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November 7, 2024

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MISO States Ramp Up ROFR Legislation

State legislatures in MISO’s footprint are undertaking a flurry of activity on right-of-first-refusal legislation as major transmission planning surges.

In Mississippi, ROFR legislation has cleared both houses of its legislature and is set to be signed by the governor later this month. Missouri and Kansas are currently mulling adding ROFRs for their utilities.

Eight MISO states already have ROFR laws, which give incumbent utilities first crack at transmission construction: Indiana, Iowa, Michigan, Minnesota, Montana, the Dakotas and Texas. Wisconsin lawmakers have considered one but haven’t passed it.

Montana had debated whether to revise its ROFR law to include lines constructed in a “federally recognized reliability organization” instead of a “midwest reliability organization,” as is currently worded. But on Wednesday, the state’s Senate Energy and Telecommunications Committee voted 11-1 to table the bill (SB 353).

Minnesota is looking into repealing its ROFR law. Had it not been for the legislation, MISO would have opened the $115 million, 50-mile, 345-kV Huntley-Wilmarth line to competitive bidding in 2016. Cost overruns related to a routing change pushed construction estimates beyond $150 million in 2020. (See Major MISO Tx Projects Face Various Hurdles.)

Indiana’s latest ROFR revision has cleared the House of Representatives and is before the Senate. The state currently maintains ROFRs for transmission projects within its utilities’ service territories. The new bill will extend that right to interregional projects as well, effectively overriding FERC Order 1000 (HB 1420).

An Indiana state representative recently said MISO has been involved in lawmakers’ proposal to re-establish a ROFR for interregional projects. During a Feb. 7 meeting of the Indiana House Utilities, Energy and Telecommunications Committee, Rep. Edmond Soliday (R) appeared to assert that MISO supported the legislation.

Soliday said he was “amazed” during a recent meeting with MISO executives how an unnamed vice president said, “We need this [ROFR] bill; we need this bill in Indiana.”

“So that’s why we brought it forward,” Soliday said during the hearing.

Soliday did not clarify his comments, nor identify who he was in conversation with after multiple requests from RTO Insider. MISO declined to identify the executive in question.

Through a spokesperson, the RTO reiterated that it is “not a policymaker and does not take positions on legislative matters.” However, Brandon Morris said, “MISO routinely has informational conversations with regulators and policymakers about the potential impacts of new rules or regulations.”

“We do not advocate for legislation, but we do outline the realities of complying with specific laws related to transmission planning and grid operations. We simply provide the facts so they can reach their own conclusions,” Morris said in an emailed statement to RTO Insider.

Indiana Rep. Matt Pierce (D) said his “no” vote on the bill’s advancement came down to his belief that having a “disinterested party like MISO manage the bid process would bring us more robust competition than we might see under this bill.”

The argument mirrors national trends in ROFR legislation. Critics say the laws restrict competition while supporters maintain that the projects are best left to the utilities that understand their systems best.

Ameren Missouri Vice President of Regulatory Affairs Warren Wood said recently in a company advocacy website that his utility supports the legislation because it “is crucial to ensuring Missouri electric utilities are the architects and builders of our state’s transmission projects moving forward.”

Last week, Oklahoma Senate Energy Chairman Lonnie Paxton announced he would not hear Oklahoma’s proposed ROFR legislation, calling it anticompetitive.

Industrial Energy Consumers of America President Paul Cicio said the bill’s failure is a win for consumers.

“Other states considering these anticompetitive and unconstitutional ‘right of first refusal’ bills such as Indiana, Mississippi, Kansas, Missouri and Montana should follow Oklahoma’s example and reject them,” he said in a statement. “With record investment into America’s electrical grid expected in the next few decades, it is vital that states find cost-effective ways to build transmission infrastructure while promoting innovation. Competition is the only way to achieve those goals. The interests of the consumer will win out.” At the time of Cicio’s statement, Montana’s ROFR bill was still being considered.

Cicio’s organization is part of a consumer alliance asking FERC to block MISO and other grid operators from applying “anticompetitive” ROFR laws to their regional transmission planning and cost-allocation processes (EL22-78). The complaint is pending at FERC. (See Consumer Groups File FERC Complaint Against MISO.)

The group said ROFR laws conflict with the commission’s rules on transmission competition and its obligation to establish just and reasonable transmission rates. It asked FERC to prohibit MISO from recognizing state ROFR laws in its $10.4 billion, 18-project, long-range transmission plan. Only about 10% of the portfolio is open to competitive solicitation.

The alliance also includes the Coalition of MISO Transmission Customers, the Wisconsin Industrial Energy Group, Resale Power Group of Iowa, Association of Businesses Advocating Tariff Equity and the Michigan Chemistry Council.

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Vistra Favors PCM’s Emphasis on Dispatchable Gen

Vistra (NYSE:VST) CEO Jim Burke took a wait-and-see approach Wednesday to ERCOT’s market redesign that is currently being debated by regulators, legislators and stakeholders, pointing out there are many details yet to be determined.

“I think there’s really a couple concepts we would want to make sure when we get through the stakeholder process,” he told financial analysts during Vistra’s year-end earnings call. “One is, is it material enough to attract investment? And is it enough to retain the generation that’s currently there?”

Attracting new generation and retaining new generation, primarily dispatchable, are the two goals behind the performance credit mechanism (PCM) that the Texas Public Utility Commission has offered up for vetting by the state’s legislature. The construct would reward generators — like Vistra’s Luminant subsidiary — in ERCOT’s energy-only market with credits based on their performance during a determined number of scarcity hours. (See Texas PUC’s Market Redesign Dominates ERCOT Market Summit.)

“I think it’s too early to say what the PCM is going to provide, obviously,” Burke said. “We believe in that dispatchable resource emphasis around PCM. We think that’s core to grid reliability. But there’s too many things to still work out in the stakeholder process.”

Vistra reported year-end adjusted EBITDA from ongoing operations of $3.12 billion, as compared to 2021’s performance of $2.03 billion. The February 2021 winter storm had a largely negative effect on the company’s earnings the year before.

For the quarter, ongoing operations adjusted EBITDA was $771 million, down from the year prior of $1.19 billion.

The company uses adjusted EBITDA as a performance measure because, it says, outside analysis of its business is improved by visibility into both net income prepared in accordance with GAAP and adjusted EBITDA.

While Vistra keeps a keen eye on the PCM and its possible benefit to thermal generation, it continues to transition its generation fleet to lower-carbon resources through investments in solar and battery energy storage developments. It added 418 MW of zero-carbon generation and storage in Texas and retired about 2.9 GW of fossil units in Ohio and Illinois.

The company plans to add 350 MW to its Moss Landing battery storage project in California. That will increase the facility’s capacity to 750 MW.

Vistra’s share price closed down 28 cents Wednesday at $21.71 after briefly reaching $22.41 following the earnings release.

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OurEnergyPolicy Examines Role of Competition in the Energy Transition

Electricity markets might need to change along with the shift to more renewables in the industry, but speakers on an OurEnergyPolicy webinar yesterday argued they were still the best way to make that transition reliable and affordable.

Some have claimed that the transition to markets has been difficult for the old monopoly utilities in the states that have opened their markets, but Emily Sanford Fisher, the Edison Electric Institute’s executive vice president for clean energy, is not among them.

“The answer is ‘no’; I think they’ve responded well,” Fisher said. “It’s been, you know, 20, maybe going on 30 years since some of these restructurings have occurred. But I think one of the interesting impacts that we haven’t focused on is the supplier-of-last-resort obligation.”

In every restructured state except for Texas, utilities are the provider of last resort, and significant shares of small, mass-market customers still take service from them. The utilities have to buy power to ensure that they can meet that demand, plus any customers who come back to their service from a competitive firm, Fisher said.

Texas has gone the farthest with restructuring, and its old utilities in the ERCOT market are effectively wires-only companies now, with the provider-of-last-resort obligation covered by competitive retailers.

“We are equal participants in these markets,” Fisher said. “Some of the discussion often sounds like we live in two worlds: There’s an [investor-owned utility] world, and then there’s a competitive market world. We’re all part of that same sort of ecosystem, but our ability to plan for and to make sure that we are able to provide power to customers is sometimes challenged by that construct.”

Restructured states generally do not allow utilities to directly own generation, but Fisher noted that has started to change in states like Massachusetts that want to see major investments in offshore wind. Utilities’ balance sheets are better able to handle those major, upfront investments, she added.

While utilities can help build massive infrastructure projects, the industry has many more options to supply customers than it used to in the past, said Robert Dillon, executive director of the Energy Choice Coalition.

“They place a bet on one technology, and the market is changing so rapidly, that a lot of times they’re betting on the wrong technology,” Dillon said.

The private sector is able to invest in a broad array of different technologies that can help improve flexibility and reliability, including the distributed technologies that customers are investing in themselves, he added.

“I think the existence of competition and generation makes sense,” Fisher said. “I think there’s a benefit that has allowed us to bring new technologies into the market.”

Renewables were probably going to grow anyways, but the combination of markets and state renewable portfolio standards has driven much of their deployment, Fisher said. Renewables are cheap to deploy now, but other technologies such as hydrogen or advanced, long-duration storage are going to be needed to get to a 100% emissions-free grid, and Fisher said utilities are in a good position to help them become commercially competitive.

Locking in too many decisions now could prove to be a bad bet for the future given that power plants are meant to last for decades, noted Conservative Coalition for Climate Solutions Vice President of Public Policy Nick Loris.

“We don’t necessarily know what the future generating sources that are most affordable, reliable and clean will be,” Loris said. “And the more that the government locks resources in unproductive places with specific tax subsidies to specific energy technologies, it makes it all that more difficult for them to compete in the marketplace.”

The Inflation Reduction Act’s clean energy tax incentives transition to just a “clean incentive” that is not technology specific starting in 2025, which should allow “all the flowers to bloom,” Fisher said.

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Washington House Calls for Dimming Turbine Lights

OLYMPIA, Wash. — The House voted 94-1 Monday to require wind turbine lights be turned off at night when not triggered by airplanes.

House Bill 1173, introduced by Rep. April Connors (R) now goes to the Senate. Connors represents the Kennewick area, where a 224-turbine wind farm proposed in the Horse Heaven Hills just south of the city has prompted pushback from residents upset that the project would clutter their views of a pristine-looking ridge line.

If enacted, the bill would require existing and future turbines to be fitted with an aircraft detection lighting system that would turn on the lights only when airplanes were in the vicinity. The proposed law would go into effect for existing turbines on Jan. 1, 2026.

Scout Clean Energy of Boulder, Colorado, has proposed building up to 224 wind turbines, each about 500 feet tall, on 112 square miles of mostly private land in the Horse Heaven Hills. About 294 acres of the Horse Heaven Clean Energy Center would also hold solar panels. The wind turbines and solar panels are projected to produce 1,150 MW. 

Horse Heaven Clean Energy Map (Scout Clean Energy) Alt FI.jpgThe Horse Heaven Clean Energy Center will generate up to 1,150 MW from solar panels and 224 wind turbines. | Scout Clean Energy

 

At a Jan. 16 hearing before the House Energy & Environment committee, Connors said the blinking lights on top of the 500-foot towers could be seen across an area with roughly 200,000 residents. “Those blinking lights at night, you can see them from hundreds and hundreds of miles away,” she said.

Germany has a similar law in effect, she said. Connors estimated that Washington already has 2,000 wind turbines.

While wind turbines provide needed electricity, “for many others, they are a disturbing eyesore,” said Kennewick resident Paul Krupin at the hearing. 

Peter Godlewski of the Association of Washington Business was concerned that the cost of adding an aircraft detection lighting system to each turbine would increase the cost of producing electricity, which would add to consumers’ bills.

Scout says it is developing visual simulations for numerous viewpoints in the surrounding area as required by the State Environmental Policy Act. “These simulations will provide a good representation of how the project will look once constructed and will be posted to the project website once completed,” the company said.

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Washington Holds First Cap-and-Trade Auction

Washington’s first cap-and-invest auction took place Tuesday, but initial results will not be released until March 7, when the state Department of Ecology will publish information about the auction prices and the number of sold allowances. Each allowance will equal a metric ton of greenhouse gases.

Ecology department spokesperson Claire Boyce-White said it will take a week to compile the initial data, and that the agency will release information on the amount of revenue raised on March 28.

Both the March 7 and end-of-March reports will be posted to the department’s Auctions and Trading webpage under the Market Information tab at the bottom of the page

“Today’s auction marks an important milestone in the implementation of the cap-and-invest program,” said Laura Watson, director of the Department of Ecology. “I am proud of our staff’s work to bring this historic greenhouse gas reduction program to life.”

In January, Washington officials told the Senate Transportation Committee that the cap-and-trade auctions could raise almost $1.5 billion through fiscal 2024.

Later this legislative session, the state Senate and House plan to allocate revenue from the first auction. The ecology department estimates $484 million in cap-and-trade revenue for fiscal 2023 (July 1 to June 30, 2024) and $957 million in fiscal 2024.

The revenue from the auctions is expected to shrink over time as the number of emission allowances is reduced. The department estimates $901 million in revenue for FY 2025, $730 million in FY 2026 and $592 million in FY 2027.

Emitting companies would bid on the allowances, which would be made available in batches of 1,000. The first auction will cover 6.185 million allowances, with a minimum allowed bid of $22.20/allowance.

The highest bidder would get first crack at the limited number of allowances, the second-highest bidder would get second crack, and so on. The auction ends when the last of the designated allowances is bid upon. Then all successful bidders will pay the same price per allowance as the lowest successful bid.

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Changes to Permitting Laws Face a Stark Partisan Divide

“Permitting reform” might be a legislative goal for some on both sides of the aisle in Congress this session, but the two parties are far apart on what that means, as evidenced by two hearings held by the House Natural Resources Committee on Tuesday.

The full committee held a hearing on the BUILDER Act, which would change the National Environmental Policy Act by requiring enhanced coordination among federal agencies, creating predictable timelines for project reviews and limiting litigation to lawsuits brought by parties involved in the agency review process. (See NRECA Endorses 2-Year Limit on NEPA Reviews.)

Earlier in the day, the committee’s Energy and Mineral Resources Subcommittee held a hearing on a pair of bills: the Transparency and Production of American Energy Act and the Permitting for Mining Needs Act of 2023. The first bill is focused on increasing leases for oil, gas and geothermal on federal lands, while the second would make similar changes for mining specifically.

Most people do not know the issues around permitting infrastructure and have never heard of NEPA, committee Chair Bruce Westerman (R-Ark.) said.

“But I do know that every single person in the U.S., regardless of their zip code, has relied on infrastructure, energy or other projects that underwent NEPA reviews,” Westerman said. “And all too often, I know that Americans have faced bureaucratic nightmares and decades-long delays in attempts to build roads and bridges in their communities, or access critical mineral resources.”

Without changes to NEPA, Westerman questioned how any of Democrats’ clean energy goals could be met.

Ranking Member Raúl Grijalva said the afternoon hearing was giving him a case of déjà vu, as his Republican colleagues had spent a previous hearing blaming all of the delays experienced by the oil industry on NEPA and the morning hearing had featured another two bills that he said would gut the law.

“Now we’re here again with yet another bill taking aim at NEPA,” Grijalva said. “And what is best for the public interest is secondary, if that. And, as I have in our other hearings, I feel obligated to point out how irresponsible it is to cut environmental review while we’re in the midst of the greatest environmental crisis of our time.”

Rep. Garret Graves (R-La.), who introduced the BUILDER Act, said he had met with Special Presidential Envoy for Climate John Kerry and Brian Deese, who recently stepped down as director of the National Economic Council. Both of them endorsed permitting reform to ensure that the billions of dollars set aside for clean energy in recent legislation actually leads to projects, he said.

Dairyland Power Cooperative is trying to build a couple of projects that it said would lead to cleaner electricity for its Wisconsin customers, but have been caught up in permitting-related delays for years, said its vice president of strategic growth, John Carr.

One is the Nemadji Trail Energy Center, a new gas plant that would replace coal and less efficient gas in the dispatch stack while helping to balance renewable power. Its permitting review process was done in 2021, but external groups asked the U.S. Rural Utilities Service to review its impact on climate change, and now Dairyland has been waiting more than five years for a final permit.

“Meanwhile, reliability concerns in the Midwest have led to postponement of previously announced coal plant retirements by other utilities in the region,” Carr said.

The other project is the Cardinal-Hickory Creek transmission line, which would bring wind power from Iowa to Wisconsin’s major cities.

“There are currently over 100 renewable energy projects depending on the construction of this line,” Carr said. “In this case, while the NEPA review was completed in a timely manner, delays due to litigation have increased the cost of the project.”

Port Arthur Community Action Network Founder and President John Beard, former mayor of the Texas city, had worked in a refinery for decades in a region that has been home to heavy industry for more than a century. The city has a poverty rate of 30% and more $80 billion of industrial development going on in an area that is already home to numerous heavy industry sites.

EPA has called Port Arthur an environmental justice “showcase community” because its residents have cancer at twice the national and state average, as well as higher rates of heart, lung and kidney diseases, Beard said. The main reason so many heavily polluting sites have been built there is it is the path of least resistance, as Port Arthur’s residents lack the resources of wealthier communities to challenge such developments, Beard said.

“So, when you talk to me about restricting access to the legal system, which is a foundation of our country, then you’re telling me exactly that you are not going to give their voice to be heard,” Beard said.

FERC oversees some of the infrastructure in Port Arthur, notably LNG export terminals, and Beard recalled a commissioner highlighting how such projects were often delayed.

“The permits were not held up because of government inefficiency, but because the permits were incomplete,” he added.

The Inflation Reduction Act included $1 billion to increase agency staff and resources to process permits more efficiently, several Democrats said, including Rep. Debbie Dingell (D-Mich.). She is open to more changes to permitting laws, but not at the expense of gutting environmental protection.

“I know we got to modernize our laws, but we’ve got to do it in a way that protects original intent, but also makes it better,” Dingell said. “These don’t. And I’m serious about working with you on real legislation that would do that. Unfortunately, I don’t think these are serious proposals.”

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FERC Denies Exemption Requests from MISO Accreditation Rule

FERC on Tuesday rejected a pair of requests for exemptions from a resource availability cutoff under MISO’s new availability-based accreditation method.

The commission used near-identical language to deny Southern Minnesota Municipal Power Agency’s (SMMPA) and Cleco’s asks for exemptions from the new 24-hour lead time threshold for thermal resources’ capacity accreditation (ER23-837, ER23-1103).

Under the new construct, MISO treats offline resources that historically take more than 24 hours to start up as unavailable during predefined, risky hours that factor heavily in accreditation. In those cases, staff assigns a zero-capacity value and reduces accreditation accordingly.

Cleco (NYSE:CNL) had asked for waivers through 2026 for Units 1 and 3 at its 1,700-MW Big Cajun II Power Station in Louisiana. SMMPA asked for a waiver through 2026 for its 41% stake (359 MW) in Unit 3 of the Sherburne County Generating Station (Sherco) in Minnesota.

In both cases, FERC said the utilities did not prove that their waivers wouldn’t have “undesirable consequences, including harm to third parties.” It said while granting the waivers would increase Cleco’s and SMMPA’s seasonal accreditation values, it would also decrease the fleet-wide unforced capacity to intermediate seasonal capacity ratio. That would reduce other resources’ final seasonal capacity accreditation values, the commission said.

MISO took no position on the filings.

Commissioner Mark Christie penned a separate concurrence to express “surprise and disappointment in MISO’s failure to take a position on these waiver requests and to submit comments in these proceedings.” He emphasized that the grid operator characterized its capacity accreditation changes as too urgent to be delayed until the 2024-25 planning year.

“Yet now, when SMMPA and Cleco seek waiver of MISO’s new accreditation calculations — and, by extension, collaterally challenge the fairness of the implementation timeline expressed in MISO’s proposal — MISO remains strangely silent,” Christie wrote. “I would have expected MISO to defend its new [accreditation] or to explain why the waiver requests do not undermine the delicate balance it sought to achieve.”

The commission did not address other arguments from the utilities.

SMMPA pointed out that Sherco Unit 3 has a 26-hour startup time, and it now faces “significantly lower” accreditation values than it’s had for the “vast majority of its 30-year history.” It said the reduced accreditation values “do not reflect Sherco’s expected availability during times of need,” and that the unit “has the same capacity, availability, reliability and characteristics as it had in the past.”

Cleco said it lengthened startup times at the Big Cajun II plant in recent years to avoid violating MISO’s limits on uninstructed deviations from its dispatch orders. (See MISO Plans for New Uninstructed Deviation Rules.)

The utility said it wanted to maintain its eligibility for make-whole payments. It offered that its other units “with similar characteristics and design as the Big Cajun units” could change ramp rates, adjust offers in MISO’s real-time market or change startup times and make offers in the day-ahead market with an economic commitment status that would still require a startup period.

Cleco argued that without the waiver, it faced a “uniquely burdensome, … dramatic decrease in the Big Cajun units’ capacity accreditation value.” It said MISO’s accreditation will reduce Big Cajun II Unit 1’s average availability by 390 MW and cut Unit 3’s average availability by 202 MW for the 2023-24 planning year.

Entergy has a similar waiver request pending before FERC. The utility has warned that without waivers for three units in Mississippi and Arkansas, it risks a capacity shortfall this year in Mississippi. Entergy has pre-emptively adjusted the units’ startup times to less than 24 hours. (See Entergy Seeks Exemptions from MISO Accreditation Rules.)

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BCSE Factbook: Clean Energy Transition ‘Hardwired’ in US Economy

Despite the disruptions of 2022 ― the war in Ukraine, inflation and ongoing supply chain issues ― the U.S. clean energy transition hit new highs in terms of renewable energy and storage deployed, new electric vehicles on the road and new investments, according to the Business Council for Sustainable Energy’s 2023 Sustainable Energy Factbook.

The transition is “now kind of hardwired into the U.S. economy and the way in which we’re evolving,” said Ethan Zindler, head of the Americas for BloombergNEF, which compiled the factbook released Wednesday.

Top line numbers from the annual compendium of energy facts and figures show that renewables, including hydro, accounted for about 23% of U.S. power generation in 2022, up 12.6% from 2021 and, together with nuclear, provided more than 40%, Zindler said during a media briefing Tuesday.

Clean energy drew about $140 billion worth of investment in the U.S., and close to 1 million EVs were sold, both new highs, he said.

Zindler also framed the passage of the Inflation Reduction Act as “absolutely a watershed in terms of policymaking in this sector at the federal level. We’ve really never seen any legislation passed by Congress as ambitious as the [IRA], in terms of what it’s trying to do to set us on the right course towards CO2 reduction and energy transition.”

Generating Capacity Build by Fuel Type (EIA-BloombergNEF) Content.jpgWith the exception of 2018, renewable energy has been the biggest source of new generation in the U.S. since 2015. | EIA/BloombergNEF

 

But the scope and speed of the transition must be accelerated if the U.S. is to meet its commitment under the Paris Agreement to reduce its greenhouse gas emissions 50 to 52% below 2005 levels by 2030. Even hitting the interim goal of a 26 to 28% reduction in GHG emissions by 2025 would require annual reductions of 4 to 5% per year, “which would be rather remarkable,” Zindler said.

Non Hydro Commissioned Energy Storage (EIA-FERC-BloombergNEF) Content.jpgWith record growth in 2022, the U.S. continues to be the largest energy storage market in the world. | EIA/FERC/BloombergNEF

Thus far, the U.S. has cut its emissions 13.8% below 2005 levels, according to the factbook. But last year, emissions from the electric power sector dropped only 1.5%, and emissions from nonpower sectors of the U.S. economy increased 1.9%.

BCSE President Lisa Jacobson argued that it’s too early to predict whether the U.S. will be able to hit its emission-reduction goals, or President Biden’s 2035 target for decarbonizing the U.S. electricity grid. Time will be needed to assess the impacts of recent federal legislation — the IRA, the Infrastructure Investment and Jobs Act, and the CHIPS and Science Act — “not to mention what states and communities and the private sector are doing,” she said.

“We’re trying to lay out what we think would accelerate it even more, but I think we have some pretty strong market signals, and it may take two or three years to really know how much they push us,” Jacobsen said.

Other growth markers in the factbook include:

  • As of 2022, corporate procurements of clean energy totaled 19.9 GW. The number of power purchase agreements announced slipped from 118 in 2021 to 112 last year, but the average project size increased from 145 MW to 178 MW. Amazon leads the pack of corporate offtakers, with 8.4 GW of wind and solar.
  • Utilities and independent power producers are investing record amounts in transmission: an estimated $31.7 billion in 2022 and $33 billion in 2023, according to figures from the Edison Electric Institute cited in the factbook.
  • Energy storage deployments on the grid hit a new high in 2022 of 4.8 GW, which put total storage on the grid at 11.4 GW. Bolstered by tax credits in the IRA, the buildout of a domestic battery supply chain has already attracted $17 billion in investments, primarily focused on the EV sector.
  • Driven largely by the growing number of extreme weather events, the number of microgrids coming online has also increased to 101, with the main markets in California, Texas and Florida. Residential storage installations grew 25% year over year in California.
  • With funding from the IIJA and IRA, investment in green hydrogen technology is set for major increases. Federal support for green hydrogen could rise to $20 billion by 2030, and as prices fall, the IRA’s $3/kg production tax credit for green hydrogen could completely cover the cost of generation, the factbook says.

Natural Gas on the Rise

The factbook also contains some less optimistic numbers, such as the drop in solar installations last year because of supply chain delays and uncertainty over the Commerce Department investigation of solar imports from Cambodia, Laos, Thailand and Vietnam.

Biden’s two-year moratorium on any tariffs on solar cells or panels from those countries gave the industry some breathing room, but installations still fell from 24 GW in 2021 to 21 GW last year. Similarly, onshore wind deployments fell from 13 GW in 2021 to 11 GW. (See Biden Waives Tariffs on Key Solar Imports for 2 Years.)

At the same time, energy consumption in the U.S. continued its post-pandemic rebound, growing 3% over 2021. Natural gas accounted for 39.4% of U.S. power generation, and natural gas utilities poured more than $35 billion into infrastructure investments in 2021. Overall demand for U.S. natural gas, including exports, rose 5.4%, to a record 95.4 Bcfd.

Levelized costs of electricity (BloombergNEF) Content.jpgU.S. levelized costs of electricity, unsubsidized for the second half of 2022. Solar and onshore wind remain cheaper than natural gas, but LCOEs for offshore wind and storage are still not competitive. | BloombergNEF

 

Energy efficiency spending by electric utilities fell during the pandemic, from $6.8 billion in 2019 to a flat $6 billion in 2020 and 2021. Another key factor affecting efficiency is state building codes. More than half of the states in the continental U.S. were using residential energy efficiency building codes from 2009 or earlier.

The International Energy Conservation Code, on which state codes are based, is updated every three years, which means the code has gone through four updates since 2009.

The factbook also looks at the ongoing challenge of interconnection queues, with solar and storage installations leading the projects applying for grid access. PJM and CAISO are called out as the grid operators with the longest wait times, averaging three or more years, versus the shorter two-year or less average for ISO-NE and MISO.

While not specifically called out in the factbook, questions about improving permitting policies and practices were also raised during the media briefing. Jacobson expects GOP bills on permitting to be voted out of the House of Representatives and is hopeful some compromise might be reached.

“We have a lot of proposals on the table, and they’re fairly comprehensive,” she said. “The question is, will the urgency of the need, at least in Congress and the Biden administration, get to the point where they are ready to make a deal. … I think the message is getting across that we will not meet our goals if we don’t take care of streamlining and making it faster and more efficient to build energy projects here in the United States.”

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DOE OKs $375M Loan for NY Battery Recovery Plant

The Department of Energy conditionally committed to loan Li-Cycle Holdings (NYSE:LICY) $375 million to develop North America’s first recycling facility for battery-grade lithium, officials announced on Monday.

Li-Cycle’s 65-acre, 14-building facility in Rochester, N.Y. will form the center of the company’s “Spoke & Hub” business model, with the potential to achieve a 95% recycling efficiency rate and support the battery needs of hundreds of thousands of vehicles, according to a promotional video.

The company currently operates four “spoke” facilities in North America capable of processing more than 50,000 metric tons of lithium-ion battery material annually. The facilities produce an intermediate product containing critical minerals called “black mass,” which will be sent to the Rochester Hub for further processing into battery-grade materials.

Once operational, the Rochester Hub will become a domestic source of recycled and reusable battery materials, producing up to 8,500 metric tons of lithium carbonate, 48,000 tons of nickel sulphate and 7,500 tons of cobalt sulphate, according to Li-Cycle.

DOE’s loan is from the Advanced Technology Vehicles Manufacturing (ATVM) program, which was created to support critical infrastructure or technology projects deemed too risky by financial institutions and recently received a massive infusion of funding from the Inflation Reduction Act (IRA).

In January, the ATVM program also gave a $700 million conditional loan to a Nevada lithium mining project. (See Nev. Lithium Project Close to Securing $700M DOE Loan.)

Li-Cycle’s loan, which has a term of 12 years and an interest rate equal to the U.S. Treasury’s 10-year rate (currently 3.92%), remains conditional until the company satisfies DOE financing procedures.

In a livestream of the announcement, Senate Majority Leader Chuck Schumer (D-N.Y.) told attendees that the DOE’s loan will not only bring jobs to New York and revitalize the Rochester industrial area, but “make America the center of electric car and electric battery production in the world.”

Doreen Harris, CEO of the New York State Energy Research and Development Authority, said that Li-Cycle’s facility is “representative of what we need to be doing at scale” and represents “the technologies of the future … that will be necessary to achieve the deep levels of decarbonization across all sectors of the economy.”

Li-Cycle said it received key environmental permits for the Rochester Hub last year and expects to commission the plant late this year. The project is expected to create about 270 permanent jobs and more than 1,000 jobs during construction.

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PJM Generators Say BRA Results Show Market Dysfunction

Generation owners in PJM say that declining capacity prices and market participation in the Base Residual Auction, as shown by the results posted by the RTO on Monday, demonstrate underlying issues with the market.

“The auction results provide a long list of troubling indicators: supplier participation is down; more regions are in need of more capacity than they have; coal, wind, hydro and demand response are all leaving the market; and clearing prices are at near historic lows,” said Glen Thomas, president of the PJM Power Providers (P3).

Prices in the Rest of RTO region fell 18% to $28.92/MW-day from $34.13 in the previous auction, though the overall cost to procure the 140,416 MW in capacity cleared in the auction remained approximately the same at $2.2 billion because of higher prices in five constrained regions. (See PJM Capacity Prices Jump in 5 Regions.)

Pointing to a white paper released by PJM last week that raised reliability concerns with the pace of new generation construction and retirements, Thomas said declining prices show a disconnect in the market. (See PJM Board Initiates Fast-track Process to Address Reliability.)

Capacity Prices (PJM) Content.jpgCapacity prices declined in the auction results released by PJM on Feb. 27. | PJM

“The tragic irony in all of this is that these results were announced just days after PJM published a report warning of looming reliability risks at least partially caused by the accelerated retirement of dispatchable generation necessary to maintain reliability,” he said. “Clearly, there is a disconnect between the market’s rules and outcomes it needs to produce to maintain reliability, and that must be fixed if PJM is interested in retaining the resources it has and incenting construction of the resources it will require as the reliability threats begin to emerge in the coming years.”

Following the posting of auction results, the Electric Power Supply Association (EPSA) said that it is satisfied enough capacity was procured, but the clearing prices still show a need for market changes.

“Once again, the results of this BRA demonstrate the need for a clear price signal for capacity resources,” the organization said. “The market must be designed properly and avoid rule changes intended to accommodate specific preferred resources or technologies. EPSA has long called on PJM leadership, policymakers and regulators to address the serious foundational issues at hand, and we stand ready to continue to provide recommendations and work collaboratively to forge a solution.”

Some of those same concerns were raised by stakeholders in the Resource Adequacy Senior Task Force on Tuesday as they embarked on discussions of how to create market design proposals in response to a letter from the PJM Board of Managers. The board published the letter concurrent with PJM’s white paper announcing a fast-track process for addressing concerns raised by the report and stakeholders in recent months. (See PJM Board Initiates Fast-track Process to Address Reliability.)

Stakeholders said the capacity prices, some of the lowest the RTO has seen, underline the importance of their work and implementing new rules as soon as possible. Much of the discussion centered around balancing the urgency some see in putting those new rules in place with the disruption of potential auction delays that may be necessary to do so.

Constellation and Vistra Report Cleared Capacity

Constellation Energy (NASDAQ:CEG) reported to the U.S. Securities and Exchange Commission that it had cleared 18,725 MW in the auction, nearly the same as its 2023/24 auction figures. Its nuclear fleet cleared 25 MW lower than the previous auction, when its Byron, Dresden and Quad Cities facilities returned to the market.

Vistra (NYSE:VST) announced that it had cleared 6,905 MW at a $43.25/MW-day weighted average clearing price. The company projects it will receive approximately $109 million in capacity revenues for the 2024/25 delivery year, as well as an additional $11 million to $15 million in existing retail and bilateral sales. Total revenues for the year are estimated at $120 million to $124 million, down from 2023/24, which was projected at $164 million to $169 million following the June auction.