RenewNewEngland.com

Long Term Contracts: RPS transition or prelude to a FIT?

All this talk of carbon cap and trade legislation has Bradford Plumer over at the Vine musing on why we need a national RPS:

. . . if adding wind or solar or biomass or hydropower isn't the most effective way of reducing emissions, at least in the short term, why saddle utilities with an existing requirement?

One answer, which Plumer finds moderately satisfying, is that the price of carbon has to get really high in order to make coal cheaper than most renewables, and that an RPS (Renewable Portfolio Standard) requirement is a way to ease the transition from carbon-intensive to low-carbon energy sources. (Check out this whip-smart powerpoint by Holmes Hummel which elaborates on this point)

Which is kind of funny, because we've been thinking lately about state policies in New England that are designed to ease the transition to . . . an RPS requirement. Every New England state but Vermont has passed legislation requiring that a percentage of its electricity come from renewable sources (Vermont has a non-binding portfolio goal). Since passage, the states have continued to tinker with the incentives needed to ensure there's sufficient renewable generation to satisfy their ever-increasing RPS requirements. 

One common method is to require distribution companies to enter into long term (10-20 year) power purchase agreements with RPS-eligible generators.  Some programs, like Connecticut's Project 150, specify a price premium. Though the programs are relatively small, the contracts provide much-needed certainty in financing renewable generation, since other incentives like the production tax credit and RECs require sale to a third party and delivery into the market.

April's been a busy month for these programs.  We blogged earlier about the April 22nd auction of RECs from the Massachusetts Green Power Partnership, a now-defunct program that entered into long-term purchase agreements for RECs from renewable generation developers.  Comprehensive proposals for the Maine Public Utilities Commission's RFP for Long Term Contracts for Capacity and Energy, with priority for renewable projects, were due April 7th.  That same week, the Rhode Island PUC and National Grid reached agreement in a dispute over the utility's failure to enter into long term contracts for renewable energy as part of its 2010 electricity supply plan.

But long term contracts? Fixed and subsidized prices?  Starting to sound a lot like a feed-in tariff, another well-established way to develop the renewable energy industries needed for the low-carbon energy transition.  Not surprisingly, states have begun to look into feed-in tariffs, the German solar and wind industry's secret weapon, which until recently was anathema to US regulators still haunted by PURPA (more on this in a future post). New England hasn't been immune, with legislators considering proposed feed-in tariffs this session in Vermont (pdf) and Maine.

Betting Big On Better Batteries

Last week, General Electric announced (pdf) a $69 million investment by GE and others in Watertown, MA battery company A123.  Some of those funds will go toward the production of car batteries for electric and plug-in hybrid cars, some will also be used to produce utility-scale batteries that can help balance the addition of variable, renewable generation to the power grid. 

Good news for batteries is good news for renewable energy, since cost-effective storage will make it easier to manage the variability issues that arise with the introduction of large amounts of renewable resources to the grid.  Utilities are increasingly turning to energy storage to manage their use of wind and solar power, and storage is a key component of the much-ballyhooed smart grid.

A123 makes advanced lithium batteries; a technology that has drawn a fair amount of attention in the press of late.  But advanced lithium batteries are just one of many potential grid-scale storage technologies.  The United States currently has about 22,000 MW  of storage in the grid today (about ¼ of the global total), the vast majority of which is pumped storage hydro.  Even older technologies are seeing innovation, with updated grid-scale versions of lead acid batteries and new twists on pumped storage hydro, like Riverbank Power’s plans to build underground pumped storage by digging huge reservoirs 2,000 feet beneath Wiscassett, Maine.

Given its focus on renewable energy, it’s not surprising that the American Reinvestment and Recovery Act (ARRA)  includes significant support for storage technologies, with grants for manufacturing advanced batteries (and training workers to make them) and tax credits and grants for potential customers (like renewable energy suppliers and purchasers of hybrid vehicles).  Most recently, the Department of Energy announced a $615 million draft Funding Opportunity Announcement for Smart Grid Demonstration Projects that include funding for “utility scale energy storage demonstrations.”

Upcoming New England REC auction: a preview for the nation?

Last week Evolution Markets and the  Massachusetts Technology Collaborative (MTC) announced plans to host its latest Renewable Energy Credit (REC) Auction on behalf of the Massachusets Renewable Energy Trust on April 22nd.  In addition to selling nearly 18,000 RECs to satisfy the Massachusetts, Rhode Island, and Connecticut renewable portfolio standards, the auction provides some of the only publicly available sources of price information on the New England REC market.  

RECs and renewable portfolio standards remain the primary method by which New England states encourage renewable energy development, so the results of these auctions offer a snapshot of how well they’re doing.  Last October’s auction, for example, was the first in which Massachusetts “new” RECs dropped significantly below the compliance price (the price retail suppliers can pay in lieu of purchasing RECs).  In that auction, 2008 Mass RECs sold at prices between $30 and $32.  At the MTC/Evolution auction a year earlier (pdf), new 2008 Mass RECs sold at an average price of $52.

The drop in prices is not unexpected: last fall the Mass DOER reported that in 2007 the supply of available RECs was greater than retail suppliers’ demand (another pdf) for the first time.  That, along with the steady increase in the number of bidders suggests that the market for Massachusetts RECs has begun to mature.  With Congress set to begin debating an energy bill that includes a national RPS next week, many will be watching these auctions to see what the future may hold.

Outer Continental Truce

As discussed in a previous post, FERC and the Minerals Management Service (MMS) have been working to resolve the long-standing conflict over jurisdiction over the Outer Continental Shelf (OCS).   Today, the Secretary of the Interior Salazar and FERC Chairman Wellinghoff announced the final agreement (pdf) between the two agencies. 

Under the agreement, MMS retains exclusive jurisdiction over non-hydrokinetic projects (like wind and solar installations) in the OCS, while FERC has jurisdiction over hydrokinetic generation.  MMS does retain exclusive jurisdiction to issue leases, easements and rights-of-way on the OCS, however:  FERC will no longer issue "preliminary permits" and will not license OCS hydrokinetic projects until the applicant has obtained a lease, easement or ROW from MMS.

A full copy of the Memorandum of Understanding between the two agencies can be found here (pdf). 

All Over the Map

With so many initiatives, programs and debates about renewable energy coming out of Washington, it can be hard to keep track of what it all means for a particular region, state or city.  A host of maps are cropping up on websites to help us envision what greening the economy might look like in our neighborhoods.

On the agency front, maps can be used to enhance transparency regarding funding or permitting.  The Department of Energy, for example, is mapping the allocation of stimulus funds to states and cities for energy efficiency.  According to the New York Times, this program is the first time federal funds have gone directly to cities (all cities of more than 35K can qualify).  Click here for an overview of the Energy Efficiency and Conservation Block Grants – and which cities in Maine have qualified.  Similarly, this FERC map helps you investigate projects in a particular region.

Meanwhile, a wide range of organizations are using maps to advocate for a particular project or policy development.  Back in February, Midwest ISO released an ambitious proposal (pdf) for a massive transmission system designed to bring Midwestern wind power to eastern load centers.  Among the striking aspects of the proposal is the map itself:

The Environmental Defense Fund, for its part, has taken a stab at mapping the “Green Economy” by state.  The EDF hopes mapping jobs in specific states – like New Hampshire – will help garner key votes for the carbon cap legislation the EDF supports.  The Natural Resources Defense Council, on the other hand, is using maps to try to keep renewable developers and conservationists on the same team.  NRDC has partnered with Google Earth to map the controversial locations in the west most in need of protection, which renewables project developers might want to avoid.  The impetus for the project was renewable energy developers – seeking to minimize permitting hassles - asking NRDC what sites they should steer clear of.

Of course, the resources themselves are also being mapped.   The National Renewable Energy Laboratory offers a wide range of renewable energy resource maps, including the United States Atlas of Renewable Resources, on which you can zoom into a particular region and “layer” on the resources of interest, including biomass, solar, geothermal and wind.  There are also maps of particular resources, like the United States Department of Energy’s colorful interactive map of wind resources, nationally and by state.

 

FERC Goes Back At Backstop Authority

Last Thursday FERC filed a Request for Rehearing of the Fourth Circuit Court of Appeals’ February decision in Piedmont Environmental Council v. FERC, the latest round in its ongoing effort to pre-empt state siting authority for transmission lines. Many observers believe this authority is necessary to expand the electricity grid to accommodate the nation’s push for more energy from renewable sources.

 At issue in the case is FERC’s interpretation of § 216 of the Federal Power Act, added by § 1221 of the Energy Policy Act of 2005.  Section 216 grants the Department of Energy authority to designate National Interest Electric Transmission Corridors based on a triennial congestion study.  When a state has “withheld approval for more than 1 year after the filing of an application,” applicants for projects proposed within designated corridors may request FERC to exercise federal “backstop” siting authority. 

FERC’s Order implementing this section interpreted “withheld approval” to include a state’s denial of an application.  Two environmental groups, along with the New York Public Service Commission and the Minnesota Public Utilities Commission, filed petitions seeking review of the FERC rulemaking.  The Fourth Circuit’s ruling, issued February 18, rejected FERC’s interpretation of the statute.  The three-judge panel ruled that “the meaning of ‘withheld approval’ is plain: it means that action on a permit application has been held back continuously for more than one year.”

FERC’s rehearing request argues that the majority opinion failed to properly defer to the Commission’s judgment in interpreting ambiguous statutory language, as required under Chevron U.S.A. v. Natural Resources Defense Council.  The Request follows Judge Thaxler’s strong dissent in noting the importance of FERC’s authority to site transmission facilities to President Obama’s goal of doubling the nation’s supply of renewable energy.  Requests for Rehearing are rarely granted, so expect the Commission to lobby for broader authority as a new energy bill moves through Congress in the months to come.

Upcoming CLE: Renewables in Transition

Pierce Atwood's Renewable Energy Group will host an American Bar Association webinar on April 15, 2009 in its Portland ME, Portsmouth NH and Boston MA offices.  Entitled Renewables in the Transition to the Modern Energy Economy: How It Will Affect Today's Legislative Issues, the program's distinguished panel will explore how the Modern Energy Economy will be shaped by these core trends:

1. Incorporation of Social Costs into Energy Economics (i.e. environmental markets)
2. Regionalism, Federalism, and Energy

   Independence

3. Globalization, both waxing and waning
4. Capital Markets Restructuring and what the implications are for the development of renewables.

This session has been approved for 1.5 Maine CLE credits.

To register to attend in Portland or Boston, click here.  To register to attend in Portsmouth, please contact Amber Elliott at aelliott@pierceatwood.com. 

When Does A Permit Mean Squat?

Lately, the announced resolution of the overlapping claims by FERC and the MMS to jurisdiction over the permitting of offshore wind projects has been much in the news.  The dispute breaks down like this: EPAct 2005 gave the Department of Interior’s Minerals Management Service (MMS) the status of lead federal regulator over offshore renewable energy projects, but under the Federal Power Act, FERC is responsible for licensing most hydro projects.  Without clarity, many were concerned that development of offshore renewable energy resources would be brought to a standstill.

Everyone’s pleased that this dispute appears to be resolved, but that doesn't mean ocean renewables are out of the woods yet.  Earlier this month a group of lawmakers, including Senator Collins of Maine and Senators Whitehouse and Reed of Rhode Island, wrote (pdf) to their former colleague – now Secretary of the Interior – Ken Salazar, on a related problem: the risk of developers taking advantage of the regulatory uncertainty to stake claim to large swaths of ocean under competing regulatory schemes. Comparing this problem to the cybersquatting of the “early days of the internet”, the lawmakers implored Secretary Salazar to develop a workable plan for offshore developers as fast as possible.  For those who take a somewhat longer view, try this analogy:  the Outer Continental Shelf is the new Wild West!

But at least one alleged squatter, Grays Harbor, strikes a more pragmatic note than might be expected of an outlaw slinging six-shooters or ill-gotten domain names.  As Grays Harbor describes its decision to seek permits from FERC: when one regulator (MMS) doesn't have a permitting process, you seek a permit from the regulator (FERC) who does.

Whatever the intent of Grays Harbor in obtaining permits from FERC, at least there’s transparency: all Preliminary Hydrokinetic Permits issued by FERC are available on its website. 

No doubt cybersquatting is a powerful cultural reference, but perhaps a better analog here would be the debate over the official Maine State Tartan.  As with permits for offshore hydro projects, for Tartans claiming to represent the State of Maine there are multiple places to register: the International Tartan Index of the Scottish Tartan Authority, the Scottish Tartans World Register of the Scottish Tartans Society, and the United States Copyright Office.

Hopefully these conflicts between the offshore permitting processes will soon be resolved.  For its part, MMS has announced four stakeholder meetings (pdf) to develop a “comprehensive plan for conventional and renewable energy resources of the [Outer Continental Shelf]”.  If we learn of any opportunity to submit public comment on the selection of an official Maine State Tartan, we’ll be sure to post that information here. 

There's Something in the Water

The Global Marine Renewables Conference is just two weeks away:  April 15-16 in Washington, DC.  Among the distinguished presenters at the conference will be Pierce Atwood's own Lib Butler.    Lib's a great advocate of public-private collaboration and will be moderating a panel on "Perspectives of the NGO Community."  A full agenda for the conference is available here.