Page 964 – RTO Insider

March 12, 2021

FERC Affirms Findings on PJM E&AS Offsets

FERC on Tuesday explained why it declined to act on requests by power generators and public interest groups to rehear a January compliance order on the treatment of energy market revenue calculations in PJM’s capacity auctions (EL19-58-005).

The rehearing requests — one filed jointly by Exelon and Public Service Enterprise Group — were automatically denied in January when FERC failed to act on them within the requisite 30 days.

At issue is the implementation of PJM’s net energy and ancillary services (E&AS) offset calculation used to help estimate the net cost of new entry (CONE) for resources in the RTO’s Base Residual Auction. The offset “is designed to model net revenue that a ‘representative resource’ would earn during its first year of commercial operation,” according to PJM.

FERC last November approved the details of PJM’s offset calculation, which draws on energy market results from the three calendar years before the BRA to inform modeled offers for resources. (See FERC Approves PJM Key Capacity Market Variable.) As noted by Chair Richard Glick in a concurring statement to Tuesday’s order, approval of the offset allows PJM to conduct “its long-delayed, much-needed capacity auction,” the subject of enduring disputes over the treatment state-sponsored resources.

But the commission had also directed PJM to allow combustion turbine resources to reflect in their E&AS offsets a 10% adder to account for “the additional costs and risks that may be incurred by operating the CT reference resource in a manner that fully recognizes flexibility, which is not limited only to peak hours or times of system stress.” No other resources would be eligible to include the adder.

PJM was also ordered to use historical prices to forecast operating reserve and regulation dispatch and revenues for capacity resources, variables also used in the calculation of the E&AS offset for all resources.

PJM Energy and Ancillary Services — FERC headquarters | © *RTO Insider*

Exelon, PSEG and a group of public interest and customer organizations (PICOs) in PJM, however, petitioned FERC to reconsider those directives. (FERC staff on Jan. 4 accepted PJM’s compliance filing implementing them in a delegated order.)

The PICOs argued that the 10% adder would unjustifiably increase net CONE for CT resources and drive up costs for ratepayers. They also contended that the use of historical operating reserve prices would underestimate the future revenues capacity resources would earn based on recent market changes.

FERC responded by noting “that PICOs’ rehearing arguments opposing the adder are repetitive of arguments that the commission previously considered and found unpersuasive” in a quadrennial review of PJM’s variable resource requirement curve. “We continue to find adequate evidence in the record to demonstrate that including the 10% adder results in a just and reasonable approximation of the costs for a CT unit.”

In rejecting the PICOs’ opposition to the use of historical prices, the commission said it “selected PJM’s proposed approach as a just and reasonable replacement rate given the lack of a futures markets for reserves and uncertainty regarding the actual reserve price impacts of PJM’s reserve market reforms.”

Exelon and PSEG attacked the plan from the other direction, objecting to the fact that the 10% adder wouldn’t be available to other resources. The companies also contested the use of historical prices, arguing that past performance in the small regulation market was not a good indicator of future revenues.

FERC gave these arguments similar treatment: “As the commission explained in the compliance order, PJM reasonably excluded the 10% adder from the modeled offers of combined cycle units and other resources, such as coal units, because, unlike CTs, those resources ‘do not significantly alter their operating schedules based on evolving conditions between the day-ahead and real-time markets.’”

The commission also rejected the generators’ concerns about the use of historical prices. “Contrary to the rehearing arguments of Exelon/PSEG, the use of scaled historical prices to estimate future regulation prices is consistent with the directive in the May 2020 order to use a forward-looking E&AS offset,” FERC said.

Clements Dissents

Despite the commission’s approval, a majority of the commissioners seemed to agree that the petitioners’ arguments had merit.

But Chairman Glick and Commissioner Mark Christie essentially overruled a dissent by Commissioner Allison Clements, arguing that it was imperative that PJM run the BRA for the 2022/23 delivery year.

Clements wrote that there is a “paucity of record evidence” to support the 10% adder. She disagreed with the commission’s assumption that PJM’s application of the adder and use of historical reserve prices “will yield just and reasonable capacity rates;” rather, they could have “material real-world consequences” because they feed into the net CONE value.

Clements pointed to the PICOs’ assertion that PJM’s 10% adder translates to a daily increase in net CONE of roughly $30/MW, which is nearly 12% of the recently posted RTO-wide per-day figure of $260.50/MW for the 2022/2023 BRA. These estimates “translate to significant additional capacity costs to customers,” she said.

Glick acknowledged that Clements “makes a number of good points” but said that “the real problem lies with PJM’s misguided choice of the reference resource to calculate net CONE, rather than in how it implemented the forward-looking E&AS offset in this proceeding.”

FERC has “meddled with one aspect of PJM’s capacity market after another,” said Glick, who has “dissented at nearly every turn” in the capacity market proceedings, arguing that “truly bad public policy” produces rates that are “patently unjust and unreasonable.”

“With that in mind, now is not the time to once again pull the rug out from underneath the auction,” Glick said. He added that there is no “superior alternative to PJM’s proposal to use historical reserve prices as the basis for projecting future reserve revenues.”

“Were such an alternative available, I agree that it would merit a hard look,” Glick said. “But as it is not, we must provide PJM with the certainty it needs to finally run the upcoming auction and then, with that behind us, turn to remedying the more fundamental problems that the commission has created over the course of the last three years.”

Christie said he shared Clements’ concerns about the adder but is “convinced any such changes at this stage would threaten — or indeed obstruct — the ability of PJM to conduct the Base Residual Auction as scheduled this May, which is essential for reliability purposes.”

He added that “the PJM capacity market is not a true market, but is, instead, an administrative construct whose very complexity is inconsistent with transparency.” He said he has been “vocal” about considering the issue in a “general proceeding” such as a technical conference.

March 12, 2021

Senators Grill Robb, Asthana over Texas Outages

The February winter storm and resulting dayslong outages in Texas loomed large over Thursday’s meeting of the Senate Energy and Natural Resources Committee, with members pressing representatives of the electricity sector for an explanation of the events and assurances that they are working to prevent future mass failures.

Senate Texas outages — Sen. Joe Manchin (D-W.Va.) | *U.S. Senate*

However, the committee emphasized that they were not interested in scapegoating a single state. Senators described last month’s disaster — when at one point nearly 49% of total installed generating capacity within ERCOT was unavailable and the operator came “seconds and minutes away” from complete breakdown — as a wake-up call about the vulnerability of the entire national grid. (See ERCOT was ‘Seconds and Minutes’ from Total Collapse.)

“[Let] me be clear: Today’s hearing is not a referendum on Texas,” Chair Joe Manchin (D-W.Va.) said in his opening remarks. “We’ve seen the impact of extreme weather events to our electric grid across the country … [and] we need to incorporate all of the lessons learned from those events into our future planning, particularly as we can expect both our energy mix and weather patterns to be different in the next decade than they were in the last decade.”

NERC CEO Jim Robb expanded on this theme in his written testimony, citing several weather-related incidents in recent years — including the August 2020 heat wave that led to rolling blackouts in California and grid emergencies in other Western states — to argue that no region is immune to disruption. (See WECC Findings Show Complexity of Heat Wave Event.) As severe weather events become more frequent, grid planners will have to be proactive about preparing their systems for stronger impacts.

No Universal Solution

What form that preparation might take was a major topic of questioning, with senators bringing up a variety of measures to ask what impact they might have had on the resilience of the grid during the weather events that Robb mentioned. Hypothetical improvements raised by senators included building out natural gas and other traditional assets to offset the purported unreliability of wind and solar facilities; implementing capacity markets to incentivize generators to make more resources available for potential surges; and expanding or improving transmission facilities to remove bottlenecks between supply and demand.

Attendees generally agreed on the need for more transmission, but they were more reluctant to endorse other recommendations in light of different regional needs. PJM CEO Manu Asthana acknowledged that his RTO’s capacity market was designed to prevent the kind of instability that gripped Texas in February, but he warned that the solution was not likely to be so simple.

“It’s easy to think, ‘Oh, if only Texas had a capacity market, this wouldn’t have happened,’” Asthana said. “I think Texas would have had a higher reserve margin [in that event], but it’s important to note that … Texas had reported a reserve margin for this winter of 43%” in NERC’s Winter Reliability Assessment. “And so it was not a shortage of capacity; it was this incredibly cold weather for which the capacity was not prepared.” (See NERC Warns of Fuel Bottlenecks in Coming Cold Months.)

Texas Faces Heat on Winter Prep

Several members seized on that lack of preparedness, using Robb’s observation that FERC and NERC had issued a cold weather preparedness guideline following the 2011 cold weather event in Texas and Arizona to suggest, in the words of Sen. Mazie Hirono (D-Hawaii), that “they probably didn’t follow your recommendations very well.”

Robb was guarded in his response to Hirono. While he acknowledged that the cold weather preparedness standard currently under development at NERC “no doubt … would have helped” in last month’s crisis, he reminded members that the situation was extremely complex. For this reason NERC and FERC are conducting a joint inquiry to establish the exact causes of the outages.

“I think one of the things that … we will uncover through this inquiry is … if the power plants were weatherized adequately for the conditions that were in place, whether the … natural gas system in Texas would have been able to deliver fuel to those plants,” Robb said.

Several committee members used the February outages as a way to argue that the transition to renewable generation resources must not be pursued too hastily. Ranking member John Barrasso (R-Wyo.) said in his opening statement that utilities “must work with the grids we have today, not with the grids we wish [for] in 15 or 25 years,” and that traditional generation must be a part of the national energy strategy for the foreseeable future.

“Increasingly the national discussion on electricity has centered around a single metric: how much greenhouse gas does the source of electricity provide,” Barrasso said. “The discussion has failed to pay sufficient attention to the questions of reliability, resiliency and affordability. … We must ensure that our grids can provide electricity at all times, and at prices that American families and businesses can afford. The American public deserves to know what policies and measures are necessary to ensure that that happens.”

March 12, 2021

Natural Gas Use Expected to Rise in NY

New York will see an increase in new natural gas plants and the hours of operation of existing gas plants after the state’s Indian Point Nuclear Energy Center closes in April, New York State Energy Research and Development Authority Board Member John B. Rhodes said Wednesday.

However, the long-term role of natural gas in the state’s energy grid is still unknown, he said during a webinar in Our Energy Policy’s Energy Leaders series.

As states in the Northeast grapple with balancing decarbonization with energy reliability and affordability, there is a possibility that thermal power generation, or energy produced by burning liquified natural gas to convert it into electric energy, “needs to be a part of that mix,” Rhodes said. But other solutions, such as battery storage and dynamic load, or adjusting the load demand on the electrical power grid to balance overall grid load with generation, are promising alternatives.

“Our pathway to backing down gas from the power grid is much clearer than it is for heat,” Rhodes said.

New York Natural Gas — As large renewable energy projects ramp up in New York, the state will see a near-term increase in natural gas power plants, such as the one seen here in New York City. | *Shutterstock*

Rhodes is confident the state will reach its goal of 70% renewables by 2030 set by the Climate Leadership and Community Protection Act in 2019, but “it’s always the case that the last megawatt-hours are the hardest to get.”

The phase out of natural gas from the heating industry, however, has a solution gap, Rhodes said. “Buildings in general are a tough sector for energy transition.”

According to Rhodes, the building sector is not centered on how buildings use energy; it is centered around serving the people that are in them.

Investing in Mitigation

Another challenge to weaning the heating sector off oil and natural gas is buy-in from consumers, Kyle Kimball, vice president of government, regional and community affairs at Consolidated Edison, said during the webinar.

“One of the biggest challenges is uptake — or getting the building decision maker or homeowner to say yes to upgrades” that would improve heat insulation, Rhodes added.

Property owners can be hesitant to go through the disruption that structure upgrades can entail. But consumer attitudes are changing.

A new poll by the MassINC Polling Group, sponsored by the Barr Foundation and conducted with input from the Massachusetts Executive Office of Energy and Environmental Affairs, found that residents are highly supportive of policies that would help them upgrade their homes, especially incentives for utility companies to help make customers’ homes more efficient.

Although most residents are satisfied with the heating setup they already have, the poll found evidence that those who have made the switch to renewables are glad they did. And a third of those who currently heat their homes with electricity from the grid say their top choice would be electricity that comes from solar.

Rhodes said that in his experience the “awareness and appetite to invest to avoid climate change is a lot higher in 2021 than it was in 2013.”

There remains, however, room for innovation in improving a building envelope practically and affordably to move away from energy sources like natural gas, Rhodes said.

March 12, 2021November 2, 2023

NJ Regulators Give Microgrid Projects a Thumbs Up

Proposed microgrids in Atlantic City and seven other locations took another step toward reality after the New Jersey Board of Public Utilities (BPU) last week approved $4 million in subsidies for the projects.

The Atlantic City project being developed by independent power producer DCO Energy would provide emergency backup power to Caesars Atlantic City Hotel and Casino, Bally’s Hotel and Casino, The Claridge hotel, Boardwalk Hall — best known as the traditional home of the Miss America pageant — local shops and the city’s main hospital.

The project will involve a retrofit to increase the capacity of the Midtown Thermal Control Center, which currently provides heating, cooling and emergency power to casinos and other facilities, to 19.3 MW.

The BPU’s awards were the result of a two-part competition that began in 2017 under the Town Center Distributed Energy Resources Microgrid Design Incentive Program. Besides Atlantic City, subsidies went to Montclair Township, the Borough of Highland Park, Hudson County, the City of Hoboken, Neptune Township, Woodbridge Township and the New Jersey Department of the Treasury on behalf of the City of Trenton. Atlantic City’s $1.1 million grant was the largest award.

The Atlantic City microgrid will involve a retrofit to increase the capacity of the Midtown Thermal Control Center, which currently provides heating, cooling and emergency power to casinos and other facilities, to 19.3 MW. | DCO Energy

The BPU said the eight projects would provide resilience to 24 Federal Emergency Management Agency Category IV facilities (including hospitals, fire and police stations) and 32 FEMA Category III facilities (including educational facilities and other buildings where more than 300 people congregate).

“In addition, they would deploy 10.5 MW of new or existing solar PV generation and 2.9 MW of new or existing battery storage, resulting in over 24,000 tons of avoided CO2 emissions annually,” the BPU said.

New Jersey’s interest in microgrids dates back to 2012 when Superstorm Sandy battered the state. After making landfall with hurricane-force winds near Atlantic City, the storm devastated the Jersey Shore, causing major flooding and power outages that left millions in the dark for days. Public Service Electric & Gas, the state’s largest utility, estimated Sandy did about $300 million in damage to its transmission and distribution system. According to IHS Global Insight, the storm, which also hit New York City, caused as much as $30 billion in property damage, making it one of the costliest natural disasters in U.S. history.

“As the recent events in Texas have reminded us, infrastructure resilience is critical to maintaining reliable energy and utility services in the event of an emergency. We learned this ourselves during and after Superstorm Sandy,” said BPU President Joseph Fiordaliso at the board’s March 3 meeting. “But we are moving in a direction that hopefully will never allow what happened in Texas to happen here in New Jersey.”

Power disruptions in Texas and California have brought new attention to microgrids. ERCOT, the nonprofit manager of Texas’ grid, fired CEO Bill Magness last week after the system nearly collapsed during a winter storm that left millions without power. (See ERCOT Board Cuts Ties With Bill Magness.) In January, the California Public Utilities Commission ordered the state’s investor-owned utilities to offer a $200 million microgrid incentive program to communities at risk of public safety power shutoffs because of wildfires. (See Calif. PUC Orders $200M Microgrid Incentive Program.)

Microgrids haven’t been an easy sell to utilities, which see them as a threat to their traditional monopoly business, according to Guidehouse Insights Research Director Peter Asmus, who tracks the microgrid industry.

“Most microgrids are not deployed by utilities,” Asmus wrote in an email. “As such, they are often not located in ideal locations to bolster the resiliency of the larger grid, though that is changing as microgrids can serve as excellent demand response resources. And given recent outages linked to extreme weather — such as in Texas — the need for greater resiliency is clear. But utilities worry that these microgrids are not directly under their control, could perhaps impact the larger grid if they don’t operate properly, and could result in a loss of revenue. ”

The microgrid would provide emergency back-up power to Caesars Atlantic City Hotel and Casino; Bally’s Hotel and Casino; The Claridge hotel; Boardwalk Hall, local shops, and the city’s main hospital. | Google

According to Adam Benshoff, vice president for regulatory affairs at the Edison Electric Institute, utilities often have problems persuading regulators to allow them to recoup the costs of microgrids in rates.

“They’ve had trouble even getting approval for sort of public purpose microgrids — one that will just keep critical online infrastructure like hospitals, police stations fire stations, things like that,” Benshoff said in an interview. “Sometimes it’s difficult to sell unless you can show real value to the broader customer base.”

DCO acquired the Midtown Thermal Control Center in 2016 from Pepco, the parent company of local utility Atlantic City Electric. According to DCO Chairman Frank DiCola, the biggest challenge facing the company in getting the microgrids established is getting Atlantic Electric to agree to it.

“We need them to work with us in establishing the microgrid,” DiCola said in an interview, adding that he had no reason to expect any problems with the utility company. “But you never can tell,” he added. “We have been talking to them on-and-off for the past couple of years. We want to work in a very cooperative manner with them. They are part of the solution.”

Pepco told NetZero Insider that it was committed to microgrids and other technologies that will bolster the company’s grid reliability,

“As with all projects on our system, we will continue to engage with the project developer and refine this microgrid project to ensure it is in the best interest of our customers and will not affect our ability to provide clean, safe, affordable and reliable energy service for our customers,” it said.

March 12, 2021November 1, 2023

Vote on Mass. Climate Bill Delayed in Senate

Massachusetts Senate Minority Leader Bruce Tarr (R) on Thursday delayed the vote on an exhaustive climate bill after lawmakers reworked the text to incorporate amendments from Republican Gov. Charlie Baker.

Tarr called for more time for legislators and the public to review the new version of the bill after the changes were released late Wednesday.

Senate Democrats expressed their disappointment that the vote was delayed. The bill has been more than a year and a half in the making in the legislature and would serve as one of the leading mandates for reducing carbon emissions in the U.S.

“Human beings are already too late in responding to human-made problems caused and represented by climate change,” Sen. Michael Barrett (D), lead on the climate bill, said on the Senate floor.

The version of the bill up for a vote maintains several of Baker’s provisions in the amendments he sent back to the legislature in early February, including a specialized energy code that will enforce net-zero building construction for towns that want it. The bill also sets mandatory emissions limits in the transportation, manufacturing and natural gas sectors. (See Baker Returns Climate Bill to Mass. Legislature.)

The latest delay of a comprehensive climate bill for Massachusetts took place Thursday in the Senate, seen here, where Republican lawmakers held up a planned vote. | Montanabw, CC BY-SA 4.0, via Wikimedia Commons

Baker attempted to loosen legal requirements for specific business sectors to meet emissions reduction goals, suggesting the requirements serve as “planning tools” or guidelines for industries, a move supported by the influential employer group Associated Industries of Massachusetts.

The governor also faced pushback from the real estate industry, which called on him to oppose provisions that would allow towns to adopt rules requiring that new buildings meet net-zero emissions. Developers expressed their concerns to Baker about the increase in upfront costs for construction.

“There is always an interest group working through their elected representatives to keep things moving at a painfully slow crawl,” Barrett said on the Senate floor.

Sen. Michael Rodrigues noted that in his 25 years in government, the state legislature has never held a hearing on amendments proposed by the governor’s office for other pieces of legislation.

“We are on the cusp of a sustainability revolution in this nation and in the world,” Sen. Marc Pacheco (D) said. “We can either lead as this bill allows us to do, or we will be behind China and other countries.”

Massachusetts lawmakers held firm on their target of reducing 50% of emissions below 1990 levels by 2030 after Baker proposed reducing emissions by 45% below 1990 levels. Baker claimed the higher target would cost the state $6 billion dollars more than a 45% target.

Environmental advocates in Massachusetts, such as Craig Altemose of the Better Future Project, told NetZero Insider that even 50% by 2030 is not enough to limit the Earth’s warming below 1.5 degrees Celsius.

New language in the bill also incorporates Baker’s amendment to strengthen protections for environmental justice populations by enforcing a cumulative, holistic impact analysis when building new infrastructure.

The climate bill will be brought to a vote in the next Senate legislative session. If the legislature sends the bill to Baker for his signature and he vetoes it, the legislature is likely to have enough votes to override the veto.

“The majority of the Massachusetts Senate remains prepared to take swift action on this bill,” Sen. President Karen Spilka (D) said in a statement.

March 12, 2021

Cut Peakers, Boost Storage, NY Climate Council Hears

Residents speaking to New York’s Climate Action Council Wednesday urged haste in stopping construction of new gas-fired power plants, closing old peaker plants and increasing the use of energy storage and other new technologies to reduce emissions and move the state toward a net-zero grid.

Laura Burkhart, an engineer from Rockland County, spoke of the importance of shutting down peaker plants in the state and replacing them with solar plus storage where feasible.

“As you know, peaker plants have several shortcomings,” Burkhart told the CAC’s Power Generation Advisory Panel. Many of them are old and contribute significantly to local air pollution, and they’re usually located in disadvantaged communities, and they greatly increase the cost of electricity to ratepayers due to the capacity payments they receive just for existing.”

New regulations under the state’s Climate Leadership and Community Protection Act (CLCPA) require a 40% decrease of methane and other greenhouse gases by 2030 and an 85% cut by midcentury.

NY Climate Council — New York GHG Emissions: New York’s industrial GHG emissions to date versus CLCPA targets for 2030/2050 | *NYDPS*

Anne Rhodes, energy educator with Cornell Cooperative Extension in Tompkins County, said, “If we are going to switch to wind and solar, we need way, way more storage. … I’d like to emphasize that we should not wait on storage solutions and that we move forward quickly.”

Rhodes added that community support is needed and “one thing that will mute resistance is if we take care of workers.”

Stop Using Gas

Environmentalist Gale Pisha from Rockland County urged the state to stop permitting new gas power plants, including those being proposed for “so called” repowering.

“Either these new plants will operate for another 30 years or more, which will keep New York state from reaching the goals of CLCPA, or they’ll become useless,” Pisha said. “And why should resources be put into building new gas plants when those same resources need to be used to build renewable generation, upgrade our transmission and develop distributed generation to increase the grid’s reliability and resiliency?”

Sixty-eight percent of the state’s electricity is currently generated by fossil fuels, so adding more is going in the opposite direction from what we need, Pisha said.

“I would far prefer that we have rolling blackouts than build an additional gas-fired power plant,” said Tara Vamos of NY Renews, speaking for herself as a citizen. “Enough is enough.”

New York’s climate goals are a good starting point, but with ocean currents slowing down and the earth’s climate becoming increasingly unpredictable and causing thousands of deaths and billions of dollars’ worth of damage per year, “we should be shooting for shorter timeframes,” Vamos said.

It would be unconscionable to allow new gas plants just because they say they’ll switch to green hydrogen in the future, she said.

Environmental scientist Suzanne Hunt said she wanted “to reframe how we’re talking about the green hydrogen issue, which is just a tool, it’s not good or bad, and depends on how it’s used. The most helpful thing you can do is craft recommendations dictating how to use the tool correctly for the climate.”

Fuel cells do not combust hydrogen, but work more like a battery, and are a useful tool in the climate toolkit, she said.

Kathleen McCarthy, a restoration ecologist in New York City, said she has been alarmed by climate change since first seeing “a climate model with all of the positive feedbacks. Now that those models and projections have not only been verified by present conditions but show us veering towards the worst-case scenario, I’m closer to being terrified.”

The animals and plants that sustain humanity cannot survive the changes projected without a drastic reduction in greenhouse gases, McCarthy said. “Now that we’re at the ninth hour, it’s important that our solutions be real solutions, not fake ones, so that we have a net reduction of greenhouse gases.”

Simon Strauss of the Ulster County Environmental Management Council and the Mid-Hudson Sustainability Coalition addressed the panel’s draft recommendation for “proactive and timely investment in local transmission and distribution infrastructure, and associated cost-sharing with utilities.”

“I’d like to ask how the panel, on behalf of the Climate Action Council, is going to, first, ensure that the utilities do make those proactive and timely investments, and second, how are those investments to be paid for? By the state, by the utility or by the ratepayers?” Strauss said.

He noted that in the pending Central Hudson Gas and Electric rate case, he has asked how the utility plans to address its CLCPA goals for renewable energy by 2030 and 2040.

“The impression I have is that other than local and transmission upgrades to permit large-scale renewables to be brought in on a wholesale basis, there is no plan to beef up the local distribution grid to accommodate local community-distributed generation,” Strauss said.

“And on these calls with this rate case we hear no dissent from the DPS staff, so I’d like to ask that you on the power generation panel give strong guidance to the Climate Action Council, and thus to the Department of Public Service, that you are looking for very significant distributed generation [DG] in the renewable energy generation mix, and an upgraded distribution system capable of accommodating that DG,” Strauss said.

Chairing the meeting, Sarah Osgood, director of policy implementation at the state’s Department of Public Service, confirmed one more public comment session on March 24 before the panel makes its final scoping plan recommendations to the CAC.

March 11, 2021February 18, 2025

Report: Half of Coal Fleet Could Safely Retire by 2025

More than half the U.S. coal fleet could be retired by 2025 to reduce emissions and generating costs, with no harm to reliability, according to a new report by the Rocky Mountain Institute.

Based on an analysis of NERC data, RMI says 27% of the coal fleet — mostly in the Northeast and Southeast where reserve margins are high — could be retired without replacement. Another 29% could be cost-effectively replaced with wind and solar.

Renewables, storage and demand-side management would be required to maintain reserve margin targets and replace the remaining coal plants in the U.S., it said.

“In considering economic retirement opportunities, utilities and regulators often raise concerns about reliability if coal capacity retires,” says the report, Cutting Carbon While Keeping the Lights On. “We find that these concerns are generally misplaced, and that the United States is on track to have 60 GW of excess generation capacity in 2025, above and beyond reserve margin targets.”

The report notes that most of the country has more dispatchable generation than necessary to meet reserve margin targets. PJM has more than 30 GW of excess generating capacity above its 15% reserve margin and its dispatchable thermal capacity exceeds the reserve margin without including wind or solar.

“No region in this category has experienced a major outage related to inadequate generation capacity in recent years,” it said. The report does not mention the 2014 polar vortex, when as much as 22% of PJM’s generating capacity was idled and the RTO came close to having to shed load.

It notes that ERCOT and CAMX (covering California) already rely on effective load carrying capacity-weighted wind and solar capacity to meet peak demand. SPP depends on wind to meet reserve margin targets.

RMI’s analysts based their economic comparison of coal and renewables on “direct, going-forward costs” of coal plants and did not consider the impact of any price or cap on carbon emissions or other environmental externalities. It noted, however, that a 2020 study by Energy and Environmental Economics found that a $10/ton price on carbon emissions — well below what most economists say is necessary — would cause the economic retirement of all PJM coal capacity by 2030.

RMI said its analysis targeted 2020-2025 “under an assumption that present-day reserve margin targets will continue to govern system planning and operations in the next few years.”

Renewable transition category by NERC regions in 2020 and projections for 2025 | Rocky Mountain Institute

“We recognize the importance of reassessing reserve margin targets given the increasing severity of extreme weather that has contributed to the recent outages in California and Texas, but we do not undertake that analysis here,” it added.

NERC did not respond to a request for comment on the report.

In its 2020 Long-Term Reliability Assessment in December, however, NERC said that the growth of renewables and retirement of conventional generation over the next decade means “resource planners must consider greater uncertainty across the resource fleet as well as uncertainty in electricity demand that is increasingly being affected by demand-side resources. As a result, reserve margins and capacity-based estimates can give a false sense of comfort.” (See NERC: Grid Operations ‘Fundamentally Changing’)

Michelle Bloodworth, CEO of coal advocacy group America’s Power, said last month’s extreme cold showed the importance of maintaining “fuel-secure coal units necessary for supporting grid resilience in much of the country.”

“While Texas was experiencing rolling blackouts, we saw that coal was able to increase its output and provide close to half the electricity in all or parts of the 21 states that comprise the MISO and SPP regions,” she said. “This recent experience underscores the importance of maintaining fuel diversity and the need to maintain coal-fired generation, even while the nation’s electricity mix is changing.”

Bloodworth also cited the group’s recent article outlining challenges to decarbonizing by 2035.

Ben Fowke, CEO of Xcel Energy, also has expressed skepticism about an all-renewable generating fleet. In testimony before the Senate Committee on Environment and Public Works Wednesday, Fowke noted that his company expects renewables to make up two-thirds of its energy mix by 2030. “However, renewable energy can only take us so far,” he said. “At higher levels of intermittent renewables, the cost of the energy system begins to skyrocket, and its reliability degrades. That means that the whole industry — even Xcel Energy with our remarkable renewable resources — will need some form of new, carbon-free, 24/7 dispatchable generation to remove the last increment of emissions on our system and get to zero.”

‘All-source’ Procurement

RMI also issued a second report recommending states adopt “all-source” resource procurements and projecting a need for 700 GW of new generation investment over the next decade, including 420 GW in the territory of vertically integrated utilities.

All-source portfolios would include utility-scale and distributed energy resources. RMI said procurements should be aligned with states’ objectives, including resilience, decarbonization and economic development. It also urged a “least regrets” approach to capture the benefits of competition and declining costs of new technologies.

The report cited numerous case studies, including Xcel’s all-source solicitation in Colorado in 2017, saying it was proof “that a solution-agnostic needs description can elicit many bids and record low bid prices for renewable energy and hybrid resources.”

Vertically integrated utilities are expected to spend up to $750 billion through 2030 on new resources, RMI said. “With an improved approach to resource procurement, the industry has a once-in-a-generation opportunity to ensure that this money is spent in ways that leverage the market, support diverse stakeholder priorities and minimize risks going forward. The alternative — continuation of legacy processes and approaches to resource investment — risks squandering capital and locking in customer costs and carbon for decades to come.”

March 11, 2021November 2, 2023

Conn. Officials Push Back on ‘Gas Tax’ Label of TCI-P

Connecticut officials and gasoline trade associations squared off Monday over the Transportation and Climate Initiative Program (TCI-P) during a 12-hour virtual public hearing held by the General Assembly’s Environment Committee.

The hearing sought input on three bills, including one regarding climate change adaptation and another on environmental air quality. But S.B. 884, which would direct the Department of Energy and Environmental Protection (DEEP) to create rules implementing TCI-P, was the main event.

Passage of the legislation is a priority for Connecticut Gov. Ned Lamont. He joined Massachusetts, Rhode Island and D.C. in committing to the cap-and-trade program, aiming to cut greenhouse gas emissions from vehicles by 26% from 2022 to 2032 and invest $300 million per year in cleaner transportation choices and public health improvements. (See NE States, DC Sign MOU to Cut Transportation Pollution.)

DEEP Commissioner Katie Dykes said opponents of the bill want to “mischaracterize” it as a gasoline tax.

“You may hear from folks who will tell you that this bill is essentially a 17-cent gas tax, and that characterization is completely false and is based on misinformation,” Dykes said. “This is not a gas tax. It is an environmental program that will cap greenhouse gas emissions and require the [fossil fuel] industry to pay for the damage it is causing to public health and the climate.”

Dykes said there have been “several years” of modeling TCI-P to assess its impact on reducing emissions and potentially increasing retail gas prices in participating jurisdictions by 5 cents/gallon beginning in 2023, assuming fuel suppliers choose to pass down 100% of allowance costs to consumers. Multiple consumer protection safeguards, including a cost-containment reserve, are designed to limit the program’s impact on prices at the pump and would kick in at 9 cents/gallon.

Dykes said the reserve “acts like a guardrail” to prevent prices from exceeding 9 cents/gallon increase and “operates like the airbags in your car.”

“If we hit the [cost-containment reserve], we don’t just keep driving,” Dykes said. “Instead, we go into a review to adjust the parameters of the program, so that we can ensure that the consumer impacts are not staying at that CCR level.”

According to Dykes, the cost-containment reserve for TCI-P is based on a similar mechanism from the Regional Greenhouse Gas Initiative (RGGI). The “17-cent talking point” is based on studies that “exaggerate assumptions” about electric vehicle battery costs and fuel economy and “assume no cost-containment reserve.”

“So essentially, it’s like modeling that this program is going to be wildly more costly than what our assumptions have determined, and that there are no consumer protection mechanisms to prevent the program from exceeding those 9-cent costs,” Dykes said.

Deputy Transportation Commissioner Garrett Eucalitto said he wanted to clear up the misconception that TCI-P is “designed to price people out of driving or force them into electric vehicles. … That could not be further from the truth.”

Rep. Stephen Harding (R) asked Dykes if there is another way to reduce emissions without increasing gas prices, which he called “regressive.”

Dykes said that because TCI-P is a market-based program, fuel suppliers participating in a regional market will have competitive options to reduce compliance costs, such as blending in biodiesel that will lessen the number of allowances “for each gallon that they’re selling into the state.”

Gasoline Associations Respond

Michael Fox, executive director of the ‎Gasoline and Automotive Service Dealers of America, said his group represents “mom and pop gasoline retailers” who sell more than half of all the fuel in Connecticut and collectively oppose the bill.

“TCI is a gas tax called by a different name,” Fox said. “The cost of the carbon credits will be passed on as higher fuel costs to Connecticut consumers. TCI perfectly fits the definition of what a tax is or is not.”

Sen. Christine Cohen (D), co-chair of the committee, asked Fox how wholesalers would pass down gas price increases to consumers. Fox answered by comparing the program to a gross receipts tax, levied on goods at the wholesale level — instead of at retail, like a sales tax — which is then passed on to consumers through higher prices.

“So, if you force these distributors to purchase these carbon tax credits, they’re just going to pass those additional costs on to us,” Fox said. “I think this is something no one has addressed and needs to think about.”

Fox said carbon credits sold at auction “are not designed for the lowest price.”

“They are designed to bring in the highest price,” Fox said. “That would allow the big [fuel] distributors to keep bidding up the price of these carbon credits, and then the smaller distributors wouldn’t be able to afford them, thereby putting them out of business and eliminating competition. That is a huge problem under TCI.”

Christian Herb, president of the Connecticut Energy Marketers Association, said his group’s members “own, operate and distribute fuel” to more than 1,000 gas stations in the state.

“The families I represent are in their third and fourth generation where they have installed [and] invested hundreds of millions of dollars in their properties,” Herb said . “Let the EV industry pay for their infrastructure just like my members have.”

Herb said TCI-P “is a part of a bigger effort to electrify the entire economy in Connecticut.”

“You’re pursuing policies that further rely on monopolies like Eversource [Energy] and Avangrid, who deliver the highest rates in America, and they’ve just asked for another increase,” Herb said.

He added that TCI-P trades “tailpipe emissions for electric generation emissions.”

“The vast majority of electricity in Connecticut is generated with natural gas, which is, according to EPA, 87 times more potent at trapping greenhouse gases than carbon,” Herb said. “So, methane from natural gas is doing that damage more than what are we achieving by adopting this. The bill doesn’t move the environmental needle. DEEP testified earlier today that sea-level rise was a huge concern. This bill doesn’t fix that; it doesn’t change it, especially when most states aren’t even participating.”

March 11, 2021November 1, 2023

Report: Decarbonizing Steel Production is Global Job

Five countries that control about two-thirds of global iron and steel production must work together to reduce carbon emissions in the sector, according to researchers from Columbia University’s Center on Global Energy Policy (CGEP).

“China alone produced over 50% of the world’s steel last year and for the first time reached one gigaton (one million tons),” CGEP research associate Zhiyuan Fan said at a webinar Tuesday. Fan co-authored a new report on technology options, economic assessment and policy to achieve low-carbon production of iron and steel.

Global steel production totaled 1.9 million tons in 2020, with the top five producers being China, India, Japan, Russia and the U.S. The sector is responsible for 6% of global emissions.

CGEP Panel: Clockwise from top left: Roxanne Brown, United Steelworkers; Paula Gant, Gas Technology Institute; Julio Friedmann, CGEP; John Larsen, Rhodium Group; Zhiyuan Fan, CGEP; and Tom Dower, LanzaTech. | Center on Global Energy Policy

Fan’s co-author, CGEP senior research scholar Dr. Julio Friedmann, said there are relatively few technical options to manage the challenges of chemical reduction for iron ore refining and high-temperature heat sources required to power electric arc furnace (EAF) and blast furnace-basic oxygen furnace (BF-BOF) production.

“And all the options increase costs, which is why it might work best from a policy perspective to fence off two-thirds of global production,” Friedmann said.

Policy challenges include the globally traded nature of iron and steel, security and economic concerns at the national level, and the small margins of most producers and labor politics, the report said. Moreover, steel mills have long capital lives, limiting the rate and range of options to substitute for existing facilities and thereby reduce emissions.

The report suggested that policymakers identify opportunities for international cooperation on development of low-emission production standards for steel akin to the Montreal Protocol.

Unsticking Innovation

Innovation is the path forward for job creation and retention in all industrial sectors, “and sometimes these innovations get stuck on the policy pieces,” said Roxanne Brown, international vice president at large for the United Steelworkers. The union represents workers in many sectors and has been engaged for more than 15 years in efforts to mitigate carbon emissions from industrial processes, she said.

“We kept getting stuck at [the U.S. Environmental Protection Agency] around the renewable fuel standard,” she added, saying that it’s critical to work together to “unstick these innovations.”

Dr. Paula Gant, senior vice president for strategy and innovation at the Gas Technology Institute, said the institute is interested in the role that hydrogen is going to play in industrial decarbonization, but echoed Brown’s call for effective policy.

“It’s clear that we have dual imperatives of deep decarbonization across our economies, while also ensuring we have economic progress that is more broadly distributed,” Gant said. “We can’t do one or the other of those things; we have to do them both. … We have to change the paradigm that pits a living wage against economic competitiveness.”

According to the report, BF-BOF dominates production (71%) and is particularly stubborn to any decarbonization technology. DRI-EAF production is 5% of production and growing, but it appears to have better decarbonization potential to move toward net zero. Scrap steel in electric arc furnace is 24% of global production, consumes the least energy and is simplest to decarbonize through electrification, but is limited in market share, the report said. In addition, blue hydrogen, carbon neutral biomass and carbon capture and sequestration seem to have the lowest cost and highest technical maturity.

Tom Dower, vice president for public policy at carbon-recycling technology firm LanzaTech, said that addressing climate change requires “every possible solution.”

“We need to spur a fundamental change in how we do and make virtually everything that we have come to rely upon for modern society,” he said.

The report suggested that new policies should support the deliberate early retirement and replacement of current steel-producing facilities with low-emission options. Additional policy design is needed to help shift to scrap steel recycling using zero-carbon electric power, the report said. Other policy options that the report said could speed decarbonization in the sector include investment in low-carbon infrastructure and green procurements.

March 11, 2021November 1, 2023

Mass. Competition Fast-tracks Net-zero Building Innovation

A recent Massachusetts Clean Energy Center (MassCEC) competition to improve the energy efficiency of the state’s iconic triple-decker homes has sparked a new project to help make net-zero retrofits easier.

Gunnison, the recipient of the people’s choice prize in the Triple Decker Energy Efficiency Challenge, is developing a website that will identify options for renovating homes or buildings, along with upfront costs, long-term savings and energy performance.

“The problem with these renovations is that humans aren’t good at looking at hundreds of thousands of pieces of data and finding the best way to do this right,” founder Grant Gunnison said. “And so, the light bulb went off, and we said what we really need to do is make a catalog of all the different strategies and products so that you can search through a space to find the best and most cost-effective way to renovate a house.”

The contest asked participants to submit retrofit plans that would eliminate the use of on-site fossil fuels and reduce energy consumption. Designers and developers could plan a renovation for a typical triple-decker structure or add a unit as part of the design to offset costs for homeowners, who could rent the unit out.

MassCEC received 14 entries and awarded four winning prizes of $25,000, three runner-up prizes for $15,000, a people’s choice award of $15,000 and two honorable mentions.

“This challenge is a fun learning opportunity,” Gunnison said, and it gave him a basic knowledge of heat pumps and wall assemblies in unique buildings for the automated home renovation website.

As a researcher at MIT’s Space Telecommunications, Astronomy and Radiation Laboratory, Gunnison took a data-driven approach to the design that achieved net-zero emissions, but there is an “extremely high barrier to this kind of information,” he said.

To retrofit a house, most people have to hire an architect or a modeler from the engineering industry to understand what needs to be done and how, Gunnison said, and “they’re not cheap.”

The goal of Gunnison’s automated system for home renovations is to reduce the variance in the number of ways someone can retrofit a home to the most affordable options.

“What we were able to do is identify the most affordable way to actually hit net zero, and we want to democratize that,” he said.

There are 113 million buildings in the U.S., 70 million of which burn natural gas or other fossil fuels for heating and cooking. To keep the Earth’s warming below 1.5 degrees Celsius, building emissions need to be reduced by 45 to 50% by 2030 on the way to 100% by 2050, according to a report from the Intergovernmental Panel on Climate Change. That translates to about five million buildings per year in the U.S.

“We just don’t have enough engineers, architects and energy modelers to figure out how to retrofit every building,” Gunnison said. “That necessitates using computers to figure out how to get this done.”

His company is organizing a pilot with building owners and portfolio owners of affordable housing in Boston to gather more information for the automated system and scale it out to other building types — essentially recreating the MassCEC challenge with each building to reach net-zero emissions.

“We have to start to get pretty clever about how to figure that stuff out without going to the building because as soon as you step foot in the building, you’re spending too much time,” Gunnison said.

Improving Insulation

Triple-deckers, or three-story multifamily houses, were designed as housing for the immigrants who flooded into Massachusetts in the early 1900s. Revered for their classic look with numerous windows and balconies on each level, triple-deckers also have oil heating systems and little insulation.

The contest submission by OPAL Architecture and TIMBER HP, which won honorable mention for lowest embodied carbon, achieved a net-zero energy performance with a negative carbon footprint by focusing on insulation.

Buildings that meet the Passive House standard require three times the amount of insulation, but materials like foam are nonrecyclable and absorb moisture, creating mold and other toxic problems for homeowners.

Matt O’Malia (left) and Joshua Henry, co-founders of Timber HP, inside the old paper mill they are renovating in Madison, Maine, to manufacture wood fiber insulation for energy efficient homes. | Matt O’Malia

Insulation made from leftover wood residuals is a nontoxic material that does not hold moisture and would otherwise go to waste in landfills, Matt O’Malia, co-founder and partner of TIMBER HP and OPAL, said.

And because wood fiber sequesters carbon, “we are coming to the job site carbon-negative,” O’Malia said.

It also offers cost savings.

For structures like academic buildings, retrofitting or building walls and windows for better insulation with wood fiber costs the same as standard construction, he said. But it saves the institution 80% in operational costs.

TIMBER HP acquired an old paper mill in Madison, Maine, near massive forest reserves, to manufacture the product. By establishing its manufacturing site where paper mills went out of business, TIMBER HP is creating jobs where they were lost in a rural community, O’Malia said. The lost paper mills contributed $1.6 million annually to the state economy.

The new facility is set to start production in 2022. O’Malia predicted it will address 8% of the insulation market in New England at full capacity, meaning there is potential for additional plants across the country.

His team also developed a way to retrofit insulation from the outside of the home, so owners or renters do not need to leave while the renovation is happening.

“There are so many houses that have to be renovated. … You can’t ask all of these people to move out during this,” O’Malia said.

Later this year, MassCEC expects to help fund demonstration projects using the concepts from the triple-decker design competition.