Lordstown Motors (NASDAQ:RIDE) reported third-quarter losses Tuesday, just a day after announcing it had secured $170 million in new funding from Taiwanese electronics manufacturer Foxconn.
In exchange for the cash, the contract manufacturer, which is the largest maker of iPhones for Apple, purchased additional shares of Lordstown common stock, shares of newly created preferred stock and won two seats on the electric truck maker’s board of directors.
The earnings report showed a cash balance and short-term investments of $204 million, which Lordstown attributed to “strong spending discipline.”
Operating loss over the quarter amounted to $154.8 million, a figure that largely consisted of accounting losses.
Additionally, the report revealed that Lordstown and Foxconn have agreed to produce another electric vehicle in the future at a sprawling former General Motors assembly plant in Northeast Ohio, though no details of that venture were revealed.
Lordstown said it has produced just 12 of the first batch of 500 Endurance trucks it has committed to manufacture at the plant, now owned by Foxconn. The plan is to complete the rest of the batch in the first half of next year, the company said in a release accompanying its report. The Endurance has not yet been federally certified to meet safety standards, though the truck has met collision standards in crash tests.
“We are proud of the accomplishments of the Lordstown and Foxconn EV technology teams in bringing the Endurance into commercial production,” Lordstown CEO Edward Hightower said. “While we have more work to do, our entire team cannot wait to get the vehicle in the hands of our customers. We are also extremely excited by the additional investment and expanding relationship with Foxconn and the opportunities it provides beyond our first vehicle.”
Lordstown also said that it is open to additional original equipment manufacturer partners to accelerate production of the Endurance.
“As one of the very few full-size, all-electric pickup trucks in the market, the Endurance offers other OEMs the opportunity to enter the market quickly and at relatively low cost,” the company said.
Foxconn is also planning to build an electric tractor and a small electric car for other companies at the Ohio plant.
Residents will soon be moving into a new microgrid community of 219 single-family homes in Southern California — a project that’s being called first of its kind in the state.
SunPower worked with KB Home and other partners on the project, which was awarded a $6.65 million Connected Communities grant from the U.S. Department of Energy last year.
The 219 homes will be built in two neighboring KB Home subdivisions, Oak Shade and Durango, in the Riverside County city of Menifee, about 80 miles east of Los Angeles.
Each of the all-electric homes will be solar powered and have individual battery storage. In addition, they’ll be connected to a microgrid powered by a large, shared community battery.
“This project may be the blueprint to follow for building new decarbonized homes of the future,” DOE said in announcing the award.
How It Will Work
Each home will receive electric utility service from Southern California Edison (SCE), which is a partner in the project. The homes will also come with controls that can isolate them from the grid during a power outage.
During an outage, the homes will draw energy from their own battery systems or from the community battery. The systems are designed to support critical loads including lights, refrigeration and Wi-Fi, as well as high-capacity loads such as hot water and space heating and cooling. SunPower called the homes “power-outage resistant.”
The project will be a “true microgrid,” in which the all-electric homes can be disconnected and reconnected to the grid, a SCE spokesperson told NetZero Insider. SCE checked with other major utilities to confirm the project’s uniqueness in California, the spokesperson said.
The Durango and Oak Shade subdivisions will have separate microgrids that can be connected when it benefits both communities, according to the Advanced Power and Energy Program (APEP) at the University of California, Irvine, another project partner.
APEP will collect data from the communities and research ways to improve the technologies for future projects. The university will also ensure that the microgrid controller meets national standards.
Some of the homes will be used to demonstrate “vehicle-to-home” charging, in which an electric vehicle can be used as an additional energy source for the home during an outage.
Residents will have an option to sign up for a Virtual Power Plant (VPP) program, in which their battery storage, EV chargers and other flexible loads can be automatically dispatched to the grid. VPP participants may be eligible for compensation.
In addition to solar-plus-storage systems, each home will be equipped with high-efficiency appliances and flexible loads such as electric heat pump water heaters and space heating and cooling systems. Project partner Schneider Electric will provide smart load panels and connected wiring devices that integrate and control the distributed energy resources.
Construction Underway
Construction started a few months ago on the homes at Durango and Oak Shade, according to a KB Home spokesperson. About 50 houses have been sold so far, and residents will start moving into their homes in February or March.
The three- to five-bedroom homes range from 1,472 to 2,906 square feet and most are priced in the $500,000 range, according to KB Home’s website.
SunPower’s project was one of 10 that received “connected communities” grants from DOE last year totaling $61 million. (See ‘Connected Communities’ Get $61M in DOE Funding.) Connected communities tie together a group of grid-interactive efficient buildings (GEBs).
DOE is hoping the demonstration projects will accelerate the technology development, commercialization and deployment of GEB systems across a range of locations, climates and building types.
Canadian company SHARC Energy will build a combined wastewater energy transfer (WET) geothermal system for heat and water in two of Amalgamated Housing Cooperative’s (AHC) buildings in the Bronx as part of New York state’s Empire Building Challenge (EBC).
SHARC, AHC and geothermal energy company Egg Geo announced their plans last month to retrofit the two co-ops, collectively called “the Towers,” by installing their system, which uses heated wastewater from, for example, a building’s dishwashers, showers and laundry machines to bring energy, usable water and heat to tenants.
The partnership leverages some of the $50 million that was allocated by the New York State Energy Research and Development Authority (NYSERDA) through the EBC to improve building energy efficiency across the state with decarbonization systems. (See Empire Building Challenge Seeks to Decarbonize NY High-rises.)
So far, the EBC has selected 16 real estate partners, including AHC, who have sought to collectively decarbonize the more than 70,000 housing units they manage and develop a “Playbook” that other building owners can study to learn how they can make their assets more climate friendly.
Several of these partners have already made tangible commitments to decarbonize their building stock.
Geographic representation of current heat & water generation system for Towers | Amalgamated Housing Corporation
Vornado plans to make its portfolio carbon neutral by 2030 through a combination of solutions, including upgrading façades with curtain walls of steel and glass, using steam to heat its buildings’ water with less energy input, and installing centralized air systems to better distribute air and keep buildings cooler.
Empire State Realty Trust (ESRT) has targeted 2035 to be carbon neutral by partially electrifying their heating, ventilation and air conditioning (HVAC) systems, installing large heat pumps in buildings, and replacing outdated systems during lease turnovers, which is already ongoing in the Empire State Building.
And Hudson Square Properties (HSP) plans to take a more phased approach where it retrofits buildings floor-by-floor since this avoids significant tenant disruption, allows for greater flexibility, and fewer budgetary concerns.
Buildings are one of the greatest barriers to New York’s climate and energy goals because they account for roughly 30% of the state’s total carbon emissions and much of the stock is decades old, meaning upgrades will be costly.
The Towers, located in the Bronx’s Van Cortlandt Village, together contain 372 units with an average of four people per apartment and extend 20 floors up. The first building was built in 1968 and the second in 1971. They currently depend on a far-away distribution boiler system based that uses steam for heating, cooling and hot water.
‘Indigenous Energy Supply’
SHARC CEO Lynn Mueller | SHARC Energy
In an interview with NetZero Insider, SHARC Energy CEO Lynn Mueller said the WET system being installed in the Towers taps into the building’s wastewater stream and uses a patented direct heat transfer system, which functions through a heat exchanger located directly within Egg’s geothermal heat pump, to domestically pre-heat incoming water for future usage within the building.
Mueller said the combined system will require about “45% less space” than similar systems, “reduce costs by a similar magnitude” and provide the Towers with their own “indigenous energy supply.”
“If you are throwing away $5, and I can reach back in there and get it back for just $1,” then the economics “just make sense,” Mueller said. The system uses the “ubiquitous” supply of wastewater to “continuously grab energy from the waste stream,” which tenants can reuse from “birth to death.”
Mueller claims that the Towers can reduce their annual estimated carbon emissions by 1,200 to 1,500 tons, which he said equates to offsetting nearly “750 cars a year.” The CEO believes that wastewater heat recovery systems, such as SHARC’s WET system or its smaller single-building Piranha system, will be everywhere in the future, as sewers are a city’s “common artery.”
Steve Beyers, an engineer, researcher and building energy heat expert at Cornell University, told NetZero that the “the concept of using heat from wastewater as a heat pump source/sink is not new, but the SHARC technology is arguably simpler and requires no compression cycle or refrigerants.”
Visual representation of SHARC geothermal heat pump system | Amalgamated Housing Corporation
The company’s technology “may well be unique in its packaging and market maturity,” as he had not seen anyone else “offering a similar packaged system.” But, he noted, Cornell once considered a similar technology for its dorms that was never implemented because of the “upfront costs and maintenance concerns.”
In a statement to NetZero Insider, a NYSERDA spokesperson said, “SHARC’s Piranha system offers the potential to achieve a high-performance heat pump system that also captures and reutilizes waste heat from the project site. Wastewater heat recovery could potentially be an important technology for building decarbonization. The state’s Empire Building Challenge program is supporting a feasibility analysis of this novel technology, and we look forward to reviewing the results of this work as we continue to identify new technologies that support the goals of the state’s Climate Leadership and Community Protection Act.”
“Amalgamated has been ambitious in their decarbonization efforts,” Egg Geo President Jay Egg said in a statement. “That, along with the vision and support from NYSERDA’s Empire Building Challenge to carryout technical feasibility, have brought together an incredible team that will guide this project through to a fully capable retrofit that will decarbonize and electrify the Amalgamated Towers in the Bronx.”
The New Jersey Board of Public Utilities (BPU) is opposing a bill that would more than triple the size of the state’s heavily oversubscribed community solar program, saying the expansion could stress an already overloaded grid and “bring everything to a screeching halt.”
Chance Lykins, the BPU’s director of government affairs, told the state’s Senate Environment and Energy Committee on Nov. 3 that the capacity increase outlined in the bill — from the 150 MW a year at present planned by the BPU to 500 MW a year — would have a series of consequences that could negatively impact agency solar programs.
Lykins made his comments at the first committee hearing of the bill (S3123), which was introduced Oct. 3. The committee did not vote on the bill. The hearing came as the BPU works to create a permanent community solar program, which will award incentives for 150 MW of capacity annually, after two rounds of pilot programs that together drew more than 650 applications and awarded 240 MW of capacity.
“This is one of the programs we’re most proud of,” Lykins said. “Because it both moves us towards our clean energy goals, while simultaneously helping us with our equity goals.”
Yet the agency is concerned about the impact of “moving these caps up so quickly,” he said. “We have to set these caps based on costs, on what the grid can support, on what the developers can do. … We think 150 megawatts is the correct cap for now.”
Sen. Bob Smith (D), the committee chairman and one of two primary sponsors of the bill, disagreed, saying the program’s success suggests it should be made bigger given the state’s goals.
“It is time to start thinking about a new allocation, in my opinion, because you already have the first one going and going well,” Smith said.
The proposed expansion highlights underlying tensions in the state’s solar programs that pit a desire by some stakeholders to expand rapidly against other stakeholders’ concerns about the cost, uncertain impact on other programs and logistical challenges.
The bill garnered support from solar developer Solar Landscape, solar software developer Arcadia, the Chamber of Commerce of Southern New Jersey, the mid-Atlantic representative of the Solar Energy Industries Association and the League of Conservation Voters.
But the New Jersey Division of Rate Counsel expressed concerns about the proposed expansion, saying it “had almost-certain potential for increasing costs to ratepayers.”
Director Brian O. Lipman, in a Nov. 2 letter to the BPU, said that forcing the agency to award such a large capacity each year would reduce its “ability to assure robust competition” between projects and make it difficult to ensure that incentives go to “projects that best serve the state’s clean energy goals.”
“Reducing the board’s ability to harness competitive processes in the community solar program may be in the interests of certain segments of the solar industry, but it is not in the best interests of ratepayers or the state overall,” Lipman said.
“In order to achieve the state’s clean energy goals, it is important to get the most ‘bang for the buck’ when ratepayers subsidize solar and other clean energy,” the letter said. “This will not happen if competition is reduced.”
Expanding Too Fast
The BPU’s community solar initiative is part of Gov. Phil Murphy’s push for New Jersey to reach 100% clean energy and generate 32 GW of solar by 2050. The state had 4.99 GW of installed capacity on Sept. 30, the latest BPU figure available.
The BPU expects to release a straw proposal for a community solar program soon and launch it next year. The two pilot programs held to date — which together awarded 150 projects — each attracted between four and five times as many applicants as were eventually awarded.
Still, the state has been slow in getting community solar projects installed. Only 18 projects have been installed since the state approved the first 45 community solar projects, totaling 75 MW, in 2019, according to BPU records. There are 108 community solar projects in the pipeline.
Lykins said a problem with greatly expanding the program and increasing the number of incentives is that developers could see it as more “lucrative” than other state programs, diverting them from those alternatives, including the Competitive Solar Incentive (CSI) program, which provides the “most economical projects.” The CSI program awards incentives to grid-scale solar projects — those larger than 5 MW in capacity — through a competitive process.
In addition, Chance said, the increased capacity of community solar could put “stress on the distribution grid,” which is already under great strain, with lengthy waits for some utilities to connect solar projects.
“There are certain territories where you cannot sign up even for a small rooftop program” to get connected to the grid, he said. “The concern is raising this cap this high is going to put those same pressures onto the local distribution grid and potentially bring the same problems we’re seeing at PJM here and just bring everything to a screeching halt.” (See Solar Developers: NJ’s Aging Grid Can’t Accept New Projects.)
Moreover, the community solar program to date has accepted only the “very best of the best” projects, he said. The sudden expansion of the program would require it to accept “less quality projects moving forward.”
Chance added that existing community solar projects already struggle to attract subscribers and the difficulty of finding them would limit further program expansion.
Searching For Subscribers
Community solar projects target users who either cannot or do not want to have solar on their roofs but want to support a clean energy initiative. To make the projects work the developer must sign up subscribers, who commit to using the clean energy and in turn receive a credit on their utility bill, reducing the electricity cost by a set percentage.
New Jersey’s program requires 51% of the clean energy to go to subscribers from low- and moderate-income communities, but that requirement has proven challenging to developers, in part, they say, because low-income consumers shy away from providing documents to support their low-income status in their application to become a subscriber.
However, Smith, brushed aside the concern. He told Lykins that the difficulty of finding subscribers would diminish if they were able to “self-certify,” or simply attest to their low-income status without offering proof, as some developers have suggested.
With a “self-certification” system in place, “the program’s going to be filled,” Smith said.
Allison McLeod, policy director for the League of Conservation Voters, agreed that the state should be looking to help disadvantaged consumers. She said community solar so far accounts for only 3% of all residential solar.
“We support using this as an incentive to continue to expand access to low- and moderate-income communities to get the benefits of community solar,” she said.
Yvette Viasus, community solar engagement manager for Solar Landscape of Neptune, New Jersey, the developer of more community solar capacity in the program than any other, said the program could be a good economic driver for the state. She said the program has helped Solar Landscape quadruple its size, and it now has 120 employees and 54 of the 150 projects approved in the program.
“Commercial property owners across the state are eager to host more community solar installations,” she said. “Community solar is ready to go today. Now is the time to increase the capacity of this program.
“It harnesses the potential of one of New Jersey’s most successful shovel-ready clean energy programs and enables us to make progress towards our 100% clean energy future while giving everyone a part to play in fighting climate change,” she said.
Dominion Energy is embarking on a “top-to-bottom” review of its investments and operations to address underperforming share values, the company announced during its third-quarter earnings call Friday.
“Fundamentally we took a look at how we’re doing — how our share price is doing — and the market is telling us that we’re not performing the way investors expect, so we think it merits a complete review from top to bottom,” Dominion CEO Robert Blue said during the call. The company started the year with a share price of $80.21 and has seen that fall over the past three months to $67.13.
The review will include looking at investments in businesses that may be considered “non-strategic” and exploring unregulated investment activities and initiatives. Blue said that the possible changes, however, are not likely to impact the “core earnings growth driver of this company: the continued execution of what we view as an industry leading, highly visible regulated decarbonization growth capital investment opportunity.”
Despite the decline in share value, Blue noted that operating earnings per share are above the midpoint of the company’s quarterly guidance range and said the company is well positioned to meet its annual expectations. It is setting expectations for 98 cents to $1.13 in earnings per share and has narrowed annual 2022 operating earnings to be between $4.03 and $4.18, with the midpoint remaining the same as its original guidance, according to the company’s announcement of the earnings report.
Blue also said the company has “been steadily executing on our investment programs focused on decarbonization. This successful execution is already benefiting our customers, communities, the environment and our investors.”
The company reported $778 million in net income ($0.91/share), compared to $654 million ($0.79/share) for the third quarter of 2021.
Steve Fleishman of Wolfe Research questioned what reasons Dominion believes could be behind its stock performance.
Responding to an analyst’s question about what has driven the company’s stock price, Blue said, “Investors are telling us … what they’re looking for is predictability. What they’re looking for is earnings quality.”
Coastal Virginia Offshore Wind Project Remains on Track
Work on Dominion’s $9.8 billion Coastal Virginia Offshore Wind (CVOW) project is continuing according to schedule, with onshore construction projected to begin in the third quarter of 2023 and offshore work starting in second quarter 2024. Completion of the 2.6-GW project is expected in late 2026, according to Blue’s presentation.
“Development of the project has continued uninterrupted to maintain the project’s schedule, and we expect over 90% of the project costs, excluding contingency, to be fixed by the end of the first quarter 2023 at the latest, as compared to about 75% today,” Blue said.
The company’s turbine installation vessel is more than 60% complete, and it expects it to be in service ahead of the 2024 turbine installation season, Blue said. There are currently no changes to the estimated installation cost, lifetime capacity factor or levelized cost of electricity.
A draft environmental impact statement is anticipated from the U.S. Bureau of Ocean Energy Management, which is also expected to release a record of decision in mid-2023.
The company recently signed a settlement agreement with several parties, filed with the Virginia State Corporation Commission (SCC), that proposes an alternative to the performance requirement ordered by the commission in August. The proposed agreement would supplement the requirement — which Blue had called “untenable” — with a review process in which the company explains any capacity shortfalls and the commission can determine remedies. (See Dominion, Va. Stakeholders File Settlement over Performance Req for OSW Project.)
The agreement also contains consumer protections for possible construction cost overruns. The other parties to the proposal are Virginia Attorney General Jason Miyares, the Sierra Club, Walmart and environmental advocacy organization Appalachian Voices.
“The agreement provides a balanced and reasonable approach that allows the project to continue moving forward to meet the commonwealth’s public policy and economic development priorities and the needs of our customers,” Blue said during the earnings call. “If approved, significant customer benefits include protection from unforeseen increases in construction costs above the project’s budget and enhanced SCC review of performance in lieu of a performance guarantee. We look forward to a decision from the SCC later this year.”
Blue said the completion of the project will be a boon to the local economy and jumpstart the development of further offshore wind projects drawing off upgrades at the Port of Virginia’s Portsmouth Marine Terminal to support OSW installations. (See Dominion Secures 10-Year Va. Port Lease for OSW Staging.)
Steven Ridge Promoted to CFO
Blue also announced the promotion of Steven Ridge, who currently manages Dominion’s Western natural gas distribution operations, to take the place of James Chapman as chief financial officer. Chapman is leaving the company to become treasurer at ExxonMobil.
Ridge “has a wealth of experience in finance, is well known to many of our investors and is a strong, capable leader. We are very fortunate to have him in this new role,” Blue said.
The outcome of Tuesday’s election will have minimal impact on U.S. leadership and action on climate change because “the market has made its decision,” Special Climate Envoy John Kerry said Tuesday at the 27th UN Climate Change Conference of the Parties (COP27) in Sharm el-Sheikh, Egypt.
“President Biden is more determined than ever to continue what we’re doing [on climate],” Kerry said at the opening of the U.S. Center Pavilion at the conference. “And most of what we’re doing cannot be changed by anybody else because much of it has to do with working with the private sector, with the marketplace.”
The role of the private sector and other “nonstate actors” — cities, states, nonprofits, schools and research organizations — took center stage at COP27 Tuesday as a range of global leaders acknowledged the critical role they play in the implementation of clean energy projects and other climate action.
Launching the Sharm el-Sheikh Adaptation Agenda, COP27 President Sameh Shoukry called on countries and nonstate stakeholders “to get behind this crucial agenda. It is the firm conviction of the COP27 presidency that nonparty stakeholders need to not only be part of the discussion but part of the action.”
The agenda provides a set of critical initiatives and outcomes needed to promote climate adaptation in an estimated 4,000 “climate-vulnerable communities” by 2030. It defines adaptation as “the process for human and natural ecosystems to adjust to actual or expected climate change and its effects in order to moderate harm or exploit potential benefits.”
For example, one of the goals set for infrastructure adaptation is the deployment of “585 GW of battery storage capacity and extension of transmission and distribution networks [to] enable decentralized generation and consumption.”
Simon Stiell, executive secretary of the UN Framework Convention on Climate Change, talked up the agency’s Global Climate Action Tracker, which monitors climate pledges and progress for thousands of cities, regions, businesses and investors worldwide.
But, he said, “delivery is not a singular moment; delivery is a compilation of many moments, added together, that make change. … We need clear standards to assess the net-zero commitments of nonstate actors and measure progress,” he said, calling on private and public entities to establish “a clear and credible process to put all climate action on the track that science has identified.”
Kerry pointed to America Is All In, a coalition of hundreds of cities, counties, businesses, schools, churches and cultural institutions that pledged their commitment to the Paris climate accords — and the goal of limiting global warming to 1.5 degrees Celsius — after former President Donald Trump pulled the U.S. out of the agreement in 2017.
Biden rejoined upon taking office in 2021.
“If you think about it, the place that we have to go to reduce our energy consumption is the cities, because energy is used by people; that’s where people live,” said Michael Bloomberg, UN special envoy for climate ambition and solutions and one of the founders of America Is All In. “After all, local leaders are the ones that turn global pledges into action.”
He and Kerry announced a new partnership between the U.S. State Department and Bloomberg Philanthropies, dubbed the Subnational Climate Action Leaders Exchange (SCALE). With $3 million in funding — $1.5 million each from the State Department and Bloomberg — the initiative will “support cities, states and regions in the development and implementation of net-zero policy, and they’re going to change our entire approach,” Kerry said.
Bloomberg sees the partnership driving “more bottom-up, collaborative progress,” both in the U.S. and other countries. “We’ve seen how much progress is possible when cities, states and businesses take the lead and get the support they need,” he said,
“It is in the interest of all nations to develop their own clean energy systems, and cities, states, regions and businesses can help pave the way forward,” he said.
‘Lies, Lies and More Lies’
Nonstate actors, particularly young climate activists, also play an important role as climate gadflies, calling government and corporate inaction to account.
Sophia Kianni started translating climate change information into Farsi while still in middle school and visiting family in Iran. She started Climate Cardinals in 2020, after graduating from high school, and the nonprofit has mobilized thousands of students worldwide to translate climate reports into more than 100 languages.
Speaking in Sharm el-Sheikh, Kianni slammed some government and business leaders “for saying one thing but doing another.”
“On top of the emissions gap, we have an honesty gap,” she said. “Which is why we are here today, to define what real action is … to prevent leaders from being able to create loopholes, creative accounting and lies, lies and more lies.”
Shoukry acknowledged that Kianni’s criticisms are “well-founded, and it is up to us to shoulder the responsibility of proving her wrong.” He encouraged nonstate actors to continue their work to “keep the parties honest and true to their commitments.”
Finance Reform Now
But honesty and political will cannot achieve climate goals, particularly in developing countries, without climate finance, which has become a major focus for nonstate financial institutions and philanthropies.
“I have a 14-year-old daughter who was asking me as I was coming here, ‘Does any of this actually matter?’ said Rajiv J. Shah, president of the Rockefeller Foundation. “The answer is, it only matters if we follow up on what we say we’re doing and deliver results and outcomes.”
Last year, the Rockefeller Foundation joined with 18 other partners in an $11 billion collaboration, the Global Energy Alliance for People and Planet, “to reach 1 billion people who don’t have access to effective renewable electrification with power,” Shah said during a Tuesday panel discussion on climate finance. To date, “we’ve spent $340 million of that money that has unlocked $3 to $4 billion from our partners.”
Echoing leaders from developing countries, Shah also called for reform of international finance institutions “that were set up after World War II to support Western Europe’s reconstruction. … We need to transform that system, and we need to do it now.”
Shah pointed to the Bridgetown Initiative, a set of reform recommendations aimed at increasing “concessional” — below-market-rate — financing for developing countries while also easing debt pressures. Led by Barbados Prime Minister Mia Mottley, the recommendations include extending concessional funding, usually reserved for very low-income countries, to middle-income countries with significant low-income populations.
The initiative is “an actionable plan … that will unlock hundreds of billions of dollars of new liquidity for developing economies,” Shad said. “We need to apply real political pressure to make sure that happens in 2023.”
Climate finance is also on a list of priorities for the U.S. mission at Sharm el-Sheikh, Kerry said in his remarks at the U.S. Center opening. “We will enhance cooperation on reduction of emissions, on adaptation, on climate finance, on technology development, on loss and damage and other parts of the Paris agreement and Glasgow climate pact.”
President Joe Biden “is deeply committed to making certain that we the developed countries, we the largest economy in the world, the second largest emitter, have a special responsibility to less developed nations, to third world, to the south. We need to do, and we will do what is necessary to make sure this is a just transition. That is imperative for everybody.”
Participants in CAISO’s Western Energy Imbalance Market saw a record $526 million in benefits in the third quarter of 2022 as the market approached $3 billion in total benefits, six months after it passed the $2 billion mark.
The results outstripped the next highest quarter, Q3 2021, by $225 million. The new record was the result of more participants in the interstate WEIM and “economical transfers displacing more expensive generation,” especially during September’s Western heat wave, CAISO said in its third-quarter report Oct. 31.
“Resource sharing among WEIM participants during this summer’s extraordinary 10-day heat wave provided meaningful economic benefits while helping maintain reliability for millions of consumers in the West,” Stacey Crowley, CAISO vice president of external affairs, said in a news release.
The Balancing Authority of Northern California (BANC) had more than $111 million in benefits in Q3. BANC consists of inland areas where temperatures set records in September. One BANC member, Sacramento Municipal Utility District, warned customers of potential outages as the high hit 116 degrees Fahrenheit in Sacramento on Sept. 6.
Other BANC members, such as Modesto Irrigation District and Turlock Irrigation District, also dealt with record-high temperatures and soaring demand.
PacifiCorp obtained $84.5 million in benefits last quarter, while CAISO saw $66 million in benefits. Other large beneficiaries included Southwest utilities NV Energy ($62 million), Arizona Public Service ($36 million) and Tucson Electric Power ($27 million).
The third quarter was the first full quarter of WEIM participation for Tucson Electric Power and the Bonneville Power Administration, which obtained a bit more than $9 million in benefits.
With 19 participants, the WEIM “finds and delivers the lowest-cost resources to meet immediate power needs and manages congestion on transmission lines to maintain grid reliability,” the news release said.
CAISO expects the WEIM to encompass 80% of load in the Western Interconnection by next year, after the entry of new participants El Paso Electric Co. and the Western Area Power Administration’s Desert Southwest Region.
Since WEIM began operations in November 2014, its cumulative economic benefits have totaled $2.91 billion, the ISO said.
“The measured benefits of participation in the WEIM include cost savings, increased integration of renewable energy, and improved operational efficiencies, including the reduction of the need for real-time flexible reserves,” CAISO said in its quarterly report.
WEIM surpassed $2 billion in cumulative benefits in Q1 2022, 20 months after it reached $1 billion in total benefits. The entry of new participants accelerated and compounded the market’s overall benefits, the ISO said at the time.
CAISO has cited the economic benefits of the real-time WEIM as reason for utilities to join its proposed expanded day-ahead market (EDAM), which it hopes to bring before its board of governors and the WEIM’s Governing Body in December.
VALLEY FORGE, Pa. — The PJM Operating Committee last week endorsed the winter weekly reserve target (WWRT) values, used to coordinate planned outages scheduled during winter, as recommended in the 2022 reserve requirement study (RRS).
The RRS also recommends values for the installed reserve margin and the forecast pool requirement, both of which were approved by the Markets and Reliability Committee on Oct. 24.
The WWRT is used to cover against uncertainties associated with load and forced outages during the winter month with a large enough reserve to handle any contingencies.
This year’s study recommended a reserve of 21% for December, 27% for January and 23% for February.
“When we get to the winter period, we want to make sure that the available reserves are sufficient so that we can handle those uncertainties,” PJM’s Patricio Rocha Garrido said. The values are fairly similar to last year’s, he said.
Maximum Emergency Status Change Advances to MRC
The committee endorsed changes to Manual 13 to allow coal generation owners to offer their units as maximum emergency if their fuel inventories fall below 10 days because of issues outside their control and not relating to economic decisions. The proposal is set to go before the MRC for endorsement on Nov. 16.
For a unit to be able to enter into maximum emergency under the proposal, PJM cannot have declared a hot or cold weather alert or conservative operations, and the RTO can deny the use for any reason. A unit granted maximum emergency can remain in that state until they have 21 days of fuel inventory or until either of the previous conditions are met.
Independent Market Monitor Joe Bowring said the proposal could effectively put PJM in the position of managing the fuel supply risk on behalf of companies.
Synchronized Reserve Dispatch
The committee approved a revised problem statement and issue charge by acclamation to examine synchronized reserve event actions.
The issue charge argues that during an all-call to deploy synchronized reserves, the “market tools for dispatching resources based on economic order are not consistently utilized.” Additional lack of clarity around the process for approving real-time security-constrained economic dispatch around a synchronized reserve event presents challenges that the work stemming from the issue charge would attempt to resolve.
The revisions made to the issue charge include education on FERC responses to filings on synchronized reserve deployment and evaluating pricing throughout the deployment events.
Monitor Presents CIP Cost Recovery Proposal
Bowring presented a slate of proposed revisions to PJM’s issue charge on cost recovery for facilities identified as critical infrastructure, which he said would address the issue charge moving too far into the direction of proposing solutions.
The modified issue charge was initially listed under the OC’s first reads, but it was moved to the informational items because no member sponsored the item. Motions to do so will be considered at the committee’s next meeting.
Bowring also suggested in the revisions that it should be considered whether non-market approaches under the expected deliverables should be used, even though he believes they shouldn’t.
PJM Presents Winter Capacity and Load Projections
PJM’s Todd Bickel presented the Operations Assessment Task Force study of the capacity projections for the upcoming winter season, which found that the RTO is expected to meet the 30-minute reserve requirement of 3 GW, while having an additional 14 GW on hand.
No reliability issues were identified for the base case and N-1 analysis, though re-dispatching and switching is expected to be required in some areas to control local thermal or voltage violations.
The results of PJM’s Operations Assessment Task Force 2022-23 Winter Study show the RTO is expected to have adequate reserves through the upcoming winter season. | PJM
“For this winter we have sufficient margins and no reliability concerns,” Bickel said.
There is expected to be 168.1 GW of capacity available this winter, which is offset by 16,510 MW of discrete generator outages. There is also expected to be 4,200 MW lost in net interchange, and 6,100 MW which could be unavailable should there be no wind and solar available. The largest gas/electric contingency is expected to amount to 6,200 MW in capacity that could be unavailable.
The Load Analysis Subcommittee’s forecasted peak load is 136.9 GW, while the 90/10 diversified load is projected at 143.8 GW.
Fuel Inventories Remain a Concern
Fuel inventories are overall improving, though natural gas prices remain volatile, and the possibility of a railroad strike makes coal transportation a concern, according to PJM Principal Fuel Strategist Brian Fitzpatrick.
According to the latest Energy Information Administration update, the natural gas storage deficit is now 3.7% below the five-year average, compared to 5.5% in its previous update, Fitzpatrick said. PJM expects that the starting winter inventory will be around 2.5% below the five-year average.
Coal and oil reserves, as shown in GWh of fuel inventory, remain below their 5-year averages according to PJM’s fuel supply update. | PJM
Coal production remains high, he said, but prices remain significantly elevated over the first half of 2021. EIA remains optimistic about inventories, but there are many contingencies that could “derail” those expectations. Chief among the concerns is the possibility of a railroad strike as half of unions in the industry have yet to ratify a contract, with a Nov. 17 deadline approaching.
“It certainly could be a crippling effect,” Fitzpatrick said.
Distillate and residual fuel oil inventory also remain below their five-year averages, and price volatility remains high, with prices in the $80 to $90/barrel range. Recession fears, a strong U.S. dollar, low inventories and geopolitical tension are all driving prices, but Fitzpatrick said there are no specific concerns at this time.
PJM Cybersecurity Update
PJM Chief Information Security Officer Steve McElwee said distributed denial of service attacks remain one of the most prominent digital security issues being seen at this time as offensives continue against NATO allies. While the RTO may not be the primary target, he said there could be collateral impacts seen as the Russian invasion of Ukraine continues.
The RTO is also exploring ways to collect contacts for members’ security teams so that in the event of an emergency, that information is more readily at hand. While those contacts are currently asked for in the contact management feature, it is not mandatory to provide and has primarily been used for invitations to events like conferences.
Massachusetts regulators have rejected developers’ requests to pause the review of their power purchase agreements for two planned offshore wind projects.
So the companies say they will look for other ways to push forward plans for the 1.2-GW Commonwealth Wind and 405-MW Mayflower Wind projects, which they say are no longer financially viable under the PPAs negotiated with Eversource (NYSE:ES), National Grid (NYSE:NGG) and Unitil (NYSE:UTL).
Avangrid asked the Massachusetts Department of Public Utilities for a one-month suspension of review on Oct. 20. Mayflower followed on Oct. 27. (See Mass. DPU Hears Opposing Views on OSW Finances.)
The DPU denied the requests in an interlocutory order on Nov. 4, saying developers could either move forward with their contractual obligations under the negotiated PPAs or file a request to dismiss the proceedings.
Avangrid spokesperson Craig Gilvarg told RTO Insider Monday that the company “can present a proposal that would return the project to economic viability while still delivering transformational economic investments, significant job creation, and cost-savings to ratepayers, and intends to present that information to the Baker-Polito administration, regulatory officials, the Attorney General’s Office, and the Massachusetts electric distribution companies in the coming days.”
Mayflower told DPU on Nov. 7 that it would move forward with the PPAs but still would seek to resolve the cost issues that led it to request the pause, starting by submitting third-party analysis of the terms.
In its request for a delay, Avangrid said inflation, supply chain constraints and other factors had changed the economics of the project. In a Nov. 1 affidavit to the DPU, Senior VP for Offshore Projects Saygin Oytan said the anticipated cost had increased by hundreds of millions of dollars, giving the project negative value and making it financially unviable.
Mayflower Wind submitted comment supporting Commonwealth’s motion and submitted a similar motion about its own project.
The DPU replied that the PPAs appear to have been negotiated in good faith. Renegotiating them now, at considerable delay, would be tantamount to starting the proceeding over again, the DPU said.
The DPU also faulted Commonwealth on its timing, saying DPU staff spent several months “expending precious resources” to review the proposed PPAs. But Avangrid did not flag these agreements as unviable until Oct. 20, even though their non-viability is based on cost factors that became apparent well before Oct. 20.
DPU noted that Avangrid discussed its concerns with financial analysts Sept. 22.
With their revenues burgeoning from Russia’s invasion of Ukraine, fossil fuel companies around the globe should be required to put some of their billions in profits into the fight against climate change, key world leaders said at the U.N. 27th Conference of the Parties (COP27) in Sharm el-Sheikh, Egypt, on Monday.
U.N. Secretary-General António Guterres said he was “asking that all governments tax the windfall profits of fossil fuel companies. Let’s redirect that money to people struggling with rising food and energy prices and to countries suffering loss and damage cause by the climate crisis.”
“Loss and damage can no longer be swept under the rug,” Guterres said. “It is a moral imperative. It is a fundamental question of international solidarity and climate justice.”
The issue, officially on the agenda in Sharm el-Sheikh, has been a flashpoint between developed and developing countries almost since the Paris Agreement was signed at COP21 in 2015.
A “clear, time-bound roadmap” on loss and damage is needed, Guterres said, which will be “reflective of the scale and urgency of the challenge [and] deliver effective institutional arrangements for financing.”
He also called for a universal early warning system to alert countries to extreme weather events intensified by climate change.
Barbados Prime Minister Mia Mottley | UNFCCC/COP27
Barbados Prime Minister Mia Mottley said that “non-state actors and the stakeholders — the oil and gas companies and those that facilitate them — need to be brought into a special convocation” between now and next year’s COP28 in the United Arab Emirates (UAE).
“How do companies make [billions] in profits in the last three months and not expect to contribute at least 10 cents in every dollar of profit to a loss-and-damage fund?” Mottley said. “This is what our people expect.”
Former U.S. Vice President Al Gore said the trillions of dollars needed for climate finance, including loss and damage, “can only be provided by the private sector … by unlocking private access to private capital” and revamping the world banking system.
He also called for a halt to new fossil fuel development — the “dash for gas” — in response to the fuel shortages caused by Russia’s invasion of Ukraine. “At a time of turbulence in the global energy markets, the wealthy nations of the world should not confuse the short term with the long term,” Gore said. They “should not be fooled by the absolute need to backfill the shortage of fossil energy caused by the cruel and evil war launched by Russia in Ukraine as an excuse for locking in long-term commitments to even more dependence and addiction on fossil fuels.”
The second day of COP27 opened with videos of floods, hurricanes and other natural disasters exacerbated by climate change and the catastrophic impact these events are having on people’s lives. With a focus on Africa and developing countries in the southern hemisphere in general, speakers called for immediate, concrete action, laying out the key themes that will likely dominate the conference over the next two weeks.
One after the other, they spoke of the need to relieve the suffering caused by climate change with a global agenda that prioritizes steep emission reductions and recognizes the responsibility of developed countries to provide more equitable support for developing countries by reforming international finance.
Abdel Fattah el-Sisi
As the first to speak on Monday, Egyptian President Abdel Fattah el-Sisi began by telling leaders that people around the world were watching them, hoping for “an environment healthier for development, for life, for workers and more respectful of the diminishing resources of the planet.”
“They want a rapid, concrete implementation of genuine, practical, concrete actions to reduce emissions; to reinforce the ability to adapt; to guarantee the funding necessary for developing countries who today are suffering more than others the consequences of these crises,” he said.
While not providing details, el-Sisi said his country is “determined to focus on and increase investment in key green areas.”
He also emphasized the need for trust-building between developed and developing countries, saying the priorities of developing countries of Africa “must be taken into account. … This will inspire trust in our ability to achieve our goals. That trust, that mutual or multilateral trust will be the best guarantee of our success, the best guarantee of progress and of achieving our goals.”
El-Sisi also appealed for an end to the war in Ukraine.
“The entire world is suffering because of the war between Russia and Ukraine,” he said. “Please allow me to say this in all respect: This war must stop, and the suffering it has caused must finish.”
Solidarity or ‘Suicide Pact’
Secretary-General Guterres, an outspoken advocate for climate action, warned that with “greenhouse gas emissions and global temperatures continu[ing] to rise … and our planet is fast approaching tipping points that will make climate chaos irreversible.”
“We are on a highway to climate hell, with our foot still on the accelerator,” he said, calling for the phasing out of coal in developed countries by 2030 “and everywhere else by 2040.”
While acknowledging the devastating impacts of the war in Ukraine and other global crises, Guterres said, “We cannot accept that our attention is not focused on climate change. It is unacceptable, outrageous and self-defeating to put it on the back burner. Indeed, many of today’s conflicts are linked with growing climate chaos.”
To keep global warming to 1.5 degrees Celsius, the target set in the Paris Agreement, Guterres proposed “a historic pact between developed and developing economies and especially between developed and emerging economies — a climate solidarity pact … in which all countries make an extra effort to reduce emissions this decade in line with 1.5 degrees; a pact in which wealthier countries and international financial institutions provide financial and technical assistance to help emerging economies speed their own renewable energy transition.
“The two largest economies, the United States and China, have a particular responsibility to join efforts to make this pact a reality,” he said. “This is our only hope of meeting our climate goals. … It is either a climate solidarity pact, or a collective suicide pact.”
UAE Pledges Green Investments, Continued Oil Production
Sheikh Mohamed bin Zayed Al Nahyan, president of the UAE, embodies the complexities of climate action in a world still heavily dependent on fossil fuels. Taking the dais at COP27, he spoke of his country’s efforts to balance being “a responsible supplier” of oil and gas with “lowering carbon emissions emanating from this sector.”
“Geology has its own logic,” he said, noting that the UAE has “among the least carbon-intensive oil and gas around the world.” He said his country would continue to produce fossil fuels for as long as the world needs them.
But the UAE is also diversifying its economy with new renewable resources and clean energy and has set a 2050 target for carbon neutrality, Al Nahyan said. The country recently announced a new partnership with the U.S. aimed at providing $100 billion in investments “to produce 100 GW of clean energy in various parts of the world.”
Next year’s COP in Dubai will focus “on supporting the implementation of the outcomes of the previous COPs,” Al Nahyan said. “We will also focus on engaging everybody, all stakeholders, with adequate representation of women and also making sure that youth from around the world will [take part] and also further promote their enthusiasm for sustainable solutions.”
Al Gore Preaches
Gore, the former vice president turned climate activist, came to Sharm el-Sheikh ready to preach.
Humanity is facing a choice, he said, between blessings and curses; life and death. “Today we can continue the culture of death that surrounds our addiction to fossil fuels by digging up dead lifeforms from eons ago and burning them recklessly in ways that create more death,” Gore said.
Former Vice President Al Gore | UNFCCC/COP27
Continued global warming poses a threat to democratic governments, he said. “Experts are predicting as many as 1 billion climate migrants crossing international borders in the balance of this century. Think of the millions that are crossing borders now and the xenophobia and authoritarian populism that is caused by large surges of refugees, “ he said.
“Then imagine, if you will, what a billion climate refugees would do. It would end the possibilities of self-governance,” he said.
But Gore also sees hope in the growth and falling prices of renewable energy and the passage of the Inflation Reduction Act, calling it “the biggest and most ambitious climate legislation in the history of the world.”
“If we absolutely do reach true net zero, the scientists tell us temperatures will stop going up with a lag time of as little as three to five years,” he said. “And if we stay at true net zero, half of the manmade CO2 will fall out of the atmosphere in as little as 25 to 30 years.”
Barbados PM: Faster Action Needed
Barbados’ Mottley, an advocate for island and developing nations, questioned why the world is not making faster progress on climate action.
“We’re in the country that built pyramids,” she said in her closing speech Monday. “We know what it is to remove slavery from our civilization. We know what it is to be able to find a vaccine within two years when a pandemic hits. … But the simple political will that is necessary, not just to come here and make promises, but to deliver on them and to make a definable difference in the lives of people who we have a responsibility to serve seems still not to be capable of being produced,” she said.
Her small island nation has high climate ambitions, but has been unable to deliver on them, hampered by global industrial and financial structures, Mottley said.
“Our ability to access electric cars and our ability to access batteries or photovoltaic panels are constrained by those countries that have that dominant presence and can produce for themselves,” she said. “The global south remains at the mercy of the global north on these issues.”
Interest rates for clean energy projects in developed countries are much lower than those for projects in developing countries, she said. Countries that cannot get financing for clean energy projects are often forced to depend on natural gas, she said. The multinational development banks must be changed to have “a different view to risk appetite” and “other ways to expand the lending that is available from millions to trillions,” she said.
Needed financial reforms include “natural disaster and pandemic clauses” in debt agreements, which would put a two-year pause on debt repayments so that developing countries recovering from a disaster or pandemic have “flexibility in the first two years to address issues of loss and damage,” she said.
