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November 18, 2022January 9, 2024

Former NRG CEO Faces Tough Questions at Senate ENR Hearing

Joe Manchin (Senate ENR Committee) FI.jpg

Sen. Joe Manchin | Senate ENR Committee

Sen. Joe Manchin (D-W. Va.) opened the Thursday confirmation hearing for three key posts at the Department of Energy by asking the nominees “a pretty simple, yes or no” question.

“Do any of you believe that the United States of America can be energy independent within the next 10 years without a robust clean fossil [fuel] energy program?”

And one after the other, David Crane, Jeffrey
Marootian and Gene Rodrigues all answered “no,” during the hearing of the Energy and Natural Resources Committee.

The question was particularly pointed for Crane, the controversial former CEO of independent power producer NRG, who was recently named to lead DOE’s new Office of Clean Energy Demonstrations (OCED), where he will oversee the development of both carbon capture and hydrogen hubs funded by the Infrastructure Investment and Jobs Act.

Marootian, who previously was head of the District of Columbia’s Department of Transportation, has been tapped as assistant secretary for energy efficiency and renewable energy, while Rodrigues, a former executive at Southern California Edison, will be assistant secretary for electricity delivery and energy reliability.

Sen. John Barrasso

| Senate ENR Committee

Both Manchin, committee chair, and Sen. John Barrasso (R-Wyo.), the committee’s ranking member, had tough questions for Crane, who was infamously fired from NRG in December 2015 after the company’s stock fell 63% in 11 months. He has also been outspoken on the need for utilities and corporate America to move faster on decarbonization and during his tenure at NRG closed several of the company’s coal plants.

Given the financial losses at NRG, Barrasso asked Crane, “Why should we believe that you’re going to manage the American people’s money better than you managed the NRG money?”

While dramatic, the losses at NRG were “actually consistent with [losses at] other companies in the industry” at that time, Crane said. According to a 2016 article in Greentech Media, Dynegy, an NRG competitor, saw its stock’s value tumble 50% in the same time period.

Crane also countered that his long experience “at the intersection of big capital and big energy projects” gives him the skillset needed at the OCED. He also pledged to Manchin that he would implement the carbon capture and hydrogen provisions of the IIJA “with the same vigor that I implement every other provision.”

Those provisions, along with the Inflation Reduction Act’s expansion of the 45Q tax credits for carbon capture “are catalyzing a response that I think is going to be very good for the industry,” he said.

Similarly, Crane said the response to DOE’s call for initial proposals for $7 billion in hydrogen hub funding, which closed on Nov. 7, was “extremely enthusiastic,” ensuring that the projects chosen will meet the IIJA’s requirements that hubs be located in different regions and use different fuel stocks, including fossil fuels. (See DOE Opens Solicitation for $7B in Hydrogen Hubs Funding.)

Sen. Martin Heinrich (D-N.M.) also quizzed Crane on what metrics the OCED would use “to ensure that those large demonstrations are truly addressing the key risks, to be able to move those things towards adoption [and] deployment scale?”

Crane said his office would be focusing not only on the technical side of the demonstration projects but “more on the commercial offtake. These projects not only have to operate within their ring fence, but they have to be commercially sound. …

“The Department of Energy has a lot of negotiating influence in these public-private partnerships” for demonstration projects, Crane said. “But what we can’t do is structure projects that the private sector would never replicate. I will tell you, in my two months at the DOE, the word ‘replicability’ has passed my lips more often than it has in my previous 63 years.”

From Baseload to Grid-edge

Thursday’s hearing was the first meeting of the Energy and Natural Resources Committee since last week’s midterm elections, which left Democrats in control of the Senate, and Manchin likely to retain leadership of the committee.

The hearing also underlined other key trends in energy policy in Congress and at DOE. First, the administration continues to promote its commitment to an all-of-the-above approach to decarbonization, which includes at least the potential for carbon capture and sequestration and green hydrogen to provide economic growth for the struggling fossil fuel communities Manchin and Barrasso represent.

DOE is also focused on making the projects it funds with IIJA dollars commercially viable, which has resulted in the agency recruiting industry leaders like Crane and Rodrigues.

By contrast, Marootian, whose most recent position was as a special adviser to the Office of Energy Efficiency and Renewable Energy, clearly does not have the depth or breadth of experience of Crane or Rodrigues. For example, when Heinrich asked him if DOE would help to set standards to accelerate the deployment of advanced conductors and other grid-enhancing technologies, he said only that he would be “delighted” to work on the issue.

Rodrigues, on the other hand, smoothly navigated grid-related questions from Republicans and Democrats. Responding to a query about baseload power from Sen. John Hoeven (R-N.D.), Rodrigues said that the complexity of ensuring the reliability of the U.S. electric grid means “we need a mix of resources that can be used in different ways. Baseload energy is critically important.”

A top priority for the Office of Electricity, he said, will be “ensuring that each and every state’s policy decisions, policy preferences and decisions made around the resource mix that they want to serve their constituents — that the grid is enabled to take those resources and affordably get them to the American people.”

At the same time, Rodrigues also stressed the importance of developing grid-edge resources, like vehicle-to-grid technologies, to increase reliability.

While technological barriers still need to be overcome, Rodrigues said, “if and to the extent the grid is able to accept [grid-edge] resources, to integrate them, then we will have ways to increase reliability, increase affordability.”

The Office of Electricity will work to advance these technologies, Rodrigues said, “to ensure that the visibility of these resources, the controllability of these resources and … [the] policies are in place to ensure that consumers recognize the value of being a beneficial part of how we control our grid.”

November 18, 2022December 12, 2023

NERC Warns Winter Margins Tight in Multiple Regions

NERC staff called the organization’s 2022-2023 Winter Reliability Assessment, issued on Thursday, a “serious warning” that highlighted the possibility of “bigger problems” compared to last winter in several regions, with extreme weather once again posing a major risk to grid reliability.

“When we look at events over the last several years, it’s really clear that the bulk power system is impacted by extreme weather more than it’s ever been,” said John Moura, NERC’s director of reliability assessment and system analysis, in a media call on Thursday. “And so, as we transition our system rapidly, it’s vitally important that we’re planning and operating a bulk power system that is resilient to … the extreme weather we’re seeing, which includes both generation and transmission solutions.”

The regions where NERC identified potential for insufficient electricity supplies during peak winter conditions are MISO; ERCOT; Alberta; the Maritimes region, which contain parts of Canada and the U.S.; and SERC-East, which includes North and South Carolina. In addition, the assessment marked New England as at risk of constraints to the natural gas transportation infrastructure during cold weather, which could lead to outages of gas-fueled generation sources.

Demand Rising as Capacity Falls

NERC’s winter assessments are released each year and cover the months of December through February, based on demand and generation availability forecasts provided by regional entities, utilities and other stakeholders. In Thursday’s call Mark Olson, NERC’s manager for reliability assessments, emphasized that “almost all areas are well prepared for … average winter years” and observed that some regions do, in fact, appear to be in a better position than they were last year.

For example, the WECC-Western Power Pool assessment area had a lower risk of supply shortfall based on its improved hydropower outlook from last year, while SPP was assessed at lower risk because of added natural gas and wind generation since last winter.

However, for a significant fraction of the North American electric grid, questions exist about the ability to maintain needed levels of service in the face of extreme conditions that might affect the functioning of generators while driving up demand for electricity for heating. ERCOT faces the biggest potential shortfall, with NERC calculating that under the region’s projected reserve margin could fall as much as 21% below demand in the most severe scenario.

Left: NERC’s risk-period scenario for MISO, showing a potential for load shedding under extreme conditions; Right: the same projection for ERCOT. | NERC

No other region approaches ERCOT’s assessed risk: The closest is the Maritimes — comprising the Canadian provinces of New Brunswick, Nova Scotia and Prince Edward Island; and Northern Maine, which is not part of ISO-NE — which has a potential 8.6% shortfall. MISO could come short by as much as 7.6%, while Alberta, which is in WECC’s footprint, has a potential 1.1% deficit.

John Moura, NERC | NERC

One reason the possible shortfall in Texas is so high, Olson said, is that unlike other regions, ERCOT has “very little transfers that can come help in the event that they do [have] energy emergencies.” Demand in Texas is also very sensitive to cold weather because of electric heating demand, which “significantly uses more electricity” as the temperature drops.

On the other hand, Olson pointed out that ERCOT has implemented a number of improvements to cold weather performance since the winter storms of February 2021 that “also should improve the fuel availability to the natural gas-fired generators.” Moura added that while NERC only assesses the readiness of the bulk electric system, he was “sure” that those responsible for regulating the natural gas supply “have made strides” in preparing their system.

For MISO, reserve margins have fallen by more than 5% since last winter, largely because of more than 4.2 GW in nuclear and coal-fired generation retirements. While 2.25 GW of demand response and wind generation with nameplate capacity of 3.2 GW have been added, Olson reminded listeners that the inherent uncertainty around the weather impacts the availability of these resources.

“If wind comes in below projections … that can drive whether there is an energy emergency or not in MISO,” Olson said. “If it’s low, it’s more likely to have emergencies, and if it’s high, it can alleviate some of those concerns.”

Coordination Recommended

NERC’s assessment includes several recommendations to utilities to lower the risk of energy shortfalls this winter. The first is for balancing authorities and reliability coordinators to work with generator owners to ensure adequate fuel supplies both for normal and extreme conditions; this includes filling storage capacity, preparing fuel delivery systems, and coordinating with fuel providers to make sure additional fuel can be secured when needed. GOs should keep BAs and RCs apprised of their fuel levels and readiness as well, while RCs and BAs should actively monitor fuel adequacy and be prepared to step in with “proactive steps” to assist if needed.

The ERO also said policymakers at the state and provincial levels should be aware of energy risks for the winter season as well, and delay generation retirements if they are likely to negatively impact reliability. State regulators can also support environmental and transportation waivers requested by grid operators (GOPs) in the event of cold weather, in addition to issuing public appeals for electricity and gas conservation.

Finally, the assessment recommends that grid operators, GOs and GOPs implement the mitigations in NERC’s recent Level 2 alert related to cold weather preparations, as well as any additional recommended winterization steps for their facilities.

November 18, 2022

NY OSW Proposal Advances After Revisions

Sunrise Wind cleared a significant regulatory hurdle Thursday after the New York Public Service Commission approved a certificate of environmental compatibility and public need for the project planned off the coast of eastern Long Island.

Long Island commercial fishermen initially had raised objections to the offshore wind project but joined in support after nearly a year of negotiations and revisions to the plan.

One PSC commissioner hailed the outcome as a precedent in what will be a series of offshore wind projects churning through the application process in New York, where state law mandates 9 GW of OSW be online by 2035 and where some models predict the need for 20 GW by 2050.

In fact, the U.S. Bureau of Ocean Energy Management earlier in the week issued a draft environmental impact statement for Empire Wind 1 and 2 off western Long Island that found the cumulative impact of offshore wind projects in the New York Bight would have a major negative impact on the fishing industry, to a degree “beyond what is normally acceptable.”

Sunrise Wind

Sunrise Wind is a joint venture of Orsted (OTC:DNNGY) and Eversource (NYSE:ES), which have begun construction of the 124-MW South Fork Wind project in the same vicinity. Sunrise would stand about 30 miles offshore from Montauk and generate up to 924 MW of energy. The cables that would carry that power to land were a point of contention for the Long Island Commercial Fishing Association.

“LICFA raised several concerns at the outset of the case, noting that its constituency of 300 commercial fishers was potentially impacted more than any other group by the submarine cable pathway and landing site,” Michael Clarke, the PSC administrative law judge presiding over the proceeding, said during Thursday’s PSC meeting.

“After 10 months of settlement discussions, Sunrise committed to various design changes that will significantly reduce impacts arising from the project, including those affecting benthic resources and water quality, as well as those potentially affecting the commercial fishing industry,” he said.

A critical change was bringing the export cable onto Long Island with one bore at the landfall site rather than the three that were part of the original plan, Clarke said.

The revised plan also requires substantial outreach and notice to the fishing community during construction, he said.

Sunrise must submit a fisheries compensation plan with a claims process for loss of commercial fishing gear and a monitoring plan that ensures the impact on fisheries and fishing operations are minimized.

In September, Sunrise, LICFA and five state agencies signed off on a joint proposal. With that, Clarke said, there is no publicly stated opposition to the power line.

PSC Chair Rory Christian and several of the commissioners praised the successful effort to bridge a gap and bring New York one step closer to operating an offshore wind industry that will help it meet its climate-protection goals.

Among them was Commissioner John Howard, who called the joint proposal (and the delicate process that yielded it) a model for future planning and review.

He then voted against approving the certificate as a protest against its cost structure. Long Island Power Authority customers would pay 13.5% of its costs, he said, while upstaters would derive no benefit and bear 50% of the cost.

“I’m going to do this every time a project comes up that is based on a load-share ratio financing scheme,” Howard said. “Everybody pays. Sometimes the biggest beneficiaries pay the least. In this case, I believe that is the case.

“If we’re going to ask everyone in the state of New York to pay, that decision should be done not through a regulatory fiat but directly through legislation.”

Howard’s was the sole no vote on Sunrise. He previously has voted against matters involving the Champlain Hudson Power Express line from Quebec to New York City for the same reason and did so again Thursday.

Later Thursday, Sunrise Wind spokesperson Meaghan Wims said:

“Sunrise Wind has reached a major milestone with the approval of a key state permit needed to build this important New York clean energy project. The New York Public Service Commission’s approval affirms that Sunrise Wind can be built while minimizing community and environmental impacts and helping New York State achieve its vision for a 100% clean energy future. We thank the PSC and its staff for its diligent review of the proposed project, which included extensive analyses and contributions by experts across multiple state agencies as well as input from the Long Island community, resulting in an unopposed project submission.”

Wims said Sunrise will next submit its environmental management and construction plans to the state Department of Public Service. Once they are approved, Sunrise can obtain a notice to proceed, allowing construction to start.

BOEM is targeting Dec. 16 for release of the draft environmental impact statement for Sunrise Wind.

Wims said Sunrise expects to be fully permitted at the state and federal level by the end of 2023.

Empire Wind

BOEM on Monday released its draft environmental impact statement on the construction and operation plan submitted for Empire Wind 1 and 2.

That opened a 60-day public comment period that will lead to a final impact statement and inform BOEM’s decision to approve, approve with modifications or reject the plan submitted by Empire Offshore Wind LLC, a joint venture of Equinor (NYSE:EQNR) and BP (NYSE:BP).

Combined, the two wind farms would include up to 147 turbines with a capacity of 2.1 GW. Some 260 miles of inter-array cables and 66 miles of export cables buried 6 to 15 feet below the seabed would connect the turbines to two offshore substations and two onshore substations via three landfall points.

The draft study includes comparison of eight alternative design scenarios that emerged during the review process, each of them tweaking construction techniques or placement of turbines or cables in some manner. The overall projected impacts were the same for all scenarios in every analysis, however.

The draft study found Empire Wind’s adverse impacts would be greatest on fishing, cultural resources and ocean views.

Cumulatively with other offshore wind projects planned in the region, the wind farm would have major negative impact for commercial fisheries and minor to moderate negative impact on recreational fishing due to new structures installed in the ocean that would result in navigational hazards, damaged or lost fishing gear and space-use conflicts.

The cumulative impacts would be “beyond what is normally acceptable” but mitigation, including financial compensation and uniform spacing and layout of turbines, could reduce the impacts.

The cultural impact of the project — its effect on historic sites and archaeologically significant places above or below water — will range from negligible to major, BOEM said, depending on the effectiveness of mitigation measures.

An unobstructed view of the sea is a key part of the heritage of multiple historic districts, for example, and they will lose that once scores of wind turbines dot the horizon, with blades reaching up to 951 feet above the water and warning lights glowing at night. The developers have agreed to use non-reflective white and light-gray paint on offshore structures, and to seek permission to use a hazard light system that turns on only when a plane or surface vessel is in the area.

Among other findings in the draft BOEM report:

The project generally would have a major disruptive impact on scientific research and surveys, particularly National Ocean and Atmospheric Administration surveys supporting commercial fisheries and protected-species programs. The structures placed in the sea would preclude aerial sampling and affect performance of survey gear.
The planned upgrades to regional ports for support of construction, operations and maintenance would have major beneficial impacts.
Air quality would be degraded by emissions caused by construction of the project and by routine maintenance once the project is complete. But emission-free wind power would displace fossil fuel power generation, and the net impact on air quality would be positive.
Birds would experience minor positive and minor negative impacts: Some would lose shore habitat; some would be killed by spinning rotors; and some would gain increased forage opportunities.
Minor to moderate economic and employment benefit is predicted, mainly from the creation of a support facility onshore in Brooklyn.
Environmental justice, a frequently stated goal of New York’s clean energy transition, would gain a minor boost through increased economic activity and see minor to moderate negative impact from the increased traffic, gentrification, air emissions, noise and land disturbances that activity creates.
Search and rescue efforts might be hindered during emergencies. The project would create underwater reefs favorable to sportfish, which would improve for-hire recreational fishing options, and could increase the number of vessels operating in the area. That would increase the chance of an accident, after which aircraft would have to fly less-effective search patterns, lest they crash into a tower or rotor blade, increasing the likelihood of preventable loss of life.
Sea turtles would likely experience some impact from the project, but not enough for a population-level impact.

Equinor welcomed the draft report, saying via email:

“We appreciate all the hard work from the Bureau of Ocean Energy Management staff and cooperating agencies to achieve this critical milestone. We look forward to reviewing the Draft Environmental Impact Statement and receiving feedback from the public on the Empire Wind Project. This is a major milestone in our effort to help New York State achieve its offshore wind ambitions.”

The New York State Energy Research and Development Authority, which is shepherding New York’s offshore wind sector into existence, said Thursday in a statement:

“The availability of BOEM’s Draft Environmental Impact Statement for Empire Wind is a major permitting milestone and a culmination of years of research and collaboration to understand and minimize impacts to the environment and to support vital fisheries. We commend BOEM and Equinor on this important achievement that will ensure the project moves forward responsibly in support of New York’s goal for at least 9,000 megawatts of offshore wind by 2035. The development of Empire Wind is expected to bring billions in economic benefits to the state, including investments in frontline and historically underserved communities, offshore wind component manufacturing in Albany, and a staging and assembly facility at South Brooklyn Marine Terminal and will deliver significant amounts of clean renewable energy to New York’s electricity grid once completed.”

November 18, 2022June 14, 2023

Public Citizen: Natural Gas Exports Driving up US Gas, Power Prices

A surge this year in U.S. LNG exports — some with long-term contracts to Asia — is driving up domestic natural gas prices and contributing to uncertainty about the reliability of the electric grid as winter begins, according to consumer watchdog Public Citizen.

Tyson Slocum, of Public Citizen | © RTO Insider LLC

LNG exporting companies must seek approval from the Department of Energy as well as from FERC. But DOE is not scrutinizing the impact of the growing exports on domestic markets, Public Citizen’s Tyson Slocum said in a news conference Thursday.

Public Citizen and seven other consumer groups less than a month ago appealed to DOE to use its statutory authority and order a “substantive analysis” as required by the Natural Gas Act to determine the impact of additional U.S. export terminals on domestic markets.

In a letter to Energy Secretary Jennifer Granholm, the consortium said that the exports are “binding American household energy bills to global calamities, resulting in a domestic energy pricing crisis.” They argued that DOE must develop a better analytical tool to measure the impact of unbridled LNG exports. The letter also noted that LNG exporters are charging European customers whatever the market will bear.

“To protect our European allies from price-gouging, DOE must condition any export authorization utilizing a global energy security justification to be subject to a cost-of-service standard tied to the landed delivery price,” the groups reasoned.

Slocum argued that DOE’s reliance on an economic study rather than a detailed analysis of every LNG export application is at the heart of the problem.

“The Department of Energy relies almost exclusively on a 2018 macroeconomic study,” he said. The study “concludes that exports at roughly the same levels that are being exported today will provide net economic benefits. They projected no increase in costs in natural gas prices domestically.

“And the report that the Biden administration relies upon from 2018 states that even if domestic energy prices were to increase, the income that families would receive from their stock ownership in LNG export terminals would exceed any increase in their monthly energy bills, which is a preposterous and wholly unsupported assertion,” he said.

In response to a question, Slocum said the consumer groups have been talking to congressional members about the issue.

John C. Allaire, a veteran environmental manager for the oil and gas industry who is now opposing a proposed LNG terminal in Texas, said China was the second largest importer of U.S. LNG last year. “But they’re not our friends,” he said. “It’s not in the interest of the U.S., but we don’t have a long-term plan. Our plan is to get it out of the ground and sell it to the highest bidder.”

DOE’s efforts to jumpstart the production and use of hydrogen in the U.S. through $8 billion in matching grants to assist industry and local governments create hydrogen hubs is likely to further complicate matters. At least two of the hubs DOE wants to fund will produce hydrogen from natural gas.

Because blue hydrogen producers will be dealing “with increasingly expensive feedstock costs to acquire that natural gas, and they’re going to be in direct competition with LNG exporters, I just don’t see that LNG exports are consistent with these efforts to try and build a domestic hydrogen production economy in any sort of meaningful way,” said Slocum.

November 17, 2022December 12, 2023

NERC Board of Trustees/MRC Briefs: Nov. 15-16, 2022

[EDITOR’S NOTE: This story previously incorrectly stated that the MRC would attend next May’s joint meeting in D.C. with the Board of Trustees virtually. While other stakeholders will attend the meeting virtually, the MRC will meet in-person along with the board.]

NEW ORLEANS — Stakeholders from across the ERO Enterprise gathered in New Orleans this week for the meeting of NERC’s Member Representatives Committee and Board of Trustees.

At Wednesday’s board meeting, NERC CEO Jim Robb joked that it was “great to be here in person and not watching from … the 23rd floor,” referring to his absence from the last MRC and board meetings in Vancouver. Robb tested positive for COVID-19 while on site and, in accordance with NERC’s policy — which was also in place this week — remained in his room while listening to the events via webcast. (See “Vancouver Hosts Return to In-person Meetings,” NERC Board of Trustees/MRC Briefs: Aug. 17-18, 2022.)

Board Makes Meeting Changes Official

In his remarks to the MRC meeting on Tuesday, NERC board Chair Ken DeFontes confirmed that the organization has decided to implement the new meeting schedule previewed at last week’s meeting of its Corporate Governance and Human Resources Committee. (See NERC Still Considering Scaling Back Board Meetings.)

Under the planned schedule, the MRC and board will hold two fully in-person meetings next year: one in February in Tucson, Ariz., and another in August in Ottawa, Canada. David Morton, chair of the Canadian Association of Members of Public Utility Tribunals, described the meeting in Ottawa as an important opportunity for the board to communicate with Canadian regulators, while the February meeting will include a stakeholder dinner, which DeFontes called “a chance for us to [thank] and recognize some key contributors.”

For the May meeting, which is being held at NERC’s new headquarters in D.C., the ERO plans to conduct a hybrid format in which only the board and MRC will meet one-on-one, while other stakeholders attend virtually. The last gathering of the year will be held entirely online; only the board is expected to meet for now, although DeFontes said a virtual MRC meeting could be arranged “should there come a need for some [actions] by the MRC.”

The new schedule is intended to reduce the costs of attending meetings for the ERO by easing the planning burden for NERC staff and eliminating two meetings’ worth of travel costs for most stakeholders. NERC staff told ERO Insider that the organization hopes the communication technology upgrades at its newly renovated D.C. office will improve the experience for those attending the May meeting virtually.

MRC Leadership Election

The MRC unanimously chose Jennifer Flandermeyer of Evergy and John Haarlow of the Snohomish County Public Utility District to serve as chair and vice chair, respectively, for 2023. Flandermeyer, who is currently vice chair, will take over the top spot from ElectriCities CEO Roy Jones.

BC Hydro’s Paul Choudhury, who chaired the MRC in 2021, briefly took over management of the meeting when Flandermeyer and Haarlow left the room during the vote. Because the MRC’s meetings were held virtually during Choudhury’s tenure, Flandermeyer joked that the opportunity to run the gathering in-person was “a gift” for the former chair.

Nominations are open through Thursday for sector representatives to replace those whose terms will expire in February 2023. The election will be held Dec. 14 to 23.

Standards Actions

The board voted unanimously to adopt the new reliability standard CIP-003-9 (Cybersecurity — security management controls), which will now be sent to FERC for approval.

CIP-003-9 is the product of Project 2020-03, set up by NERC in 2020 to address the risk of low-impact cyber assets with remote electronic access connectivity on the bulk electric system, as recommended in the ERO’s Supply Chain Risk Assessment report in 2019. NERC’s Vice President of Engineering and Standards Howard Gugel explained that the new standard, an update to CIP-003-8, adds a requirement for utilities to include “vendor electronic remote access security controls” in their cybersecurity policies, along with guidelines for how those controls are to be implemented.

Gugel also brought to the board for approval a new white paper drafted by the organization’s Low Impact Criteria Review Team. Gugel reminded the board that they authorized the team to examine “the issue of coordinated attacks on low[-impact cyber assets] and whether or not additional controls should be placed around [them] to help protect against coordinated attacks.”

The paper was posted for industry comment earlier this year and garnered “very supportive comments,” Gugel said. Its recommendations include further revisions to NERC’s Critical Infrastructure Protection (CIP) standards to improve user authentication procedures and security, new security guidelines around protection of communications with and between low-impact assets, and continuous monitoring of risk reports from the Electricity Information Sharing and Analysis Center. The board voted unanimously to accept the white paper.

In addition, the board accepted NERC’s Reliability Standards Development Plan (RSDP) for 2023-2025. The RSDP is “a snapshot of all of the projects that we have in place at this point,” Gugel said, which the organization has to file with regulatory agencies each year.

Along with the approvals at this meeting, Robb noted in his opening remarks the recent passage of NERC’s new cold weather standards EOP-012-1 (Extreme cold weather preparedness and operations) and EOP-011-3 (Emergency operations), which the board approved in a virtual meeting last month. (See NERC Board Approves New Cold Weather Standards.) The CEO thanked NERC’s standards developers for their work, which he called a “very important first step” in addressing the ongoing challenges posed by climate change.

GADS Expansion Gets Board OK

John Moura, director of reliability assessment and performance analysis at NERC, brought to the board a request to approve an update to the Generating Availability Data System (GADS), which trustees approved. The update will expand GADS, which currently covers conventional generation resources and some wind facilities, to include solar facilities and grid-connected energy storage, along with patching some gaps in its wind coverage.

In his presentation, Moura explained that while the behavior of traditional generation resources under a wide range of circumstances is well understood, the rapid expansion of renewable generation resources on the grid has outpaced grid planners’ understanding of their performance characteristics. The expansion of GADS is meant to give NERC’s assessment staff more insights into these assets and how they might react under pressure.

“To forecast energy assurance in the future, understanding the performance of the generation fleet that we have is fundamental; it is a must when we’re considering the reliability assessment obligations of the ERO,” Moura said.

November 17, 2022

Impact of NJ’s Storage Plan on Overburdened Communities Questioned

New Jersey’s Board of Public Utilities (BPU) needs to enhance and more sharply target its Storage Incentive Program (SIP) if the agency wants to stimulate development in historically polluted, overburdened communities, speakers at a public hearing said Monday.

The SIP cites a program goal of supporting overburdened communities with storage projects that provide “energy resilience, environmental improvement and economic opportunity benefits.”

The goal is one of seven in the SIP proposal. It suggests that placing storage resources in overburdened communities would provide benefits, such as enhanced resilience, while reducing emissions and offsetting the use of backup generation options such as peaker plants during emergency conditions.

But several speakers in the three-hour forum, which attracted more than 250 registrants and more than two dozen speakers, said the program needs to provide larger, and more directed, incentives if it is to bring the benefits of distributed storage to low-income and minority areas that have long suffered the scars of polluting plants and excessive emissions.

Ted Ko, a consultant to clean energy companies, said it’s “not sufficient” to simply incentivize the location of storage projects in the communities.

“While there’s a good reason to actually have deployment incentives to get people to deploy in those locations, it’s not enough to actually get the benefits to those locations,” he said. Instead, he added, the BPU “needs to come with a companion program, to actually get the storage to operate in a way that actually provides those benefits,” which he said could include providing resilience to the electricity system or avoiding the extra emissions unleashed when demand peaks occur.

Scott Elias, director of Mid-Atlantic state affairs for the Solar Energy Industries Association, urged the BPU to set aside a portion of the incentives for projects “located in or directly serving overburdened communities.”

“Our preference is that is done by establishing an adder of $1/kWh to the fixed portion of the incentive” allocated to projects in overburdened areas, he said.

Defining Incentive Capacity

The hearing — the third and final forum to solicit stakeholder input on the proposal — focused on program rules designed to stimulate the development of storage for distributed, or behind-the-meter, projects. The first hearing focused on providing an overview of the project and the second on the program rules for grid-scale projects. (See Stakeholders: NJ Storage Incentives Too Small, Slow.)

The program, with a target of building 1,000 MW of four-hour-plus storage by 2030, is part of the state’s effort to jumpstart state storage development in pursuit of the state goal of creating 2,000 MW of storage by 2030. The state has about 500 MW in place and is hoping to develop 1,000 MW through the Competitive Solar Incentive (CSI) program, which includes incentives for co-located storage.

With different rules for distributed and utility-scale projects, SIP provides incentives to both project categories through a combination of fixed incentives and a pay-for-performance mechanism. For distributed storage, the pay-for-performance payments would be administrated by electric distribution companies (EDC), which would pay “based on the successful injection of power into the distribution system when called upon by the EDC,” according to the proposal.

It would award capacity and incentives to distributed storage projects in blocks, allocating 9 MW of planned capacity in the first year, 10 MW in the second year and 15 MW in the third year. Combined they total about one-quarter of the capacity incentivized in awards to grid-scale projects under the program. Two speakers questioned the imbalance and suggested that more should be allocated to stimulate the development of distributed projects, which include residential and commercial projects competing for the same pot of incentives.

“Without any cap on project size, a single large commercial energy storage can eat up the entire capacity,” said Elias. Without increasing the capacity available, he said, it is “critical that the BPU separate capacity buckets for residential and nonresidential distributed projects, which will add to additional program complexity.”

Available Incentive Capacity

Competing demands for limited incentives prompted other speakers to express concern that insufficient capacity would hurt efforts to support overburdened communities.

John Rotolo, chief engineer for the Newark-based Passaic Valley Sewerage Commission, called the proposed incentive capacity “insufficient” and urged the BPU to increase the program capacity and “make the majority the capacity available to distributed storage projects,” such as those planned at his own agency.

The commission, which operates the largest sewage treatment plant in New Jersey, serves 48 municipalities and is situated in an overburdened community that has a “strong desire to minimize fossil fuel emissions.” During Superstorm Sandy, the commission lost power and could not treat sewage, which resulted in “hundreds of millions of gallons of raw and partially treated sewage” being released into the Passaic River and Newark Bay, Rotolo said.

The agency is in the process of evaluating responses to a request for proposals to develop a clean energy source that would tie in to a microgrid that in several of the proposals would be supported by storage, he said. The plan would require about 34 MW of storage, which would provide enough power to operate the facility during an outage, Rotolo said.

“We are concerned that the storage proposal does not provide enough incentive program capacity even for our single project, let alone the main vital resiliency projects I’m sure are being planned or already processed around the state,” he said.

Todd Olinsky-Paul, senior project director at Clean Energy States Alliance, said that to have a positive impact on overburdened communities, the BPU had to do more than just create a “carve out,” or allocation of incentives to those areas. He cited the example of California’s Self-Generation Incentive Program (SGIP), which provides storage incentives to residents that live in low-income or affordable housing. The program initially had a carveout but offered no “adders” or extra incentives to pay for storage in low-income housing and its residents, he said.

“There was absolutely no uptake until they increased the incentive rate, at which time the equity budget was fully subscribed almost immediately,” he said. “So, we recommend that the New Jersey BPU adopt both a separate capacity block and an additional upfront incentive for overburdened communities. The upfront incentive is important to help offset higher costs and also higher risks of financing.”

Kyle Wallace — vice president for public policy and government affairs at PosiGen, a Livingston-based developer of solar projects for disadvantaged consumers — said the BPU should have a separate allocation of incentives for overburdened communities to help address the fact that the distinct challenges and costs faced by projects catering to those communities mean that the market for them will take longer to develop.

He added that low-income applicants should be paid the full incentive upfront, rather than over 10 years, because those consumers are less able to handle the financial commitment from having an investment tied up long term on a solar project, let alone an additional storage project.

“They don’t have that same tolerance that higher-income households may, where they’re willing to put off their payback period a few more years to add storage,” he said. “Low-income customers just do not have that luxury.”

Other speakers encouraged the BPU to consider ways in which the program can encourage the use of vehicle batteries to provide storage when they are not powering the vehicle, a strategy that is not incorporated into the SIP.

“We want to make sure the BPU storage program can support the full range of applications and use cases, including cases where storage is embedded as part of a broader project, for instance solar and EV charging,” said Pamela Frank, CEO of ChargEVC-NJ, a nonprofit trade and research organization that promotes electric vehicle use. “Electric vehicles in particular, when they’re not operating on the roads, which is the majority of time, they present opportunities to utilize the car battery.”

Stanislav Jaracz, president of the New Jersey Electric Vehicle Association, said that moving in that direction would require a clear statement of intent from the BPU. Vehicles currently are not wired to be bi-directional, and manufacturers won’t move in that direction unless they see a market for it, he said.

“I think it’s very important that we in New Jersey start ahead and have this regulation in place so that we send the message to the carmakers, so that they make the vehicles capable of having bidirectional chargers,” he said.

November 17, 2022

SunZia Transmission OK’d by Ariz. Regulators

Arizona regulators have granted a key approval to the SunZia Transmission project, Pattern Energy’s proposal for delivering wind energy from central New Mexico into Arizona.

The Arizona Corporation Commission (ACC) last week approved a certificate of environmental compatibility for the project, which will consist of two 525 kV transmission lines across a 550-mile corridor.

The lines are intended to send energy from the 3,500 MW SunZia Wind project, which Pattern Energy is looking to develop in central New Mexico, to population centers in Arizona. SunZia Wind will be the largest wind project in the Western Hemisphere, the company said in a release.

“SunZia is proof that New Mexico is leading the charge in the clean energy transition,” U.S. Sen. Martin Heinrich (D-NM) said in a statement.

The ACC approval completes the Arizona state permitting process for the transmission project. In addition, the New Mexico Public Regulation Commission granted two separate approvals — in May and in October — related to SunZia Wind, Pattern Energy said.

The company said it is awaiting approval from federal agencies, including the Bureau of Land Management, as well as local jurisdictions. Construction is expected to start in mid-2023.

Amendments Requested

The ACC originally approved an environmental certificate for SunZia Transmission in 2016. In May, SunZia Transmission LLC asked the commission to amend the approval. SunZia asked the commission to split its decision into two separate environmental certificates to allow separate ownership of each line. The move will facilitate financing.

SunZia also asked the commission to approve additional structure types and updated structure design for the project. In addition, the company asked to extend the time to complete the project, from February 2026 to February 2028.

Pattern Energy called the commission’s unanimous decision to approve the requests a “major milestone.”

Critics of the project said it would harm wildlife and questioned the benefit to Arizona, because New Mexico power would be sold to California, according to a draft order to approve the certificate.

A Pattern Energy spokesman said agreements are still being negotiated, so it’s too early to say how much of SunZia’s wind energy would go to California.

Regarding wildlife, Pattern Energy said previously that SunZia Transmission worked closely with wildlife conservation groups to analyze environmental impacts and find the best route for the transmission project.

Supporters of the transmission project pointed to the need for more renewable energy to combat climate change and the economic benefits the project would bring to rural Arizona.

“Our window to combat [climate change] by reducing greenhouse gas emissions is closing quickly,” Adam Stafford, Western Resource Advocates’ managing senior staff attorney in Arizona, said in a statement. “We need to take action now, and building the SunZia lines helps us move in the right direction.”

Kevin Wetzel, Pattern Energy’s senior director of business development, said the SunZia projects would “greatly benefit” Arizona. SunZia wind will complement solar energy produced in the state, he said, helping utilities and commercial customers reach their renewable energy goals.

In addition, “new transmission and diversified generation resources will improve overall WECC reliability and resiliency, which benefits all Western states, including Arizona,” Wetzel said in a statement provided to RTO Insider.

Project Acquisition

In July, Pattern Energy announced it had acquired SunZia Transmission from SouthWestern Power Group. Pattern Energy had previously been awarded the full 3,000 MW of capacity of the transmission line.

SouthWestern Power Group is retaining ownership of a second 500 kV transmission line, El Rio Sol Transmission.

Combined, the SunZia transmission and wind projects form the largest renewable energy infrastructure project in U.S. history, with a total investment of more than $8 billion. Both projects are privately funded.

After initial approval of SunZia Transmission, the route was adjusted in consultation with the Department of Defense and White Sands Missile Range. The modified route partially parallels the existing Western Spirit Transmission line for 35 miles, which reduces environmental impacts, Pattern Energy said.

November 17, 2022

Calif. Proposes World’s ‘Most Ambitious’ Climate Goals

California regulators on Wednesday released an updated proposal for bringing the state to carbon neutrality by 2045, incorporating changes such as boosting offshore wind development and moving toward net zero without new natural gas-fired plants.

The new version of the climate change scoping plan is a follow-up to a draft that the California Air Resources Board released in May. The CARB board is scheduled to vote on finalizing the plan during its Dec. 15-16 meeting.

The plan would rapidly shift the state away from fossil fuels and toward renewable energy and zero-emission vehicles. It would cut greenhouse gas emissions to 85% below 1990 levels and create 4 million jobs, the agency said.

Gov. Gavin Newsom called the plan “the most ambitious set of climate goals of any jurisdiction in the world.”

“If adopted, it’ll spur an economic transformation akin to the industrial revolution,” the governor said Wednesday in a statement.

CARB revised the draft scoping plan based on changes requested by the CARB board, by the agency’s Environmental Justice Advisory Committee and by Newsom. Other changes are in response to laws passed by the state legislature this year.

The plan calls for meeting the increased demand for electrification without new gas-fired plants, while maintaining reliability. It includes the development of 20 GW of offshore wind by 2045. Both strategies were requested by Newsom in July. (See Newsom Calls for ‘Bolder’ Climate Action in Calif.)

The scoping plan sets a goal of 6 million electric heat pump appliances installed in the state by 2030. All-electric appliances would be required in new homes starting in 2026 and in new commercial buildings beginning in 2029. Appliance sales for existing homes would be 80% electric by 2030 and all electric by 2035.

The plan relies on carbon removal and sequestration, which it calls “an essential tool to achieve carbon neutrality.” Carbon capture and sequestration would be used in sectors such as electricity generation, cement production and refining.

The plan is projected to reduce greenhouse gases by 48% below 1990 levels in 2030, surpassing a mandated 40% reduction by 2030.

The scoping plan is a framework for the state to reach carbon neutrality by 2045. But further action, such as the adoption of regulations, is needed to move toward the plan’s goals.

“Hitting the targets — from the required build out of renewable resources to putting tens of millions of zero-emission cars and trucks on our roads and highways — will require implementation on a very ambitious timeline,” CARB said.

David Weiskopf, senior policy advisor with NextGen Policy, said the plan’s ambitious goals have the potential to offer major benefits.

“But until we take action, it is just a report,” Weiskopf said in a statement. “It is our job as an advocacy community to turn seemingly impossible goals into realities and to prevent outcomes that continue the legacy of environmental racism at the hands of polluting fossil fuel companies.”

November 16, 2022January 30, 2024

NARUC Annual Meeting Taps Into Winter Unease, Rate Design, Storage

NEW ORLEANS — The 2022 annual meeting of the National Association of Regulatory Utility Commissioners covered ground on rate design, energy storage and reliability as the energy portfolio undergoes renovation.

The meeting, which began Sunday and concludes Wednesday, continued NARUC’s multiyear theme of innovative and disruptive technology and regulation.

“The energy transition poses the greatest threat to reliability,” said NERC Director of Legislative and Regulatory Affairs Fritz Hirst during a briefing Sunday on the reliability organization’s 2022 Winter Reliability Assessment.

Hirst called NERC’s summer assessment a “sobering report.”

“And the winter assessment is no exception,” he said, adding that a large portion of the country will confront reliability risks should severe winter weather strike.

Fritz Hirst 2022-11-15 (RTO Insider LLC) FI.jpg

Hirst said Texas, MISO, SERC and New England are particularly exposed to winter risk, due to generation retirements, fuel supply and generator vulnerability to the elements.

He added that the Pacific Northwest’s hydropower conditions have improved since last year and SPP has added enough natural gas and wind generation to manage winter resource adequacy, likely keeping them off the season’s hot seat.

Hirst said it’s “cold comfort” that the National Oceanic and Atmospheric Administration is predicting a mild winter for much of the country.

“It matters not what the predictions are because all it takes is a cold snap lasting several days in a region,” he said.

Hirst also said an ongoing nationwide shortage of transformers might mean longer restoration times. He said that though NERC cannot mandate resource adequacy, the “energy sufficiency challenge” is top of mind for staff. The agency’s consideration of a standard for forward-looking energy reliability assessments seeks to tackle the burgeoning issue, he said.

“The system needs flexible, dispatchable resources, whether that’s coal or natural gas,” Hirst said. “Natural gas is probably your best bet … and that will be the case until we have some breakthrough in storage at scale or in hydrogen.”

Michelle Bloodworth, CEO of coal lobbying group America’s Power, said she’s alarmed by the pace at which dispatchable resources are exiting the grid. She said operators are “vastly underestimating” the amount of coal resources poised to exit the system.

Utilities have announced the retirement of more than half of the nation’s 200 GW coal fleet by 2030, Bloodworth said. She said the industry should “do a better job of publicly recognizing” that coal resources have reliability attributes that are essential for the foreseeable future. America’s Power has filed a letter with FERC, asking the commission to acknowledge those attributes.

The Brother Martin boys’ college preparatory marching band of New Orleans serenaded NARUC attendees on Nov. 14 | © RTO Insider LLC

“Every coal plant that leaves puts more and more pressure on the natural gas system,” said Bloodworth.

She added that she hoped carbon capture and sequestration investments on the nation’s existing coal plants are given an assist by the Inflation Reduction Act.

“It takes time and sustained investment. We’ve seen more subsidies on the intermittent generation to date,” she said.

State regulators also wrung their hands over natural gas price increases.

During a Monday roundtable, Colorado Public Utilities Commission Chairman Eric Blank said customers will see increases north of 60% on the natural gas portions of their bills.

“It’s just enormous, enormous,” Blank said. “I would say the regulatory options are very limited. We’re just struggling.”

He said “it’s a lot more fun” to regulate when fuel prices are stable. He asked other regulators for ideas on limiting bill increases.

Regulators suggested prohibiting utilities from earning a return on natural gas power purchases, customer charge suspensions, and more robust energy efficiency programs that hedge high commodity prices.

Some regulators said while surging natural gas prices will strengthen some commissions’ commitment to electrification, renewable energy and hydrogen substitution, others will concentrate on how to blunt the price hikes.

“It’s going to be an ugly time for ratepayers in Georgia in the next few months,” Georgia Public Service Commissioner Tim Echols predicted.

“Is the final word from this session, ‘This job sucks?’” Blank joked. “Is that the takeaway?”

Rate Design Considerations

Debbie Lew, associate director of the Energy Systems Integration Group (ESIG), said zero marginal cost renewable resources and looming, immense electrification loads mean that regulators will have to introduce more dynamic pricing that incentivizes demand when supply is plentiful.

“New electrification loads are a double-edged sword — they can help or stress both the distribution and bulk power system,” Lew said during a Sunday panel. “We know we’re going to need more than time of use rates.”

Debbie Lew 2022-11-15 (RTO Insider LLC) FI.jpg

But Lew said time-of-use rates are beneficial today. She said Sacramento Municipal Utility District’s TOU rate created on a $5 million investment averted the need for a new, more expensive 150-MW resource to meet peak demand.

Lew said if regulators want demand flexibility, they will need to expose some customers or load-serving entities to price signals that “reflect cost causation and grid needs.”

“If all demand were price-sensitive, we might not need … reserve margins. Obviously, we’re a long way away from that,” she said.

Brattle Group principal Sanem Sergici focused on electrifying heating with heat pumps. She called their adoption “a key component of state and city climate action plans” but said adoption hinges on their installation and operating affordability compared to natural gas.

Sergici said regulators must design new rate structures that balance customers’ payback periods, fixed charges and incentives under the IRA. She said it’s possible to use cost-based rates and avoid subsidies to foster heating electrification.

“With the right rate design, adoption is possible. It’s time to stop discouraging electrification of heating,” she said, adding that rate design can be “a constant evolution” if the bulk electric system becomes winter peaking.

Storage Makes an Entrance

Jason Burwen, American Clean Power Association’s vice president of energy storage, told regulators to expect 10 GW of new storage annually nationwide for the foreseeable future if transmission system planning is updated, regulatory and permitting processes are revamped, and supply chain issues stabilize.

He predicted the IRA will counteract some of the recent inflation-based price increases of storage facilities.

From left Enel’s Greg Geller, Interstate Renewable Energy Council’s Radina Valova, PJM’s Danielle Croop and American Clean Power Association’s Jason Burwen | © RTO Insider LLC

PJM Manager of Market Design Danielle Croop said PJM has 40 GW of hybrid generation projects and 54 GW of standalone energy storage in its interconnection queue. She said the amount of storage projects likely means that storage is becoming cost effective.

Greg Geller, Enel North America’s head of U.S. and Canada regulatory affairs, said storage is a key component of decarbonization plans. He said regulators can take three steps to stimulate storage additions: collaborate with utilities and grid operators, allow storage to compete to solve grid issues, and give consumers as much cost-causation transparency as possible so they can fire up distributed resources when they stand to save the most.

Geller said Texas, in particular, has an alluring regulatory environment. Enel’s storage projects in the state usually make it through the interconnection queue in one or two years, he said. Elsewhere, the wait is upward of three years. Geller said that storage solutions might help avoid decades-long stranded costs on more permanent assets.

November 16, 2022

Mass. OSW Projects to Continue Through Regulatory Process

BOSTON — Negotiations will continue on two Massachusetts offshore wind projects that developers have declared financially unviable.

Commonwealth Wind and Mayflower Wind in October requested the state Department of Public Utilities pause its review of the power purchase agreements they had struck with Eversource Energy, National Grid and Unitil for two planned wind farms. The developers said inflation, supply chain problems and other factors had altered the economics of the projects, which are rated at a combined 1.6 GW.

The DPU rejected the request and directed the developers to continue with the PPAs as originally negotiated or file a request to dismiss the proceedings. (See Mass. Rejects Delay of Offshore Wind Review.)

In a notice to the DPU on Nov. 7, Mayflower withdrew its motion to suspend review and said it will seek to resolve the financial issues through conversation with the state and the three electric distribution companies.

Commonwealth filed a similar notice Nov. 14, saying if the DPU would not support a pause, the appropriate course of action would be to continue with the proceeding and discuss contract changes or other ways to make the project financeable and economically viable.

Eversource, National Grid and Unitil told the DPU on Nov. 1 that they have no intention of renegotiating the PPAs.

Commonwealth, the larger of the two projects at 1.2 GW, is being developed by Avangrid (NYSE:AGR). In a statement late Monday, the company said, “We have been transparent and committed, at all times, to doing everything we can to move the project forward, including coming to the table with all parties to find a solution to the unprecedented economic challenges facing this major infrastructure project. …

“Ensuring Commonwealth Wind is able to move forward is squarely in the public interest and the best possible outcome for Massachusetts and its ratepayers, and we look forward to continued engagement so this project can deliver on its immense economic and environmental benefits and help the state achieve its ambitious 2030 climate target.”