas.

The biogas is burned in a combustion engine to produce electricity (enough for about 800 homes) and heat.  I helped the company qualify the project for incentives under Maine's community-based renewable energy pilot program, which gives Exeter Agri-Energy a long-term contract to sell the facility’s output to its local transmission and distribution utility for up to 20 years at average prices up to $100 per MWh (equivalent to 10¢ per kWh).  This works much like a feed-in tariff for qualified projects, giving them a guaranteed buyer and price for the project's output.

Fuel production on the farm: dairy cows at Stonyvale Farm.

This on-farm energy project also enables the creation of additional products and revenue streams, as well as cutting the farm's costs.  Byproducts of the digestion process become organic fertilizer, organic soil additives, and animal bedding used on the farm, creating a variety of products with minimal waste.

3 years of RGGI carbon market results

A report released this week by the Regional Greenhouse Gas Initiative (RGGI) shows that carbon dioxide emissions from power plants in RGGI member states fell by 23% over the program's first three years.

RGGI, the first major market-based greenhouse gas regulatory program in the United States, represents a cap-and-trade approach to reducing the emission of carbon dioxide and other greenhouse gases.  Ten states - Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island and Vermont - originally agreed to cap and reduce the greenhouse gas emissions of their electrical energy sectors by 10% by 2018.  (New Jersey subsequently withdrew from the compact effective January 1, 2012.)  RGGI's first three-year compliance period ran from January 1, 2009 through December 31, 2011.

This week's report documents the performance of the RGGI member states in reducing greenhouse gas emissions from the electricity sector.  According to the report, 97% of covered power plants - 206 out of 211 covered units - met program compliance obligations.  (Raw data on each plant's performance is available through the RGGI CO2 Allowance Tracking System, also known as COATS.)  Over the three-year period, annual CO2 emissions for the three-year period averaged 126 million short tons.  This represents a 23% reduction compared to 2006-2008. 

Part of the reduction may be attributed to increased state investment in energy efficiency as well as the economic slowdown.  However, CO2 emissions in the region decreased nearly ten times more than electricity consumption did: according to the U.S. Energy Information Administration, three-year average electricity consumption across the ten-state region experienced only a 2.4% decrease over the same time. This points to another significant trend in northeastern electricity markets: a shift away from coal to natural gas as the combustion fuel of choice for thermal power plants.

Maine court rules on REC certification

Today the Maine Supreme Judicial Court issued a ruling that affects how the Public Utilities Commission evaluates some applications for renewable resource certification.

The case, Covanta Maine, LLC v. Public Utilities Commission (21-page PDF), centered on a provision of Maine law allowing existing renewable energy projects to be certified as new renewable resources if they have been refurbished after September 1, 2005 such that the project is either operating beyond its previous useful life or employing an alternate technology that significantly increases the efficiency of the generation process.

Covanta owns two standalone biomass plants in Maine.  These plants, in West Enfield and Jonesboro, generate electricity by burning wood to produce steam, which in turn spins turbines attached to generators.  Although the plants were initially built in 1986, in 2010 Covanta applied for certification of the West Enfield and Jonesboro biomass plants as new renewable capacity resources, claiming eligibility under the refurbishment clause (i.e. that each facility was operating beyond its twenty-year useful life due to investments made after September 1, 2005).

The PUC ultimately denied certification, noting that the facilities were not “refurbished” under the statute because much of the investment was for “routine maintenance”, not “refurbishment”. The Commission applied an implicit ratio test, noting that the total expensed and capitalized expenditures for the facilities were below 20% (West Enfield) and 25% (Jonesboro) of the facility’s 2008 value. The Commission concluded that neither the West Enfield nor the Jonesboro facility, when comparing Covanta’s total expenditures to the value of each facility, had sufficient capitalized investments to be considered refurbished; therefore, the Commission denied Covanta’s applications.  Covanta appealed.

Through today's majority opinion, the Law Court rejected the PUC’s analysis. The court found that the Commission did not deny the petition because it concluded that the expenditures were more in the nature of maintenance or repair items than of refurbishment investments; rather, the court found that “the Commission arbitrarily established a requirement that the expenditures meet some minimum level that equals an unspecified percentage of the total value of the facility.”

The statute does not require any minimum investment threshold, and imposing this requirement on Covanta was an error of law. Any quantitative requirement by the statute occurs only in the second prong of the pertinent section 3210(2)(B-4)(4) analysis (i.e., whether the equipment or facility is “operating beyond its previous useful life”). If the facility has been refurbished and is “operating beyond its previous useful life,” then the refurbishment investments are creating “new” energy and accomplishing the goals of the legislation.

As a result, the court vacated the PUC’s decision and remanded the matter back to the Commission. On remand, the court ordered the Commission to evaluate the expenditures by determining whether the expenditures were for the purpose of repair or maintenance, or were refurbishment investments.  The Commission must make this determination by examining the nature and character of the expenditures without any quantitative requirement related to the amount spent or the ratio of the expenditures to the total value of the facility.  The court also said that while the PUC can take the company’s tax treatment of the investments into account, this issue is not dispositive.

Two justices dissented from the majority opinion, finding that the PUC should be given deference in its evaluation of the facts of the case, including the details of Covanta's refurbishment list.

California building energy efficiency rules

California regulators have issued strong new building energy efficiency standards.  Yesterday the California Energy Commission issued its so-called 2013 Building Energy Efficiency Standards, which require new buildings to meet significantly higher energy efficiency targets than under the previous rules issued in 2008.

According to the Commission, the 2013 Building Energy Efficiency Standards are 25 percent more efficient than the 2008 standards for residential construction and 30 percent better for nonresidential construction.  These standards apply to all new buildings other than hospitals, nursing homes, correctional centers, jails, and prisons.

New requirements for residential construction include insulating hot water pipes, tighter window performance standards, whole house fans to reduce evening air condition demand, and "solar ready roof" requirements to facilitate the installation of solar photovoltaic or solar thermal panels at a future date.  Commercial and other nonresidential standards are similar, including high-performance windows, efficient process equipment for grocery stores, advanced lighting controls, and cool roof technologies.

Designing and constructing buildings to these standards will increase the capital cost of development, but the Commission projects that the energy savings will outweigh these costs.  According to the Commission, the standards will increase the average cost of constructing a new home by $2,290 but will return more than $6,200 in energy savings over 30 years.

California's 2013 standards were supported by a broad coalition of interests, including construction trade associations, environmental activist groups, and gas and electric utilities.  While state-mandated building energy codes face opposition in some parts of the country, California is no stranger to mandatory building energy efficiency standards.  California first issued standards in 1977, following the 1976 enactment of the Warren-Alquist Act.  The California Energy Commission notes that since 1978, it has saved Californians $66 billion in electricity and natural gas costs through energy efficient building and appliance standards.

The new standards take effect on January 1, 2014.