Thursday, February 21, 2019

Overheard at ACORE Renewable Energy Policy Forum

WASHINGTON — The American Council on Renewable Energy’s (ACORE) 15th Renewable Energy Policy Forum brought regulators, federal officials, investors and others to a downtown D.C hotel for discussions on environmental policy, the growth of markets in the West and the Department of Energy’s budget. Here’s some of the highlights.

ACORE held their annual Renewable Energy Policy Forum on March 14 | © RTO Insider

Western Markets

Several speakers discussed the growth of the Western Energy Imbalance Market (EIM) and SPP’s planned expansion with Mountain West.

Powelson | © RTO Insider

FERC Commissioner Robert Powelson said the developments of markets in the West is remarkable given the distrust that remains from the 2000-2001 Western energy crisis.

“Who could have thunk it … that today around the CAISO market that you could see markets like the Energy Imbalance Market or the potential expansion of the Southwest Power Pool bringing together an eclectic group of state regulators, renewable investors, vertically integrated utilities and all doing it under the guise of market development,” Powelson said.

“Yes, there were a lot of lessons learned post-California energy crisis. But today these markets — especially EIM — have enormous potential for this industry. And I think we need to stay the course in supporting the market design and more importantly staying away from collapsing these markets with regressive policy actions.”

Picker | © RTO Insider

“I think that you’re going to see probably a Rocky Mountain state [market] formed around Southwest Power Pool … then you’re probably going to see one that’s more coastal in nature that’ll be more North-South,” said California Public Utilities Commission President Michael Picker. “I think eventually they’ll grow together. There may be some transfers across the seams. There’s always going to be too much Wyoming wind for any of the other Rocky Mountain states to swallow. But they’ll want to go talk to the [public utilities] in the Pacific Northwest — they’re seeing California as their more natural market than going east.”

Reiten | © RTO Insider

“By 2020, two-thirds of the Western Interconnection will be participating [in EIM]. That’s great,” said Patrick Reiten, senior vice president of government relations for Berkshire Hathaway Energy. “That’s only within-hour energy. You want to get to hour-ahead energy. You want to get to day-ahead.”

Converting CAISO to a multiple-state RTO would require a change in California law, he noted. (See related story, CAISO Presses Lawmakers on RTO Conversion.)

“I was pleased to hear President Picker express some optimism in terms of state legislation to enable that,” he continued. “But there may be an interim step with the EIM entities actually engaging in a day-ahead market — day-ahead unit commitment — without full ISO membership. That would require some flexibility on FERC’s behalf.”

Reiten said the markets’ promise would be enhanced by making it easier to build transmission. He recounted his experience winning federal permits for PacifiCorp’s Energy Gateway projects, which could add as much as 2,000 miles of transmission.

“It took us 10 years to federally permit those. And you can imagine what happens in 10 years between envisioning the project and actually delivering [power]. Loads change, markets change, regulations change. And so when you have that kind of lag, the risk profile [for] making the investment obviously goes up. We need to change that.”

Reiten said any federal infrastructure legislation should include changes to siting and permitting policies and the National Environmental Policy Act. “We need three things: … We need a single point of accountability — a lead federal agency that has power to make decisions. We need concrete timelines — and that gets a little sensitive because we’re talking about NEPA reform. And then we need to make sure that federal decisions aren’t revisited in the pendency of the permitting process so we can get out of the ‘Groundhog Day’ syndrome. If you can get those three things, that should shorten the permitting timeline [and] reduce the risk. We’ll see more transmission developed.”

Decarbonizing Transportation

Picker also had some advice for ACORE’s members in addressing his state’s “glut” of renewable energy.

“Rather than taking a bigger share of the existing market, think of how you could partner with the existing electric utilities or other parties to foster the electrification of transportation. In California, 20% of our carbon emissions come from the electric industry, 30% come from buildings, 40% come from transportation. So the utilities are taking a great interest in this. They see that as probably being a more natural thing for them to do, which is to build things rather than just to sell electricity. If California is going to meet its carbon goals, decarbonizing transportation becomes more important than decarbonizing the slimmer and slimmer margins in the electric industry.”

Solar Industry: ‘It Could Have Been Worse’

Mansour | © RTO Insider

Christopher Mansour, vice president of federal affairs for the Solar Energy Industries Association, said his industry is unhappy about the Trump administration’s tariffs on imported solar energy cells and panels but relieved that the investment and production tax credits survived the tax cut bill signed by the president in December.

“We don’t like the 30% tariff. It’s not good. It’s not going to be helpful to our industry in general,” said Mansour, whose organization has estimated the tariffs will cost 23,000 industry jobs. “On the other hand, given the policy environment we’re in, it could have been worse.”

SEIA is now backing a bill by Sens. Dean Heller (R-Nev.) and Martin Heinrich (D-N.M.) to create an investment tax credit for storage. “We’re hopeful. We came close this last go-round with the continuing resolution, which put in a bunch of tax extenders. We came close with that.”

Storage Role Outside of RTO Markets

Glass | © RTO Insider

Todd Glass, a partner in Wilson Sonsini Goodrich & Rosati, who moderated a panel on grid resilience, noted that FERC Order 841 — which directs RTOs and ISOs to remove barriers preventing storage from participating in energy, capacity and ancillary service markets — does not apply to utilities outside the organized markets. (See FERC Rules to Boost Storage Role in Markets.)

How will storage make inroads with them, he asked?

Gillett | © RTO Insider

“In terms of the rest of the country, in the vertically integrated markets, that’s on groups like us and ACORE and others to get out there and educate our state regulators and work with our utilities to have storage recognized as part of the [integrated resource plan] process,” responded Marissa Gillett, vice president of external relations for the Energy Storage Association.

Ott Promises to Protect Markets

Wetstone | © RTO Insider

ACORE CEO Gregory Wetstone said his group is relieved that FERC rejected the Department of Energy’s call for coal price supports but concerned about policies that may result from the commission’s resilience docket.

“We’re worried that we see traces of the [DOE proposal] in various market design and pricing proposals,” he told PJM CEO Andy Ott, after Ott put in a plug for the RTO’s proposal to allow inflexible generators to set clearing prices.

Ott | © RTO Insider

Ott assured Wetstone that competition is the “hallmark” of PJM. Ott also said a repricing proposal the RTO will file later this month will be designed to allow state clean energy procurements to coexist with its markets.

“We really can’t put one of these above the other. We need to make sure both are equally accommodated so that … when a state does make that decision it shouldn’t be penalized. But we need to figure out a way that the market signal remains healthy.”

DOE Budget

Menezes | © RTO Insider

Wetstone also had some tough questions for Under Secretary of Energy Mark W. Menezes, after Menezes spoke glowingly of the work of DOE’s national laboratories. Menezes cited the department’s battery storage goals for 2030: reducing the price to $100/kWh, increasing the range to 300 miles per charge and reducing the charging time to less than 15 minutes. “In pursuit of that goal last year, we made an award for up to $15 million for research projects on batteries and vehicle electrification technologies to enable extreme fast charging,” he said.

“You’ve made a phenomenal case for innovation, R&D investment and — I guess I would argue — opposition to the proposed DOE budget, which eliminates ARPA-E … proposes a 66% reduction in [the Office of Energy Efficiency and Renewable Energy, and] eliminates the loan guarantee program,” Wetstone told him.

Menezes responded that all department research projects come with defined goals, such as reducing costs or reaching production thresholds.

“The point is that … our job is to do early-stage research and move it along the technological readiness levels eventually getting it to where it’s commercially deployable,” Menezes said. “So, sure you can continue spending money there, but then potentially where would be the opportunities for new energy breakthroughs?”

“I think the case is there that there’s lots of good things that need to be done that the national labs would be immensely helpful with,” Wetstone persisted.

100% Renewables a ‘Red Herring’

Sivaram | © RTO Insider

Varun Sivaram, Philip D. Reed fellow for science and technology at the Council on Foreign Relations, and author of the newly released “Taming the Sun,” is under age 30, but even he doesn’t think he’ll live to see 100% renewable energy.

“Forget about 100% renewables. I don’t even want to talk about that. [It’s a] red herring — hugely expensive,” he said. “We should focus on getting as far toward that goal as possible, but laying out 100[%] as this magical milestone, I don’t think is a good or useful idea.”

— Rich Heidorn Jr.