WASHINGTON — Despite its virtues, energy storage won’t eliminate the need to pay unprofitable generators to continue operating for grid support, speakers said in the second panel of FERC’s technical conference on storage Wednesday.
In its notice of the conference (AD16-25), FERC noted that storage resources are modular and easily transportable — meaning they could provide local voltage support in situations that would otherwise result in contracts with generators as reliability-must-run (RMR) or system support resources. Building transmission to alleviate such problems following a plant retirement often takes years.
But grid operators questioned whether storage will be a cheaper option.
“It’s going to be very difficult for any new resource to compete with [a generating plant] that’s already essentially heavily depreciated,” said Neil Millar, CAISO’s executive director of infrastructure development. “I just think we need to be realistic about expectations.”
Eric Hsia, PJM’s manager of performance compliance, was also skeptical. “I totally agree that markets for storage are good things and what we should be focused on, but we know these RMRs are going to continue to get done and they’re not going to go away necessarily,” he said.
Representatives of CAISO, PJM and NYISO said they all recover RMR contract costs in the zones that will eventually pay for the necessary transmission upgrade and not as part of region-wide transmission rates.
Witnesses also questioned whether storage could be implemented quickly enough to replace RMRs.
Capacity Performance units in PJM are required to give three years’ notice in advance of retirements, but non-CP units only need to give 90 days.
That might not be enough time to get storage in place, said Bill Capp, president of Grid Storage Consulting.
Millar said nine months is the fastest deployment he’s seen and that included several implementation teams working in parallel. “If we’re talking a smaller battery storage project, like sub-transmission, the ability to interconnect that project more quickly is higher,” he said, but for larger installs, “months is very tight.”
He said CAISO is identifying areas where future retirements will likely create reliability issues and is developing plans to address the potential.
Michael DeSocio, senior manager of market design for NYISO, said running a competitive process for such situations “extends the timeframe … because it’s going to take us longer to go through all the projects to figure out reliability and sufficiency and what we can deal with.”
“Not a bad idea,” DeSocio added. “Just it will add time to the process.”
Grid operator representatives acknowledged they haven’t had much experience with such projects. Millar was the only one who provide an example, saying about 110 MW of storage will be used to respond to the closure of the Aliso Canyon natural gas storage facility. “That was probably the most expedited procurement of storage we’ve seen,” he said.
The California Public Utilities Commission ordered the procurement in August, and projects are required to be completed by Dec. 31.
Part of the issue, developers said, is that the grid operators aren’t prepared to handle the flexibility of storage, so developers haven’t made the effort to propose projects.
“I think generally speaking, most of your ISOs/RTOs right now have an open-mindedness toward storage as a non-transmission alternative,” said John Fernandes of Renewable Energy Systems Americas. “Not everyone might be far enough along to do the complex modeling that’s needed to optimize the system. … I think there’s possibly a little bit of a disconnect between ‘sure, we’ll go in to take a look’ and ‘yes, we will actually deploy this.’ Until the developer community has some level of certainty that there is at least some likelihood that non-transmission alternatives will be selected, it’s hard for us to justify spending the time, the resources, the effort to really put together viable projects.”
Getting the Green Light
Storage isn’t likely to get special consideration from operators. “Looking at all the variables, if energy storage meets that cost, the lowest methodology, that’s fine if we go with energy storage. But if some other technology can meet the same solution at a lower cost, then we would favor that,” said Charlie Bayless, of the North Carolina Electric Membership Corp., who represented the National Rural Electric Cooperative Association.
“A competitive process is of interest if we can, one, agree on a manner in which it is able to happen expeditiously, but also two, we should be looking at this as a manner that is in fact adding value by reducing the costs of this particular solution to the system,” said Jason Burwen of the Energy Storage Association.
“We’re looking to compete at cost with all the other resources being considered,” Fernandes said. “[We’re] not looking to shoulder ratepayers with a neat little experiment here. We’re justifying this in front of regulators everywhere.”
However, storage needs to be able to serve multiple functions to make it economical, he said. The single RMR revenue stream is insufficient. “I might also want to participate in the real-time market at certain times,” he said.
GEORGETOWN, Texas — Preston Schultz, director of development for Chicago-based Hecate Energy, says his firm is named after the three-faced Greek goddess of the crossroads. “She’s also the goddess of black magic,” he said, “but we don’t talk about that so much.”
It’s an apt enough description for where the renewables industry finds itself following last week’s election of climate skeptic Donald Trump as president of the United States: at the crossroads, and possibly needing a little magic to build upon its recent progress.
Trump, who has promised to scrap the Clean Power Plan and withdraw the U.S. from the Paris Agreement, has shown little affection for renewables but promised to “save” the coal industry and reduce restrictions on natural gas production.
“Obviously, there is some uncertainty,” Schultz said Friday, before participating in a panel discussion during the Texas Renewable Energy Industries Alliance’s GridNEXT conference. “It’s probably more the climate goals … whether they’re under threat or whether they’re actively implemented at this point. … [The U.S.] probably just won’t participate very much” in the Paris Agreement.
Others at GridNEXT also shrugged over the incoming administration’s effects on the renewable industry. Only a couple of speakers briefly mentioned the subject, and hallway discussions were animated less by concern over politics than excitement over emerging renewable and battery storage technologies.
State RPS, Federal Tax Credits Remain
One reason there was little alarm is that states — through renewable portfolio standards and policies favoring rooftop and utility-scale solar — are continuing to create demand. (See related story, Michigan Senate Increases RPS; Keeps 10% Retail Choice Cap.)
Another is that Congress last year approved legislation extending wind tax credits through 2019 and solar credits through 2021. (See Solar to Shine Under ITC Extension.) The bill also eliminated the longstanding ban on the export of crude oil.
The solar industry has added more jobs than oil and gas in each of the last two years, while the Bureau of Labor Statistics says that the fastest-growing occupation through 2024 will be wind turbine technician.
Pointing to the industry’s economic development, Hala Ballouz, president of Electric Power Engineers, expressed doubt the tax credits would be revoked, a sentiment others at the conference shared.
“That would not be a wise battle. It would be a hard thing to reverse,” she said. “Energy choice, job creation … those are things Americans like.”
“I think it would be quite an effort to reverse the extension that was in place,” Schultz agreed. “Many in Congress who were involved in that approval are still there. Ultimately, the extension was tied to the export of oil, so it was kind of a quid pro quo. There was dealmaking, so there may not be strong support … going back on a deal that was struck.”
But few expect the subsidies to be extended beyond 2021.
“With the election, we’re not going to get the government support we’ve been used to, so we’ll have to be cost competitive,” Texas Energy Aggregation’s T.J. Ermoian said.
During his campaign, Trump railed against the Obama administration’s “war on coal,” overlooking market dynamics that have made gas-fueled power plants much more attractive than coal-fed units. He derided “fast-tracked” wind projects that “kill more than a million birds a year” and said “the problem with solar is it’s very expensive.”
Falling Prices
A study last year by the Lawrence Berkeley National Laboratory, however, found that prices for installed PV solar fell more than 50% between 2009 and 2014 — and are still dropping.
“The developments we’ve been hearing today — that storage [costs are] coming down and how people and solar and storage can work together — all those things will proceed,” said Cyrus Reed, conservation director for the Sierra Club’s Lone Star chapter.
“I don’t see a huge change in markets for renewables, whoever the president is,” Reed said. “The market forces in place are such that I don’t see renewable energy impacted in a big way under the new administration. I think it will continue to develop. The big deals that Congress and the president made on the [tax credit] extensions … are likely to continue, so that gives some certainty to the industry.”
“This industry will stand on its own,” agreed Schultz, “and I think it will do that over the runway they’ve mapped out with the current incentives. I think you still need that support to keep driving this industry.”
Energy market forces include natural gas prices in the $2-3/MMBtu range, thanks to the fracking revolution. It is those prices that have primarily driven down the use of coal, and few expected those costs to change, given Trump’s emphasis on fossil fuels.
“With the election results, gas could remain low for a really long time,” said Hans Royal, associate vice president of strategic renewables for Renewable Choice. “That poses a challenge to renewable buyers.”
“Every time he talked about energy, it was usually in relation to the coal industry,” said Chris Foster, manager of resource planning for the city of Georgetown. “We’ve told people for years the only way to bring back a lot of the coal in our area is to essentially figure out how to raise the prices on natural gas. Those [coal and gas industries] are two lobbies in Congress that are usually together, so we found it highly unlikely one would pivot [against] the other. … So under [Trump’s] administration, we also don’t expect [many] changes.”
Foster is one of the driving forces behind Georgetown’s drive to provide its more than 54,000 residents with 100% renewable power by 2017. The 50-50 mix of wind and solar will be supplied by EDF Renewable Energy and SunEdison, respectively, through a combination of long-term, low-cost power contracts.
Red States Go Green
“This area is red for political reasons, but the reality is, renewable energy in Texas is getting so cheap every day,” Foster said. “Let’s say Capitol Hill went and said, ‘You know what, all those subsidies are done.’ It wouldn’t change the growth pattern of the wind industry here, because [it’s] economically competitive now. It would only delay some of the solar stuff by a couple of years, because of the timing of the pipeline the projects are in.
“The reality is, Texas has such a great wind profile and such a great solar profile that economically speaking, [renewables] are going to compete, with or without those subsidies.”
Indeed, a Brattle Group study in May predicted that natural gas and renewables could provide 85% of ERCOT’s demand by 2035, with coal’s contribution reduced to 6%. Schultz said he is seeing similar receptiveness to renewable projects in the equally red Southeast, where much of his work is. He said a Tea Party group in Georgia has been pushing renewables from the perspective of energy choice and avoiding regulated monopolies, and that Southern Co. subsidiary George Power recently issued an integrated resource plan that calls for “a big chunk of renewables.”
“This latest one had 1,000 MW of renewables over the next two or three years. They’ll have 700-plus solar megawatts in the ground by mid-next year,” Schultz said. “It’s a bipartisan issue … as compared to climate change. You talk to the landowners, they get it. They’re benefiting from this.”
Wind development has taken off in the Great Plains, where the wind is plentiful and the states — Kansas, Nebraska, Oklahoma and the Dakotas — are as red as they can be. When Trump made a campaign stop last November in Iowa, another hotbed of wind energy, he was asked about his stance on wind subsidies.
“I’m fine with it,” the candidate told his questioner. “Wind is a problem because it’s very expensive to build the towers. Very, very expensive. Wind will need subsidies. It’s going to have subsidies.”
Of course, that was then. Now, Reed said, environmental and renewable advocates will continue to make their case.
“We will continue to work on these issues, and we will continue to talk to people of all political stripes about the benefits of renewable energy.”
FERC has approved CAISO’s plan to fine-tune its procedure for preventing generators from exercising market power during local transmission constraints.
The provision allows the ISO to increase the frequency of its intra-hour “mitigation runs” designed to determine whether transmission congestion is temporarily providing certain generators with market power.
“We find that CAISO’s proposal will improve the accuracy and effectiveness of CAISO’s local market power mitigation process by addressing situations where CAISO currently under-mitigates in the real-time dispatch process,” the commission said in its Nov. 8 order (ER16-1983).
Under current practice, CAISO evaluates congestion patterns for “uncompetitive” transmission paths in an “advisory” and financially non-binding market run about 50 minutes before real-time procurement and dispatch.
“If load only can be served by dispatching resources owned by a small sub-set of ‘pivotal suppliers,’ then the CAISO assumes there is local market power and automatically imposes market power mitigation measures on resources that would benefit from the noncompetitive congestion,” the ISO explained in its June filing with FERC.
Those measures consist of applying the higher of a generator’s default energy bid or the ISO’s administratively determined competitive price, unless the market-based bid is lower than either number. Default bids can be based on a resource’s variable costs, a negotiated rate or a weighted average of LMPs set at the unit over the previous 90 days. Resources can rank their default bid preference from among the three options, subject to the ISO’s approval.
The ISO currently conducts a mitigation run for each 15-minute real-time unit commitment interval within an operating hour. Any mitigation triggered for that 15-minute interval applies to each of the five-minute dispatch intervals contained within — and also continues for the rest of the hour.
The diagrams illustrate how CAISO will revise its local market power bid mitigation procedure with an additional “mitigation run” incorporated into the financially binding market run for procuring real-time energy. | CAISO
CAISO said its current measures assume that the conditions existing in the non-binding mitigation run will persist during the financially binding market run occurring 37 minutes ahead of the market interval. But changing conditions put the ISO at risk of either underestimating or overestimating the congestion.
“True congestion discrepancies frequently are caused by changes to inputs to the market optimization, as well as new information becoming available, in the time between conducting the mitigation and binding market runs,” the ISO said.
The solution approved by FERC attempts to prevent “under-mitigation,” which would expose load to excessive costs.
Under the new measure, the ISO will implement an additional mitigation run for each five-minute dispatch interval within a 15-minute real-time unit commitment interval.
The new run will be integrated into financially binding operations and allow the grid operator to factor in congestion not foreseen during the initial mitigation run. If necessary, it will be able to mitigate generator bids closer to the time of delivery.
“If any bid mitigation occurs, a second scheduling run is performed with these mitigated bids,” the ISO said. “A final pricing run is then performed to determine financially binding prices for the 15-minute interval.”
Once a bid has been mitigated for a five-minute increment, the mitigation remains in place for the balance of the 15-minute interval.
Any bid mitigation applied to a unit during the initial non-binding real-time unit commitment (RTUC) run will remain in place for the hourly interval regardless of whether a subsequent real-time dispatch (RTD) run shows a decrease in congestion within that hour.
“A unit that was mitigated for the RTUC but unmitigated for the RTD could be put in the untenable position of having to buy back its [15-minute market] schedule at a loss,” the ISO said.
“We agree with CAISO that improving the granularity of the mitigation process and improving the information that goes into the market runs will result in a more accurate representation of real-time system conditions that should enhance the overall measure of competitiveness of the market,” the commission said in approving the new procedure.
The commission denied a request by Pacific Gas and Electric that CAISO file a “reversion plan” in case the procedure results in “unforeseen” performance issues, or failed market runs require the ISO to rely on a fallback measure.
“Unlike the limited circumstances in which the commission has previously required or accepted the submittal of reversion plans, such as the launch of a new market where there was a risk of a significant operations failure, we find that such a risk has not been presented here,” the commission said.
The ISO’s local market power mitigation procedure goes into effect Jan. 30, 2017.
FERC has accepted SPP’s Tariff revisions to clarify and consolidate the RTO’s out-of-merit energy (OOME) processes, scotching objections by several wind energy companies.
The order is effective as of Aug. 10, 2016 (ER16-1912). In a Nov. 9 compliance filing, SPP revised the new OOME definition to clarify the term’s scope, saying it would allow the RTO to issue an out-of-merit instruction to address either an emergency condition or a reliability issue that had not yet risen to an emergency condition.
In June, the RTO filed proposed revisions to clarify OOME dispatch instructions to dispatchable variable energy resources (DVERs) and non-dispatchable variable energy resources (NDVERs). It also said it was improving the Tariff terminology related to operational dispatch instructions by consolidating terms with “no necessary functional distinction,” saying the revisions would mitigate overlap and potentially confusing or conflicting requirements with the NERC communication reliability standards’ (COM) use of “operating instruction.”
The commission accepted SPP’s proposed revisions, noting the Tariff “uses a variety of terms to describe out-of-merit and manual dispatch instructions and, at times, erroneously refers to out-of-merit and manual dispatch instructions in the commitment context.” It said the proposed Tariff revisions “should reduce possible ambiguity within the Tariff and potential conflicts with NERC terminology.”
| Theodore Scott, Creative Commons
SPP’s filing was opposed by EDF Renewable Energy, E.ON Climate & Renewables North America and Invenergy, known collectively as the Wind Generation Group.
The Wind Generation Group said the revisions were not needed to avoid confusion or comply with NERC COM-002-4. It also said the proposal would change the OOME term’s scope. The group argued that SPP’s proposal will result in “confusion, financial harm and opportunities for increased litigation,” as well as “a loss of information that will negatively affect wind developers.”
The group also said that in SPP’s Integrated Marketplace, variable wind energy resources are bifurcated into DVERs and NDVERs, noting that the RTO issues automated dispatch instructions through its security-constrained economic dispatch (SCED) for DVERs and issues OOME instructions as needed. The group said “NDVERs are incapable of responding to automated dispatch directives and are thus only subject to manual dispatch instructions.” Manual instructions are issued “only when there is a reliability need that remains after automated SCED dispatch occurs,” it added.
FERC disagreed, saying its review of SPP’s current Tariff “confirms that SPP has used the term out-of-merit energy in the emergency and reliability contexts; thus, the Tariff already allows for out-of-merit energy instructions arising from manual or automated means.” It said the proposed Tariff revisions are not intended to change SPP’s existing practice for OOME instructions, and noted SPP said the processes “will continue to include both manual and automated SCED components.”
The commission dismissed the wind group’s concerns that its members will lose the ability to distinguish between the reasons for manual curtailments (economic, reliability or emergency in nature). It said SPP has confirmed it issues OOME instructions “to respond to reliability issues only.”
FERC said if SPP develops communication protocols outside of the Tariff that wind developers find problematic, the wind generators can raise those issues in the RTO’s stakeholder process. The commission found the wind group’s concerns regarding the differences between NDVERs and DVERs to be outside the proceeding’s scope.
WASHINGTON — The U.S. just elected a president who has said he will tear up the Paris Agreement, block the Obama administration’s Clean Power Plan, “save the coal industry” and loosen the regulatory reins on the energy industry.
Like the entire country, the electric industry is still trying to get its head around how President-elect Donald Trump will convert his rhetoric into policy.
Trump offered little detail on the energy policies he would pursue beyond vowing to revoke EPA’s climate rule and supporting Republican calls to ease restrictions on oil and gas exploration and fuel pipelines.
There were some obvious winners and losers as a result of the Republicans’ capture of the White House and their continued control of the House and Senate, however.
In addition to the Clean Power Plan, other losers are likely FERC Chairman Norman Bay, Commissioner Colette Honorable and the Department of Energy.
One other likelihood, based on the defiant responses from environmental groups Wednesday: protests and litigation over Trump attempts to roll back environmental rules.
Edison Electric Institute President Tom Kuhn issued an anodyne statement Wednesday that nonetheless betrayed the industry’s uncertainty about what a Trump administration means to utilities. The trade group said it is looking forward to working with the new administration to “navigate the many challenges and opportunities facing our industry.”
“We want to ensure that we are communicating with the incoming administration, policymakers and key stakeholders about the investments our members are making and the projects they are undertaking to benefit their customers and our energy future.”
Reshuffle at FERC
Bay, a Democrat, will presumably lose the FERC chairmanship, and Commissioner Colette Honorable, whose term expires next June, will likely be replaced by a Republican.
Although the commission has not traditionally been marked by partisan divisions, the president gets to appoint members of his party to three of the five seats and pick the chairmanship. Since Republicans Philip Moeller and Tony Clark left, the five-member panel has been all Democrats: Honorable, Bay (whose term expires in June 2018) and Cheryl LaFleur (June 2019).
Donald Trump will get to fill two Republican vacancies on FERC and replace Democrat Colette Honorable when her term expires in June 2017. Chairman Norman Bay, a Democrat, will have to hand the gavel to one of the three Republican commissioners. | FERC
Because Republicans maintained their control of the Senate, Sen. Lisa Murkowski (Alaska) will remain chair of the Energy and Natural Resources Committee, the gatekeeper for FERC nominees.
A subdued Bay, who made an appearance at FERC’s technical conference on energy storage Wednesday, declined to comment when asked by RTO Insider for his thoughts on his future.
Paris Agreement, Clean Power Plan
Neither the U.S. participation in the Paris Agreement nor the CPP were approved by Congress, so President Obama’s target of reducing U.S. greenhouse emissions by up to 30% by 2025 is clearly in peril.
Trump — who has called climate change a hoax created “by the Chinese in order to make U.S. manufacturing noncompetitive” — has promised to “cancel” the agreement, which aims to limit global warming to 1.5 degrees Celsius above preindustrial levels and went into effect Nov. 4. Trump also promised to stop U.S. payments to the U.N.’s Green Climate Fund.
According to an analysis by Climate Central, an organization of scientists and journalists whose mission is to communicate the effects of climate change, Trump would have three ways of withdrawing the U.S. from the Paris Agreement. The first is to invoke an article to withdraw from the agreement a year after it takes effect by declaring the abandonment of a 1992 treaty — the United Nations Framework Convention on Climate Change, on which it is partly built.
Another section of the agreement allows a signatory to withdraw three years after it is signed, with an additional one-year waiting period after that.
Or, in what many see is the most likely scenario, he could just abandon any of the voluntary rules and incentives to reduce emissions.
Most in the industry and regulatory bodies overseeing it believe the goals set by the agreement would not be obtainable without slashing greenhouse gas emissions from electric utilities’ use of coal.
Trump will appoint a new EPA administrator. He also could order the Justice Department to stop defending the Clean Power Plan in court should the D.C. Circuit Court of Appeals overturn it — preventing the possibility of the order being reversed by the Supreme Court (for which Trump will nominate a replacement for the late Justice Antonin Scalia). (See Analysis: No Knock Out Blow for Clean Power Plan Foes in Court Arguments.)
If the rule is upheld by the D.C. Circuit, Trump’s EPA would need to establish another rule revoking the CPP.
“It’s virtually certain that the Clean Power Plan will be revoked. The question is how,” Jeff Holmstead, a partner at the law firm Bracewell and a former assistant administrator at the EPA, speaking at a post-election conference call.
“I’m quite confident that they do intend to make good on that promise. The question is how they will do it — and will they do it in a way that will withstand legal scrutiny,” he said. “Any action to revoke the plan will also be litigated, just like the plan itself.”
Congress attempted to kill the CPP last year through the Congressional Review Act, which allows Congress to disapprove regulations that have an economic impact of more than $100 million. Those disapprovals, however, must be signed by the president or his veto overridden by a two-thirds majority. President Obama vetoed Congress’ CRA rejection of the EPA rule last December.
The GOP will retain control of the Senate by 51-48, with a December runoff election in Louisiana. Republicans will control the House by 239-193, with three races (two in California and one in Louisiana) still undecided.
Environmental Groups Vow Resistance
The reaction from environmental organizations was a mix of shock and defiance.
350.org came out of the blocks with a message calling Trump’s election “a disaster.”
“But it cannot be the end of the international climate process. We’re not giving up the fight and neither should the international community,” the group said in a statement attributed to Executive Director May Boeve. “In the United States, the climate movement will put everything on the line to protect the progress we’ve made and continue to push for bold action. Our work becomes much harder now, but it’s not impossible, and we refuse to give up hope.”
The Environmental Defense Fund’s political arm, EDF Action, said in a statement Wednesday that Trump’s positions are “in complete contradiction to the realities of climate science. Mr. Trump should listen to the scientific experts on climate change and recognize that a clean energy transition is already underway. America’s economic future depends on embracing this trend,” EDF said.
The Sierra Club called it “a deeply disappointing day for the United States, and the world.”
“For people all over the country, the pain, anger and fear at the prospect of a Trump presidency are very real,” Executive Director Michael Brune said in a statement that was nearly a call to man the barricades.
“What we know is that it would be extraordinarily difficult for Trump to remove the U.S. from the Paris Agreement,” Brune said. “His position is already causing international blowback abroad, and in very pointed ways that are in some respects unprecedented. If Trump does try to undermine climate action, he will run headlong into an organized mass of people who will fight him in the courts, in the states, in the marketplace and in the streets.”
Earthjustice, a nonprofit environmental law organization, said Trump “might be the most anti-environment president in history” and suggested that Trump’s EPA may face court fights from environmentalists akin to those the Obama administration had to fend off from industry and coal states.
“He has publicly stated that he does not believe in the overwhelming amount of evidence supporting climate change and his record on all matters involving justice, equity and human rights is troubling,” Earthjustice President Trip Van Noppen said in a statement. “Therefore, Earthjustice will be working overtime in the courts to hold President-elect Trump and his administration accountable under our nation’s laws, which protect Americans’ right to a clean and healthy environment.”
Wind
Trump has called wind turbines expensive eyesores and decried their impact on bird populations.
Nevertheless, the American Wind Energy Association proclaimed itself “ready to work with President-elect Donald Trump and his administration to assure that wind power continues to be a vibrant part of the U.S. economy.”
“An unstoppable shift to a cleaner energy economy is underway, and the fundamentals of wind energy in America are strong,” AWEA said in a statement, in which it noted that the wind industry has 88,000 jobs, “a quarter of them made-in-the-USA manufacturing jobs.”
“In his victory speech early this morning, the President-elect said, ‘We’re going to rebuild our infrastructure, which will become, by the way, second to none. And we will put millions of our people to work as we rebuild it.’ Wind power is some of the best infrastructure America has ever built and we are on track to doubling it from today’s levels by 2020.”
Coal
In his campaign visits to coal country, Trump promised to put miners back to work. Regardless of what happens to the CPP, however, it’s hard to imagine any utility board of directors authorizing construction of a new coal-fired plant when existing plants are having trouble competing with natural gas.
“Forget the Clean Power Plan. You cannot build a coal plant that meets existing regulation today that can compete with $5 gas,” Charles Patton, president of Charleston-based Appalachian Power, told a state energy conference earlier this year, as reported by American Public Media’s Marketplace. “It just cannot happen.”
The Labor Department reported coal mining jobs have declined from about 84,600 in March 2009, after Obama took office, to 56,700 in March. At least six publicly traded U.S. coal companies have entered Chapter 11 bankruptcy proceedings since 2015.
Goldman Sachs issued a report in February saying that declining demand for thermal coal is “irreversible.”
Trump
It followed a report last year that concluded “The industry does not require new investment given the ability of existing assets to satisfy flat demand, so prices will remain under pressure as the deflationary cycle continues.”
The investment bank’s conclusion contradicts the International Energy Agency, which predicted last year that coal consumption would rise by about 2.1% annually through 2019.
“This is a great day for America,” Murray Energy CEO Robert Murray said in a statement. “I have personally spent time with Mr. Trump, and I know that he will surround himself with the very best people to fix the many problems facing our country. Indeed, Mr. Trump will finally implement a national energy policy whereby all energy sources will compete on a level playing field.”
One of those people could be Myron Ebell, a climate skeptic and executive at the Competitive Enterprise Institute. Trump has vowed to take away EPA’s regulatory powers and make it an advisory council. Ebell has been running the EPA working group for the Trump transition team and is seen as a contender for the EPA administrator post.
Trump has also said he wants to open federal lands to oil and natural gas drilling and coal mining. Forrest Lucas, cofounder of Lucas Oil, has been mentioned as a candidate for secretary of the Interior Department.
Nuclear Power
Despite Trump’s opposition to the CPP — which could provide support for the carbon-free generation of nuclear power — the Nuclear Energy Institute said his election is good news for the industry.
“Despite a tepid economy, the Department of Energy forecasts a 23% growth in electricity demand by 2040, the equivalent of more than 200 large power plants,” said Maria Korsnick, NEI’s incoming CEO. “Couple this with Mr. Trump’s all-in approach to energy and it’s apparent that the low-carbon, reliable electricity that nuclear energy facilities provide must continue to be a key part of the nation’s energy portfolio.
“Throughout the presidential campaign, nuclear energy was a bipartisan issue and one of the few areas of general agreement between the candidates. Additionally, public polling shows that the importance of nuclear energy to this nation’s energy mix is one thing voters could agree on, irrespective of their candidate preference.”
Department of Energy
Trump’s appointee to head the Department of Energy is sure to be less enamored than the Obama administration in investments in renewables and energy efficiency.
“Off the bat, it’s likely to be a fairly antagonistic transition given the overall dynamics in the election and given his stances on energy,” Teryn Norris, a former special adviser to the department, told Greentech Media. “Trump has repeatedly expressed disdain for renewables, and seems likely to gut those programs in” the Office of Energy Efficiency and Renewable Energy.
Six days after an explosion in Alabama shut it down, Line 1 of the Colonial Pipeline began shipping gasoline from Houston to New Jersey again on Sunday morning.
Colonial said it would take three days for the gas to arrive at the Linden, N.J., terminal. The explosion and ensuing fire, near Helena, Ala., was the result of a backhoe punching a hole in the pipeline, sending 200 feet of fire into the air, killing one worker and injuring five others.
The pipeline’s shutdown disrupted the wholesale gasoline market and raised retail prices in the Southeast.
Obama: US Considering Ways To Reroute Dakota Access
The U.S. Army Corps of Engineers is considering ways to reroute the controversial Dakota Access pipeline so that it doesn’t intrude upon Native American cultural sites, President Obama said last week.
“I think as a general rule, my view is that there is a way for us to accommodate sacred lands of Native Americans, and I think right now the Army Corps is examining ways to reroute this pipeline,” Obama said in an interview with news organization Now This.
But that was news to pipeline constructor Energy Transfer Partners, spokeswoman Vicki Granado said. “We are not aware that any consideration is being given to a reroute, and we remain confident we will receive our easement in a timely fashion,” she said.
NRC Approves Plant Expansion While FP&L Cleans Up Leak
As Florida Power & Light works to clean up leaking cooling canals at its Turkey Point Nuclear Power Plant, federal regulators have partly cleared the way for the plant to build two new reactors.
Following a seven-year environmental study, the Nuclear Regulatory Commission found the use of cooling towers to operate the new reactors — located on the shores of Biscayne Bay between two national parks — would not damage the already fragile ecosystem.
Over the years, the plant’s aging cooling canals sent an underground plume of saltwater miles inland, threatening drinking water supplies, and leaked tainted water into the bay. FP&L is conducting a massive cleanup.
The federal government will create 48 “charging corridors” across nearly 25,000 miles of interstate highways in 35 states and D.C. — the beginning of what it hopes will become a nationwide web of stations that will eliminate “range anxiety” and spark broader acceptance of electric vehicles.
Under the plan announced last week by the White House, EV owners will be able to find charging stations every 50 miles on designated highways. Most of the charging stations are to be installed by the end of 2017. The Department of Energy is offering $4.5 billion in loan guarantees to aid financing for multi-outlet, commercial-scale charging stations.
The electrification of transportation could provide a jolt to power producers dismayed by flat load growth. But there are only about 520,000 EVs on the road today — 0.2% of the 250 million vehicles in the U.S. fleet — little more than half of the 1 million plug-in EVs target President Obama set eight years ago for 2015.
Sales of EVs have been hampered by low gasoline prices, high battery prices and limited range and charging infrastructure. U.S. EV sales declined 5% in 2015 over 2014 but increased 19% in the first half of 2016 over the year before, according to FleetCarma.
According to the Energy Department, there are about 14,600 public charging stations for plug-in vehicles, with 37,000 charging outlets, now in the U.S.
Charging Speed
Charging speed also is a challenge. While the new network would make it possible to drive coast to coast, there could be a lot of waiting along the way. Depending on the vehicle and charger type, it can take between three and six hours to fully recharge a plug-in EV.
The Energy Department is working with the National Laboratories and others on a study expected by the end of the year on developing direct-current chargers capable of 350 kW, which could provide a 200-mile charge in less than 10 minutes.
Nissan says its LEAF can restore up to 80% of its charge in 30 minutes with a “fast charger,” but there are only 1,840 of them nationwide. Tesla Motors’ Model S and Model X can charge to a 170-mile range in 30 minutes using a 120-kW “supercharger” available at 734 stations.
Increasing the Range
Vehicle manufacturers also are responding to the desire for more range. The Chevrolet Bolt EV, expected to be released later this year at less than $30,000 (net of federal tax credits), will run for more than 200 miles on a full charge. Tesla’s Model 3, due in late 2017, also will have a range of at least 200 miles.
The Obama administration also is attempting to help make technological advances to reduce battery costs, which exceeded $500/kWh in 2012.
Bloomberg New Energy Finance says lithium-ion battery costs have dropped 65% since 2010, falling to $350/kWh last year. It issued a study in February predicting costs will drop below $120/kWh by 2030.
It projects that worldwide EV sales will hit 41 million by 2040, representing 35% of new light duty vehicle sales. EVs would comprise a quarter of the cars on the road, consuming 2,700 TWh of electricity — equal to 11% of global electricity demand in 2015.
Partners
A public-private partnership of 28 states, utility companies, vehicle manufacturers — including BMW, Nissan and General Motors — and other organizations have agreed to accelerate the installation of chargers and other infrastructure needed. Among the utilities signing on to the project are Pacific Gas and Electric, Ameren Missouri, Portland General Electric, Public Service Company of New Mexico, Eversource Energy and Southern California Edison.
Car manufacturers and utilities will accelerate installation and hookup of charging stations throughout the U.S. Vehicle manufacturers are redoubling production commitments and working to coordinate installation and help fund some of the charging stations. Some of the companies have vowed to increase access to EV stations for their employees.
State and local governments are also making additional commitments to plug-in vehicles. Thursday’s announcement included the details of 24 state and local government plans to purchase 2,500 new EVs in 2017. Los Angeles, for instance, is spending $22.5 million on EV charging stations by June 2018, with 500 additional public EV vehicle charging stations scheduled to be completed by the end of 2017, for a total of 1,500.
Alternative Fuels
The Department of Transportation also is seeking nominations from state and local officials in the creation of alternative fuel corridors for vehicles powered by hydrogen, propane and natural gas. A Federal Highway Administration website offers maps of current EV and alternative fuel infrastructure.
EV Charging Corridors | Federal Highway Administration
“Alternative fuels and electric vehicles will play an integral part in the future of America’s transportation system,” Transportation Secretary Anthony Foxx said. “We have a duty to help drivers identify routes that will help them refuel and recharge those vehicles and designating these corridors on our highways is a first step.”
“Working together with the private sector, these actions can help to combat climate change, increase access to clean energy technologies and reduce our dependence on oil. Expanding the infrastructure that supports plug-in and fuel cell vehicles is key to achieving these national energy and national security imperatives,” said Genevieve Cullen, president of the Electric Drive Transportation Association.
‘Tipping Point’
Jim Sholler, 52, who drives about 40 miles from his home in Hillsborough, N.C., to his financial services job in Raleigh, has just reserved a Tesla. “First of all, it’s a much cleaner solution [to greenhouse gas emissions]. You can’t tell me that a large power plant is less clean than a six-cylinder car,” Sholler said in an interview Sunday after learning the details of the government plan.
He said his “tipping point” came when he realized that the EV charging stations at his work were always in use. “And I realized I saw more and more charging stations.”
Sholler noted that the worry that either the vehicle’s range or the dearth of charging stations available on long trips is what holds many prospective owners back.
But improving battery technology — the latest Tesla model boasts a range of 300 miles on a charge, versus the typical range of the first generation of production plug-in electric cars of about 100 miles — and an expanding system of EV charging stations helped him to finally decide to order an electric car.
MISO said last week that it is ready to begin introducing improved modeling of its combined cycle generating fleet.
The RTO will use a configuration-based combined cycle model that can mimic different combinations of combined cycle units and their dependencies, Yonghong Chen, MISO principal advisor of market development and analysis, said during a Nov. 1 Market Subcommittee conference call.
Currently, MISO’s roughly 40 combined cycle unit “groups” are subject to an aggregate model in which they must either bid as a single generator or bid as separate combustion or steam turbines; dependencies between the units are not modeled. A generator with two combustion turbines and one steam turbine would constitute a “group.”
MISO said the new modeling will increase bid accuracy and prevent infeasible scheduling. Chen said the RTO performed a rough analysis using eight sample cases and found the new model could have saved $47 million in annual production costs in 2014 and $16 million in 2015. The analysis studied MISO’s 20 combined cycle groups with reliable configuration data and assumed other combined cycles would stick to the aggregated model.
Chen said the modeling can be used with the current 40 combined cycle generator groups in MISO’s system, but doubling or tripling the number of groups under the model would create computational challenges.
She also said MISO will look for further improvements and continue to study the benefits of the new modeling throughout 2017 using more updated offer data from resource owners and optimization software from programming firm Gurobi Optimization.
Jeff Bladen, executive director of MISO market services, said the RTO “expects to spend meaningful resources on combined cycle generators” in 2017 given the potential benefits.
MISO May Tweak Emergency Pricing Floors
Following a summertime emergency pricing event that resulted in depressed prices, MISO is considering changing its emergency offer floor calculations to expand the pricing logic to more emergency power.
MISO predicted load would hit 130 GW on July 21 based on a forecast that temperatures would hit a record of 91. The load didn’t materialize because of thunderstorms that lowered temperatures. | MISO
MISO had been monitoring performance of its two emergency pricing floors since July 21, the first maximum generation event since the 2014 polar vortex. Based on a forecast that average temperatures in the footprint would hit a record of 91, load on July 21 was predicted to hit 130 GW. But the load didn’t materialize because of thunderstorms that lowered temperatures. (See “New Emergency Pricing Floors Undergoing Monitoring,” MISO Market Subcommittee Briefs.)
Michael Robinson, principal adviser of market design, said MISO is mulling five possible approaches, all of which require Tariff changes:
Implementing an offer cap to the emergency offer floors, which unlike the other solutions would not require a software change;
Allocating the commitment costs of offline fast-start units into the minimum run time when calculating the offer floor;
Expanding the emergency pricing logic to allow emergency-committed units dispatched at their economic minimum prices to set emergency prices, similar to how fast-start resources can set prices under extended locational marginal pricing;
Applying emergency pricing to non-firm export curtailments; and
Evaluating the need to further compensate deployed emergency resources when LMPs, make-whole uplift and capacity credits are not sufficient.
Robinson said MISO could consider further changes as well. MISO is asking for stakeholder input through Nov. 18.
“We want to make sure we’re sending the right prices to as many generators called up as we can,” Bladen told stakeholders.
New York’s generators have appealed to the NYISO Board of Directors to reject a rule change that would effectively cap capacity payments received by generators in a constrained zone.
| Independent Power Producers of New York
The Independent Power Producers of New York filed its appeal Nov. 1 seeking to overturn the Management Committee’s Oct. 25 vote capping capacity payments in the Lower Hudson Valley and New York City zones to protect consumers from higher prices. (See NYISO OKs Capacity Export Fix Over Generators’ Opposition.)
Responses to IPPNY’s appeal are due Nov. 8; the board is expected to take up the appeal at its next meeting on Nov. 14-15.
Supporters of the rule change concede that the cap is not justified by any analysis done by NYISO staff.
“Because [the cap] is unsupported, will distort market signals, will harm reliability and will set a dangerous precedent that will embolden load interests to use the stakeholder process rather than the competitive markets based on sound and efficient market design to set prices, it cannot be found to be just and reasonable,” the petition says.
The appeal will be a “paper proceeding” unless a party requests oral arguments, NYISO spokesman David Flanagan told RTO Insider on Friday. “No such request has been received at this time,” Flanagan said.
The proposed rule change is in response to FERC’s Oct. 17 order accepting ISO-NE’s changes to its annual capacity reconfiguration auctions. The motion was carried with a 63% vote in favor, above the required supermajority of 58%.
Con Ed’s Astoria Generating Station would be impacted by the cap.
FERC’s ruling allows Castleton Commodities International’s 1,242-MW Roseton 1 generator, located 43 miles north of New York City in NYISO’s capacity import-constrained G-J locality, to supply 511 MW of its capacity to ISO-NE beginning next June for the 2017/18 delivery year.
Appeals of committee motions are rare and reversals are even rarer. According to the NYISO website, there have been 28 appeals since 2000, with 20 being denied, three motions reversed and five sent back to either the committee or staff for further action.
SPP stakeholders are considering the use of incremental long-term congestion rights (ILTCRs) to help solve some of the complexity with the RTO’s Z2 crediting process, a contentious issue that dates back to 2008.
Meeting in Kansas City last week, the Z2 Task Force spent considerable time discussing ILTCRs — a form of financial transmission rights used by most other RTOs and already included in SPP’s Tariff — as part of the transmission-congestion rights market.
The top 10 creditable upgrades represent $89.4 million, more than three-quarters of the total Z-2 assessments. | SPP
In lieu of cash compensation, upgrade sponsors would be eligible to receive ILTCRs as credit for their financial contributions to grid improvements, as the upgrades increase the available transfer capability on the system.
SPP’s outside legal counsel, D.C.-based Wright & Talisman, provided the results of its research on how other RTOs’ Tariffs compensate entities that sponsor network transmission upgrades. CAISO, ISO-NE, MISO, NYISO and PJM all apply some form of compensation through congestion rights or incremental auction revenue rights, according to the report.
“While the terminology, form, amount and duration varies from RTO to RTO,” the report said, “most RTOs provide these incremental ARRs on a long-term basis based on the incremental transfer capability provided by the upgrade.”
SPP’s TCR “market is still a little bit different than MISO or PJM’s, because SPP models on point of delivery, whereas in other markets it’s financial,” said Denise Buffington, Kansas City Power & Light’s director of energy policy and corporate counsel, and the task force chair.
The task force will continue its discussion with an educational session in Dallas on Nov. 29, during which it will bring in several subject matter experts to help the group examine SPP’s TCR market and its generation interconnection and aggregate study processes, among other items.
“I want more information. I don’t want to go into the weeds, but I want to know the pressure points and how one impacts the other … and begin connecting the dots,” Buffington said. “The problem we still face is an education problem. Every time we talk about [Z2], we learn something new — or about something else that touches it.”
In addition to ILCTRs, the group discussed five other options staff offered to improve the Z2 process:
Base plan funding: All upgrades, regardless of their origin, would be included in the current cost allocation methodology. This would recognize that the regional planning and operational processes will optimize all the available transmission.
Reverse engineering: SPP staff has reverse engineered the Z2 process and its associated data inputs, identifying potential modifications to simplify the process, including annual Z2 billing; revising the Tariff’s transmission payment schedules; removing short-term transmission service requests (TSRs) from the process; using annual transmission revenue requirements for point-to-point credit-payment obligations; posting impact ratios for each TSR; using an alternate source for transmission distribution factors; removing short-term TSRs from stacking; and a hybrid solution combining most of the modifications.
Upgrade sponsor-facilities rider (USFR): Consistent with the current Z2 revenue crediting process, sponsors would retain responsibility for reimbursing the owner that builds the creditable-upgrade facilities and the funds used to compensate the sponsors collected from users of the facilities. The process would be simplified by substituting a USFR in part of the crediting process by recovering the facilities’ engineering and construction costs over a specified number of months. The USFR rate would be an add-on charge applicable only to customers using the creditable-upgrade facilities, and funds would be distributed to the sponsor.
Construction credits: Allows the upgrade’s sponsor to receive credits against its transmission service invoice up to, but not above, the amount of engineering and construction costs paid to the entity that built the upgrade.
Toll-road option: Similar to the approach used to fund toll roads, the funding entity is repaid over time by those who use the upgrade. Staff would calculate transmission impacts on a new facility once it is constructed, and all subsequent customers would be charged a fee for use of the line. The sponsor would receive funding from that use until it recoups to the cost of the facility.
All of the options are still in play. Buffington told her fellow stakeholders she hopes they bring their own proposals or a ranking of those on the table to a January task force meeting before the Markets and Operations Policy Committee meeting. The task force expects to finish its work by April.
In the interim, staff will review the Z2 process to identify FERC-mandated requirements and SPP’s own additions and provide the task force with background on why certain requirements were placed in the Tariff. Staff was also asked to develop an annual cost estimate for ongoing support of the Z2 system and to document how it will model fixes and improvements.
SPP’s Board of Directors formed the task force in July to address Z2 waiver requests from members for directly assigned upgrade costs and to improve the process going forward. SPP has billed members for almost $110 million in regionwide, aggregate net payable historic amounts for Z2 credits and obligations, some of which date back to 2008.
Colonial said it would take three days for the gas to arrive at the Linden, N.J., terminal. The explosion and ensuing fire, near Helena, Ala., was the result of a backhoe punching a hole in the pipeline, sending 200 feet of fire into the air, killing one worker and injuring five others.
