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November 5, 2024

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Massachusetts Floats FCEM Proposal

The energy department of outgoing Massachusetts Gov. Charlie Baker left behind a gift on the governor’s last day in office: a Forward Clean Energy Market proposal.

The document, put together by Massachusetts Department of Energy Resources officials along with Brattle Group and Sustainable Energy Advantage, is intended to be a first draft that could eventually make its way into the NEPOOL stakeholder process.

It will add new weight to longtime discussions about creating a clean energy market in the region for the purpose of encouraging the buildout of more renewable and non-emitting energy sources.

FCEM is the preferred regional decarbonization solution of the states, which are wary of the political implications of carbon pricing. But ISO-NE has warned that FERC or the courts could find the proposal discriminatory.(See NE States, ISO-NE Start to Wrestle with Next Steps on Pathways.)

“Massachusetts views the FCEM as a critical, and presently missing, institutional pillar that will be required to support equitable, affordable, and reliable clean energy transition,” the proposal says.

Structure and Governance

The proposal calls for creating a new independent nonprofit to administer the FCEM, led by representatives of each of the six New England states. Whether it would be FERC jurisdictional is up for debate. Under the main proposal it would, but the proposals’ authors also acknowledge that they might need an alternative structure separate from ISO-NE and overseen exclusively by state officials.

The FCEM’s auctions would line up with ISO-NE’s existing capacity market, taking place every three years. Buyers in the market (such as state agencies, competitive retailers, utilities, municipalities and private companies), taking part voluntarily, could procure one of a number of types of clean electricity certificates.  

The FCEM would include several other mechanisms that the proposal says are designed to “facilitate the financing of large volumes of new clean electricity resources.”

Those include a new resource price lock-in that guarantees new resources a clearing price for a term of 15 years at the rollout of the FCEM, the option for buyers to specify that their demand must be fulfilled by new resources and the option for buyers to submit a “phased entry” demand bid that offers greater flexibility in the startup date for projects that can offer a more competitive price if they initiate operation in future years.

Multiple certificates on offer 

The system would be designed to handle both several region-wide products and whatever certificates states want to put forward on their own, the proposal says.

The first region-wide product would be a New England Renewable Energy Certificate that would be comprised of onshore and offshore wind, solar, hydroelectric and some distributed energy resources.

The second would be a Clean Energy Attribute Certificate, representing “energy generated by any non-emitting energy resource,” including renewables as well as nuclear.

The third is a GHG Marginal Abatement Certificate that includes all of the above, as well as storage and demand response.

And the fourth is a Clean Capacity Certificate that represents all of the above plus clean capacity imports.

States could then list their own products, with no limits on scale or technology types.

“These state-defined rules need not match the rules applicable to similar regional FCEM-defined products. However, over time, the experience with innovative product offerings within the FCEM and across participating New England states may be mutually informative, improving the economic efficiency and efficacy of both state policies and the FCEM products,” the proposal says.

Buyers would have the option to procure their certificates from any combination of the products listed.

The FCEM would use the NEPOOL Generation Information System to track certificates.

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Southern Board Taps Womack as New CEO

Tom Fanning (Southern Company) Content.jpgTom Fanning, outgoing CEO at Southern Co. | Southern Co.

Southern Co. (NYSE:SO) announced a major executive reshuffle Thursday, with CEO Tom Fanning set to step down from most of his roles and the head of its biggest subsidiary tapped as his successor.

The company’s board of directors named Chris Womack, current CEO of Georgia Power, to take over as CEO of the overall organization; he will also succeed Fanning as president. Womack has also been elected as a member of the board, though Fanning — the board’s current chair — will remain with the company as executive chairman after ceding the CEO’s office to Womack.

Fanning plans to remain as president until the end of March and step down as CEO after Southern’s annual meeting this year. The date for the meeting has not been announced, though the gathering has been held in late May for at least the last five years.

Along with Womack’s ascension, the utility announced the following executive appointments:

  • Kimberly Greene to succeed Womack as CEO, president and chair of Georgia Power;
  • Jeff Peoples as CEO, president and chair of Alabama Power;
  • James Kerr II as CEO, president and chair of Southern Company Gas; and
  • Peter Sena III as president of Southern Nuclear.

Peoples will step into his new role immediately; the other moves are effective March 31. Sena will remain as chief nuclear officer of Southern Nuclear, while Stephen Kuczynski, the subsidiary’s chairman and CEO, will also keep his positions.

Womack has worked at Southern since 1988; prior to joining the utility, he worked for the U.S. House of Representatives. He became president of Georgia Power in 2020 and added the chair and CEO duties in 2021.

“Chris’s leadership, vision and integrity during his career with Southern Co. have uniquely prepared him to guide Southern … into a new era,” Fanning said in a media release. “I have confidence that Chris will continue our progress and deliver on [our] commitment to providing clean, safe, reliable and affordable energy and customized solutions to customers across the United States.”

Southern Active Under Fanning’s Leadership

Fanning became president of Southern in August 2010, assuming the roles of chair and CEO just a few months later. Under his tenure the utility has played an active role in the industry, spearheading influential, though sometimes controversial, initiatives.

Among Southern’s recent efforts is the launch of the Southeast Energy Exchange Market (SEEM). Southern — as part of a consortium of electric utilities including Duke Energy, the Tennessee Valley Authority, Dominion Energy South Carolina and Louisville Gas & Electric — proposed the market in 2021, suggesting that the planned expansion of bilateral trading in 11 Southeastern states would reduce trading friction while promoting the integration of renewable resources.

The project faced criticism from the start, with opponents skeptical the market would live up to its proponents’ promises. FERC only passed the SEEM agreement on a technicality in 2021, when the commission — down a member because of the departure of Neil Chatterjee — deadlocked 2-2 and the agreement took effect automatically in accordance with Section 205 of the Federal Power Act (ER21-1111, et al.). (See SEEM to Move Ahead, Minus FERC Approval.)

Since then SEEM has moved ahead despite ongoing attempts by various activist groups to reverse FERC’s approval: The market began operation in November, and utilities have continued to adopt the market. Most recently the commission approved the requests of Tampa Electric and Duke Florida to join SEEM, effective Jan. 1 (ER23-323, et al.). FERC still faces an ongoing lawsuit over its SEEM decision in the D.C. Circuit Court of Appeals filed last year. (See Environmental Groups Appeal SEEM in DC Circuit.)

Vogtle Units 3 and 4 (Georgia Power) Alt FI.jpgVogtle Units 4 (left) and 3 in November, with the cooling towers for Units 1 and 2 in the background | Georgia Power

 

Fanning also leaves unfinished the construction of Units 3 and 4 at the Vogtle nuclear power plant in Waynesboro, Ga. The two reactors — which Southern calls the first new nuclear units built in the U.S. in the last 30 years — have drawn much criticism over their frequent delays and cost overruns, including an inspection by the Nuclear Regulatory Commission in 2021 into Unit 3’s safety systems. (See Southern Faces NRC Inspection over Vogtle Repair Work.)

Southern began fuel load for Unit 3 in October and says the reactor should come online in the first quarter of this year. Unit 4 is scheduled to be completed in either the third or fourth quarter.

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ERCOT Board Member Resigns over Business Conflict

ERCOT’s Board of Directors has begun the year with one new member and a vacancy, leaving it with eight voting members.

The Texas grid operator Wednesday notified the market and membership that Zin Smati resigned from the board on Dec. 29 to comply with state rules after Boralex, a Quebec-based renewable operator where he is a director, completed the acquisition of a 50% ownership in five Texas wind farms.

According to the Public Utility Regulatory Act, “a person does not qualify for selection as a member of the governing body of [ERCOT] … if the person has a fiduciary duty or assets in the electricity market for that region.”

The ISO’s ethics agreement for directors also prohibits any direct business relationship with any market participant or its affiliates. Three of the wind farms are ERCOT market participants: Longhorn Wind Project, Spinning Spur Wind Three, and TX Hereford Wind.

Courtney Hjaltman 2022-12-20 (RTO Insider LLC) FI.jpgCourtney Hjaltman, OPUC | © RTO Insider LLC

ERCOT said Smati indicated that he planned to remain on the Boralex board and that he resigned his position to address the conflict.

Smati fully disclosed in a timely manner all applicable information, the grid operator said.

The ERCOT Board Selection Committee will work with an outside consulting firm to fill the vacancy. The committee consists of three members selected by Texas’ governor, lieutenant governor, and the state House speaker.

Earlier in December, Gov. Greg Abbott appointed Courtney Hjaltman, his deputy legislative director, as CEO of the Office of Public Utility Counsel. The position, which expires Feb. 1 but will likely be extended, comes with a voting seat on the ERCOT board.

Hjaltman replaces Chris Ekoh, who was serving as interim CEO.

The ISO’s board consists of eight independent directors, OPUC’s CEO, the Public Utility Commission’s chair and ERCOT’s CEO. The latter two positions do not hold voting powers.

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FERC, PacifiCorp Reach $4.4M Settlement in Tx Ratings Probe

FERC last week approved a $4.4 million settlement with PacifiCorp that ends an enforcement probe into the utility’s transmission line rating practices.

The deal includes a $1.9 million payment to the U.S. Treasury and $2.5 million that PacifiCorp will use to improve its transmission line rating capabilities, subject to FERC enforcement staff approval. The utility neither admitted nor denied the allegations in the case (IN21-6).

The allegations in the settlement cover 2009 until 2017, during which time enforcement staff found clearance violations on at least 215 transmission lines, which is 58% of PacifiCorp’s total transmission lines.

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The National Electrical Safety Code sets minimum clearances from any obstacle to conductors that must be maintained under the “maximum conductor temperature for which the line is designed to operate.”

PacifiCorp allegedly violated a NERC mandatory standard, FAC-009-1 RI, which requires utilities to document their “Facilities Ratings Methodology” in writing. The FRM contains the guidelines for transmission owners to develop their facility ratings and they are supposed to be followed.

Facility Ratings dictate how much power can flow across a facility, such as a transmission line. PacifiCorp developed its FRM in 2009 and it has been updated four times since then.

NERC issued a recommendation to the industry in October 2010 that it and regional entities had become aware of discrepancies between the design and actual field conditions of transmission lines that might be widespread. The reliability organization recommended that transmission owners, such as PacifiCorp, review their FRMs to ensure the written methodology is based on actual field conditions.

PacifiCorp spent $132 million fixing 4,725 clearance conditions, with the work wrapping up in 2017. Enforcement found that the clearance issues clashed with NERC’s requirements and did not fix all the violations until that work was completed.

The $2.5 million will go to reliability enhancements above and beyond NERC’s requirements for transmission line ratings. It will pay for a new single-source transmission facility ratings database management system that will promote enhanced accuracy in the development, updating and communication of facility ratings.

PacifiCorp will also install 60 new weather monitoring stations throughout its transmission system, which will feed information about ambient conditions directly into the data management system to further improve transmission line ratings. PacifiCorp agreed to make those investments within two years of the agreement.

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North Carolina Regulators Approve Duke’s 1st Carbon Plan

The North Carolina Utilities Commission on Friday approved Duke Energy’s first “carbon plan” to comply with the state’s law requiring carbon neutrality by 2050.

The plan does not include any major requirements to invest in new resources, but rather calls on the firm to update its modeling and file a plan with actual investments later. The order discusses different ways of achieving the law, from investing in renewables, to keeping existing nuclear plants running another 20 years, expanding batteries, and even building new natural gas plants to replace coal-fired ones.

“The guidance the General Assembly provided to the commission for this task is clear: The commission must find the least-cost path to compliance with the carbon dioxide emissions-reduction requirements while maintaining or improving the reliability of the electric system,” the NCUC said in its order. “Developing the path to least-cost compliance with the carbon dioxide emissions reductions that the law requires is complex and will, necessarily, be an iterative process given the rapid pace of change of the electric industry.”

The law also requires continued reliability of the system, with the NCUC noting that the transformation of the electric system will present new challenges for system operators as resources dependent on weather grow while new demand such as home heating must be met. The outages some customers saw over the holidays during cold weather underscores the vigilance the regulator will have to employ while overseeing that transition, the commission said.

Duke called the decision “constructive,” noting that the plan will be updated every two years going forward under state law.

The commission’s decision “advances our clean energy transition, supporting a diverse, ‘all of the above’ approach that is essential for long-term resource planning,” Duke said. “We’ve already made incredible progress, retiring two-thirds of our aging coal plants in North Carolina and South Carolina and reducing emissions by more than 40% since 2005; we will continue this ongoing work of lowering carbon emissions to reduce risk for our customers while balancing affordability and reliability.”

The utility said it will file an integrated resource plan with South Carolina regulators this August, which will take into account the carbon plan from its neighboring state, recent federal legislation on infrastructure and clean energy, and other factors relevant to clean planning. Customers in both states deserve a clean energy plan that keeps rates as low as possible, Duke said.

The commission drew fire from environmentalists, with climate advocacy group NC WARN calling its decision to allow Duke to build new natural gas plants “tragic.” It noted that in a quantitative analysis of the plan, Duke called for more than doubling its gas generation by building another 11,700 MW, but opponents have argued that the same capacity needs can be met with solar, wind, energy storage and efficiency.

“Duke Energy is required to obtain permits from the NCUC before it actually builds any more gas-fired power plants,” the group said. “NC WARN and others have vowed to vigorously oppose those applications.”

All of Duke’s modeling showed that new combined cycle natural gas plants would be needed as part of a least-cost energy transition and to help retire the utility’s existing coal plants, the NCUC said in its order. Replacing coal with new natural gas would eliminate the need for additional transmission at certain sites.

The delivery of natural gas to new natural gas plants is uncertain with Mountain Valley Pipeline’s construction still under litigation, but the commission said Duke would be able to pivot to an alternate plan if that pipeline does not go forward. The utility will have to use the most up-to-date information on natural gas prices and pipeline capacity into North Carolina to justify the construction of new natural gas plants under its climate plan, it said.

Without new natural gas plants, the utility said it would not be able to speed up the retirement of its dispatchable coal plants, with its plans to retire 8,400 MW of coal by 2035. New combined cycle plants produce 60% less carbon dioxide than the coal plants they would replace, the NCUC said.

The NCUC determined that planning for 1,200 MW of new combined cycle capacity and 800 MW of combustion turbines makes sense, but the utility needs to file a separate application to actually build such assets.

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Feds Charge Two in Wash. Substation Sabotage

The Department of Justice charged two men in attacks on four electric substations that left thousands in Washington state without power on Christmas, saying the incidents were a cover for a burglary plot.

Each of the men — Matthew Greenwood and Jeremy Crahan, both of Puyallup, Wash. — faces a potential prison sentence of 20 years on the vandalism charges. Greenwood was also charged with possessing an unregistered firearm, a potential 10-year sentence.

According to a criminal complaint filed Dec. 31 and unsealed this week, the attacks occurred in Pierce County, beginning early in the morning of Dec. 25. Two of the affected substations were operated by Puget Sound Energy, while the others were controlled by Tacoma Power.

Initial Intrusion in Hemlock Facility

The first sign of a problem came around 2:39 a.m., when PSE crews responded to an alarm from the Hemlock substation. Arriving on the scene, the team discovered that someone had cut the perimeter fence and entered the substation. While the intruders did not steal anything or cut any wires, they did manipulate a bank high side switch, causing a power outage for about 8,000 customers.

While PSE staff were working to restore service at the Hemlock substation, Tacoma Power received a notification around 5:30 a.m. that its Elk Plain substation was offline. Just 30 minutes later, word came that the Graham substation was down as well. Investigators at the Elk Plain facility found the padlocks on the pedestrian gates had been cut and the high side breakers had been handled; at the Graham facility the fence had been cut, similar to Hemlock, and the high side breakers were out.

Tacoma Power said about 7,500 customers lost power because of the two outages. The utility also reported that it would cost about $3 million and take up to 36 months to replace damaged transformers at both facilities. Until the transformers are replaced, Tacoma Power must use mobile transformers at the substations, reducing their combined output from 50 MW to 15 MW.

The final attack occurred around 7:25 p.m. at PSE’s Kapowsin substation. Once again, the chain link fence had been cut and someone had tampered with the bank high side switch. In trying “to pry the linkage open,” the attackers “caused the substation to start arcing and sparking,” according to the complaint. Authorities did not state whether any outages occurred as a result of this attack.

Phone Records Lead to Suspects

The investigation by the FBI’s Joint Terrorism Task Force used surveillance photos from the Elk Plain substation of a man and a vehicle that arrived at the facility at the time of the attack. Investigators also used cell phone records to identify two phones that appeared to have been in the vicinity of each substation around the time the attacks occurred.

Those phones turned out to be connected to Google accounts used by Greenwood and Crahan; in addition, Crahan was identified as the owner of a pickup truck similar to the vehicle seen in the Elk Plain surveillance photos. This connection was enough for the FBI to put both men under “essentially continuous … surveillance” for several days beginning Dec. 27.

Suspect surveillance photos (Tacoma Power) FI.jpgSurveillance photos from Tacoma Power showing the individual who damaged the Elk Plain substation. Matthew Greenwood was later arrested wearing similar clothing. | Tacoma Power

Investigators obtained a search warrant on Dec. 30 for a house in Puyallup where both men were often present. Executing the warrant on Dec. 31, federal agents and local law enforcement officers found Greenwood in a trailer on the property along with a rifle and a shotgun later determined to be unregistered. His clothes “matched, in part, the clothing seen in the” Elk Plain surveillance photos. Crahan was found and arrested a short time later, also in Puyallup.

In a statement to police, Greenwood said he and Crahan committed the power station vandalism as part of a plan to burglarize an unnamed local business. He said he used bolt cutters provided by Crahan to enter the facilities, while Crahan drove their getaway car. According to Greenwood, Crahan only entered one facility, referred to in the court filing as the “South Hill” facility but probably referring to the Hemlock substation, which is located in South Hill.

During the outage, Greenwood said they went to the business where Crahan drilled out the lock, while Greenwood stole from the cash register. It was not clear from the filing when in the day this occurred, or whether it happened before or after the Kapowsin substation attack.

The Washington sabotage came just weeks after unknown attackers damaged two substations in Moore County, N.C. with rifles, causing 45,000 customers to lose power for several days. (See Duke Completes Power Restoration After NC Substation Attack.) Investigators have yet to publicly identify any suspects or motive for those attacks; Duke Energy, Moore County, and the state government have each offered a reward of up to $25,000 to catch those responsible.

In a statement, FBI Special Agent Richard A. Collodi, who heads the bureau’s Seattle field office, said the arrests demonstrate “the commitment by all levels of law enforcement to protect our infrastructure and hold those accountable who put our community in danger.”

Tacoma Power also thanked law enforcement officers, noting that it had “committed significant resources to both cyber and physical security” and that investigators said these efforts “aided in these swift arrests.” During the outages the utility had said that “in accordance with best practices, we do not share the details of our resiliency and security tactics,” but that it “follows federal reliability standards, including assessing physical risks to our critical energy infrastructure and applying recommended mitigation measures.”

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NJ’s Aggressive Clean Energy Plans Face 2023 Challenges

New Jersey’s far-reaching offshore wind plans face a series of challenges in 2023 as the first project undergoes permit scrutiny and the state launches a third coastal wind solicitation amid questions about whether it can handle the rapid development of an industry from scratch.

The advance of OSW projects represents just one facet of the state’s clean energy policy as it works to meet Gov. Phil Murphy’s aggressive goal of zero emissions by 2050. Other key events in the coming months will include the launch of a permanent community solar program and public discussion of how to stimulate the development of heavy-duty electric vehicle chargers, which will be essential for the state’s plan to put more non-fossil fuel heavy trucks on the road.

Transportation is the state’s largest carbon-emitting sector, producing 42% of the state’s greenhouse gases. And the progress of the state’s efforts to cut carbon emissions from the third largest sector — buildings — will likely be a prominent issue this year too, as Murphy’s administration seeks to regain its footing on what turned out to be a controversial policy of replacing fossil fuels with alternatives, mainly electricity.

The state Department of Environmental Protection (DEP) says it is still seeking ways to cut building emissions after the agency — in rules published Jan. 3 — dropped a prohibition on the installation of fossil fuel water and heating boilers after 2025, amid vigorous business and union opposition. (See NJ Backs off Ban on Commercial-size Fossil Fuel Boilers.)

Wind Expansion Planned

OSW will likely represent the most intense of the state’s clean energy efforts, however, as it seeks not only to build its own industry but also to become a regional player. The state’s Board of Public Utilities (BPU) is hoping its first project, the 1,100-MW Ocean Wind 1, will advance rapidly through 2023 and be ready to go online in late 2024.

Construction has not begun on the project, one of three approved by the BPU including the 1,148-MW Ocean Wind 2 and 1,510-MW Atlantic Shores approved in 2019. The BPU’s third solicitation, planned for early 2023, could dramatically accelerate expansion of the wind sector, with the agency planning to approve projects of between 1.2 GW and 4 GW in capacity, and perhaps more.

If that process unfolds as planned, New Jersey could have OSW projects totaling more than 7.5 GW in the pipeline by mid-2023, close to the state’s 2035 target set before Murphy last year increased the goal to 11 GW by 2040.

Some observers, most notably the New Jersey Division of Rate Counsel, and opponents of the projects have suggested that the state move at a slower place so that the success of the early projects can be evaluated before putting more into the pipeline.

“Now may be the time to be conservative in making larger awards, given the fact that times are uncertain and challenging for all large energy investments,” Brian O. Lipman, director of the division, told a hearing on the third solicitation proposal last month.

Those concerns are partly fueled by rising costs facing all parts of the economy. Cost pressures have been highlighted by developer Ørsted as a potential problem, and Public Service Enterprise Group (NYSE:PEG) CEO Ralph LaRossa in October told investors and analysts that the company is mulling whether to continue its 25% ownership of Ocean Wind 1.

Whether the state can proceed at such a rapid pace will also depend on the progress of Ocean Wind 1 in the coming months, which could smooth the way for succeeding projects.

The BPU in September granted Ørsted an easement that would enable the project to run cables through Ocean City on the Jersey Shore and is now evaluating a second request for an easement through land owned by Cape May County. The board’s decision is expected in the coming months. (See NJ BPU Approves Easement Plan for 1st OSW Project.)

The two easement requests rely on a 2021 state law that allows the BPU to override local government rules if a transmission project is “reasonably necessary” to complete an OSW project. Public hearings on both requests featured vigorous opposition from local residents who say the law disenfranchises local government, whose lawyers have told the BPU they expect the law to be challenged in court.

The project also awaits a DEP decision on the first five of 13 permits needed to advance. The federal government’s permitting dashboard estimates that the federal environmental review and permitting process will be completed in July.

Supporting Infrastructure

New Jersey is also pursuing an aggressive plan to develop a supply chain, manufacturing and service industry to support its own OSW projects and others along the East Coast.

A key element is the development of a wind port in South Jersey, for which the state has committed investments of $478.2 million, the New Jersey Economic Development Authority (EDA) said in November, as it outlined plans to float bonds for additional funding. (See NJ Backs $20 Million Spend on Tx Link for Offshore Wind Port.)

Located in Salem County, the New Jersey Wind Port will include a 30-acre marshalling area for component assembly and staging; a dedicated, overland, heavy-haul transportation corridor; and a heavy-lift wharf with a dedicated delivery berth and an installation berth that can accommodate jack-up vessels. With construction underway, the EDA hopes to complete the first phase by 2024.

The EDA last year also announced plans to hire a consultant to develop a world-class offshore wind research and development testing facility. (See NJ Plans ‘Flagship’ R&D Innovation Center for Wind.)

The BPU in October put in place another major support block for the offshore sector, approving $1.07 billion for transmission upgrades to deliver 6,400 MW of offshore wind generation to the PJM grid. Central to the proposal is the construction of a new substation adjacent to FirstEnergy’s Jersey Central Power and Light’s Larrabee substation in Central Jersey, which is onshore and near the coast. That will be accompanied by a series of smaller upgrades to the transmission system. (See NJ BPU OKs $1.07B OSW Transmission Expansion.)

The BPU picked the projects from among 80 proposals submitted by 13 developers in response to a solicitation issued by PJM that was notable for its use of the State Agreement Approach set out under FERC Order 1000.

Still to be determined, however, is an infrastructure system to bring the offshore energy to the shore. The BPU expects that work to be designed and built as part of the projects picked in the third solicitation.

Grid Worries

Concerns about the ability of New Jersey’s grid to handle the extra load from a dramatic increase in clean energy generation are expected to continue in 2023, reflecting similar discussions about infrastructure weakness across the nation.

“My greatest fear is that one morning, we’re going to wake up and … have no place to plug in our renewable energy,” BPU President Joseph L. Fiordaliso told a Nov. 9 board meeting after the agency approved receipt of a grid modernization study prepared by consultant Guidehouse Inc. Fiordaliso made the same comment on several occasions in 2022.

Solar developers told state legislators in May that the grid is so old and its capacity so limited that new solar projects can’t be connected in certain areas of the state, a weakness that is stifling solar expansion. The developers spoke in support of a bill (S431) that would establish a fixed “grid modernization” fee structure to cover the cost of upgrading the grid. The bill passed the state Senate in June but has not advanced in the Assembly.

A similar concern centered on the PJM Interconnection’s inability to connect new projects, and the lengthy delays in getting it done, which were frequently cited by New Jersey regulators and solar developers looking to build projects in the state.

Solar Advance

Aside from those difficulties, the state solar sector pushed ahead in 2022, reaching 4.2 GW of installed capacity in November, according to the latest BPU figures available. That was driven by the installation of 387,358 kW of capacity in the first 11 months of the year, the fastest addition of new capacity since 2019, the figures show.

The capacity of projects in the pipeline, 709,716 kW, is well below the 1,668,061 KW of 2021, which was inflated by developers rushing to get projects admitted in a soon-to-close incentive program. But the pipeline is stronger than the 532,749 kW reported in 2020, BPU figures show.

The new capacity was driven, in part, by the state’s pilot community solar program, and BPU officials in August celebrated the completion of the first project under the program’s second phase — a 500-kW community solar project covering six roofs in Neptune Township. After developers complained in 2021 about the slow pace to execute the second phase, the BPU announced plans for a permanent program, which will begin in 2023 and is expected to award 150 MW of capacity a year. (See Slow Progress of NJ Community Solar Pilot Draws Fire.)

Still, developers had installed only 20 community solar projects in the state by November, totaling 43,961 kW, less than one-fifth the 240 MW of capacity awarded in the two phases of the program. And while the program has proven popular with developers, the BPU is cautious about making a dramatic increase. In November, a BPU representative urged state legislators not to approve a bill that would triple the size of the planned permanent community solar program to 500 MW a year, expressing concern that the grid and developers would not be able to handle the sudden increase.

State officials believe the pace of other types of solar installations will accelerate after the December approval of rules for the Competitive Solar Incentive (CSI) program, which will determine incentive levels for grid-scale solar projects through competitive solicitations. Developing such projects in the state was difficult and rare in the past. (See NJ BPU Approves Rules for Grid Solar Program.)

The CSI program is the second part of the BPU’s Solar Successor Incentive (SuSI) program, which reshaped the state’s incentive system, a response, in part, to criticism that previous programs were too generous. Under the first part of SuSI, the Administratively Determined Incentive (ADI) program, incentives are set by the BPU.

But developers now say the incentives are too low, and although the state has hit its target of 150 MW of net metered residential installations, it is far short of the target for non-residential projects and those installed on brownfield, infill or landfill sites.

That is especially true given the shipping constraints and supply chain issues affecting the industry, which have increased commercial installation costs by 15% since the start of 2021, Scott Elias, director of Mid-Atlantic state affairs for the Solar Energy Industries Association, told the BPU in December.

EV Development

New Jersey also reshaped its strategy in 2022 to accelerate the uptake of EVs. The BPU launched the third phase of its Charge Up New Jersey EV subsidy with a reduction in the maximum incentive from $5,000 to $4,000 after available funds were exhausted in the first two phases. (See NJ Cuts Incentives for New Phase of EV Promotion.)

The state also allocated an extra $46.6 million to expand an incentive program for the purchase of electric trucks and for the first time allowed incentives for Class 7 and Class 8 trucks, the largest on the road and some of the largest polluters. Previously the program funded the purchases of Class 2 to Class 6 trucks only.

Seeking to remove diesel buses from the road, state legislators approved a three-year, $45 million program to test electric buses in 18 school districts, where performance would be evaluated and data on costs, maintenance, fuel and bus speed and movements would be collected and submitted to the DEP.

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NJ Extends Comment Period on 3rd OSW Solicitation

New Jersey has extended by two weeks the comment period on the plan to hold its third — and largest — offshore wind solicitation in early 2023 after speakers at a public hearing into the plan criticized the way the period straddled the holidays and questioned whether the state is ready for such a big expansion.

The New Jersey Board of Public Utilities on Dec. 22 extended the final date by which the public could submit written comments, from Dec. 29 to Jan. 13, after “several stakeholders requested an extension to the comment deadline.”

The concern was raised at a Dec. 13 online hearing into the proposal organized by the BPU to receive stakeholder input. The solicitation guidance document outlines a plan to award project capacity of between 1.2 and 4 GW early next year with the option to go higher, potentially far larger than the 1.1 GW and 2.658 GW awarded in the first and second rounds, respectively. (See NJ Shoots for 4 GW+ in 3rd OSW Solicitation.)

Environmental groups told the BPU that the large size and speed of its third solicitation was essential to combating climate change, which is already disrupting the state and planet. But other speakers, among them local residents, asked the board to slow down, and written opposition to the plan has trickled in since the hearing.

Speaking at the hearing, Kari Martin, advocacy campaign manager for Clean Ocean Action, criticized the BPU for providing insufficient due process for the project by having the public comment period end Dec. 29 and holding a stakeholder hearing two weeks before Christmas.

“This is the largest offshore wind solicitation for New Jersey thus far,” she said. “There is a short time frame for reviewing these documents and providing comments during the height of the holiday season.”

She added that it “it is clear that New Jersey is unprepared for the third solicitation for offshore wind, as well as offshore wind already being fast-tracked in this region,” and she worried about the impact on marine life.

Martin cited a report published by Rutgers University’s Center for Ocean Observing Leadership on strategies for monitoring offshore wind development that stated that the “pace of offshore wind development is faster than the pace of fisheries science.” She noted that the report said that baseline studies should begin at least two to three years prior to construction and added that it is “premature” for the state to move ahead with the solicitation when “current baseline information is deficient and impacts from projects from previous solicitations are unknown.”

Brian O. Lipman, director of the Division of Rate Counsel, also noted that “the comment deadline was placed in between two major holidays when many commenters may be taking a respite from work and may not be available.”

Lipman’s comments, however, focused mainly on concern about the size of the proposed solicitation, and he urged the agency to be “conservative” and ensure that ratepayers don’t bear an unnecessary burden.

Lipman noted the economic turbulence in the U.S. and said the BPU should think about the risk to ratepayers in deciding the size of projects to award in the next round. He said that parts of the economy are suffering wage stagnation, supply chain disruptions, worker scarcity, and higher prices for commodities and equipment.

“It is not unlikely that bids offered in this solicitation may propose to shift some, or a large number, of these risks onto ratepayers,” Lipman told the hearing, adding that his office has “great concern” that developers may try such a move if they get project approval. “Ratepayers simply cannot afford drastically higher electric bills.”

He said one developer is mulling such a move. Danish developer Ørsted, which is developing New Jersey’s first OSW project, Ocean Wind 1, said during a Nov. 3 earnings call that returns on the project are “not where we want to be” and that it is exploring its options, according to a Seeking Alpha transcript of the call.

“This particular solicitation … will represent the largest potential capacity block or range of any solicitation scheduled by the board,” Lipman said. “Rate Counsel suggests that now may be the time to be conservative in making larger awards, given the fact that times are uncertain and challenging for all large energy investments.”

He added that “there are at least four more solicitations of a fixed 1,200-MW target that could be used to make up any lower offshore wind procurement amounts in the third round of bids.”

Reducing Costs, Increasing Competition

The BPU plans to open the third solicitation in the first quarter of 2023 and accept applications through the second quarter. The agency plans to make one or more awards in the third quarter.

“We really want to encourage competition and see reduced overall prices in this third solicitation,” said Andrea Hart, the BPU’s senior program manager of offshore wind, who made the board’s presentation on the solicitation at the public hearing.

Project applications must include the dollar-per-megawatt-hour price at which the developer would execute the project and the impact on ratepayers, which will account for 70% of the evaluation weight, the BPU said in the presentation. Non-price factors such as the economic impact, the strength of guarantees that those benefits will happen, and the impact on the environment and fisheries will account for the remaining 30%.

The Impact of Meeting Climate Goals

About 20 speakers spoke during the hearing, among them local residents that oppose the projects and a nonprofit opposition group, Save Long Beach Island. Supporters of the solicitation included a business group, New Jersey Alliance for Action, several clean energy companies and developers, including a representative of offshore wind developer Atlantic Shores, and environmental groups.

In a Dec. 29 letter to the board, resident Ken Lagana said he understands the importance of renewable energy but that there are “other locations where windmills could be installed.” He expressed concern at the impact of the turbines on fishing in the area.

“The placement of windmills in such close proximity to our waters could potentially disrupt the migration patterns of fish and other marine life,” creating a negative impact on commercial and recreational fishing.

Doug O’Malley, executive director of Environment New Jersey, called the solicitation proposal “a clear plan on how to reach Gov. [Phil] Murphy’s goal of 11 GW of clean renewable energy from offshore wind by 2040.”

“If we are serious about our climate goals, we need to be able to develop offshore wind in an environmentally responsible way,” he said. “Offshore wind is the best source of powering our economy with clean renewable energy.”

David Pringle, representing Clean Water Action, said, “The science says we have eight years to deal with the climate catastrophe unfolding. The state needs not only the third solicitation, but a fourth and a fifth and a sixth, and a heck of a lot more.”

But some speakers at the hearing expressed concern that the state is moving too fast.

Cindy Zipf, executive director of Clean Ocean Action, said there are “too many questions” about OSW to move ahead and urged the BPU to hold off doing so.

“From our view, there is little responsible about the current pace, scope and magnitude, literally paving the ocean in wind power plants,” she said. “The solicitation does not provide evidence of how the clean ocean and that economy can coexist with the industrial economy of the future that is planned.”

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NREL Boosts Development of Distributed Wind Energy

The National Renewable Energy Laboratory last month distributed another round of grants to boost small- to mid-sized wind turbine technology and marketing.

In announcing the funding, NREL said growth in this market sector will boost the development of distributed wind energy, which in turn will support local electrification, grid resilience and reliability, especially when combined with solar and/or storage technology.

NREL said this could support decarbonization in rural communities; support commercial, agricultural and industrial operations in windy regions; and avoid adding load to already strained transmission networks by delivering power directly to users.

The grants are part of the Competitive Improvement Project (CIP) that the U.S. Department of Energy began in 2012.

The sums of money involved are not huge: 11 companies will split $2.9 million in this latest round, bringing the program total to $15.4 million in grants plus $7.9 million in leveraged private-sector funding. But collectively the grants will improve technology, lower costs, encourage innovation and mitigate regulatory barriers, NREL said.

Increasing electrical output without also increasing manufacturing or installation expenses reduces a wind turbine’s levelized cost of electricity (LCOE) and makes it more competitive in more situations with fossil-generated power.

NetZero Insider spoke with three of the recipients. Each has a significantly different niche within the small-to-medium wind market, but all said they see significant benefits from the CIP grants.

Bergey Windpower

In announcing the grants, NREL singled out Bergey Windpower in Oklahoma as a CIP success story, having doubled the power output of its flagship turbine with research and development assisted by several rounds of grants.

CEO Mike Bergey said the company’s Excel 10 became uncompetitive when Chinese solar manufacturers started flooding the U.S. markets with panels that could produce power more cheaply than the 10-KW wind turbine.

So the company followed the example of General Electric and Vestas in squeezing more power out of their megawatt-scale turbines: With CIP help, it lengthened the Excel 10’s rotors and optimized their aerodynamics to create the Excel 15, which produces 15 kW with essentially the same nacelle and tower as the Excel 10.

“The DOE funding has allowed us to develop a whole new design that cuts the LCOE in half,” Bergey said.

He co-founded the company with his father, the late Karl Bergey, in 1977 and has spent his career in the wind industry, with stints as president of the Distributed Wind Energy Association (which he founded) and the American Wind Energy Association (now the American Clean Power Association).

In the distributed energy sector, wind has suffered for years from solar competition, Bergey said.

“There’s so much promotion of solar, we’re kind of stuck in the shadows,” he said. Also, “we don’t have the kind of financing alternatives that the solar industry has.”

This year’s CIP grant to Bergey Windpower is not for technology development: It will help the company set up a financing model that cuts upfront costs for customers. The Excel 15 and a 100-foot self-supporting lattice tower run about $100,000 installed, before incentives.

The events of 2022 are a game-changer, Bergey said: He can direct potential customers to a 30% investment tax credit through the Inflation Reduction Act plus a 10% domestic production adder, because the Excel 15 is made in the U.S. with mostly American parts.

The cost drops even further via tax deductions for depreciation and Department of Agriculture grants, if the buyer qualifies.

The CIP grants, Bergey said, now seem prescient: They allowed the company to have a new product ready when a new financial paradigm created new market opportunities.

“Because we’re in the sixth year of [CIP], it’s really helped fill the pipeline,” he said.

Carter Wind Energy

Carter Wind Energy, another multigeneration family-run company, is based in Texas, which produces more wind power than the next three highest states combined.

But CEO Matt Carter said his company is not producing the megawatt-scale machines that are creating all that electricity.

“We’re focused on what we call a mid-sized market,” he explained — turbines producing 100 to 1,000 kW.

Carter Wind also uses a different technology than most other wind power manufacturers: lightweight towers designed to sway like a palm tree, and lightweight two-blade rotors oriented downwind from the tower, rather than three blades oriented upwind.

Further, the product is portable, can be set up without a crane and can be relocated on a two-wheel dolly. This is attractive for certain agricultural and manufacturing applications and for industries such as water treatment or oil and gas production.

Finally, customers do not have to buy the tower and turbine: Carter Wind (and investors) will own it and sell the power to the customer or lease the equipment to the customer.

This latest CIP grant — Carter Wind’s third — will help it develop a 60-meter tower whose six sections are tapered, allowing them to nest like a telescope for transport.

“From a shipping standpoint, you can make it much more portable,” Carter said.

The economics are lining up now for small-scale distributed and behind-the-meter wind power operations, he said.

Carter Wind has long been able to pitch a significant savings to potential customers who use diesel-burning generators in remote locations, but now it will be easier to sell wind power to customers who burn natural gas, Carter said, as the 10-year window of the IRA incentives firms up the financing picture.

“These industrial projects are now easier to pitch. … The ebbs and flows have been a challenge for our market, [with its] on-again-off-again incentives.”

XFlow Energy

Two previous CIP grants have helped XFlow Energy take its vertical-axis wind turbine from a concept on paper to testing in the field. This third award will help it design a tower and move toward a prototype incorporating the lessons learned from the models tested.

25-KW vertical-access wind turbine (XFlow Energy) Content.jpgA half-scale prototype of the 25-kW vertical-access wind turbine being developed by XFlow Energy is shown in California. | XFlow Energy

The Washington state-based firm hopes to go to market with a 25-kW turbine in two years’ time, CEO Ian Brownstein said.

Vertical-axis wind turbines and the more commonly seen horizontal-axis designs each have their advantages and disadvantages, he said.

A key drawback of the vertical-axis orientation is the cyclical stress exerted on the rotors, which can cause fatigue. Brownstein and XFlow co-founder Ben Strom both focused on eliminating this problem in their doctoral research and in the subsequent R&D for their turbine.

A key advantage of the vertical-axis design, meanwhile, is its relative mechanical simplicity.

XFlow’s task is the classic R&D goal: Boost output and reliability while cutting costs, enhancing strengths and eliminating weaknesses.

“We’re trying to translate that to a true LCOE-competitive product,” Brownstein said.

Continual technical support from NREL has been just as important as the financial assistance in moving XFlow closer to a point where it can go to market, he said.

“We started with them when our design was pretty much on paper,” Brownstein said. “NREL support has been critical along the way.”

Mass production of the 25-kW turbine is a milestone goal for the company, not the destination, Brownstein said: “XFlow is definitely interested in building larger turbines.”

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Biden Appointees Take Majority on TVA Board

President Biden’s appointees control the majority of seats on the Tennessee Valley Authority’s Board of Directors after six new members were sworn in Wednesday.

The U.S. Senate approved all six of Biden’s board nominees through a voice vote just before Christmas. Without the Senate’s approval, the TVA board would have lost quorum and its ability to make business decisions.

The new members are:

      • Beth Geer, chief of staff to former Vice President Al Gore and a participant in the Nashville Sustainability Accountability committee;
      • Bobby Klein, vice president of the International Brotherhood of Electrical Workers after a decades-long career as a lineman and foreman in Chattanooga, Tenn.;
      • Michelle Moore, author of “Rural Renaissance” and CEO of Groundswell, a nonprofit that builds community power to reduce energy burdens and expand economic opportunity;
      • Bill Renick, a former Mississippi state legislator and mayor who chairs the Commission on the Future of Northeast Mississippi;
      • Joe Ritch, an Alabama-based attorney and former TVA board member (2013-2017); and
      • Wade White, a former Kentucky county judge-executive.

They join TVA Board Chair William Kilbride, whose term expires in 2023, and fellow incumbents Beth Harwell and Brian Noland; their terms expire in 2024. The full nine-member board will meet publicly for the first time in February when it holds a quarterly business meeting in Muscle Shoals, Ala.

Kilbride said in a press release that the federal agency was delighted to welcome the newcomers aboard “during this challenging but exciting period.”

“They each bring diverse perspectives and experience to the board that will help guide TVA as it plans for the future while entering its 90th year of service to the region,” he said.

Biden originally nominated Geer, Klein and Moore in the spring of 2021 and re-upped their nominations in January 2022. The trio faced a somewhat combative Senate confirmation hearing last year, with Republican lawmakers expressing worry that adding more progressive board members would lead to abandoning TVA’s fossil fuel fleet. (See TVA Board Nominees Back Renewable Power, Affordability.)

Biden nominated Renick and White in June 2022; Ritch’s nomination followed in July. Renick and Ritch have Democratic affiliations, while White is a Republican.

Ritch’s term expires in 2025 and Renick’s and White’s in 2027. The other three terms expire in 2026.

The full board has its work cut out for it. TVA was forced to order rolling blackouts ahead of Christmas day, leading to another FERC–NERC joint inquiry into grid performance during winter storms. (See FERC, NERC Set Probe on Xmas Storm Blackouts.)

The board is also tasked with approving TVA’s resource mix under its next 10-year integrated resource plan, due out in 2024. The federal utility has come under pressure in recent years from renewable power advocates, who say TVA is shortsightedly planning natural gas generation and overlooking renewable resources. (See Nonprofits Urge TVA to Reconsider Gas-fired Options.)

Some conservation groups have said the agency’s goal of reaching net-zero carbon emissions by 2050 is too gradual and out of step with the Biden Administration’s 2035 target for decarbonizing the power sector. TVA responded last year to a letter of inquiry from the U.S. House of Representatives’ Committee on Energy and Commerce that focused on its decarbonization goal and energy affordability. (See TVA Defends Rates, CO2 Reduction Plans in House Inquiry.)

TVA said it will contract this year with a third party to conduct a Valley Decarbonization Study, which will analyze how it can further slash emissions. It also plans to build 10 GW of solar generation by 2035.