Archive for the ‘Power Plants’ Category

The EPA, Greenhouse Gases, the D.C. Circuit, and Political Warfare

Photo via D.C. Circuit Court of Appeals

Photo via D.C. Circuit Court of Appeals

The Obama administration, increasingly frustrated by Congressional hostility to any efforts to contain greenhouse gases, has turned to the EPA as a tool for reining in carbon emissions. The agency is developing regulatory standards under the Clean Air Act to reduce carbon pollution on a number of fronts. It is coordinating with the National Highway Traffic Safety Administration to promote new technologies with the goal of reducing carbon dioxide emissions from motor vehicles by 3,100 million metric tons by the year 2025.  It is implementing rules requiring minimum amount of renewables in transportation fuel, setting national limits on carbon emissions by power plants, and implementing rules which are expected to bring about a 95% reduction of  volatile organic compound emissions from fracking gas wells. Where Congress has refused to act, the Agency has embarked on an aggressive and far-reaching effort to fill the void.

But the agency’s efforts to curb America’s copious carbon discharge may encounter a fatal snag in an unexpected place: the Court of Appeals for the District of Columbia Circuit. It is this court, arguably the second most important in the country, which reviews decisions and rule-making by many federal agencies,including the EPA, and has jurisdiction over regulations enacted under the Clean Air Act, the very act upon which the EPA is basing its regulations. The D.C. Circuit Court has a conservative reputation and environmentalists have been growing increasing concerned about the likelihood of it de-clawing the EPA’s efforts. As Steven Pearlstein has written in the Washington Post, the D.C. Circuit represents a “ new breed of activist judges …waging a determined and largely successful war on federal regulatory agencies.”

Without question, the court is well positioned to block the administration’s efforts to regulate greenhouse gas emissions via agency action. The administration, however, is determined to counter-balance the political composition of the court. The court currently has three empty spots on the bench.  The administration has put forth candidates to fill the vacant seats, a move which has some Republican politicians reaching for Orwellian political analogies. Senators Mitch McConnell and Charles E. Grassley accused Obama of “court-packing”, as though simply filling long-vacant seats on the court were the equivalent of President Roosevelt’s efforts to expand the size of the Supreme Court, a plan that would have resulted in a total of six new justices at the time. The senators know perfectly well that the D.C. court, like many others across the nation, is under staffed – it’s just in their interests to keep it that way. A dysfunctional, chronically short-staffed, and conservative court is exactly what is called for to keep the EPA’s hands off the climate control switch. The New York Times has called Republican intransigence on filling the court’s vacancies “something not far from a crisis in our constitutional system.”

Readers of this blog are well aware of the necessity of tackling global climate change. Faced with a stone wall of willful denialism and industry resistance, the administration had little choice but to turn to the EPA. The political battle over greenhouse gas emissions has now shifted inexorably to the courts: The Republican’s bone-deep hostility to regulation has assured it. Filling the D.C. court’s empty seats is likely to provoke more than a skirmish. It could turn into a major battle in the country’s – and the globe’s – efforts to keep from cooking itself to death.

Expiring Wind PTC: Who Stands Where?

Photo by Francesco Gola. Some rights reserved.

In the intensifying battle over the extension of the wind energy production tax credit, a new tactic has emerged. The main lobby for extension, the American Wind Energy Association, on Wednesday announced its support for a middle ground solution. AWEA recommends a one-year extension, followed by a five-year gradual decrease in the PTC until it goes away completely. If gradually reduced until 2019, according to industry analysis, the PTC could be eliminated and a minimally viable industry could exist and be able to continue achieving cost reductions.

Our friends at Grist worry that this tactic essentially admits that the PTC is not actually needed, and that other renewable energy sources whose production tax credits expire soon, like solar, are left in a weaker position.

The tax credit, originally passed in 1992, has been extended three times. But now 17 days remain until its expiration, and the stakes are high for both sides.

Conservative groups argued in a letter to lawmakers Wednesday that the credit “essentially transfers taxpayer dollars from your constituents and subsidizes the states with such mandates.” The states without renewable electricity standards, mostly in the Southeast, Appalachia, and the Gulf Coast, generally have less installed wind power.

In addition, Republicans have pointed to the credit as a way to help close the deficit, as it will cost $12.1 billion over ten years. Not all Republicans are convinced, though. Joining many Democrats in voicing support for the extension are Republicans whose districts house more than 80% of wind installations.

Separately, the Department of Energy has offered some good news to the wind industry. DOE announced that seven projects will receive up to $4 million in grants to complete engineering, design, and permitting processes, and three of these will be selected to receive up to $47 million over four years with a target opening of 2017.

For readers to whom the above means anything, it is probably needless to say that DOE is optimistic about the energy potential from offshore wind generation. Data suggest that 4,000 GW of energy could be tapped in state and federal waters, which is four times the capacity of all existing US electric power plants.

Training Energy’s Labor Force

Albany Township, PA. Photo by Nicholas Tonelli, some rights reserved.

As natural gas is booming, the industry is teaming up with the Labor Department to address a growing skills gap. Energy and utility industries are in growing need of skilled workers, especially those with backgrounds in science, technology, engineering, and math, and apparently these workers are becoming harder to find. Interviewed by The Hill, a Labor Department official expressed concern that the biggest obstacle to emerging energy industries is a shortage of workers with appropriate skills.

One way Labor is addressing the issue is by developing school curricula and supporting workforce-training programs. The Labor Department awarded a $15 million grant to western Pennsylvania community colleges’ training programs that feed workers into the region’s booming natural gas industry. If the program is successful, it could be replicated in North Dakota and other areas with growing energy industries. Energy firms are involved in the effort, donating equipment for training and supporting a nonprofit consortium to develop curricula and offer apprenticeships.

The electric utility industry, too, is facing the challenge of training a new workforce for the changing industry as many workers plan to retire in the coming years. Utilities are seeking workers with a new skill profile, combining electrical engineering with information technology, and sometimes struggling to find qualified workers to work on new “smart-grid” technology.

More Efficiency Standards, and Transportation Finance

Photo by Andrew Curtis. Some rights reserved.

Earlier this week, the Obama administration announced its fuel efficiency standards for cars in an effort to curb U.S. dependency on oil and reduce greenhouse gas emissions. In a related measure, on Thursday President Obama issued an executive order to spur energy efficiency upgrades at manufacturing facilities across the country. Energy efficiency policy, put on the back burner for years, has hardly moved forward despite support from members of both political parties. Some of that support comes from DOE studies indicating that doubling the nation’s industrial efficiency could create 1 million skilled jobs and bring in $234 million of investment.

The directive aims to boost combined heat and power capacity to 40 gigawatts by 2020, an increase of 50 percent compared with today. Agencies will craft best practices and help states encourage combined heat and power implementation. The administration said that reaching the goals outlined in the order would reduce energy costs by $10 billion annually in addition to attracting $40 to $80 billion in private investment.

Combining heat and power facilities to produce both simultaneously on-site is more efficient than having separate facilities. By burning less fuel, the combined heat and power technology reduces greenhouse gas emissions and lowers energy costs. By having a fuel source on-site, manufacturing facilities are protected from electricity outages.

Also in the news are the fiscal policy repercussions of the new vehicle mileage standards announced earlier, because the requirements will make less fuel tax money available for road construction and maintenance. The highway trust fund, which pays for a large portion of road projects, will take a $71 billion hit due to the requirements. Already included in the current transportation bill, set to expire in 2014, are tax loopholes and fee increases to cover a $10 billion shortfall in gas tax revenue. Expect to hear more about financing transportation projects as the gas tax brings in less revenue in the future.

 

 

 

 

Cape Wind Gets FAA Approval, Again.

The Cape Wind turbines won’t be this close. Photo by Morten A. Mitchell Larød, some rights reserved.

The FAA announced Wednesday that the 130-turbine Cape Wind project off the Massachusetts coast posed no danger to air travel. The FAA’s approval means that Cape Wind is fully permitted, with federal and state approval, a commercial lease and construction and operations plans, and power purchase agreements with utilities in Massachusetts – the only offshore wind farm so close to construction. Massachusetts, then, is about to add to its fast-growing use of renewables.

The approval does not come without controversy, however. Republican lawmakers want to investigate the possibility that the Obama administration put pressure on the agency to approve the project despite safety concerns. Even with that threat looming, the project is the subject of numerous legal challenges.

Last year, the Alliance to Protect Nantucket Sound challenged the FAA’s previous approval of the project, and the DC Circuit overturned that approval, ordering the agency to review its findings. Cape Wind must also set aside $15 million to address any issues with the radar systems used to locate aircraft in the area, but because the turbines, at 440 feet, are below a 500-foot threshold, the FAA does not expect them to obstruct pilots. Boston.com has the story here.

For those of us who might have been following this story since the George W. Bush administration, this storyline might sound familiar. That’s because this is actually the FAA’s fourth no-hazard determination, an approval that must be reviewed if construction does not begin within 18 months. Maybe the fourth time is the charm on the high seas of Nantucket Sound.

“Decentralized” Energy: The UK Leads the Way

Photo by CMG0220. Some rights reserved.

Often a development in the energy industry is chosen to be spotlighted in the Green Mien for the scope of its impact, but that is not always required. Some stories deserve to be told for their potential to describe one or two small threads that may prove to hold together a complex quilt – this is the case with today’s post. Environmental Finance has a piece about small energy projects in the UK installed at major energy-consuming locations like hospitals, manufacturers, and retailers, into which investment is pouring.

Sites like food retailer Waitrose’s store on the Isle of Wight host energy centers powered by available fuel (biomass from local timber at the Waitrose plant), which they call decentralized energy centers. Usually with thermal energy capacity between 1MW and 10MW, the centers generate power for their central energy need and sell surplus energy to nearby consumers. Hosts of these plants, the big hospitals and factories, see the benefits of mitigating against rising prices, securing energy supply, and potentially reducing environmental impact.

Because the projects in the UK are financed by multiple lenders before being converted to a long-term supply contract, the host energy-guzzlers are spared investing any capital. Investors in London are supposedly “queuing up” to finance these projects, whose feasibility has grown rapidly over the past few years. The security of the supply contracts attracts some investors, but the projects’ potential to address future energy costs and supply security are also encouraging businesses to consider an on-site energy facility.

Resources across the country are pouring into finding and developing new ways to power our lives, and the UK’s work in developing decentralized energy projects might just be blazing the path to the power plant of my dreams: just big enough to light a Walmart Supercenter.

Insurers Offer Coverage for Solar Developments

Photo by theregeneration. Some rights reserved.

Challenges to “green” energy developments abound. Compared to traditional companies even in the energy sector, means of financing projects are fast-changing, subsidies and tax credits are unpredictable, and data on projects’ returns are sparse. We wrote about trends in venture capital and IPOs for clean technology companies in February in a post recently linked to by The Atlantic, seeing energy storage and generation companies faring well in 2011. The wind industry is still waiting for Congress to vote on extending its production tax credit, and as we covered here, if it is not passed, the industry’s capacity might fall by three-quarters.

However, it is becoming easier for “green” developers to secure private financing in a functioning market. In January, we posted about a Deutsche Bank study aimed at providing data on the accuracy and reliability of energy audits associated with building retrofits, to encourage private investment in retrofits, the “low-hanging fruit” of carbon reduction. Now, insurers Assurant and GCube Insurance Services are offering an insurance product to help solar developers navigate the risks of mid-size projects, aiming to fill a gap in coverage that has often prevented developers from securing financing.

In particular, Assurant’s product uniquely bundles property and liability coverage with equipment warranty management, allowing developers to move beyond their skepticism and uncertainty toward warranty management frameworks. They offer $10 million of coverage per location – initially limited to photovoltaic projects in the US – ranging from 100kW to 3MW in capacity. Environmental Finance has a detailed description of the insurance product here.

As those behind the Deutsche Bank building-retrofit study did, we can hope Assurant’s product will lay the groundwork for further comprehensive coverage products in other clean technology sectors that might open the floodgates of private financing, maybe making debates like that over the wind PTC unnecessary.

FERC Helps Renewables’ Transmission to Electrical Grid

Photo by Peter Craine. Some rights reserved.

The Federal Energy Regulatory Commission (FERC) recently finalized a rule helping integrate Variable Energy Resources (VERs) into the US electric system. VERs are electricity generators that produce output that is not constant and controllable over time, sources like wind and solar. The existing electrical grid was designed with steady electricity generation sources in mind, and FERC’s Order No. 764 is an attempt to efficiently incorporate renewable resources into grid operations in the US by making power transmission from generator to grid more flexible.

Though renewables with variable generation are claiming a greater portion of electricity generation, the new rules could improve transmission scheduling flexibility for both VERs and traditional sources. The grid’s current setup challenges both renewable generators who struggle to work within grid rules designed for constant sources and for grid operators trying to incorporate hard-to-predict electricity sources.

The problems for VERs in the electrical grid are many. We have written about the Bonneville Power Administration struggling to cope with simultaneous surges in wind and hydroelectric power during storms, forcing it to give away or dump excess electricity. FERC’s new rule aims to help transmission from renewables to the grid in recognition of one of these problems. Under current rules, VERs incur high charges for supplying electricity in an amount above or below that committed to for each hour-long interval. With FERC’s change to scheduling transmissions in 15-minute intervals, VERs will be better able to match their committed transmission to actual output and avoid the imbalance penalties.

You can read Davis Wright Tremaine’s full advisory to learn about FERC’s Meteorological and Outage data changes, and a post of ours with background information about the new rules from November.

The Agencies Align for Nuclear

Secretary Chu. Photo by NNSA News. Some rights reserved.

Last Thursday, the Nuclear Regulatory Commission approved Southern Co.’s construction of a nuclear reactor near Waynesboro, Georgia, the first new reactor to be approved since the 1978 construction of the Shearon Harris plant in North Carolina. (The Hill covers the approval in more detail here). The story of the next year’s accident at Three Mile Island and its drag on the nuclear industry has been well told, and in the wake of the Fukushima disaster, an Obama-mandated task force calling for sweeping improvements to the NRC’s “patchwork” of regulatory requirements threatened to extend what has been decades of regulatory delays. Combined with financing problems, the industry has struggled to build new reactors. On both fronts, this week’s developments point to good news for the industry.

The Nuclear Energy Institute, the industry’s trade group, touts NRC’s approval as recognition that nuclear energy can contribute to a low-carbon future and a diversified energy supply, while critics say that the project should face additional scrutiny and environmental review after the disaster at Japan’s Fukushima Daiichi plant. Those events have prompted the NRC to consider new rules to better protect the country’s 104 reactors from earthquakes and floods, but did not deter the Commission, which voted 4-1 in favor of approval. The Commission’s chairman, Gregory Jaczko, was the lone dissenter, highlighting that reactor operators have made no assurances they will incorporate lessons learned from Fukushima into their operations.

The government also has an instrumental role in financing the new plant. The Energy Department announced this week that it is finalizing an $8.3 billion taxpayer-backed loan to build the reactors. Energy Secretary Steven Chu said that though the project still has to meet a number of conditions, the loan is nearing final approval, as reported in this article from The Hill. No surprise to anyone following the story behind another government-backed loan to an alternative-energy company, that company’s subsequent bankruptcy, and a year-long House investigation, the DOE’s loan is not without its own controversy.

Rep. Edward Markey, D-Massachusetts, in his opposition to the plant, pointed to anger over a $535 million loan to California solar firm Solyndra, which House Republicans of the Energy and Commerce Committee have been investigating for more than a year, alleging that administration officials missed warning signs and mishandled taxpayer funds. Markey wants the Committee to open an inquiry into Southern Co.’s new loan, noting that it is worth fifteen times more than Solyndra’s ill-fated loan, and describing it as “exponentially riskier.” Rep. Cliff Stearns, R-Florida, who heads the oversight panel, says the renewable energy loan guarantees that his panel is investigating are at a higher risk than the “proven [nuclear] industry” with its “established record.”

While the tentacles of politics are wrapped around every bit of this story, it illustrates some of the major hurdles alternative- and clean-energy projects face in the future, from regulatory uncertainty to evaluating risk in financing such projects. The Green Mien has posted about significant progress in financing clean energy, but we predict that Knowledge Mosaic’s tools in navigating the regulatory landscape will not prove obsolete anytime soon.

The Future of Nuclear: Small Reactors

Photo by Ayumu Kawazoe. Some rights reserved.

On Friday, we posted about the fate of the Vermont Yankee nuclear plant and its safety and reliability issues. Today, we turn to the future of nuclear power, as envisioned by the Department of Energy: small modular nuclear reactors (SMRs). That the Yankee plant in Vermont generates 35% of the electricity used in the state without emitting greenhouse gases is an outcome the DOE wants to encourage across the country.

These small reactors draw on the engineering expertise that was developed for the reactors powering naval vessels, and could be made in factories and shipped to sites with small electricity grids. Their economy of mass production would reduce capital cost and construction time, not to mention an easier permitting process. Utilities could have the flexibility to increase production by adding small reactors to their grid over time.

On Friday, the DOE released a draft Funding Opportunity Announcement to gather input from the industry to establish cost-shared agreements and support the design and licensing of SMRs. With the goal of deploying two reactors by 2022, the Department aims to back what it describes as “first-of-a-kind engineering [and] design certification and licensing.” Serving as a model for this plan is the certification of Westinghouse Electric’s new AP1000 reactor, which was developed with funding from the Energy Department.

Energy Secretary Steven Chu portrays the move as a way to advance America’s competitive edge in developing clean energy technologies as well as a step toward the United States regaining leadership in nuclear power. Forbes reports that this leadership has moved toward Asia recently, as startups – notably the Bill Gates-backed TerraPower – foreign governments, and industry giants alike have been working on small reactors in nuclear-friendly countries such as China, India, and Russia. Chinergy is building the most advanced modular project in China, a joint venture in South Africa is developing what is called a pebble bed modular reactor, and a corner of Siberia hosts four small units of a unique “graphite-moderated boiling water design.” The World Nuclear Association’s website describes current trends in small nuclear reactors.

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