Bills target renewable energy standards in three states

A bill in Missouri would allow energy from large hydro facilities, like the Table Rock Dam, to count toward the state's renewable standard. (Photo by jeff brown via Creative Commons)

A bill in Missouri would allow energy from large hydro facilities, like the Table Rock Dam, to count toward the state’s renewable standard. (Photo by jeff brown via Creative Commons)

Ohio’s energy efficiency and renewable standards will be on trial again this year in the state’s legislature.

The Buckeye State is among a few Midwestern battlegrounds where lawmakers associated with a conservative policy group are working to freeze, repeal, or otherwise weaken renewable energy policies.

Others so far include Missouri and Kansas, where fossil-fuel-funded groups have actively attacked the state’s renewable standard at public events and legislative hearings.

The efforts follow a call to action last fall by the American Legislative Exchange Council (ALEC) for its members to pass legislation repealing renewable standards in their home states.

“[ALEC] is definitely on the march,” says Gabe Elsner, who tracks oil and gas company lobbying for the Checks and Balances Project, a nonprofit watchdog group.

Ohio: ‘A meaningful review’

For example, an ALEC task force member who chairs the Ohio Senate Public Utilities Committee wants “a meaningful review” of the state’s efficiency and renewable standards.

State Sen. Bill Seitz, a Cincinnati Republican, outlined in a Feb. 1 memo a list of questions that he plans to seek answers to in a series of legislative hearings this spring.

Among them: whether to freeze the state’s efficiency standard, whether to revise the “cost cap” financial-burden threshold for exempting utilities, and whether to establish a “more accurate and transparent” way of comparing costs of electricity sources.

The legislator’s final question reveals the scope of what’s on the table in his view: what should be done about existing contracts “in the event that the current EE/RPS benchmarks are significantly altered or abolished”?

Dayna Baird Payne, a lobbyist for the American Wind Energy Association in Ohio, said debate about the efficiency mandate was anticipated after one of the state’s largest utilities, FirstEnergy Corp., floated a proposal to repeal it during last year’s lame-duck session.

The review of the renewable standard was less expected, though, considering that the legislature spent much of last session revising the law to include certain waste-heat recovery projects.

“The ink is hardly dry on that bill,” Baird Payne said.

Another ALEC task force member, Republican state Sen. Kris Jordan, has introduced a bill to repeal Ohio’s Alternative Energy Portfolio Standard, which requires utilities to get 25 percent of their electricity from “advanced” or renewable sources by 2025. That bill has yet to find co-sponsors.

But there’s nothing to stop Seitz from using his utilities committee chairmanship to put the state’s efficiency and renewable standards on trial.

“We’re prepared to have that discussion if that’s what he wants to do,” said Baird Payne.

Missouri: Watering down standard?

In Missouri, clean energy supporters are accusing utilities and their allies in the legislature of trying to water down the state’s renewable standard, literally.

Missouri voters passed a ballot measure in 2008, with 66 percent approval, that requires utilities to generate 15 percent of electricity from renewables by 2021. The law lets utilities count hydropower “that has a nameplate rating of ten megawatts or less.”

Renew Missouri, a non-profit clean energy group, says utilities are violating the law by claiming hydropower from large facilities with individual generators of 10 megawatts or less inside. It’s filed complaints with the state’s utility commission against four utilities. (Ameren, one of the utilities, said the accusations are “100 percent false.”)

The arguments might become moot, though, if the state legislature passes a bill that would amend the renewable standard to count hydropower from any sized facility. The bill, HB 44, has already cleared a committee vote in the House.

PJ Wilson, executive director of Renew Missouri, said the “sideways attack” is a way for legislators to gut the renewable standard without appearing to directly go against voters’ will.

“The optics are a little bit better than if they were to come out and say renewable energy is worthless,” Wilson said. “It’s tricky.”

Wilson said there’s no hard evidence linking the hydro bill to ALEC, but it fits the organization’s mold and mission. Missouri House Speaker Tim Jones serves as a state chairman for the organization.

The deadline for introducing legislation in Missouri is Feb. 28. As of last week, no companion bill had been introduced in the state Senate.

In the House, Renew Missouri and its allies will need to convince 31 Republicans to join their position. So far, it’s recruited just three, Wilson said.

Elsner, of the Checks and Balances Project, said broadening the definition of renewable electricity shifts support away from sources that voters originally intended to be increased.

“Whether it’s big hydro or nuclear power plants, the effect is the same. It’s effectively eliminating or weakening the renewable energy standard that’s meant to increase the use of wind, solar and geothermal and [other] clean energy sources,” Elsner said.

Kansas: A sign of things to come?

A bill, SB 82, is on its way to the Senate floor in Kansas that would postpone the state’s 20 percent by 2020 renewable electricity standard by four years. In the House, HB 2241 would lower the standard to 15 percent by 2018.

The conservative state passed the 20-by-2020 standard in 2009. Last year it led the nation in megawatts of wind projects under construction — bringing in about $3 billion in investment from the industry, according to Republican Gov. Sam Brownback.

What puts the policy at risk is a flood of influence from groups such as the Heartland Institute and Americans for Prosperity, which Elsner says are using flawed and misleading economic analysis to scare legislators into second-guessing it.

“Unfortunately, I think some state legislators may be convinced by these groups that clean energy standards have a negative economic impact,” Elsner said.

It’s early in the 2013 legislative season, he said, but the way things in Kansas have quickly moved could be a sign of what’s to come elsewhere.

Bills to repeal Minnesota’s renewable standard have been introduced, but neither has much chance of advancing with Democrats in control of the House, Senate and governor’s office.

In Wisconsin, clean energy groups are monitoring a bill that would extend the definition of renewable power to include nuclear, though it would have little impact because most utilities have already fulfilled their benchmarks.

Connor Gibson has been tracking ALEC’s anti-renewable legislation for Greenpeace. In addition to Ohio, Kansas and Missouri, he sees Michigan as another state at risk for a weaken or repeal attempt.

Gibson said ALEC has the support of a network of industry and conservative groups that are determined to move energy policy in their favor.

“They win some and they lose some, but they are very persistent and they are consistently well-supported by large financial interests,” Gibson said. “If they don’t get everything they want, they find different avenues to approach.”

Originally published February 27, 2013 at 05:00AM at Midwest Energy News

As economics shift, wind developers see the light on solar power

A farm in Ontario, where the owner opted for solar panels over wind turbines. (Photo by spanginator via Creative Commons)

A farm in Ontario, where the owner opted for solar panels over wind turbines. (Photo by spanginator via Creative Commons)

Wind energy companies are getting into the solar game.

An ongoing lull in wind projects and falling solar panel prices has wind companies looking to add solar projects to their portfolios.

In the U.S., 2013 is projected to be a lost year for the wind industry, which added more than 13 gigawatts of capacity in 2012 but could do as little as 3 gigawatts this year in the aftermath of the latest uncertainty over the federal wind production tax credit.

Meanwhile, solar is surging. Duke Energy President Gregory Wolf recently predicted that U.S. solar installations could surpass new wind additions this year for the first time ever.

So instead of sitting on their turbines, wind developers are diversifying, hiring solar experts and broadening their portfolios to include photovoltaics.

“I don’t know of a wind company that isn’t at least looking at solar,” says Shanelle Evens Montana, a legislative and regulatory affairs associate for EDF Renewable Energy.

The trend extends throughout the supply chain, from consultants to construction and engineering firms. Some companies are even dropping the word “wind” from their names.

EDF Renewable Energy, a San Diego company with an office in Minneapolis, is developing one of the country’s largest solar-wind hybrid projects in California’s Mojave Desert, pairing a 140-megawatt wind farm with a 143-megawatt solar farm.

Solar is still a relatively small part of EDF’s portfolio — it’s developed less than 300 megawatts of solar compared to more than 3,500 megawatts of wind. But its solar business been growing in recent years with an eye towards the current wind slowdown.

“I think part of it was seeing that [gap],” says Evens Montana. “It was also just seeing positive opportunities.”

A need to diversify

Congress extended the wind production tax credit (PTC) for one year in January, but much of the damage was already done, as uncertainty caused many companies to postpone planning for larger projects. Another factor is the schedule of state renewable mandates — many utilities have already met the early benchmarks.

Those kinds of disruptions have been an unavoidable part of doing business in the renewable energy world, idling industries every few years as incentives come up for renewal.

“I’ve learned over the years we needed to diversify,” says Dan Juhl, a 35-year veteran of the industry who is founder, chairman and CEO of Juhl Wind. “I start planning for the falloff of the PTC the day after they pass it.”

In the past, Juhl Wind diversified its business by adding electrical engineering and operations services for existing wind farms. This time around, it decided to step up its investment in solar and storage technologies.

As much as uncertainty over incentives pushed wind companies to think about other opportunities, the pull of solar power’s rapidly improving economics has been a more important factor.

“The biggest thing was just seeing the dramatic drop in the cost of solar,” says Blake Nixon, president of Geronimo Energy. “We had always had our eyes on entering the solar business once we thought economic viability was within 18 months. Frankly, we were surprised how fast that came up, because costs fell off so fast.”

Earlier this year, the company changed its name from Geronimo Wind and hired a solar professional to build a new solar development unit. It won’t be from scratch, though. That’s because much of its existing expertise easily transfers from wind to solar, Nixon says.

Overlapping skills

Wind companies that already have in-house skills related to GIS mapping, real estate contracts, and transmission issues, for example, are finding those apply to solar. And the customers are often the same, too.

“They don’t line up perfectly, but overall they’ve very similar,” says Evens Montana.

Most of EDF’s solar projects have been in states like California or New Jersey, where policies have driven early adoption of solar power. Evens Montana sees its Midwest solar business growing as the economics continue to improve.

Geronimo Energy has modest solar goals in 2013. It hopes to install 1 or 2 megawatts by the end of the year, compared to 200 megawatts of wind power. Next year, it could do anywhere between 5 and 100 megawatts, with policy being the big variable, Nixon says.

If the Minnesota legislature approves a solar electricity standard, requiring utilities to get 10 percent of their electricity from solar by 2030, it would drive demand for utility-scale projects in addition to the commercial rooftop ones that Geronimo is currently pursuing.

Juhl Wind, meanwhile, believes smaller-scale solar and storage projects will be a source of growth. The company has developed a product called Solar Bank that combines solar and storage for peak-load management and back-up or off-grid power.

“We’re going to be busy this year in all of our fields, but we’re going to be more busy with solar this year,” says Juhl.

Evens Montana expects most wind developers entering the solar market, especially larger companies, will focus on utility-scale projects, which lines up better with their expertise. The synergy they see is similar to the way wind and solar generation can compliment each other on the grid. The wind can still blow even when the sun isn’t shining, and vice versa. That’s why Nixon and other wind developers are optimistic.

Says Nixon: “We see the solar business going from a very modest piece of our business to a very substantial piece very quickly.”

Originally published February 25, 2013 at 05:00AM at Midwest Energy News

Is Iowa paying to help other states meet renewable goals?

(Photo by Karen Kleis via Creative Commons)

(Photo by Karen Kleis via Creative Commons)

As the country rebuilds its aging transmission system, spending more than $14 billion this year alone, there’s a looming, unanswered question: who gets the bill?

Federal regulators are attempting to equitably distribute the costs, but a recent complaint by an Iowa utility shows that the issue is far from settled.

Interstate Power & Light Co. says its customers are unfairly shouldering the costs of connecting wind farms to the electricity grid. The utility, which is a subsidiary of Alliant Energy, wants federal regulators to spread the cost of local interconnection projects, which mostly benefit other utilities that import wind power, it says.

The company’s complaint against transmission company ITC Midwest is currently pending before the Federal Energy Regulatory Commission (FERC).

“The fundamental question here is: who pays?” said Jim Hoecker, general counsel for Wires, a nonprofit that represents the electric transmission industry.

The complaint

Interstate Power & Light filed its complaint in September. It alleges that its customers “bear an inordinate and burdensome portion of the cost” — about $32 million between 2008 and 2011 — for generator interconnection projects in its territory.

The utility serves about 495,000 electric customers in Iowa and another 50,000 in southern Minnesota. It’s a wind-rich territory that’s attracted lots of wind projects, many of which require local grid upgrades to support.

As for the benefits of those projects?

“We’re not seeing them,” said Mitchell Myhre, regulatory affairs manager for Alliant Energy, Interstate’s parent company. “We’re incurring a substantial amount of costs associated with these generator interconnects, and we’re not seeing any commensurate benefit.”

The utility wants FERC to investigate the “justness and reasonableness” of the cost allocation, and, if necessary, to establish a schedule for refunding payments, which will reach $170 million by 2016, it says.

‘Bald assertions’

ITC Midwest counters that Interstate Power & Light is exaggerating the costs and ignoring the benefits. It says the utility’s claims aren’t backed up by data or studies, and it’s asking FERC to dismiss the complaint.

“[Interstate Power & Light] must do more than merely make bald assertions in order to meet its burden of proof,” ITC Midwest said in its answer, submitted to FERC in October.

ITC Midwest says the utility is benefiting from lower prices and better reliability. Interstate Power & Light acknowledges both, but credits the economic downturn and other, non-interconnection projects for the improvements.

The transmission company also blames Interstate Power & Light for “its own historic lack of investment in the transmission system,” which ITC Midwest bought from Interstate in 2007.

“Simply put, the entire transmission system was in need of improvements, repairs and rehabilitation,” ITC Midwest said. “[T]hese interconnection upgrades are, in certain cases, expediting transmission system improvements that would be necessary even without the additional generation.”

Who gets the bill

When ITC Midwest acquired the transmission system, it sought permission from regulators to pass the full cost of certain interconnection projects onto utilities that purchase power from the grid. The Midwest’s grid operator, MISO, and FERC approved in 2008.

At the time, the cost of interconnection projects in most of the MISO footprint was split 50-50 between the generator and the utilities. In 2009, after complaints from utilities in the Dakotas and western Minnesota, MISO put 90 percent of interconnection costs on generators.

FERC’s approval of that change, however, didn’t apply to ITC Midwest and two other MISO areas run by independent transmission companies, which can still pass costs directly to utilities instead of billing new generators.

The costs of large, interstate transmission lines (known in MISO terms as “multi-value projects”) are spread widely across a region. Wind farms and other generators typically pay the full cost of connecting their projects to the nearest substation. What’s in dispute in this case is who pays for changes and upgrades that are often needed nearby in order to accommodate the new power source coming online.

An analogy: If a football team builds a stadium a mile from the nearest freeway, who pays for adding lanes and traffic signals to all of local roads that will be overwhelmed with new traffic on game days? Is it the city? The team? The fans?

Assigning benefits

“Who pays can become a pretty complicated equation, and in the electric business, we are always arguing about that,” says Hoecker. Under the stadium analogy, it could be that the project diverts traffic from other, more congested roads, he says.

Or it could be that the roads were already due for work, which is the argument ITC Midwest and its supporters are making.

“It’s like that saying, the straw that broke the camel’s back,” said Natalie McIntire, a consultant for Wind on the Wires, which represents the wind industry and environmental groups (and is a member of RE-AMP, which also publishes Midwest Energy News).

FERC has said transmission costs should be distributed in a way that is “roughly commensurate” with its benefits, but there is no standard for calculating benefits or for interpreting what “roughly commensurate” means, Hoecker said.

“The problem … is that this is a big, broadly based social good [in which] frequently it’s hard to trace the benefits of particular investments to a specific customer or group of customers,” Hoecker said. “It’s a very difficult thing to do.”

Meeting others’ demand

Since 2008, ITC Midwest has reconstructed nearly 100 miles of transmission lines as part of 23 interconnection projects, mostly wind farms. The average age of the lines it replaced was approximately 51 years.

One project was a wind farm built for Interstate Power & Light, but the majority are helping meet demand for renewable power in neighboring states. As of September, ITC Midwest had 3,442 MW of projects in its interconnection queue, while the area’s load is only 2,911 MW.

The transmission company says the cost to Interstate’s customers has been “minimal” — about 17 cents a month for the average residential customer. It also notes that Interstate didn’t object five years ago when the cost allocation was proposed and approved by FERC.

FERC noted in that decision that “transmission customers can benefit from the increased amount of generation in their pricing zone even if that new generation capacity is not sold to them.”

“What’s changed since 2007 is now we have some experience with this cost allocation methodology, and we’ve been able to see the effects from it,” Myhre said. “We’ve seen that the magnitude of costs that it’s putting back on our customers.”

‘It is complicated’

Interstate Power & Light’s complaint is supported by Minnesota utility regulators and the Iowa Consumers Coalition, a group of large energy customers, which want ITC Midwest to shift most of the cost to generators like the rest of MISO.

“There is no reasonable justification to support this different treatment of IPL and its customers,” the Minnesota Public Utilities Commission and Minnesota Department of Commerce said in comments filed with FERC.

Wind on the Wires, the American Wind Energy Association and several renewable energy companies have filed comments asking FERC to dismiss Interstate’s complaint and not change the cost allocation.

Eric Guelker, Alliant Energy’s director of transmission policy and strategy, said they want to pay an amount for transmission that’s represenative of the benefits.

“The 100 percent all going to IPL customers, that’s an extreme,” Guekler said. “But to say that none of these costs provide any benefit, that wouldn’t be right either.

“It is complicated.”

Originally published February 19, 2013 at 05:00AM at Midwest Energy News

Analysis: Can Congress compromise on clean energy?

(Photo by Phil Roeder via Creative Commons)

(Photo by Phil Roeder via Creative Commons)

The prospect for bipartisan energy policy was on the agenda last week in Washington.

Former members of Congress spoke last Wednesday about restoring the “legacy of bipartisan support for renewable energy” at a policy forum organized by the American Council on Renewable Energy (ACORE).

The next day, the Bipartisan Policy Center think tank separately released a set of recommendations (pdf) endorsed by a task force of Republicans and Democrats for improving the nation’s electricity grid.

The conversations around both events offer a few rays of hope that the heightened level of partisanship that’s bogged down the discussion of clean energy in recent years may be starting to fade.

“I think there are some positive signs,” said Joe Kruger, energy and environment director for the Bipartisan Policy Center.

Solyndra narrative fading

The election is over, the economy is improving, and mainstream support for clean energy continues to grow.

That said, any legislation faces a major hurdle in the House, where some conservative Republicans will still try to invoke Solyndra to slander any efforts to support renewables.

Some conservative Republicans, but not all. That nuance was on display at the ACORE forum.

Iowa Rep. Steve King, for example, receives consistently high marks from conservative groups, yet he broke with his party last year in the debate over extending the wind energy production tax credits.

He explained his support for renewables at the ACORE event, as reported by Stephen Lacey for Greentech Media:

“We’ve got to be a more reliable partner,” King said. “We do all of this [wind, solar, biofuels] and our country becomes more energy secure. … It’s the right thing to do.”

Modest expectations

In December, a Colorado Republican, Rep. Cory Gardner, and a Vermont Democrat, Rep. Peter Welch, announced a bipartisan energy efficiency caucus in the House.

Another promising partnership has emerged in the Senate between Ron Wyden, an Oregon Democrat, and Lisa Murkowski, an Alaska Republican. Wyden chairs the Senate Energy and Natural Resources Committee and Murkowski is the ranking Republican member.

The senators in November announced their intentions to “set the tone” for collaboration and seek to address “pent-up demand” for energy legislation. Congress hasn’t passed a major energy bill since 2007.

“Sen. Wyden and Sen. Murkowski are clearly looking for ways to work together,” said Richard Caperton, director of the clean energy investment program at the Center for American Progress.

Caperton doesn’t expect “revolutionary concepts” to emerge from this Congress, but there could be progress on more familiar topics such as nuclear waste storage, hydropower siting, and natural gas exports.

Phyllis Cuttino, director of the clean energy program at Pew Environment Group, has a similar forecast. Don’t expect an all-encompassing national energy bill, but there’s hope for some “smaller, common-sense bills,” she said.

One example is the Master Limited Partnerships Parity Act, which would extend a key fossil-fuel tax benefit to renewable energy projects. Murkowski is a co-sponsor of the bill, whose lead author is Democratic Sen. Chris Coons of Delaware.

‘A lot at stake here’

One possible explanation for this new cooperation is the growing competition U.S. cleantech companies face from abroad. The Pew Environment Group’s latest clean energy report frames the issue as a matter of American competitiveness.

“I think people are coming to realize that there’s a lot at stake here,” Cuttino said.

Shanelle Evens Montana, a legislative and regulatory affairs associate for EDF Renewable Energy, has noticed that change trickle up from the local and county level to the statehouse level.

“I do think that [economic] message is starting to get out there, I would say in the last two years a lot more than it was before,” Evens Montana said.

It’s a message that’s been embraced more quickly in some states — Iowa, for example — than others. And that should be expected, said Hank Habicht, a cleantech investor who co-moderated last week’s ACORE session on bipartisanship.

Habicht is a managing partner at Sail Venture Capital, a cleantech finance and investment group with offices in Irvine, California; New Orleans; Washington, D.C. and Toronto. He said in an interview that many energy issues are more regional than partisan.

“When you potentially have winners and losers, you need to understand that,” Habicht said. “If there is a geographic area that’s maybe losing jobs by virtue of a certain energy policy, the energy policy needs to, as much as possible, be mindful of that.”

‘Culture war’ over energy

Mindfulness on its own, though, is unlikely to un-do the “Solyndra-fication” of the energy debate–conservative Republicans’ use of the company’s collapse as an indictment of all clean energy policies, especially those supported by President Obama.

Cuttino said it’s possible a new energy secretary will reset the debate, if the new appointee is someone who wasn’t at the Energy Department during the time the Solydra loans were made.

Grist’s David Roberts was less optimistic last May when he wrote that evidence, reason and “common-sense solutions” can’t help clean energy avoid being sucked into a partisan “culture war” over The American Way.

“For the conservative base … the issue of energy is wrapped up in a way of life that they view as under threat from multiple directions,” Roberts wrote.

Kruger of the Bipartisan Policy Center said he thinks there’s enough “convergence of interests” behind its electric grid recommendations that they could find traction.

The report endorses a range of transmission reforms that would make it easier to integrate renewable power onto the grid. But they would also reduce power outages, which cost the U.S. economy $79 billion a year, according to a 2006 study by Lawrence Berkeley National Laboratory.

Rick Boucher, a former Democratic Congressman from Virginia who co-chaired the Bipartisan Policy Center electric grid project, was asked to comment on the prospects for transmission siting reform in Congress.

“I’ve learned from long years of experience that that is a hazardous exercise,” he said. “I think members of Congress who I know well and who are very thoughtful and farsighted in the way they evaluate the national interests, are going to listen to the arguments.

“I would say the prospects in Congress are good, and I’m sort of going to leave it at one word. I’m not going to put a percentage on it. It is going to be heavily debated, and this recommendation will not come without opposition.”

Originally published February 12, 2013 at 05:00AM at Midwest Energy News

FERC dismisses complaint over CapX2020 ownership

Xcel Energy does not have to share ownership of a planned Twin Cities-to-La Crosse transmission line with a Wisconsin competitor, federal regulators ruled earlier this week.

American Transmission Company (ATC) had argued it was entitled to own part of the $490 million project in a complaint to the Federal Energy Regulatory Commission (FERC).

On Monday, FERC denied ATC’s complaint and said MISO, the Midwest’s electricity grid operator, was correct to distribute ownership of the transmission project as it did.

The 150-mile, 345 kV line is among a group of projects known as CapX2020, an effort by eleven utilities in Minnesota and the adjacent states to improve reliability and add wind power to the grid.

MISO split up ownership of the lines based on whose service territory they cross and whose equipment they connect to — in this case Xcel and a handful of smaller cooperatives and municipal utilities.

ATC challeged MISO’s decision after Xcel successfully argued to FERC that because it owns the LaCrosse substation, Xcel should own part of the Badger Coulee transmission line from LaCrosse to Madison.

The Wisconsin utility argued that the Twin Cities-to-LaCrosse and LaCrosse-to-Madison lines were essentially one project, and that as owner of the Madison substation ATC should have a share in the entire length.

FERC dismissed that arguement, saying that the two sections were separate projects, one approved in MISO’s 2008 transmission plan and the other part of MISO’s 2011 transmission plan.

“We are not persuaded by American Transmission’s argument that the Twin Cities – La Crosse Line and the La Crosse – Madison Line, together, form a single interconnection,” FERC concluded.

Transmission lines are among the most dependable utility investments, offering solid, steady returns from the time they are built, which is why they’ve attracted the interest of companies like Warren Buffet’s Berkshire Hathaway.

While the utilities are battling for hundreds of millions in projects, the stakes for electricity customers are considerably lower, says Chris Zumski Finke, a policy associate with Wind on the Wires.

“Really, it has very little impact on rate-payers. Even in the filings, ATC says these complaints aren’t going to interfere with the development timeline, they aren’t going to interfere with the costs to consumers.”

Originally published February 08, 2013 at 05:00AM at Midwest Energy News

Midwest grid operator expands south, to ‘last frontier’ for renewables

MISO's current territory is shown in green on this map, with Entergy in blue. (Image via MISO)

MISO’s current territory is shown in green on this map, with Entergy in blue. (Image via MISO)

The Midwest’s electricity grid operator later this year is expected to add more than 15,000 miles of transmission and 30,000 megawatts of generation to its system overnight — at midnight, to be precise, on Dec. 18.

That’s the date MISO, pending a few remaining regulatory hurdles, will assume responsibility for operating the electric grid in much of Arkansas and Louisiana and parts of Texas and Mississippi.

The area’s transmission has been run since the 1950s by Entergy, a group of southern utilities that was recently pressured by regulators to give up grid management and focus on power generation.

MISO says its new scale and “footprint diversity” will help improve reliability and efficiency and save money, with annual benefits to existing member utilities exceeding $1.2 billion.

Wind energy advocates are also hopeful the integration could pave the way for grid and policy changes to help clean energy reach one of the “last frontiers” for renewables: the Southeast.

Cost disputes

Entergy’s integration into MISO follows decades of lawsuits over how each state’s ratepayers should share the cost of transmission and generation projects.

Arkansas utility regulators, who thought their state’s residents were unfairly subsidizing costs for Louisiana ratepayers, threatened to prevent Entergy Arkansas from recovering certain costs if it didn’t study options for changing its relationship with the other Entergy companies.

Cost-benefit studies showed that having all of Entergy join MISO would be preferable to Entergy Arkansas managing its own transmission, or to joining the Southwestern Power Pool, another regional transmission organization like MISO.

Utility regulators in Arkansas and Mississippi have signed off on the transfer, as has the New Orleans City Council. Louisiana and the Federal Energy Regulatory Commission still need to approve the arrangement.

If all goes as planned, by the end of the year generators will be bidding daily on MISO’s market to sell Entergy customers the lowest-cost electricity, a change that’s expected to save Entergy customers $1.4 billion in the first decade.

‘Advantages to both sides’

MISO’s existing utilities expect to see savings as well. MISO will have some new costs associated with the expansion, but operating costs will be spread out among more utilities after the Entergy companies join.

Meanwhile, seasonal differences between the two sections will give MISO new options for meeting peak demand and balancing the grid, said Todd Hillman, MISO’s vice president of customer and stakeholder relations.

For example, in early summer when the windows are open in Minnesota but air conditioners are already running in Louisiana, there will be potential to use excess generation capacity in the Midwest to meet cooling demand in the south.

“The ability to have some diversity there and flow megawatts between the two regions will be an advantage to both sides,” Hillman said.

The two regions have different generation mixes, too. Coal makes up the largest share in the current Midwest footprint, while oil and gas are dominant in the Entergy region.

Opportunity for renewables?

The Entergy footprint currently has no significant renewable power on its grid. Sixty-nine percent of its power comes from oil and gas, 20 percent from nuclear, and 11 percent from coal.

The MISO integration improves the prospects for being able to export Great Plains wind to the region, but not until new transmission lines and new policies are place, according to Beth Soholt, executive director of Wind on the Wires, a nonprofit that works on wind and transmission issues (and a member of RE-AMP, which publishes Midwest Energy News).

“We have a number of years of groundwork to do before we can probably see something significant happen,” Soholt said.

The main interconnection between the MISO and Entergy areas is a 1,000 megawatt transmission line in New Madrid, Missouri. Other routes exist that would require paying fees to other utilities or grid operators.

There also aren’t renewable portfolio standards to drive demand for clean energy in Arkansas, Louisiana, Mississippi, or any of their neighbors to the east, making the Southeast one the “last frontiers” for renewables, Soholt said.

Other priorities

Soholt said MISO’s market tools have been a game-changer for renewables in the Midwest, allowing wind farms to bid against fossil fuel power plants to provide utilities with the lowest cost electricity to meet the next day’s forecasted demand.

While much of MISO’s planning work in recent years has focused on finding ways to move more wind power from the western plains to cities in the east, the organization is mostly agnostic about electricity sources.

“For us, it’s not so much that it’s wind but that it’s low-cost generation,” Hillman said. “[Wind] will have equal opportunity to compete, based on the market rules and the transmission system.”

Planning is already underway on how to improve the transmission infrastructure in the Midwest, in the Entergy area, and combined, he said. MISO will be proposing projects aimed at mitigating congestion and improving reliability and efficiency.

Through discussions on those proposals and other issues, the MISO expansion might also lead to more cross-pollination of policy ideas between the northern and southern areas, Hillman said.

“It opens up a lot of new possibilities,” Soholt said. “There’s just a lot of work to be done.”

Originally published February 05, 2013 at 05:00AM at Midwest Energy News

Minneapolis plan aims to let market drive efficiency

(Photo by zman z28 via Creative Commons)

(Photo by zman z28 via Creative Commons)

Minneapolis is poised to become the first city in the Midwest to adopt an energy benchmarking and disclosure rule for commercial buildings.

The City Council’s energy and environment committee unanimously passed a proposal Monday (video) to require large commercial building owners to annually measure and report energy consumption data.

Council Member Elizabeth Glidden, who proposed the ordinance, said it’s about using market forces to capitalize on the “untapped potential” of commercial building energy savings.

“The intent of this ordinance is to use market force — not performance or design mandates — to increase energy efficiency in existing commercial and city-owned buildings,” said Brendon Slotterback, the city’s sustainability program coordinator. “It’s also intended to provide consistent, transparent reporting on energy and water use data, not just to owners and managers, but to tenants, potential tenants and the public at large.”

It’s also designed to promote green job growth. Slotterback said energy service companies in cities with similar ordinances have seen up to 30 percent increases in activity as building owners sought to improve their scores.

How it works

The proposal originated from a Twin Cities green jobs committee called Thinc.Green, which is made up of business, union, nonprofit and city leaders from Minneapolis and St. Paul. It’s modeled after similar ordinances in half a dozen other cities, including New York, San Francisco, and Austin, Texas. In the Midwest, Chicago is also considering a commercial benchmarking and disclosure policy.

The reporting would be completed using Energy Star’s free, online Portfolio Manager software, which is already used by more than 4,300 commercial building owners in the Twin Cities area, according to the U.S. Environmental Protection Agency.

The city would disclose data on its own buildings in 2013. Only the largest commercial buildings — over 100,000 square feet — would need to comply in 2014, and the program would extend to 50,000-square-foot and 25,000-square-foot buildings in 2015 and 2016, respectively. In total, the ordinance would cover 630 buildings representing about 75 percent of the city’s total commercial square footage.

The city would wait one year to publish the first results so that owners would have a chance to make improvements.

Supporters at Monday’s public hearing included representatives of Fresh Energy, the Midwest Energy Efficiency Alliance, and the Natural Resources Defense Council (members of RE-AMP, which also publishes Midwest Energy News), as well as energy efficiency consultants who said the policy would help create jobs.

Stephen Todd, a Twin Cities sustainability consultant, said his firm would likely hire another employee and more contractors to help Minneapolis building owners improve efficiency before they need to start reporting energy use. That’s in part based on his experience working in Austin, Texas, where a 2011 benchmarking and disclosure policy is already having an impact.

“What I see down there is that it has motivated many commercial real estate organizations to look at what they can do to optimize the performance of their buildings and try to improve the relative efficiency,” Todd said. “They anticipate more market pressure… on behalf of tenants in evaluating office space.”

‘Green premiums’ vs. ‘brown discounts’

While building owners usually pay for things like windows and HVAC systems, tenants are typically the ones who pay the energy bills. That’s created a split-incentive problem in commercial real estate.

Giving tenants better information for comparing building energy use gives building owners more incentive to invest in efficiency. Some may be able to charge a “green premium,” but Todd said what’s more likely is a “brown discount,” in which an existing tenant might be able to use a building’s relative inefficiency to negotiate better lease terms.

The impact of Minneapolis’ ordinance would have potential to extend beyond the 630 buildings required to report, Todd said. If it’s successful, tenants could start to expect Energy Star scores from anyone before signing a lease.

“If that information is readily available in Minneapolis, they’re probably going to ask the same questions in St. Paul and Bloomington,” Todd said.

The Minneapolis Building Owners and Managers Association (BOMA) encourages members to benchmark energy use — its “Kilowatt Crackdown” competition generated 13 million kWh of energy savings — but it opposes mandated disclosure.

“We question whether the proposed building rating system would add to the success of market forces already in play and are concerned about the potential for unintended negative consequences,” said Kevin Lewis, executive director of BOMA Greater Minneapolis.

Lewis described a hypothetical building with outdated systems that couldn’t afford expensive retrofits. “Could they lose tenants and could they go out of business?”

David Dabson, general manager of Piedmont Office Realty Trust, asked that the published disclosures only identify buildings by an ID number or address, not by name, so that the scores don’t “misrepresent” tenants who names appear on the building.

Council Member Glidden said the ordinance is about taking best practices already used by some and spreading them across the city.

“It’s been through BOMA that there’s been a light shown on the great practices already in place by a lot of building owners… of what can happen through voluntary participation in these energy saving programs,” Glidden said.

Buildings under financial distress, buildings with less than 50 percent occupancy, and buildings with less than two years of occupancy would be exempt.

The annual report would take between two to five hours to complete using the Energy Star website. Owners or managers enter information on the buildings size and use along with metered utility data. From that information, the city would publish online an energy intensity rating, an estimate of annual greenhouse gas emissions, and the building’s Energy Star score, which is relative to other buildings in the country.

The city has already received a grant from the Minnesota Pollution Control Agency for training building owners who would be required to use the tool.

The full City Council is expected to discuss the measure Feb. 8.

Originally published February 01, 2013 at 05:00AM at Midwest Energy News