Renewable Energy

A Coal Plant Shutdown and the Undoing of a Wind Energy Bottleneck

July 14, 2016 11:21
by J. Wylie Donald
Everyone knows the transmission bottleneck is the boot on the neck of wind energy. The Plains States have megawatts of wind energy. Getting it to the places with megawatts of demand, like Oregon and Washington, aye, there’s the rub. If only an operating plant would expire and shuffle off its transmission lines to a wind farm.

Renewable Energy | Wind Energy | Utilities

What is President H.R. Clinton’s Energy Policy?

April 7, 2016 23:04
by Tricia Caliguire
Even as the number of 2016 presidential candidates in both parties has dwindled, the media -- particularly television news -- has yet to focus on an in-depth discussion of the candidates’ policy proposals. While it was difficult to discern the energy policies that a President Trump would implement, candidate Hillary Clinton has made quite clear the energy goals that a President H.R. Clinton would set. Including her “Clean Energy Challenge,” issued last summer, and the proposal to increase energy efficiency standards that she announced in February 2016, Clinton has made very specific and far-reaching plans that would continue and expand on the Obama Administration’s policies. The focus of her energy policy is twofold – address climate change and use the clean energy industry to grow the economy and create jobs. It seems safe to say the phrase “all of the above” will not apply to the Clinton administration energy policy.

Carbon Emissions | Climate Change | Green Buildings | Regulation | Renewable Energy | Wind Energy | Solar Energy

What is President Trump’s Energy Policy?

March 2, 2016 03:29
by Tricia Caliguire
We all know where the respective party “establishments” in Washington come down on climate change, clean power, and the pace at which the country should move to renewables as the primary source of energy (if at all). President Obama gave us the Paris Climate Agreement and the Clean Power Plan; the Republic Congress is not happy about either. Earlier this year, the Supreme Court effectively shut down the discussion until judicial review of the Clean Power Plan is complete – est. circa 2017 – so, the industry may now be better served by concentrating on the energy policies of the candidates to be our next president, one of whom will soon be setting policy for the next four years.

Climate Change | Climate Change Litigation | Regulation | Renewable Energy | Wind Energy | Solar Energy | Supreme Court

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ORECs or ERCs: How Will New Jersey Pay for Offshore Wind?

October 6, 2015 22:43
by Tricia Caliguire
On November 9, 2015, the federal Bureau of Ocean Energy Management (“BOEM”) will hold the fifth auction of leases for space on the Outer Continental Shelf in the Atlantic Ocean, this one offshore New Jersey. BOEM will offer 342,833 acres in two lease blocks, enough space to support at least 3,400 megawatts (“MW”) of commercial wind generation, which – according to BOEM -- could power approximately 1.2 million homes.

Carbon Emissions | Climate Change | Legislation | Regulation | Renewable Energy | Wind Energy

How the Supreme Court Just Delayed the Clean Power Plan

July 1, 2015 21:40
by Tricia Caliguire
The Supreme Court’s decision in Michigan v. EPA holding that the Environmental Protection Agency should have considered costs when making the decision to regulate mercury emissions from power plants (the “MATS Rule”) may have put the brakes on the late-summer release of the final Clean Power Plan (“CPP”), the regulations limiting CO2 emissions from power plants – but not because EPA failed to consider the costs. They did, just not the right ones.

Carbon Emissions | Climate Change | Climate Change Effects | Renewable Energy

Texas Changes the Goal(s)

April 28, 2015 12:09
by Tricia Caliguire
Some say you can't go back, but last week, I did go back -- to Austin, Texas, where I went to law school. Things changed -- the east side has been gentrified, the traffic is horrendous, and Molly Ivins is gone – and are much the same – including that having the legislature in session makes for some interesting headlines.

Climate Change | Renewable Energy | Solar Energy | solar finance

Florida’s Solar Conundrum

March 31, 2015 09:40
Despite ranking third in the nation for rooftop solar potential, the "Sunshine State" is 13th in cumulative solar capacity installed (dreary New Jersey is 3rd). This is the result of a state without a renewable energy portfolio standard (RPS) that does not permit power purchase agreements (PPAs) (Florida is one of only five states that explicitly prohibits anyone other than the big utilities from selling power). Depending on whom you ask, Florida's lack of solar infrastructure is either caused by the "monopoly" held by the State's big power companies, or the simple viewpoint that solar is a silly alternative when you compare cost to the comparatively cheap prices from more conventional generation sources. Well, the debate is scheduled to be settled soon... Environmentalists in Florida are pushing for a constitutional amendment initiative to place solar choice on the November 2016 ballot. The purpose of the ballot proposal is to expand solar choice by removing barriers that limit solar ownership models. If approved, the ballot measure would allow homes and businesses to install solar and sell excess energy they generate back into the grid. Curiously enough, much of the focus on this particular ballot proposal has been on the unlikely alliances that are now supporting the measure. Tea Party conservatives and aggressive libertarians (who advocate for free-market principles through energy choice) find themselves aligned with fundamental environmentalists and progressive liberals (who advocate for cleaner energy solutions). Opponents of course oppose taxpayer subsidies and consumer mandates. Regardless of one's viewpoint, an amendment permitting third-party sales in Florida will immediately result in a tremendous boom to the Sunshine State's solar industry. If that road is opened, expect a sea of solar developers to begin canvasing I-95 for opportunities from the Panhandle to the Keys.

Climate Change Effects | Renewable Energy | Solar Energy | Utilities | Florida | renewable portfolio standard | solar finance

The Clean Power Plan: A View from FERC, Part IV - Economic v. Environmental Dispatch, Please

March 16, 2015 09:31
by J. Wylie Donald
It’s been a long winter in my neck of the woods and not because Punxsutawney Phil saw his shadow.  Pipes froze.  Twice.  Furnace was out overnight.  Broke three shovels.  So I had a particular interest this past Wednesday, March 11, in FERC’s Eastern Regional Technical Conference on EPA’s Clean Power Plan (CPP) and FERC’s and EPA’s takes on reliability issues.   After the introductions EPA Assistant Administrator Janet McCabe led off with the same position she had delivered at the Opening Conference, which is something of a mantra for EPA:  EPA has enforced the Clean Air Act for over forty years and has not impacted reliability.  Commissioner Tony Clark,  however and politely, was not buying it.  To be sure, EPA’s Clean Air Act initiatives had not brought the Grid crashing down.  But he enumerated half-a-dozen facilities where EPA regulations had impacted reliability, including the Presque Isle Power Plant, the Potomac River Generating Station, and the E.D. Edwards Power Station.  Commissioner Clark laid it out plain and simple:  any time there is a “must run” requirement imposed on a plant, that is a reliability issue.  Where operators have made decisions to close because plants are no longer profitable as a result of the cost of environmental compliance, but reliability concerns have compelled the plants to keep operating, that is a case of environmental regulations impacting reliability. Commissioner Moeller asked Ms. McCabe for EPA guidance on how reliability could be ensured under the CPP, the so-called “reliability safety valve” (RSV).  She responded without specifics, saying merely that EPA is prepared to work with everyone.  To that Commissioner Moeller was very plain:  a reliability safety valve needs to be in the final rule. Period. What were the details driving Commissioners Moeller and Clark?  They are set out in great detail in the written comments of the affected generators. A few were stated at the technical conference: New England - RGGI, the Regional Greenhouse Gas Initiative, has put New England in excellent position to meet the CPP goals.  But even with the early mover advantage, New England has substantial concerns. As Commissioner Paul Roberti  of the Rhode Island Public Utilities Commission reported, the independent system operator, ISO-NE, forecasts 8300 MW are to be retired by 2020, to be replaced by 6300 MW, with an additional 1000 MW in efficiency improvements. Even assuming all of that can be built in time and the forecast efficiency is real, New England has gas transmission challenges (as demonstrated by skyrocketing prices and unavailability during the 2013 polar vortex) and electrical transmission challenges (the substantial wind resources identified in northern Maine are 100 miles from the nearest transmission).  As Steve Rourke, a VP of ISO-NE, commented:  even as New England's fuel mix starts to change, those current coal plants are needed on the coldest and hottest days. Duke Energy - Paul Newton, the State President for North Carolina for Duke, stated flatly that EPA's interim compliance deadlines leave no room to ensure compliance can be achieved without compromising reliability.  In February, North Carolina set records for demand at 7 a.m.  Why did he select 7 a.m. to report?  Because that is a time when non-dispatchable generation assets cannot provide power. The Southern Company - Jeff Burleson, System Planning Vice President for Southern, explained how Southern plans for the future.  It looks at each plant (as it must because regional capacity can only be based on individual plant capacity).  EPA predicts that Southern will need to retire 9 GW as a result of the CPP, in addition to 3 GW as a result of MATS (Mercury and Air Toxics Standards).  In response, Southern anticipates needing 5 GW of new gas-fired plants.  There is one small impediment:  current gas pipelines in the region are fully subscribed.  Mr. Burleson also commented that demand response is estimated to be able to shave peak demand by about 10% and that that is already included in Southern's planning. The environmental perspective is that reliability issues are manageable.  As John Wilson, the Director of Research for the Southern Alliance for Clean Energy, commented, "the sky is not falling" and there is plenty of solar and wind energy available.  Energy efficiency will help too.  In sum, the Alliance's studies show that "ensuring reliability can be business as usual."  Johnny Casana of EDP was a little more equivocal, if the suite of low carbon strategies can ensure reliability, then the RSV may not be needed.  Jonathan Peress with the Environmental Defense Fund advised that their studies showed that there is ample pipeline capacity in New England if it is used efficiently.  Some may remain unconvinced.  The solar and wind resources don't meet Mr. Newton's 7 a.m. need.  One might legitimately be skeptical that "business as usual" can possibly apply to something that (to paraphrase Commisioner Moeller) is the most comprehensive and profound rule ever to come out of the Clean Air Act.  EPA's own estimate of over 50 GWs in plant retirements belies that.  As for efficient use of gas pipelines, all are for that.  But theoretical efficiency worked out in an office is not much salve as the temperatures drop and the pipes burst because the gas has not gotten to where it efficiently should.  Mary Walker, representing the Georgia Environmental Protection Division, best summed it all up.  What is needed is “economic dispatch v. environmental dispatch.”  When a state's environmental regulator is talking the language of FERC, it is worth listening to.  As Ms. Walker noted, the environmental regulator in Georgia is being asked to implement energy policy, which it hasn't done before.   A bit of jocularity between Administrator McCabe and Chairman LaFleur puts the issue, we think, in perspective.  Ms. McCabe owned up to her lack of knowledge regarding the sources of unreliability – squirrels, she had been informed by her staff, affect reliability.  The Chairman referred to an apocryphal "throw-down squirrel" that linemen carry on their trucks.  But linemen don't need a throw-down squirrel, squirrel outages are very real.  So what do we have?  One regulator, “learning something new every day;” the other regulator dispensing the wisdom of the ages, so to speak.   As we move forward with what both regulator and regulatee have referred to as the most significant regulation of the Grid ever, we suspect that many will want the people that really know, rather than the people who are picking it up as they go, in charge of keeping the lights on.

Carbon Dioxide | Regulation | Renewable Energy | Utilities

A Provisional Winner of an Offshore Wind Lease is Announced and that Means the Goal Line is Still Far Off

August 24, 2014 20:23
by J. Wylie Donald
Offshore wind took another small step forward last week when US Wind was announced as the provisional winner of the US Bureau of Ocean Energy Management's August 19 auction of development rights to nearly 80,000 acres off of Maryland.  The price?  $8.7 million. According to the BOEM press release, and other reports the few million to be ponied up by US Wind (or by its Italian parents, Renexia and Toto S.p.A.) is more than was bid for offshore leases in Virginia and Massachusetts and apparently is justified by the substantial financial carrot established by the O'Malley administration: $1.7 billion in construction subsidies. So what does it mean to be a provisional winner? It means the Attorney General and the FTC have 30 days to complete an antitrust review, following which US Wind can sign the lease, file the required financial assurance and pay the balance of the lease bid.  And then it's all downhill, right?  Well, not so fast.  First, a lot has been done to get to this point: November 2010 – BOEM issued Request for Interest to gauge industry’s interest in obtaining offshore Maryland commercial wind leases.  Commercial interests, for example, showed no interest in offshore Maine.  February 2012 - BOEM published a Call for Information and Nominations to solicit lease nominations and request public comments.February 3, 2012 - BOEM published in the Federal Register a Notice of Availability of an Environmental Assessment, and a Finding of No Significant Impact (FONSI) for “commercial wind lease issuance and site assessment activities on the Atlantic OCS offshore New Jersey, Delaware, Maryland, and Virginia.” June 2012 - BOEM published a Finding of No Historic Properties Affected.December 18, 2013 - BOEM published a Proposed Sale Notice and took comments.July 3, 2014 –BOEM  published a Final Sale Notice scheduling the August 19, 2014 sale.  These steps have completed the first two phases of BOEM’s program for outer continental shelf leasing:  (1) planning and analysis, (2) lease issuance.  So in a little over 3 and a half years an entity interested in pursuing an offshore wind project, is poised, but poised for what?  It is poised for phases 3 and 4, site assessment, and construction and operations, as BOEM further explains in its fact sheet.  There is an ominous word in the fact sheet, however:  “BOEM conducts environmental and technical reviews of SAP [Site Assessment Plan], eventually deciding to approve, approve with modification, or disapprove” (emphasis added).  A Site Assessment Plan “describes the activities (installation of meteorological towers and buoys) a lessee plans to perform for the assessment of the wind resources and ocean conditions of its commercial lease area.”  That BOEM will eventually complete its review, does not suggest alacrity, or even timeliness.  Once the SAP is approved, another plan must be submitted, the COP, the construction and operations plan. The same ominous term, "eventually," shows up as well in the description of the approval process of the COP. And then, only after the COP is approved, can construction begin. What struck us as we reviewed all of this is that at least four sessions of Congress will have passed from when BOEM’s 2010 Request for Interest emerged before a single joule of energy will make its way from some mid-Atlantic zephyr into a Maryland household.  And it would not surprise us if it were six or eight sessions.  In other words, success in offshore wind may depend nearly as much on the political winds, as the meteorological ones. 

Regulation | Renewable Energy | Wind Energy

Executory Forward SREC Contracts - What Exactly Does This Mean?

March 3, 2014 20:25
by J. Wylie Donald
What happens to the payment for a solar renewable energy credit (SREC) when the payor closes its doors?  Maryland citizens are finding out the hard way.  The promises made to some of them are turning up empty. Here are the details.  Greenspring Energy was a promising solar installation company.  As it describes itself:  "Greenspring Energy offers a unique combination of high-quality solar energy systems and the best energy saving products and services in the marketplace today. Created to help people effectively and permanently reduce their utility bills, Greenspring Energy’s products and services will allow you to: Reduce your utility bills with innovative energy saving products, Produce your own energy with solar systems, Take advantage of federal, state, and local incentives to go solar, Increase the value of your property, Reduce your carbon footprint.”  It was a good business model. Following its founding in 2007, Inc. reports it had revenues of $10.5 million in 2010 and 40 employees the next year. Its website boasts 2011 Inc. 500.  Then something happened.   Jamie Smith Hopkins of the Baltimore Sun reports that Greenspring Energy closed its doors at the end of January this year.  Its employees received rubber checks.  And its customers, promised recurring payments for the SRECs associated with the electricity generated from their solar equipment, were likewise burned.  This is not a particularly unexpected outcome.  Entities regularly enter bankruptcy and their creditors take a beating.  The solar industry is no different.  In fact, one website compiled a list of dozens of “Deceased Solar Companies” through early 2013.   But what is not getting a lot of play (or even any) is the effect of a bankruptcy of the SREC provider.  It is probably safe to say that most SREC transfers are the subject of executory contracts, long-term contracts where the provider agrees to transfer the SRECs accompanying its future electricity generation for some future consideration.  In bankruptcy, such contracts may be assumed, or not, at the discretion of the bankruptcy trustee.  11 U.S.C. § 365.   Except, however, where such contracts are forward contracts.  E.g., Master Solar REC Agreement  (NJ BPU 2014) (“Buyer and Seller each acknowledge that it is a “forward contract merchant” and that all transactions pursuant to this Master Agreement constitute “forward contracts” within the meaning of the United States Bankruptcy Code.”).  In that case, the trustee’s right to reject or assume the executory contract does not exist.  11 U.S.C. § 556.  So there is some complexity here.  And it gets worse.  The SREC does not exist but for the generation of 1 MWh of electricity, even if the SREC is sold separately from that electricity.  It is not difficult to conceive of a situation where the value of the contract for the sale of electricity is going in the opposite direction of the value of the SREC contract.  Suppose the bankruptcy trustee has the right to suspend electricity generation, even if it does not have the right to walk away from the SREC contract.  Does an SREC contract have any value if there is no generation? To our knowledge, SRECs (and RECs as well) have not been tested in the furnace of bankruptcy.  We will be interested in seeing how that turns out. 

Renewable Energy | Solar Energy | Utilities

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