Plan for solar on U.S. public lands advances

The U.S. Department of the Interior has finalized its general assessment of the environmental impacts of developing solar electric generation on public lands in six western states.  Last Friday's issuance of a Programmatic Environmental Impact Statement (PEIS) will expedite the permitting of solar energy projects in designated solar energy zones on federal land.

A view of the back a solar panel on public land in the Utah desert.

Part of the Obama administration's plan to encourage utility-scale solar energy development on federal lands, the finalization of the record of decision for the PEIS established an initial set of 17 Solar Energy Zones (SEZs) in Arizona, California, Colorado, Nevada, New Mexico and  Utah.  (Refer to DOI's map to see the general location of the zones.)

These initial 17 zones cover about 285,000 acres of public lands, and were designated based on factors including environmental suitability and access to transmission lines.  The Interior Department projects that if fully built out, the designated zones could be home to up to 23,700 megawatts of solar energy, an amount sufficient to power about 7 million homes.

The approved solar plan also allows a case-by-case evaluation of solar projects on another 19 million acres in “variance” areas outside the designated zones.  At the same time, the plan excludes almost 79 million acres deemed "inappropriate for solar development based on currently available information."

Notably, the PEIS does not pre-approve any specific plan.  Each project proposed in the designated zones will still require its own environmental review and other permitting.  Nevertheless, the solar plan may facilitate significant development of solar energy projects on public lands in the western United States.

NJ declares NRG Bluewater abandoned offshore wind project

Finding that the developer has abandoned the project, New Jersey regulators have withdrawn $3 million in financial support for an offshore wind project proposed by NRG Bluewater Wind. 

The U.S. and New Jersey flags, flying in the sea breeze at Cape May, NJ.

Bluewater Wind New Jersey Energy LLC proposed a 350 megawatt wind project off the New Jersey coast.  In 2008, the company won a $4 million grant from the state to install an offshore meteorological tower as part of a state-sponsored offshore wind grant solicitation.  The grant agreement required Bluewater to install the tower by 2010, and took the form of a rebate: if Bluewater installed the tower by the deadline, it would receive $4 million back from the state.

NRG Energy - a Fortune 250 wholesale power generation company controlling nearly 26 gigawatts of capacity - acquired Bluewater in 2009.  Also in 2009, Bluewater asked for and received a one-year extension of the met tower deadline.

In October 2010, Bluewater requested another extension, this time for two years.  Bluewater pointed to difficulties in obtaining federal permits for the project.  The NJ BPU granted the extension on April 27, 2011, requiring regular progress reporting and installation of the met towers by January 9, 2013.  The BPU also lowered the rebate amount to $3 million.

According to the BPU's October 4, 2012 order cancelling the rebate, Bluewater filed progress reports with the BPU in 2011 and January 2012, but ultimately stopped reporting.  But in December 2011, NRG announced that it was putting active development of offshore wind projects on hold.  By September 2012, BPU staff put NRG on notice that they planned to recommend that the Board cancel its rebate commitment "due to project abandonment and lack of reporting".  According to the BPU's order, "the company did not object or otherwise respond when advised of staff's recommendation to withdraw the rebate commitment".

As a result, last week the BPU found that the company had not complied with the order requiring status updates, and thus "that NRG Energy and Bluewater have abandoned the project and will not meet the rebate commitment requirements."  The Board cancelled the met tower rebate, and directed BPU staff to reallocate the funding to other New Jersey Clean Energy Programs.

Maine energy corridor proposals solicited

Maine is soliciting letters of interest in using state-owned highway corridors as paths for electric transmission lines.  Resulting from a state law enacted in 2010, the solicitation may lead to the development of transmission lines along state-owned highway routes including I-95 and I-295.

Siting transmission lines and other linear infrastructure can be challenging, as routes typically are narrow but must be uninterrupted over long distances.  The diversity of landowners along most proposed routes can lead to difficulties in negotiating leases or purchase prices for the land rights, or enmity if the developer uses eminent domain powers.  Because state-owned highway routes have a single owner and are already linear, existing highway corridors can provide a natural route for transmission lines.  If lease payments are set properly, the state can create a new source of revenue to support energy initiatives or other governmental objectives.

Maine sits in a strategic position that may enhance its opportunity to capitalize on highway corridor leasing.  Maine is viewed as the New England state with the best sites for development of renewable electricity generation; this electricity generally must flow out of state to more power-hungry markets in Boston and points south.  The state also sits between generation in Canadian provinces and southern New England's significant consumer demands, increasing the pressure for transmission development.

But allowing transmission line development in highway corridors may not come without risk.  If lines are permitted, they may limit future opportunities to develop higher-value infrastructure along the same key routes.  Transmission lines allowing Canadian power to flow to Boston could also dampen the market for development of in-state energy projects, which typically provide greater economic development prospects than would a transmission line connecting out-of-state resources.  Depending on how their costs are allocated at the regional level, transmission lines could also lead to higher electricity rates for Maine consumers.

Under the 2010 law, Maine formed an interagency review panel to develop rules and conduct a competitive solicitation for potential energy corridor developers.  The law also provides that highway corridor transmission developments are subject to a standard of review requiring developers to demonstrate that their projects will not impede in-state electricity generation, but will lower electricity rates and energy costs for Maine consumers.

The interagency review panel is now soliciting letters of intent to seek corridor rights.  Proposals will be reviewed on a rolling basis.  Once the panel receives one or more proposals, it will begin the process of evaluating their specifics to screen out proposals that fail to meet the standards.

Maine PUC declines to OK Statoil offshore wind term sheet

Today the Maine Public Utilities Commission declined to approve a term sheet offered by Statoil North America, Inc. for a long-term power purchase agreement from its proposed Hywind Maine floating offshore wind project.

Sutton Island, Maine, about 80 miles downeast of the proposed Hywind Maine project.

In 2010, Maine enacted a law designed to support the development of offshore wind and other marine renewable energy projects.  Among other features, that law required the state Public Utilities Commission to conduct a competitive solicitation for proposals for deep-water offshore wind energy pilot projects, meaning grid-tied floating wind projects at least 10 nautical miles offshore.  The statute gave the commission authority to direct mainland utilities to enter into power purchase agreements with one or more responding developers if certain minimum criteria were met.  This authority was discretionary, meaning the commission could choose not to order the utilities to sign a deal even if it met those criteria.

In September 2010, the commission issued its request for proposals under the program. Over the ensuing years, Statoil emerged as the apparent leading respondent, proposing the "Hywind Maine" project, a four-turbine, twelve megawatt project south of Boothbay Harbor.  Commission staff and Statoil negotiated the terms of a proposed power purchase agreement, which became public this summer.  Among those terms was a proposed energy price of between $290 and $320 per megawatt-hour, escalating annually, for the first 41 gigawatt-hours of energy produced each year.

That term sheet was the subject of deliberations by the Maine commission this morning.  After two hours of discussion, two of the three commissioners had stated that they would vote against approving the term sheet.  They expressed concerns about the cost of the contract, as well as uncertainty over the deal's benefit to Maine and Maine ratepayers.

The Maine commission's action bears some resemblance to that of the Rhode Island Public Utilities Commission in 2010 when it rejected a proposed contract between utility National Grid and offshore wind developer Deepwater Wind on the grounds that $244 per megawatt-hour was not a "commercially reasonable" price.  The Rhode Island commission ultimately approved a renegotiated deal with Deepwater Wind at a comparable price.  Similarly, the Maine commission invited Statoil to revise its proposal to offer more benefits to Maine, and to present a renegotiated deal for further deliberation.  Will Statoil be able to sweeten its offer and convince the commission that its contract is a good deal for Maine?

National Park Service OKs transmission line on park lands

The National Park Service has given its final approval to a proposed high-voltage electric transmission line that would cross public lands in Pennsylvania and New Jersey, including the Delaware Water Gap National Recreation Area, the Middle Delaware National Scenic and Recreational River as well as the Appalachian National Scenic Trail.

The 500 kilovolt transmission line, known as the Susquehanna-Roseland line, has been proposed by utilities PPL Electric Utilities and Public Service Electric and Gas Co. It would run 145 miles from Susquehanna, Pennsylvania to Roseland, New Jersey.  Mid-Atlantic electric grid operator PJM, Inc. and national electric reliability organization NERC had called for the line to protect the grid's reliability by preventing existing power lines from facing overloaded conditions.  The line also received a fast-track review by federal agencies under the auspices of the Interagency Rapid Response Team for Transmission, a group formed to coordinate on an expedited review of transmission projects designed to increase grid reliability, integrate new renewable energy, and cut consumer costs.

While the line's route largely followed existing rights-of-way, environmentalists and park activists challenged the National Park Service's approval of expansions to the rights-of-way through these national parklands.  The New Jersey Board of Public Utilities' approval of the project was also challenged, on the grounds that the state board failed to give adequate consideration to non-transmission alternatives that could have met consumer demand, such as programs promoting demand response and energy efficiency.  That case remains pending.

On Monday, the National Park Service issued its record of decision approving the line (31-page PDF).  As a condition of approval, the NPS required the developing utilities to contribute at least $56 million to a
fund to mitigate the line's impacts on federal lands by purchasing or otherwise conserving land for public use, compensating for impacts to wetlands affected by the line, and funding cultural and historic preservation in the affected parks.

In a Facebook post issued yesterday, the New Jersey chapter of the Sierra Club vowed to challenge the NPS's approval of the line in court.  PPL and PSE&G plan to place the line in service by June 2015.

Commercial fishing and solar energy

Commercial fishing businesses tend to consume significant amounts of energy, but may be able to offset their energy expenses by turning to solar panels and other distributed electric generation.

The winter fishing fleet of Northeast Harbor, Maine.

According to the National Marine Fisheries Service, the U.S. commercial fishing sector landed $5.3 billion in seafood last year.  Alaska led the nation in total catch value in 2011, landing $1.9 billion in fish and shellfish.  Massachusetts came in second at $570 million, with Maine coming in third at $426 million.

Catching this seafood comes at a price.  Diesel and other marine fuels account for a significant fraction of commercial fishermen's expenses.  Onshore, electricity powers stationary facilities like freezers, refrigerators and pumps for holding tanks, with seafood processing operations consuming even more power.

The location of many commercial fishing businesses -- typically located on the coast, often on a pier or wharf exposed to the sun and wind -- may create an opportunity for fishermen to offset their energy costs by producing their own electricity.  One Maine lobsterman recently added a 10-kilowatt solar array to his wharf in Harpswell. Funded in part by an $11,750 grant through the U.S. Department of Agriculture's Rural Energy for America Program, last month Potts Harbor Lobster added 44 solar panels to two roofs on the Reversing Falls Lobster wharf in South Harpswell.

In addition to USDA REAP grants, additional incentives are available that may shorten the payback period for distributed generation projects at commercial fishing facilities.  For example, Maine's net energy billing law allows consumers to use solar or other distributed generation to effectively spin their electricity meters backwards.  Consumers in almost every state can use similar net metering programs to sell excess power back to the grid, offsetting their electricity bill.  Other states, like Massachusetts and New Jersey, allow consumers to produce and sell solar renewable energy credits (sometimes called SRECs) from grid-connected solar photovoltaic panels.  These SREC sales can create a significant revenue stream for people and businesses who develop qualified renewable power projects.

Not every site may be well-suited for distributed generation projects.  Given relatively high capital costs for many small renewable power projects, payback periods may be too long for some businesses to make the investment.  However, as the cost of electric transmission increases across the country, the traditionally self-reliant fishing industry may increasingly turn to solar energy and other distributed generation technologies.

Obama blocks Chinese co wind acquisition

President Obama has blocked a Chinese-owned company's acquisition of four Oregon wind farm development companies, citing "credible evidence" that the company "might take action that threatens to impair the national security of the United States."

Wind energy project Ralls Corporation had acquired four wind project development companies in Oregon earlier this year.  Those companies -- Lower Ridge Windfarm, LLC, High Plateau Windfarm, LLC, Mule Hollow Windfarm, LLC, and Pine City Windfarm, LLC -- were developing wind projects in or near restricted airspace at the Naval Weapons Systems Training Facility in Boardman, Oregon. Ralls is owned by two executives of Chinese wind turbine manufacturer Sany Group, whose turbines were to used in the Oregon projects.

Earlier this summer, as Ralls acquired the project companies from Terna Energy USA Holdings Corporation, the Committee on Foreign Investment in the United States (CFIUS) began to review the transactions.  The CFIUS -- an interagency panel whose purpose is to review transactions that could result in the control of a U.S. business by a foreign person in order to determine the effect of such transactions on the national security of the United States -- determined that "there are national security risks to the United States that arise as a result of the Transaction" and issued a series of orders compelling Ralls and the project companies to cease work and stay away from the project sites.

In an order issued last Friday, President Obama formally prohibited the transaction, and ordered Ralls to divest itself of the project companies and their assets within 90 days.  Ralls is prohibited from selling the companies and assets until it removes everything from the project sites, and must give the CFIUS an opportunity to reject the proposed third-party buyer.  The order cites Section 721 of the Defense Production Act of 1950 as authority.  The Ralls order appears to be the first presidential exercise of this power since 1990, when President George Bush issued an order banning the China National Aero-Technology Import and Export Corporation from acquiring a Seattle-based aerospace developer.

Ralls has reportedly challenged the order in a lawsuit filed with the U.S. District Court in Washington, D.C.