Hydropower relicensing surge expected

Hydropower industry experts are gathering near Worcester, Massachusetts, this week for a conference on hydropower re-licensing. Organized by EUCI and hosted by Alden Research Laboratory, the March 18-19 Hydropower Re-Licensing Conference features speakers from federal and state regulatory agencies, owners of hydropower projects, and consultants.

The power of falling water.

Hydropower currently accounts for about two-thirds of all renewable electricity generated in the U.S, with room for growth primarily by expansion of existing facilities at existing storage dams. Most hydropower projects fall under the jurisdiction of the Federal Energy Regulatory Commission, receiving either a license or an exemption pursuant to the Federal Power Act.

Before most existing projects may expand, they need to secure a license amendment from the FERC allowing changes to the project. Planned and upcoming project expansions will drive significant relicensing in the coming years.

The age of the nation's existing hydropower projects will also drive additional relicensing activity in the near term. Of roughly 2,000 existing hydropower licenses and exemptions issued by the FERC, nearly one-quarter will expire within the next 15 years. Since dams have relatively high construction and permitting costs and relatively long useful lives, since demand for renewable electricity remains relatively high, since most dams were built decades ago and since existing licenses typically run for 30 to 50 years, most of these existing dams will likely apply for new licenses before the terms of their existing licenses expire.

For these reasons, expect to see significant re-licensing activity around hydropower projects in the next decade.

Following this week's conference, EUCI will host a workshop on financing new and existing small hydropower projects. A panel of presenters, including Jon Petrillo of Gravity Renewables, Dana Hall of the Low Impact Hydropower Institute, my colleague Peter Brown of Preti Flaherty, and me, will engage with attendees on the ever-important question of how to finance hydropower projects.

For more information about the event, contact me at 207-791-3000 or tgriset@preti.com.

FERC directs standards requiring utility hardening against physical threat

In the wake of last year's sniper assault on a California electrical substation, federal regulators have initiated a process to require utilities to demonstrate that they have hardened their power plants, transmission lines, and other infrastructure against physical attacks.  Last week the Federal Energy Regulatory Commission ordered the North American Electric Reliability Corporation, or NERC, to develop reliability standards requiring utilities to address risks due to physical security threats and vulnerabilities.  If NERC adopts reliability standards to protect against physical threats, will the standards improve electric reliability -- and if so, at what cost?

Stacks from a power plant subject to NERC standards rise above a cove in Salem, Massachusetts.

NERC, a not-for-profit entity whose mission is to ensure the reliability of the bulk power system in North America, has been designated as the United States' electric reliability organization.  To carry out this mission, NERC develops and enforces reliability standards for owners and operators of critical electrical infrastructure.  NERC's existing standards span 1,778 pages, and cover issues ranging from personnel training and emergency preparedness to protection against hacking and cyberterrorism. 

Following the April 16, 2013, destruction by intense gunfire of a PG&E Corp. substation in San Jose, California, much attention has fallen on the protection of the U.S. electrical grid against physical threats.  At the federal regulatory level, this attention led the FERC to issue an order on March 7, 2014, directing NERC to adopt additional standards for physical security.  That order prescribes the creation of new standards requiring owners and operators of the so-called Bulk-Power System to take at least three steps to protect physical security:

• First, owners and operators must perform a risk assessment of their system to identify their "critical facilities".  Critical facilities are defined as those that, if rendered inoperable or damaged, could have a critical impact on the operation of the interconnection through instability, uncontrolled separation, or cascading failures of the Bulk-Power System.


• Second, owners and operators of critical facilities must evaluate potential threats and vulnerabilities to those facilities.


• Third, owners and operators must develop and implement a security plan to address potential threats and vulnerabilities.

The order directing physical protections standards has prompted at least two sets of questions in the utility industry.  First, will these standards lead to improved reliability?  While the efficacy of the standards will likely only be proven in retrospect, if at all, fears brought to life by the California attack and others have convinced a majority of the Commission that the standards are necessary.

Other questions have arisen about the cost of implementing the standards.  While some defenses against physical threats may be adopted relatively inexpensively -- for example, opaque fencing around critical facilities -- others may prove expensive.  When the possible scope and extent of critical facilities are taken into account, some estimates of the potential cost -- including that of concurring FERC Commissioner John Norris -- rise into the billions.

Under the Commission's order, NERC has until June 5, 2014, to prepare and submit its proposed new reliability standards.

Switch movie showing in Maine

Tonight the Maine chapter of the U.S. Green Building Council and ReVision Energy are hosting a showing of the movie Switch at the Portland Public Library.



Switch, a 2009 documentary produced by Harry Lynch and geologist Dr. Scott Tinker, describes some of the changes affecting the production and consumption of energy resources around the world.  From coal and oil, to nuclear power and renewable resources, to energy efficiency, the way society produces and converts fuels and other energy resources into useful power is shifting.  These changes are driven by advances in technology, as well as market and regulatory forces.  The movie features visits to places including a coal mine, geothermal power plant, and a hydropower station, coupled with interviews with industry and regulatory leaders about how they are responding to these forces.

Following the movie, the hosts have asked me to give a brief presentation on Maine's portfolio of energy resources and to answer questions from the audience.  I'm looking forward to the event!

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?

Oregon wave project permit surrendered

The developer of a proposed large wave energy project off the Oregon coast has surrendered a key federal permit for the project.

Waves lap islands off the Maine coast near Casco Bay, a more sheltered site than that proposed off Oregon.

Ocean Power Technologies subsidiary Reedsport OPT Wave Park, LLC had proposed a 50 megawatt project in the Pacific Ocean off the central Oregon coast.  This larger project was intended to follow on the heels of OPT's "Phase I" development, a 1.5 megawatt non-grid connected pilot project which in 2012 became the first U.S. wave project to win a license from the Federal Energy Regulatory Commission.

OPT also won preliminary permits from the FERC to study the feasibility of larger projects off Reedsport, including a 15 megawatt "Phase II" and the 50 megawatt "Phase III" project.  OPT's Phase III preliminary permit gave it three years to study the feasibility of the "Reedsport Expanded Project", after which OPT could seek a license to develop and operate the larger scale phases.

That permit was set to expire on February 28, 2014.  Given the technological, permitting, and community engagement challenges raised by developing any advanced energy project, many permittees find that they need more than 3 years to study a site.  The FERC allows such developers to seek successive preliminary permits, effectively extending the due diligence period for qualified developers able to show real progress.

But based on a February 28, 2014, FERC filing, OPT announced that it would not seek a successive preliminary permit at this time, and would instead surrender the Phase III preliminary permit.  In its filing, OPT acknowledged the significant efforts made by the state of Oregon to facilitate wave energy projects, but noted the challenges interposed by a cascading series of unforeseen delays:delays in the Phase I study and development processes, resulting delays in the Phase II consultation, licensing, study, and monitoring processes, and "increased project-related costs."  Ultimately, OPT noted that while it continues to evaluate its Phase I and Phase II implementation options, "OPT's plans for an expanded Phase III Project are sufficiently uncertain at this time that the company cannot justify requesting an additional three-year preliminary permit extension."

Meanwhile, last month another OPT affiliate announced an agreement with Lockheed Martin to develop a 62.5 megawatt wave energy project off the coast of Australia.  While it is tempting to read between the lines and surmise that the Australian permitting process, culture, or site conditions are more favorable than those in Oregon, OPT has given no concrete indication that this is the case.  Estimates of U.S. wave energy potential remain large -- with at least one report identifying a total available wave energy resource of 2,650 terawatt-hours per year.  Whether or not the expanded Oregon project returns to active development, the size of the resource points to continued interest in developing the U.S.'s marine renewable energy resources.

US Supreme Court considers EPA greenhouse gas emissions regulations

May the U.S. Environmental Protection Agency regulate greenhouse gas emissions from power plants and industry under the Clean Air Act?

The Supreme Court of the United States heard oral argument on this issue yesterday, in the case Utility Air Regulatory Group v. Environmental Protection Agency, Docket No. 12-1146.  How the court rules on the case will shape federal regulation of carbon dioxide and other greenhouse gas emissions in the nation.

The case arises from EPA's decision in 2010 to regulate greenhouse gas emissions from power plants and industrial facilities.  That decision stemmed from a 2007 Supreme Court ruling, Massachusetts v. EPA, requiring EPA to regulate greenhouse gas emissions from motor vehicles under Title II of the Clean Air Act.  Since 1980, EPA has held that once it regulates one type of air pollution (e.g. greenhouse gases from motor vehicles), it may (or must) broaden its regulations to cover all such emissions (e.g. greenhouse gases from all sources).  Applying this precedent in 2010, EPA found that regulating motor vehicle greenhouse gas emission standards under Title II of the Clean Air Act also compelled EPA to regulate greenhouse gas emissions under the Clean Air Act's Title I "prevention of significant deterioration" or PSD program, as well as under its Title V stationary-source permitting program.

Building on its Title II regulation of greenhouse gas emissions from cars and trucks, EPA then promulgated its Title I and Title V regulatory programs for stationary sources.  These rules regulated stationary sources emitting 75,000 tons of carbon dioxide or more per year, but triggered challenges from several states, over 70 non-governmental advocacy groups, and business interests.  While challengers raised a host of objections, one of the key substantive issues raised was whether EPA may truly regulate carbon dioxide as a "pollutant."  Challengers also mounted attacks rooted in law, questioning whether EPA's 2010 decision to regulate motor vehicle greenhouse gas emissions could legally trigger permitting requirements for stationary sources.

After the U.S. Court of Appeals for the D.C. Circuit upheld EPA's rules, challengers appealed that decision to the Supreme Court.  While the Court declined to address most of the issues challengers raised, it decided to entertain argument on one point: "Whether EPA permissibly determined that its regulation of greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases."

The Court's official docket for Utility Air Regulatory Group v. Environmental Protection Agency can be found here, and unofficial copies of many of the pleadings can be found on SCOTUSBlog.  While the Court has not indicated when it will rule on the case, energy and other industries are watching closely for the ultimate outcome.

Wave energy project in Australia advances

What may become the world's largest electricity generation project to rely on the power of ocean waves is moving forward in Australia, as Lockheed Martin has announced that it has signed a contract with Victorian Wave Partners Ltd. to develop a 62.5-megawatt project off the coast of Victoria, Australia.

Waves off the coast of Maine.

The world's oceans contain significant amounts of energy, embodied in waves, tides, and currents.  Winds blowing over the seas also contain substantial energy.  Given the immense size of these marine renewable energy resources, extracting useful power from the oceans offers significant potential to serve society's needs without relying on fossil fuels.  Early projects, like the 2008 Aguçadoura Wave Farm off Portugal, sought to demonstrate the feasibility of wave energy conversion, but the rigors of the marine environment, need for advanced technologies, and costs of developing a wave energy project have limited development of wave and other hydrokinetic energy resources.

Today's announcement by Lockheed Martin of a project development agreement with Victorian Wave Partners Ltd. envisions a much larger project than has previously been developed anywhere in the world.  Victorian Wave Partners is an Australian special purpose company owned by Ocean Power Technologies Australasia Pty Ltd., an affiliate of U.S. company Ocean Power Technologies or OPT.   OPT's PowerBuoy wave generation technology uses a buoy that moves up and down in ocean waves to capture mechanical energy.  This mechanical energy is used to power an electrical generator, whose electricity is transmitted to shore via an underwater cable.  OPT has proposed projects relying on its PowerBuoy technology off the coast of Oregon in the U.S., and has tested its technology off Hawaii, New Jersey, and Scotland.

The Victoria project is scheduled to be developed in three stages.  The first stage is expected to produce approximately 2.5 megawatts of peak power by 2014 or 2015, with subsequent stages designed to build up to 60 additional megawatts of peak capacity by 2018 or 2019.  The project relies in part on funding from the Australian Renewable Energy Agency or ARENA.  Australia has established a goal of relying on renewable energy for 20 percent of its needs by 2020.  ARENA offers funding to qualified renewable energy projects capable of helping the island nation meet this goal.

While the Victoria project may become the world's largest wave energy project to date, other projects in Australia, Scotland, and the United States are moving forward.  Will waves soon contribute meaningfully to the world's portfolio of energy resources?