Page 513 – RTO Insider

March 28, 2022January 19, 2024

New Jersey Solar Pipeline Surges While Installations Drop

The current state of the New Jersey solar market depends on who you’re talking to.

The Board of Public Utilities (BPU) has been heralding a pipeline of more than 1.6 GW of projects as a healthy surge, while developers caution that the 305 MW of projects completed in 2021 — a 30% drop from 2019 — has left the state lagging on its clean energy goals.

For example, Ariane Benrey, solar policy and program manager for the BPU, said that projects in development have grown more than threefold from 523 MW in January 2021, signaling strong growth ahead.

“This really indicates to us the health of the industry going forward,” Benrey said. “It’s larger by an order of magnitude, by several orders of magnitude, than anything we’ve seen previously. So, we’re actually quite optimistic about the capacity that’s going to be installed later this year, next year, in the following year.”

In a March 2 press release, the BPU called 2021 a “banner year” for solar, adding that the pipeline of projects “provides assurances of continued strong development over the coming year.”

The agency said the dramatic increase in pipeline capacity stems from the convergence of many factors. Project applications slowed with the arrival of the pandemic in 2020 and the closure of many municipal and state offices, which prevented permitting and inspections. The number of applications accelerated in 2021 as vaccines took hold and the economy returned to more normal activity, the BPU said.

But Doug O’Malley, director of Environment New Jersey, says the state’s declining solar subsidies are part of the reason for the drop in installations. State incentives in the form of renewable energy credits were cut in 2020 and again in July 2021.

The state’s “very rich subsidies” in the past helped to offset construction, wage and other project costs, which are high in New Jersey, he said. O’Malley also believes early market growth came from easier projects — “low-hanging fruit” — while developers are now taking on more complicated projects, such as siting solar on landfills and brownfields and may be less keen to pursue them.

The recent decline in installations, in particular, spells bad news for New Jersey’s clean energy goals, O’Malley said. The state’s official Energy Master Plan calls for deploying increasing amounts of solar: 5.2 GW by 2025; 12.2 GW by 2030; and 17.2 GW by 2035.

The state, which had a total of 151,916 installed solar projects at the end of February, hit an annual installation peak in 2016, with 22,289 projects installed, according to figures from the BPU. Since then, new installations have declined each year, slipping to 13,803 projects in 2021.

With 3.84 GW currently online across the state, O’Malley said, “We need to be reaching 750 MW per year of solar to reach the Energy Master Plan goals. We are not there.”

Still another sign of a slowdown in project completions, the recent Solar Market Insight Report, compiled by the Solar Energy Industries Association and Wood Mackenzie, showed New Jersey falling significantly in national rankings based on megawatts installed per year. In 2019, the state took the No. 9 spot, but dropped to 12 in 2020 and to 20 in 2021.

Mixed Messages

These opposing views, New Jersey’s dramatically rising solar pipeline and declining installations, reflect a state and solar sector striving to balance aggressive clean energy targets with the cost to ratepayers of incentives to support the industry.

As in other states, solar installers in New Jersey were initially roiled by the pandemic. But they have also had to contend with two years of mixed messages as the state simultaneously reshaped its incentive programs to curb costs to ratepayers, while also rolling out new programs aimed at boosting the development of both community solar and grid-scale projects. And the impact on future growth is uncertain.

According to the state’s 2019 Master Plan, the state will need to deploy 950 MW of solar per year to reach its 2035 goal. However, since 2016, New Jersey has been averaging about 289 MW per year, less than a third of the capacity needed.

In other words, the full 1.6 GW in the pipeline would need to be built for the state to reach its 2025 target.

The BPU’s Benrey remains optimistic, pointing to pipeline growth as a sign of “a lot of pent-up demand.”

But at least part of that demand may have been triggered by the BPU’s decision to significantly trim solar incentives. The state’s original, more generous incentives ― the Solar Renewable Energy Certificate program ― paid about $250 per MWh of power generated. The program was cut in 2020 and replaced with the temporary, lower incentives of the Transition Incentive Program, which ranged from about $90 to $150 per MWh.

In July, the BPU approved a permanent replacement, dubbed the Successor Solar Incentive (SuSi) program, which offered even lower incentives, from $70 to $100 depending on the project. (See NJ Sees Solar Growth in Reduced Incentives.) A second element of the SuSi program enabled a much broader range of grid supply projects to be built and created a separate, competitive system for those incentives.

As a result, developers rushed to submit projects to qualify for the transition incentive before it closed, helping boost the pipeline, Benrey said.

Fred DeSanti, executive director of the New Jersey Solar Energy Coalition, estimates that the BPU may have seen about 4,000 project applications between June and August, which he called a “huge” number, due to the incentive change. But he is skeptical that the project completion rate will be anywhere close to the pipeline figure because of the difficulty of completing projects in the time allowed. He expects many projects will be cancelled or abandoned.

“I think by the end of this energy year, on May 31, we will probably show a completion rate of projects that will be even lower than last year,” he said.

Differing Views of the Future

However, Benrey points to other drivers of the pipeline surge as cause for confidence.

The launch of the state’s pilot community solar program in 2019 provided a pipeline boost. As of January, 203 MW of community solar were in the pipeline, accounting for 12% of the total. The BPU expects that number to grow with the coming introduction this year of a permanent community solar program.

The state also expects the number of grid-scale projects to increase as a result of a bill, S2605, that Murphy signed in July, authorizing the BPU to approve incentives and permits for a broader range of grid-scale projects than had been allowed in the past, and creating a new competitive bidding system to set incentive levels. Grid supply projects accounted for 7.4 % of the pipeline, or more than 121 MW in January, the BPU figures show. (See NJ Grid-scale Solar Bill Signed by Murphy.)

Getting those and other projects hooked up to the grid could be a major obstacle, DeSanti said. Many distribution lines have reached capacity and are now closed to additional solar projects, he said.

“The cost of interconnection has increased significantly as the higher levels of renewables on the utility system are requiring major upgrades at very significant cost,” he said. Projects are also being hampered by labor and materials shortages, rising inflation and other pandemic-related problems, he said.

If a project is not completed within 12 months of the date of application for BPU approval, it will fall out of the program unless the BPU grants a waiver. Without the waiver, the developer must to re-apply for SuSi incentives, which in some cases would be too small for the project to be financially viable, DeSanti said.

“It’s all about the numbers,” he said. “If that money … goes away, or it’s too small to support the projects, you’re not going to build them. It’s that simple.”

The BPU believes the SuSi program will “pave the way” for 3,750 MW of new solar generation by 2026 — or 750 MW a year — so that solar would provide 10% of the state’s electricity.

Eric Miller, New Jersey energy policy director for the Natural Resources Defense Council, is not worried about the “mismatch” between the surging pipeline figures and the declining installation figures. One reason is the current turbulence in the state sector, partly due to the changing incentive programs and the pandemic, which makes the future difficult to predict, he said.

“We’re at a very strange time in the history of New Jersey solar,” Miller said. One positive factor is that the SuSi program has “flexibility” in the form of a built-in mechanism that requires the BPU to evaluate the program and allows it to change policies that are not meeting the desired targets, he said.

Miller believes that the state “unequivocally” will meet its solar goals, although that may involve importing some clean energy from out of state. He added, however, that it is “unclear at this point,” whether the state can meet its goals of generating all solar energy in state.

March 28, 2022

CARB: Calif. Must Double Annual Solar Build to Meet GHG Goals

To reach carbon neutrality by 2045, California must more than double the amount of solar capacity built each year compared to its previous maximum build rate, according to modeling by the state’s Air Resources Board.

The build rate for battery storage would need to increase by more than six-fold to meet the 2045 target, the modeling found.

And reaching carbon neutrality a decade sooner, by 2035, could require the annual build rates for solar capacity and battery storage to increase more than three-fold and 10-fold or more, respectively.

The California Air Resources Board conducted the modeling as part of the process to develop the agency’s 2022 climate change scoping plan, a roadmap to meeting greenhouse gas reduction goals. Results of the modeling, which analyzed four scenarios for reaching carbon neutrality, were presented to the CARB board on Thursday.

The first two alternatives would bring the state to carbon neutrality by 2035; the other two would reach the target in 2045.

Alternative one, the most aggressive of the four scenarios, would nearly eliminate fossil-fuel combustion by 2035. The scenario would require early retirement of gasoline- and diesel-powered vehicles: an estimated 16 million light-duty vehicles and 1.4 million medium- and heavy-duty vehicles by 2035.

Early retirement of natural gas appliances, such as space heaters, water heaters, clothes dryers, and ovens and stoves, would also be needed under the alternative.

The alternative would require “ambitious innovation in electric technology and aggressive consumer adoption trends,” Maureen Hand of CARB’s Industrial Strategies Division said.

Hand noted that a federal “cash for clunkers” program in 2009 cost $3 billion and removed about 690,000 fuel-inefficient vehicles from the roads.

Other alternatives would allow internal combustion vehicles and gas appliances to reach the end of their useful lives before their owners switch to electric models. The natural gas supply would be retained during the transition from gas to electric appliances.

The alternatives vary in their rate of zero-emission vehicle adoption and the extent to which they rely on carbon capture and sequestration (CCS) technology.

“Electrification is a cornerstone of each alternative,” Hand said. “The speed at which we need to expand zero-carbon electricity capacity is unprecedented.”

Hand said the most solar capacity that California has added in one year was 2.7 GW, and the largest annual increase in battery storage was 0.3 GW. Under the four alternatives, solar capacity must grow by 5 to 10 GW annually, and storage must increase by 2 to 5 GW per year, according to CARB’s modeling.

Role of Hydrogen

The alternatives envision an increased reliance on hydrogen as an alternative fuel in the transportation sector.

“The quantity of hydrogen needed in each of the alternatives to supply California’s projected demand is significant,” Hand said. “It will also need to be provided by low-carbon sources.”

One approach is to use electrolysis to split water into hydrogen and oxygen. If all the state’s demand is met by hydrogen produced through solar-powered electrolysis, solar capacity requirements would increase by 31 to 47 GW, according to the modeling. That’s about 40 to 50% of the state’s current electric generation capacity of 83 GW.

CARB board members listened to a presentation on the modeling on Thursday but took no action. One board member said the modeling showed the enormous cost of the 2035 scenarios.

“It would be hugely disruptive, hugely expensive to get to carbon neutrality by 2035,” said board member Daniel Sperling, who is also founding director of the Institute of Transportation Studies at the University of California, Davis. “Any kind of reasonable assessment would say 2040, 2045 is really the soonest we can get there.”

CARB is planning to hold workshops in coming weeks to focus on the economic and air quality modeling for the carbon-neutrality scenarios. The agency expects to present a draft scoping plan to the board in June and to finalize the plan by the end of the year.

Carbon Capture Controversy

All four scenarios analyzed in the modeling require some degree of carbon capture and sequestration for the industrial and refining sectors. Alternative one, in which petroleum refining would cease in 2035, would require less than 1 million metric tons (MMT) of CCS.

In the remaining three alternatives, the need for CCS would range from 8 to 11 MMT in 2035, dropping to 2.4 to 5 MMT in 2045.

Martha Dina Argüello, co-chair of CARB’s Environmental Justice Advisory Committee, urged the board to look at emerging evidence that calls into question the feasibility and viability of CCS strategies. The evidence comes from studies that are not funded directly or indirectly by the fossil fuel industry, she said.

“What happens if this technology doesn’t work?” Arguello said. “What happens if this technology, as [has] happened with others, actually ends up producing more carbon that it takes in?”

Arguello said CCS could also extend the life of the fossil-fuel infrastructure based in low-income communities and communities of color.

Rajinder Sahota, CARB’s deputy executive officer for climate change and research, said 20 years of testing has shown that CCS is safe and reliable.

Sahota said policymakers’ focus has traditionally been on ways to reduce greenhouse gas emissions. But the Intergovernmental Panel on Climate Change is now pointing to the need for CCS in addition to emission reductions to meet climate goals, she said.

“The science now says that has to be part of the solution,” Sahota said.

March 28, 2022June 14, 2023

EPA’s Regan Confident in Emission Trends Despite Clean Air Act Challenge

WASHINGTON — EPA Administrator Michael Regan said Thursday he is confident the electric power sector will continue cutting its greenhouse gas emissions despite a challenge to EPA’s authority under the Clean Air Act.

Regan told the American Council on Renewable Energy’s Policy Forum that the industry will continue to decarbonize because of EPA’s broad authority and falling renewable costs, regardless of how the court rules in West Virginia v. EPA.

The court heard arguments in February in the challenge by the coal industry and 20 states to EPA’s authority to impose “beyond-the-fence-line” regulations on power plants. (See Supreme Court Hears Arguments on EPA Authority over GHGs.)

“Obviously, it’s our hope that the decision will stay on the more narrow side,” he said during an interview with former EPA Administrator Carol Browner, now senior counsel at Covington & Burling. But he said the Clean Air Act is not the only authority at its disposal, citing its “health-based” regulations on air toxics, criteria pollutants, and water and waste disposal.

“We have an agency that doesn’t have to overly rely on any one regulation,” he said. “And the benefit that we have today is [that] the markets are speaking to us” with almost 80% of current generation investments going to wind, solar and battery storage.

“We have seen so many advancements in technology since 2010. We think that there are lots of … clean energy opportunities for the power sector to deploy inside the fence line [and] outside the fence line.”

Carol Browner Gina McCarthy Michael Regan 2022-03-24 (RTO Insider LLC) Alt FI.jpg

EPA Administrator Michael Regan (right) joined two previous administrators, Covington & Burling partner Carol Browner (left) and White House climate advisor Gina McCarthy (center) at the ACORE Policy Forum. | © RTO Insider LLC

Regan said the agency is “excited about the fact that the power sector actually wants to engage with us on regulations” to gain certainty for their investment decisions. “It’s not a question of what or when, but how and how quickly we [regulate],” he said.

“We are suggesting to the power sector industry that through court-ordered deadlines, statutory authority and shortening some of our regulatory timelines, we can present the power sector with a suite of regulations at the same time. Instead of darkening their doorstep, one regulation at a time, we can present these regulations in one fell swoop or as close as possible, giving them the best chance at determining where their long-term investment should go. And I think most are going to bet on the future of clean energy and not the past. I think that we’re in a unique place in history in terms of having the regulatory flexibility to try to tie many of these regulations, match it with the markets and technology.”

EPA told the court in February that it expects to issue a Notice of Proposed Rulemaking by the end of 2022 to replace the Clean Power Plan (CPP), proposed by the Obama administration, and the Affordable Clean Energy (ACE) rule, issued by the Trump administration.

Regan said his approach will aid utilities. “Not only can they predict their investment opportunities, but we can all do it in a way where you explain it to the states and explain it to the [public utility] commissioners,” he said.

Previewing potential regulations on methane emissions, which could be issued this year, Regan again stressed the importance of industry involvement. “Let’s think about the complete utilization of technology and data management, and put a rule in place that does not codify a specific technology that will be outdated in two years,” he said.

At the same time, facing a short-term ramp-up in natural gas because of the war in Ukraine, Regan said, “We want that to be the absolute best technology available, and we’d like those investments to be compatible with future opportunities, like hydrogen.”

But, he cautioned, “we can’t just have a technology-based discussion, because everyone’s realized the impacts — the public health impacts, the climate impacts. … The question is, again, how do we transition while providing affordable, reliable, clean energy that keeps this country in a globally competitive position?”

‘Walking-around Money’

Regan, who worked as an EPA intern early in his career — when Browner was administrator — said he was thrilled by the funding under the Infrastructure Investment and Jobs Act (IIJA). “I was teasing Carol earlier,” he said. “This is the first time EPA has had a little walking-around money, so to speak. So instead of being just a regulator, people actually like to see us come.”

‘Color-blind’ Hydrogen

National Climate Adviser Gina McCarthy also talked about the need for any short-term increase in natural gas production to be consistent with long-term climate goals, pointing to the federal dollars earmarked for hydrogen development in the IIJA.

Hydrogen production encompasses “a rainbow of colors”: green, blue and gray, she said.

“I think we need to be color-blind,” McCarthy said. “What we need to do is evaluate each and every one of those hydrogen streams to look at both upstream and downstream. … And so, while hydrogen can be a real game changer, we can’t be blind to the upstream impacts, based on how they’re generating hydrogen, and we have to be honest about it and do the best we can to make this truly green.”

Phillips Excited for Return to In-person Heckling

FERC Commissioner Willie Phillips, who joined the commission in December, said he’s excited by plans to return to in-person meetings by fall.

“For me, I’m a people person. That can’t happen fast enough,” he said.

The commission will appear on camera but without a live audience in April. “And so we won’t have audiences yet,” he said. “I can’t wait for you all to come in. And you can yell at me directly instead of doing it on Twitter.”

March 27, 2022November 17, 2023

Overheard at IEA Ministerial Wrap-up on Finance, Industry, Minerals

Attendees of the International Energy Agency’s 2022 Ministerial Meeting gathered Thursday in Paris for a closing plenary to review ministers’ discussions in three roundtable sessions.

Government and business delegates tackled issues related to private finance for a net-zero transition, reducing emissions in hard-to-decarbonize industry sectors, and energy security challenges for critical materials and minerals.

Here’s a look at some insights that came from the roundtable discussions.

Finance

Ministers and business representatives had a “very engaging” session on how to accelerate private financing for clean energy advancement, said Stephanie Pfeifer, CEO of the Institutional Investors Group on Climate Change.

“There is a consensus that we really need to deal with the current crisis in the Ukraine, but it’s also critical that we keep sight of longer-term net-zero goals,” she said in a wrap-up of the roundtable.

The top concern during the session was that governments must have clear regulatory frameworks and policy signals to drive technological investments.

Attendees said priority should be given to:

- - addressing permitting problems, such as licensing delays;
  - setting price signals, such as a global carbon price;
  - creating support mechanisms, such as tax credits, for contracts; and
  - building early-stage support for newer technologies, such as green hydrogen, biomethane, and carbon capture and sequestration.

There also was a call for more collaboration between policymakers, companies and investors at early stages in developing markets.

“We should have a forum to have these discussions on a much more regular basis so that we don’t lose sight of the net-zero transition, the just transition and the energy security that we all know we need,” Pfeifer said.

Sectors

A roundtable discussion on reducing sectoral emissions led to a debate on why certain sectors are hard to decarbonize, according to Shell CEO Ben van Beurden.

Ben van Beurden (International Energy Agency) FI.jpg

Ben van Beurden, CEO of Shell, in Paris Thursday. | International Energy Agency

The top sectors of concern included heavy industries, such as steel petrochemicals and cement, and long-distance transportation, such as aviation and shipping.

“We came to the conclusion that maybe the sectors aren’t as hard to decarbonize as a lot of people fear or expect them to be,” van Beurden said in a roundtable wrap-up. (See Shell CEO: Sector-based Mandates Critical for Global Energy Transition.)

There’s a perception, he said, that the technologies needed to reduce emissions for heavy industries and long-distance transportation do not exist yet. But technologies, such as hydrogen, green steel and CCS, do exist to help those sectors, and they’re “much further along than perhaps we collectively fear,” he said.

Roundtable members decided that the biggest challenge to reducing sectoral emissions is providing incentives to decarbonize, according to van Beurden.

The best incentives, according to the roundtable, include:

mandates for adopting a certain amount of a technology;
standards for any mandated technology;
faster permitting; and
a stable policy environment.

The hard-to-decarbonize sectors also need more international coordination, according to the roundtable participants.

“We need to deal with global competition because many of these heavy-duty industries are global industries,” van Beurden said. “And the moment you try it out successfully in one geography, another geography may very effectively undercut it by global competition.”

Materials

Participants of a roundtable discussion on energy supply chain challenges concluded that there’s an “unprecedented” need for critical minerals and materials in the energy transition, according to Christian Bruch, president and CEO of Siemens Energy.

Christian Bruch (International Energy Agency) FI.jpg

Christian Bruch, president and CEO of Siemens Energy, in Paris Thursday. | International Energy Agency

The demand side needs “an end-to-end strategy by country,” Bruch said in a roundtable wrap-up. But it’s not clear what is needed “country by country,” he said.

To resolve risk and uncertainty, he added, governments must work together to coordinate the supply chain to avoid duplicative activity.

On the supply side, participants said that the extraction industry must hit key environmental, social and governance marks to attract investment.

“We need to think about how to steer money into this segment and get public acceptance for the mining industry,” Bruch said.

Energy Security

At the close of the two-day meeting, IEA’s 31 member countries adopted a communiqué acknowledging a “new phase” for the agency under the guiding principle of “supporting countries in the global effort to attain net-zero greenhouse gas emissions in the energy sector by midcentury.”

Ministers committed to work together to mitigate disruptions to energy resource supply and consider ways to “modernize” IEA’s oil stockholding requirement for member countries. During the next ministerial, member countries will hear recommendations from the governing board for adjusting that requirement while maintaining a “robust and efficient emergency response mechanism suitable for the transition to a net-zero future,” the communiqué said.

In early March, member countries responded to changes in the global oil market from Russia’s invasion of Ukraine by agreeing to release 61.7 million barrels of oil from their emergency stocks. The release represented 3% of their total collective emergency reserves, according to IEA.

The agency outlined a plan in mid-March to reduce oil demand by 2.7 million barrels a day by July to help avoid a supply crunch from Russia’s actions. The plan focuses on short-term measures that would reduce oil used by cars, such as working from home, designating car-free days in big cities and lowering costs of public transportation.

In a joint statement at the end of the ministerial, IEA members condemned the invasion of Ukraine, saying that “energy should never be used as a means of political coercion or to threaten national security.”

March 27, 2022December 7, 2023

FERC Officials See Need for Changes to RTO Transmission Rules

WASHINGTON — FERC officials told the American Council on Renewable Energy’s Policy Forum on Thursday that RTO transmission planning rules must be revised to support reliability and accommodate the flood of renewable generation.

FERC Commissioner Willie Phillips, in what he said was his first speaking engagement since joining the commission in December, cited estimates that weather-related power outages cost Americans $70 billion annually. He also noted the November FERC-NERC staff report that concluded interregional transfers from PJM to MISO, and MISO to SPP, were essential to recovery from the February 2021 winter storm. (See FERC, NERC Release Final Texas Storm Report.)

“I’ve taken a lot of meetings since becoming a commissioner. And one of the things I hear all the time is that we have generators [and] transmission developers out there that want to build reliability projects; they want to build these interregional projects. But one of the one of the complaints I’ve heard is that RTOs sometimes don’t really take into consideration the reliability value of interregional lines. The thing I keep asking myself is that, in the wake of Winter Storm Uri, how in the world would you assess the … reliability benefit as zero?

“We have a wakeup call right now,” he added. “The transmission development and transmission buildout can be a huge part in addressing reliability and resilience.”

“Amen,” responded ACORE CEO Greg Wetstone, prompting applause from the nearly 200 in attendance at the Convene conference center.

Phillips said additional transfer capability along the MISO-SPP seam “could have made a huge difference and saved lives” during the storm. MISO and SPP recently estimated that transmission projects among their seam could free up to 53 GW of new low-cost renewables and more than $900 million in adjusted production costs benefits. (See MISO, SPP Finalize JTIQ Results with MISO Tx Duplicates.)

‘Reactive’ Planning Panned

Also speaking at the conference was Eric Vandenberg, deputy director of FERC’s Office of Energy Policy and Innovation, who said there was a clear “theme” in the tens of thousands of pages of comments filed in response to FERC’s July Advanced Notice of Proposed Rulemaking (ANOPR) on transmission planning (RM21-17). The consensus: Transmission planners’ “reactive” strategy cannot absorb the influx of renewable generation.

“That process … worked really well for these discrete central station generator interconnections. But now that we’re having so many interconnections, and they’re all of a much smaller size, that process is starting to break down,” Vandenberg said, citing offshore wind projects being built along the East Coast. “That kind of reactive process isn’t necessarily the best way to accommodate that multibillion-dollar investment that you’re looking to make in offshore wind.”

Most commenters on the ANOPR agreed with the commission on the need for changes, but there was no consensus over whether the commission should eliminate participant funding or create independent transmission monitors. (See FERC Tx Inquiry: Consensus on Need for Change, Discord over Solutions.)

Vandenberg made his remarks during a panel discussion with speakers from renewable developer RWE Renewables Americas, think tank RMI and Amazon Web Services (AWS), which has about 274 utility-scale generation projects totaling 12 GW in its global portfolio, most in the U.S.

Although the panel was titled “Advancing Competitive Wholesale Electricity Markets,” the speakers spent much of their time also discussing the need for changes to transmission rules.

Kevin Gresham, senior vice president of government relations and external affairs for RWE, agreed that current transmission planning is too slow for the pace of generation development and that OSW projects need regional plans rather than requiring individual states to cover the costs — as under PJM’s “state agreement approach.” (See Fierce Competition in Plans to Upgrade NJ Grid.)

Craig Sundstrom, AWS’ senior manager of energy and environment public policy, also called for broader geographical areas in planning and said RTOs should include corporate power purchase agreements in their forecasts. “That kind of load coming on the system is very real; those commitments are real,” he said, citing the more than 300 companies that have signed on to The Climate Pledge. “Transmission [planning] should account for that.”

Sundstrom said AWS is “super excited” by the provisions of the Build Back Better bill, particularly the investment tax credit for high-voltage transmission, calling it “a critical policy to unlock private investment in transmission.”

Because of its growing power demands, Sundstrom said AWS has started to get involved in stakeholder processes in PJM and CAISO.

AWS began analyzing the PJM queue in early 2021 and determined “a high likelihood of four to five years of project delays,” Sundstrom said. “For companies like ours, that want to decarbonize as fast as possible, that’s simply not keeping up with the pace of innovation and renewable deployment.”

In CAISO, AWS is challenging the ISO’s proposal “to essentially disallow corporate projects with corporate PPAs from availing themselves of resource adequacy in the market, basically limiting those to load-serving entities or utilities,” Sundstrom said.

He said the capacity AWS is deploying “provide some level of resource adequacy, which … load-serving entities and utilities [can buy] to meet their own obligations. We think that there should be some parity in that process to ensure that all the investments that we’re making in Amazon are also helping them meet the reliability needs in the market.”

‘Make Transmission Sexy’

Katie Siegner — senior associate for carbon-free electricity at RMI, who urged the use of grid-enhancing technologies to relieve some of the pressure on PJM’s transmission queue — also said transmission developers need a public relations makeover to respond to local opposition that can prevent RTO-approved projects from being built.

“I feel like there’s a lot more public support for renewables than there is for transmission today,” she said. “So there’s a need that I see to make transmission sexy.”

She cited an RMI report documenting the economic development opportunities associated with wind and solar projects.

“There’s a need to really highlight [the benefits of] transmission [to respond to complaints that] the lines that go over my state are not benefiting me at all. If we can more clearly communicate how they are — even at a macro scale benefiting us all — that, I think, can help.”

Although there was relatively little change in the electric industry for most of its 140-year history, RWE’s Gresham said the current transition means more communication is needed between generators and RTOs.

He said RTOs have not always recognized the technological advances of wind turbines. “If there was one thing that I would say [is] still to be worked on, [it] is to have more industry-RTO/ISO discussion and engagement to really figure out, what can these machines do? Because I think part of the hesitation on ancillary services and inverter technology is [a lack of] understanding of how these machines function.”

FERC’s Vandenberg said he told his staff that they should consider what the electric system will look like in 15 years in evaluating comments from the commission’s two technical conferences last fall on the energy and ancillary services markets (AD21-10). (See Stakeholders Ask FERC to Support E&AS Market Changes.)

The consensus of the technical conferences, he said, was that no single product will solve all of the issues of the generation transition. “There’s a toolkit that you can use, and that toolkit includes things like changes to your operating demand curves for reserves; things like changes to your software; looking at, you know, more efficient ways to commit your resources.

“The other thing that was also very clear is that different regions have different levels of variability and uncertainty and other operational issues that they’re all trying to accommodate.”

March 27, 2022November 17, 2023

Renewable Industry Banking on Trade Bill, Tax Incentives in 2022

WASHINGTON — Supply chain challenges and trade and tax legislation were recurrent themes in discussions at the American Council on Renewable Energy’s Policy Forum on Thursday.

ACORE CEO Greg Wetstone opened the daylong session at the Convene conference center on a note of optimism — citing Sen. Joe Manchin’s (D-W.Va.) willingness to resume negotiations over the energy tax incentives in the Build Back Better (BBB) bill he had rejected in December — before dourly noting that the Russian invasion of Ukraine had spurred “new enthusiasm for near-term fossil fuel development and … momentum for growing the export of liquefied natural gas.”

“Meanwhile, supply constraints, trade policy issues and legislative uncertainty are slowing renewable development,” he continued. “The world has changed in ways that are complicated and not fully understood. But a couple of things are clear: We do know that the folly of our continued reliance on the fossil fuel economy — which leaves us vulnerable to unsavory foreign actors and the gyrations of unpredictable markets — has never been more clear.”

Solar’s Headwinds

Katherine Gensler, vice president of government affairs and marketing for generation developer Arevon, noted that the U.S. has seen three consecutive quarters of price increases for installed solar. “That has not happened before in the United States,” she said.

John Smirnow, general counsel and vice president of market strategy for the Solar Energy Industries Association, said tariffs “are doing great damage” to the solar industry.

“We’ve literally lost tens of thousands of jobs, multiple gigawatts of solar deployment and billions of dollars of economic investment,” he said during a panel on strengthening renewable supply chains through trade and regulatory policy. “Are we still growing as an industry? Sure. Are we going to have our best year ever? Maybe. That’s a question mark.”

Smirnow said the solar industry is “dangerously over reliant” on imports. “Ninety-five percent of solar wafers are manufactured in one country, almost in one region. If solar is going to be the economic engine — the national security economic development engine — that we need here in the United States, we have to grow a solar supply chain here.”

Doing so, he said, will require the federal government to invest in manufacturing, starting with passage of the clean energy provisions of the BBB bill. “Today as a country, we mainly look to the states to drive economic development. Anytime you see a new announcement for new manufacturing investment, it’s always the state governor [or] state economic development officials that are there with the investment,” Smirnow said.

“We can’t compete for private sector investments by relying on states alone, because other countries aren’t relying on their provinces or states alone. And it’s not just China. India, for example, just started a new production-linked incentive. That’s a big reason why First Solar is building a plant there.”

Supply Chain Challenges

Rachel Jones, vice president of energy and resource policy for the National Association of Manufacturers (NAM), said industry needs to change its siloed “pre-pandemic, pre-Ukraine invasion playbook” focused on the “fastest, easiest” way to obtain supplies. Now, she said, manufacturers must understand not only their direct suppliers but the entire supply chain above them.

“I had a company that was looking to build a facility, and they couldn’t get the structural aluminum that they needed,” she recalled. “It became a several-day endeavor of unpacking backwards until we identified the global shortage of magnesium [as the problem]. Ultimately, the global shortage of magnesium was about 20 links up the chain and totally out of control of the person that was trying to build a facility. … It was eye opening.”

The need for critical minerals, she said, “means all of us in this room need to learn about mining” and processing.

“It’s great if you can mine something in the United States. But if there’s one country that controls all of the processes for that, you have to then be reliant on them.” China, for example, controls almost 90% of rare-earth processing and almost 60% of lithium processing, according to the International Energy Agency.

Offshore Wind: Opportunities and Risks

Grant van Wyngaarden, Ørsted’s head of offshore North America procurement, said the “brand new” supply chain the offshore wind industry is building in the U.S. presents economic development opportunities and “a lot of risks.”

Ørsted is building 12 vessels in U.S. shipyards but will need to use foreign heavy-lift installation vessels initially.

One example of opportunity: A plant in South Carolina that will be supplying some of Ørsted’s projects with high-voltage submarine cable will also produce cable for export to an offshore wind farm in the U.K.

Among the risks: international competition for supplies. “Other countries — Netherlands, Belgium, Australia and the U.K. — all announced increased [OSW] targets just this month alone, and that increases additional pressure on a constrained supply chain,” he said.

Although North American OSW developers are primarily sourcing components from Europe, which has been building offshore turbines for decades, van Wyngaarden said the economics will favor U.S. sources in the long term. Transportation costs are “such a significant portion of the total cost that if we can avoid that cost through domestic production, we’re at a sustainable competitive advantage,” he said.

Security Concerns

The panel also turned to supply chain-related security concerns.

Jonathan Wakely, a partner with law firm Covington & Burling, said the U.S. government is particularly concerned with ensuring no risks are introduced by manufacturers of supervisory control and data acquisition (SCADA) and other industrial control systems.

It also is taking a close look at foreign investment in U.S. renewable projects. “Many of these solar farms [and] wind farms can be located in areas of the country that are close to things that the government cares about [such as military] training and testing that’s being done in the air,” he said. “Transactions have been prohibited because of those concerns.”

At a recent NAM board meeting, Jones said, “The biggest … surprise to me, was to fully appreciate the scale of the cyber warfare that’s going on right now, in particular ransomware.

“If you have ransomware that attacks … your [operating technology] system, that takes two or three times as long to rebuild as an [information technology] ransomware type attack. And so far, almost none of these have been reported,” she said. “Companies obviously don’t want a lot of this [made public]. But I would say … a lot of the supply chain disruptions that we are seeing actually have their roots in cyber warfare by ransomware or other types of things.”

Trade Legislation

Congress is considering legislation that could address some of the panelists’ concerns.

Democratic leaders said earlier this month they will convene a conference committee to iron out differences between the United States Innovation and Competition Act (USICA) (S. 1260), approved by the Senate last June, and the America Creating Opportunities for Manufacturing, Pre-Eminence in Technology and Economic Strength (COMPETES) Act (H.R. 4521), which cleared the House of Representatives on Feb. 4.

Both would provide funding to support supply chain security and U.S. semiconductor manufacturing, research and development.

SEIA’s Smirnow said the semiconductor funding would be “hugely valuable,” but his group is concerned by “anti-circumvention” provisions in the COMPETES Act that would “reduce due process rights.”

Wakely said “every business that does business overseas with foreign partners should look at the outbound investment provision” in the House bill. “This would, for the first time, regulate a broad range of transactions between U.S. businesses and foreign businesses, including investments overseas. It’s never been done before; no other country does it. The language is extraordinarily broad.”

Jones said NAM supports the USICA provisions on chips and critical minerals. “The way that we’re thinking about this is we’ve got an opportunity right now, all of us in this room, to get the best parts of the House bill [and] the best parts of the Senate bill; we get those all together in the conference.”

March 27, 2022December 7, 2023

Texas RE Releases 2021 Annual Report

Texas Reliability Entity CEO Jim Albright said in the organization’s annual report for 2021 that staff were tested by February’s winter storm and the ongoing COVID-19 pandemic, but they “rose to the occasion and [were] able to maintain high-level operations across all program areas while functioning in a virtual work environment.”

The report, released last week, details Texas RE’s accomplishments in registration and certification, reliability standards, compliance assessment, enforcement, reliability services, and outreach.

The Reliability Services Department, which monitors the Texas Interconnection by reviewing system disturbances, analyzing grid performance and contributing to future performance, maintained situational awareness throughout the February winter storm. It also participated in developing the FERC–NERC joint inquiry’s key findings with their staff and those of other regional entities.

“Winter weather readiness has been top-of-mind for all of us this past year, so continuing to engage with stakeholders on this key topic and other extreme events is critical to bulk power system reliability,” Board of Directors Chair Milton Lee said in the report.

March 27, 2022October 30, 2023

Members Urge MISO to Assist with Federal Funding Access

MEMPHIS, Tenn. — MISO members last week urged the RTO to position itself as a liaison to help stakeholders access project funding from last year’s federal infrastructure bill.

They also said MISO’s long-range transmission projects seem ripe for an infusion of cash.

The $1.2 trillion bipartisan Infrastructure Investment and Jobs Act passed Congress in November and was swiftly signed into law by President Joe Biden. The bill provides billions in financial resources for new transmission, energy efficiency, electric vehicle development, carbon-capture technologies and nuclear fleet preservation. (See Biden Signs $1.2 Trillion Infrastructure Bill.)

During an Advisory Committee roundtable discussion Wednesday on the legislation’s effect within the RTO’s footprint, several stakeholders envisioned a mad scramble for the bill’s grants and loans. They said the process to access the funds is still unclear.

ITC Holdings’ Brian Drumm, representing transmission owners, said the grid operator might serve as a “hub or a clearing house of ideas” to bring its stakeholders together on projects that would be candidates for the bill’s funds.

Sam Gomberg 2022-03-23 (RTO Insider LLC) FI.jpg

The Union of Concerned Scientists’ Sam Gomberg said MISO could foster a coalition among its stakeholders and members that would help it better its chances to save members’ customers money.

Multiple stakeholders said the RTO might be able to approach the Department of Energy and deliver some clarity to stakeholders. Many said MISO has a role to play in gathering stakeholders together to develop infrastructure projects that can vie for federal dollars.

“MISO could be a conduit for demanding clarity … of what the DOE is asking for. I think they could gather better answers than what my group could,” said Public Consumer Advocates sector representative Christina Baker.

Gomberg said MISO has already done a lot of work to identify the transmission expansion it needs to sustain the grid through its long-range transmission planning. He said MISO could easily get noticed by the DOE as a recipient of federal dollars.

“I know the DOE is under the gun. They want to move this money out the door,” he said. “I think it would be a missed opportunity if MISO and utilities and members didn’t get in line for some funding for these projects.”

Michigan Public Service Commissioner Dan Scripps also said it appeared MISO could see some of the bill’s benefits flow back to the region through its long-range transmission plan.

Otter Tail Power’s Stacie Hebert, representing MISO transmission owners, said it’s not clear how approval of federally funded projects would logistically work. She asked whether transmission developers would still come before the RTO to request project approval.

The Affiliate Sector’s Michelle Bloodworth, CEO of coal trade organization America’s Power, said it’s logical that MISO’s transmission planning would be most affected by the bill. She asked staff to consider that the bill provides for grid development in rural areas, which could spur transmission projects in unexpected places.

Bloodworth said the infrastructure funding will likely speed up the nation’s transition to clean energy sources. She encouraged MISO to conduct analyses on how the bill might interrupt dispatchable resources’ revenue streams.

Multiple members agreed that ratepayers, especially residential ones, should ultimately see the most savings.

The Advisory Committee will discuss the energy industry’s staffing shortages and employee retention concerns during its quarterly Board Week meeting in June. MISO leadership has said it and members are not immune from the Great Reshuffle and CEO John Bear has voiced apprehensions about the grid operator’s ability to secure talent in a tight labor market.

March 27, 2022

MISO Pivots to Models, Market Engines in New Platform Replacement

MEMPHIS, Tenn. — Now in its fifth year, MISO’s market system replacement project is focusing on a one-stop model manager, new energy management system and day-ahead market-clearing engine.

MISO Vice President Todd Ramey said during the Board of Directors’ March 22 Technology Committee meeting that staff hopes to retire its existing model-management procedure by the end of the year. Going forward, the RTO will rely on a standardized model manager that will be improved upon through 2024, with monthly updates instead of quarterly refreshes.

The grid operator receives modeling data from more than 60 transmission owners and nearly 600 market participants. Ramey said that currently the submission methods vary and require manual validation of the data.

The RTO also plans to test its new energy management system this year and prepare for parallel operations in 2023. The EMS system was delivered last year by General Electric; it’s also slated to deliver the new day-ahead market-clearing engine by the end of 2023.

Ramey said General Electric has two dedicated teams for MISO’s market system, one working on the market clearing engine and another devoted to the EMS.

MISO’s market platform project is set to conclude in late 2024 when the real-time market fully migrates to the new, modular platform.

“This is critical to all the things we want to do to facilitate the change that’s coming,” MISO CEO John Bear said, referring to the new platform.

Later this year, the RTO must add an energy storage participation model to its legacy market platform. Staff have said they couldn’t simultaneously roll out the energy storage offers mandated by FERC Order 841 while working on the platform replacement. FERC has said storage participation couldn’t wait, so MISO must introduce the storage participation model on both its old and new market platforms. (See MISO: No Choice but to Double Up on 841 Compliance.)

During Thursday’s board meeting, Bear said MISO’s quarterly progress report on the market platform was brief, which he said was a good sign. He said Ramey and his team were making such good progress that there was little to report.

Director Todd Raba asked whether the RTO is stepping up cybersecurity measures following Russia’s invasion of Ukraine. The U.S. has put the private sector on notice that Russia may launch cyberattacks in retaliation for Western sanctions.

Chief Information Security Officer Keri Glitch said staff understands that Russia is ramping up “preparatory action” for a cyberattack, including scanning websites for security cracks.

“We continue to take appropriate actions,” Glitch said, adding that MISO regularly reviews updates from government authorities. Staff further addressed the situation in a closed session following the technology committee meeting.

March 27, 2022June 14, 2023

MISO Board of Director Briefs: March 24, 2022

MEMPHIS, Tenn. — MISO leadership took advantage of its Board Week in Memphis to meet with Memphis Light, Gas and Water staff, who are mulling a split from the Tennessee Valley Authority and a new source of wholesale power.

MISO was one of 27 respondents to MLGW’s requests for proposals for an alternative wholesale supplier. The utility is reviewing the proposals and has yet to announce whether it will depart TVA. (See Memphis Moves Closer to Breaking from TVA.)

MLGW representatives and Memphis-based lawyers and activists attended MISO’s Thursday board meeting.

Former MLGW CEO Herman Morris, Jr., who now practices energy law, said he appreciated getting to know the people behind MISO.

“The City of Memphis is at a crossroads,” said Pearl Eva Walker, representing the Memphis Has the Power campaign, an offshoot of the Southern Alliance for Clean Energy. “While TVA heralds its low rates, Memphians struggle to afford power.”

Walker expressed frustration at Memphis’ high energy burdens and TVA’s lagging decarbonization goals, which render the city’s own climate goals unattainable. She also said it’s unacceptable that the federal agency now dumps tons of coal ash near a South Memphis residential area of 72,000 people.

“We can’t trust TVA,” she said. “They have no accountability. They have no integrity.”

Walker urged MISO to work with the utility and forge a relationship should Memphis decide to join the RTO. The city will need to develop its transmission infrastructure if it’s to access MISO’s wholesale markets.

MISO Community Mourns Vannoy

MISO said last week that Kevin Vannoy, its director of market design, passed away unexpectedly on March 20.

An emotional CEO John Bear remembered Vannoy as a “phenomenal” link between the RTO and stakeholders whose knowledge, warm manner and quick wit benefited many.

Vannoy was with the grid operator for more than 15 years and was a fixture at Market Subcommittee and Resource Adequacy Subcommittee (RASC) meetings, often delivering presentations and leading stakeholder conversations.

RASC Chair Kari Hassler, of Xcel Energy, recalled Vannoy as an invaluable source of knowledge and “a reasonable voice in stakeholder discussions.”

MISO Expects to be On-budget in 2022

MISO’s finances are tracking to be on budget in 2022, CFO Melissa Brown told the board.

Brown said her team predicts that by year’s end, the RTO will pay about $282 million in base expenses and $47 million in project investments. Both projections are within a 1% variance from the 2022 budget set last year.

MISO has spent $22 million of its base budget and $2.3 million of its project investment budget so far this year.

Brown said inflation has taken the financial team a little off-guard.

“MISO continues to monitor the evolving labor market dynamics, supply chain situation, interest rate environment as well as inflation, which may lead to more significant adjustments to the 2022 forecast in the coming months,” she said.

Last year, the grid operator was 1.4% under its $271 million base budget and 5.5% under its $50 million project investment budget.

Brown said the underspend was primarily due to lingering COVID-19 impacts, including reduced travel spending, diminished off-site training and untouched salaries and benefits allotments because of unfilled positions.

Board Asks for Better Succession Planning

The grid operator’s directors are becoming concerned about succession planning within their ranks, according to the board’s annual self-evaluation.

They pointed out that most of the nine directors are in their sixth or seventh year of service. The directors said they and MISO should work on ensuring the board doesn’t suffer gap years where it’s light on experience with the RTO’s systems and protocols.

MISO directors are limited to serving three three-year terms.