VALLEY FORGE, Pa. — PJM highlighted the release of the second phase of its multiyear study to examine the grid’s transition to more renewable energy during last week’s Annual Meeting of Members.
Bernabeu said PJM wanted the studies to specifically look at the impacts on the RTO’s grid while also examining comparisons to other territories.
“Even though we’re in the same business, it’s amazing how different the system behaves,” Bernabeu said. “We’re not California; we’re not Texas. And it’s important to translate what it means for us.”
The results of Phase 2 suggested several areas for PJM and its stakeholders to focus on.
Study assumptions in Phase 2 of PJM’s energy transition study | PJM
Bernabeu said it revealed that electrification will shift the seasonal resource adequacy risk from summer to winter. Traditionally resource adequacy risk in PJM has been concentrated in the summer season; in an accelerated transition scenario in the study, 95% of the load-loss risk is experienced in the summer and the remaining 5% in winter.
But electrification has an “asymmetrical impact,” Bernabeu said, with demand growth in winter of 15% more than doubling summer totals of 7%, driven by winter heating. The switch creates a “pronounced shift in both the seasonal and hourly risk profiles,” including a new seasonal split of load-loss risk of 20% in summer and 80% in winter.
Bernabeu said about 60% of the load-loss risk in winter is concentrated during the last four hours of the day, creating a “slightly higher, but substantially wider,” peak demand compared to summer.
Another focus area of the study indicated market changes are needed to incentivize flexibility and “mitigate uncertainty,” Bernabeu said, to accurately reflect the flexibility needs on the system. He said the current reserve market construct uses a two-step operating reserve demand curve (ORDC), which “fails to capture the uncertainty” of the rising number of renewable resources.
Study simulation results found the two-step ORDC procures less than one-third of needed reserves on the system, and with an average clearing price of 2 cents/MWh, it also “fails to send long-term market signals to incentivize flexibility,” Bernabeu said.
The integration of renewable resources is also increasing the need for balancing resources to meet forecasted ramping requirements. In the accelerated scenario of the study, the driver for the ramping requirements is split, with 50% coming from existing load ramping and 50% from the variability of renewable resources.
Simulation results showed a “drastic increase” in the net-load ramping requirement, Bernabeu said, with a 90th percentile slope of 10 GW/hour and a maximum slope exceeding 20 GW/hour, calling it a “very severe run today.” He said on certain extreme days, the total climb from the beginning to the end of the ramping period was 73 GW, which is more than peak summer loads in NYISO and ISO-NE combined.
Thermal resources performed a “critical role in maintaining reliability” in the study, Bernabeu said, supplying 50% of the ramping needs, with 42% coming from gas generation and 8% from coal. Hydro resources, including pumped-hydro storage, delivered up to 15% of the ramping needs.
The study also looked at how energy storage enhances flexibility; at the same time, seasonal capacity and energy constraints will require transmission expansion, long-term storage and other emerging technologies for reliability. Renewable integration scenarios included up to 6 GW of standalone storage and 30 GW of storage connected to 35 GW of solar hybrid resources.
Storage had a “profound impact” in the ancillary services market, Bernabeu said, providing up to 80% of synchronous reserves. But transmission congestion patterns changed “drastically,” he said, with overall congestion increasing by 60%.
“As you increase the penetration of renewables, you are going to need a broader set of solutions,” Bernabeu said.
The next phase of the study will include more sensitivities, including the growing number of coal and gas generation retirements, and federal and state renewable energy policies.
“We’re not proposing solutions here,” Bernabeu said. “All we want to do is to share the conversation, identify gaps and opportunities, and potentially highlight what things may need to change.”
SAN ANTONIO — American Clean Power (ACP) last week kicked off its annual CLEANPOWER conference by releasing its 2021 market report filled with significant milestones, but also warning of obstacles that lay ahead for the clean energy industry.
According to the report, the industry installed a record 28.5 GW of utility-scale wind, solar and battery-storage projects in 2021, accounting for 81% of all new power additions. Clean energy installations surpassed the 200-GW level during the year, providing enough electricity to power over 56 million American homes.
However, transmission bottlenecks and policy uncertainty threaten to stall future developments and the administration’s goal to reach a net-zero grid by 2035, ACP staff said, despite CLEANPOWER 2022’s video testimonials from politicians on both sides of the aisle about the renewable industry’s importance.
“Don’t get me wrong, 2021 marked a record year for clean power,” CEO Heather Zichal said during the second day of the May 16-18 event. “But despite this laudable progress, the rate of deployment must accelerate at a much faster pace than it did in 2021.”
Zichal said the industry needs to increase its project volume by 65% over last year to reach the 2035 net-zero goal. It may be difficult to maintain the momentum of the last two years, she said, given COVID-19 challenges, inflation, supply chain constraints, trade barriers and uncertainty over the extension of tax incentives.
John Hensley, ACP’s vice president of research and analytics, said renewable energy growth in 2021 was equivalent to the previous year and that only 386 miles of new transmission were built last year, down from a yearly average of 1,800 miles over the last decade and “woefully under the volumes that we need to enable the clean energy transition.”
“This is critical. We need to be transitioning,” Hensley said. “We need to be deploying more and more renewables every year. That’s what’s needed to enable the clean energy transition. That will help to push this country towards a net-zero emissions grid by 2035.”
Optimistic Granholm Battles Headwinds
Admitting that she’s “annoyingly optimistic” about the future, U.S. Department of Energy Secretary Jennifer Granholm offered some hope to the conference’s 7,000 attendees during a taped interview with Zichal. She said her sunny outlook stems from the fact the industry’s headwinds all have one solution: clean energy.
“It’s affordable; it’s diverse; it’s reliable; and we can build it at home. The more clean energy we deploy, the more energy-secure and the more climate-secure we’re going to be,” Granholm said.
And even bigger source of her optimism is working at DOE, she said, breaking the video’s “fourth wall” by frequently leaning forward from her office desk in D.C. to address those gathered before her screen.
“I feel like I have a front-row view of America’s solutions department every day. I get to watch what our 17 national labs are doing … what [the agency’s departments] are all cooking up,” she said. “The brainpower here is unmatched; the infrastructure is unparalleled; and we’re putting historic levels of resources into innovating and scaling these clean energy technologies. At the end of the day, these technologies are going to be our best tool for fixing this cascade of problems.”
Granholm, with the Ukrainian flag featured prominently behind her along with the American and DOE flags, said the war in Eastern Europe has provided the U.S. an opportunity to transition away from dependence on fossil fuels.
“Clean energy gives us the means to advance all of these priorities like climate security and energy security, especially with this war. People want to see us move away from the volatility of unabated fossil fuels. They want to see us build out this clean energy future,” she said. “The president and the entire administration have really been focused on this from day one, but the war gives us an opportunity to really foot-stomp it.”
Pointing to clean energy development in both red and blue states, Granholm said more Americans are realizing the benefits of clean energy. “We hope that their leaders, all of our leaders, catch up to them,” she said.
“I completely understand the worries, and frankly, I’ve grappled with a lot of the same concerns that you are grappling with right now,” Granholm said. “But let’s keep in mind this lesson from the past: the future is always unwritten. That has a way of surprising us when you’re making history. Sometimes you don’t see that history in the making … but I’m telling you, we’re all making history right now.”
Texas Penalizes Renewables in ERCOT Redesign
Texas industry insiders said the state’s politicians and regulators are penalizing clean energy resources as they restructure ERCOT’s market following last year’s disastrous winter storm.
Michael Jewell, a principal with Jewell and Associates, said politicians continued to focus on renewables during last year’s legislative session after initially blaming clean resources for the loss of generation during the storm. Subsequent studies have shown that the lack of natural gas supplies accounted for the majority of generation outages during the storm’s extreme temperatures. (See FERC, NERC Release Final Texas Storm Report.)
“That was the number one problem,” Jewell said of the lawmakers’ emphasis on renewables’ intermittency. “I would not have been working so hard during the session if that had not been the focus … and it continued through the session. It shaped a lot of what actually came out of the session.”
While weatherization was a big part of the bills that passed, other pieces of legislation focused on ancillary services, their contribution to reliability and the inability of renewable resources to provide those services. As the Public Utility Commission of Texas begins to dabble in the second phase of its market redesign, it has openly discussed penalizing resources for not providing power when it is needed.
During a press conference last week in which he frequently promised no outages this summer, PUCT Chair Peter Lake highlighted the new ERCOT contingency reserve service being developed. He described it as a fast-ramping product to offset the “sun setting and dropping of solar,” with the costs of procuring the service allocated under the cost-causation principle.
“That cost, the commission decided, will be assigned to the resources causing [the drop], in this case, the intermittent resources,” he said, avoiding the use of solar or wind.
“If I get a tattoo at the end of my career, it’ll say, ‘cost causation,’ because that’s where we really lose a lot of sleep,” said the Advanced Power Alliance’s Jeff Clark, a solar advocate.
“There’s a couple of key [legislative] provisions … that focus on ancillary services, which traditionally are a real sleeper of an issue,” Jewell said. “But if you’re about to face the potential for the cost of all of those resources to be put on your industry, which is the threat that we have faced since Winter Storm Uri, it’s a huge issue that can absolutely undermine your industry.”
Bird Dog Energy’s Colin Meehan said the addition of several new ancillary services, some in the 10- to 20-GW range or higher, could amount up to $1 billion in costs to the market.
“I think what some of the political leadership would like to see is imposing those costs on renewable energy, and that’s highly concerning,” he said. “We’re trying to work with the commission to say, ‘Look, we’re open to the idea of a cost-allocation discussion, but it has to be across the entire market. It can’t be focused exclusively on one technology.’ The political side is still about renewables.”
“I think it’s important to recognize cost causation is in the eye of the beholder in this environment, so whoever is making the decision and what biases they’re bringing to the table is going to dictate what is cost causation,” Jewell said. “Even with a significant growth of wind and solar on the grid, we have not seen any incremental growth of ancillary services. It’s actually gone down. So, has wind and solar been causing the need for ancillary services? I would argue that need was already there and nothing should be allocated to renewables. But that’s not the conversation we’re going to be having because the eye of the beholder is really critical.”
“Everyone in this room knows that we are blessed with the world’s best renewable resources, wind, solar and other resources as well,” Glick told Zichal during a Q&A session. “And everyone knows that in many cases, those resources are located in very remote regions. We just need to build out the transmission grid to access those resources.”
Glick said FERC is focused on the two toughest issues when it comes to barriers to transmission development and doing so in an anticipatory fashion.
“We know where those resources are located, so we really need to focus on what we need to better approach the transmission cost allocation as well,” he said. “I want to point out that this isn’t the end of our transmission reform agenda. We are soon hopefully going to be attacking that generator interconnection [issue], which you all know is a major, major problem both in terms of addressing the speed we need to expedite the process for transmission interconnection significantly and expedite the process. But we also need to deal with some of the cost-allocation issues there too. We need a much better approach to address participant funding.”
Still to come, said Glick, who was re-nominated as FERC chair on Friday, is dealing with interregional transmission planning, cost oversight and “a whole bunch of other issues … hopefully, relatively soon.” (See Biden to Re-nominate Glick as FERC Chair.)
At the same time, the DOE’s Grid Deployment Office has solicited comments on its Transmission Facilitation Program (TFP), a $2.5 billion fund for a once-in-a-generation grid expansion, courtesy of the Infrastructure Investment and Jobs Act. Under the TFP, DOE can offer three types of support to help build new, replacement and upgraded high-capacity transmission lines:
capacity contracts for up to 50% of proposed transmission project’s capacity;
loans to carry out eligible projects; and
public-private partnerships.
“There’s so much that needs to happen to get this right, but one crucial part is making this collaborative and inclusive in a coordinated process,” Granholm said. “We want these new transmission lines to have collaboration and communication sort of in their foundation so that they meet local needs and help communities achieve their energy needs. And of course, that helps to avoid the NIMBY problems that have plagued us in the past.
“We hope that the funding carrots that were given to us in the bipartisan infrastructure law are going to be significant and being able to make sure at least early on [that] the low-hanging fruit is addressed in some of these transmission lines,” she said.
Wanted: Resolution to Chinese Solar Probe
Several speakers lamented that the Department of Commerce probe into whether Chinese companies are circumventing U.S. trade tariffs has stalled the import of solar panels. The agency opened the investigation in March to determine whether the solar panels and related equipment are actually Chinese products shipped through four other Asian countries to avoid anti-dumping and countervailing duties that would otherwise have to be paid by Chinese manufacturers. (See Solar Sector Braces for Tariff Probe Impact.)
“We need a swift resolution from the Department of Commerce on the anti-circumvention probe,” Zichal said during a press conference on ACP’s 2021 market report, noting the industry finds retroactive tariffs “very disconcerting.”
“There are tariff rates that can go up to 250%, though just the threat of that out there and the requirement that industry would have to carry that risk has led to a major standstill in the deployment of clean energy,” Zichal said.
“Many, many decisions that companies are faced with are delaying and scrapping solar projects across the country. Instead of solar projects being deployed, we are dealing with states and utilities that are making decisions to keep coal assets generating longer.
“I think the most frustrating piece of all of this is that this is a Department of Commerce decision that is 100% discretionary. So, we’ve got a Biden administration that says a lot of the right things about deploying clean energy but then when you look at the policies and the substance, we’re actually going in the wrong direction,” she added.
Zichal later conducted a live video interview with Sen. Martin Heinrich (D-N.M.), who was among a group of senators that participated in a conference call May 17 with administration officials.
“The White House is now fully now aware of just how devastating the … current uncertainty in the industry is for jobs across the country,” Heinrich said. “They’re on [defensive readiness condition] five now, understanding that this has to be resolved really quickly to reinsert the level of certainty and predictability back into the market. I think they’re being very careful to make sure that whatever they do complies to the absolute letter of the law, but the speed and the necessity of resolving this very quickly seems to be something that that they are fully embracing at this point.”
“I completely understand that the uncertainty around trade regulations is ‘interfering,’ a gentle word, with the industry’s ability to scale up,” Granholm said during her taped interview. “Obviously, I’m extremely troubled by what that means for our climate goals. This administration is looking at every tool available to support the domestic solar energy industry. Ultimately, we do have to ramp up and build this whole supply chain at home as quickly as possible.”
Gulf of Mexico’s Offshore Wind Potential
A panel discussing the growing offshore wind market touted the Gulf of Mexico’s potential resources in a region where the oil and gas industry has long held sway. Ironically, the fossil fuel industry’s offshore expertise will play a role in the administration’s target of 30 GW of installed offshore wind capacity by 2030.
Mike Celata, the Gulf’s regional director for the U.S. Department of the Interior’s Bureau of Ocean Energy Management, said the agency may be able to auction off leases as soon as early 2023, but not before conducting an auction for the Pacific Ocean off California. Celata’s office is responsible for all leasing, regulatory oversight and resource management functions for offshore energy in the U.S. Gulf.
“We’re at the point where we’re ready to define wind energy areas and an area ID’d where we can actually have leases defined and those leases become available … so it’s an exciting time,” he said. “Maybe we’re a little behind, but we have a lot of lessons to learn from the other for the other areas and a lot of lessons to learn from the oil and gas industry. I think the Gulf can clearly be a leader in offshore wind in the future.”
Celata credited Louisiana Gov. John Bel Edwards’ request for a task force that is coordinating renewable energy planning activities on the Gulf’s outer continental shelf and serving as a forum to discuss stakeholder issues and exchange data. The state has also approved a sweeping climate plan that includes a goal of 5 GW of offshore wind development by 2035.
ACP’s Joshua Kaplowitz, the panel’s moderator, recalled his time at Interior’s solicitor’s office, when he spent maybe 1% of his time on Gulf of Mexico issues. He asked Celata what accounts for the acceleration of offshore wind activity.
“Sometimes it takes a long time for the federal government to get things moved, but we have operational experience in the Gulf of Mexico,” Celata said. “We turned our operations on our oil and gas into working on wind. In the future when we get to the cost stage and development, hopefully we can apply that experience as well to turning projects around the office.”
Robert Miner with BP — which attempted to rebrand itself as Beyond Petroleum before the Deepwater Horizon disaster — said the Gulf will remain a “vital oil and gas center for many years to come.” He also said employees’ expertise in offshore development will be easily transferable to wind production.
“We’re already seeing within our company as BP employees get excited about these new energy opportunities,” Miner said. “We are seeing this kind of the excitement that people say, ‘Look, I know how to work on the water. I know how to work with transmission. I know how to work with procurement. I know how to work with all these things that are important to those businesses and numbers.’ There’s just no question that while there are some similarities, there are also some specialized jobs that are going to need specific training.”
“It goes back to the Gulf of Mexico being a place that businesses, energy businesses and people are comfortable with,” Celata said. “We’ve had recreational fishermen say, ‘Get the steel in the ground now,’ because they want more artificial reefs where they can fish. I mean, there are great opportunities.”
New Jersey residential ratepayers that drive electric vehicles, embrace energy-efficiency measures and convert to electric heating could pay hundreds of dollars a year less in energy bills in 2030 than those who don’t, according to preliminary results released Monday from a study on the cost impact of the state’s Energy Master Plan (EMP).
The study showed that the annual energy cost — taking into account natural gas, electricity and gasoline — for a non-low-income customer that fully embraced the conversion to clean energy would be 15% lower in 2030 than a typical customer in 2020, according to a presentation made by The Brattle Group for the New Jersey Board of Public Utilities (BPU) at a hearing Monday.
A typical residential energy customer in 2020 paid about $4,800, which would rise to about $5,600 by 2030 if the customer took no steps to convert to clean energy, Brattle said. But a customer that drove an EV, adopted energy-efficiency measures and heated their home with electricity, rather than gas, would have an annual energy bill of only just over $4,000, according to Brattle’s figures, which were presented in 2020 dollars and not adjusted for inflation.
The figures only include energy costs and do not include the investment needed to convert to clean energy use, such as an EV purchase or installing electric heat pumps. They were also calculated based on the state’s current clean energy course, Brattle said. If the state stepped up its efforts to follow the trajectory outlined in the EMP, the annual costs for customers that don’t embrace efficiency or clean energy measures would be even higher, and the costs even lower for those that do.
Cost of Carbon-free
The presentation offered the first glimpse into the contentious issue of how much Gov. Phil Murphy’s (D) 2019 EMP will cost to implement. Murphy wants the state to cut greenhouse gas emission levels to 80% below 2006 levels and use 100% clean energy by 2050. Opponents, among them business groups, have long complained that Murphy has never told state residents how much the plan will cost. (See Brattle Study of NJ Energy Master Plan Cost Under Scrutiny.)
According to the BPU, the study will look at the gross costs in 2030 of implementing the EMP and potential reductions in energy consumption driven by increased efficiency. It will also focus on shifts toward electricity use for heating and transportation, and changes to electricity and natural gas rates as costs are applied across changing volumes.
Sanem Sergici, a Brattle principal, told the BPU that the figures released at the hearing related only to customers of Atlantic City Electric and South Jersey Gas, but energy costs at the other six utilities in the state have “similar directionality.”
Once completed, the report will include similar cost breakdowns for small and large commercial and industrial customers who are served by the state’s utilities, she said.
The figures released Monday assumed that the state continued to pursue its current policies. A second set, which assumed the state pursues the “EMP Achievement Pathway,” found that the energy costs for a ratepayer that only used energy-efficiency methods would be about $5,600. That would drop to about $4,000 if the ratepayer also drove an EV and adopted an electric heating system, the study said.
Sergici said that the “takeaway” from the figures is that meeting the goals in the EMP would be more expensive, but the benefits are significant.
“So, in other words, yes, EMP will cost more, but only moderately relative to the current policy pathway,” she said.
Sergici also said the preliminary study showed that the state would avoid “substantial” costs by following the plan. The state would avoid 19 million metric tons of carbon emissions on the current path but 25 million metric tons following the path recommended by the EMP. The annual benefit of the current path would be $1.22 billion, while the plan’s trajectory would yield benefits of $1.63 billion, according to calculations using the social cost of carbon method, Brattle said.
Affordable Energy
Environmental groups welcomed the presentation, seeing it as a vindication of their argument that shifting to clean energy, while expensive, can show savings in the long run.
“The preliminary results show what many advocates have already suspected and known from other studies,” said Eric Miller, energy policy director for the Natural Resources Defense Council. That is, he said, that “electrified customers that are able to leverage cold climate heat pumps, energy efficiency and electric vehicles will be far better off in the future than customers who are stuck using dirty and expensive energy.”
“Based on what we’ve seen so far, given the broad benefits of energy efficiency, electrification and electric vehicles, this isn’t a challenge but an opportunity to design and implement nation-leading programs to make sure that all New Jersey residents can share in a clean energy future,” including low- and moderate-income, commercial, industrial and residential customers.
Tom Gilbert, co-executive director of New Jersey Conservation Foundation, said the preliminary results should help “put to rest the false narrative and deliberate misinformation campaign that we can’t afford to transition away from fossil fuels to clean energy.”
“This analysis shows that we can meet our clean energy goals in a way that is not only affordable but actually results in cost savings to consumers through the avoided costs of increasingly volatile fossil fuels, as consumers switch to electric vehicles and appliances,” he said.
Benefits Without the Costs
But several speakers, from both the business and environmental sectors, said the study is too narrowly focused and won’t give a full picture of the impact of the state’s transition of clean energy.
Paul Patterson, a utilities analyst with financial consultancy Glenrock Associates, said the study should include the amount that would have to be spent on converting to clean energy.
“It doesn’t sound like it’s really a cost-benefit analysis,” he said. “It’s important, I think, to really have a better picture as to what the … capital costs [would be]. Without knowing that, I think it’s sort of difficult to really assess what the impact would be.”
Other speakers from the environmental sector argued that the study will not give a true picture of the impact of the state’s shift to clean energy because Brattle will not look at the cost of doing nothing, such as for health care from increased emissions or for damage from severe weather events.
Allison McLeod, policy director for the New Jersey League of Conservation Voters, welcomed the prediction of savings but said she was discouraged that the study would focus largely on the ratepayer impact and that “the details of climate and public health costs are beyond the scope of this study.”
“As part of this conversation, we continue to strongly urge you to consider the costs of inaction,” she said. “Some of the ratepayer savings outlined today are encouraging, but the economic damage that we’d be looking at — including health care, agriculture, infrastructure, including utility infrastructure, which would need to be rebuilt at cost when damaged — will also impact our ratepayers.”
ISO-NE is touting several “enhancements” to its current governance practices in a recent memo to state energy officials, with minor changes intended to appease frustration that has been bubbling among the New England states in recent years.
The memo, published Friday ahead of the annual New England Conference of Public Utilities Commissioners Symposium, lays out what the grid operator calls “targeted governance and communications enhancements.”
“The changes reflect ISO New England’s independent, but collaborative, role and its commitment to the clean energy transition,” the RTO’s Board of Directors wrote in the memo.
The grid operator is planning a public board meeting in Boston for November of this year, focusing on market issues.
The board also promises in the letter that it will continue to try to center consumers and costs in its considerations, pledging to review “existing documents to identify any additional reasonable needs for enhanced public communications with non-technical audiences” and discuss “potential actions to memorialize its current practice and commitment to considering the costs of significant ISO proposals.”
ISO-NE will also explore boosting its public communication by hosting more webinars on recently completed studies and reports, the memo says.
Finally, the memo says ISO-NE will try to boost its communication directly with the states by offering additional meetings. And significantly, it promises that when developing regional proposals regarding state policy, like a potential Forward Clean Energy Market, ISO-NE will “develop and propose designs that provide states with decision-making authority.”
Philip Bartlett, chairman of the Maine Public Utilities Commission, told RTO Insider that he appreciates the grid operator’s willingness to engage.
“It doesn’t go as far as we’ve been asking for,” he said, but several of the changes laid out in the memo are good steps. “We need to institutionalize these changes … and I think that’s going to be a big part of the discussion going forward.”
The New England State Committee on Electricity has asked for other changes, including more public board meetings, a standing board committee on state and consumer responsiveness, and a process for giving the states shared rights under Section 205 of the Federal Power Act when developing certain new regional rules. (See ISO-NE, States Seek to Build on ‘Alignment’ Efforts.)
Vermont Public Service Commissioner June Tierney called the memo a “promising indicator that we can work together effectively to address our regional market design challenges in the coming months.”
A new report suggests that Houston should become the “epicenter” of a federally funded hydrogen hub stretching from the Gulf Coast of Texas into Louisiana, potentially transforming the region into “global leader” in the production, application and export of clean hydrogen.
Released Monday by the Center for Houston’s Future and the Greater Houston Partnership, the report signals that the city is preparing a push to win a portion of the $8 billion in funding that the U.S. Department of Energy plans to award to four to eight sites across the country to accelerate the production and distribution of “clean” hydrogen for use in transportation, industrial processes and electric generation.
“This report gives additional weight to the already strong case that Houston is uniquely positioned to lead a transformational clean hydrogen hub with global impact,” Mayor Sylvester Turner said in a press release accompanying the report. “We can also deliver economic growth, create jobs and cut emissions across Houston and the Gulf Coast, including in underserved communities.”
While the authors say they are “technology-agnostic” on how hydrogen will be produced in the region, the report focuses on the production of “green” hydrogen through electrolysis (powered by renewable energy sources) and “blue” hydrogen produced by steam methane reforming of natural gas, accompanied by carbon capture.
The report attempts to emphasize that a Houston hub could be uniquely positioned to help DOE meet its ambitious target of producing $1/kg clean hydrogen by 2030. It notes that, as a global center for the production and transportation of oil and gas, Houston boasts “natural advantages” for developing the cost-effective production and distribution of clean hydrogen. Among those advantages, the Texas Gulf Coast has access to more than 900 miles of dedicated hydrogen pipelines extending into Louisiana, which represent more than half of all hydrogen pipelines in the U.S. and one-third of such pipelines in the world.
“Unlike natural gas pipelines, which allow open access, hydrogen pipelines are not regulated by the Federal Energy Regulatory Commission and provide only ‘bundled’ sales and transportation via bilateral contracts between the pipeline owners/operators (primarily large, industrial gas companies) and their industrial clients,” the report says. “This existing infrastructure points to a competitive advantage in the form of knowledge and expertise with respect to hydrogen pipelines.”
The report also notes that Texas’ extensive network of natural gas pipelines could “potentially be repurposed” to transport natural gas. (A 2013 study by the National Renewable Energy Laboratory raised concerns that high concentrations of hydrogen within natural gas pipelines can cause embrittlement and increase the possibility of leaks.)
Houston could also benefit from its proximity to geographic formations that can accommodate the storage of hydrogen and CO2, the report notes. Texas possesses three of the four salt caverns in the world currently used to store hydrogen, with a combined working storage capacity of 485 GWh.
Top Producer
According to the report, Texas also enjoys the advantage of presently being the largest supplier of hydrogen in the U.S., producing 3.6 million tons (MT) of hydrogen per year, about one-third of the country’s annual output. On the flip side, the region’s extensive petrochemical and refining industries provide a strong, existing base of demand for the fuel.
“Texas is likely to be a demand hub for hydrogen given its high share of U.S. industrial activities and population growth, as seen in potential demand clusters such as Greater Houston, Corpus Christi and the Texas Triangle. Proximity to demand could help hydrogen producers in the region drive early adoption,” the report says.
Yet another advantage for Texas, according to the report, is the abundance of low-cost wind generation in the western part of the state, a key component for powering the electrolyzers needed to produce a fuel that can qualify as zero-carbon green hydrogen.
Pointing out that electricity represents the single greatest cost in the production of electrolysis-based hydrogen, the report’s authors estimate that the average cost of wind generation in Texas without the federal production tax credit could fall from $28/MWh at present to $21/MWh by 2030. Assuming that West Texas wind capacity factors increase from 46% to 51% by 2030, and that the region’s electrolyzer capacity grows to about 20 MW by 2025 and 85 MW between 2030 and 2050, the authors estimate that state’s electrolysis-based hydrogen could price at $1.50/kg by 2030 and $1/kg by 2050.
“The estimated cost of producing natural-gas-based hydrogen with carbon capture and storage (CCS) in 2030 could meet the DOE’s goal of $1/kg of clean hydrogen; however, electrolysis-based hydrogen is unlikely to achieve this target without government interventions in the form of research and development funding or direct incentives for hydrogen production and supporting technologies, such as renewables and CCS,” the report said.
Export Potential
The report also envisions a Houston-centered hub becoming a powerhouse of hydrogen exports.
The authors estimate that demand for Texas’ clean hydrogen could reach 21 MT by 2050, with industrial applications accounting for 6 MT, followed by ground transportation (2.3 MT), utilities (1.6 MT), and marine and aviation (1.5 MT). The lion’s share of that demand — 10 MT — would be international exports, putting the Houston hub in competition with other likely low-cost clean hydrogen producers such as Australia, Chile and Saudi Arabia.
Beyond cost advantages in production and transportation, the report states, Houston may offer beneficial “non-cost strategic considerations” for export markets, including “geopolitical and national security considerations (such as Europe’s move to diversify its fuel supplies away from Russian and accelerate its use of green hydrogen); a potentially quicker deployment of capital and capital build than competitors; and the possibility for long-term offtake agreements.“In many ways, the market for hydrogen exports could resemble the evolution of the liquified natural gas market. Similar to LNG, supply-based hydrogen hubs such as in the Middle East, Australia and North America could compete to serve demand in East Asia (e.g., Japan and South Korea). Given the cost assumptions, Texas is likely to leverage its cost and strategic advantages to export hydrogen and its derivative products,” the report said.
Extreme weather, wildfires and supply-chain problems could continue to make CAISO vulnerable to energy shortfalls and outages starting this summer, despite ongoing efforts to increase reliability, speakers said Friday at a workshop hosted by the California Energy Commission (CEC) and the California Public Utilities Commission.
The CPUC has ordered nearly 15 GW of new supply to come online through 2026, but delayed battery production and stalled shipments of solar panels from Southeast Asia could undermine those efforts, speakers said.
At the same time, CAISO faces the challenge of trying to interconnect an unprecedented number of renewable resources in a relatively short time, as the state transitions from fossil fuels to clean energy.
“With a tremendous amount of new resources needed to be brought online in California, and some of the headwinds confronting us on supply chain issues and other significant risk variables, it is essential that our processes for onboarding new resources be up to the task,” CAISO COO Mark Rothleder said, reading from a written statement by CEO Elliot Mainzer, who could not attend the workshop.
The ISO added 3,698 MW of installed capacity to its grid in 2021 and is on track to add 3,062 MW more by July 1, much of it as battery storage, Neil Millar, vice president of infrastructure and operations planning, said.
CAISO has begun connecting resources, such as solar and storage, in geographically grouped superclusters of dozens of units, and is currently involved in a stakeholder initiative to streamline and triage its “overheated” interconnection queue of nearly 246,000 applicants, Millar said.
Adding to those challenges, CEC planners said a combination of heat, drought, fire and supply chain disruptions could result in California’s energy supply falling far short of demand over the next four summers.
Previous examples include a California heat wave last July that coincided with a major wildfire in southern Oregon. The Bootleg Fire nearly shut down the Pacific AC and DC interties, the main transmission links between the Pacific Northwest and California. As hydropower stopped flowing to California, CAISO declared energy emergencies but did not need to order rolling blackouts, as it did in August 2020, when a severe Western heat wave shrank imports into California.
In even more extreme scenarios, cumulative disruptions from weather and fire could leave the state 7,000 MW short this summer and up to 10,000 MW short by 2025, David Erne, manager of CEC’s Supply Analysis Office, said.
The gap could be as little 1,700 MW this summer and 1,800 MW in 2025, without cumulative crises, he said.
The state is adopting measures to make up the differences including temporary generation, delayed plant retirements, increased generator efficiency and expanded demand response programs, but all those efforts could be insufficient, Erne said.
Solar, Battery Delays
Gov. Gavin Newsom’s budget proposal, updated earlier this month, proposes a $5.2 billion, 5,000-MW “strategic electric reliability reserve” to meet the challenges of extreme heat, wildfires, drought and the West’s changing resource mix. (See Calif. Governor Proposes $5B ‘Reliability Reserve’.)
Newsom said that greater dangers from wildfires, heat and drought prompted the need, which could be met with new generation and storage, backup generation and other methods. Record-low reservoir levels in California and the Southwest are expected to severely limit hydropower production this summer.
The governor has floated the idea of keeping the state’s last nuclear generator, PG&E’s Diablo Canyon Power Plant, operating beyond its planned retirement in 2024-25. Advocates for keeping Diablo Canyon open have argued the plant’s retirement will exacerbate resource deficiencies.
As in the past two summers, the main reliability challenge in CAISO will continue to be the 7-9 p.m. summer net peak, when solar ramps down but demand remains high because of high heat and air conditioning use, analysts said.
CAISO has interconnected 4,000 MW of four-hour lithium-ion battery storage since the August 2020 outages to help cover the net peak, but future storage additions could be hampered by pandemic lockdowns in China and rising lithium costs, Molly Sterkel, program manager at the CPUC’s Energy Division, said.
“While these shutdowns appear to be resolved at the present moment, developers are now furiously calculating their revised delivery dates for batteries and the impact that has on their construction schedule,” Sterkel said.
The U.S. Commerce Department is investigating allegations that Southeast Asian solar panel manufacturers are using Chinese components but circumventing U.S. tariffs on Chinese goods.
“This has led to the severe disruption on the supply of solar panels into the U.S. market,” Sterkel said. “Some of the solar projects that were expected for 2022 are far enough along that they have not been directly impacted by this petition” but future projects could be delayed, she said.
The NYISO Business Issues Committee on Thursday approved revisions to the Ancillary Services Manual to increase participation in the ISO’s Demand-Side Ancillary Services Program (DSASP) by allowing resources to establish communications directly with the ISO, rather than through the resource’s transmission owner.
In order to maintain grid reliability, NYISO established a 200-MW limit on DSASP resources in the New York Control Area communicating directly with the ISO; that limit has been met.
The changes allow for the establishment of an alternative communications pathway between a DSASP resource and the applicable TOs under Interim Control Operations (ICO). Absent such alternative communications, during ICO, the TO would be unable to dispatch a DSASP resource that directly communicates with NYISO, but “now that the TO has a communication pathway with the resource, they would be able to ultimately dispatch them if the ICO conditions would ever be enacted,” said Mitchell Braun, associate engineer of distributed resources operations.
Resources participating under such alternative communication procedures with the TO will no longer be included in the 200-MW limit.
Because one or more TOs may not be able to establish appropriate communication infrastructure with DSASP resources by the time the model is deployed, NYISO will seek to align the period for existing DSASP resources to transition with the time it takes to establish the TO communications connection.
The ISO will begin quarterly posting of the magnitude of DSASP resources utilizing direct communications to its website around June 30.
ICAP Manual Updates
The BIC also approved revisions to the Installed Capacity Manual to reflect faster turnaround time for the processing of dependable maximum net capability (DMNC) testing because of software automation.
DMNC is the sustained maximum net output of a generator, as demonstrated by the performance of a test or from actual operation. DMNC values must be determined each season to establish a generator’s capability for the capacity market, and generators cannot offer capacity without a valid DMNC.
Under the current rules, data submitted beyond the applicable 60-day deadline are rejected per the ICAP Manual, so generators without a valid in-period DMNC test are required to conduct an out-of-period test. The out-of-period window opens just two months before the applicable season, and testing out-of-period introduces additional risk, as the windows occur in shoulder seasons and can coincide with maintenance schedules, said Dylan Zhang, manager for ICAP market operations.
New submittal deadlines of Feb. 1 for summer test data and Aug. 1 for winter test data will be reflected in the automated market system event calendar. The new submittal deadlines will apply for winter 2021-2022 in-period DMNC tests.
Mitigation Review Update
Director of Market Design Michael DeSocio led a discussion on the implications of FERC’s May 10 approval of NYISO excluding from its buyer-side market power mitigation (BSM) rules any new capacity resources required to satisfy the state’s environmental mandates. (See FERC OKs NYISO Capacity Market Changes Stemming from NY Climate Law.)
“The very favorable order from FERC provides a huge win for New York and takes away a lot of risk that had been described from stakeholders for a long period of time,” DeSocio said.
Effective May 11, the change automatically eliminates offer floors for wind, solar, storage, hydroelectric, geothermal, fuel cells that do not use fossil fuel, demand response and other qualifying resources under the Climate Leadership and Community Protection Act (ER22-772-001).
“We do have an active class year: There’s currently 13 energy storage projects and three solar projects that are looking to locate in mitigated capacity zones, and they are now excluded from BSM,” DeSocio said.
NYISO will also discontinue evaluations for any new special-case resources (SCRs) within mitigated capacity zones that come into the market and immediately remove all existing offer floors for existing SCRs, he said.
The ISO is reviewing and ultimately will be recommending the technique for calculating capacity accreditation factors, DeSocio said.
April LBMPs Steady but up Year over Year
NYISO locational-based marginal prices averaged $56.46/MWh in April, down from $56.78/MWh the previous month and more than double the $22.79/MWh average in April 2021, driven by higher fuel prices, Rana Mukerji, senior vice president for market structures, said in delivering the monthly operations report.
NYISO locational-based marginal prices averaged $56.46/MWh in April, down from $56.78/MWh the previous month and more than double the $22.79/MWh average in March 2021, driven by higher fuel prices. | NYISO
Day-ahead LBMPs came in higher and real-time load-weighted LBMPs were lower compared to March. Year-to-date monthly energy costs averaged $91.92/MWh, a 117% increase from $42.41/MWh in the same period a year ago.
April’s average sendout was 359 GWh/day, down from 390 GWh/day in March and higher than 354 GWh/day a year earlier. Transco Z6 hub natural gas prices averaged $6.13/MMBtu for the month, up from $4.47/MMBtu in March and up 187.8% year-over-year.
The New Jersey Division of Rate Counsel added its voice Thursday to community opposition facing Ørsted’s proposal to run cables bringing electricity from its Ocean Wind offshore wind project through the tourist town of Ocean City to an inland substation.
During a hearing on the plan, Deputy Rate Counsel T. David Wand told the Board of Public Utilities that his agency has “some concerns” about the route that the Danish developer is proposing to run the cable, which would take it across several land parcels upgraded with funding from the state’s Green Acres program.
The project is the first test of a new law approved in July that allows offshore wind developers to override local officials for the siting, construction and operation of “wires, conduits, lines and associated infrastructure” on public land if it’s needed to connect an offshore wind project to the grid. To get BPU backing for the easement, the developer must show that it is “reasonably necessary” for the project’s construction.
Ørsted is seeking a 30-foot-wide easement running the length of the city’s main island, which is about 8 miles long, for a 275-kV cable that will connect Ocean Wind’s turbines, about 15 miles offshore, to the PJM grid at a substation, sited on a closed coal-fired power plant in neighboring Upper Township.
Wand said that Ørsted has testified in the past that it had identified an alternative route to the one that would run over the Green Acres land, along an abandoned railroad right of way. The route, “although longer in distance, may result in fewer disturbances,” Wand said.
Ørsted, which discarded this route as a possibility, has declined to provide its cost nor that of any of the routes it has analyzed, Wand said. He recommended that the BPU require the developer provide that information.
“Although the company maintains that it bears the risk of the preferred route’s cost, Rate Counsel believes the board should have the opportunity to review ongoing project costs,” he said. That would “ensure that the board-approved offshore renewable energy certificate price, which was established to incentivize development of offshore wind, was not set at an unreasonably high or low rate.”
Wand added that the route chosen could affect the cost of upgrading the grid to accommodate the power from Ocean Wind, so the developer also should be required “to demonstrate its preferred route is also the least-cost plan when including the transmission upgrade costs to minimize cost impact repairs.”
The Rate Counsel also said it has concerns about the BPU’s “procedural approach” to soliciting public input and noted that the board has “allowed for discovery, testimony, and public and evidentiary hearings” to illuminate other, similar, land-use questions, which has not happened in the easement case.
BPU President Joseph L. Fiordaliso rebutted what he called Wand’s “insinuations” and said “none of this has been done in secret. … This board is committed to transparency.”
Negotiations
Among the dozen or so speakers at the hearing were Ocean City residents who complained that the hearing had not been widely publicized — which Fiordaliso denied — and opposed not only the easement but the project as a whole.
Yet the opposition was more muted than a March 7 hearing on the easement held by Ørsted, at which more than 35 people spoke, many of them opposed to the project. (See Ørsted NJ Wind Project Faces Local Opposition.)
Madeline Urbish — head of government affairs and policy for Ørsted, who represented the developer at the meeting — said that it had been in “extensive outreach” with Ocean City since 2019 about “property right and consents” for the project and to acquire the easement. Those talks continued into early 2022, she said.
“However, Ocean City has not been willing to reach the necessary agreements to allow the process to proceed with the acquisition of the easements or for the New Jersey [Department of Environmental Protection] permit and accompanying environmental review,” Urbish said. As a result, Ørsted filed the petition seeking BPU approval to move ahead anyway under the new law.
The developer “remains ready and willing to come to a voluntary agreement with Ocean City,” she said. But she added that “time is of the essence if the project is going to meet its commitments to New Jersey.”
Asked after the hearing if Ørsted wanted to respond to the Rate Counsel’s comments, or any others voiced at the hearing, Urbish did not respond directly, saying: “These public hearings are an essential part of the petition process, as outlined by the state to provide regulatory oversight and encourage public participation, and we are committed to adhering to this important process.”
Local Construction Impact
Residents said they are concerned about the disruption, health issues and the negative impact of the project on the ocean view, marine life and tourism, the last of which the town relies heavily on.
“We know that these cables are going to emit EMFs [electromagnetic fields], which have been linked to brain cancers, bone cancers, blood cancers, birth defects,” said Suzanne Hornick, an Ocean City resident and environmental activist. “We don’t want this here. And if the BPU approves this, you’re going to have serious resistance, including people laying across the beach.”
Mike DeVlieger, a former Ocean City councilman, said that “overwhelmingly our community is against this, and it’s not even close.”
“They’re against this line coming up through our beaches; they are against it being run through our Green Acres land; they’re against it being run past our playgrounds and our ball fields and just through our streets,” he said. “This presents medical concerns; it can present environmental concerns.”
DeVlieger suggested that Ørsted consider an alternative route. “They have an alternative viable way of doing this. And they are doing what they want to do, not what they can do. And that’s wrong.”
But Frank Worrell, an Ocean City resident, said the impact of climate change around the country is too great to ignore.
“I believe in climate change. I believe we need these wind turbines and [to] build them as economically and as safe — and I underline safe — as you can,” he said. “If you’re going to go through 35th Street and make it safe, then I am all for it. I think climate change is of major concern, and I wish people would open up their eyes and get on board.”
Three environmental groups — Environment New Jersey, Sierra Club and New Jersey League of Conservation Voters — emphasized the threat of climate change and highlighted the job creation and economic benefits of offshore wind projects.
Richard Isaac, chairman of the Sierra Club’s New Jersey chapter, said the organization takes Green Acres diversions very seriously but is not concerned about the Ørsted project.
“In this case, here in Ocean City, the deep horizontal drilling will still leave every last inch of the beach available to the public [and] will not only help address climate change but, in doing so, will also help slow down sea level rise and maintain local businesses,” he said. “This proposal is clearly a win-win. From everything we’ve seen, we don’t have concerns regarding the health or potential hazards.”
Norah Langweiler, a resident of Egg Harbor Township, about 10 miles from Ocean City, said the “threats of climate change really feel more present than ever.”
“I totally understand that folks have concerns about the transmission lines coming onshore,” she said. “But any new infrastructure project brings some level of construction, and offshore wind turbines also bring jobs, energy security and resilience for the future by doing our part to mitigate climate change.”
FERC on Thursday ordered show-cause proceedings on the transmission formula rate protocols of four utilities in SPP, saying they do not appear to provide customers and regulators the ability to challenge the resulting rates.
The commission ordered Grand River Dam Authority (EL22-44), Lincoln Electric System (EL22-45), Nebraska Public Power District (EL22-46) and Omaha Public Power District (EL22-47) to either show why their protocols remain just and reasonable, or explain what changes they could make to address FERC’s concerns.
FERC said the protocols did not meet the standards it has required since a 2012 order regarding MISO’s transmission owners. Under formula rates, the commission does not require TOs to make FPA Section 205 filings to update their annual transmission revenue requirements. Instead, the utilities update the input data in the formulas.
“Safeguards need to be in place to ensure that the input data is correct; that calculations are performed consistent with the formula; that the costs to be recovered in the formula rate are reasonable and were prudently incurred; and that the resulting rates are just and reasonable,” the commission said in each of the orders.
FERC found that each of the four utilities’ protocols fell short on one or more of the following:
“the scope of participation (i.e., who can participate in the information exchange);
the transparency of the information exchange (i.e., what information is exchanged); and
the ability of customers to challenge transmission owners’ implementation of the formula rate as a result of the information exchange (i.e., how the parties may resolve their potential disputes).”
In the 2012 order, the commission ruled that MISO’s protocols inappropriately limited who could participate in the review processes and directed the RTO and its TOs to revise them to include all interested parties, including customers under the MISO tariff, state utility regulatory commissions, consumer advocacy agencies and state attorneys general.
The commission ordered each of the SPP utilities to respond within 60 days.
Achieving New York’s climate goals should not come at the cost of “cannibalizing” existing renewable resources, said Chris LaRoe, senior director of regulatory affairs at Brookfield Renewable and chair of the Independent Power Producers of New York (IPPNY).
“We also need to make sure the transmission system is up to the challenge and that we are not bottling public policy resources,” LaRoe said Wednesday at IPPNY’s 36th annual spring conference.
Legislative, Regulatory Update
During the conference, New York Sen. Kevin Parker (D), chair of the Energy and Telecommunications Committee, drew a line from the May 14 mass shooting of Black people in Buffalo to the issue of making energy affordable for all people in the state.
“In this moment you have everyone feeling like they cannot make, not just unrepresented groups, but working class and poor whites across the country, particularly in our great state, feel like there’s no chance for them,” Parker said.
With gas prices headed toward $6/gallon, he added, it’s critical that the energy market “create the kind of economic opportunities such that people are not thinking that they have to murder other folks in order to make their way in this state.”
The pandemic disrupted both lives and livelihoods and created a dynamic in which the state put moratoriums on service cutoffs for overdue utility bills, and now utility arrears total nearly $4 billion in New York just as energy prices are spiking, he said.
Parker said he has to remind his constituents that net-zero emissions means net and that bakeries and restaurants will still be able to use gas-fired ovens for their work.
The benefits of the competitive wholesale electricity market are important, and principally they shield energy consumers from unwarranted risk, said Assemblymember Michael Cusick (D), chair of the Energy Committee.
“Competitive procurement is also an important pathway in meeting the state energy goals and the benefit of this approach is evidenced by the energy storage law (S8384) I created in the legislature along with my good friend and colleague Senator Parker,” Cusick said.
The electric system won’t be powered entirely by renewable resources and numerous reports highlight that various capabilities are needed to support a grid with significant levels of power generated by intermittent resources, said New York Public Service Commission Chair Rory Christian.
Generation assets are only effective if the transmission line is available to move power, which is why the PSC established a coordinated planning process between utilities and NYISO to align processes and procedures (20-E-0197), he said. (See NY Looks to Improve Tx Headroom Assessments.)
“Working collectively, we can set up a full spectrum of transmission needs, both bulk and local. … In the past, project needs were mainly driven by reliability, whereas today many of these projects will be needed to meet public policy and climate goals,” Christian said.
The commission has so far approved just under 200 local transmission projects, which will allow moving up to 15 GW of renewable energy, but it has approved only two large-scale transmission projects, Christian said. He noted that the PSC last September established a public policy category for transmission and distribution investments to help achieve the state’s environmental goals. (See New York Adopts Groundbreaking Tx Investment Rules.)
Fast Transition
Lawmakers, regulators and agency administrators — together with power producers — are transforming the state in a significant way over what many would say is not an extended period, said New York State Energy Research and Development Authority CEO Doreen Harris, who moderated a panel on offshore wind and energy storage.
“For many people this feels very quick, and certainly how we got here was anything but quick as to the system that we have built together,” Harris said.
IPPNY President and CEO Gavin Donohue said siting was the main challenge for both storage and renewables.
“We have developed 12,800 new megawatts over the last 20 years; we have 6,500 MW of renewable capacity installed in the state; and we’ve closed over 10,500 MW of less efficient facilities,” Donohue said. “Coal has been eliminated in New York state. It’s safe to say that upstate New York is a carbon-free area based on our electricity mix.”
The grid was not designed with points of interconnection on the coast, and because transmission is a long-term planning process, industry and policymakers must keep working on the issue, said Fred Zalcman, executive director of the New York Offshore Wind Alliance.
“First and foremost, we see that in order to achieve the [Climate Leadership and Community Protection Act’s] expectation that we have 70% renewable energy by 2030, we really need to stay laser-focused on the buildup of infrastructure, be that transmission, be that resources,” NYISO Executive Vice President Emilie Nelson said. “This will be critically important. A lot of times the focus is on some of the intangibles, some of the unknowns.”
Nelson said that the PSC proceeding on integrating 3,000 MW of OSW into Long Island and increasing the transfer capability from Long Island to New York City will help ensure that the buildout can meet the needs of customers in load centers (18-E-0071).
New York has distinct advantages in managing resource adequacy in that NYISO has sole authority, while in California the responsibility is distributed over more entities, CAISO President and CEO Elliot Mainzer told RTO Insider.
Regarding public policy transmission needs, the ISO is between the viability and sufficiency assessment and evaluation, Nelson said.
“We’ve had 19 projects that have submitted proposals into this process and recently had to identify if they will move on, for the 16 projects that are still included, if they’ll continue into the evaluation phase,” she said. “From there we will be evaluating the projects across a set of metrics to identify the more cost-effective and efficient solution.”
The most efficient place to build OSW projects is closer to shore, and as the wind resource is very strong in the northeastern part of the U.S., farther south becomes less economic, especially as you get farther south from New Jersey, said Shane Ogren, vice president for investment banking at Macquarie Capital.
Despite a burgeoning OSW industry in the U.S., “I expect you to see cost declines that will continue to make the investment look better and better over the years,” Ogren said.
Significant global demand for OSW is making the supply chain “very strained,” said Beth Treseder, head of U.S. renewables development for Equinor. “When we talk about domestic investment supply chain, it’s not purely to generate jobs; it’s fundamentally because we need the supply chain to develop the industry effectively in this country.”
Study assumptions in Phase 2 of PJM’s energy transition study | PJM
