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Maine Narrows Offshore Wind Sites to Four

After a series of public information workshops in September along the coast of Maine, the Maine Department of Conservation announced (pdf) on Tuesday that it has narrowed the potential sites for an offshore wind energy demonstration site from seven to four sites.  The four sites include areas off Boon Island, Damariscove Island, Monhegan Island and the town of Cutler.  This site will be used by the University of Maine national offshore wind demonstration project, recently awarded an $8 Million grant from the Department of Energy, to test deepwater wind turbine technology. The State explained that the consultation process has allowed the State to choose the areas with the fewest impacts on existing fisheries and wildlife.

The Department of Conservation will be accepting comments until November 30th.  Legislation passed this June requires the Department to select a site by December 15th, 2009.

DOE Grant to Maine Consortium to Study Offshore Wind

DOE today announced an investment of up to $8M in the University of Maine’s Deepwater Offshore Wind Test Site and related educational initiatives.  The award was one of three competitive grants made to university-led consortia that will support university research and development programs to improve wind turbine performance and reliability and undergraduate and graduate educational opportunities in cutting-edge wind technologies.  The University of Maine is the only grant recipient that will research and develop deepwater wind technologies.

The University of Maine consortium includes Norway’s StatoilHydro, which recently hosted Maine’s Governor Baldacci and a Maine trade mission (including Pierce Atwood’s John Gulliver) to Europe to discuss renewable energy opportunities.  (For more on the trade mission, see our previous post.)  Trade mission members were invited to visit StatoilHydro's 2.3-megawatt Hywind turbine, the only offshore, deep-water, power-generating wind turbine in the world.  A more detailed account of the trade mission is here.  After seeing the Hywind turbine, Governor Baldacci and University of Maine’s Prof. Habib Dagher signed a letter of intent with StatoilHydro to explore whether this deepwater wind technology could be put to work in Maine.  The DOE grant marks a great step forward for this public-private partnership. 

Maine Issues RFP for Efficiency and Conservation Grants

After months of anticipation, on Friday, Maine’s Energy and Carbon Savings Trust and Efficiency Maine announced two RFPs for Energy Efficiency and Conservation Projects.  Together, the RFPs offer over $15 million in funding for efficiency and conservation projects by businesses and municipalities.

Competitive Grants for Large Energy Efficiency and Conservation Projects

The first RFP offers grants for “large energy efficiency and conservation projects.”  These grants will be funded by a combination of approximately $6 million in ARRA funds administered by the MPUC and designated for “job creation, energy efficiency, renewable energy, weatherization, and workforce development” and $3 million in RGGI auction funds administered by the Energy and Carbon Savings Trust.  ARRA funds must be spent or committed within two years.

Pursuant to a competitive grant program, Efficiency Maine and the Trust are seeking applications for large energy efficiency and conservation projects with the primary goals of reducing kilowatt hour (kWh) consumption, encouraging alternative and renewable energy, and decreasing greenhouse gas (GHG) emissions.  Grant awards will range from $100,000 to $1 million and will be used to support eligible commercial and industrial projects that will save or create jobs, achieve energy savings and GHG reductions, and are “project-ready.”  Applications for eligible projects that accomplish these goals will be evaluated on the criteria of cost effectiveness, management and resource adequacy and readiness, and economic impact.

To be eligible, projects must be at a single commercial or industrial location and at least 30 percent of the total project cost must come from private funding, including financing.  Examples of eligible projects include energy improvements for industrial and commercial processes and equipment; compressed air systems; boilers and steam systems including biomass fired; combined heat and power systems in various settings; waste-heat recovery; and solar and wind systems.  Ineligible projects include those mandated by law or required by standard industry practice, feasibility studies and projects where funds will be used at multiple locations.

Energy Efficiency and Conservation Block Grants

The second RFP offers more than $5.7 million in grants for Municipal and County energy efficiency and conservation projects, including renewable energy projects, from units of local and county government.  This program is funded by the ARRA’s Federal Energy Efficiency and Conservation Block Grant (EECBG) program.  Maine’s ten largest cities received formula grants earlier this year (see our earlier post).  Now, Maine’s remaining communities and counties may obtain support for energy use planning, action-ready projects that previously could not be funded, and/or the initial stages of projects promising long-term energy savings and emissions reductions.  This opportunity consists of two alternatives, one for “Custom Projects” and another for standardized or “Template” projects.  Custom project grants, which assist communities to bring planned projects to realization, may be up to $85,000 each (or up to $500,000 regionally) and are awarded on a competitive basis; template project grants, which assist communities with planning and/or energy use analysis, may be up to $10,000, as funds allow.  Efficiency Maine expects that a second round of these RFPs will be issued in early 2010.

Proposals for both RFPs must be submitted by 2:00 pm on November 4, 2009.

If you would like more information about the program, please contact John Gulliver, Bill Hewitt or Patty Aho. 

New England Governors Release Renewable Energy Blueprint

On Tuesday, the New England Governors' Conference released its Renewable Energy Blueprint. The Blueprint is based in part on a draft study conducted by ISO New England at the Governors' request, the New England 2030 Power System Study (pdf),which explored a range of different renewable energy development scenarios for New England.  The Governors' Blueprint is intended to identify strategies to "help bring new renewable resources to market within the current market structure." To that end, it identifies three main opportunities for New England states:

1) Synchronize states' power procurement and contracts -  Each New England state has authority to procure renewable energy, capacity, energy and RECs, usually in the form of long term contracts with generators selected through a competitive solicitation process.  The blueprint reviews these laws, and proposes synchronizing these approaches to obtain the most cost-effective renewable resources.  This makes some sense: the wind developments needed to meet the domestic wind generation totals envisioned in the ISO-NE study (from 2,000 to 12,000 MW) dramatically exceed the scale of any single state's existing procurement program.  Given the costs and uncertainty involved, offshore wind in particular (the ISO-NE study considers as much as 4,500 MW of offshore wind) will rely on state-mandated long term contracts in the foreseeable future. But state procurement authority is typically tied to in-state development of renewables:  coordinated procurement would not address states' interests in fostering their own in-state renewable energy industries.

2) Coordinate siting of interstate transmission facilities - The Blueprint offers an overview of state transmission siting laws, and explores the possibility of coordinating these processes to facilitate building large interstate transmission lines.  Right now, there aren't any existing plans to build any such lines in New England (at least onshore: there are a number of proposals to link Maine and Massachusetts underwater), but the ISO Report states the need for a lot of new interstate transmission lines to support New England's renewable energy goals.  For example, the 12,000 MW wind case contemplates "a new three-subloop, dual circuit overhead 500 kV or 765 kV backbone transmission system overlaying most of the interior of New England."  The cases involving expanding interconnections with Quebec and New Brunswick propose two lengthy +/- 450 kV HVDC lines, including a 400 mile line stretching from the Maine-New Brunswick border to Millbury, Massachusetts.

3) Strengthen federal support for state and regional renewable development - This last category is more a hodge podge of things that New England would like the federal government to do, including prioritizing and expediting federal permitting for off-shore wind projects in state and federal waters, and providing additional funding for development of renewable resources and transmission infrastructure.  Most important, though is a general plea that the federal government:

Respect regional system planning processes and consider the results of regional transmission system plans and renewable resource scenario analysis as guidance in connection with interconnection wide analyses and any federal financial support for renewable energy infrastructure development

This hints at what's really driving the blueprint: New England governors' concerns about federal intervention forcing New England ratepayers to contribute to massive transmission projects needed to bring the huge amounts of wind planned in the Midwest to New England markets.  (For an example of what this might look like, see the Joint Coordinated System Plan (pdf), released by MISO, PJM and other regional entities in February, or our previous post on the subject.) In addition to the costs, those projects, backed by federal subsidies, could crowd out renewable energy investment in New England.  The Blueprint, along with the ISO-NE study, represent New England's latest efforts to show that New England can meet its renewable energy goals with intra-regional solutions.

The Straw Proposal: Offshore Wind and Tidal Power Seek Surer Footing on Maine’s Submerged Lands

Maine’s Ocean Energy Task Force (OETF) Regulatory and Permitting Subcommittee met this Tuesday, September 8th, to discuss a Straw Proposal for a set of recommendations to the full OETF.  The Subcommittee chair, State Planning Office (SPO) Director of Coastal Zone Management Planning, Kathleen Leyden, and SPO staffer Todd Burroughs reviewed the proposal with Regulatory Subcommittee members, accepting comments from members of the public. The Subcommittee meeting minutes will be posted at its page on the OETF website.

The Straw Proposal would establish that development of renewable ocean energy resources, including tidal and wind power, is an authorized use of state submerged lands.  But some commenters noted that the proposed language requiring "due consideration" and even compensation to be provided by renewable developments for other existing commercial uses, such as fishing, gives commercial fishing a superior right to use of submerged lands, rather than putting renewable resource uses on equal footing with fishing interests.  It was noted that the Subcommittee Recommendation to the OETF should include the option that renewable energy projects be recognized as an appropriate use of submerged lands, equal (or even higher) in priority to other uses, given the urgency of the need for renewable energy.

Tidal developers also pointed out that the straw proposal is focused exclusively on wind, and has not taken into account the unique aspects of tidal power projects.  DEP and SPO staff indicated that they believe that the Maine Waterways Act is sufficient to regulate tidal power, and that only the submerged lands, tax, and federal state coordination provisions of this proposal would apply to tidal power.  Members of the public were encouraged to provide more detailed commentary on this point, especially the unique aspects of the FERC Pilot Project process used for tidal projects.

The Subcommittee has been asked to complete its recommendation on legislation to the OETF by September 15, 2009.

For more information regarding the Straw Proposal or OETF, please contact Lib Butler, Sarah Verville or Chip Ahrens. 

Section 1603 Cash Grants: Wind Wins

Having opened the application process for so-called Section 1603 Cash Grants just 33 days earlier, the Treasury Department yesterday announced the first round of grant recipients.  Among the twelve recipients are two New England projects:  Solaire Development, LLC of Danbury, CT (awarded more than $2 million) and Evergreen Wind Power V, LLC's Stetson Wind of Danforth, ME (awarded just over $40 million).  All told, the Treasury today issued about $500 million in grants in lieu of tax credits under Section 1603 of the American Recovery and Reinvestment Act, which provides cash grants of 30% of the cost of eligible property once a facility is placed in service (we described these grants in greater detail in a previous post).  The bulk of today's grants were awarded to wind projects (Solaire was one of two solar recipients).

In announcing these grants, Treasury took care to note that this first round was awarded in about half the time provided under the statute (60 days).  (Those who have been frustrated with the slow disbursement of stimulus dollars take note:  these grants were made 27 days ahead of schedule!)  The Treasury Department expects to announce more grants in the coming weeks. 

FERC and Maine Sign MOU on Ocean Tidal Power

Recognizing Maine’s “vast, untapped renewable ocean energy resources, including tidal power resources” and the state’s potential to become “an international proving ground for testing promising new technologies in state waters”, FERC Chairman Jon Wellinghoff today signed a Memorandum of Understanding (MOU (pdf)) with the State of Maine, providing that the federal and state regulators will coordinate – and streamline – the permitting process for tidal energy projects.

The MOU is the first of its kind on the East Coast (Washington signed a similar MOU (pdf) in June, 2009; Oregon signed one (pdf) in March, 2008); and was recommended (pdf) by the tidal power subcommittee of Maine’s Ocean Energy Task Force (OETF) earlier this year, which noted that a lack of coordination between the state and FERC permitting processes can limit the ability to move projects forward.

The MOU agreement will reinforce the close working relationship between federal and state regulators needed to ensure timely consideration of pilot project license and commercial project license applications.  Under the agreement, for instance, FERC and Maine agree that:

• Each will notify the other when they become aware of a potential applicant seeking a preliminary permit, project pilot license, or other license to develop a hydrokinetic tidal energy project;
• Maine will take action on a demonstration hydrokinetic tidal energy project’s application for a state permit and water quality certification within 60 days of the state’s acceptance of the application; and
• Both will designate management contacts to work through any procedural issues that arise in the review of a particular proposed tidal energy project.

In addition to these provisions designed to streamline the permit review process, the MOU also seeks to coordinate the substantive review of pilot projects and support the development of tidal energy by sharing critical data gathered from these innovative projects.  Maine commits to support FERC’s establishment of a permit process to allow short-term hydrokinetic tidal energy projects and FERC agrees to review permits with a view to ensure projects are compatible with Maine comprehensive plans and offshore wind energy test areas, as defined by new Maine law (pdf), which creates a streamlined DEP permit process for tidal energy demonstration projects.  Recognizing that gathering information regarding the economic and technical feasibility of new ocean technologies can be a stumbling block for their development, Maine and FERC also agree that any required pre- and post-licensing studies for pilot projects should be reasonable in scope and that any data gathered on pilot projects should be shared.

The MOU will promote the close working relationship between federal and state regulators needed to ensure timely consideration of pilot project license and commercial project license applications.  This is good news for the tidal power development community, and addresses concerns like those raised by the OETF, that an uncoordinated approach to permitting can lead to the failure of projects - like Finavera Renewables' (pdf) proposed tidal project in Makah Bay, WA - to make it past the planning stage.  The new framework will provide an efficient and predictable permitting process that will better enable the United States – and specifically the State of Maine – to compete effectively in the global race to develop tidal power technology and power projects.

Legislative FITness Test

On June 26, Maine's Governor Baldacci ceremonially signed LD 1075, “An Act to Promote Community-based Energy Pilot Program.”  The new law establishes a six-year pilot program to encourage the development of community-based renewable energy in Maine, defined as a majority locally-owned facility that generates electricity from an eligible renewable resource.  The pilot program has an overall program cap of 50 MW, 10 MW of which is reserved at the outset for projects that have a generating capacity under 100 kW or are located in the service territory of a consumer-owned utility.  To be eligible for the program, renewable energy projects must (1) have a generating capacity of 10 MW or less, (2) secure a resolution of support from their local community (projects with a capacity of less than 100 kW are exempt from this requirement), (3) be connected to the grid, and (4) have an in-service date of September 1, 2009 or later.

Under the pilot, participating renewable energy projects can choose one of two incentives:  a long-term contract or a 150% multiplier on the value of renewable energy credits (RECs) for electricity generated.  For the long-term contract option, the Public Utilities Commission can direct investor-owned utilities to enter into long-term contracts (consumer-owned utilities to enter into long-term contracts at their option).  These contracts can be up to 20 years in duration, and the Commission is directed to contain costs by ensuring that the average price per kWh in each contract year does not exceed 10 cents.

According to Maine Rural Partners (pdf), a supporter of the bill, the law creates a economically feasible “green power option” for consumers.  But another supporter of the bill, the Midcoast Green Collaborative, points out that while the pilot program “includes key elements of the feed-in tariff concept – long term contracting on the basis of predetermined rates for small power generators that use renewable energy as defined in Maine law”, what started out as a feed-in tariff (FIT) eventually became, as passed, “only a very modest incentive effect at best.”

Concerns about long-term contracts and mandatory rates, or, as Vermont’s governor called them “statutory standard offer rates”, ordinarily make it very difficult for robust FITs to become state or federal law.  (One notable exception is the Vermont FIT, featured in an earlier post.)  In fact, concerns about costs were among those that led to the modification of LD 1450 (pdf), the original FIT proposed in Maine, into LD 1075.  While FIT advocates argue such concerns lack merit, some solar industry leaders appear to have a more pragmatic response to the political challenge, and are leaving the quest for FITs for another day.

Maine PUC: Maine will stay in ISO-New England

Last Tuesday, the Maine Public Utilities Commission issued its final order in Docket No. 2008-156, finding that Maine’s transmission and distribution utilities, Central Maine Power (CMP)* and Bangor Hydro, should automatically renew their participation agreement with ISO New England (ISO-NE).  The ruling closes a two-year Commission investigation into whether Maine utilities’ continued participation in the regional transmission organization was in the interests of Maine’s electricity consumers.

The proceeding was a fascinating case study with some important lessons for the rest of  the country (The Ohio legislature recently created a Federal Energy Advocate in part to evaluate that state's continued participation in MISO).  Throughout the proceeding, the Maine Commission grappled with the state's diminished control over its own energy policy as part of a regional market, and the need to address transmission planning on regional basis.  The Commission expressed concerns with ISO-NE’s transmission cost allocation, governance, and cost containment efforts: in the final Order the Commission vowed to continue efforts for reform in these areas within the ISO.

Ultimately, none of the proposed alternatives proved viable or cost-effective.  Instead, the Commission determined that continued ISO participation was the best option.  The Commission's Order rules out Maine leaving ISO-NE, which is good news for the development of renewable energy, particularly wind, in Maine.  Some of the proposed alternatives lacked a day-2 market, which would have required wind generators to submit day ahead balanced schedules, and there were serious questions about an independent or joint Maine-New Brunswick ISA's ability to balance the combined 2,800 MW (1,300 MW in Maine) of proposed wind in the two areas.  Reliable access to the ISO-NE markets for Maine renewables will benefit all of New England.  Kudos to the Maine PUC for making the right decision.

National developments may have trumped Maine's concern for its own autonomy. The Order contains something of a call to arms, reflecting the growing concern within New England that federal electricity policy is biased toward midwestern wind and the giant transmission projects needed to bring that generation to market:

In order to fulfill our energy objectives, neither Maine nor our sister States in New England can act alone.  We in New England cannot ignore the reality that there are federal moves afoot to bring vast quantities of Midwest wind to the east coast through the construction of high voltage transmission that Maine will be required to help pay for.  A concerted and cohesive regional response by New England and its neighbors . . . will be required to thwart efforts at the national level to impose the costs of Midwest wind on New England ratepayers unilaterally.

Maine, at least for now, sees the importance of participating with rest of New England to respond to this challenge.  It remains to be seen whether New England will take up the PUC's call, though early signs are promising. 

* Pierce Atwood represented CMP throughout this proceeding.

"An Act Regarding Maine's Energy Future" is Law

Responding to volatility in home heating energy prices and anticipating the passage of the American Reinvestment and Recovery Act, in January, 2009 the Legislature established (pdf) the Joint Select Committee on Maine’s Energy Future to undertake a holistic assessment of diverse energy issues.  In an effort to design a comprehensive process by which energy-related funds are allocated by the State, the 17-member Committee conducted a review of Maine's current approach to energy planning and received testimony from an array of stakeholders.

Today, Governor Baldacci signed the resulting legislation, LD 1485 (pdf), An Act Regarding Maine's Energy Future, into law.  The new law is the culmination of six months of effort by the Select Committee; highlights include:

• Consolidation of various conservation and energy efficiency programs, including electrical, natural gas, and greenhouse gas, into a newly established Efficiency Maine Trust, which will oversee the creation, planning and implementation of energy efficiency and alternative energy resource programs;
• Articulation of efficiency, emissions and consumptions goals intended to reduce Maine's usage of foreign fuels;
• Creation of the Maine Energy, Housing and Economic Recovery Program to be run by the Maine State Housing Authority, which establishes funding sources for affordable housing;
• Establishment of a legislative Commission to study efficiency infrastructure, especially energy corridors, cables, pipelines, and other structures, with Commission recommendations due by December 2, 2009; and
• Placement of a moratorium until mid-2010 on the final permitting of certain energy corridors and facilities, pending any legislative recommendations.

The new law is effective immediately in order to allow the Governor to start the appointment process for the members of the newly established nine-person Board which will oversee the new Trust.  The Trust in turn will commence its duties and activities starting July 1, 2010.

Several members of the Pierce Atwood Energy Practice Group were actively involved with the creation of the new law, and specific questions regarding LD 1485 should be directed to Pattie Aho.