CenterPoint Energy (NYSE:CNP) executives celebrated their company’s status as a “pure play regulated utility” during their first-quarter earnings call Tuesday with financial analysts.
“We heard loud and clear that many of you wanted CenterPoint to exit the [gas] midstream industry,” CEO David Lesar said. “We did it in a way we believe was better and quicker than many of you ever expected.”
Late last year, CenterPoint and OGE Energy (NYSE:OGE) completed the $7.2 billion sale of their partnership in Enable Midstream Partners to Energy Transfer Partners (NYSE:ET). (See OGE, CenterPoint Complete Enable’s Disposal.)
CenterPoint sold all its common units within four months of the transaction at a 20% premium to Energy Transfer’s unit price when the deal was announced, Lesar said.
“Not a bad outcome for those shareholders who thought we would never get out of this investment, let alone receive approximately $1.3 billion of net after-tax proceeds from it,” he said. “We listen to our investors.”
The Houston-based utility in February also sold gas distribution businesses in Arkansas and Oklahoma for more than $1.6 billion. It has used $1.8 billion of the combined proceeds to reduce debt, with a goal of slicing parent-level debt to about 20% of the total by the end of the year.
Management expects full recovery of $1.1 billion in gas costs incurred during the 2021 winter storm through Texas securitization efforts. CenterPoint will also soon file in Indiana for the cost of retiring two coal plants. It expects a decision by the end of the year and, with approval, securitization bonds to be issued early next year.
The utility reported earnings of $518 million ($0.82/diluted share) for 2022’s first quarter, up from $334 million ($0.56/diluted share) for the same period a year ago. The non-GAAP earnings of 47 cents/share just missed the Zacks Consensus Estimate of 48 cents.
The company’s share price closed at $30.54 on Tuesday, a gain of 33 cents.
For a moment last Saturday, CAISO was able to serve nearly 100% of its native load with renewable energy, beating a record set just a month earlier.
The peak occurred at 2:50 p.m. on April 30, when the California grid operator served 99.87% of its momentary demand with renewables, breaking the previous record of 97.6% set on April 3, the ISO confirmed Tuesday after reviewing generation data. (See CAISO Sets 98% Renewables Record.)
In a tweet Tuesday, CAISO called the event “a significant milestone along the path to a carbon-free power grid.”
Preliminary data from the ISO indicated that output from renewables reached 18,629 MW during the peak, nearly matching demand. At the same time, gas-fired plants were generating 2,434 MW, nuclear 2,239 MW and large hydro 590 MW. Exports from the CAISO system hit about 4,400 MW during the interval.
The exports did not match total generation from those resources because a portion of the ISO’s natural gas generation consists of reliability-must-run units operating behind transmission constraints and combined heat and power units that cannot be curtailed.
Spring is typically a period of low demand in California, accompanied by relatively high output from solar, wind and hydro, often leading to energy surpluses.
CAISO’s installed renewable energy mix consists of about 57% solar, 30% wind, and smaller amounts of geothermal energy, small-hydro resources and biofuels. While emissions-free and technically renewable, large hydro resources are not included in the mix.
About 32% of California’s energy mix came from renewable power in 2020, the most recent year for which figures are available, according to the state Energy Commission.
ATLANTIC CITY, N.J. — New Jersey is staking its claims in the offshore wind supply chain, with a monopile factory preparing to start production and the announcement of the first tenant at its offshore Wind Port — both involving large European companies that have been in the industry for decades.
But building a thriving offshore wind industry in the U.S. will require many home-grown members of the supply chain, speakers told the International Offshore Wind Partnering Forum last week.
“If the offshore wind industry is going to survive and thrive, it needs a robust and sustainable and diverse supply chain in the U.S.,” said Amanda Schoen, U.S. policy specialist for Vestas, a Danish turbine manufacturer that has manufacturing facilities in Colorado. “This is where the market is, and there’s a desire to be where the market is. But you do need to grow the industry.”
That needs to happen soon, said Ross Gould, vice president of supply chain development for the Business Network for Offshore Wind, which organized the conference. He told a panel that the U.S. is not ready to meet President Biden’s goal of 30 GW of offshore wind by 2030.
“The U.S. doesn’t have sufficient manufacturing infrastructure,” he said. “Meeting the national offshore wind target would require over 2,000 turbines.” It also will require 11,000 kilometers of cable, five wind turbine installation vessels, 10 feeder barges, eight crew transfer vessels and four cable-laying vessels, Gould said, citing data from a report released in March by the National Renewable Energy Laboratory.
And the U.S. can’t rely on getting those elements from other, more mature offshore wind markets, he said, because the “global supply chain will be occupied on … other markets and does not have the capacity to supply all the projects that are needed to meet the 30-GW target.”
Building an Industry from Ground Up
New Jersey officials say they are on their way to developing a supply chain that can serve the state and others on the East Coast, and they say that their experience to date can provide a guide on how to develop it for the future.
Speaking on the final day of the conference, Gov. Phil Murphy announced that the New Jersey Economic Development Authority (NJEDA) had signed up the first tenant for the New Jersey Wind Port, which the state says is the first purpose-built wind facility on the East Coast. Ørsted Offshore North America signed a letter of intent to marshal its Ocean Wind 1 project, including staging, assembling and transporting components, at the port.
“There are many more opportunities to come, including ongoing negotiations between offshore developers and major component manufacturers to bring them to New Jersey,” Murphy told the conference. “This is, if you will, New Jersey’s ‘If you build it, they will come’ moment.”
Murphy wants offshore wind to provide 23% of the state’s energy by 2050, and to that end the state plans to award offshore projects totaling 7,500 MW. The New Jersey Board of Public Utilities (BPU) approved the 1,100-MW Ocean Wind 1 project, owned by Ørsted and PSEG, in 2019, and Ørsted’s 1,148-MW Ocean Wind 2 and the 1,510-MW Atlantic Shores project, a joint venture between EDF Renewables North America and Shell New Energies U.S., last June. (See NJ Awards Two Offshore Wind Projects.)
The BPU expects to award projects in three further solicitations, the first of which will be held early next year.
New Jersey officials envision the Wind Port project as a manufacturing and supply chain hub that will serve not only the state’s wind projects but others along the East Coast, noting it is within one day’s ship travel to half of the U.S.’s OSW lease areas. The state has already committed $500 million to the port, which is sited on the Delaware River in Lower Alloways Creek. (See NJ Ramps up Wind Sector Support.)
Expected to open in 2024, the Wind Port will include heavy-lift wharfs and component laydown areas. Subsequent phases are targeted to come online between 2024 and 2026. The project is expected to create up to 1,500 jobs and add $500 million annually to the state’s economy, Murphy said. The EDA says it has seen high demand for space in the port, noting it received 16 non-binding offers in October from companies looking to become tenants. (See NJ Wind Port Draws Offshore Heavy Hitters.)
The Wind Port announcement came as EEW American Offshore Structures said it is close to starting operations at its monopile factory at Paulsboro Marine Terminal, also on the Delaware River, into which the state invested $250 million.
CEO Lee Laurendeau told a conference panel that EEW expected to receive an imported monopile last weekend on which to conduct welding tests.
After that, “our plan is to start working on the Ocean Wind 1 monopiles in November of this year,” Laurendeau said of the factory, which is expected to make 100 monopiles a year.
Case Study
New Jersey’s success to date provided the conference a case study on how the wind sector can overcome the challenges to building a sustainable industry.
New Jersey officials said they had a clear vision early on.
“Right from the start, in 2018, 2019, we really dove in headfirst into offshore wind, conducting a number of feasibility analysis studies, listening sessions with developers and industry visits abroad to really understand how do we bring this industry to New Jersey,” said Julia Kortrey, a senior project officer at the EDA.
“Our theory of the case has really been getting these big first movers, [like] EEW’s monopile fabrication facilities — something that feels tangible and helps really anchor the ecosystem,” to come to New Jersey, said Kortrey. And the state believes that the Wind Port will be attractive to suppliers seeking to locate near the larger companies.
State officials are now looking at “who are those sub-suppliers? Who are the next tier to further create that ecosystem?” she said.
Laurendeau said EEW looked at multiple states — and at whether a U.S.-based manufacturing operation was feasible — before deciding to build a factory in New Jersey. A key event was a visit in 2018 by Murphy to EEW’s office in Berlin to pitch to the company the idea of building a factory at Paulsboro.
“From a Tier 1 [large] supplier standpoint, the very biggest question you have to answer is, can we build a product cheaper than one coming from Europe,” he said, noting that it costs $1 million to transport a monopile from Europe to the U.S. “That’s, the first business case item that you have to address. And, in Europe, the ports are subsidized. They’re already up and running, they’ve already capitalized their factories, they’re efficient.” That presents an operational challenge and a learning curve to newly created U.S.-based suppliers who are trying to compete, he said.
New Jersey’s investment of $250 million in the project also was key to it moving forward, Laurendeau said. The decision also was made easier when Ørsted committed to building monopiles at the Paulsboro factory if it was built, he said. EEW has since gained orders from the other offshore wind projects, among them a commitment by Atlantic Shores to make 89 monopiles at the EEW factory out of the 111 monopiles needed for the project. (See New Jersey Shoots for Key East Coast Wind Role.)
With those major hurdles overcome, the company is now “in the process of developing our sub-tier supply chain” that EEW expects will support growth well beyond New Jersey, Laurendeau said.
“The local content gives us that jumpstart,” he said. “Our New Jersey projects get us up to being a fully operational, efficient factory. But our eyes are certainly beyond that. We [have had] every project developer in the last two days up in our conference room, so there’s a lot of interest in our factory. We’ve put in proposals for almost every one of the U.S. projects that are there. So, we’re going to service the entire U.S. market from New Jersey.”
Catching Europe
That kind of calculation is going on in companies across the board as they look to the future and try to work out what is the best way to get a piece of the growing U.S. market, said Schoen, whose company, Vestas, has agreed to build a nacelle manufacturing facility at the Wind Port.
“There’s a lot of interest right now, in growing a domestic supply chain. There’s also a lot of challenges,” she said.
“We are competing with an established marketplace in Europe. And that’s the big challenge. So, if you’re looking at like how we can support this? Well, we need to play catch up. We’re a decade, two decades behind the European marketplace right now. And so, if we want big factories and a huge supply chain, it requires investment.”
FERC on Monday denied PJM’s rehearing request of the commission’s rejection of the RTO’s plan to modify its financial transmission rights credit requirement calculation, but it said it would address the RTO’s arguments in a future order (ER22-703-002, EL22-32-001).
PJM proposed to modify the FTR credit requirement by implementing an initial margin calculation from a historical simulation (HSIM) model using a 97% confidence interval. The commission first rejected the proposal Feb. 28, saying the RTO failed to support the plan because its independent auditors only validated the model at a 99% confidence interval. (See FERC Rejects PJM’s FTR Credit Requirement Proposal.)
FERC directed PJM to show within 60 days why its existing FTR credit requirement remains just and reasonable or explain what tariff changes will remedy the commission’s concerns.
PJM appealed FERC’s decision on March 31 by requesting a rehearing after stakeholders voted to endorse a motion for the RTO to refile the original proposal “accompanied by some new supporting rationale.” (See Stakeholders Encourage PJM to Defend FTR Filing.)
On April 22, the RTO asked for another 60 days to respond to the order to show cause to “allow PJM to complete further analyses, and conduct further engagement with PJM stakeholders, that will help PJM better determine the need for, and prepare and support any just and reasonable revisions to, PJM’s financial transmission rights credit requirement and fully address the concerns identified” by FERC.
The commission on Thursday gave PJM only another 30 days, setting a new deadline of May 31. In its one-page notice on Monday, the commission said the request for rehearing “will be addressed in a future order.”
Connecticut Gov. Ned Lamont on Friday applauded state legislators for passing a bill with a broad set of measures for reducing emissions from vehicles, including adopting California’s medium- and heavy-duty vehicle (MHDV) emissions standards.
The California regulations and other initiatives in the bill are an “important step” and will help “get the state headed back in the right direction” on greenhouse gas emissions reductions, Lamont said in a statement, adding that he looks forward to signing the bill.
The bill (SB 4) passed the House of Representatives 95-52 on Friday following Senate approval earlier in the week.
As enacted, the bill authorizes the Department of Energy and Environmental Protection (DEEP) to adopt regulations in line with the California MHDV standards, but it does not require or set a time frame for adoption.
MHDVs are responsible for 25% of GHG emissions in the transportation sector, which is the largest source of emissions in the state at 37%, according to DEEP.
Buses
SB 4 would update transit bus mandates and create new electric school bus mandates.
The Connecticut Department of Transportation would no longer be allowed to purchase diesel-fueled transit buses after 2024. ConnDOT’s electric bus initiative already has a goal of converting 60% of the state’s 600-bus transit fleet five years ahead of an existing full-conversion mandate for 2035, and all buses would be electric by 2031.
In addition, all school buses in the state would have to be zero-emission vehicles (ZEV) by 2040, and an interim target would require all school buses serving environmental justice communities to be ZEVs by 2030. A separate interim mandate for 2035 would require all school buses to be either ZEVs or alternative fuel vehicles, which include buses powered all or in-part by liquefied or compressed natural gas, hydrogen, propane or biofuels.
As of the beginning of this year, Connecticut had two electric school buses in operation, according to data released by the World Resources Institute. DEEP, however, awarded Volkswagen settlement funds in December for the purchase of 43 electric school buses that serve seven environmental justice communities.
The bill would also direct DEEP to establish a program to provide matching funds for towns and bus operators to apply for competitive federal grants. Under the Infrastructure Investment and Jobs Act, $5 billion is available for clean school bus grants.
Additional Measures
SB 4 would set additional measures for equitable EV charger installations and clean vehicle purchase incentives.
By 2024, all rental property owners would have to approve qualified requests from renters for installation of chargers. The bill establishes guidelines for those installations, including use by multiple renters and liability insurance policies. Starting next year, the bill would require the installation of EV chargers at any newly constructed state buildings, commercial buildings and multi-unit dwellings.
In addition, DEEP would have to establish a Connecticut Hydrogen and Electric Automobile Purchase Rebate program. Up to $3 million annually would be available for the purchase of EVs, plug-in hybrids and fuel-cell electric vehicles. And the bill would update the existing EV rebate program by increasing rebate amounts and increasing the cap on the cost of vehicles that can qualify for rebates.
Clean Power Bills
Lamont has signaled that he will sign a bill (SB 10) he introduced in February that would establish a zero-carbon electric grid mandate for 2040. The House of Representatives passed the bill 113-35 on Thursday following unanimous approval by the Senate earlier in the week.
“By codifying our zero-carbon electric grid target into state law, we are providing a critical direction for state and local agencies, utility companies and other partners as we collectively plan and implement Connecticut’s energy policies over the coming years,” Lamont said.
Legislators also sent a bill (SB 176) to the governor last week that would double the caps for the state’s non-residential and subscription-based renewable energy system programs.
“I’m excited by the prospects of these programs, especially the increased solar installation capacity for non-residential installation and the benefits these changes will provide for low-income customers,” Sen. Norm Needleman, chair of the Senate Energy and Technology Committee, said in a statement.
SB 176 would also increase the total capacity for a non-residential solar array by removing restrictions on the amount of rooftop space that a project can use.
The Department of Energy on Monday announced new funding totaling $3.16 billion aimed at jumpstarting the buildout of a U.S. supply chain for lithium-ion batteries for electric vehicles and grid-scale storage.
DOE is dedicating the lion’s share — $3.1 billion — to support the development of new commercial-scale plants for battery material processing, with a particular focus on cathode materials such as lithium and graphite. Grants for retrofitting existing plants or for demonstration projects are also part of the package. Individual grants will range from $50 million to $100 million, according to the funding opportunity announcement.
An additional $60 million will go to fund recycling projects and “second-life” applications for EV batteries. Grants for recycling buildout will range from $6 million to $12 million, and for second-life demonstrations, from $4 million to $6 million.
The funding is the first installment of $7 billion in the Infrastructure Investment and Jobs Act (IIJA) dedicated to the battery supply chain. At present, U.S. battery manufacturers are largely dependent on China, which dominates global lithium and other key mineral processing and battery cell manufacturing.
To further encourage a closed-loop U.S. supply chain, the announcement states that “priority consideration” will be given to projects that “will not use battery material supplied by or originating from a foreign entity of concern,” an official designation tracked by the Commerce Department. Chinese companies account for about a third of all organizations on the list.
“Positioning the United States front and center in meeting the growing demand for advanced batteries is how we boost our competitiveness and electrify our transportation system,” Energy Secretary Jennifer Granholm said in a statement released by the DOE. This “investment in battery production will give our domestic supply chain the jolt it needs to become more secure and less reliant on other nations.”
Administration officials also framed the new funding as a way to address current market volatility caused by Russia’s invasion of Ukraine, as reported in E&E News.
During a Monday press call with reporters, Brian Deese, director of the White House Economic Council, said, “We’ve seen even in just recent days [Russian President Vladimir] Putin trying to use Russia’s energy supply as a weapon against other nations. This funding announcement will punch above its weight in not only accelerating the transition to a clean transportation future, but also in securing one of the most important supply chains in the U.S. economy.”
The DOE has set an ambitious schedule for the application process and award selection for the grants, with first letters of intent to apply due May 27, applications due July 1 and awards to be announced in October. Applicants will be expected to match the grants dollar for dollar, for a 50-50 cost share.
The funding announcement includes a range of potential safeguards to ensure the companies receiving the grants can deliver on their projects. Applicants must have offtake agreements or letters of commitment from the companies that will buy the processed minerals or components they produce. They must also supply information on the project’s potential output and purity of materials produced.
A domestic supply chain for raw materials is also encouraged, for example, sourcing minerals from recycled batteries, coal or hard rock mine tailings or refuse materials.
“Responsible and sustainable domestic sourcing of the critical materials used to make lithium-ion batteries — such as lithium, cobalt, nickel and graphite — will help avoid or mitigate supply chain disruptions and accelerate battery production in America to meet this demand and support the adoption of electric vehicles,” the DOE release said.
The Future of Mobility
A former governor of Michigan, Granholm returned to her home state on Monday, accompanied by local lawmakers, to promote the energy programs, such as the battery supply chain grants, made possible by the $1.2 trillion IIJA. Many of Michigan’s top automakers, such as General Motors and Ford, are in the process of converting their fleets to electric, with major market growth anticipated in the coming decade.
According to figures from the DOE, more than 2.5 million plug-in EVs have been sold in the U.S., including 800,000 since President Joe Biden took office.
“The future of mobility is electric — and [the new grants] could help to ensure Michigan remains on the forefront of innovation by shoring up our supply chains for advanced battery technologies necessary to deploy the next all-electric fleet,” said Sen. Gary Peters (D-Mich.).
According to the EPA, transportation accounts for 29% of U.S. greenhouse gas emissions, more than the electric power sector. Biden has set ambitious targets for EV adoption — 50% of all U.S. auto sales by 2030 — and the IIJA also contains $7.5 billion to help states install 500,000 EV chargers nationwide.
The funding announcement is the latest in a series of White House actions intended to lessen U.S. dependence on foreign sources for the critical minerals essential for battery storage and other clean technologies. On March 31, Biden invoked the Defense Production Act to accelerate “sustainable and responsible domestic mining … and value-added processing of strategic and critical materials for the production of large-capacity batteries for the automotive, e-mobility and stationary storage sectors.”
CLEVELAND, Ohio — ReliabilityFirst may expand the periodic preparedness exercises it conducts to include state and local authorities that would deal with the consequences of a grid catastrophe.
In remarks at RF’s quarterly meeting Thursday, CEO Tim Gallagher said he is considering developing a statewide group to focus on scenarios to deal with the “real vulnerabilities” if the grid were to fail, whether from a cyberattack, severe weather or other grid-threatening events.
As part of its mission, the agency conducts multiple “tabletop” grid catastrophe gaming exercises that include member companies as well as RF staff. Gallagher told the RF board of directors that he is considering involving state governments in future exercises because he sees a “potential lack of coordination.”
To test the hypothesis, Gallagher said he hopes to create an Ohio group that would “pull in communications providers, local governments and law enforcement.” Once developed, the scenario gaming process would be versatile enough to use in other states and by RF’s five counterpart regional entities across the nation, he said.
Representatives of both American Electric Power (NYSE: AEP) and FirstEnergy (NYSE: FE) at the meeting endorsed the idea.
In his opening remarks, George Hawkins, a NERC board member said it appeared that the pace of potential threats and responses to those threats seems to have accelerated since his arrival on the NERC board in 2015. Hawkins is a former regional EPA administrator and former CEO of the D.C. Water and Sewer Authority.
Hawkins pointed to three areas of increasing risk: 1) “internal changes” to the grid with a changing resource mix and generation retirements; 2) growth of “extreme” weather; and 3) cyberattack risks, particularly in light of the conflict between Russia and Ukraine.
Gallagher said he and Niki Schaefer, chief legal officer at RF, had been interviewing “selected trustees as part of our information gathering for updating the RF strategic plan.”
He said in recent years, RF has begun seeing a “drift” away from full compliance with NERC standards in some “facility operations.”
“That is a real risk. It’s a risk to safety; it’s a risk to reliable operations and planning; and it’s a risk to the proper administration of markets. Our entire footprint is market-dominated, so the [facility] ratings are extremely important in our footprint,” Gallagher said.
That drift has been reversed, he added. “We are nearing completion of our audits and the corrections with the collaboration of our industry partners across our footprint. And that’s a major risk taken off the table.”
“I can’t say too much about the impacts of the war that Russia started in Ukraine in an open session,” he added. “But I do want to share that the coordination and the sharing of information has been impressive.”
“We all continue to monitor progress and share [information],” he said, in reference to potential cyberattacks.
He revealed that RF auditors “were able to uncover multiple instances of a turnkey vendor system that left an open door into critical assets. That’s about as much as I can say. That door is now being closed, and I think that shows the power of the audits.”
“I know that no one likes to be audited; we were just audited by NERC,” he added, suggesting that outside audits should be looked at as “third-party risk analysis.”
“To my knowledge, there have not been any actual compromises,” he said. “But that does not mean that we should be comfortable. The future is unknown.
“Diligence is more required now and in the future than ever [before], and it’s not going to end. It’s not going to end when the actual physical conflict ends, which will hopefully be very soon but who knows, because I don’t know when the economic sanctions and all the other things will end,” he said about repercussions from the war.
“And there are a lot of things that are going on to retaliate in response to those [sanctions]. This is a marathon — I think we all know that now — not a sprint, and we need to be mindful,” he said of potential Russian cyber threats.
Annual Report
The RF 2021 annual report accompanying the agenda for the quarterly meeting noted an increase in noncompliance of NERC standards for Critical Infrastructure Protection (CIP) violations — including a jump in higher risk violations. NERC revised the CIP standards in 2016 in response to growing cyber threats.
The good news in the report was that most of the CIP violations in 2021 were self-reported rather than found in an RF audit.
“The percentage of noncompliance identified through self-reports and self-logs in 2021 was slightly higher than previous years, with entities self-reporting and self-logging 95% of noncompliance. This is a positive trend showing strong detective controls at entities and also relates to the increased numbers of self-logs (which are presumed to be minimal risk),” the report stated. “In other words, while the volume of violation intake remains high, the overwhelming majority are self-identified and many are presumed to be minimal risk.”
Marcus Noel, RF chief security officer, told the board that following the discovery in December of a vulnerability in open-source software Log4j affecting millions of applications and potentially allowing hackers to take control of a system, the RF team installed a patch and put firewall rules in place, including automatic detection rules.
He said the team also reviewed third-party software providers and cloud providers as well. More recently, in response to potential Russian threats, he said his group blocked some companies, especially those RF does not do business with.
With six months to go until the Massachusetts gubernatorial election, Attorney General Maura Healey is making climate and energy a central plank of her campaign in the race to replace Gov. Charlie Baker.
The first policy proposal put out by Healey is a wide-ranging climate plan, which calls for overhauling everything from New England’s grid to how Massachusetts residents move around to how buildings are regulated.
“I have to say that the challenges we face as a society are so daunting,” Healey said Wednesday at a forum hosted by Boston National Public Radio station WBUR and the Environmental League of Massachusetts. “It can be overwhelming, I know that, but I would not be in this, pursuing this, if I did not have optimism.”
The Grid
Healey is aware of the influence and power that ISO-NE has in shaping climate and energy policy in the region.
Her office also acts as the state’s ratepayer advocate, and in that position, she has repeatedly pushed the grid operator to go green faster, in addition to trying to educate Massachusetts residents about how the organization works.
In her climate plan, Healey plans to “work closely with regional partners to ensure that ISO-NE markets for buying and selling power do not discriminate against clean power.”
She called for a consumer-focused, modern, renewable energy grid fueled by the markets, transmission planning and siting.
She also said that as governor, she would convene a “regional energy summit” to develop a strategy for addressing transmission, siting, market reform and cost allocation issues.
Big Promises
Healey’s plan would push the state to achieve 100% clean electricity supply by 2030.
She called for boosting nearly all renewable technology procurements to do that: more than doubling offshore wind to 10 GW, a total of 10 GW of solar deployed by 2030, and a quadrupling of energy storage.
“It is about big-time revving up renewables,” Healey said during the forum “We have a plan, but we’ve got to be a lot more aggressive about it.”
Her proposal also addresses transmission siting challenges, although it’s short on specifics for how she would battle through local opposition like that which has stymied the New England Clean Energy Connect project.
“There are large reserves of reliable hydropower from existing dams in Canada, which would complement solar and offshore wind energy, but thus far, Massachusetts has not succeeded in finding a way to bring these supplies to the Commonwealth,” the plan said.
Electrification
Healey said she would launch a major electrification effort, including where the AG’s office has created barriers for cities and towns in Massachusetts on building energy policies.
“Municipalities will have the option to adopt a specialized energy code that gives them the authority to ban gas use in new construction,” the plan said.
Baker’s administration, in its draft specialized net-zero code, did not call for allowing cities and towns to do so, which has frustrated environmental advocates and Democratic lawmakers in the state. (See Mass. Net-zero Building Code Proposal Faces Barrage of Criticism).
And Healey’s office has ruled that towns cannot do so currently, with the candidate saying she has had her hand forced by the law.
Her administration would also install 1 million heat pumps by 2030, focusing on workforce training, customer education and lower installation costs, she said.
The plan includes big goals for electrifying transportation, moving to green all modes of public transportation by 2040, getting a million EVs on the road by 2030 and ending the sale of gas-powered new passenger cars and light-duty trucks.
The Race
Recent polls show Healey has a significant lead over Sen. Sonia Chang-Diaz in the primary, and an almost equally dominant lead over two Republican candidates, Chris Doughty and Geoff Diehl, in a potential general election matchup.
Chang-Diaz has put out her own “Green New Deal for Massachusetts” which calls for 100% renewable energy in Massachusetts by 2030, eliminating all carbon emissions from new buildings by 2030 and transitioning existing buildings to be zero-carbon by 2045.
It also calls for blocking the development of new fossil fuel infrastructure projects and expanding, electrifying and making fare-free public transit systems across the state, including establishing East-West rail and regional transit networks.
At the forum Wednesday, Chang-Diaz called for an “enduring and unflinching sense of urgency” toward climate work and touted her own experience getting policy done in the Senate.
She also challenged Healey on what she said were $50,000 in donations from the fossil fuel industry and said she was pledging to reject donations from oil, gas and coal executives, along with lobbyists and PACs.
Healey declined to address the donations issue directly but said she’s “not on the holiday card list” for those companies, pointing to her work as AG fighting Exxon and pipeline companies.
The two also differed on how they would approach regional climate policy.
“We should not tie our fates and wait on the success or the willingness of the federal government or regional partners,” Chang-Diaz said. “Ultimately, we do have the tools we need to get the job done in Massachusetts.”
“In one form or another, we are going to need to put a tax on carbon,” she said.
Healey did not commit to creating a carbon tax and instead said she would aim to revisit programs like the Transportation Climate Initiative (TCI).
And they took different tacks on a lightning round question about the green job that would be “coolest to have.”
“How can you choose? I want to be in the woods. I’d love to be out on the infrastructure, in the water, and being part of the lines being built,” Healey said.
ATLANTIC CITY, N.J. — New York officials told the Business Network for Offshore Wind’s 2022 International Partnering Forum last week that they are considering doubling the state’s initial 9-GW offshore wind target.
“One thing we’ll be starting this year is the next Offshore Wind Master Plan, focusing on deep water,” said Doreen Harris, CEO of the New York State Energy Research and Development Authority (NYSERDA). “Because we know … time is not on our side with respect to climate change.”
Laila El-Ashmawy, a project manager with NYSERDA’s OSW team, noted that 9 GW represents a third of the state’s energy demand. “But we’re also considering that that might double” with electrification of transportation and building heating, she said. “And so when we really think about how much offshore wind [we need], we’re not really thinking about this nine-year cycle. We’re thinking about … an economy-wide decarbonization by 2050. So we expect this number to be … on the order of 15 to 20 GW of offshore wind. So, while we know 9 GW is challenging enough to plan for … the totality of those goals are what’s driving our transmission planning.”
Mesh-ready Requirement
The state’s 2021 power grid study concluded the current grid can handle 9 GW of OSW based on radial lines from each wind farm. “To do that, effectively, we need about 6 GW going into New York City, where most of our demand is. And that already starts to trigger a key limitation we have, which is that critical ocean right of way in ecologically sensitive areas: a lot of marine traffic; you have one of the biggest ports in the world, going through the Narrows [the tidal strait separating Staten Island and Brooklyn],” El-Ashmawy said. “So how we are going to get cables even for 6 GW into New York City is super, super challenging.”
The proposed solution: the mesh-ready concept. “Our projects will still be procured on that radial basis — one offshore wind project, one intertie, one point of interconnection — but we’d like to build them keeping in mind some common assumptions around what might be needed in the future; designing these offshore platforms with enough space to accommodate more equipment. We can’t go back and build it retroactively; [that] becomes much more expensive. So for incremental, upfront, modest costs, we can preserve a lot of optionality in the future,” she said.
NYSERDA’s draft offshore renewable energy credits (ORECs) request for proposals spelled out the technical requirements. “Each platform should be able to connect to two different wind farms. We’d like to be able to transfer around 350 MW of power. And that’s an AC offshore grid, contemplating 230-kV lines for those AC connections,” El-Ashmawy said. “These are not being built today; we’re just building with that in mind. This allows these projects to pivot to a future grid, where projects just in New York are interconnected and can reroute power between zones. But it also allows these to pivot and think about interregional interconnections, which might come in the future.”
El-Ashmawy said the next version of the RFP will provide more detail on the mesh-ready concept and clarification on “what is paid for now and what is paid for later.”
Pete Kohnstam, business development manager for Siemens Energy, said the mesh-ready approach could be risky because of the lack of standardization on what will be required in an offshore grid.
“The risks I see in doing the [mesh-ready] right out of the gate is if we have not got everything defined, is there sufficient space [in the platform]? Is there sufficient equipment in that to make it work?”
1st Offshore HVDC Project in the US
New York’s first OSW project, the 924-MW Sunrise Wind farm south of Long Island, will not be mesh-ready. But it will be the first implementation in the U.S. of an offshore HVDC grid connection.
Siemens and Aker Solutions were hired by developers Ørsted and Eversource Energy for the project, which will have an offshore converter station to collect the 66-kV AC power from the wind turbines and transform it to 320-kV DC for transmission through a 100-mile export cable. An onshore converter at Holbrook, Long Island, will convert the power back to AC to feed into the distribution grid.
Kohnstam explained the project during a workshop session that attracted dozens of attendees.
“DC obviously offers us lots of opportunities for going that long distance, getting more power into the network with fewer cable connections,” Kohnstam, said. “If you’ve been in several of the other panels and workshops, you’ll hear there’s an awful lot of concern about minimizing cable routes and minimizing access points. And DC is obviously perfect for that. So it’s happening. It’s real.”
Directors Approve RTO’s 4th Competitive Project Under Order 1000
DALLAS — SPP’s Board of Directors last week approved the RTO’s fourth competitive transmission project, awarding a $55 million, 345-kV facility in Oklahoma to NextEra Energy Transmission (NEET) Southwest (NYSE:NEE).
An industry expert panel (IEP) comprising five industry experts recommended the NextEra subsidiary be selected as the project’s designated transmission owner. The panel gave NEET Southwest’s bid the highest score among six other competitors, saying it presented the best evidence that it could produce a successful project that is constructed on time and within budget.
“There’s a clear winner here,” IEP Chair Steve Strickland, a 35-year veteran with Entergy Arkansas, told the board and Members Committee. “It’s significant to note that while [its bid] provided the highest cost savings, it also scored highest in engineering design and management. That indicated there is substance behind [the bid] in meeting cost commitments.”
The panel gave NEET Southwest’s bid a 1,000.38 score, 70 points higher than the next closest competitor. The other proposals’ scores ranged from 843 to 930.13. NEET Southwest’s bid received 225 points for rate analysis, representing the lowest cost to SPP customers in both construction and operating costs. The losing bids’ costs were between $74 million and $97 million. All seven proposals received the maximum 100 incentive points under SPP’s competitive transmission owner selection process, which is required by FERC Order 1000.
Strickland assured the board that “significant” supply chain issues and cost increases would not be an issue.
The IEP unanimously recommended Transource Oklahoma as the alternate designated TO after its bid received the second-highest point total.
The 48.4-mile connection between substations in Minco and Draper is an economic project designed to ease congestion around Oklahoma City. It has a July 2024 completion date, six months ahead of schedule.
“The early in-service date would allow lower-cost energy to flow across the project’s transmission lines, to the benefit of SPP’s customers, sooner than targeted by SPP,” the panel said in its report.
Matt Valle, NEET’s president, said the company was pleased to win the project’s construction. The project is the second time NEET Southwest has been awarded a competitive project, having won a bid last October for the 345-kV Wolf Creek-Blackberry project in Kansas and Missouri. (See SPP Board of Directors/Members Committee Briefs: Oct. 26, 2021.)
“This project award … furthers our goal of creating America’s leading competitive transmission company and is consistent with our strategy of adding high-quality regulated assets to our portfolio,” Valle said in a statement.
Oklahoma Gas & Electric opposed both motions approving NEET Southwest and Transource as the projects’ designated TOs. Seven members abstained from the NEET Southwest vote and six from the Transource vote.
Keith Collins, vice president of market monitoring at SPP, said rising natural gas prices and congestion from increased wind capacity is contributing to ongoing negative prices, curtailments and make-whole payments.
Sharing a draft of the Market Monitoring Unit’s State of the Market report, Collins said gas prices have doubled to $7/MMBtu and congestion was “materially higher” last year — at $1.2 billion — and had little to do with the February winter storm.
“Clearly, congestion is having an impact,” he said. “As renewables are more and more a part of the system, we should anticipate those effects to continue and start taking action. In the interim, we’ll continue to experience these challenges.”
According to the report, SPP’s installed wind capacity hit 30.5 GW last year, up from 27.3 GW in 2020 and 22.5 GW in 2019. Wind curtailments averaged 675 GWh in 2021, up from 130 GWh in 2019.
The increase in gas prices has made coal more competitive, Collins said. Coal accounted for 36% of SPP’s generation in 2021, just nudging out wind at 35%. “We see those trends continuing into 2022,” he said.
The MMU is recommending an emphasis on previous years’ recommendations by updating market and outage requirements to improve transmission congestion rights’ funding; improving market-to-market (M2M) efficiencies by collaborating with MISO; and addressing inefficiencies when forecasted resources under-schedule the day-ahead market.
The Monitor added one new recommendation, calling for SPP to expand or adjust the multiconfiguration combined cycle resource model to include additional multiconfiguration resource types. Collins said coal and other resources would be able to offer into the market more efficiently with the multiconfiguration logic’s additional applications.
Collins also drew attention to recent comments by David Patton, MISO’s Independent Market Monitor, that SPP is not properly recognizing M2M flowgate constraints with its seam neighbor in its day-ahead market. Patton told a MISO stakeholder group that the oversight must be costing SPP members several million dollars in balancing congestion. (See MISO and SPP Announce New Interregional Stakeholder Meetings.)
SPP responded that it does model MISO’s system and constraints in the day-ahead market and that it believes the market should best reflect expected real-time operating conditions and not necessarily create day-ahead congestion based on calculated firm flow entitlement values.
“The difference between SPP and MISO is how we reflect expected operating conditions in the day-ahead market,” SPP spokesperson Meghan Sever said in an email, saying the RTO has been transparent about its approach. “MISO automatically binds on constraints based on a calculated firm flow entitlement value and not real flows. SPP employs an injection/withdrawal projection based on similar operating days and expected actual operating conditions.”
Developers’ Self-funding Appeal Fails
The directors rejected an appeal by renewable developers of a revision request (RR465) that allows transmission facilities constructed to facilitate generator interconnections to be treated on a consistent cost basis with other infrastructure if the TO self-funds the work.
The measure easily passed over the developers’ objections last month during the Markets and Operations Policy Committee meeting. (See “Surplus Interconnection Service Change Remanded,” SPP Markets and Operations Policy Committee Briefs: April 11-12, 2022.) As is their right, they filed an appeal with the board that it further consider the self-funding mechanism and that it do so “more holistically” in the stakeholder process by including input from the Regional State Committee (RSC) and the MMU.
Writing for the seven developers April 22, EDP Renewables North America’s David Mindham said SPP TOs “severely mischaracterized” legal precedent by claiming “they are simply implementing a mechanism to which they already have a right.” He argued that FERC has never indicated that self-funding is allowed outside of MISO “and has been extremely clear” that the MISO example does not require its implementation in any other region.
He also noted that FERC’s decision to grant self-funding to MISO TOs is currently before the D.C. Circuit Court of Appeals and that the commission had not found a similar PJM proposal to be just and reasonable, though it did allow it to go into effect subject to refund after a paper hearing. (See MISO Gauging Aftershocks of TO Self-fund Order.) And on Friday, FERC rejected a MISO proposal to allow TO self-funding for merchant HVDC projects. (See related story,FERC Blocks MISO Self-fund Rule for Merchant HVDC Line Upgrades.)
“To use that as the basis that it should be used in SPP is not right,” Mindham told the board last week. “This construct increases the costs of network interconnection upgrades to the customers. It would behoove all of us to have that discussion broadly within the stakeholder process. We should have a discussion before suggesting a cost-recovery mechanism.”
Southwest Public Service’s Jarred Cooley countered that there had been significant discussion of the issue and that SPP’s tariff already includes language that allows self-funding, which he said can be potentially discriminatory.
“This revision request was identified to help produce a consistent and repeatable process for the staff and TOs, to put the rules around it so that then these opportunities to fund on the TO side are more clear and transparent,” Cooley said.
SPP Legal counsel Paul Suskie said staff would ensure the RSC is educated on RR465’s documents and provides feedback before filing its proposal at FERC.
The Advanced Power Alliance, Enel Green Power North America and Tenaska all sided in favor of the appeal during the Members Committee’s vote.
Counterflow Optimization not Dead Yet
The board and stakeholders agreed with board Chair Larry Altenbaumer’s suggestion to direct staff and stakeholders to work together in reaching some semblance of consensus and adding counterflow optimization (CFO) to the market.
It hasn’t been easy. The Holistic Integrated Tariff Team recommended three years ago that counterflow optimization, limited to excess auction revenue, be added to SPP’s market mechanism that hedges load against congestion charges. The process, which keeps system transmission flows between two points in balanced, was meant to address concerns about how congestion rights instruments are awarded and the current process’s efficiency.
The Market Working Group spent months trying to reach agreement on how best to add CFO, only to eventually turn it over to the Strategic Planning Committee. (See SPP SPC Takes on Congestion Hedging Issues.)
“There’s been no shortage of analysis. It’s simply a lack of consensus,” Altenbaumer said. “Lack of consensus doesn’t mean we have a lack of an issue. It’s reached a point where it doesn’t mean we should delay our concerns.”
Altenbaumer said he discussed a path forward with SPP’s leadership. Under his proposal, stakeholders, the MMU and state regulators will submit specific congestion-hedging recommendations with near- and long-term solutions. Staff will be responsible for setting parameters for the submissions, reviewing them and conducting a workshop to summarize the recommendations.
With staff freed from the stakeholder process, Altenbaumer envisions them working with regulators, the Strategic Planning Committee and the Cost Allocation Working Group (CAWG) to develop a final recommendation that could be brought to MOPC and the board in October.
NPPD Project to be Re-evaluated
The directors approved a re-evaluation of a 115-kV project interconnecting an industrial facility in Nebraska that has undergone a 24% escalation in costs.
Nebraska Public Power District (NPPD) pulled the item off the consent agenda so that it could move ahead with the project. Its costs went from $43.4 million to $53.8 million when a 345-kV substation was moved, resulting in $3.9 million for additional 345-kV ties. A 115-kV substation was expanded to accommodate three load-serving transformers, adding another $3.7 million in costs.
“We fully expect the answer will be the same,” NPPD CEO Tom Kent said, anticipating that SPP’s restudy to again result in a notification to construct. “I don’t see the value of going through the restudy process and getting the same result when the planning staff has other important work to do. We want the board to say, ‘No,’ so we can move forward.”
“A cursory look suggests it’s not likely to change,” said Antoine Lucas, SPP’s vice president of engineering. “All re-evaluations aren’t created equal, but the nature of this particular project will be simpler than some others. It’s not a very heavy lift.”
NPPD staff said the project’s load has changed several times, and the utility only recently firmed up its design with the industrial facility, which will produce hydrogen and carbon black. They said the Project Cost Working Group was notified as soon as NPPD had a handle on the cost increase.
With the board’s action, the restudy’s results will have to go before the Transmission Working Group and MOPC before being brought back to the board, possibly in July.
“We can probably live with the outcome. I don’t think it’s the right thing to use resources when we know outcome,” Kent said. “At the end of the day, we’ll be fine. We’ll move forward.”
RSC Adds 2 New Members
The RSC welcomed two new members during its first in-person meeting in more than two years: Minnesota Public Utilities Commissioner John Tuma and Nebraska Power Review Board Member Chuck Hutchison.
Tuma was eligible for membership because SPP member East River Electric Cooperative has distribution cooperatives with load in Minnesota. The RSC comprises state regulators and responsible for providing input of approval of rate-related issues and other matters of “regional importance.”
Hutchison replaces Dennis Grennan, who chaired the RSC in 2020.
In other actions during the April 25 meeting, the committee directed the CAWG to analyze RR465 for any potential effects on retail rates. It also endorsed staff’s recommendation to not add CFO to the current market construct and approved a pair of changes to its bylaws that remove a membership classification not used in 18 years and clarify that RSC membership is based on SPP’s RTO footprint.
SPP Releases Online Annual Report
SPP’s slick digital 2021 annual report finds the RTO at “another pivotal point” in its continuing growth and development with both challenges and opportunities, including the continuing COVID-19 pandemic, the historic February 2021 winter storm and establishing relationships with new stakeholders in the West.
In their joint letter to stakeholders, CEO Barbara Sugg and Chair Altenbaumer said the previous two years have “prepared us well for the next chapter in SPP’s history.”
“We’ve learned valuable lessons from managing reliability in historically unprecedented circumstances, collaborating closely while separated by physical distance and building consensus among an increasingly diverse group of stakeholders,” they wrote. “The adaptability we have shown in responding to the unexpected will remain an important part of our ongoing strategy.”
