News

Portman, Shaheen introduce energy-efficiency bill

Southwest Power Pool sets new wind generation penetration record of 52.1 percent

Energy storage rule should focus on benefits to consumers, groups say

For lack of quorum, FERC cancels monthly meetings

Alaska utilities sign power pooling agreement

Kelly highlights need for tax-exempt financing

Lack of quorum at FERC threatens inaction, groups say

Senate committee approves Pruitt despite boycott by Democrats

Bay's departure will leave FERC without a quorum

Wholesale supplier AMP prepares utilities for possible boom in distributed resources

Trump names LaFleur acting chairman of FERC

House passes measure that would fix key law on power rates

EPA denies petitions asking it to reconsider Clean Power Plan

Renewables expected to account for lion's share of 2016 capacity additions

EIA projects flat consumption, changing fuel mix, between now and 2050

Bill Gates, others launch $1 billion clean energy, technology investment fund

February 17, 2017

Portman, Shaheen introduce energy-efficiency bill

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News Editor

On Feb. 15, Sens. Jeanne Shaheen, D-N.H., and Rob Portman, R-Ohio, introduced energy-efficiency legislation similar to energy efficiency legislation they have been trying to get passed for the last six years and has attracted broad bipartisan support in the past from consumer-owned utilities and others.

The legislation, the Energy Savings and Industrial Competitiveness Act, calls for energy efficiency policy measures that will strengthen the economy and reduce pollution, the senators said in a Feb. 15 news release. They noted that components of a previous version of the bill were signed into law by President Obama in April 2015 “and are already helping individuals and companies use less energy, creating jobs and reducing emissions.”

Taken together, these bipartisan reforms “include common-sense initiatives that will create nearly 200,000 new jobs and help the economy by saving consumers $16.2 billion annually in reduced energy costs by 2030,” said Shaheen and Portman.

They noted that the bill, S. 385, has received broad bipartisan support and passed the Senate last year by a vote of 85-12, though it stalled in the House. Original cosponsors include Sens. Michael Bennet, D-Colo., Susan Collins, R-Maine, Chris Coons, D-Del., Al Franken, D-Minn., Joe Manchin, D-W.Va., Mark Warner, D-Va., and Roger Wicker, R-Miss. Among those who have endorsed it are the National Association of Manufacturers, the American Chemistry Council and the Alliance to Save Energy.

“Energy efficiency is the cheapest and fastest way to address our energy challenges in New Hampshire and around the country,” said Shaheen. “It’s also the largest sector in the U.S. clean energy economy, employing nearly 2.2 million Americans. Our bipartisan legislation would create jobs in the private sector, save families and businesses money, and drastically reduce pollution in a smart, effective and affordable way. Simply put, it’s good for our economy and good for our environment – that’s why it enjoys broad bipartisan support.”

Portman: bill would help consumers

Portman called the bill is “a win-win, creating nearly 200,000 new jobs and protecting our environment—all without a single new tax or mandate.”

The measure “would reduce our carbon emissions equivalent to taking 22 million cars off the road over the next 15 years and give our workers in Ohio and around the country a competitive advantage by making our plants more energy efficient. It’s good news for the taxpayer, too, because it would make the federal government practice what it preaches and use energy more efficiently. And by saving consumers about $16.2 billion in reduced energy costs, it will help folks who are just trying to get by, bringing down the cost of living, easing the middle-class squeeze, and giving them a few dollars extra at the end of each month that they can use for a needed expense, or savings for an investment in a kid’s college education or for retirement. There is a reason this bill has garnered such widespread support. Congress should take it up as soon as possible.”

Included in the bill are provisions calling for greater energy efficiency in building codes, worker training, coordination of retrofitting assistance for schools, and an energy performance requirement for federal buildings.

The American Council for an Energy-Efficient Economy estimated in a 2014 study that, by the year 2030, the bill would create more than 190,000 jobs, save consumers $16.2 billion a year, and cut CO2 emissions and other air pollutants by the equivalent of taking 22 million cars off the road.
 
Bill passed House in 2014, passed Senate last year

The two senators have been trying for several years to get their energy efficiency bill through Congress, and it has come close a couple of times.

In early 2014, the legislation passed the House with a broad bipartisan vote of 375-36, but then stalled in the Senate. The American Public Power Association, the Alliance to Save Energy and a broad coalition of over 80 companies, organizations, and trade associations wrote to the Senate majority leader and the chamber’s minority leader that spring, asking them to bring the bill to the floor for a vote, but it never happened. Last year, Shaheen-Portman legislation was incorporated into a broad energy bill that passed the Senate, but could not make headway in the House.

Alliance president calls for passage

“This is exactly the kind of legislation Americans want Congress to pass — bipartisan, common-sense policy that saves taxpayers money and drives economic activity and job creation,” said Kateri Callahan, president of the Alliance to Save Energy.

“There are nearly 2.2 million energy efficiency jobs across the country — in manufacturing, installation, construction, engineering and other sectors,” Callahan said. “We added 130,000 efficiency jobs last year alone, and the policies in this legislation will only boost those numbers moving forward." Saying that the bill should have been passed several years ago, Callahan urged leaders in both parties "to put an end to the gridlock and finally move it across the finish line.”

The Alliance to Save Energy’s board of directors recently named Gil Quiniones, CEO of the New York Power Authority, as the group’s new chairman.

February 16, 2017

Southwest Power Pool sets new wind generation penetration record of 52.1 percent

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News Director

The Southwest Power Pool set a wind-penetration record of 52.1 percent in the early morning of Feb. 12, making it the first regional transmission organization in North America to serve more than 50 percent of its load at a given time with wind energy, the grid operator said on Feb. 13.

The milestone beats a previous North American RTO record of 49.2 percent that SPP set April 24, 2016, it said in a press release, noting that wind penetration is a measure of the amount of total load served by wind at a given time.

The proliferation of wind power in the SPP region has grown significantly over the last decade. As recently as the early 2000s, SPP’s generating fleet included less than 400 MW of wind, and for years, wind was reported in the “Other” category in SPP’s fuel mix data, the grid operator said.

But wind is now the third most-prevalent fuel source in the SPP region. It made up approximately 15 percent of the organization’s generating capacity in 2016, behind only natural gas and coal.

Installed wind generation capacity increased in 2016 alone by more than 30 percent — up 4,000 MW from 12 GW to more than 16 GW, according to SPP. The RTO’s maximum simultaneous wind generation peak rose from 9,948 MW in 2015 to 12,336 MW in early 2016.

“Ten years ago, we thought hitting even a 25 percent wind-penetration level would be extremely challenging, and any more than that would pose serious threats to reliability,” SPP Vice President of Operations Bruce Rew said in the news release.

“Since then, we’ve gained experience and implemented new policies and procedures,” he said. “Now we have the ability to reliably manage greater than 50 percent wind penetration. It’s not even our ceiling,” Rew said, noting that SPP continues to study even higher levels of renewable, variable generation as part of its “plans to maintain a reliable and economic grid of the future.”

SPP said that the successful deployment of wind and other renewables in SPP is made possible because of its geographic diversity and robust transmission system. The RTO’s footprint covers almost 550,000 square miles from the Canadian border in Montana and North Dakota in the north to parts of New Mexico, Texas and Louisiana in the south.

SPP has approved the construction of more than $10 billion in high-voltage transmission infrastructure over the last decade, with much of it being built in the Midwest to connect rural, isolated wind farms to population centers hundreds of miles away.

February 15, 2017

Energy storage rule should focus on benefits to consumers, groups say

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News Editor

In comments it filed with the Federal Energy Regulatory Commission on Feb. 13, the American Public Power Association said it generally supports FERC’s efforts to allow storage and distributed energy resources to participate in wholesale markets, but urged the commission to keep its main focus on the end result to electricity consumers, and offered a number of recommendations.

The Association joined the National Rural Electric Cooperative Association in filing the comments on FERC’s recent notice of proposed rulemaking, or NOPR, on participation in organized wholesale markets by electric storage resources and distributed energy resource aggregators.

The notice of proposed rulemaking, issued on Nov. 17, 2016, would require regional transmission organizations and independent system operators to revise their wholesale power tariffs to better remove barriers to RTO-run wholesale market participation by energy storage resources such as large battery systems. It also would also require RTOs and ISOs to allow aggregators of distributed energy resources “to participate directly in the organized wholesale electric markets,” and similarly remove barriers to DER aggregator participation, FERC staff explained when the draft rule was issued.

“We urge the commission to maintain as its primary focus, efforts to allow electric storage and distributed energy resources to participate in organized wholesale markets for the benefit of end-use consumers,” said the Association and NRECA in their Feb. 13 comments.

The two groups noted that, in June 2016, APPA suggested four guiding principles with respect to electricity storage resources. Those principles “are applicable to the instant NOPR with respect to electric storage resources as well s distributed energy resource aggregation,” they said.

Those principles are:

1.    Maintain a focus on end-use customers. In removing barriers to entry for storage and distributed energy resources, FERC must move toward markets that produce just and reasonable rates for customers.

2.    Accommodate existing technology. FERC’s efforts should not threaten existing projects or hamper technological advances.

3.    Respect state and local regulatory authority. The final rule must not undermine the ability of state and local bodies to regulate existing and future storage and/or distributed energy projects. This issue “is of paramount importance to APPA and NRECA,” the two associations emphasized.

4.    Protect against double-recovery and cross-subsidies. Providers of storage or distributed energy resources must not be able to doubly recover their costs — at both cost- and market-based rates — or gain access to cross-subsidies, the two trade groups told FERC. One class of customers should not be put in a position of subsidizing another — e.g. wholesale customers should not subsidize retail customers, they said.

The comments also offer recommendations on specific proposals and requests for comment on FERC’s notice of proposed rulemaking.

Among those recommendations, APPA and NRECA said that, in order to abide by the statutory limits on its jurisdiction and authority, and in order to honor roles reserved for state and local authorities, the commission should clarify that the final rule will be “limited to RTO/ISO rules, and include a role for state and local authorities, similar to the Relevant Electric Retail Regulatory Authority (“RERRA”) for demand response aggregation” under FERC Orders No. 719 and 719-A.

February 9, 2017

For lack of quorum, FERC cancels monthly meetings

By Jeannine Anderson
News Editor

The Federal Energy Regulatory Commission said Feb. 8 that it will cancel all of the commission’s future monthly meetings, including the upcoming Feb. 16 meeting, until a quorum is restored.
 
In a Feb. 8 news release, FERC said that “unless otherwise announced, FERC will continue to hold previously scheduled meetings and events sponsored by FERC, including the joint meeting between FERC and the Nuclear Regulatory Commission on Feb. 23, 2017, and the upcoming Hydropower Regulatory Efficiency Act of 2013 workshop on March 30, 2017. FERC also will continue to announce and schedule future meetings, technical conferences and workshops as appropriate.”

Late last month Norman Bay, who was FERC’s chairman for the last two years, said he would resign from the commission, effective on Feb. 3. Bay announced his resignation the same day that FERC said that President Trump had selected Commissioner Cheryl LaFleur to be the commission’s acting chairman.

Bay’s departure has left FERC without enough commissioners to vote on decisions or orders — a situation that marks uncharted territory for the agency.

The lack of a quorum threatens a state of inaction at the commission that “could have profound negative impacts for the nation’s electric, natural gas, and oil customers,” said the American Public Power Association and a coalition of more than a dozen energy trade groups.

The agency be “unable to tackle much of its important work promoting energy infrastructure for the benefit of U.S. energy consumers,” the coalition said in a Feb. 2 letter to President Trump. Among the other electricity industry groups signing the letter were the Large Public Power Council, the National Rural Electric Cooperative Association and the Edison Electric Institute.

February 6, 2017

Alaska utilities sign power pooling agreement

By Paul Ciampoli
News Director

Several utilities in Alaska, including public power utility Municipal Light & Power in Anchorage, have signed a power pooling and joint dispatch agreement, which they said will allow them to collectively utilize their generation and transmission assets to benefit tens of thousands of customers.
 
Along with ML&P, which is a member of the American Public Power Association, the agreement was signed by the Municipality of Anchorage, Chugach Electric Association and Matanuska Electric Association, and filed with the Regulatory Commission of Alaska on Jan. 30.
Chugach and Matanuska are electric cooperatives.

The power pooling and joint dispatch agreement is the framework for a commitment to jointly dispatch and share in the benefits of power pooling.

The filing with the RCA is considered informational as the utilities continue to work out details of the dispatch and payment reconciliation process throughout 2017.

Parties to the agreement noted in a Jan. 30 news release that signing of the agreement solidifies work of the utilities on a power market, allowing the utilities to buy and sell power when it is more economic than generating their own.

By running the most efficient units first, regardless of location or ownership, the utilities estimate the arrangement will jointly save $12 million to $16 million a year in fuel, operations and maintenance costs, and will reduce carbon dioxide emissions by 90,000 to 120,000 tons per year.

In addition to the reduced cost of power and reduced CO2 emissions, power pooling and economic dispatch of power will also reduce natural gas usage.

“The work of the utilities serving Anchorage demonstrates what collaborative effort can achieve and builds on our cooperative work to provide reliable, cost-effective electric service for businesses and families,” said ML&P General Manager Mark Johnston.

“Working together to provide power to our customers in the most efficient, cost-effective manner means lower costs and improved reliability for everyone,” said Lee Thibert, Chugach CEO.

“We are pleased to see our recent utility cooperation expanded into a more formalized agreement that can reduce costs for our members,” said Tony Izzo, CEO, Matanuska Electric Association.

A filing requesting RCA approval of the final, long-term agreement is expected in 2018.

Other public power utilities pursue similar agreements

Other public power utilities have also pursued similar agreements.

For example, in an effort to save on costs, two Florida public power utilities last year announced plans to join forces and begin operating under a power pool-like dispatch agreement.

Gainesville Regional Utilities, a multi-service public power utility, formed the agreement with nearby JEA, Jacksonville’s community-owned electric utility.

Designed to run from May 2016 to December 2021, the arrangement could save GRU and JEA between $6.5 million and $10.8 million annually, according to the utilities.

February 6, 2017

Kelly highlights need for tax-exempt financing

By Paul Ciampoli
News Director

Ensuring continued access to tax-exempt financing for public power utilities and maintaining and building upon the strong industry-government partnership on cyber and physical grid security are among the front burner issues for the American Public Power Association in 2017, Sue Kelly, the Association’s president and CEO, said at a recent gathering of energy industry officials.

She made her remarks on Jan. 31 at the U.S. Energy Association’s 13th annual “State of the Energy Industry” forum in Washington, D.C.  

Tax reform “big agenda item” this year in Congress

Tax reform is a “big agenda item in Congress this year” and also a big concern for the Association because the primary financing tool that public power utilities use to construct new infrastructure is tax-exempt financing.

“Any time you get tax reform there’s a certain number of what we call ‘pay fors’ that are on the table,” Kelly noted. “The charitable deduction is one of them. Mortgage interest deduction is another one and deductibility of interest from state and local bonds is always another one.”

The Association is already working with a broad array of other local and state government groups to highlight the benefits of tax-exempt financing.

Kelly noted at the USEA event that she is on the executive committee of Municipal Bonds for America. This group is a non-partisan coalition focused on explaining the many benefits of the traditional municipal bond market and highlighting the tax exemption that enables state and local governments to finance vital infrastructure at the lowest cost to their taxpayers.

“This is going to be the big issue for us this year,” Kelly said. She noted that Mick Cornett, the Republican mayor of Oklahoma City, Okla., has said that one cannot be for infrastructure and be against tax-exempt financing.

Kelly underscored the point that “so much of the infrastructure in the United States – not just poles and wires,” but also roads, schools, sewers and water systems, are built with tax-exempt financing, “so that will be a big message from us this year.”

She added that she was very pleased to see that when president-elect Trump met with the U.S. Conference of Mayors during the transition, “he told them that he supported tax-exempt financing. I was very relieved to hear that, as we all were, and we hope that that indeed turns out to be the case,” Kelly said.

Grid security and the industry-government partnership

Meanwhile, Kelly noted that grid security is another topic that is “top of mind right now.” She said that as “we transition to this new administration, I want to make sure that we continue and build on the close industry-government partnership” in this area.

Kelly highlighted the work being done by the Electricity Subsector Coordinating Council. “It’s an industry-government group. It enables us to meet periodically with high government officials and it enables us to work on issues of common interest and concern together and we have work groups that work between those meetings,” she remarked.

“We’ve done a lot of things to improve information sharing. We’ve done a lot of drills. And one of the things that I really hope and will try to work to see is that the change in administration does not mean that that falls down in any respect. That we’re able to maintain that and to continue to strengthen that partnership,” she said.

Kelly emphasizes need for resource decisions at state, local levels

“A lot of our members were feeling over the last few years very, very burdened by increased federal regulation,” she noted during the USEA event.

Kelly said that with the Association’s strategic planning effort in 2015, “we came up with six initiatives and one of them” focused on addressing increased federal regulation. “We in the Association were supposed to be assisting our members in pushing back and dealing” with increased federal regulation, she said.

In 2017, “we’ll have more of an opportunity, I hope, to make resource and service decisions at the state and local level as opposed to having those decisions imposed on us by the federal government through its policies – both at administrative agencies and in Congress and the executive.”

“My hope is that means these decisions are more in line with what the local communities themselves really want,” she added.
 
“And when I talk about resource decisions, I want to be clear that our members have retained the obligation to serve, so we are continuing to make sure that our customers” have reliable, affordable and environmentally responsible power, she said.

“We have not farmed that out,” Kelly said. “We’re all in on the entire resource decision basket,” she added.

“What we’re looking forward to is being able to take a long term view to procurement of resources and to balance on a community basis supply side versus demand side, wholesale generation versus distributed generation and to think about a truly holistic” and all of the above approach.

She noted the wide variety of resources that the Association’s members consider to be part of such an approach. Those resources run the gamut from geothermal resources to the potential use of small modular reactors to small hydro generation.

“These are community decisions and I can’t emphasize enough how important it is that we be able to make those at the community level,” she said.

February 6, 2017

Lack of quorum at FERC threatens inaction, groups say

By Jeannine Anderson
News Editor

The lack of a quorum at the Federal Energy Regulatory Commission after the departure of Commissioner Norman Bay on Feb. 3 threatens a state of inaction at the commission that “could have profound negative impacts for the nation’s electric, natural gas, and oil customers,” a coalition of more than a dozen energy trade groups told President Trump.

The absence of a quorum at FERC “will leave the agency unable to tackle much of its important work promoting energy infrastructure for the benefit of U.S. energy consumers,” the coalition said in a Feb. 2 letter to the president. Among those signing the letter were the American Public Power Association, the Large Public Power Council, the National Rural Electric Cooperative Association and the Edison Electric Institute.

The lack of a quorum at the commission “will prevent the agency from making major policy decisions and could delay timely action on natural gas infrastructure certificate applications, hydropower license applications, petitions in connection with oil pipeline construction, pending mergers, and rate proceedings until such time as the agency has at least three sitting commissioners,” said the diverse group of energy organizations.

“Such delays and inaction could have profound negative impacts for the nation’s electric, natural gas, and oil customers given the need for strong national energy infrastructure and enhanced market access and opportunities.”

“Given our shared sense of the importance of regulatory certainty in promoting energy infrastructure investment and just and reasonable rates, we are aligned in urging the administration to promptly nominate candidates to fill the commission’s three existing vacancies as quickly as possible so a quorum can be reconstituted without undue delay,” they said.

Others signing the letter were the American Gas Association, the Independent Petroleum Association of America, the American Petroleum Institute, the Interstate Natural Gas Association of America, the American Public Gas Association, the National Hydropower Association, the Association of Oil Pipe Lines, the Natural Gas Supply Association, the Electric Power Supply Association and the Nuclear Energy Institute.

Bay, who has been FERC’s chairman for the last two years, said Jan. 26 that he would resign from the commission, effective on Feb. 3. Bay announced his resignation in a six-page letter the same day that FERC said that President Trump had selected Commissioner Cheryl LaFleur to be the commission’s acting chairman.

FERC has five seats but has been operating with just three commissioners: Commissioner Colette Honorable, LaFleur, and Bay. After Feb. 3, there will be only two left.

The statute that created FERC — the Department of Energy Organization Act, 42 U.S.C. § 7171 — provides that the commission must have a quorum of three members in order to take action. So once Bay leaves, the commission will lack a quorum until the president names, and the Senate confirms, one or more additional commissioners.

Without a quorum, FERC could not issue any orders on matters requiring a commission vote.

Commission issues order delegating authority to staff

On Feb. 3 — the day following the letter from the coalition — FERC issued an order delegating additional authority to agency staff to continue certain agency operations in the absence of a quorum. The order also affirms that all pre-existing delegations of authority by the commission to its staff continue to be effective.

The delegation order is effective Feb. 4, and FERC said the additional authority granted to agency staff will last until the commission has a quorum again “and takes action to lift the delegation,” the commission said in the order. The delegation period will not “extend beyond 14 days following the date a quorum is re-established,” the commission said.

FERC noted that it has a continuing responsibility to carry out its regulatory obligations under the Federal Power Act, Natural Gas Act, and Interstate Commerce Act, among other laws.

“When regulated entities make rate filings under the FPA or NGA that, in the absence of commission action, would take effect without suspension, refund protection or the ability for protesting parties to appeal, the commission’s general practice has been not to allow that to happen,” FERC said in a Feb. 3 news release. “By issuing the order today, the commission intends that to ensure that FERC staff has authority to prevent such filings from taking effect by operation of law during the no-quorum period.”

The FERC order delegates the agency’s authority as follows, the commission said:

·    Rate and other filings: The director of the Office of Energy Market Regulation, or OEMR, “can accept and suspend rate filings, and make them effective subject to refund and further order of the commission, or accept and suspend them, make them effective subject to refund, and set them for hearing and settlement judge procedures.” For initial rates or rate decreases submitted under Section 205 of the Federal Power Act, for which suspension and refund protection are unavailable, “FERC staff is granted authority under Section 206 to institute proceedings in order to protect the interests of customers.”

·    Extensions of time: FERC staff “can extend the time for action on matters where it is permitted by statute.”

·    Waiver requests: The director of OEMR “can take appropriate action on uncontested filings under the NGA, FPA and ICA, seeking waivers of the terms and conditions of tariffs, rate schedules and service agreements, including waivers related to capacity release and capacity market rules.”

·    Uncontested settlements: The director of OEMR “has authority to accept settlements not contested by any party or participant, including commission trial staff.”

February 3, 2017

Senate committee approves Pruitt despite boycott by Democrats

By Jeannine Anderson
News Editor

On Feb. 2, the Senate Environment and Public Works Committee suspended its rules to avoid a requirement that at least two Democrats take part in a committee vote — then voted to approve the nomination of Oklahoma Attorney General Scott Pruitt, President Trump’s choice to lead the Environmental Protection Agency. The nomination now goes to the full Senate for a vote. The date for the vote has yet to be determined.

Only Republicans on the committee voted, as Democrats had boycotted the meeting. The vote was 11-0.

It was the second day in a row that Democrats, who are in the minority, had refused to show up for a scheduled vote on the nomination of Pruitt for the top post at the EPA.

“Elections have consequences,” and a new president is entitled to put the people he wants in place, said committee Chairman John Barrasso, R-Wyo., at the Feb. 2 meeting. Barrasso said that the temporary suspension of committee rules — for the duration of that particular meeting — was justified because the committee’s Democrats had boycotted the vote on Pruitt for the second day in a row.

The rules were not suspended for long, as the meeting lasted only 10 minutes or so.

“We took this extraordinary step because the minority took the extraordinary step of boycotting,” Barrasso said.

“Never before in the history of the EPA has an incoming nominee been boycotted,” he thundered. “The minority wants political theater,” he said, but the nation needs a leader for the EPA.

The day before, Democrats boycotted the committee meeting where the vote was originally supposed to have taken place. Their absence, and the absence of one of the 11 Republicans on the committee, meant that the committee did not have the quorum required to vote on the nomination.

The committee has 11 Republicans and 10 Democrats, so if the original vote had taken place as scheduled, the panel was expected to approve Pruitt’s nomination on a straight party-line vote.

Ranking Democrat had asked for a postponement

The committee’s ranking minority member, Sen. Tom Carper of Delaware, sent a letter to Barrasso early in the week seeking to delay the vote on Pruitt.

Democrats on the committee “are deeply concerned about the lack of thoroughness of Mr. Pruitt’s responses to our questions for the record,” Carper said in the letter. “I share their concerns. “On their behalf, I ask you to direct Mr. Pruitt to disclose information requested by Democratic members with the same level of transparency that this committee has required of past nominees.”

This includes documents that were requested and questions that were not answered, including questions about whether, if confirmed as EPA administrator, Pruitt would recuse himself from agency matters dealing with pending litigation that he initiated, Carper said. “I request that you delay the committee’s consideration of Mr. Pruitt’s nomination until he provides complete answers our questions,” he wrote.

Barrasso responded to Carper’s Jan. 30 letter the next day, asserting that the candidate “has demonstrated his qualifications to lead the EPA” and refusing to postpone the Feb. 1 vote. He said the committee’s review of Pruitt has been “unparalleled in its scrutiny, thoroughness, and respect for minority rights.”

Following the Feb. 2 committee vote to approve Pruitt’s nomination, Barrasso said the Democrats’ complaints about inadequately answered questions amounted to “a smokescreen.”

Pruitt, a Republican, has been at the forefront of lawsuits challenging both the EPA’s Clean Power Plan and the agency’s “Waters of the United States” rule. His selection is seen as a sign that President Trump is determined to undo the Clean Power Plan, the EPA final rule aimed at curbing power plant carbon dioxide emissions.

The New York Times reported Feb. 2 that a similar scenario — a boycott by Democratic committee members, and Republicans' ensuing decision to suspend committee rules — also played out this week on the Senate Finance Committee as the minority party sought to block the nominations of Rep. Tom Price, R-Ga., to lead the Department of Health and Human Services, and Steven T. Mnuchin to head the Treasury Department.

January 30, 2017

Bay's departure will leave FERC without a quorum

By This email address is being protected from spambots. You need JavaScript enabled to view it.
News Editor

With the upcoming departure of its former chairman a few days from now, it appears that the Federal Energy Regulatory Commission will be left early next month without enough commissioners to vote on decisions or orders — a situation that, if it occurs, will mark uncharted territory for the agency.

Norman Bay, who has been FERC’s chairman for the last two years, said Jan. 26 that he is resigning from the commission, effective on Feb. 3. Bay announced his resignation in a six-page letter the same day that FERC said that President Trump had selected Commissioner Cheryl LaFleur to be the commission’s acting chairman.

FERC has five seats but has been operating with just three commissioners: Commissioner Colette Honorable, LaFleur, and Bay. After Feb. 3, there will be only two left.

The statute that created FERC — the Department of Energy Organization Act, 42 U.S.C. § 7171 — provides that the commission must have a quorum of three members in order to take action. So once Bay leaves, the commission will lack a quorum until the president names, and the Senate confirms, one or more additional commissioners.

The commission is bipartisan: no more than three commissioners can be from the same political party. The president designates one member as chairman.

All three current commissioners are Democrats. The two previous Republican commissioners, Philip Moeller and Tony Clark, left the agency in October 2015 and September 2016, respectively.

Honorable’s term is set to expire on June 30, 2017, although she is entitled to remain until either a successor is confirmed by the Senate, or the current term of Congress ends.

No quorum, no orders

Without a quorum, FERC could not issue any orders on matters requiring a commission vote, said Randolph Elliott, senior regulatory counsel for the American Public Power Association. Thus, he said, an important part of the commission’s day-to-day work would not occur.

Interested parties will be able to continue to file documents with FERC, and the staff and commissioners will be able to review cases. The commission’s regulations delegate to the staff the authority to act on certain matters, such as uncontested filings, but the commission will be unable to issue any orders where a commission vote is required, Elliott said. That means, for example, that FERC could not suspend rate filings by investor-owned utilities or natural gas companies, and could neither decide pending complaints nor issue regulations, he said.

New utility rate filings under the Federal Power Act go into effect in 60 days absent commission action, and it has been suggested that the commission, before Commissioner Bay departs, might issue a blanket order that suspends the effectiveness of new utility rate filings. “Such a suspension could last no more than five months, which might be enough time to seat at least one new commissioner, at which time FERC could act on the backlog of filings,” Elliott said.

Complaints pending over upcoming PJM capacity auction

Following are examples of recent FERC proceedings of interest to public power that could be left in limbo.

On Jan. 25, the American Public Power Association and several other organizations filed comments with FERC in support of two complaints filed with the commission regarding the pending implementation of the PJM Interconnection’s full “Capacity Performance” plan. Besides the Association, the other groups filing the comments were the PJM Industrial Customer Coalition, the Public Power Association of New Jersey, the National Rural Electric Cooperative Association, Rockland Electric Company, the Union of the Concerned Scientists, the Sierra Club, and the Natural Resources Defense Council.

The two complaints — one filed by AMP, Old Dominion Electric Cooperative and Direct Energy, and the other filed by the Advanced Energy Management Alliance — request that PJM delay implementation of its full Capacity Performance plan until PJM develops a long-term solution to facilitate the participation of a diverse set of seasonal resources, including include intermittent resources, environmentally limited resources, renewable resources, industrial demand response, energy storage, and energy efficiency.

PJM is set to hold its next annual capacity auction under the full Capacity Performance rules in May 2017. But FERC may not be able to issue an order on the complaints before the auction is held.

Cost increases in PJM estimated at $1 billion to $5 billion

Cost increases in PJM, estimated at PJM’s next Base Residual Auction to be held in May, will require 100 percent of the resources clearing the auction to meet the criteria for Capacity Performance that are fully available at all times, and will eliminate the Base Capacity Resource category that accommodates seasonal resources.

A major concern expressed in the Association’s comments to FERC over this matter is that costs will increase “due to the inevitable, unnecessary, and unreasonable exclusion of a significant number of capacity resources that are currently serving the system reliably and cost-effectively as Base Capacity Resource.” Such cost increases are estimated to range from $1.2 billion to as much as $5.2 billion.

Another example of a matter pending before the commission is that on Jan. 19, FERC issued a notice of proposed rulemaking concerning uplift cost allocation and transparency in electricity markets operated by regional transmission organizations and independent system operators. FERC said the proposal would advance its price formation goals for wholesale power markets run by RTOs and ISOs (Docket RM17-2-000). With only two sitting commissioners, FERC would not be able to finalize that rulemaking, nor could it issue a decision on any other contested matters requiring a quorum.

FERC hurrying to ‘to get orders out’ in next few days

The commission “is working to get as many orders out as possible, to maximize the time we have with Norman Bay here,” said Acting Chair LaFleur in a Jan. 26 statement. “I am confident that, with the strong team that we have here at the commission, we can continue to do our work.  The commission is also evaluating how best to do the work of the commission going forward as much as possible after Commissioner Bay’s departure. I expect there will be more to communicate on this in the coming weeks.”

LaFleur added that “nominations for the three openings at the commission would be very welcome, and I look forward to the day when we will have a full, five-member commission working here

FERC issues statement on Trump regulatory freeze

On Jan. 27, FERC issued a statement regarding the Trump administration’s regulatory freeze memorandum, issued by the White House on Jan. 20.

One of Donald Trump’s first actions after being sworn in as the nation’s 45th president on Jan. 20 was to issue an executive order halting all pending regulations until his administration has had a chance to review them. This is standard procedure for an incoming president: in January 2009, President Barack Obama issued a similar order that put a hold on pending regulations from the George W. Bush administration.  

The Trump order, explained in the Jan. 20 memo to federal agencies from the president’s chief of staff, Reince Priebus, allows the head of the Office of Management and Budget to make exceptions for “emergency situations or other urgent circumstances relating to health, safety, financial or national security matters.”

FERC “has reviewed the memo carefully,” the commission said in the Jan. 27 statement. “To the extent that the memo applies to the Commission, a triggering event described in the memo is the presence of an official designated by the new President. That happened this week with the designation of Cheryl A. LaFleur as Acting Chairman, much as in 2009 when Jon Wellinghoff was named Acting Chairman.

“Acting Chairman LaFleur has completed a review of new or pending regulations described in the memo. FERC now will send to the Federal Register previously voted Commission items that need to be published there. Previously set comment deadlines will remain unchanged.”

January 30, 2017

Wholesale supplier AMP prepares utilities for possible boom in distributed resources

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There might not be a major boom yet in behind-the-meter distributed energy in most of the states in the footprint where its member utilities are located, but American Municipal Power, Inc. (AMP) has planned ahead so that if such a boom comes, the wholesale electricity supplier and its member public power utilities will be ready for it.

AMP has put together a manual for its member utilities to give them the information they need to handle a possible upcoming surge of inquiries from customers interested in distributed power.

“We wanted to be as proactive as possible in helping our members prepare,” said AMP Executive Vice President of Member Services and External Affairs Jolene Thompson in a Jan. 11 interview with the American Public Power Association. “We’ve received a number of inquiries from our members over the past year about customer-sited generation and that led the AMP Board of Trustees and executive team to formulate a strategic approach.”

“You don’t want to be in a position where you haven’t thought about it,” she said. “Try to be ahead of the game, if you can.”

AMP, based in Columbus, Ohio, is a joint action organization that supplies electricity and services to more than 130 public power utilities in Ohio, Pennsylvania, Michigan, Virginia, Kentucky, West Virginia, Indiana and Maryland, and to the Delaware Municipal Electric Corporation, a sister joint action agency in Delaware.

Last September, AMP published a 75-page manual called the AMP Focus Forward Member Toolkit. It is a guide to distributed energy resources, or DER, and was “designed to prioritize and address some of the important national trends reshaping the electric industry,” as AMP explains in the manual’s executive summary. It is focused on customer-owned generation located behind the meter, with a special focus on rates and interconnections.

Summit gave rise to the idea of a manual

The effort to create the manual began after members of AMP’s Board of Trustees, along with CEO Marc Gerken, Thompson and some AMP staff members, attended the American Public Power Association’s first Public Power Forward Summit in Arlington, Va., in the fall of 2015. Public Power Forward, a strategic initiative by the Association, is designed to help public power utilities prepare for a new era in electricity.

“During a break, we were talking about what tools our members needed to accommodate customers’ interest in distributed resources while taking into account the operational and financial issues of importance to the utility system,” Thompson said. “If member utilities had customers who wanted to interconnect, AMP wanted to make sure its member utilities had the information that they needed to make it happen.”

After the Public Power Forward Summit, Thompson and a team of AMP staff and consultants brainstormed a multitude of concepts for the manual. “We thought it was important to involve outside consultants to gain their perspective and expertise,” she said.

Together with consultants that were partners in the project, AMP compiled the Focus Forward Member Toolkit over a 12-week period last summer, and presented the results in September 2016 at the annual conference held by AMP and the Ohio Municipal Electric Association.

Manual focuses on rates, interconnection checklist

The report has two main components, a Rate Design Guide and an Interconnection Checklist, which is a refinement of an existing AMP interconnection checklist.

The kit suggests that AMP members consider creating a standard interconnection agreement that they can have on hand, so they are ready when the first DER inquiry is raised. Having such a standard agreement, or application process, “will assure that each potential DER customer is treated fairly,” the manual notes. An interconnection policy for DER can also allow a member utility to review the generation being added to its system to ensure that the distribution system can accommodate the addition.

The amount of distributed resources on most local member systems in AMP’s footprint right now “is negligible and does not have the ability to affect overall member load curves significantly,” the manual states.

‘Duck curve’ problem could spread

However, as market share of DER increases, these resources can create new problems, such as the “duck curve” made famous by the California Independent System Operator.

According to AMP, the duck curve “represents the fact that a high level of solar generation will create a deep valley in the net remaining load curve on the grid during daylight hours.” Then, at the end of the day, when all the solar generation stops, “a steep ramping of non-solar resources is required” to keep up with demand for electricity.

These kinds of issues, which are already a challenge for regional transmission operators in areas such as California that have heavy shares of solar power, “will be faced by distribution utilities as market share increases,” the manual states.

“Changes to the grid aren’t going to happen overnight, but the national landscape clearly suggests grid modernization is something AMP members need to be prepared for,” the wholesale power supplier notes in the Focus Forward Member Toolkit. “Having a comprehensive DER policy in place before the widespread adoption of DER allows for thoughtful planning and consideration.”

Customer-side DER ‘infrequent’ so far among AMP members

“For most members, installation of customer-side DER has been infrequent and had little impact on members’ financial and operational status,” AMP said in the manual. “However, distributed generation behind the retail meter is becoming less expensive and more popular.”

The report notes that, according to the Solar Energy Industries Association, residential solar installations in the United States grew from 500 megawatts in 2012 to more than 2,500 MW in the first quarter of 2016.

In the Jan. 11 interview, Thompson noted the push by giant online retailer Amazon to power its data centers in the region using renewable energy — part of a trend among companies to increase the amount of renewable energy they purchase.

In November 2016, Amazon Web Services Inc. announced an expansion of a solar alliance with investor-owned utility Dominion Resources that will add 180 megawatts (MW) of solar generating capacity in five Virginia counties. Amazon Web Services said that it “continues to make progress toward its long-term goal of powering the AWS Cloud with 100 percent renewable energy.”

Periodic rate, cost-of-service studies recommended

The manual explains how a utility can go through a process to look at rates and policies on distributed resources, and suggests this be done every three to five years. AMP offers a timeline, as well, saying the process can take eight to 12 months.

The report also explains the basics of doing a cost-of-service study, and suggests that this, like an overview of DER rates, can be a useful exercise to go through every few years.

As more distributed resources are added, “it becomes increasingly important to understand the differences in electricity usage between a standard customer and a customer that has installed DER,” the manual notes.

Two of the most critical elements of a DER program are 1) accounting for the energy consumption and energy generated by the DER, i.e., “energy accounting,” and 2) the amount of compensation to the DER customer for the value of the energy generated by the distributed resource, the manual says. It notes that net metering “is without question the most widely adopted” of the approaches used to structure such energy transactions.

Retail rate design options

Retail rate design is an important component in determining the value of the generation resource to the DER customer and in making sure that the recovery of the member’s fixed costs can happen in a fair and equitable manner, the manual explains.

“In most circumstances with standard member rate design and net metering practices, customers that install DER will reduce their energy purchases and reduce their contribution to the member’s fixed costs. In the near term and depending on the number of DER installations, such reduction in fixed cost can reduce the margins of the member. In the longer term, the fixed costs are shifted to other customers, which most utilities strive to avoid.”

Case studies are included

AMP’s Focus Forward Member Toolkit includes case studies of four AMP members that have undertaken distributed energy projects. One of the case studies profiles the small Village of Minster, Ohio, which has combined a 4.2-MW solar project with 7 MW of battery storage. In September 2016, Minster was named “Public Power Utility of the Year” by the Smart Electric Power Alliance.
    
The case studies also outline a rate design and net metering policy created by the Borough of Ephrata in Pennsylvania; an advanced metering project in Wadsworth, Ohio; and the creation of a solar training facility in Hudson, Ohio.

Early engagement with stakeholders is recommended

The AMP manual emphasizes that when designing a distributed resource program, it’s important to engage stakeholders. Asking for early involvement by elected officials and other departments in the community “can provide for a smoother transition with any new rate structure.”
 
The manual also encourages AMP members to take advantage of resources made available through their membership in the American Public Power Association, particularly the Association’s Public Power Forward program — a strategic initiative that addresses distributed energy resources, grid modernization, enhanced retail services, new business partnerships, and rate designs.

Thompson said AMP has posted the manual online for its members, and plans to make some refinements to the electronic version to keep it up to date.

January 27, 2017

Trump names LaFleur acting chairman of FERC

By Jeannine Anderson
News Editor

President Trump has selected Cheryl LaFleur to be acting chairman of the Federal Energy Regulatory Commission, FERC said in a Jan. 26 news release. The same day FERC member Norman Bay, who has been the commission’s chairman for the last two years, announced that he is resigning from FERC, effective on Feb. 3.

“It is an honor to again be asked to serve as acting chairman,” LaFleur said in a statement. “While I recognize that FERC is in a state of transition as we await nominations to fill vacant seats at the agency, it is important that FERC’s work on the nation’s energy markets and infrastructure move forward.”

“I would particularly like to thank Chairman Norman Bay for his leadership of the commission over the past two years, and I look forward to working with him, Commissioner Colette Honorable, the terrific staff throughout the agency, and future colleagues at FERC to continue to address the important energy issues facing our nation,” LaFleur said.

The appointment took effect on Jan. 23.

FERC has five seats but has been operating with just three commissioners: LaFleur, Bay and Honorable. All are Democrats. The two previous Republican commissioners, Philip Moeller and Tony Clark, left the agency in October 2015 and September 2016, respectively.

The five-person commission is bipartisan. No more than three commissioners can be from the same political party. The president designates one member as chairman.

LaFleur, a former utility executive, has been a member of the commission since 2010. She was acting chair of FERC and then the commission’s chairman, under the Obama administration. LaFleur served as acting chairman from November 2013 to July 2014 and as chairman from July 2014 until April 2015.

Prior to joining the commission, LaFleur had more than 20 years’ experience as a leader in the electric and natural gas industry. She was executive vice president and acting CEO of National Grid USA, responsible for the delivery of electricity to 3.4 million customers in the Northeast.

Her previous positions at National Grid USA and its predecessor New England Electric System, included chief operating officer, president of the New England distribution companies, and general counsel.

She began her career as an attorney at Ropes and Gray in Boston. She has a J.D. from Harvard Law School and an A.B. from Princeton University.

Bay: It has been ‘the honor of a lifetime’

In a Jan. 26 letter of resignation that was posted on the FERC website, Bay said he was honored to have served as a member of the commission, and then as its chairman.

“I am proud of what we have accomplished on behalf of the American people over the past 21 months in furthering FERC’s mission of providing efficient, reliable, and sustainable energy to consumers,” he said in the letter, which was addressed to President Trump.

“The last few years have brought dramatic change to the energy space,” Bay wrote. He listed accomplishments by FERC, which he called “a gem of an agency” that touches the lives of all Americans.

Bay, who previously headed FERC’s enforcement office, was named chairman of the commission in April 2015. He noted in his letter that his last day as chairman was Jan. 23.

“It has been the honor of a lifetime,” he told the president in his letter of resignation. “You and my successors at FERC have my best wishes as you build on the progress we have achieved to date and work to address the energy challenges of the future.”

January 26, 2017

House passes measure that would fix key law on power rates

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News Editor

On Jan. 23, the House passed H.R. 587, the Fair Ratepayer Accountability, Transparency, and Efficiency Standards Act, or Fair RATES Act, by a voice vote. The legislation passed under “suspension of the rules,” an expedited procedure used to move non-controversial legislation, but which requires a two-thirds vote to pass a measure.
 
This bill would ensure that where rate changes take effect because the Federal Energy Regulatory Commission is deadlocked, parties still would have recourse to seek a review (and an appeal of that review) of the rate changes.
 
The legislation, introduced by Rep. Joseph Kennedy, D-Mass., is supported by the American Public Power Association and the National Rural Electric Cooperative Association. Identical legislation passed the House in the 114th Congress, but failed to advance in the Senate.
The issue the bill seeks to address stems from a requirement under the Federal Power Act that a utility — this usually means an investor-owned, for-profit utility — must give FERC and the public 60 days' notice before making changes to its rate, charge, or classification structure. If FERC is deadlocked, such changes take effect without any further action by the commission. FERC has said that changes taking effect after such a deadlock cannot be appealed because there is no decision by the commission to rehear or appeal.

The Fair RATES Act would fix this technical flaw, allowing any person, electric utility, state, municipality, or state commission aggrieved by a rate change that takes effect under such circumstances to seek rehearing within 30 days.

January 18, 2017

EPA denies petitions asking it to reconsider Clean Power Plan

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News Editor

The Environmental Protection Agency has rejected most of the 38 petitions it received asking the agency to reconsider all or parts of its final Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Utility Generating Units. The final rule, which was published in the Federal Register on Oct. 23, 2015, is better known as the Clean Power Plan. It sets limits on carbon dioxide emissions from existing fossil fuel-fired power plants.

The EPA agreed to look more closely at two issues raised in the petitions: how the rule treats biomass when co-firing with fossil fuels, and waste-to-energy power generation.

The petitions were filed by a variety of parties that included states, utilities and others. Among the petitioners were the American Public Power Association; WPPI Energy, a joint action agency based in Wisconsin; the Intermountain Power Agency in Utah; the National Rural Electric Cooperative Association; and a number of investor-owned utilities.

In rejecting the petitions, the EPA concluded that most of the issues raised in the petitions were previously addressed during the rulemaking process. Those ranged from core legal objections over the EPA’s authority to regulate CO2 emissions under the Clean Air Act to technical issues with aspects of the rule, including the reliability safety valve, the EPA's use of uniform subcategorized emission rates, and concerns over the remaining useful life of generating units.

The EPA laid out its denial of the petitions for reconsideration in a Jan. 17 Federal Register notice; plus a 266-page document explaining the basis for the denials; and four appendices. The documents are posted here.

In denying the petitions for reconsideration, the EPA noted that it “engaged in extensive and vigorous outreach to stakeholders and the general public at every stage of development of the Clean Power Plan” and said it “is firmly convinced that the extensive outreach and engagement led to a more workable rule.”

The agency added that, since the rule was finalized, “new information makes clear that the trends away from coal-fired generation and towards cleaner generation have accelerated.” As a result of these trends, the agency projects that the Clean Power Plan will “have a modest impact on the generation mix, one that is less than the EPA projected at the time of the final rule.”

The EPA also rejected 22 petitions asking it to put an administrative stay on the Clean Power Plan. The agency noted that the rule has already been on hold for almost a year because of a stay issued by the Supreme Court in February 2016.

January 11, 2017

Renewables expected to account for lion's share of 2016 capacity additions
 
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News Director

The Energy Information Administration expects 24 gigawatts of new generating capacity to be added to the power grid during 2016, once final data are in, the EIA said on Jan. 10.

For the third consecutive year, more than half of these additions will be renewable technologies, especially wind and solar, the EIA said in a “Today in Energy” report.

Of the 2016 renewable additions, nearly 60% were scheduled to come online during the fourth quarter. “Renewable capacity additions are often highest in the final months of the year, in part, because of timing qualifications for federal, state, or local tax incentives,” EIA pointed out.

Estimated fourth-quarter capacity additions for 2016 are based on planned additions reported to the EIA and are subject to change based on actual project schedules.

According to the EIA, monthly U.S. renewable electricity generation peaked in March as high precipitation and melting snowpack led to a monthly peak in hydroelectric generation and strong wind resources led to a monthly peak in wind generation.

Most renewable generation comes from the Western part of the country, which accounted for the majority of the hydroelectric (63%) and solar (77%) generation in the U.S. in 2016.

Wind generation was more evenly spread across the country with 37% occurring in the Midwest, 35% in the South, 24% in the West, and the remaining 4% in the Northeast.

Small-scale PV

Meanwhile, the EIA noted that at the end of 2015, it began publishing monthly estimates for distributed small-scale solar photovoltaic capacity and generation. The agency defines small-scale PV as one megawatt or less.

As of October 2016, the U.S. had a total of 12.6 GW of small-scale solar PV installed. Of this capacity, 56% was in the residential sector, 36% in the commercial sector, and 8% in the industrial sector. Monthly generation from small-scale solar PV peaked in July at 2.1 billion kilowatt-hours.

The EIA said that the distinction between capacity and generation shares is important to recognize. “Because non-dispatchable technologies such as wind and solar facilities generate power only to the extent those respective resources are available, their capacity factors are typically lower than those of other resources,” it said.

PTC, ITC extended

The production tax credit for wind and the solar investment tax credit were extended at the end of 2015, the EIA noted.

The tax credits include an eventual decline in value for both technologies with the PTC for wind expiring in 2020 and the ITC for large-scale solar declining from 30% to a permanent 10% and expiring for residential projects in 2022.

January 11, 2017

EIA projects flat consumption, changing fuel mix, between now and 2050
 
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Domestic energy consumption is projected to remain relatively flat over the next three decades, but the fuel mix used to produce electricity is likely to change significantly, the Energy Information Administration says in its latest long-term energy outlook.

The 2017 Annual Energy Outlook from the EIA — part of the Department of Energy — provides projections of domestic energy markets through 2050. It includes cases with different assumptions of macroeconomic growth, world oil prices, technological progress, and energy policies.

Electricity use “continues to increase — but the rate of growth remains lower than historic averages,” the report said. And by 2040, the average household will use less than half as much electricity for lighting as it did in 2016 because of greater use of energy-efficient lightbulbs, according to the Outlook.

Natural gas use for electric power generation is projected to dip because of strong growth in renewables, then to increase after the year 2020.
Natural gas use over the long term “increases more than other fuel sources in terms of quantity of energy consumed,” led by demand from the industrial and electric power sectors, the EIA said. Coal consumption “decreases as coal loses market share to natural gas and renewables” in the electricity sector.

Overall U.S. energy consumption is projected to rise by 5 percent between 2016 and 2040 under the EIA’s reference case. Total energy production, on the other hand, is projected to increase by more than 20 percent over the same period, led by increases in renewables, natural gas, and crude oil production.

Shale gas drives growth of natural gas production

Natural gas production “accounts for nearly 40 percent of U.S. energy production by 2040” in the EIA’s reference case, though the agency hedged that projection, saying that varying assumptions about resources, technology and prices in alternative scenarios “significantly affect the projection.”

Production from shale gas and from tight oil plays “is the largest contributor to natural gas production growth,” the EIA said. “Continued development of the Marcellus and Utica plays in the East is the main driver of growth in total U.S. shale gas production.”

“As natural gas prices rebound from their 20-year lows which occurred in 2016, coal regains a larger generation share over natural gas through 2020,” the EIA said. Federal tax credits will also drive near-term growth in renewable generation, displacing growth in natural gas.

Natural gas prices are projected to rise “modestly” from 2020 through 2030 as consumption of this fuel for power production increases, the Outlook said. But gas prices are projected to stay relatively flat “after 2030 as technology improvements keep pace with rising demand.”

Nuclear energy generation projected to decline

Nuclear energy generation is projected to decline between now and 2040, “as new builds already being developed and plant uprates nearly offset retirements.”

The decline in nuclear generation is projected to accelerate beyond 2040, as “a significant share of existing plants is assumed to be retired at age 60.”

Projections are subject to ‘much uncertainty’

The EIA noted that the trends highlighted in its annual energy outlook “are not predictions of what will happen, but rather modeled projections of what may happen” given certain assumptions and methodologies. Energy market projections “are subject to much uncertainty,” the agency added.
The United States, which has been a net energy importer since 1953, is expected to become a net energy exporter by 2026, the EIA said, with natural gas trade projected to be increasingly dominated by exports of liquefied natural gas.

Clean Power Plan is included in assumptions

The EIA’s reference case generally assumes that current laws and regulations affecting the energy sector, including the Environmental Protection Agency’s Clean Power Plan, are unchanged throughout the projection period. The reference case in the analysis “includes the CPP and assumes that states select the mass-based limits” on carbon dioxide, the Outlook said. The EIA noted that it also looked at an alternative case assuming that the Clean Power Plan is not implemented.

From 2005 to 2016, energy-related CO2 emissions fell at an average annual rate of 1.4 percent, the EIA said. From 2016 to 2040, the agency projects that this rate will fall to 0.2 percent per year.

Both the Clean Power Plan and state renewable portfolio standards will increase the demand for wind- and solar-generated electricity throughout the projected period, the EIA said. Those two forms of renewable energy “become the predominant sources of renewable generation” in the reference case used in the Outlook, with both wind and solar power surpassing hydroelectric generation, the agency said.

Most solar-powered generation is expected to come from utility-scale installations, but photovoltaic generation will be a significant contributor, the report said.

Over the long term, various policies, including the CPP and tax credits for renewables, will result in declining coal generation and growing natural gas and renewables generation, the report said.

70 GW wind, solar to be added by 2021

Nearly 70 gigawatts of new wind and solar photovoltaic capacity are projected to be added in the U.S. between 2017 and 2021, “encouraged by declining capital costs and the availability of tax credits,” the Outlook said.

Most of the wind capacity used to comply with the CPP is built prior to the scheduled expiration of the production tax credit for wind plants coming on line by the end of 2023, “although wind is still likely to be competitive without the tax credits,” the EIA said.

After 2030, new generation capacity is likely to be split primarily between solar and natural gas. Solar capacity is projected to represent more than 50 percent of new capacity additions between 2030 and 2040 in the EIA’s reference case.

“In particular, the Clean Power Plan and the scheduled expiration of renewable tax credits in the mid-2020s result in an increase in the electric power sector’s natural gas use,” the EIA said.

Natural gas consumption is higher in CPP scenario

In 2040, natural gas consumption in the electric power sector is projected to be about 6 percent higher in the reference case than in the “No CPP” case.

“Even if the CPP is not implemented, low natural gas prices and the tax credits result in natural gas and renewables as the primary sources of new generation capacity,” the EIA said.

Utility rebates will “contribute to a decrease in energy consumption,” especially if the Clean Power Plan stays in place, the Outlook said, since energy efficiency programs are one of the things utilities can use to comply with the CPP.

Power prices seen going up, then stabilizing

After modest price increases from 2016 to 2030 in the residential and commercial sectors, electricity prices are seen stabilizing after 2030.
Energy consumption for lighting is projected to decline for residential and commercial customers, as light-emitting diodes and compact fluorescent lamps continue to replace incandescent lamps and other types of bulbs.

In the industrial sector, energy consumption is projected to grow faster than in the residential and commercial sectors, increasing by nearly 1 percent per year between now and 2040. Meanwhile, U.S. industrial energy intensity is projected to decline by about 0.9 percent a year over the same period.

Sales of EVs, PHEVs projected to increase

Sales of battery electric vehicles are projected to increase over the period from less than 1 percent to 6 percent of total light-duty vehicles between now and 2040, while sales of plug-in hybrid electric vehicles are projected to increase from less than 1 percent to 4 percent.

“Updated data that indicate lower battery costs have increased EIA’s outlook for battery electric vehicle and plug-in electric vehicle sales.”

In a separate report on Jan. 10, the EIA said it expects 24 gigawatts of new generating capacity to be added to the power grid during 2016, once final data are in. Renewables are expected to account for the lion’s share of the 2016 capacity additions, the agency said.

December 14, 2016

Bill Gates, others launch $1 billion clean energy, technology investment fund
 
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News Director

Microsoft co-founder Bill Gates and several other prominent investors including Amazon.com founder and CEO Jeff Bezos on Dec. 12 unveiled a $1 billion investment fund, Breakthrough Energy Ventures, for emerging energy technologies.

BEV is an investor-led fund made up of members of the Breakthrough Energy Coalition. The coalition is a large group of individuals and institutions committed to investing in new energy technologies emerging out of government research institutions to provide reliable, affordable power with zero emissions.

According to a website related to BEV and the Breakthrough Energy Coalition, BEV shares the market definition of success used by traditional funds in that its goal is to make a profit.

“Thus, BEV will measure the success of its investments through risk-adjusted returns,” the website said. “BEV has a longer lifespan than many other funds, the in-house science and technical expertise, the flexibility to invest wherever opportunities present themselves and the global network of its investors will help address the challenges of investing in energy innovation while positioning the fund to take advantage of the tremendous market opportunity in the expanding energy market.”

The website said that the fund will decide where to invest based on four criteria: (1) climate impact; (2) other investments; (3) scientific possibility; and (4) “filling the gaps,” which refers to the fund’s plan to invest in companies “that need the unique attributes of BEV capital, including patience, judgment by scientific milestones, flexible investment capabilities, and a significant global network.”

The “other investments” criterion refers to the fund’s desire to invest in companies “with real potential to attract capital from sources outside of BEV and the broader Breakthrough Energy Coalition.”

The “scientific possibility” criterion calls for the fund to invest in technologies with an existing scientific proof of concept that can be meaningfully advanced.

Along with Bezos, other investors in BEV include, among others, Michael Bloomberg and Reid Hoffman, co-founder of LinkedIn. Gates serves as co-chair of the
Bill & Melinda Gates Foundation.

Breakthrough Energy Coalition recognized in late 2015

In November 2015, a new initiative was unveiled at the U.N. climate conference in Paris under which the U.S. government said it would seek to double its current base-level investment in clean energy research and development over five years.

The U.S. joined with several other governments in announcing details of the Mission Innovation effort through a joint launch statement.

The countries participating in the initiative said that business "needs to play a vital role in the commercialization and cost-effectiveness of clean energy breakthroughs, and participating countries commit to work closely with the private sector as it increases its investment in the earlier-stage clean energy companies that emerge from government research and development programs."

At that time, the countries singled out for recognition the Breakthrough Energy Coalition.

DOE’s Moniz comments on new fund

Commenting on the formation of the new fund, U.S. Secretary of Energy Ernest Moniz on Dec. 12 said that one year “after the landmark Paris climate agreement was agreed upon, creating a multi-trillion-dollar global market for clean energy innovation, the establishment of the Breakthrough Energy Coalition fund highlights the opportunity for countries participating in Mission Innovation to capture this investment potential, and then establish a strong position in that massive market.”

Moniz said that Mission Innovation countries “continue to be highly engaged one year after the initiative’s launch, and here in the United States support for clean energy R&D continues to attract broad support. This combination of public and private investment will be vital to creating the scientific and technological breakthroughs we need to strengthen our economic, environmental, jobs, and national security.”