Renewable Energy Insights » Technology

FERC Issues Pilot License for New York Tidal Project

Renewable Energy Insights — Tue, 31 Jan 2012 22:02:50 +0000

On January 23, 2012, FERC issued the first pilot project license to Verdant Power, LLC (“Verdant”) for its Roosevelt Island Tidal Energy Project No. 12611 (“RITE”). The RITE project will be a 1,050 kW tidal project located on New York’s East River, and the project will use natural tidal currents to generate power from turbines mounted on the riverbed. In approving the pilot license, FERC required a number of environmental measures to preserve the fish, wildlife, cultural, and aesthetic properties of the area surrounding the RITE project.

The term “hydrokinetics” describes zero-emission renewable power from the movement of water. Hydrokinetic projects are often referred to as “tidal” or “wave” projects, and unlike traditional hydropower projects, hydrokinetic projects do not require the building of infrastructure to create an impoundment of water (such as dams that collect and cascade water) to create energy. Low-head hydropower projects can be confused with several hydrokinetic projects because several low-head hydropower projects are smaller projects that utilize “run-of-the-river” technology, but actually, low-head hydropower usually refers to sites with a head (i.e., elevation difference) of less than five meters (about 16 feet) for the falling water.

In an effort to encourage hydrokinetic development, the Commission developed the pilot license process in 2008 to test new technologies and to evaluate appropriate sites for these new technologies. FERC also hopes to assess the environmental impact of implementing new hydrokinetic projects. In order to be eligible to receive a pilot license the project must be: (1) small, (2) short term, (3) located in environmentally non-sensitive areas based on the Commission’s review of the record, (4) removable and able to be shut down on short notice, (5) removed, with the site restored, before the end of the license term (unless a new license is granted), and (6) initiated by a draft application with the appropriate environmental analysis. To date, FERC has issued 100 preliminary permits to study the feasibility of developing a pilot hydrokinetic project, and currently there are nine entities in the pre-filing process for license applications. Only three entities have actually submitted full license applications.

The RITE project will be operated remotely, and although there will be no manned control center, dispatch technicians will be available to check interconnections. A supervisory computer will collect data on the status of each turbine and allow for real-time and post-processed performance monitoring. During periods of “no-load” when energy is not being generated, an automatic brake will be applied to the turbines and prevent the rotors from rotating.

A full copy of the Commission decision is available here.

FERC Technical Conference Addresses Reliability Issues and EPA Regulations

Renewable Energy Insights — Mon, 05 Dec 2011 21:07:10 +0000

On November 29 and 30, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) held a Commissioner-led Technical Conference on electric reliability issues. Of note, the Commission devoted an entire day of the conference to the impact of the EPA’s regulations on electric reliability. The conference produced an active discussion and debate among FERC Commissioners, EPA leadership, industry leaders, and state regulators about whether EPA’s new power plant rules will degrade electric reliability and what, if anything, FERC should be doing to evaluate and mitigate those risks. A copy of prepared testimony submitted by all panelists is available here.

The first day of the conference was devoted to NERC activities and processes. At the November 29 session, there were two panels, entitled: (1) Identifying Priorities for NERC Activities; and (2) Incorporating Lessons Learned into a More Reliable Grid. Participants on Panel 1 were asked to provide general views on “how NERC’s prioritization tool has been working” and address specific issues related to the NERC compliance and enforcement process. Panelists on Panel 2 were asked to address how “lessons learned” are incorporated into NERC priorities, including lessons from events analysis and how those get disseminated to industry. Further, panelists on Panel 2 were asked if there is a “feedback loop” into the Reliability Standards development process to locate gaps in the process.

The November 30 session was dedicated to the EPA discussion and consisted of two panels. The first panel, Panel 3, included “Presentations and Discussion on the Current State of Processes for Identifying Unit-Specific Local or Regional Reliability Issues in Response to Final EPA Regulations.” Panelists were asked to give details about their local and regional processes to identify unit-specific reliability issues in connection with final EPA environmental requirements. Panelists were also asked for details surrounding proposed exemption processes and whether they supported exemption processes identified by the RTOs or other entities in comments to the EPA. The second panel, Panel 4, was titled “Discussion on multi-jurisdictional processes.” Panelists were asked how they coordinate processes like state integrated resource planning with reliability requirements and the “safety valve proposal.” They were also asked about what role the Commission or the Department of Energy (“DOE”) should play in reliability solutions due to retirements.

The EPA-related sessions produced a sometimes spirited debate on what has become a controversial issue – whether FERC has done enough to study the reliability impact of the EPA rules and what role FERC should play in communicating reliability risks to EPA. EPA Assistant Administrator Gina McCarthy began the session with prepared remarks, in which she reiterated the public health concerns driving the EPA rules and pledged that, “the lights will not go out in the future as a result of EPA rules.”

Kicking off the subsequent panel discussion, NERC’s Mark Lauby presented the results of NERC’s most recent annual reliability assessment, which predicted a significant amount of generation retirements as a result of the EPA rules. Lauby also voiced concern over the reliability impacts of taking down large portions of the nation’s coal fleet for retrofits: “NERC is concerned about the risk to reliability from retrofitting by 2015, environmental controls in over 500 units, representing over 250 gigawatts of capacity driven by the utility air toxics rule,” Lauby said.

In the panel discussions, industry representatives, including regional transmission organizations (“RTOs”), utilities, NERC, and state regulatory commissions, debated whether the EPA rules would degrade electric reliability and what role FERC should play.

Chairman Wellinghoff argued that he sees no significant role for FERC, arguing that “planning authorities… had generally indicated that they are able to step up and address these issues.” Commissioner LaFleur noted that “while the panelists disagree on some things, maybe we would say disagree on most things, I believe they all agree that coordination and flexibility will be needed.” Commissioner Moeller voiced significant concerns about the reliability impacts of the EPA rules and suggested that “generators should not have to choose between violating reliability standards and clean air standards.” Commissioner Norris remarked that he is “sufficiently satisfied that the reliability of the electric grid can be adequately maintained as compliance with EPA regulations is achieved.” (Commissioner Spitzer did not participate.)

The day after the conference, the DOE and EPA jointly presented a new DOE report entitled, Resource Adequacy Implications of Forthcoming EPA Air Quality Regulations, which argues that the EPA’s Cross-State Air Pollution Rule (“CSAPR”) and the Mercury and Air Toxics Standards (“MATS”) will not affect grid reliability.

Atlantic Wind Connection Project Adds Belgian Grid Firm Elia to Team

Renewable Energy Insights — Tue, 02 Aug 2011 18:27:26 +0000

On July 22, 2011, the Atlantic Wind Connection (“AWC”), offshore transmission line project off the Mid-Atlantic coast that would bring thousands of megawatts of offshore wind capacity ashore (see the October 12, 2010 edition of the WER), announced that Belgium-based transmission company Elia has taken a minority stake in the project and will be providing consulting services to the AWC. Elia is Europe’s fourth largest transmission company and has extensive experience building underwater transmission lines to offshore wind farms. Elia has been involved in several high-profile offshore wind projects in Europe, where there are multiple large-scale wind farms in operation in several countries today.

Elia will join Google, Trans-Elect Development Company, LLC (“Trans-Elect”), Good Energies, and Marubeni Corporation (“Marubeni”) in the partnership to develop the Atlantic Wind Connection. As a minority stakeholder in the $5 billion project, Elia has agreed to take a 10 percent stake in the first segment of the five segment project, and then take a 5 percent stake in each of the four remaining segments. The AWC project is designed to bring up to 7,000 megawatts of wind energy ashore and is the first high-voltage, direct current (“HVDC”) offshore transmission project that has been proposed in the United States. Accordingly, Elia’s expertise should be very valuable to AWC as they have been a key player in the development of thousands of megawatts of offshore wind farms in Europe and are now playing a key role in the development of Europe’s “Super Grid,” a $40 billion transmission project that will interconnect Europe and regions around its borders with a HVDC power grid. This project is a similar concept to the proposed AWC project, as it is designed to bring vast amounts of renewable energy resources ashore. The management of AWC believes that the addition of Elia’s expertise will bring synergy to the project that is needed to ensure its success.

The AWC first announced its plan to move forward with the project in October 2010 and was granted incentive rate treatment by the Commission in May, despite opposition from utilities, state regulators, consumer advocates, and electricity market players (see the January 31, 2011 edition of the WER). The granted incentive rates will give the project a return on equity of 12.59 percent. However, AWC claims that the transmission backbone created by the project will save Mid-Atlantic electricity consumers $1.6 billion a year and provide transmission for clean, offshore wind energy for a long time.

EPA Releases Long-Awaited Emissions Standards for Boilers and Incinerators: Some Relief for Existing Solid Fuel Sources, Less So for Others

Renewable Energy Insights — Thu, 24 Feb 2011 23:49:00 +0000

Yesterday, EPA released a package of rules to impose new emissions standards for industrial boilers and incinerators known as “Maximum Achievable Control Technology” (MACT). The rules included emissions standards for five hazardous air pollutants or surrogates of hazardous air pollutants emitted from boilers at “major” and “area” sources and incinerators of solid waste or sewage sludge. In addition to the emissions standards themselves, EPA’s rule package included a redefinition of the term “solid waste” under the Resource Conservation and Recovery Act (RCRA).

In December 2010, EPA requested an extension from a court-ordered deadline that originally required EPA to finalize the package of rules last year, but the court only allowed EPA until February 21, 2011 to issue the final rules. After its request for an extension was denied, EPA conceded that the final rules would look quite different from the rules it proposed last year, and that additional procedures would be initiated to allow for additional comment on those differences.

Changes to the Proposal

Like the initial 2010 proposed rules, the final rules require coal, oil, and biomass boilers to comply with specific emission standards for particulate matter, carbon monoxide, hydrogen chloride, mercury, and dioxins/furans, while sources covered under the incinerator rule are held to stringent emission limits for nine different pollutants. However, the final rules differ in several significant ways from the original proposal.

In a telephone conference to announce the final rules, Gina McCarthy, Assistant Administrator for the Office of Air and Radiation, began by focusing on the costs and benefits of the new emission standards – asserting that, although the new rules would cost only half as much as the original proposal as a result of the changes EPA has made, the final rule would achieve nearly the same health benefits. She also stated that the final rules would result in a net creation of 2,200 jobs. The primary changes to the original proposal noted by the Assistant Administrator included (1) establishing a new category of small boilers (< 10 mmBtu/hr heat input) that would only need annual tune-ups to comply, (2) imposing only work practice standards on limited use and emergency boilers (less than 10 percent capacity factor), and (3) combining large coal and biomass boilers into one “solid fuel” category subject to the same emission standards for three of the five pollutants covered by the rule. With regard to the last item, Ms. McCarthy indicated that EPA’s intent was to allow greater flexibility for biomass sources by allowing them to avoid the need to install scrubbers and focus more on the pollutants they emit in greater quantities, such as particulate matter, which can be addressed through fabric filters or baghouses.

In addition to the differences noted by Ms. McCarthy, the new rule also includes a variety of other changes from the 2010 proposal. Some of the changes are welcome news to industry, such as less stringent mercury and dioxin/furan limits for most sources, the elimination of the need to install continuous emission monitors for carbon monoxide, and new startup and shutdown requirements that allow work practice standards to take the place of the numeric emission limits. Others changes, however, will not be good news for most facilities, such as more stringent particulate matter and hydrogen chloride emission limits for new biomass boilers, more stringent carbon monoxide limits for existing biomass stoker boilers, more prescriptive requirements for conducting an energy assessment to identify possible energy efficiency improvements, and a new procedure for claiming an affirmative defense for emission exceedances during a malfunction. The full impact of these changes on new and existing boilers remains to be seen. In a new twist to the rules, EPA has also finalized never-before-seen “output based” alternative emission standards, which would allow sources to determine compliance by comparing the level of pollutants emitted to energy output, rather than to fuel input, which in effect incorporates an efficiency component into the emissions standard.

New “Solid Waste” Definition

Once Ms. McCarthy concluded her opening remarks on the Clean Air Act rules, Mathy Stanislaus, Assistant Administrator for the Office of Solid Waste and Emergency Response, made a few remarks with regard to the redefinition of the term “solid waste” under RCRA. According to Mr. Stanislaus, the purpose of the redefinition rule is to more clearly divide those sources that would be treated as a “boiler” under Section 112 of the Clean Air Act and those that would be treated as an “incinerator” under Section 129 of the Act, since the Act defers to the RCRA definition of “solid waste” to make that distinction. The new rule states that most “secondary materials” (i.e., those that are not the primary product of an industrial process) are solid waste when burned in combustion units, but the rule provides new exceptions from that determination.

Specifically, the new definition is designed to allow for, and even encourage, the beneficial use of “secondary materials” as a product, fuel, or ingredient in another industrial process in certain situations. The rules exclude from the definition of “solid waste” (i) secondary materials that remain within the control of the generator, (ii) scrap tires managed by an appropriate program, (iii) resinated wood used as fuel, (iv) materials used as “ingredients,” (v) discarded secondary materials that are “processed” to produce fuels or ingredients, and (vi) materials that have received a case-specific “non-waste determination” from EPA. The new rule also excludes “traditional” fuels from the definition of “solid waste,” including fossil fuels, their derivatives, and clean cellulosic biomass. The intent of the new rule is to ensure that biomass boilers, and boilers that utilize “secondary materials,” need only comply with the boiler requirements described above, instead of the more stringent incinerator standards.

Notice of Reconsideration

As promised in a press release following the denial of its request for more time, EPA has already issued a “notice of reconsideration” for the rules. That notice contains a comprehensive list of the differences between the 2010 proposal and the final rule and requests comment from the public on those changes. On the telephone conference announcing the final rules, Ms. McCarthy indicated that the reconsideration will not necessarily result in additional substantive changes to the rules because EPA believes the final rules to be “realistic, achievable and reasonable” as finalized. Instead, Ms. McCarthy indicated that the reconsideration is intended largely to correct any possible “procedural defects” associated with the significant differences between the proposal and the final rule by allowing another opportunity for public comment. Even so, the notice of reconsideration states that EPA will request comment on “any provisions we propose to modify after more fully evaluating the data and comments already received.” Ms. McCarthy also stated that EPA expected to receive several petitions for reconsideration on the merits of the rule, which it would fully consider as well.

Despite the additional procedural steps EPA plans to take, EPA still expects the deadline for compliance to be 2014 for boilers and 2016 for incinerators. The final rule package will be published in the federal register in the coming weeks, but EPA has not yet established a deadline for additional comments in response to the notice of reconsideration.

U.S. Launches Unfair Trade Investigation Of Alleged China Green Tech Subsidies

Renewable Energy Insights — Tue, 02 Nov 2010 19:56:59 +0000

On October 15 the Obama Administration’s Office of the U.S. Trade Representative (“USTR”) announced it would initiate an investigation of an array of Chinese governmental policies supporting the development of green technology. The investigation is being conducted under section 301 of the Trade Act of 1974 (“section 301”), which authorizes USTR to take action to break down foreign trade barriers and enforce U.S. rights under trade agreements. Since its inception, there have been over 100 Section 301 cases but none since the Clinton administration. The Bush administration declined to accept several that were filed against Chinese currency manipulation and labor rights suppression.

This new investigation stems from a petition filed on September 9th by the United Steelworkers (“USW”). The USW petition claims that Chinese government policies violate World Trade Organization (“WTO”) rules in five broad categories:

Restrictions on access to critical materials (rare earth elements and other minerals)
Prohibited subsidies that are contingent on export performance or use of domestic content
Discrimination against imports and foreign firms in approval of projects, government procurement and awarding carbon credits
Requirements that foreign investors transfer technology as a condition of approval
Provision of trade-distorting domestic subsidies

Section 301 directs the USTR to investigate unreasonable or discriminatory trade practices and suspected violations of U.S. trade rights under any international agreement. When the dispute involves a trade agreement, (such as the WTO Agreement), the USTR is bound to follow the dispute settlement procedures contained in that agreement. If, after an investigation, the USTR finds that those foreign actions in fact do infringe upon U.S. trade rights, the USTR may impose sanctions including withholding trade concessions, enforcing duties on or restricting services, or entering into an agreement with the subject country to eliminate the unfair practice(s) or provide the U.S. with compensation.

Both President Obama and his Democratic allies in Congress had previously voiced concerns similar to those of the USW. As part of their “Make It In America” initiative, Congressional Democrats have introduced a number of bills such as the Rare Earths and Critical Materials Revitalization Act of 2010 to reduce foreign dependency on, and enhance domestic supply of, rare earths, and the Clean Energy Technology Manufacturing and Export Assistance Act which would provide businesses assistance in exporting green technology. In addition to his National Export Initiative to double U.S. exports in five years, Obama has called for the U.S. to be the leader in the development of green technology. Finally, USTR in its 2009 National Trade Estimate Report on Foreign Trade Barriers has already acknowledged China’s trade distorting policies, restrictions of raw materials exports, and encouragement of technology transfers.

Given these previous statements, and given the political season, it was inevitable that the Obama Administration would initiate an investigation. The USW petition was carefully timed so that the deadline for deciding whether to initiate would expire just weeks before the critical mid-term elections. With unemployment still in double digits, and with increasing anti-China sentiment building in Washington and around the country over Chinese policies on a host of trade issues, including in particular currency valuation, the notion that the Obama administration would refuse to act on this petition just two weeks before the mid-term elections was a non-starter.

At the same time, however, the green energy investigation poses a difficult political and policy challenge for the Obama administration. First, the administration must integrate its actions in this area within its overall management of the U.S.-China relationship. The United States has been quietly but persistently engaging China for some time on a host of sensitive trade and economic issues, including the aforementioned currency issue, while seeking to avoid a direct confrontation that could lead to an all out trade war with an increasingly assertive China. This green energy investigation adds yet another potential flash point in the tense U.S-China trade relationship.

Second, the Obama administration is believed to support many of the same type of pro-green-energy policies that are targeted in the USW petition. In President Obama’s stimulus bill, $71 billion was dedicated to clean energy funding, with an additional $20 billion for loan guarantees and tax incentives to support clean energy projects. President Obama’s budget proposes $150 billion over ten years in clean energy and efficiency programs. Clean energy job creation is also one of the central tenets of the Administration’s new Middle Class Task Force. Given these policies, and other proposals pending in Congress, the United States needs to tread carefully in denouncing green-energy subsidies as violations of WTO rules.

These factors militate in favor of a cautious, “go-slow” approach to the section 301 investigation. The Obama administration has already indicated that it intends to delay the commencement of bilateral consultations – the first step to requesting a WTO dispute settlement panel – for up to 90-days, as permitted by the statute, in order to “examine and verify” the claims in the USW petition. The administration may use this period to try to narrow the focus of the investigation and reduce the number of claims. It is also possible that the USTR will ultimately split the investigation into two or more separate WTO disputes. If consultations fail and a WTO panel is established a decision could take well over a year. If handled properly a WTO case can limit trade tensions by narrowing the focus to specific provisions and policies and turning the green energy issue into a legal, rather than a political, dispute, while at the same time allowing the United States and China to move forward in trying to reach accommodation on the full range of trade issues currently dividing the two nations.