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November 5, 2024

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ACP: Solar, Storage Soar in Record-breaking Q3; Wind Sputters

The U.S. grid added a record 5,551 MW of utility-scale solar, wind and storage in the third quarter of 2023, according to a new report released Wednesday from the American Clean Power (ACP) Association.

But while the overall numbers in ACP’s Clean Power Market Report were strong — a 13% year-over-year increase in clean power capacity — the results for individual sectors were uneven. Utility-scale solar coming online jumped 31%, but new wind capacity fell 77%. Only two onshore projects totaling 288 MW came online, the lowest figures the industry has seen since 2013, according to the report.

While solar and storage saw strong year-over-year growth in Q3, wind took a 77% nosedive. | ACP

Commercial and industrial (C&I) power purchase agreements (PPAs) were down 55% year over year, as buyers announced 3,175 MW of new contracts. According to the report, the drop reflects an ongoing slowdown in C&I PPAs.

At the same time, project delays continue to hamper industry growth. Developers put close to 23 GW of new capacity on hold last quarter because of delays, adding to other projects still unfinished from 2021 and 2022. Delayed capacity now stands at more than 56 GW, the report says.

While acknowledging such “near-term challenges,” ACP CEO Jason Grumet remains bullish on the U.S. clean energy market. The country currently has 243.4 GW of clean power capacity online, with a pipeline of 1,220 solar, wind and storage projects totaling an additional 128.2 GW, according to the report.

“The demand for clean energy is undeniable,” Grumet said, adding that the quarter’s “record-breaking numbers tell us that the U.S. clean energy sector continues to grow on a healthy, long-term trajectory.”

Other topline findings from the report include:

    • The wind sector could bounce back from its disappointing quarter, with projects totaling 12,856 MW now under construction, including 803 MW that broke ground over the three months from July to September. Including projects under construction and in development, the total pipeline is now 22,135 MW.
    • California took the No. 1 spot for new clean energy installations in Q3, with 1,900 MW of solar and storage added to the grid, but Texas still leads the nation in cumulative clean energy online — 56,948 MW — with No. 2 California trailing well behind, with 31,726 MW.
    • Hybrid projects, mostly combining solar and storage, continue to grow, with 2,908 MW coming online, up 30% over the same period last year. At present, the U.S. has 18,447 MW of hybrid projects in operation, 80% of which are solar and storage.

Waiting on the IRA

What’s behind all those numbers is the ongoing push-pull of the federal incentives from the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, and market forces from inflation to supply chain pressures and workforce shortages.

Like ACP, the Solar Energy Industries Association (SEIA) and Wood Mackenzie’s Solar Market Insight Report for the second quarter, released in September, noted that “the full benefits of the IRA have yet to materialize.”

But, for a change, the main problem is not project financing. “If anything, the amount of capital seeking high-quality solar project investments has only increased,” the SEIA-WoodMac report said. On top of inflationary pressures in the form of high interest rates and rising equipment and labor costs, developers are still uncertain about whether their projects will be able to qualify for IRA tax credits.

Despite guidelines issued by the Treasury Department, questions still linger. “As a result, the full benefits of the IRA, in the form of more development of solar projects that meet various policy objectives, won’t manifest until developers, asset owners and financiers have enough regulatory clarity to make confident investments,” the report says.

Many projects originally put on hold in 2021 and 2022 have yet to come online, along with 23 GW year-to-date this year. Solar accounts for two-thirds of delayed projects. | ACP

Looking at project delays, the ACP report says that on average, project delays run about 14 months, but 39% of delayed projects have experienced multiple setbacks — in some cases, five. Solar projects make up 67% of the delayed projects.

Still another caveat is that both the ACP and SEIA reports look at clean energy capacity, not generation, and few clean energy projects produce power at their full megawatt capacity. While renewables continue to outpace fossil fuels in new power added to the grid and waiting in interconnection queues, according to the Department of Energy, wind and solar combined now generate about 12% of U.S. electricity.

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EPRI: Changing Loads Raise Concerns for Modelers

The changing nature of large loads on the power grid is already making system modeling more challenging, and the problem will only grow as the shift continues, according to presenters at a webinar hosted by NERC, the North American Transmission Forum and the Electric Power Research Institute. 

Speaking at the first day of the annual Planning and Modeling Virtual Seminar on Wednesday, Parag Mitra, a senior technical leader at EPRI, said that while “we have been used to modeling large electric loads on our system for many years,” the kind of applications that make up those large loads has undergone a major shift in recent years. 

Whereas traditionally large loads comprised factories, steel mills and other large industrial functions, their newer counterparts are mostly electronic in nature — for example, cryptocurrency mining operations, data centers, hydrogen electrolyzers and electric vehicle chargers. Mitra explained that modelers are still coming to terms with the fact that although these new applications are comparable to their industrial forebears in the size of demand, their performance on the grid can be very different. 

“If you looked at a steel mill, you had a whole bunch of different motors that were running, and there were a bunch of different processes; whereas if you think of a data center, a large electrolyzer or a crypto-mining facility, all of these are large loads, but 90% of that [demand] is just a single type of process,” albeit spread across multiple machines, Mitra said. “The problem with that is, if one of those [electronic] devices behaves in a certain way, which may or may not be grid-friendly, you can anticipate that the entire facility is going to behave in that way.” 

The concept of grid-friendly and grid-unfriendly behavior, as NERC Senior Engineer John Skeath explained later in the seminar, has previously been expressed primarily in relation to EV chargers. (See NERC, WECC Outline EV Charging Reliability Impacts.) Grid-friendly behavior contributes to the overall stability of the power grid by, for example, reducing power draw when system voltage drops; by contrast, grid-unfriendly applications aim to maintain a constant power level regardless of system voltage, which can hurt grid stability by raising current draw when voltage is low. 

Mitra said that the large industrial loads of previous years were grid-friendly by nature; during a system disturbance, they would either trip offline or reduce their power draw without requiring any specific action. Electronic loads are different because the devices that make them up require a constant power draw, so their demand will not drop during a disturbance unless this behavior is programmed in. 

Some facilities may also have backups like a local generator or uninterruptible power supply, which makes predicting their behavior during a disturbance even more difficult; if a facility switches to a backup generation source, when will its demand return to the grid? 

“These devices may not trip offline; they might just move onto a local generation source or a local battery, but then they just disappear from the grid. So that can be a big issue if these loads are significantly sized,” Mitra said. 

The challenge is compounded in systems with high levels of inverter-based resources (IBRs), including wind and solar generators, which present challenges of their own to system modelers, Mitra said. (See IBR Models Remain Persistent Challenge, Task Force Warns.) Because both the shift to IBRs and the growth in electronic loads are likely to continue, grids designed in the future without a better understanding of both sides of the equation will face greater risks to reliability. 

Mitra said that building an understanding of these resources requires deep communication with manufacturers of the electronic equipment, who “have, for the most part, not been involved in this conversation.” Making these companies part of the discussion can help educate them about the burdens they place on the system, but also inform the modelers when their expectations are unrealistic. 

“There will be places where … you want to ask loads to follow a certain type of ride-through requirement,” Mitra said. “It’s going to be important to understand what the limitations of the loads are. [If you ask] a load to do a certain thing, it’s not a generator; it might not be able to provide those benefits, simply because it was never designed to provide grid support; it was probably designed to serve another purpose. So [it’s] important to have the discussion … so that we know what type of solutions are required to solve all these issues.” 

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FERC Approves CAISO Wheel-through Rule Changes

FERC on Oct. 30 approved a raft of CAISO tariff changes intended to ease temporary restrictions on wheeling power through the ISO’s grid under emergency conditions.

The approval came despite numerous protests from Western entities that considered the revised wheel-through rules to still be overly biased in favor of CAISO’s native load (ER23-2510).

CAISO implemented interim wheel-through restrictions in 2021 as part of a package of changes meant to promote summer reliability following the rolling blackouts and energy emergencies of summer 2020.

The rules reprioritized wheel-throughs so energy transfers between balancing authority areas in the Northwest and Southwest could no longer take precedence over capacity needed to serve CAISO native load. Under the rules, non-CAISO entities were required to apply at least 45 days in advance to designate high-priority wheel-throughs needed for reliability, giving the wheels equal standing with CAISO native load.

Until that time, CAISO — unlike other RTOs/ISOs — had never established mechanisms within its tariff to set aside transmission capacity to serve native load, notably not including native load requirements in its transmission commitments when calculating available transmission capacity (ATC).

Additionally, CAISO never adopted a transmission reservation system to protect its ability to serve native load when the ISO is constrained.

“Instead, when there was insufficient transmission capacity to support all intertie transactions, CAISO’s market software determined the priority order in which self-schedules would be curtailed using real-time market parameters known as penalty prices that were set forth in a business practice manual,” FERC noted in its Oct. 30 order.

In March 2022, FERC upheld its 2021 approval of CAISO’s wheeling restrictions, rejecting a rehearing request by the Arizona Corporation Commission and a coalition of Arizona utilities, including Arizona Public Service and Salt River Project, which argued CAISO’s rules discriminated in favor of the ISO’s load (ER21-1790).

But the commission at the time also pointed to continued divisions over the rules in the region and directed CAISO to “work with stakeholders to design and file a just and reasonable and not unduly discretionary or preferential long-term solution as expeditiously as possible.”

Changing Formulas

The CAISO tariff changes approved Oct. 30 are intended to give wheel-through transactions at the ISO’s interties the same scheduling priority as that of imports serving the ISO’s load. At the same time, the changes also elevate the scheduling priority of serving native load by altering CAISO’s ATC calculation to set aside intertie capacity for that load.

Under the new rules, CAISO will estimate ATC at the interties “monthly across a rolling 13-month horizon and daily across a seven-day horizon to derive the amount of transmission capacity available for entities seeking a monthly or daily Wheeling Through Priority,” the commission said in its order.

In its calculation for estimating the ATC for wheel-throughs at an intertie, CAISO will subtract both existing transmission commitments (ETComm) and the transmission reliability margin (TRM) from the total transfer capability (TTC) on the line. Under a new formula, the definition of ETComm is revised to include transmission ownership rights (TOR) and existing transmission contracts (ETC) — as it currently does — as well as transmission capacity for wheeling through priorities and native load needs, including native load growth in the applicable time horizon.

“CAISO states that it will initially determine the amount of transmission capacity to serve native load needs at each intertie for each calendar month based on the highest MW quantity of total RA and non-RA import supply under contract dedicated to serving CAISO load serving entities’ load as demonstrated by RA showings, and showings of historical contract information regarding non-RA import supply, at the intertie for that same calendar month during the previous two years,” FERC notes.

Powerex, NV Energy, the Arizona utilities and the Electric Power Supply Association (EPSA) argued CAISO’s proposal for calculating ATC would be “unduly preferential” to native load and would result in the ISO setting aside more intertie capacity than necessary to reliably serve its load.

Powerex contended CAISO’s own data indicates the availability of intertie capacity for priority wheel-throughs would be much lower under the new rules than under the current interim measures. NV Energy complained about a lack of clarity in how CAISO will calculate ATC values.

The Western Power Trading Forum (WPTF) and EPSA argued the proposed ATC calculation would set aside intertie capacity for native load without requiring CAISO load-serving entities to show they have contracted firm resources in a timely manner, whereas external LSEs could secure wheeling only through priority if they meet a power supply contract requirement.

The commission brushed aside those concerns, and others, in approving CAISO’s ATC calculation.

“As a threshold matter, we find no merit in any suggestion by protestors that CAISO is not entitled to set aside intertie capacity that is needed to serve CAISO load, or that it is unduly discriminatory in principle for CAISO to reserve this capacity for native load before making ATC available to external load serving entities,” the commission wrote.

The commission added that “one of the core elements” of FERC’s open access policies “is the ability of transmission providers to include in their tariffs certain protections to ensure reliable service to native and network load customers. [FERC] Order No. 888 establishes that public utilities may reserve existing transmission capacity for native load and reasonably foreseeable network transmission customer load growth.”

‘Inherent Tension’

FERC also approved CAISO’s proposed process for requesting and using priority wheel-throughs. For the monthly request window, the process will require a scheduling coordinator to request a wheeling-through priority no earlier than 12 months before the month for which it seeks the priority and not later than one month before the effective date of the priority. Daily wheeling-through priorities can be requested no sooner than seven days before and no later than one day before the priority effective date.

Protestors once again contested the provision that a wheel-though request must be supported by an executed firm power supply contract. CAISO said the contract requirement was an extension of its interim wheel-through tariff provisions and consistent with the requirement for external LSEs seeking to obtain an allocation of congestion revenue rights in the ISO. The grid operator said the contract requirement helps ensure that limited ATC on the interties is accessible to those that show they need it to serve their load and comparable to how RA contracts demonstrate the same need for CAISO LSEs.

The commission said that when it accepted CAISO’s interim scheduling priority rules in 2021, it explained that the firm contract requirement was not preferential for CAISO because it functions as “reasonable proxy that allows external load serving entities to demonstrate that they plan to use the CAISO grid to serve load in a manner that is comparable to CAISO load serving entities.”

“We find that the commission’s reasoning in that case applies with equal force here because the central issue is still the inherent tension between CAISO’s need to use intertie capacity to serve its own load and third parties’ ability to access that capacity,” the commission wrote.

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Summer Heat Drives Strong Entergy Earnings

Entergy said the summer’s record-setting temperatures led to “very strong” financial results during the third quarter, providing an opportunity for the company to flex its investment plans.

CEO Drew Marsh told financial analysts during the company’s quarterly earnings call Nov. 1 that the system surpassed previous peak demand records on 13 days during July and August.

“Our generation portfolio covered our customer demand and we operated well within our reserve margins,” Marsh said, adding that Entergy’s nuclear fleet operated with a 99% capacity factor.

The call came two days after the New Orleans-based company reached an agreement to sell its natural gas distribution business for $484 million to Bernhard Capital Partners, a Baton Rouge, La., private equity firm. Marsh said Entergy will use the proceeds to reduce debt and support its capital needs.

Marsh also discussed a recent $142 million settlement in principle between Entergy subsidiary System Energy Resources Inc. (SERI) and Arkansas regulators that resolves several pending cases. The agreement will result in SERI refunding Entergy Arkansas the settlement’s total, inclusive of about $50 million already received by the operating company from another Entergy affiliate.

SERI generates and sells nuclear power, primarily through its 90% ownership and leasehold interest in Grand Gulf. Regulators in Entergy’s four-state footprint have long complained about SERI’s practice of billing ratepayers for the costs of Grand Gulf’s sale-leaseback renewals under a unit-power sales agreement between the subsidiary and Entergy’s operating companies.

Entergy reported third-quarter earnings of $667 million ($3.14/share), an improvement from the same period a year ago, when earnings came in at $561 million ($2.74/share).

The company’s share price closed at $97.74 Wednesday, a gain of $2.15.

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Youngkin Announces Coalfield Redevelopment Deal

Virginia Gov. Glenn Youngkin (R) on Wednesday announced a deal to transform up to 65,000 acres of previously mined land in the southwest part of the state. 

The deal will involve the nonprofit Energy DELTA Lab working with Wise County officials and the landowner, Energy Transfer, to redevelop reclaimed coal mines as part of a public-private regional economic development campaign. 

“The commonwealth’s power demand is skyrocketing, and now is the time to make strategic investments in energy infrastructure to meet our growing needs,” Youngkin said. “This agreement will make Virginia energy more reliable, affordable and clean while transforming Southwest Virginia into a hub for innovation.” 

Energy Transfer’s land is managed by Penn Virginia Operating Co. and includes ownership of surface and subsurface rights, largely in Wise County, which borders Kentucky. 

The Energy DELTA (Discovery, Education, Learning & Technology Accelerator) Lab was formally launched after the release of the 2022 Virginia Energy Plan to diversify Southwest Virginia’s economy. The lab is a collaboration between energy companies including the state’s two main investor-owned utilities (Dominion Energy and American Electric Power’s Appalachian Power), the business development initiative InvestSWVA, the Southwest Virginia Energy Research and Development Authority, and the Virginia Department of Energy. 

The nonprofit lab is working to improve energy security and reliability while accelerating the commercialization and deployment of new technologies. It has a broad portfolio of projects that it could redevelop the old coal mines with including solar, wind, hydrogen, energy storage, pumped-storage hydro and building energy-efficient data centers. Overall it is considering more than a dozen projects that altogether represent more than $8.25 billion in potential investment from private capital. 

The deal with Energy Transfer to redevelop the huge tracts of land in Wise County won support from both sides of the political spectrum, with Virginia’s U.S. senators, Mark Warner and Tim Kaine (both Democrats), releasing a joint statement. 

“We have worked tirelessly for years to bring economic diversity to Southwest Virginia and were glad to secure funding for both Energy DELTA Lab and abandoned mine reclamation in last year’s government funding bill,” the senators said. “We are excited that this agreement between Energy Transfer and Energy DELTA Lab will pave the way for new energy developments on repurposed mined lands, serving as a market-driven solution to ensure Virginia’s energy security.” 

One of the advisers to the lab also welcomed the deal with Energy Transfer. 

“Private-sector leadership from Energy Transfer and Penn Virginia is critical to our long-term development strategy in Southwest Virginia’s coalfields,” said Will Payne, managing partner of Coalfield Strategies. “By creating multipurpose, energy-ready sites, we are addressing industry demand for co-locating significant power generation assets with robust power users, including data centers.” 

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UPDATED: Ørsted Cancels Ocean Wind, Suspends Skipjack

The world’s leading offshore wind developer has canceled two major U.S. projects and suspended work on a third but committed to building a fourth and is trying to salvage a fifth. 

None of the five have reached steel-in-the-water construction yet, but all were in various stages of development. 

Ørsted announced the news Nov. 1 with its nine-month 2023 financial results, which painted an unhappy picture for the Denmark-based company: an impairment of $4.06 billion in U.S. currency, $2.83 billion of it attributed to the cancellation of the Ocean Wind 1 and 2 projects in New Jersey. 

The company expects to announce further developments later this year as it reviews its U.S. offshore portfolio. 

Ocean Wind 1 received its federal approvals for construction in July and September. It was an important project to New Jersey’s clean-energy initiatives, an 1,100-MW first chapter in what state leaders had hoped eventually would be an 11,000-MW offshore power portfolio. 

Gov. Phil Murphy (D) and other proponents criticized Ørsted after the announcement. Opponents unhappy with Ocean Wind’s potential impact on the fishing and tourism industries cheered the decision and vowed to keep up the fight as the state’s third contracted project, Atlantic Shores, continues in preconstruction development. 

Also Wednesday, Ørsted CEO Mads Nipper said during a conference call: 

    • The company would halt work on the Skipjack project off the Delaware coast so as not to incur any further costs on it; if negotiations do not yield significant increases in the offshore renewable energy credit (OREC) prices, the company will cancel that project as well. 
    • Ørsted and partner Eversource have made the final investment decision on Revolution Wind and will start construction next year, albeit with a longer time frame. 
    • Having had their request for higher ORECs rejected by New York, Ørsted/Eversource hope to rebid the Sunrise Wind project under the expedited process promised by the state. 

Headwinds

The problems Ørsted is reporting with the Ocean Wind projects are being felt to some degree by everyone in the first wave of U.S. offshore wind development: soaring material costs, surging interest rates, supply chain constraints and lack of domestic infrastructure. 

The exceptions are projects that locked in their costs early on. Ørsted/Eversource, for example, is now building South Fork, which may be the first commercial-scale offshore wind project completed in U.S. waters. Vineyard Wind also is under construction, and Dominion Energy says its Coastal Virginia Offshore Wind project — approved by federal regulators just hours before Ørsted’s announcement — also locked in its contracts early on. (See BOEM Approves Virginia Coastal Offshore Wind.) 

Nipper said Ocean Wind ran into a severe problem when completion date of the first U.S.-built offshore wind vessel, the Charybdis, was pushed back. That pushed the entire construction schedule back to the point of requiring contract re-negotiations. The cost increases in those new contracts would make Ocean Wind untenable, he said. 

Ørsted will look to use the equipment it has purchased for Ocean Wind 1 on other projects. It will retain the seabed lease area for Ocean Wind 1 and 2 and consider options for it as part of the review of its U.S. portfolio. 

Offshore wind has become a political flash point in New Jersey, where the Legislature earlier this year allowed Ørsted to claim federal tax credits that otherwise would go to ratepayers. (See Murphy Signs OSW Tax Credit Bill.) 

Murphy blasted the company Wednesday. In a prepared statement, he said: 

“Today’s decision by Ørsted to abandon its commitments to New Jersey is outrageous and calls into question the company’s credibility and competence. As recently as several weeks ago, the company made public statements regarding the viability and progress of the Ocean Wind 1 project.” 

Tim Sullivan, CEO of the New Jersey Economic Development Authority, posted on X: “Gov. Murphy’s statement is exactly right — outrageous decision but offshore wind remains vital to our future. Note on the bill passed in June: it permitted federal credits to benefit Ocean Wind 1 *if and only if* they built the project. Now they get nothing from that bill, period.” 

U.S. Rep. Jeff Van Drew (R), who represents much of the Jersey Shore, where opposition had galvanized, posted: “I am thrilled to see that Ørsted has decided to pack up its offshore wind scam and leave South Jersey’s beautiful coasts alone. A tremendous win for South Jersey residents, our fisherman and the historic coastline of the Jersey shore.” 

Save Long Beach Island posted: “One down-One to go. We are encouraged by Ørsted’s decision to move on but remain steadfast in our fight with Atlantic Shores. This fight is not over.” 

Wider Picture

Offshore wind is off to a late start in the United States. Thirty-two years after the first wind farm went live off the coast of Denmark, installed capacity is estimated at more than 64,000 MW worldwide. Just 42 MW of it is operational in the United States. 

The ill-fated Cape Wind project famously collapsed almost a decade ago, but Ocean Wind 1 is the first of the new wave of U.S. offshore wind projects to be canceled. 

It is the strongest blow yet to President Biden’s goal of 30 GW of offshore wind capacity installed by 2030. 

But it is far from the only setback. 

Vineyard Wind and SouthCoast Wind have canceled their power purchase agreements in Massachusetts and Park City Wind has reached a deal to do the same in Connecticut.  

The difference there is that the developers hope to rebid, secure higher compensation and start construction. 

Ørsted is walking away from Ocean Wind. 

Developers of the Beacon, Empire and Sunrise projects also have said they cannot continue without more money. New York rejected their requests in October but invited rebids. (See NY Rejects Inflation Adjustment for Renewable Projects.) 

Atlantic Shores in July said it needed more support from New Jersey of the kind the state had just extended to Ocean Wind. But it told the Philadelphia Inquirer on Wednesday it is continuing development for now. 

Ørsted’s Other Projects

Nipper said during the conference call there would be minimal financial repercussions if Ørsted cancels the Skipjack project. 

But cancellation of the Ørsted/Eversource Sunrise project would run in the range of $420 million, he said. 

Nipper said he sees rebidding as the best path forward for Sunrise, although he would like to keep the current contract alive during the rebid process. Initial indications are that New York will require cancellation before rebid. 

Two things give him optimism on Sunrise: The average OREC price in the latest round of tentative offshore wind contract awards is higher than Sunrise had been seeking, and soil testing reveals the landfall site for the Sunrise export cable is contaminated — making the project eligible for enhanced federal investment tax credits. 

Revolution Wind also should benefit from brownfield designation, Nipper said. 

Importantly, Ørsted has been able to secure a backup installation vessel for both Revolution and Sunrise. 

Revolution received its positive record of decision in August and its construction and operations plans are expected to be approved this month. (See BOEM Approves Revolution Wind off New England Coast.) 

Nipper said a risk analysis was favorable and Ørsted decided to move ahead with Revolution. Ørsted and Eversource announced the final investment decision Wednesday. 

Eversource is actively attempting to sell its share of the partnership. It did not return a request for comment on the progress of that effort. 

Nipper said Revolution and potentially Sunrise would proceed to construction with Eversource as a partner if the New England utility is unable to reach a sale deal. 

The two companies also are partners on South Fork Wind, a smaller project that may be the first to reach completion in U.S. waters. In early October, Newsday reported that installation vessel availability was delaying the work. 

But on Tuesday evening, the first turbine set sail from the Port of New London, Connecticut. It will be installed in the coming days. 

Financial Trouble

Ørsted’s nine-month financials were not well-received. Its stock price dropped more than 25% in heavy trading Wednesday to close at its lowest point in more than five years. 

As one financial analyst noted during the call, each update in 2023 has been worse than the one before it. 

The company did take some effective hedges against interest rates earlier this year, Nipper said, but accounting rules do not allow that to be deducted from the impairment. 

Equinor and bp, partners on the financially troubled Beacon Wind and Empire Wind projects in New York, also are suffering financially, though not to the same degree as Ørsted. 

Equinor on Oct. 27 announced a $300 million impairment due to its U.S. renewables portfolio and bp on Oct. 31 announced a $540 million impairment attributed to its New York Offshore wind projects. 

Reuters reported that bp’s head of U.S. renewables told a conference in London on Wednesday that “offshore wind in the U.S. is fundamentally broken.” 

However, she said she believed that while the path forward will be challenging, the projects will be built. 

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Advanced Energy United Urges Changes Beyond Order 2023 for ISO-NE

ISO-NE should go beyond the changes required by Order 2023 to address the high costs and long delays associated with interconnection in the region, said a recent white paper commissioned by Advanced Energy United and written by the energy consulting firm Daymark Energy Advisors.

“The costs imposed by inefficiencies in the interconnection process are borne by ratepayers in the region and are one significant factor which threatens the New England states’ decarbonization goals,” Daymark wrote. Advanced Energy United represents clean energy and storage developers, owners, and operators in the region.

The report detailed specific recommendations for the RTO’s compliance filing, along with longer-term actions to take to address issues that will not be addressed in the filing.

“While it is critical that Order 2023 is addressed and that a solid compliance package is submitted to the commission, we stress that this marks the beginning of the region’s interconnection process reform efforts,” Daymark wrote. “Changing technology, policy efforts and expected FERC orders on planning and cost allocation, among others, makes continued attention to comprehensive market reform imperative.”

Regarding ISO-NE’s Order 2023 compliance, Daymark said ISO-NE should work to limit the potential for restudies and keep the cluster study window to the 150-day time frame prescribed by FERC, instead of the RTO’s proposed 270-day cluster window. (See ISO-NE Details Proposed Order 2023 Compliance.) The firm said that reducing interconnection timelines was one of the main goals of the commission’s order, and a longer cluster study window could push back subsequent clusters.

ISO-NE representatives have said it is difficult to guarantee it will be able meet the 150-day timeline, in part because of the undetermined number of projects it may need to consider in any given cluster.

Daymark also recommended that ISO-NE clarify its methodology for studying separate subgroupings of projects within a given cluster. The firm said the RTO should publish the data and assumptions used in each cluster study in conjunction with its results.

“The process the ISO intends to use in each cluster study should be known before the cluster request window opens so that interconnection customers can replicate the process, if they so choose, and make fully informed decisions,” Daymark wrote.

Regarding alternative transmission technologies (ATTs), Daymark said ISO-NE should include dynamic line ratings with the other ATTs to be considered in interconnection studies. Daymark also called on the RTO to provide transparency around how each alternative will be considered in the study process and detail the results of ATT evaluations in study reports.

Looking beyond Order 2023 compliance, Daymark called for more disclosure around expected regional interconnection costs for project developers prior to interconnection studies, saying this could reduce the number of projects that drop out mid-process.

“Hand-in-hand with providing the data is ensuring that each study cycle follows a well-documented study approach,” Daymark added. The firm also said ISO-NE and the region’s transmission owners should work to minimize uncertainty within interconnection cost estimates and advocated for an upper limit to the cost overruns that can be charged to developers.

Finally, Daymark said spreading costs among a cluster of projects is a good first step toward properly allocating costs associated with interconnection upgrades. At the same time, ISO-NE should consider further steps to share the costs of upgrades with all beneficiaries, Daymark wrote.

“The establishment of a cost-allocation structure that is simple to administer, clear to all participants and fair to interconnection customers, the TOs and ratepayers should be a reform priority,” Daymark wrote, adding that interconnection upgrades can benefit state policy goals, enable increased electrification, promote system resilience and increase market competition.

“We recommend that the ISO pursue a cost allocation rule that would recognize the headroom created by a set of network upgrades and charge the projects in the cluster only for the system capability they needed to interconnect,” the report recommended, saying this would be conducive in the long term to “more closely coordinated planning of the system to address the reliable delivery of power to load and the interconnection of projects without distorting incentives.”

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PSEG Reports Q3 Earnings, Infrastructure Investment Plans

Public Service Enterprise Group (PSEG) on Tuesday reported that third-quarter earnings were up to $139 million, compared to $114 million for the same period last year, and executives laid out their plans for infrastructure investing on a call with analysts.

PSEG’s main subsidiary, Public Service Electric and Gas, “invested approximately $1 billion in capital spending during the third quarter, bringing the year-to-date spend to $2.7 billion,” said PSEG CEO Ralph LaRossa. “For the full year 2023, capital spend is expected to total $3.7 billion, slightly higher than our original plan of $3.5 billion, ahead of scheduled execution on our Clean Energy Future-Energy Efficiency and Infrastructure Advancement Programs. This work is helping our customers to save energy and lower their bills, upgrading the ‘last mile’ of our system, as well as adding new electric infrastructure due in part to increasing EV penetration.”

PSEG has been working to improve the predictability of its business by selling off its fossil generating assets to ArcLight Capital Partners early last year and exiting the offshore wind development business early this year.

“We have helped to secure the financial viability of critical, important New Jersey energy assets with the decision to retain our carbon-free baseload nuclear fleet, enhanced by the revenue stability of a production tax credit (PTC) that begins January of 2024,” LaRossa said.

The federal PTC for nuclear is in place for a decade, giving PSEG enough security that it can execute its five-year capital investment program without issuing new equity or selling any assets, he added.

PSEG is putting some of the extra money back into those nuclear plants, as well, with plans to transition its boiling water reactor at Hope Creek from an 18- to a 24-month refueling cycle, LaRossa said.

The firm is waiting for final approval on a $447 million transmission project that it bid into a PJM solicitation last year, with the RTO’s board expected to vote on it in December, LaRossa said.

“We intend to leverage our considerable transmission skills in similar opportunities that arise,” he added.

The utility also reported success in expanding efficiency efforts under the conservation incentive program that has been in place since 2021. The program limits the impact of weather and other sales’ variances on the firm’s earnings while letting it earn money by promoting efficiency to both its electric and gas customers, said CFO Daniel Cregg.

“To give you some perspective on how strong the demand for energy efficiency is: Consider that PSE&G now sells more energy-efficiency solutions in a single month than we did in an entire year just a few years ago,” LaRossa said.

The utility is also just over halfway done rolling out new smart meters, with 1.3 million deployed out of a plan for 2.3 million, LaRossa said.

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BOEM Approves Coastal Virginia Offshore Wind

Federal regulators have approved the nation’s fifth and so far largest utility-scale offshore wind farm: the 2.6-GW Coastal Virginia Offshore Wind project. 

Dominion Energy has been gathering components in anticipation of the Record of Decision that the U.S. Bureau of Ocean Energy Management issued Tuesday. Dominion said it plans to start construction in late 2023 and complete the work in late 2026. 

The project is an integral part of the company’s move toward clean energy, it said. 

“More than a decade of work has gone into the development, design and permitting of CVOW,” Dominion CEO Robert Blue said in a prepared statement. “Offshore wind is a vital part of our strategy to provide our customers with a diverse fuel mix that delivers reliable, affordable and increasingly clean energy.” 

The project will entail up to 176 wind turbine generators rated at 14.7 MW each. The layout of the offshore infrastructure was modified from initial proposals to reduce impacts on fisheries and ocean navigation, based on input BOEM received during public comment periods. 

The Record of Decision includes provisions to avoid impacts from construction and operation. BOEM said Dominion has committed to fishery mitigation funds to compensate the commercial and recreational fishing industries for any losses inflicted by CVOW. It also will take steps to reduce the chances of harm to protected ocean species. 

The decision comes 10 years and two months after Dominion won Lease Area OCS-0483 in a BOEM auction. The 112,799-acre zone stands 23.5 nautical miles east of Virginia Beach. 

Dominion has been laying the groundwork for the project even as it worked its way through the review process. It reached a milestone Oct. 27, when the first eight monopile foundations were offloaded at the Portsmouth Marine Terminal. The massive steel cylinders will be stored there to await installation, which is anticipated in spring 2024. 

More than 750 workers have been involved in the project directly or indirectly as Dominion ramped up preparations for CVOW, most of them in the Hampton Roads region. The company said more than 1,000 workers will support the project’s operations and maintenance after construction is complete. 

CVOW is the fifth commercial-scale project approved by BOEM, which previously greenlit the Vineyard Wind 1, South Fork Wind, Ocean Wind 1 and Revolution Wind projects. 

But in another way, CVOW was first: Dominion installed two 6-MW turbines in the lease area for research purposes. When they went online in fall 2020, they provided the first grid-connected wind power in U.S. federal waters. (Rhode Island’s Block Island Wind Farm went online in 2016 but is in state waters.) 

Wind power development off the Northeast coast has run into serious financial problems. Two major New England projects have canceled their power purchase agreements, and a third is in the process of doing so. Three major projects are at substantial risk of dropping out of New York’s development queue. 

The problem in each case is that the developers locked in their revenue before they locked in their construction costs, then were socked by inflation and rising interest rates. 

By contrast, construction is well underway on the first two projects, Vineyard and South Fork. CVOW seems to be in the same position: able to proceed to construction now because it locked in its costs early enough. 

In a Sept. 5 news release, Blue credited Virginia lawmakers and regulators with creating a framework that allowed it to take those steps. 

“[The framework] enabled us to take a differentiated approach to project development, securing agreements early with offshore wind suppliers for material and services while giving them confidence in our project’s completion,” Blue said. “This allows our vendors to maintain focus on delivering their equipment and services on time. Not only is our project on budget and on schedule, but it is also estimated to deliver electricity at a levelized cost that competes very favorably with the nation’s unregulated offshore wind projects while creating hundreds of jobs and millions of dollars of local economic benefit.” 

In the same news release, Dominion said that it would de-risk the CVOW project by taking on a minority investor. And in a filing with the Securities and Exchange Commission in August, Dominion indicated the offshore wind installation vessel it ordered will cost more and take considerably longer to complete than initially projected. 

The Charybdis is notable not only for its sheer size (473 by 184 feet) but because it is being built in Texas: It will be the first U.S.-built vessel of its kind and meet the domestic manufacture requirements of the Jones Act. 

The industry trade group Oceantic Network — which until Monday was known as the Business Network for Offshore Wind — hailed the decision as great news. 

“Dominion’s CVOW project is anchoring a critical corner of the emerging domestic supply chain, and advancing this project means supporting development of America’s first wind turbine installation vessel and substantial port redevelopment work,” Oceantic Vice President John Begala said in a news release. “The Hampton Roads area is abuzz with offshore wind activity and the federal government’s advancement of the CVOW project will continue advancing the area as a hub for the whole industry.” 

BOEM still must approve the construction and operations plan, which would be the final greenlight for CVOW. 

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MISO Selects Ameren to Build 2nd Competitive LRTP Project

MISO has awarded Ameren Transmission Company of Illinois (ATXI) the lead in building a pair of lines and substation in northwest Missouri, the second competitively bid project stemming from the RTO’s $10 billion long-range transmission plan (LRTP).

The Ameren subsidiary plans to partner with the Missouri Joint Municipal Electric Utility Commission on development of the $84 million, 345-kV Fairport-Denny project, extending to the Iowa-Missouri border. ATXI plans to sell 49% of the project to the Missouri state utility agency just before the project is placed in service in 2030.

MISO said ATXI was one of four developers to submit project proposals, with LS Power Midcontinent, NextEra Energy Transmission Midwest and Transource Energy offering nine. MISO does not reveal the companies behind non-winning bids, although it said one developer submitted six proposals based on differing designs. It said proposals ranged from $84 million to $134 million for project implementation. MISO originally estimated the Fairport-Denny project would cost $161 million. The RTO said cost differences between proposals came down to conductor size, substation design and tax liabilities.

Jeremiah Doner, MISO’s director of cost allocation and competitive transmission, said ATXI’s proposal incorporates “strong cost containment and a sound design.” MISO said ATXI pledged annual revenue requirement caps and carefully considered pre-construction studies and proposed routes.

“Ameren’s proposal, submitted with its partner MJMEUC, had a substantially lower cost than that of the next closest proposal, which was 36% higher based on the annual costs to customers over 40 years,” Doner said in a press release.

MISO said ATXI will execute a selected developer agreement. Doner said MISO looks forward to “working closely with the developer, regulators and other stakeholders to support a successful and on-time completion of the project.”

In a press release, ATXI President Shawn Schukar said the project bid was the “result of a collaborative effort with many community partners who have the best interests of our state in mind.”

He said ATXI will continue to solicit input from the community to build affordable transmission projects.

MISO is simultaneously managing multiple RFPs related to the first LRTP portfolio.

The grid operator opened an RFP for another LRTP project in March. It seeks bids on the $556 million Denny to Zachary to Thomas Hill 345 kV project, part of which will link up with the Fairport-Denny project. Proposals are due Nov. 14. (See MISO Begins LRTP’s 2nd RFP Process.)

The half-billion-dollar solicitation is MISO’s most expensive request for proposals.

The grid operator also opened two other RFPs in July: the $12 million Deadend to Tremval 345-kV project in Wisconsin and a $23 million, 345-kV line segment from the Iowa-Illinois border to the Ipava substation in Illinois. It will select developers for the trio of projects over 2024.

In May, MISO selected LS Power’s Republic Transmission to build the $77 million Hiple 345-kV line at the Indiana-Michigan border. It’s MISO’s first competitive project surfacing from the LRTP. (See MISO Picks Republic Transmission for 1st LRTP Competitive Project.)

In MISO, competitive transmission developers must be members and must be prequalified to bid on competitive projects. Developers must include a $20,000 application fee and a $100,000 initial deposit to have their bids considered by MISO.

MISO’s decision to go with ATXI for the LRTP competitive builds comes as a right of first refusal (ROFR) bill for downstate Illinois fizzled out, with supporters last week acknowledging they don’t have enough votes in the Democratic-controlled General Assembly to overrule Gov. J.B. Pritzker’s August veto of the ROFR portion of energy legislation approved in the spring. (See Ill. Gov. Vetoes Downstate ROFR for MISO Regional Tx Projects.)

The bill would have given ATXI exclusive rights to build regional MISO transmission lines in its territory and shut down MISO’s competitive bidding process for future projects in downstate Illinois. ATXI backed the legislation.

Recently, ATXI Chairman and President Leonard Singh wrote in a letter to state lawmakers that the company had been “subjected to well-funded misinformation campaigns by out-of-state developers and special interests” who opposed the ROFR.

Singh said a ROFR would keep transmission projects under state — rather than federal — control and remains “the best option to prevent unnecessary delays in construction and hundreds of millions of dollars in potential cost overruns.”

Rep. Larry Walsh (D-Elwood), who sponsored the original measure, said he would reintroduce even broader legislation in spring that seeks to install a permanent ROFR on transmission projects for all utilities in the state.