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November 13, 2024

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ACP: $500B in Clean Energy Investments Announced in Two Years

The American Clean Power Association reports that U.S. clean energy investments announced over the past two years have reached a half-trillion dollars. 

That money would pay for at least 161 new manufacturing facilities, with the potential for more than 100,000 new manufacturing jobs and more than 300 GW of new emissions-free power generation. 

Most of the spending and much of the resulting infrastructure are in the future, but the commitments are significant enough for ACP to declare it a manufacturing renaissance in “Clean Energy Investing in America,” the report it issued Aug. 7. 

“These historic investments are providing a powerful engine for job creation across the nation,” ACP CEO Jason Grumet said in a news release. “As demand for electricity continues to rise, clean power is answering the call and propelling a new era for American manufacturing.” 

The two-year period in the report overlaps a historic infusion of federal funding intended to encourage exactly what the report quantifies: clean energy development and the creation of a domestic manufacturing base to supply it.  

The Inflation Reduction Act, signed into law by President Biden in August 2022, has provided billions to encourage the changes the ACP report highlights. 

A geographic look at clean-energy-related manufacturing facilities that were announced or came online after August 2022. | American Clean Power

In the latest example, a day after the report was released, the Department of Energy’s Loan Programs Office announced a $1.45 billion conditional loan guarantee for Qcells to set up what is expected to be the largest solar ingot and wafer factory ever built in the United States.  

The LPO said the Georgia facility would be the first vertically integrated U.S. solar factory in more than a decade and would re-establish critical parts of the domestic supply chain for photovoltaics. 

Grumet said that while headline numbers in the ACP report are remarkable, they are only part of the clean energy transition: “Our ability to deploy new capacity with adequate speed and scale requires dramatic efficiency improvements in federal, state and local decision making. ACP is encouraged by recent bipartisan progress to confront barriers to modernizing America’s energy economy.” 

The report’s statistics run through June 30, 2024. At that point, most of the benefits cited in the report were yet to come: 

    • $500 billion in investments had been announced, but only $75 billion had been made. 
    • Construction or expansion of at least 161 manufacturing facilities had been announced, but at least 119 of the projects were in development. 
    • Only 20,000 of the anticipated 100,000 new manufacturing jobs had been created. 
    • Only about 55 GW of the announced 300 GW of new clean energy generating capacity had become operational. 

Breaking down the numbers: 

    • Solar leads the way in new generation, with 33 GW of new capacity built, at a cost of $42 billion. Onshore wind (11.6 GW, $20 billion) and storage (10 GW, $12 billion) are a distant second and third. 
    • New generation projects totaling $363 billion account for the bulk of the announced $500 billion of investment, followed by manufacturing ($61 billion), supply agreements ($47 billion) and other sectors ($28 billion). 

ACP’s report intersperses the project lists and dollar counts with vignettes diving deeper into some of the new manufacturing created in the past two years: 

    • Form Energy built the first factory for its iron-air, 100-hour battery system in Weirton, W.Va., on the site of a demolished steel mill that was the economic and cultural heart of that community for generations. 
    • GE Vernova announced a $50 million expansion and 200 new jobs at its Schenectady, N.Y., facility, where it produces the largest land-based wind turbine in the United States. 
    • Illuminate USA announced, built and opened a massive plant in Pataskala, Ohio, to produce advanced solar panels. Its workforce already exceeds 800 “illuminators,” and the company expects to surpass 1,200 by the end of 2024. 
    • Vestas, which already invested more than $1 billion in Colorado factories that produce wind turbine blades and nacelles, announced a $40 million expansion of the two facilities and plans to hire upward of 1,000 people. 

Grumet said much more is possible — the nation can be a global leader in clean energy: “If we combine innovations in technology and governing, it is possible to achieve an energy system that is reliable, affordable, secure and clean.” 

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Governance is ‘Key Consideration’ for West, Markets+ Backers Say

Governance should be a “key consideration” for the West in the competition between day-ahead electricity markets because the outcome potentially affects $25 billion a year in energy transactions, according to an “issue alert” issued Aug. 7 by 10 entities that helped develop the SPP Markets+ tariff.

The “governance” alert, addressed to the Markets+ States Committee, is intended to be the first of seven such notices published in coming months by the “Markets+ Phase 1 Funding Parties.”

The contributing parties include Arizona Public Service, Chelan County Public Utility District (PUD), Grant County PUD, Powerex, Public Service Co. of Colorado, Salt River Project, Snohomish PUD, Tacoma Power, Tri-State Generation and Transmission Association, and Tucson Electric Power.

Those entities, along with the Bonneville Power Administration, which did not sign on to the alert, represent some of the strongest supporters of Markets+ in its competition for participants with CAISO’s Extended Day-Ahead Market (EDAM), designed to extend the capabilities of the Western Energy Imbalance Market (WEIM).

In April, BPA staff issued a “leaning” that cited CAISO’s state-run governance as one of the top reasons the agency should choose Markets+ over EDAM. (See BPA Staff Recommends Markets+ over EDAM.)

In their Aug. 7 alert, the Funding Parties noted the “considerable industry dialogue focused on the market seams that will exist between EDAM/EIM and Markets+, as well as the EDAM/EIM governance enhancements being pursued through” the West-Wide Governance Pathways Initiative, a multistate effort launched last year to create the framework for an independent organization to oversee those markets.

“While both topics are important, the Markets+ Phase 1 Funding Parties believe this dialogue is incomplete without also considering the numerous governance and market design differences between Markets+ and EDAM/EIM that are driving continued support for Markets+,” they said.

The parties derived their $25 billion annual impact estimate from the assumption that transitioning to a full day-ahead and real-time market likely will replace much of the region’s bilateral transactions still occurring “while also impacting forward transactions and the utilization of the Western transmission grid.”

“Sound governance is a foundational requirement for a day-ahead organized market to provide the benefits of increased efficiency and enhanced reliability while also ensuring equitable outcomes for all participants and all Western subregions,” they said.

That entails having a “durable, effective and independent governance structure” that fairly represents all market stakeholders, who would “initiate, develop and own outcomes,” they said.

According to the alert, the Markets+ governance framework “fully achieves” those requirements by having:

    • a “geographically diverse” board that is independent of market participants and has authority over “all aspects” of the market;
    • a “transparent and consensus-based market development process” that is led by stakeholders, who have voting rights to determine whether market design proposals advance;
    • a “fully independent and impartial market operator that does not also act as one of the participating balancing authorities with its own interests”; and
    • a stakeholder framework in which “all generators, load and BAAs are participating in the same manner with equivalent rules, rights and responsibilities.”

The alert additionally notes that the Markets+ governance framework already is up and running, having underpinned the decision-making in developing the market’s tariff, which last week received a deficiency notice from FERC. (See FERC Finds SPP Markets+ Tariff ‘Deficient’ in Several Areas.)

‘Uncertain Outcome’

In contrast, the parties said, the Pathways Initiative “remains in development, with an evolving scope and an uncertain outcome. Changes to the CAISO governance structure require action at the California legislature.” (See No Clear Blueprint for Western ‘RO’ Stakeholder Process and California Labor Groups Affirm Support for Pathways Proposal.)

They expressed additional skepticism that Pathways would create a governance framework “comparable to” Markets+, saying the initiative’s starting point is an EDAM/WEIM tariff designed under CAISO’s existing governance model, and that Pathways has not proposed to replace it with a “stakeholder-driven design.”

The parties also contended that Pathways has not addressed the fact that “EDAM and EIM were built as extensions of a legacy institutional framework with embedded dependencies on, and obligations to, California state agencies” and has not ensured that CAISO, as the operator of the markets, “will balance the interests of all stakeholders and avoid undue influence from California interests.”

They also argued the stakeholder-driven Markets+ process has produced a market design “substantially different” from EDAM in “several key respects,” which will be the subject of future alerts. Design differences can influence the level of participation in a market, “while also encouraging or discouraging generation and transmission investments,” they said.

“For example, a market that inaccurately suppresses peak prices will discourage flexible generation and storage solutions. Similarly, a market that misallocates congestion costs will generally lead to less economically efficient transmission investments,” the parties said, touching on two issues particularly important to entities in the Northwest, the latter sparking especially sharp controversy after a January 2024 cold snap left the region severely short of energy. (See NW Cold Snap Dispute Reflects Divisions over Western Markets.)

The parties concluded by touting the benefit of competition — in this case between markets.

“Experience in the East demonstrates that the ongoing existence of two or more competing organized markets provides the opportunity for participants to continuously evaluate which organized market provides the best value for its customers. This places ongoing competitive pressure on each organized market to continuously evolve to deliver value to all of its participants and all of its subregions, driving immeasurable value for consumers while also reducing risk.”

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Data Centers Bringing ‘Massive’ Loads to Western Grid

Five years ago, load growth from transportation electrification was a major issue for policy makers, according to speakers at a WECC webinar. Now the focus has shifted to data centers. 

“Over the last year or so, the data center growth has become one of the major challenges for this industry,” said Branden Sudduth, WECC’s vice president of reliability planning and performance analysis, who noted the centers can consume as much as 3 GW of energy. 

“That’s just massive loads that we’re not accustomed to seeing come onto the grid,” Sudduth said. 

The discussion came during a WECC webinar Aug. 7 on emerging risks to reliability in the West. 

In its 2023 Western Assessment of Resource Adequacy, WECC projected the region’s demand would increase 16.8% over the next decade, nearly double the 9.6% growth predicted in its 2022 assessment. The 2023 assessment said the biggest driver of the increased demand is the expansion of data centers, especially in the Northwest. 

Data center growth also is expected in other parts of the Western Interconnection. In its integrated resource plan filed in May, NV Energy said more than 3,000 acres of industrial land had been purchased in Northern Nevada last year for data center development. 

In addition to needing large amounts of energy to process data, data centers require significant cooling, which further increases load. 

New Generation Lagging

During the WECC webinar, Sudduth said the data centers can come online as quickly as 18 months, or even sooner if infrastructure is in place. 

“What we know for sure is that generation doesn’t get built that quickly,” said Kris Raper, WECC’s vice president of strategic engagement and external affairs. 

Although an increasing amount of generation is being planned each year, much of that is not materializing, Sudduth said. 

For example, he said, 14 GW of new energy resources were expected to come online in the Western Interconnection in the first half of 2023. But by the end of 2023, only 55% of those resources had been added. 

Projections of new resources for the following two years were even greater: 17 GW in 2024 and 28 GW in 2025, said Sudduth, who noted the figures were near-term forecasts for resources close to or in the construction phase. 

“We’re getting more and more aggressive with the amount of generation that we’re expecting to bring online,” Sudduth said. “But up to this point, we don’t seem to be able to keep up with that aggressive growth.” 

Sudduth attributed the delays to supply chain issues, which are making it difficult to get equipment such as transformers. And increasing costs are “forcing people to rethink when and if they’re going to build certain resources,” he said. 

One way the generation gap is being filled is through resource retirement delays, Sudduth added. 

EV Concerns

Raper, who noted that data centers had taken over from transportation electrification as a hot topic among policymakers, said both sources of load growth remained on WECC’s radar screen. 

“We’re trying to watch all of it,” Raper said. “Because all of the things are going to have an impact on reliability to the grid.” 

Sudduth said one aspect of EV adoption that makes him nervous is long-haul trucking.  

“[Truck drivers] are not going to want to sit around all day and charge their vehicle, and so it’s going to require massive amounts of power to get those long-haul trucks charged quickly,” he said. “What does that do to load forecasts?” 

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SPP’s Sugg Announces Retirement from RTO

SPP CEO Barbara Sugg announced Aug. 8 that she will retire from the RTO on April 1, 2025, after 35 years of service.

Sugg was appointed to the RTO’s top position in 2020, replacing longtime CEO Nick Brown. Under her guidance, SPP has earned designations as one of the best places to work in Arkansas the past three years; expanded its service offerings and territory into the Western Interconnection with RTO West, Markets+ and other services; and garnered consistently high stakeholder satisfaction ratings.

During her tenure, the RTO has navigated historic challenges that included the COVID-19 pandemic and resulting changes to workplace norms; increasing extreme weather that has affected regional electric reliability; and the ongoing growth in demand for electricity and challenges to resource adequacy.

Sugg said in an email to RTO Insider that she has “bittersweet, mixed emotions” about her planned retirement during an “exciting and rewarding time to be part of the electric utility industry.”

“I have no doubt that SPP’s future is as bright as ever,” she said.

Golden Spread Electric Cooperative’s Mike Wise, one of SPP’s more senior and involved members, noted Sugg’s career has virtually matched his. He commended her for bringing out the best in people and encouraging them to grow.

“Barbara’s leadership and vision guided the SPP through some very difficult times,” Wise told RTO Insider, alluding to the COVID-19 pandemic that hit just after she was named CEO. “She had to create a new corporate culture around remote work and still maintain effective RTO operations. Then she was forced to navigate the highly destructive Winter Storm Uri as an RTO which faced circumstances never seen before in the region.

“She exhibited amazing strength of character and never wavered from her strong belief in the exceptionalism of her employees and the committed stakeholders in the SPP. A big three cheers for a good friend and great leader.”

Joe Lang, Omaha Public Power District’s director of generation strategy and origination and vice chair of the stakeholder-led Markets and Operations Policy Committee, wished the best for Sugg and congratulated her on a “fulfilling” career.

“Barbara has been a strong leader as SPP’s CEO through significant challenges in the electric power industry,” he said. “Barbara will be remembered for her leadership that guided SPP through the pandemic, generation interconnection backlog efforts, navigating resource adequacy constraints during extreme weather events, as well as successes expanding into the West.”

“Barbara’s dedication, passion and support of SPP’s mission and people have been evident throughout her tenure,” John Cupparo, chair of the Board of Directors, said in a news release. “Her impact as a CEO will be felt for years to come, and the board joins SPP’s stakeholders in thanking her for the high standard of leadership she’s set.”

The board plans to name a new CEO before Sugg’s departure, and it has engaged search firm Heidrick & Struggles to assess internal and external candidates as her potential replacement.

“I’m not done until I’m done. I still have much work to do,” she said, crediting SPP’s “dedicated” staff and “diverse” stakeholders. “For now, I remain energized, committed and focused on ensuring SPP’s success and partnering closely with my replacement to ensure she or he is prepared to take the reins.”

Sugg joined SPP in 1997 after eight years with Louisiana Energy and Power Authority. Because LEPA, which comprises 20 municipal power systems, was an SPP member at the time and new hires from members were able to bridge their service years, Sugg is credited with 35 years with the grid operator.

Her career has spanned every level of the RTO’s leadership, including roles as senior vice president of information technology and chief security officer.

Michael Deselle, SPP’s chief compliance and administrative officer, also has announced his retirement, effective at year-end. He joined the RTO in 2006 after 14 years at Central and South West and American Electric Power.

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Maryland Energy Administration, PSC Staff Clash on Future of Gas

Instead of continuing to build pipeline systems and replace aging pipes with expensive new ones that raise rates for customers, Maryland’s gas utilities should first look at non-pipes alternatives (NPAs) such as identifying and sealing leaky pipe joints, said Joyce Lombardi, energy policy manager at the Maryland Energy Administration.

“There’s a robot that can do this,” Lombardi told the Maryland Public Service Commission on July 31, during the continuation of its July 25 public hearing on the future of natural gas in the state. “It just zips underground. It goes into a working pipe, seals the joints; no one up top knows about it. [It] lasts for 50 years. It is one-third of the cost of traditional pipe replacement [and is] being used in New York and Rhode Island.”

The PSC heard two presentations with strongly opposing views at the July 31 hearing: one from the MEA and one from the commission’s own staff attorneys.

Lombardi focused on practical actions, which she said the PSC has the legal authority to take in the short term, such as requiring gas utilities to consider NPAs, while staff laid out complex and at times seemingly contradictory arguments on the fine points of existing legislation and whether any action on the future of gas is currently needed.

“The General Assembly should be given the opportunity to ratify or modify the commission’s decisions after the commission has had the opportunity to create a thorough review of the factual record,” said Staff Counsel Lloyd Spivak.

The hearings were triggered by a petition from the Office of People’s Counsel, filed in February 2023, asking the PSC to open a docket on the future of natural gas, and natural gas infrastructure and utilities, in the state. At the July 25 hearing, People’s Counsel David Lapp argued that Maryland’s ambitious climate targets and push for electrification of heating and cooling would decrease gas demand and the need for ongoing pipeline buildout and replacements. (See Maryland PSC Opens Debate on Future of Gas.)

Under the Climate Solutions Now Act (CSNA) of 2022, Maryland is committed to cutting its greenhouse gas emissions 60% by 2031, and Gov. Wes Moore (D) has pledged the state will have a 100% clean electric system by 2035.

The result, Lapp said on July 25, is that “there’s a massive disconnect between the technology, climate policy and what’s actually going on with the state’s gas utilities,” which have been spending hundreds of millions of dollars per year on pipeline replacement projects while increasing customer bills — in some cases, threefold.

Lapp stressed at the earlier hearing that OPC’s goal was not shutting down the state’s natural gas utilities, but rather to have the commission consider a “wide spectrum” of pathways for these companies to plan for substantially downsized demand and capital spending.

A panel of four PSC staff attorneys initially seemed to support the OPC petition, saying that a proceeding on the future of natural gas would be “necessary in order to achieve the goals laid out in the CSNA,” according to Harrison Scherr, who led off the presentation.

But Scherr and the other attorneys then qualified that support with a series of legal and technical considerations, finally recommending the commission take no immediate action beyond possibly launching a work group or several feasibility studies.

The PSC has “broad authority to regulate the gas utilities … [but] changes in commission policy should proceed with a rule making,” Scherr said. “It should be a very thorough path that we move forward. [Any] actions and policy decisions regarding the transition away from gas should be consistent with guidance from the General Assembly.”

Similarly, Scherr first said that the CSNA tasks the commission with determining how the law’s GHG reduction goals should be achieved, but then backtracked, saying, “It is the responsibility of the General Assembly to set the course by choosing a GHG reduction pathway and enacting enabling legislation.”

Spivak noted that natural gas — used as fuel, for electricity and from its own production facilities — accounts for about 19.5% of Maryland’s greenhouse gas emissions and contested the OPC’s figures on the increasing adoption of heat pumps across the state.

He discounted a 3.8% increase in electric heating customers from 2013 to 2022 — versus a .3% increase in natural gas customers — by speculating that “customers are switching from propane or oil to electric and are not necessarily switching from gas to electric.”

He argued for a balance of climate and public safety considerations in any review of Maryland’s natural gas policies, calling for feasibility studies to look at options like renewable natural gas or geothermal energy or whether the state has the workforce or enough heat pumps to support widespread electrification. A “human feasibility study” may also be needed to look at “the willingness of citizens to switch,” he said.

National Trends

The primary impetus for the OPC’s petition was a 2013 law called the Strategic Infrastructure Development and Enhancement (STRIDE) Act (S.B. 8/H.B. 89), which has allowed the gas utilities to recover the costs of certain pipeline replacements before they are completed, resulting in significant increases in gas utility bills.

But the OPC petition is also part of a larger national trend as other states look to curb emissions from natural gas and face pushback from the industry. As detailed in the petition’s appendices, the California Public Utilities Commission in 2022 passed a first-in-the-nation rule eliminating subsidies for natural gas hookups — still allowed in Maryland. It also passed a general order requiring gas utilities to get PUC approval for any projects costing more than $75 million and potentially causing significant environmental impacts.

Colorado, Massachusetts, Minnesota, New Jersey, New York, Rhode Island and the District of Columbia also have proceedings underway looking at how to balance their emission reduction goals with the public safety imperatives of existing natural gas systems. In 2021, for example, Minnesota passed the Natural Gas Innovation Act (NGIA), requiring the state’s natural gas utilities to develop plans for how they will use “innovative resources” to decarbonize their operations.

In 2022, the Minnesota Public Utilities Commission issued an order setting standards for energy efficiency and electrification investments that will comply with the NGIA.

While the PSC has yet to rule on the OPC’s petition, Chair Frederick H. Hoover did acknowledge the July public hearings as de facto proceedings on the future of natural gas. Other drivers for the PSC could be the executive order Gov. Moore signed in June, calling for the state to establish a zero-emission heating equipment standard and a new clean heat standard to be added to the state’s renewable portfolio standard.

Moore also signed a new law (H.B. 397) in May, requiring gas utilities to develop geothermal pilot projects to provide power to specific neighborhoods, also aimed at cutting back the need for natural gas pipelines. The utilities’ plans will go to the PSC for approval.

As these policies and programs come into effect, Lombardi stressed that requiring gas utilities to demonstrate that they are giving serious consideration to non-pipes alternatives should be a first step for the commission.

“This would be for all capital infrastructure spending, including capacity and line extensions to the extent possible,” she said. “Again, this is a floor, not a ceiling.”

In addition to pipe repairs, like joint resealing, Lombardi said definitions of NPAs should include both demand response and targeted electrification, a strategy for selectively swapping out natural gas for electric heating, or other electric appliances in locations that could most benefit from electrification.

“You can electrify just a few houses or an apartment building or an entire neighborhood maybe that has a high energy burden, or maybe a neighborhood that already has a lot of leaks,” she said.

That idea won support from Commissioner Bonnie Suchman, who said targeted electrification could be an effective, incremental approach to reducing both emissions and gas networks.

“The idea of targeted electrification is a much easier pill to swallow than sort of all-or-nothing,” she said. “And it gets us focused on what makes the most sense for an individual as opposed to just full-on electrification.”

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California Labor Groups Affirm Support for Pathways Proposal

Labor groups that blocked past California legislative efforts to “regionalize” CAISO told state lawmakers Aug. 6 they “look forward” to working with the legislature next year to pass a bill to implement the governance changes to the ISO being developed by the West-Wide Governance Pathways Initiative. 

The statement by the California Coalition of Utility Employees and the California State Association of Electrical Workers to a key State Senate committee might mark the unofficial start of the legislative campaign to allow CAISO to hand off oversight of its Western Energy Imbalance Market (WEIM) and Extended Day-Ahead Market (EDAM) to the Pathways Initiative’s proposed “regional organization” (RO). 

It also confirms that Pathways has the support of a key constituency needed to advance that change. 

“As you all know, we’ve been the proverbial fly in the ointment and opposed all three of the prior legislative attempts at regionalization,” Scott Wetch, a lobbyist representing the labor groups, told the Senate’s Energy, Utilities and Communications Committee during an oversight hearing on state agency efforts to maintain electric reliability in the face of extreme weather and the transition to emissions-free resources. 

“Those proposals would have transformed … CAISO itself into an RTO. In contrast, the Pathways Initiative would preserve … CAISO and its balancing authority and other functions, except for control over the energy markets,” Wetch said during a public comment period at the end of the hearing. 

Bills to convert CAISO into an RTO failed three years in a row over the 2016-2018 sessions, largely because of opposition from the International Brotherhood of Electrical Workers (IBEW), as well as resistance from publicly owned utilities in California and some environmental groups worried about the impact on the state’s renewable energy goals. 

Those bills would have extended the boundaries of the ISO’s balancing authority area to include states with utilities opting to join the expanded market. Under California law, that could have meant that the portion of projects that California’s renewable portfolio standard requires to be interconnected directly to the ISO’s BAA would be built outside the state, reducing job opportunities for IBEW members — a nonstarter for the union. 

“I also just want to emphasize that the Pathways proposal being developed would preserve California jobs, unlike previous regionalization proposals,” Wetch told senators. He also noted the plan “will enable many more utilities around the West to join” EDAM. 

“I want to emphasize that we foresee that the proposal would not affect California’s or any other state’s ability to protect its policies such as renewable portfolio standards, transmission planning, cost allocation or GHG reduction,” Wetch said. “It could even enhance our ability to decarbonize at lower cost by allowing us to use solar, wind and hydro resources more efficiently.” 

The change of heart among California labor groups became evident last year when Marc Joseph, an attorney for the IBEW, joined the Pathways Launch Committee. 

“Frankly, I wouldn’t be spending this much time [on Pathways] if I thought this was going to crash and burn,” Joseph said during an April meeting of that committee. (See Past Opponents Now See Legislative Pathway to CAISO Regionalization.) 

No Clear Road Map

During a Pathways workshop Aug. 5 to examine issues related to altering the CAISO tariff and migrating ISO functions to the RO, Launch Committee member Evie Kahl, general counsel for the California Community Choice Association, provided clarification on what a proposed bill would seek to achieve. 

“When we talk about the legislative change for any of this, what we’re looking at is not a legislative change to enable the CAISO to become a different entity than it is today, but to provide these [market] services and to allow California’s BA to participate in the RO market,” Kahl said, adding that the legislation will not determine what services the RO can offer. “That’s all independent.” 

Launch Committee members have made clear that the committee itself is prohibited from attempting to influence legislation because Pathways is a nonprofit 501(c)(3) organization, although some of its members could act in that capacity as representatives of their employers. 

Asked how specific the legislation would need to be to allow a scenario in which the RO takes on a larger portion of the ISO’s market functions and legal responsibilities (what Pathways is calling Option 2.5), compared with a more limited assumption of functions (Option 2.0), committee member Spencer Gray, executive director of the Northwest & Intermountain Power Producers Coalition, said he hesitated to “get too far into the weeds” about legislation the group is not directly shaping. 

“I do think there is a pretty plausible legislative route that is permissive and does not get into the specifics of prescribing changes specific to 2.0 or 2.5. In other words, the legislation could look exactly the same,” Gray said. 

“What would be different, potentially in the legislative process, is more clarity from the Launch Committee and stakeholders in support of a particular outcome — 2.0 or 2.5 — that would inform the deliberations,” he said. “But the actual changes to California law don’t necessarily need to be different, and a more prescriptive approach may raise some issues on its own, as opposed to a more permissive approach.” 

The Aug. 5 workshop offered insight into the broad spectrum of issues and level of complexity that participants in the Pathways CAISO Issues and Tariff Analysis Work Group confront as they sort out the future relationship between the RO and ISO, including relative levels of independence, responsibility and liability for market issues, as well as what services each might provide over time. 

“We are really creating something new here,” Kahl said. “Everything that’s being outlined — there have been pieces of this developed across the country with different RTOs, but we’re putting the pieces together differently. In other words, there really hasn’t been a clear road map for us to do what we’ve been doing.” 

In his comments to the senators, Wetch expressed confidence in the outcome. 

“We are pleased with the progress that the [Pathways] Launch Committee has made in the past year. We remain optimistic that the Launch Committee will be able to make a recommendation to create a new regional organization and transfer oversight of the energy markets from the CAISO to the new regional organization,” he said. 

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CISA Launches Cybersecurity Software Buying Guide

The Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency (CISA) has released a guide to help organizations determine their software suppliers’ approach to cybersecurity in order to prevent nonsecure code from getting into their systems. 

CISA’s Secure by Demand Guide, published Aug. 6, provides “questions and resources” that software buyers can use to double-check their suppliers. The agency said that while staff in charge of software acquisition at an organization usually understand the core cybersecurity requirements for a desired technology, they often do not check whether suppliers have “practices and policies in place to ensure that security is a core consideration” at all stages of development. 

The document is intended as a complement to the agency’s Secure by Design Guide, released a week earlier. That guide aims to help instill in software developers the philosophy of building cybersecurity into their products from the ground up and taking proactive steps to ensure their software is free of vulnerabilities. A secure-by-design approach follows three principles: 

    • Take ownership of customer security outcomes. 
    • Embrace radical transparency and accountability. 
    • Build organizational structure and leadership to achieve these goals. 

With the new guide, CISA said, businesses can make sure suppliers are following these principles. 

“We are glad to see leading technology vendors recognize that their products need to be more secure. … Businesses can also help move the needle by making better risk-informed decisions when purchasing software,” CISA Director Jen Easterly said in a statement. “This new guide will help software customers understand how they can use their purchasing power to procure secure products and turn secure by design into secure by demand.” 

In the guide, CISA said businesses’ due diligence of software manufacturers “often [focuses] on [the manufacturers’] enterprise security measures,” which they examine through the lens of compliance standards. However, this focus on enterprise security — which relates to how the company protects its own infrastructure — can come at the expense of neglecting the vendor’s product security, by which the company ensures its products are safe from attacks. 

The guide urged organizations to look for ways to make product security a focus at each stage of procurement. Before procurement, an organization can use probing questions to evaluate a manufacturer’s understanding of product security; during procurement, the organization can write product security requirements into its contract language; and afterward, it can continue to assess the product security and security outcomes. 

Suggested general questions for software manufacturers include whether the manufacturer has taken CISA’s Secure by Design Pledge, how it measures its adherence to the pledge, and to what extent it supports security patches. Additional questions cover a number of specific topics: 

    • authentication — whether the product supports secure authentication measures such as single sign-on and multifactor authentication and has eliminated default passwords in its products. 
    • eliminating classes of vulnerability — what vulnerability classes the manufacturer has addressed systematically in its products, and whether it has a road map for eliminating those classes. 
    • evidence of intrusions — whether manufacturers make security logs available to customers in the baseline version of their products. 
    • software supply chain security — whether the manufacturer generates a software bill of materials in a standardized format that is available to customers, and how it vets the security of open source software components. 
    • vulnerability disclosure and reporting — whether the manufacturer demonstrates transparency and timeliness in vulnerability reporting for its products. 

Describing the guide as “a starting point for software customers to generate the demand for more secure technology products,” CISA advised businesses to use additional resources, such as its Software Acquisition Guide for Government Enterprise Consumers and the National Institute of Standards and Technology’s Secure Software Development Framework. 

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NYISO Presents Draft Recommendations for Demand Curve Reset

NYISO presented its draft recommendations for the demand curve reset Aug. 1, including the choice of a two-hour battery electric storage system resource as the proxy unit in calculations.

The ISO said it agreed with the findings of Analysis Group, even after some stakeholders — mostly generators — opposed the choice. (See NYISO Stakeholders Continue Debate over Battery as Proxy Unit.)

The presentation to the Installed Capacity Working Group was proceeded by a long discussion of various financial parameters employed by NYISO’s consultants.

“Hopefully I don’t need to cover this,” said Zach Smith, senior manager of capacity and new resource integration market solutions for NYISO, referencing a background slide. “We just spent the past two hours talking about” it.

Smith said that NYISO staff concurred with the recommendations of Analysis Group. Based on the data analyzed so far, a 200-MW, two-hour lithium battery storage system is the technology that represents the highest variable and lowest fixed cost for all zones in New York.

“There are a couple of areas we are continuing to investigate, to sharpen our pencils on,” Smith said. “The first is an assessment of the capital parameters for the battery storage option. … We are also looking at the appropriate derating factor for battery energy storage.”

Smith added that NYISO was looking at the appropriate indices and weightings used for updating the cost of new entry.

Doreen Saia, a lawyer with Greenberg Traurig, said she was unsure how well Analysis Group captured the risk portfolio of the two-hour battery as compared to other storage options. Earlier she said she believed the analysis was “too aggressive” on an eight-hour battery but not aggressive on the two-hour.

“While I’m not conflating capacity accreditation factors with this, from a risk perspective, I think you have to project or assume or presume that investors are going to see that distinction and manage it with a risk assessment,” Saia said. “I think that’s where the train fell off the tracks a little.”

Other stakeholders seemed concerned about the derating factor for energy storage. Derating factors measure the availability or performance of specific resources. They are combined with duration adjustment factors to account for a resource’s capacity accreditation.

Smith outlined a problem with the derating factor for the two-hour battery. Analysis Group and its consulting partners, 1898 and Co., recommended a 2% derating factor. However, NYISO’s ICAP Manual establishes that the initial derating factor for new classes of energy storage entering the capacity market is set to the NERC class average of pumped hydro storage, 9%.

“There is a potential misalignment between the assumed proxy EFORd [equivalent forced outage rate – demand] value for energy storage directed by the ICAP Manual versus the potential operating performance anticipated for such resources,” said Smith. “We are continuing to evaluate what the appropriate derating factor should be for battery energy storage systems in the demand curve reset.”

“You’re acknowledging that there’s a problem,” said Mark Younger, president of Hudson Energy Economics. “But you have not committed yet to fixing the problem.”

“We are committed to investigating the problem,” Smith answered. “I don’t know what the solution to the problem is, but we will have a resolution to it.”

Smith went on to say that NYISO would work with Analysis Group to investigate the appropriateness of the composite escalation factor methodology in the indices used for determining the gross CONE. Composite escalation factors combine inflation and potential market shifts to try to estimate the future cost of longer-term projects.

“Despite our best efforts, which everyone seems to be having including the state in their contracting efforts, the issue of how to manage escalation has taken on a life on its own. … It’s cumbersome and unmanageable,” said Saia.

Smith said that NYISO was still soliciting feedback and it would post the comments received. It will post the final staff recommendations Sept. 5. The final reports from NYISO and the consultants will then be posted on Sept. 19 and referred to the Board of Directors for approval. Final stakeholder comments for the board should be filed by Oct. 9.

The ISO is required to file a proposal with FERC by Nov. 30.

“Then I’m going to take a vacation,” Smith said.

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DC Circuit Vacates FERC Approval of Two LNG Facilities in Texas

The D.C. Circuit Court of Appeals issued an order Aug. 6 vacating FERC’s approval of two LNG export facilities in Texas and remanding the cases back to the commission. 

The two facilities are in Cameron County, Texas, which borders Mexico. The facilities’ approval already had been in front of the court in appeals filed by Vecinos para el Bienestar de la Comunidad Costera (Neighbors for the Well-being of the Coastal Community). The vacated orders were on remand from those earlier cases. 

“The commission erroneously declined to issue supplemental environmental impact statements addressing its updated environmental justice analysis for each project and its consideration of a carbon capture and sequestration system for one of the terminals,” said the decision, authored by a three-judge panel. “It also failed to explain why it declined to consider air quality data from a nearby air monitor.” 

Texas LNG Brownsville filed an application in 2016 to build an LNG export terminal on the Brownsville Shipping Channel. Within six weeks, Rio Grande LNG filed to build a second terminal nearby, while Rio Bravo Pipeline Co. filed to build an interstate pipeline to bring fuel to the second facility. The latter two firms are subsidiaries of NextDecade LNG and the joint pipeline/LNG development is called the Rio Grande project. 

Rio Grande filed to add a carbon capture and sequestration system to its facility after losing the first round of litigation. It would seek to capture 90% of the CO2 produced by natural gas liquefaction and ship it via pipeline to an underground injection site in Texas. 

On remand, the commission did an environmental justice analysis that included gathering new, relevant information. But it declined to order a more formal supplemental Environmental Impact Statement (EIS) under the National Environmental Policy Act (NEPA), which would have required giving parties a chance to comment on its analysis. 

Petitioners argued FERC should have done an EIS on the projects on remand. The court agreed. NEPA requires a supplemental EIS when significant new circumstances or information related to environmental concerns of the action are available.  

“Here, the pertinent ‘new information’ includes the updated demographic and environmental data submitted by the developers, as well as the commission’s entirely new analysis and interpretation of that data, which are substantially different from the previously conducted environmental justice analysis in the final EIS,” the court said. 

The original EIS covered the impact on just a two-mile radius around the projects, which FERC extended to 50 kilometers (31 miles) in the less formal review on remand. The new analysis was significantly longer and, unlike the initial EIS, found “disproportionately high and adverse” impacts on environmental justice communities. FERC also ordered additional mitigation measures. 

FERC argued it did not have to do a formal EIS because it reached the same conclusion that the projects would not have major impacts on air quality. 

“That explanation is inadequate for two related reasons,” the court said. “First, neither the regulations nor case law condition the requirement to issue a supplemental EIS on a new determination that a particular environmental impact is significant.” 

The second reason in FERC’s argument is that environmental justice analyses, even new and expanded ones, are not important enough to require a supplemental EIS unless they also disclose significant impacts on the physical environment.  

Effects on environmental justice communities are impacts that are relevant to environmental concerns, which would require a supplemental EIS, the court said. 

FERC took comments on how the developers responded to its new analysis, but it did not let other parties comment directly on its conclusions. 

“But NEPA’s purpose is to allow the public to see and comment on the agency’s interpretation of data, not just the underlying data itself,” the court said. FERC therefore deprived petitioners and the broader public of an adequate springboard for public comments, which it would have been legally required to consider in its decision. 

Rio Grande’s addition of CCS to its project also drew arguments that FERC should have conducted a new EIS based on that change. 

“Rio Grande submitted its CCS proposal specifically in response to our 2021 remand — which required the commission to revisit aspects of its environmental analysis and its ultimate approval of the project — such that both approval requests were pending before the commission at the same time,” the court said. “Indeed, Rio Grande implored the commission to consider the CCS proposal as part of the reauthorization process precisely because it viewed the two actions as related and thought that the CCS proposal’s ability to capture most of the terminal’s GHG emissions would make reauthorization more likely.” 

On remand, FERC must consider the actions together in its environmental analysis before deciding whether to reauthorize the terminal. Even if Rio Grande decided against moving ahead with the CCS, FERC must study it as an alternative in a new EIS on remand. 

The court also criticized FERC for failing to properly consider data from a nearby air monitor, and on remand, it must use the data or supply a reasoned argument for not doing so. 

The court noted its decision to vacate the orders could have a significant impact on the two projects, but it was warranted due to FERC’s serious “procedural defects.” 

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ISO-NE Outlines ‘Straw Scope’ of Capacity Market Reforms

ISO-NE responded to stakeholder feedback on its capacity auction reform (CAR) project at the NEPOOL Markets Committee meeting Aug. 6, providing clarity on the scope of its capacity market overhaul.

Chris Geissler, ISO-NE’s director of economic analysis, outlined the “straw scope” of the reforms, including which topics likely will be included in the project, and those remaining under consideration.

The CAR project is intended to coordinate resource accreditation reforms with changes to the time frame of capacity auctions. ISO-NE plans to move from the current forward annual auction format to a prompt seasonal auction for the 2028/29 capacity commitment period (CCP).

This change would reduce the time between the auction and the CCP and would split the yearlong CCP into seasons. (See ISO-NE Moving Forward with Prompt, Seasonal Capacity Market Design.)

Geissler presented ISO-NE’s initial thoughts on the scope to the MC in July, and stakeholders submitted written comments prior to the August meeting. (See NEPOOL Markets Committee Restarts Work on Capacity Market Changes.)

The core aspects of the project include defining the timing and schedule of the prompt reforms, the treatment of new and retiring resources, and the delineation of seasons in the CCP, along with finalizing the accreditation reforms, Geissler said. The project also will include a focus on offer price formation, accounting for gas constraints and updating the current data systems, he added.

ISO-NE also plans to move from a descending clock to a sealed bid, which was recommended by the External Market Monitor. He said sealed bids would help enable simultaneous (instead of sequential) seasonal auctions, which ISO-NE is considering to allow bidders “to submit offers that separately reflect seasonal and annual costs.”

Geissler said the RTO still is considering whether to include an evaluation of how it will model resources that are retained via out-of-market mechanisms, tie benefits and correlated temperature-related outages.

He added ISO-NE will consider whether it can improve the existing load model used for accreditation, along with the modeling frameworks used for different resource types. Storage developers argue the RTO’s load modeling has produced unrealistic capacity shortfall events. (See ISO-NE Capacity Accreditation Reforms Spur Energy Storage Concerns.)

The RTO is unlikely to include in the scope a reconsideration of the underlying software program used for the accreditation modeling, or an evaluation of modeling of resource start time. Some stakeholders argue in favor of modeling resource start time, and the External Market Monitor (EMM) has highlighted the issue.

“Resources with long startup times that do not operate frequently provide less reliability value than more flexible units,” the EMM noted in 2021.

Scope Feedback

Prior to the meeting, a wide range of stakeholders submitted written comments on ISO-NE’s scope proposal.

A coalition of clean energy companies and environmental advocacy groups called on ISO-NE to “facilitate more discussion on how the modeled risk relates to observed real-world risk.”

Storage developers expressed concern that the new accreditation framework will lead to a significant reduction in capacity market revenue for storage resources. The impact analysis results presented in the previous stage of the accreditation project indicated storage would see the most significant revenue reduction of all resource types. (See ISO-NE: RCA Changes to Increase Capacity Market Revenues by 11%.)

Several solar companies also submitted comments urging the RTO to consider “enhancements to the modeling framework” for co-located solar and storage resources.

LS Power made the case that accreditation should account for unit-by-unit differences in natural gas availability for gas generation. The company has stressed that gas availability when temperatures decline varies significantly by state and by unit, and ISO-NE’s current accreditation proposal would not account for these differences.

“Just as the current Forward Capacity Auction methodology recognizes locational variations and unit-specific characteristics for accreditation, ISO’s CAR accreditation approach to natural gas accessibility must do the same,” LS wrote.

Meanwhile, RENEW Northeast expressed support for ISO-NE’s proposal for accrediting gas resources, writing that “the proposed market constraint for gas, as part of the seasonal market, appears to be a significant improvement and we appreciate that ISO continues to plan for this as part of the initial market reform effort.”

Calpine advocated for a simultaneous clearing design for seasonal auctions, writing that it has “grave concerns with a seasonal construct that does not allow or permit resources the opportunity to recover full (annual) costs.”

The company also stressed the scope should include an evaluation of tie benefits, and that tie benefits should be treated similarly to other capacity resources.

In contrast, Synapse Energy Economics wrote that re-evaluating the treatment of tie benefits is “not a critical priority at this stage,” adding that it likely would have a small impact on overall capacity requirements.

Several stakeholders, including the New England Power Generators Association (NEPGA), said ISO-NE should discuss with stakeholders what costs can be included in a capacity market offer price.

The Massachusetts Attorney General’s Office recommended ISO-NE “develop a longer-term strategic plan and roadmap for consideration and implementation of needed capacity market reforms that are outside the scope of CAR for CCP 19.”

Financial Assurance

A proposal by NEPGA to amend ISO-NE’s proposed updates to the financial assurance policy failed to gain the support of the MC, with 50% of votes in favor.

NEPGA’s proposal would direct ISO-NE to allow bilateral trading of capacity supply obligations (CSOs) until five business days before each obligation month and would require ISO-NE to review trades within five business days of their submission. (See NE Generators Propose Financial Assurance Changes.)

“The current rules create incremental risk and increase the cost of assuming a CSO,” said Bruce Anderson of NEPGA. “The ability to trade closer in time to the obligation month improves reliability, in that it allows for timely substitution of anticipated Capacity Scarcity Condition performance.”