RenewNewEngland.com

Smart Grid Update

The first half of 2009 has been a wild ride for the smart grid, as this wonky electric industry dream has gone mainstream, complete with a presidential shout-out in a major economic speech and a super bowl commercial. Last week brought a slew of smart grid news.

On May 18, networking giant Cisco announced plans to enter the smart grid infrastructure market, which it expects to grow to over $20 billion a year within the next five years.

That same day, the Department of Energy announced that it would modify its plans to distribute the $4.5 billion in smart grid stimulus funds, by raising the cap on individual investment grants from $20 million to $200 million, and for demonstration projects from $40 million to $100 million.  Industry players had argued that the previous caps weren't large enough to support large scale end-to-end deployments. The final guidelines are expected to be released June 17.

In the same announcement, NIST released 16 smart grid interoperability standards, the product of the first Smart Grid Interoperability Conference held April 28th and 29th.  These standards, mostly governing cybersecurity and home area networks, were the low-hanging fruit of what promises to be a contentious standards-development process.  That work continued at the second workshop last week--PG&E's Next100 blog has a good description of what these workshops involve, and Katie Fehrenbacher at Earth2Tech has a rundown on the accelerated timeline for smart grid standards development.  Title 13 of the 2007 Energy Independence and Security Act, which laid out the legislative framework for this process, calls for FERC to adopt these standards in a rulemaking once the NIST process has developed "sufficient consensus."  If you want an inside glimpse of the process, check out the standards conference's wiki.

The day after the DOE/NIST announcement, FERC requested supplemental comments (pdf) on its Smart Grid Policy Statement--initial comments were due May 2nd--to address steps the Commission might take in assisting utilities applying for DOE Smart Grid funds.  Noting that the DOE's draft Funding Opportunity Announcement calls for applicants to identify and confirm funding sources for proposed projects, the Commission seeks input "how it should address requests for rate recovery that may be necessary for public utilities to qualify for awards," and whether a conditional approval may be useful. Comments on that Notice are due June 2nd.

Welcome to renewNewEngland!

On behalf of the Energy and Renewables Teams at Pierce Atwood LLP we're excited to welcome you to the latest addition to the Pierce Atwood stable of blogs, on renewable energy policies and projects in New England.  Our posts will highlight key developments in the region, and explore how state and federal policies impact the development of renewable energy in the New England states. 

We'll draw on the experience of the attorneys in Pierce Atwood’s renewable energy practice, who are active in all aspects of the renewable energy sector throughout the United States and abroad. We have assisted developers with securing regulatory authorizations for large scale wind, hydro, biomass/biogas and co-generation facilities, as well as emergent tidal power development projects along the coast of Maine.  With offices in Washington, DC, New Hampshire, Massachusetts and Rhode Island, we benefit from our principal location in Maine, a state with a long history of hydro and biomass development, which is also recognized for its vast wind and tidal power potential.  We have advised, among many others, companies developing cutting edge tidal power generation technology designed to harness the surging tides along the coast of Maine, and European and African governments on the development of feed-in tariffs and green trading mechanisms.

We've had a few weeks to kick the tires, so check out our earlier posts to get a sense of what we're about. Look for our posts twice a week, for now, but if you need more, check out our link feed, to track the renewable energy news we're following.  The information posted here does not constitute legal advice (we're lawyers; we can't resist disclaimers), but it does reflect our keen interest in the complex and important developments taking place in the renewable energy sector.

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Renewable Energy Project Finance Seminar

Pierce Atwood is proud to be co-sponsoring a half-day seminar in Boston on June 11, focusing on Renewable Energy Project Finance.  William Hewitt and John Gulliver of Pierce Atwood, as well as other renewables experts from the private and public sectors throughout New England, will provide their insights on opportunities and strategies for getting renewable energy projects financed.  Please join us! 

Location
University of Massachusetts Club
225 Franklin Street
Boston, MA 02110

Date: Thursday, June 11, 2009
Time: 8:00 AM - 12:00 PM

RSVP to this event

Biofuel In Bloom

The path ahead for biofuels is not entirely clear.  Real-world challenges include their need for infrastructure and the “blend wall” – there’s only so much biofuel that can be blended into petroleum before a car’s warranty is voided.

The industry faces significant regulatory challenges, too:  rules recently proposed by EPA reflect the regulator’s concern about the environmental impact of indirect land use.  The impact on biofuels from certain stock like soybeans could be particularly detrimental.

So perhaps it is no wonder that the mood in the biofuels industry is low.

One biofuel that can clear these regulatory hurdles is algal.  (After all, biofuel from algae can keep a commercial jet in the air.)  The land-use concerns that hound biofuels based on crops like soybean and corn don’t apply to algae.  And there is some funding available specifically for algae projects: this summer, DOE will issue a funding opportunity announcement for several biomass projects, including algal biofuels; an international algal biofuel project competition has also recently been announced.  These may be some of the reasons the National Renewable Energy Laboratory (NREL) reports a huge resurgence of interest in algae-derived biodiesel.  Still, algal biofuel is not yet close to being economically competitive with petroleum as one Massachusetts-based company recently learned the hard way:  GreenFuel has recently confirmed it is closing down due to lack of funding.  It may be that the biggest test for algae-based biofuel is not regulatory, but finding a way across what investors call the “Valley of Death” that lies between pilot and commercial viability. 

Know Your Neighbors: The Lower Churchill Project

Last week ten eastern governors (including the governor of every New England state except Connecticut) sent a letter (pdf) to Congress criticizing current legislative proposals regarding transmission.  The governors noted that the current proposals

would designate national corridors for transmission of electricity from the Midwest to the East Coast, with the costs for that transmission allocated to all customers. While we support the development of wind resources for the United States wherever they exist, this ratepayer-funded revenue guarantee for land-based wind and other generation resources in the Great Plains would have significant negative consequences for our region

According to the governors, the current proposals would hinder the development of offshore and onshore wind and other renewable sources in the northeast by subsidizing competing onshore generation in the Midwest. They advocate a regional approach to transmission planning that doesn't favor one region's resources over another.

The letter prompted us to start what we hope will be a continuing feature here, profiling renewable energy projects in northeastern Canada.  After all, if we're going to contemplate a transmission superhighway to bring wind power from the Dakotas, we may as well look to our (considerably closer) neighbors to the North.  Our very own Tom Welch made this point earlier this year in an article in Law360 (subscription req), arguing that with proper stewardship, regional energy self-sufficiency could be a reality.

With all the excitement around wind, tidal and wave energy, there are still plans to construct large scale hydro-electric facilities on the Lower Churchill Project, on the Churchill River in Labrador.  If you're not familiar with the Churchill River, perhaps a map will help:

According to project sponsor Nalcor Energy (formerly Newfoundland and Labrador Hydro), the Lower Churchill Project's sites at Gull Island and Muskrat Falls represent "two of the best undeveloped hydro sites in North America" with a total potential capacity of between 2,800 and 3,000 MW.  Even at that size, the Lower Churchill project would still not be the largest hydro facility on the Churchill River: that title belongs to the 5,428 MW Churchill Falls facility, 100 miles to the west.  The bulk of the energy from that facility is committed to Hydro Quebec through 2041 under a much-reviled power purchase agreement signed in 1969 (at a price of between $2 and $2.50 a MWh!). 

The Lower Churchill project is currently undergoing environmental review: documents filed in that proceeding optimistically suggest that the project could begin construction in 2009 and be completed by 2018, but much work remains before construction can begin. Not suprisingly given its remote location, one major holdup is transmission lines to get the power out (the energy generated by the facility would far exceed the electricity needs of Labrador). The easiest solution would be an overland route linking the facility to the existing transmission link from Churchill Falls, but Labrador politicians are resistant to any plan that would make the new facility reliant on Hydro Quebec for access to markets.  A number of undersea cables have been proposed that would link the project to the New England markets by island-hopping via some combination of Labrador, Prince Edward Island, Nova Scotia and New Brunswick. The plans are nothing if not ambitious: in 2007, Newfoundland and Labrador signed an MOU with Rhode Island to study a long term power purchase agreement for Lower Churchill power.

Afforestation for the Trees

In honor of the opening of the movie, Earth, Disney has partnered with The Nature Conservancy to plant 2.7 million trees (pdf) in Brazil (one tree for each ticket sold on the opening day).  In honor of Arbor Day, the ABA Section of Environment, Energy and Resources is planting 1 million in the US.  In honor of the ongoing debate over the inclusion of offsets in proposed federal carbon legislation, we’re wondering whether those 3.7 million new trees could count as carbon offsets under RGGI or voluntary markets today. 

Despite their ambitious scope, both projects would likely fail to qualify as RGGI offsets.  The Brazilian project would likely fail due to RGGI’s project location requirement:  under the RGGI model rule (pdf), to be certified as offsets, “afforestation projects” must be located within the RGGI member state or in a US state or jurisdiction in which the regulator has agreed to comply with RGGI’s standards.  Even if every tree was rooted in a suitable jurisdiction, the ABA program would also likely fail to qualify due to RGGI’s easement requirement:  RGGI standards require a permanent conservation easement on the land on which the afforestation project is located. 

Disney’s project may fit the typical mold of a reforestation offset, at least as defined by major voluntary offset markets and standards: replanting land, often in remote and ecologically important areas, using diverse native species where possible, and using prescribed methodology to calculate the carbon captured.  For example, see this Costa Rican Forest Offset Case Study (pdf) from the Chicago Climate Exchange.  The Atlantic Forest, where Disney will plant its trees, is home to 60% of Brazil’s endangered species and provides clean drinking water to 120 million people, but only 7% of the original forest remains.

But urban trees, like those included in the ABA project, would not be certified under most voluntary market rules, even though urban trees provide special benefits beyond carbon offsets that a remote rainforest tree can’t.  As one advocacy group notes, “one tree that shades your home or office is more efficient in saving fossil fuels and carbon emissions, than 15 trees in the forest.”   Another study (pdf) have found that “on a per-tree basis, energy simulations from 12 U.S. cities found that annual energy savings for cooling from a well-placed 25 ft tall deciduous tree ranged from 100 to 400 kWh (10 to 15%), and peak demand savings ranged from 0.3 to 0.6 kW (8 to 10%).”

The California Climate Action Registry is the only voluntary market we know of providing offsets for urban tree projects, having added urban forest offsets in August 2008.  Using the Urban Forest Project Reporting Protocol (pdf) developed by the US Forest Service and other stakeholders, the Climate Action Registry will certify qualifying projects developed by – and contained within the boundaries of  – California municipalities, educational campuses and utilities.  Other organizations, like tree-planting non-profits, may participate (pdf) in an offset project by partnering by a municipality, educational institution, or utility.