Hydrokinetic energy projects in 2014

Wednesday, April 2, 2014

Hydrokinetic energy projects generate electricity from moving water, capturing the power embodied in tides, waves, and currents without the use of dams.  Hydrokinetic energy resources are estimated to have a tremendous power potential -- according to one U.S. Department of Energy study, approximately 1,420 terawatt-hours per year, or approximately one-third of the nation's total annual electricity usage.  The technologies required are relatively new, do not have decades of operational experience, and remain relatively expensive.  Nevertheless, federal records show growth in hydrokinetic project development.

The Federal Energy Regulatory Commission regulates most hydrokinetic energy projects under its hydropower jurisdiction pursuant to the Federal Power Act.  Project developers may seek preliminary permits granting the right to study a particular site and priority to apply for a project license. 

Relatively few projects have received licenses to date.  In 2012, the Commission issued a pilot project license for the Roosevelt Island Tidal Energy project in the East River near New York City.  Last month, the Commission issued a pilot project license to the Public Utility District No. 1 of Snohomish County for a 600 kilowatt tidal project in Puget Sound, Washington.

As of last month, six projects have been issued preliminary permits that remain in effect:
  • Ecosponsible, Inc.'s Niagara Community project, a 1.25 megawatt inland project proposed for the Niagara River in New York
  • Ecosponsible, Inc.'s Niagara Community #2 project, a similar 1.25 megawatt inland project proposed for the Niagara River in New York
  • Iguigig Village Council's Iguigig RISEC project, a 40 kilowatt inland project proposed for the Kvichak River in Alaska
  • The Town of Edgartown, Massachusetts's Muskeget Channel Tidal Energy project, a 4.94 megawatt project proposed for the Muskeget Channel off the island of Martha's Vineyard
  • Turnagain Arm Tidal Energy's Turnagain Arm Tidal project, a 240 megawatt tidal project proposed for Cook Inlet, Alaska
  • Resolute Marine Energy, Inc.'s Yakutat project, a 750 kilowatt wave project proposed in the Gulf of Alaska
 As of March, another 15 applications for preliminary permits were pending before the Commission.

EPA issues draft permits for carbon sequestration

Tuesday, April 1, 2014

The U.S. Environmental Protection Agency has issued the first draft permits for injecting and storing carbon dioxide in underground rock formations, which could advance carbon capture and sequestration efforts.

EPA promotes carbon capture and sequestration for its expected ability to reduce greenhouse gas emissions, while enabling low-carbon electricity generation from power plants.  The process entails capturing and compressing carbon emissions at their source, piping the gas to injection wells, and injecting the gas into geologically stable rock formations capable of holding the gas for long periods of time.

EPA's simplified schematic of deep geologic carbon sequestration, available from EPA at http://www.epa.gov/climatechange/ccs/.

Under the federal Safe Drinking Water Act, EPA regulates most injections of waste and other materials into the ground.  EPA has developed a series of programs to manage such injections, including a "Class VI" geologic sequestration program.  While oil producers have long injected carbon dioxide into their wells to enhance oil recovery, EPA has not previously issued any permits under its Class VI program.  This lack of Class VI activity is largely because carbon capture and sequestration in the U.S. remains in its infancy, but some industry observers have expressed concerns that EPA's regulatory process is too restrictive to allow the technology to flourish.  The record of permit applications shows some support for these concerns: for example, Christian County Generation, LLC of Taylorville, IL withdrew its applications for two Class VI sequestration wells for the Taylorville Energy Center on July 9, 2013, and Archer Daniels Midland's applications for Class VI permits for two injection wells to store carbon emissions from its Decatur, Illinois agricultural products and biofuel production facility have remained pending since 2011.

Carbon capture and sequestration's future may be brightening, as on March 31, 2014, EPA issued four draft Class VI permits to FutureGen Industrial Alliance, Inc. for its proposed FutureGen 2.0 project.  The Alliance is a non-profit organization whose membership includes major coal producers, coal users, and coal equipment suppliers, including Alpha Natural Resources, AngloAmerican, JoyGlobal Inc., Peabody Energy, and Xstrata Coal Pty. Limited.  The FutureGen 2.0 project is designed to capture over 90 percent of the carbon emissions from a 168 megawatt power plant in Meredosia, Illinois, and to inject them into four nearby wells for deep geologic sequestration.

EPA's draft permits now face a public hearing on May 7 and public comments through May 15.

Smart meters are safe, says Maine agency staff

Thursday, March 27, 2014

The staff of the Maine Public Utilities Commission has issued a report concluding that the use of "smart meters" -- advanced utility metering infrastructure capable of communicating wirelessly with the utility -- is a "safe, reasonable, and adequate utility service."

Smart meters and other new utility technologies offer the opportunity to cut ratepayer costs while enabling new and innovative services.  Building on the ubiquity of cell phones, the internet, and other devices that can communicate using radio frequency emissions, smart meters can provide utilities with real-time data on each customer's consumption of electricity.  This can eliminate the need for traditional meter readers, enable utilities to manage outages in real-time, and can open up opportunities for real-time pricing of electricity.  Many utilities have adopted smart meters and other so-called "advanced metering infrastructure", including Maine's largest electric utility Central Maine Power Co.

But some people are concerned about the safety of smart meters, and in particular with the health effects of the radio frequency emissions associated with the meters' communication system.  Utilities around the country have faced questions, and even legal challenges, over the safety of smart meters.  As CMP rolled out its smart meter program, the Maine Public Utilities Commission received a series of complaints and requests for investigation into whether CMP's advanced metering infrastructure program complied with Maine law requiring utilities to provide safe, reasonable, and adequate utility service.

After legal proceedings before the Commission and Maine's highest state court, in 2012, the Commission opened an investigation into "the health and safety issue related to CMP's installation of smart meter technology."  That investigation led to Tuesday's release of a Commission staff report (67-page PDF) summarizing the evidence it had collected and staff's conclusions.  Highlights from the report include the following findings:
  • The radio frequency (RF) emissions from CMP' s smart meters and other AMI components comply with duly promulgated federal safety regulations and other RF emission standards;
  • No state, federal, or Canadian regulatory body or health agency that has considered the health impacts of smart meters (including Maine 's Center for Disease Control and Prevention (Maine CDC)) has found smart meters to be unsafe;
  • The scientific evidence presented in this proceeding is inconclusive with respect to the human health impacts from low-level RF emissions generally;
  • There are no credible, peer-reviewed scientific studies in the record that demonstrate, or even purport to demonstrate, a direct human health risk specifically from smart meter RF emissions;
  • The studies that have been presented in the record to demonstrate the risk to human health from exposure to RF-emitting devices are based on exposure to substantially higher levels of RF emissions than smart meters;
  • The relative RF emission exposure from smart meters is significantly less than other commonly used RF-emitting electronic devices; and
  • CMP' s installation and operation of its smart meter system is consistent with federal and state energy policy and is a generally accepted utility practice throughout the country.
Based on these findings, the staff report concludes that "CMP's installation and operation of its smart meter system is consistent with its statutory obligation to furnish safe, reasonable and adequate facilities and service."  That said, the report also concurs with recommendations that continued research should be done on the impacts on human health from radio frequency emissions.

It now falls to the full Commission to take up the issue.  Will the Commissioners agree with their staff's findings and conclusion?

Biofuels lead growth in U.S. biomass energy

Monday, March 24, 2014

The use of energy from biomass resources in the United States grew more than 60% over the decade between 2002 and 2013 -- primarily in the form of increased use of biofuels like ethanol and biodiesel that are produced from biomass.

A fuel pump displays prices for gasoline blended with up to 10% ethanol.

According to the U.S. Energy Information Administration, biomass accounted for about half of all renewable energy consumed in 2013 and 5% of total U.S. energy consumed. The three primary sources of this biomass are wood and forest products byproducts, waste including municipal solid waste and landfill gas, and raw organic feedstocks like corn and soybean oil used to produce biofuels.

Of biomass energy resources, biofuels experienced the greatest growth over the last decade. From 2002 to 2013, biofuels created from biomass grew more than 500%, driven largely by increases in U.S. production of ethanol and biodiesel for blending as transportation fuels. These biofuels are typically produced from feedstocks such as agricultural crops and other plant material, animal byproducts, and recycled waste. For U.S. ethanol production, corn is the dominant feedstock, while biodiesel producers rely on soybean oil for just over half of feedstock needs and an array of biomass resources for the rest. Market demand for these biofuels comes in part from federal mandates such as the U.S. Environmental Protection Agency's Renewable Fuel Standard, which requires the blending of certain volumes of biofuels into gasoline and diesel.

Meanwhile, EIA data shows that consumption of wood and waste energy increased just 4% over the decade. About two-thirds of U.S. wood energy is consumed for industrial processes, while nearly all U.S. waste energy is consumed for electric generation or industrial processes.

If this trend continues, woody biomass and waste energy will continue to hold their positions in our portfolio of energy resources, while continued growth in the conversion of biomass into biofuels for transportation and other needs will increase biofuels' weighting in the nation's energy mix.  At the same time, debates continue over the cost and value of programs encouraging the growth of corn as a biofuel feedstock.  What does the future hold for biomass in the U.S.?

Snohomish tidal project wins FERC pilot license

Friday, March 21, 2014

Federal regulators have issued a pilot license for a proposed tidal energy project in Washington.

Tidal waters off the Maine coast.
Yesterday, the Federal Energy Regulatory Commission issued a 10-year pilot license to Public Utility District No. 1 of Snohomish County for the proposed Admiralty Inlet Pilot Tidal Project.  The 600-kilowatt hydrokinetic project, to be located in Puget Sound in the state of Washington, is designed as a temporary, experimental project to evaluate the commercial viability of tidal energy development in Puget Sound.

According to the Commission's Order Issuing Pilot Project License (85-page PDF), the proposed project features two tidal turbines to be manufactured by OpenHydro, each measuring 6 meters in diameter, secured to the seabed by the turbines' 414-ton weight.  Peak tidal currents at the site exceed 3 meters per second.  The Public Utility District plans to connect the project to the mainland grid via subsea cables connecting to District-leased land south of the Coupeville Ferry Terminal.

In granting the pilot license, the Commission considered a range of possible resource impacts from the project.  The site lies near key shipping lanes to the ports of Seattle, Tacoma, Olympia, and Everett, and is near a key trans-oceanic fiber optic cable connecting North America to Japan.  To address concerns over impacts to these resources, the Commission imposed conditions and monitoring requirements on the project.

The Commission's pilot licensure program differs somewhat from its general licensing of hydropower projects.  As described in a whitepaper on the pilot project licensing process prepared by Commission staff, pilot projects should be (1) small; (2) short term; (3) located in non-sensitive areas based on the Commission’s review of the record; (4) removable and able to be shut down on short notice; (5) removed, with the site restored, before the end of the license term (unless a new license is granted); and (6) initiated by a draft application in a form sufficient to support environmental analysis. Projects meeting these criteria enjoy a streamlined regulatory review process.

With the pilot license in hand, the Public Utility District may prepare for project development.  But if the project goes forward, the District may have to justify its costs.  As noted in the Commission’s order, the project has relatively high capital, operation, and maintenance costs with respect to the amount of power produced.  According to the Commission’s order, the levelized annual cost of operating the project will be about $1,848,294, or $7,574.98 per megawatt-hour of energy generated -- significantly higher than the estimated $30/MWh cost of alternative power.  Based on an estimated average annual generation of 244,000 kilowatt-hours as licensed, Commission staff projects that in the first year of operation, the project power will cost $1,840,974 more than the cost of alternative power.

Admittedly, the Snohomish project is designed as an experiment -- a pilot project to test technology and project feasibility.  The Snohomish project is among the first hydrokinetic projects in the country to receive a FERC license.  The first pilot project issued for a tidal project, the Roosevelt Island Tidal Energy Project, similarly faces projected above-market energy costs.  Like the Roosevelt Island project, the Snohomish project will be relatively small.  But given its financial picture, will the Snohomish project go forward?

NJ regulators reject offshore wind project

Thursday, March 20, 2014

The New Jersey Board of Public Utilities has voted against extending ratepayer subsidies to an offshore wind project proposed by developer Fishermen's Energy, challenging the project's financial viability.

The New Jersey coast near Atlantic City, seen from above.

Back in 2011, Fishermen's Energy proposed a 25-megawatt offshore wind pilot project to be located off Atlantic City.  The developer applied to the Board of Public Utilities for ratepayer support under New Jersey's Offshore Wind Economic Development Act of 2010.  That law directed the Board of Public Utilities to develop a program to require utilities to source a percentage of the electricity they sell in New Jersey from one or more qualified offshore wind projects.  To track energy from offshore wind, the law envisioned the creation of offshore renewable energy certificates, or ORECs, that could be sold by qualified offshore wind projects to the load-serving utilities.  The concept was that given the relatively high costs and uncertainty of offshore wind, no project could be financed or built without a steady revenue stream from OREC sales.

But the New Jersey project appeared to stall before the Board.  Charged with creating the OREC program and evaluating whether the Fishermen's Energy project could qualify to produce ORECs, the Board was faced with serious technical tasks.  As the regulatory process for the Fishermen's Energy project lengthened -- ultimately stretching to over 1,000 days -- Board staff raised concerns over the financial viability of the project, as well as over the impact of the requested subsidy to ratepayer costs.  Despite trimming the project's estimated costs to $188 million, these concerns remained, leading Board staff to recommend denial of Fishermen's Energy's request for OREC certification.
Yesterday, the Board of Public Utilities rejected Fishermen’s Energy’s proposal by a unanimous 4-0 decision.  While the Board's formal written order has not yet been released, expect it to explain the Board's reasoning in more detail when it surfaces next week.  In the meantime, Fishermen’s Energy is undoubtedly considering its options, which may include dropping the project, appealing the Board's rejection, or finding alternative ways to de-risk and finance the project.

NJ board to decide on offshore wind project

Wednesday, March 19, 2014

Will New Jersey regulators approve key support for an offshore wind project proposed off the Jersey shore?

Many coastal states and nations are placing new focus on energy projects designed to generate electricity from offshore winds.  A project off New Jersey, first proposed in 2011, appeared to make some initial progress, but has since seemed to stall -- due in part to regulatory delays at the state level.  With a decision by the state Board of Public Utilities (BPU) expected this week, will the Fishermen's Energy offshore wind project move forward?

Fishing boats in a small harbor along Maine's midcoast.

The New Jersey coast offers a fairly unique combination of wind resources and proximity to customer demand.  To capitalize on this combination, the New Jersey legislature and government adopted measures promoting the development of the state's offshore wind resource.  For example, New Jersey's Energy Master Plan calls for an ambitious target of 1,100 megawatts of offshore wind installed by 2020.

In response to the opportunity, in May 2011,  Fisherman's Energy submitted an application to the BPU under the Offshore Wind Economic Development Act for an offshore wind demonstration project.  The Cape May, New Jersey-based developer proposed five, five-megawatt wind turbines in state waters about 2.8 miles off the Atlantic City coast, with a total capacity of 25 megawatts and an estimated cost of $200 million to $300 million.  By the end of 2012, the project had won substantially all of the permits necessary for its development and operation, including approvals by the New Jersey Department of Environmental Protection and Army Corps of Engineers -- but a key piece of the regulatory and financing puzzles remains missing.

Under New Jersey law, the BPU may select one or more qualified offshore wind  projects for financial support in the form of a long-term contract to buy Offshore Wind Renewable Energy Certificates, or ORECs, from the developer.  This revenue stream is viewed as essential to enable a developer to finance and construct a project.

But nearly 3 years later, the state OREC review process remains ongoing. Last year, BPU Staff recommended the BPU reject Fishermen’s project on the grounds that it demonstrated no economic benefits but bore unnecessary technology risk due to its selection of XEMC turbines.  But project advocates, including the New Jersey Rate Counsel, support the project for its apparent consumer benefits.  Nevertheless, the BPU has yet to approve an OREC program.

Meanwhile, crucial federal tax incentives such as the renewable energy business investment tax credit have ended.  Many renewable project developers have found these credits essential in building financing packages for their projects over the last years; while the credits may be reenacted in some form, their loss may mean Fishermen's Energy needs to revise its financial projections.

Fishermen's Energy -- and the many other stakeholders following the project -- may soon learn the project's fate.  The New Jersey BPU is scheduled to vote today on whether to approve the project and authorize it to produce and sell ORECs.  Will the BPU grant Fishermen's Energy's request?

Hydropower relicensing surge expected

Tuesday, March 18, 2014

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

Monday, March 17, 2014

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

Thursday, March 13, 2014

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

Friday, March 7, 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

Wednesday, March 5, 2014

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

Tuesday, February 25, 2014

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

Tuesday, February 11, 2014

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 Agu├žadoura 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?

Norman Bay tapped as next FERC chairman

Friday, January 31, 2014

In a move that portends continued intense enforcement of federal energy laws, President Obama has nominated Norman Bay to serve as the next chairman of the Federal Energy Regulatory Commission. Currently the Director of the Commission's Office of Enforcement, since 2009 Mr. Bay has led that office through a series of high-profile investigations and enforcement actions, culminating in record fines for alleged violations of federal energy law -- over $440 million in 2013, plus hundreds of millions more in penalties levied but not yet collected due to legal challenges. His nomination for chairman illustrates the growing importance within the Commission of enforcement, and suggests enforcement would continue to remain aggressive if he is confirmed.

The Federal Energy Regulatory Commission, or FERC, is an independent federal agency charged with regulating the interstate transmission of electricity, natural gas, and oil. The Commission also licenses hydropower projects and reviews proposals to build liquefied natural gas (LNG) terminals and interstate natural gas pipelines. The Commission is composed of up to five commissioners appointed by the President with the advice and consent of the Senate, each of whom serve five-year terms.

While the Commission has enforced federal energy laws since its inception, enforcement has become a higher priority for the Commission in recent years.  The Energy Policy Act of 2005 increased the Commission's enforcement powers, giving it the authority to levy fines of up to $1,000,000 per day for some violations. Following that law's enactment and a restructuring of the Commission's Office of Enforcement, the Commission has ramped up its enforcement activities. For example, in its 2012 fiscal year the Commission ordered penalties for over 904 possible or confirmed violations, including over $5.8 million in refunds, over $148 million in civil penalties and disgorgement of over $119 million in unjust profits.  Activity increased in 2013, with the Commission assessing over $304 million in civil penalties and ordering disgorgement of almost $141 million in unjust profits

Last year also brought record-high individual penalties.  Charged with market manipulation, a J.P. Morgan subsidiary agreed to pay a civil penalty of $285 million and to disgorge $125 million in unjust profits.  In another case, the Commission assessed its largest civil penalty ever: finding that Barclays Bank PLC and four traders violated the Commission’s rule against market manipulation, the Commission imposed civil penalties of $435 million against Barclays and $18 million against the traders, and disgorgement of $34.9 million plus interest in unjust profits. Barclays has challenged the order, and the case is now before the U.S. District Court for the Eastern District of California.

Mr. Bay led the Office of Enforcement through this escalation in enforcement activity.  An alumnus of Dartmouth College and Harvard Law School, prior to joining the Commission he served as a U.S. Attorney and as a law professor.  He now faces confirmation by the U.S. Senate. While some confirmation hearings move quickly, the confirmation process for President Obama's last nominee to replace former Commissioner Jon Wellinghoff -- Ron Binz -- became controversial, leading the President to withdraw his nomination last year.

Mr. Bay may be viewed as less controversial than the previous nominee, but the outcome of the confirmation process remains uncertain.  Whether Mr. Bay becomes a Commissioner -- and if so, how he leads the Commission -- will play out over the coming months and is likely to provoke further discussion on the role of enforcement in U.S. energy policy.

Energy and the 2014 State of the Union

Wednesday, January 29, 2014

Last night, President Obama delivered his 2014 State of the Union address.  As in his previous four annual addresses, energy and environmental issues featured prominently in this year's remarks.  Here's a closer look at some of the highlights from the transcript of his remarks as prepared for delivery:

The U.S. Capitol, site of the President's annual State of the Union address.

Energy development as economic development: As in previous years, President Obama promoted an "all-of-the-above" energy strategy as a foundational element of the nation's economy.

Now, one of the biggest factors in bringing more jobs back is our commitment to American energy. The all-of-the-above energy strategy I announced a few years ago is working, and today, America is closer to energy independence than we've been in decades.
Natural gas revolution: President Obama highlighted the economic value of increased domestic natural gas production.  Calling natural gas the "bridge fuel" to reduced carbon emissions, he pledged to expedite the development of factories and transportation fueling stations reliant on domestic natural gas, while continuing to demonstrate environmental stewardship:
One of the reasons why is natural gas – if extracted safely, it's the bridge fuel that can power our economy with less of the carbon pollution that causes climate change. Businesses plan to invest almost $100 billion in new factories that use natural gas. I'll cut red tape to help states get those factories built, and this Congress can help by putting people to work building fueling stations that shift more cars and trucks from foreign oil to American natural gas. My administration will keep working with the industry to sustain production and job growth while strengthening protection of our air, our water, and our communities. And while we're at it, I'll use my authority to protect more of our pristine federal lands for future generations.

Renewable energy: Solar power is among the nation's fastest-growing energy resources.  President Obama called for reformed tax policies to level the playing field for solar and other renewable energy technologies:
It's not just oil and natural gas production that's booming; we're becoming a global leader in solar, too. Every four minutes, another American home or business goes solar; every panel pounded into place by a worker whose job can't be outsourced. Let's continue that progress with a smarter tax policy that stops giving $4 billion a year to fossil fuel industries that don't need it, so that we can invest more in fuels of the future that do.

Energy efficiency: As in previous speeches, President Obama touted his administration's efforts to improve the nation's energy efficiency.  In particular, he focused on tighter fuel efficiency standards for the transportation sector:
And even as we've increased energy production, we've partnered with businesses, builders, and local communities to reduce the energy we consume. When we rescued our automakers, for example, we worked with them to set higher fuel efficiency standards for our cars. In the coming months, I'll build on that success by setting new standards for our trucks, so we can keep driving down oil imports and what we pay at the pump.

Climate change: President Obama reiterated his belief that climate change driven by carbon dioxide emissions is not only a threat but is a present harm.  With Congress apparently unwilling to act, President Obama pointed to his administration's proposed new standards on power plant emissions of carbon:
Taken together, our energy policy is creating jobs and leading to a cleaner, safer planet. Over the past eight years, the United States has reduced our total carbon pollution more than any other nation on Earth. But we have to act with more urgency – because a changing climate is already harming western communities struggling with drought, and coastal cities dealing with floods. That's why I directed my administration to work with states, utilities, and others to set new standards on the amount of carbon pollution our power plants are allowed to dump into the air. The shift to a cleaner energy economy won't happen overnight, and it will require tough choices along the way. But the debate is settled. Climate change is a fact. And when our children's children look us in the eye and ask if we did all we could to leave them a safer, more stable world, with new sources of energy, I want us to be able to say yes, we did.
While the positions and initiatives announced last night may not be new, President Obama's renewed commitment to these energy policies signals his continued approach to growing the American economy through improved use of our nation's energy resources, all while addressing environmental challenges.  Consistent with last year's State of the Union address, President Obama appears to acknowledge a lack of congressional consensus around energy policy, and the corresponding need for executive action.  Over the course of 2014, expect his administration to pursue goals like facilitating the production and use of domestic natural gas and renewable energy, improving energy efficiency, and addressing climate change.  Exactly how these initiatives take shape -- and whether they succeed -- will play out over the coming year.

Electricity and Super Bowl XLVIII: Will the lights stay on?

Friday, January 24, 2014

Fans will soon pack MetLife Stadium for Super Bowl XLVII.  The National Football League's 2013-2014 season championship game will be held on February 2 at 6:30 PM (Eastern). Following the power outage during last year's Super Bowl, organizers of this year's event are taking extra precautions to avoid disruptions to the East Rutherford, New Jersey stadium's electricity supply.  At the same time, organizers are promoting the environmental aspects of the power supply for this year's game.

During Super Bowl XLVII at the Mercedes-Benz Superdome in New Orleans, Louisiana, a power outage moments after the beginning of the second half of play caused many of the stadium lights and systems to go dark.  Between restoring power supply, rebooting computer systems, and letting stadium lighting cool and return to full power, it took 34 minutes for play to resume.  Subsequent investigation revealed that the outage occurred when load-monitoring equipment had opened a breaker after detecting an abnormality in the system.

Organizers hope this year's championship is free from such disruption.  MetLife Stadium and the rest of the Meadowlands Sports Complex is served by utility Public Service Electric & Gas Co. or PSE&G.  Two power lines feed into the substation serving the complex, and on-site generators add additional capacity.  PSE&G has been reported as expecting the game to draw as much as 20 megawatts of power, and the utility, NFL, and stadium owner have collaborated on measures and testing to ensure continuity of service during the big game.

Meanwhile, PSE&G's parent PSEG has partnered with the NFL Environmental Program to source renewable energy for the game.  PSEG has agreed to purchase and retire a renewable energy credit, or REC, for every megawatt-hour of electricity used at the stadium, the AFC and NFC team hotels, and Super Bowl in Times Square.  240 solar RECs are slated to come from PSE&G's nearby 3-megawatt Kearny solar farm, as well as 5,700 additional RECs from the 7.5-megawatt Jersey Atlantic Wind Farm near Atlantic City.

Beyond electricity, event organizers have committed that all the waste oil generated from food production during the game will be processed into biodiesel fuel by Tri-State Biodiesel, and that all other food waste will be composted.

Presumably, most fans' attention will be focused on the game.  Will the organizers' measures prevent power outages in an environmentally friendly manner?

Previewing energy issues in Obama's 2014 State of the Union

Thursday, January 23, 2014

President Obama will deliver his 2014 State of the Union address on January 28, at 9 PM (Eastern).  His audience -- Congress, as well as millions of people in the United States and elsewhere -- will listen closely for indications of the President's upcoming policy initiatives.  In past years, issues related to energy and climate change have featured prominently in these addresses.  What energy- and climate-related issues will he address in his fifth State of the Union remarks?

Likely themes include:

  • Climate change.  Last year, President Obama urged Congress to pursue a bipartisan, market-based solution to climate change.  When Congress did not act, the Obama administration proposed new limits on carbon emissions from new and existing power plants.  While the regulations implementing these limits remain on the U.S. Environmental Protection Agency's drawing board, next week's speech may shed new light on the Obama administration's climate change plans.

  • Renewable energy.  The Obama administration has pushed for increases in the production and consumption of renewable energy in the U.S.  On the production side, the Department of the Interior has highlighted the development of renewable energy resources on federal lands and waters as a regulatory priority for 2014.  The Bureau of Ocean Energy Management held the first competitive auctions for leases for offshore wind project sites last year, with additional auctions expected in 2014.  On the consumption side, in December President Obama ordered the federal government to use renewable sources for 20 percent of its electricity by 2020

  • Natural gas.  The production of natural gas from unconventional resources such as shale plays has revolutionized the U.S. energy economy.  Compared to other fossil fuels, natural gas is widely considered to be more environmentally benign.  Readily dispatchable natural gas-fired power plants can be a powerful complement to renewable resources, balancing out variations in power production from intermittent resources like wind.  At the same time, the low cost of producing natural gas domestically is driving interest in exporting gas through pipelines and liquefied natural gas or LNG export terminals.  

  • Oil.  As with natural gas, unconventional oil resources have similarly revolutionized the U.S. energy economy.  In recent years, the U.S. has become a net exporter of oil, gasoline, and other petroleum fuels.  Meanwhile, the proposed Keystone XL pipeline would increase shipments of Canadian oil to U.S. refineries, but the project relies on federal approvals that remain pending.

  • Energy efficiency.  President Obama has supported increases in energy efficiency in homes, industry, and transportation.  In his 2013 State of the Union, he proposed to cut in half the energy wasted by our homes and businesses over the next twenty years.  Energy efficiency continues to be a popular theme.

The 2014 State of the Union will be streamed at http://WhiteHouse.gov/SOTU.

US Department of Interior features energy as a priority

Tuesday, December 3, 2013

The United States Department of the Interior has updated its regulatory priorities for the coming six months, with energy issues featured prominently.  The nation's principal steward of federal public lands and resources, the Department manages more than 500 million acres of Federal lands, including 401 park units, 560 wildlife refuges, and approximately 1.7 billion of submerged offshore acres on the Outer Continental Shelf.  These lands and waters are home to significant energy and mineral resources, including renewable energy sources such as solar, wind, and hydropower, as well as oil, gas, coal, and minerals such as uranium.  The Interior Department's recently-announced priorities highlight the importance of energy issues in its regulatory agenda for 2014.
The Parker River National Wildlife Refuge, managed by the Department of the Interior's U.S. Fish and Wildlife Service.
Energy issues are not new to the Interior Department.  Its mission statement, captioned, "Protecting America’s Great Outdoors and Powering Our Future", reads:
The U.S. Department of the Interior protects America’s natural resources and heritage, honors our cultures and tribal communities, and supplies the energy to power our future.
Twice a year, the Interior Department publishes a statement of its regulatory priorities.  The most recent statement, issued November 26, features several initiatives designed to promote the development of renewable resources on public lands.

As noted in the Department's statement, under the Obama Administration, the Department has focused on renewable energy issues and has established priorities for environmentally responsible development of renewable energy on public lands and the Outer Continental Shelf.  Energy producers and developers are investing in the development of wind farms off the Atlantic seacoast and solar, wind, and geothermal energy facilities throughout the West.  The Department announced its intent to continue its intra- and inter-departmental efforts to move forward with the environmentally responsible review and permitting of renewable energy projects on public lands, and to streamline regulatory processes to facilitate the responsible development of these resources.

Like most federal agencies, the Interior Department is organized as a collection of bureaus and offices.  These agencies include the Bureau of Land Management, which manages the 245-million-acre National System of Public Lands, located primarily in the western States, including Alaska, and the 700-million-acre subsurface mineral estate located throughout the nation.  The Bureau of Land Management's regulatory priorities include creating a competitive process for offering lands for solar and wind energy development.  Specifically, the Bureau is proposing competitive bidding for lands within designated solar and wind energy development leasing areas.  The proposed rule is designed to enhance BLM's ability to capture fair market value for the use of public lands, ensure fair access to leasing opportunities for renewable energy development, and foster the growth and development of the renewable energy sector of the economy.

If the Bureau of Ocean Energy Management's recent auctions for offshore wind sites on the Outer Continental Shelf are any example, the Bureau of Land Management may soon be holding competitive auctions for land-based renewable energy sites.  These auctions will likely seek to balance support for responsible resource development against conservation, as the Department also includes conservation-oriented agencies such as the U.S. Fish and Wildlife Service and the National Park Service.

Yet how these regulatory priorities translate into regulatory action -- and how that regulatory action affects the development of renewable resources -- remains to be seen. 

Nova Scotia tidal power projects

Monday, December 2, 2013

Plans to develop tidal power resources in the Canadian province of Nova Scotia are moving forward, as Fundy Tidal Inc. announces firmer plans to deploy tide-powered generators at three locations in Digby County.

The extreme tidal range in the upper Bay of Fundy gives Nova Scotia a tremendous tidal energy resource.  The province has been home to the 20 megawatt barrage-based Annapolis Royal Tidal Power Plant for almost 30 years; more recently, Nova Scotia established a Marine Renewable Energy Strategy setting a target of 300 MW of commercial tidal development by 2020, an amount roughly equal to 10% of the province's electricity consumption.  Nova Scotia also established a Community-Based Feed-in-Tariff or COMFIT program designed to give qualified tidal energy developers certainty over project revenues early in the development phase.

Fundy Tidal Inc. proposed three projects in Digby County that have received approval through the feed-in tariff program.  The largest, to be developed in the Digby Gut, could generate up to 1.95 megawatts of power.  Two smaller projects in Grand Passage and Petit Passage could each generate up to 500 kilowatts of power.  These three projects have an expected development cost of $30 million.  Fundy Tidal also received approval for COMFIT funding for two projects on Cape Breton Island.

Last month, Fundy Tidal announced a strategic partnership with Tribute Resources Inc. and Tocardo International BV to develop the three Digby County sites.  Under the terms of that partnership, Tocardo will delivery tidal turbines, and will set up a tidal turbine assembly and manufacturing plant in Nova Scotia.  Fundy Tidal will serve as the overall developer and will retain a 51 percent interest in the projects, with Tribute Resources owning the remaining 49 percent interest.

This is not the first time tidal power projects have been proposed in Digby County; previous concepts have ranged from tidal barrage development to deployment of hydrokinetic turbines in conjunction with Ocean Renewable Power Co.  Fundy Tidal now plans to construct and deploy the Digby area projects to deliver power as soon as 2015.  Will these plans come to fruition?

Solar energy led new installations in October 2013

Monday, November 25, 2013

Solar-powered projects led new electric generation capacity installed in October 2013.  According to the Federal Energy Regulatory Commission's October 2013 Energy Infrastructure Update, most of the electric generation placed in service in October relies on solar energy technologies.  Developers placed 504 megawatts of solar capacity online in October, out of 699 megawatts of total new capacity for the month.  Solar also led the month in terms of the number of projects installed, accounting for 12 of 21 projects.

Solar photovoltaic panels line the roof of the visitor center at the Parker River National Wildlife Refuge in Massachusetts.

The solar energy projects placed in service last month vary widely in scale and in technology.  The largest, Abengoa SA's Solana Generating Station in Arizona, generates up to 280 megawatts of power using a thermal concentrating solar power technology.  2,700 parabolic trough mirrors focus the sun's rays on a pipe containing a synthetic oil.  This heat transfer fluid can reach 735 degrees Fahrenheit, and is sent to boilers where it produces steam from water.  The steam turns turbines attached to generators, much as in a conventional thermal power plant.  The Solana plant also features energy storage in the form of molten salt tanks that can enable it to generate electricity for up to 6 hours after sunset.

On the other end of the spectrum, Constellation Solar New York LLC placed its 2 MW Owens Corning Delmar Solar photovoltaic project online.  The project, located at an Owens Corning factory in Delmar, New York, consists of about 9,000 ground-mounted, photovoltaic panels covering over 9 acres.  Power produced by the project is sold to Owens Corning under a long-term power purchase agreement for use at the thermal and acoustical insulation factory; the project is expected to cover about 6 percent of the plant's annual electricity need.

While the use of solar energy is increasing rapidly, it remains a relatively small component of the nation's overall energy mix.  Solar powered projects account for 6.79 gigawatts of capacity, just 0.59% of the 1,158 gigawatts of existing electric generation capacity nationwide.  Nevertheless, the relatively small market penetration of solar technologies suggests that rapid growth may continue for the near term.

Federal energy enforcement: $304 million in penalties in 2013

Friday, November 22, 2013

The Federal Energy Regulatory Commission has released its report on its enforcement activities in fiscal year 2013.  The FERC's 2013 Report on Enforcement (69-page PDF) gives the public insight into how the Commission's Office of Enforcement operates.  The report also provides key statistics on the Commission's 2013 enforcement actions, which led to over $304 million in civil penalties and disgorgement of almost $141 million in unjust profits.

In recent years, the Commission has increased its market surveillance and enforcement of federal energy law.  The Commission has explained that conduct involving fraud and market manipulation poses a significant threat to energy markets, and that this in turn harms consumers who are exposed to losses from intentional misconduct.  These concerns, coupled with increased enforcement powers granted in the Energy Policy Act of 2005, have led the Commission to ramp up its enforcement efforts.  Today, the Commission's Office of Enforcement is now structured around four divisions: Investigations, Audits and Accounting, Energy Market Oversight, and Analytics and Surveillance.  These divisions are designed to identify and prosecute violations of federal energy laws and regulations.

The enforcement report describes the Commission's 2013 activity, which includes the largest civil penalty ever assessed by the Commission.  In that case, the Commission found that Barclays Bank PLC and four traders violated the Commission’s rule against market manipulation.  As a result, the Commission assessed civil penalties of $435 million against Barclays and $18 million against the traders, and directed the company to disgorge $34.9 million plus interest in unjust profits.  That case is now before the U.S. District Court for the Eastern District of California.

The report also describes 29 financial and operational audits of public utilities and natural gas pipelines conducted in fiscal 2013.  According to the report, these audits resulted in 360 recommendations for corrective action, and directed the targeted companies to pay $15.4 million in refunds. Other recommendations directed improvements to companies’ internal processes and procedures, enhancements to the accuracy and transparency of reports and web sites, and more efficient and cost-effective operations.

The Commission announced that it does not intend to change its enforcement priorities for 2014.  As described in the report, the Commission will continue to target fraud and manipulation, serious violations of mandatory reliability standards, anticompetitive conduct, and conduct that threatens the transparency of regulated markets.

New England Clean Power Link proposed

Tuesday, November 19, 2013

A developer of electric transmission lines has proposed a new line that would connect New England to Quebec.  The so-called New England Clean Power Link would run about 150 miles from the U.S.-Canadian border to Ludlow, Vermont.  While the line shares some features with other proposed ties to the Canadian power grid -- including its development team -- the New England Clean Power Link differs from prior proposals in several regards.

Demand for electricity in the northeastern United States, and in particular for renewable power, has led to interest in developing several transmission lines to Canada.  Provincial crown corporation Hydro-Quebec has many large hydroelectric dams, and continues to develop Quebec's rivers for power production.  Meanwhile, Newfoundland utility Nalcor is developing gigawatt-scale hydropower on the Churchill River in Labrador, with aims to export the power to eastern Canada and the U.S.

This relative surplus of Canadian hydropower has led developers to propose transmission lines connecting Quebec resources to New England consumers.  These lines include the Champlain-Hudson Power Express from Canada to New York City, and the Northern Pass from Canada into New Hampshire.

The $1.2 billion Clean Power Link would have a capacity of 1,000 megawatts, roughly equal to the size of a nuclear power plant.  Like previous proposals, the newly-proposed line is motivated by the perceived opportunity to sell Canadian power in New England.  The Clean Power Link also shares features in common with other proposals, in that it would be a high-voltage direct current or HVDC line.  Notably, it would also be developed and financed by TDI New England, a Blackstone Group subsidiary led by the team behind the Champlain-Hudson Power Express.

Like that line, it would run about 100 miles under Vermont's Lake Champlain.  South of the lake, the Clean Power Link proposal features lines buried underground.  This contrasts with the Northern Pass, whose traditional wires-on-towers architecture has drawn significant opposition in New Hampshire.

The Clean Power Link faces a regulatory process including environmental and energy permitting, and is also dependent on the market forces that motivated its proposal.  It is unclear whether any of the proposed transmission lines to Canada will actually be built, let alone which one.  For now, TDI aims to build the line and place it in service by 2019.

Google invests in solar energy projects

Monday, November 18, 2013

Google has announced an investment in six solar photovoltaic projects to its portfolio.  The projects, located in California and Arizona, have a combined electric generating capacity of 106 megawatts.  This deal illustrates the trend of renewable energy investments by data centers and other tech companies.

The projects are under development by Recurrent Energy.  Five are located in Southern California, while the sixth is in Arizona.  Google and investment firm KKR invested $400 million in the projects; Google's share is reportedly $80 million.  The partners will sell the power produced by the facilities to local utilities including Southern California Edison.

Google announced that this represents its fourteenth investment in renewable energy since 2011.  In 2010, the Federal Energy Regulatory Commission granted market-based rate authority to Google subsidiary Google Energy LLC, enabling it to sell power at wholesale.  Google has since entered into long-term agreements to purchase power from wind farms and other renewable generators.

Other tech companies are pursuing similar strategies.  Earlier this month Microsoft announced a deal to purchase energy produced by a Texas wind farm for its data center in San Antonio.  In September, eBay received market-based rate authorization from the Federal Energy Regulatory Commission, allowing it to sell surplus power from its generators to the grid.

For consumers like Google with significant demand for power, developing on-site electric generation or entering into a long-term power purchase agreement can be cost-effective, either by reducing the cost of energy or by reducing its exposure to price volatility.  Investments in renewable energy can also position companies for improved sustainability and "green" their public images.  For these reasons, the trend of tech company investment in renewable energy infrastructure will likely continue for the foreseeable future.

Voluntary renewable power markets small but growing

Friday, November 15, 2013

Electricity generated from renewable energy resources continues to grow its share of the U.S. market, according to a recent U.S. governmental report.  While most renewable energy sales are motivated by renewable portfolio standards -- state laws requiring utilities to source specified amounts of energy from renewable resources -- a small but growing amount of electricity is sold in voluntary green power markets.

Consumer demand for renewable-sourced electricity has led to voluntary markets in which consumers and institutions voluntarily purchase renewable energy to meet their electricity needs.  These markets include green power offers, competitive supplies, and over-the-counter renewable energy certificate (REC) sales.  According to the National Renewable Energy Laboratory's report, Status and Trends in the U.S. Voluntary Green Power Market, in 2012 voluntary retail sales of renewable energy represented approximately 1.3% of total U.S. electricity sales, or about 48 million megawatt-hours.  According to NREL, these sales represent the power produced by about 17,000 megawatts of installed renewable capacity.

While the voluntary renewable electricity market remains relatively small in absolute terms, it is growing rapidly.  NREL's report found that from 2010 to 2012, total green power market sales increased by 36%, for a compound annual growth rate of 1%.

In 2012, the resource mix supplying renewable energy to the voluntary renewable market was dominated by wind energy, at 80.1% of total green power sales.  Other resources in the mix include landfill gas and biomass (12.8%), hydropower (6.2%), solar (0.6%), and geothermal (0.3%). Like the entire voluntary market itself, solar power is a small but growing segment, experiencing a tripling of market share between 2010 and 2012.

For now, despite its recent growth, voluntary retail sales of renewable energy represent a small fraction of power sold.  The vast bulk of renewable energy is sold in compliance markets, established pursuant to state renewable portfolio standards or targets.  Will voluntary markets continue to grow?  How will proposals to increase state standards affect the voluntary markets?

Tidal power past, present, and future at Tide Mill Institute 2013

Thursday, November 14, 2013

The Tide Mill Institute held its ninth annual conference this past Friday and Saturday.  About 60 people interested in the past, present, and future of tidal energy gathered at the Topsfield Historical Society's Gould Barn in Massachusetts.  The audience included developers of recreated historic tide mills and modern tidal power projects, inventors of tidal turbine technology, academics, state legislators, historians, architects, and other enthusiasts of tidal power.

Tide Mill Institute's John Goff speaks about historic tide mills in Salem, Massachusetts.
Ocean Renewable Power Company's president and CEO, Chris Sauer, gave the keynote presentation on ORPC's efforts and success in developing modern hydrokinetic tidal power plants in the Gulf of Maine and elsewhere.  Chris described the research and development process that led to ORPC's Turbine Generator Unit or TGU.  He also described the engineering, regulatory, and commercial challenges of developing tidal power plants today, as well as ORPC's approach to overcoming these challenges.

Other presentations included: Professor Kerr Canning's exposition of a tide mill site he discovered on the Apple River in Nova Scotia; Professor Robert Gordon's look at tide mill mechanics at sites in York, Maine; a review of tide mill history on the Gowanus Canal in Brooklyn, New York, by Angela Kramer of the Brooklyn Historical Society and Proteus Gowanus; and a survey by representatives of local historical societies of tide mills on the North Shore of Massachusetts.

Tide Mill Institute members and attendees also enjoyed displays on historic and modern tide power projects, and informal discussions of archaeological discoveries and modern developments. 

The Tide Mill Institute will hold its 10th annual conference in 2014.