Topics in this September 2012 Green Power Update.
PJM well positioned to address EPA regs
and advance renewables
In addition to the IMM quarterly report, the Government Accountability Office (GAO) in July issued a report finding that the EPA's regulations are not expected to create reliability problems for the grid. The GAO report does make a recommendation for the Federal Energy Regulatory Commission (FERC) and EPA to enhance communications around EPA's air rules and their effect on the grid.
Underscoring the impact that natural gas and renewable generation is having on the market, the EIA in August released data citing 165 new, mostly natural gas and renewable, generators across the U.S. that went online in 33 states in the first six months of 2012.
Allowing the PTC to expire will diminish gains made in domestic wind manufacturing. A relatively stable commitment to the PTC over the past six years has helped turn wind energy into one of the fastest-growing manufacturing sectors in the U.S., with over 500 factories in 43 states. According to the U.S. Department of Energy's (DOE) latest wind power annual report, 67 percent of the equipment used in American wind power projects is now sourced domestically, almost double the reported content for 2005-2006. Failing to extend the PTC will create uncertainty, sending manufacturing jobs and plants back overseas, where there is a more stable commitment to wind energy.
Pennsylvania has much to lose if Congress allows this important credit to expire. Gamesa alone has invested over $175 million in Pennsylvania with two manufacturing facilities, and employs over 800 workers in the state. Additionally, there are more than 150 companies in Pennsylvania involved in the wind industry, supporting approximately 4,000 jobs across the state.
According to the American Wind Energy Association, U.S. wind power in August reached 50 gigawatts of installed capacity, up from only 5 gigawatts in 2003. Fifty gigawatts of wind power is enough to power 12.8 million homes, and has the equivalent electricity generating power of over 44 coal-fired power plants. The tremendous growth and potential of American wind energy will be halted if the PTC is not extended this year.
Whooping it up at Mehoopany Wind Farm
Progress was marked in late July at a "signing party" where individuals, including U.S. Representative Tom Marino (R-Lycoming County), could sign one of the 130-foot blades soon to be hoisted into the air. John Graham, BP Wind Energy's president and chief executive officer, alluded to the company's interest in building an even larger wind farm in Pennsylvania, slated for 2014, if Congress can extend the wind energy Production Tax Credit (PTC). Graham estimated the proposed wind farm would entail a $340 million investment.
In early August, the Senate Finance Committee passed a PTC extension as part of a $250 billion tax extenders package. Senate Majority Leader Harry Reid (D-Nev.) has expressed confidence that a PTC extension will be in place by the end of 2012. It is unlikely, however, that anything will happen before the November elections.
China and Vietnam subject to wind manufacturing tariffs
Prior to the ruling on steel towers, the U.S. Commerce Department found China guilty of providing improper subsidies to Chinese solar photovoltaic (PV) manufacturers as well as flooding the U.S. with under-priced PV panels. While the rulings by the Commerce Department will affect the wind and solar industries differently, these rulings have exacerbated tense trade relations between the U.S. and China, and have prompted much conversation throughout the renewable energy sector.
This project is illustrative of the increasing popularity of third-party models in the solar industry. Tangent Energy Solutions Inc. of Philadelphia will own the array while Eaton will buy the generated electricity through a 20-year power purchase agreement. The project was financed by a $5 million Commonwealth Financing Authority grant, in addition to private backing.
PennFuture is currently overseeing a Department of Energy SunShot project for southwestern Pennsylvania. According to our program manager, Sharon Pillar, "Everyone calls us the energy capital of the country, and solar is going to be a big part of that mix. That Eaton is willing to invest on that scale is a testament to what is the future of the electrical and energy industry." The state has 157 MW of installed solar, but only 4 MW in southwestern Pennsylvania.
Solar burns bright across the U.S.
Highlights for 2011 include a doubling of installed PV capacity for larger systems in the utility and commercial sectors. While no new concentrating solar power (CSP) plants were connected to the grid in 2011, several plants are planned for 2012.
According to the report, Pennsylvania ranked fifth in grid-connected PV capacity from installations in 2011. Ahead of Pennsylvania were New Mexico, Arizona, New Jersey, and California. Pennsylvania had 46.5 MW of installed capacity in 2010 and an additional 78.2 MW in 2011, bringing the cumulative total to 133.1 MW at the beginning of 2012.
The Pennsylvania Sunshine Solar Rebate Program, which was funded with $100 million in state bonds, is currently accepting applicants onto a waiting list. The 1603 Treasury Grant Program expired at the end of 2011, with projects required to have begun construction by the end of 2011. The federal business investment tax credit, which provides a credit for up to 30 percent of the cost of solar equipment investments, is open through December 31, 2016.
After accounting for the federal incentive programs, the report makes clear that 2011 solar growth is concentrated in states with strong solar policies, the most significant being state renewable portfolio standards, rebates, and net metering. That said, the increasing popularity of third-party models is helping to spur solar throughout the U.S.
PPL completes third solicitations for RECs
PPL purchased the SRECS at $43.20 each, a price that is down from $149 in the first solicitation and $107.83 in the second solicitation. The decrease in price reflects the oversupply of SRECs in the Pennsylvania market. While attempts were made, via HB 1580, to correct the existing oversupply, a vote on the bill was never taken in the House Consumer Affairs Committee.
Simply put, on-bill financing is a small loan made to a utility customer. This loan allows for energy efficiency improvements to be made to the customer’s property, and the loan is repaid incrementally via the monthly utility bill. On-bill financing legislation and programming exists in California, New York, and Connecticut, among other states (New York passed the Power NY Act in 2011 authorizing residential on-bill loans).
These loans are unique for two reasons: 1) they are tied to a utility service; and 2) the expected savings from energy efficiency upgrades must be equal to, or exceed, the on-bill loan payments to be eligible.
For many, upfront capital is the only barrier to making energy efficiency upgrades, and on-bill financing removes that obstacle. However, there still remains considerable hesitation from utilities on implementing on-bill financing. Concerns include the cost of revamping payments systems, potential liabilities associated with loan loss, and involvement in programmatic oversight that will bring with it a host of responsibilities such as vetting prospective participants in the on-bill program. In states like New York, third parties have stepped in to facilitate the program.
PennFuture supports on-bill financing, particularly on-bill repayment, where programs can be underwritten and financed by private, third-party capital such as community development financial institutions (CDFI) or banks and credit unions, thereby allowing electric distribution companies to avoid liabilities on their balance sheet. These programs are crucial to furthering the ability of Act 129 to penetrate hard-to-reach customer sectors like the small-commercial class.
The Pennsylvania Public Utility Commission, as part of its final order for Phase II of Act 129, directed its Bureau of Consumer Services and Bureau of Technical Utility Services to initiate a working group to "investigate best practices from other states and identify working models of on-bill financing and on-bill repayment that address the concerns of the EDCs, consumer interest groups and other interested stakeholders."
While these standards remain largely unchanged from those proposed in November, a new incentive for natural gas vehicles has been added to the Final Rulemaking. The incentive will be in place between 2017 and 2021, with the hope of encouraging automakers to manufacture vehicles like the Honda Civic Natural Gas, which are primarily fueled by natural gas. All electric, hybrid electric and fuel cell incentives from the proposed rule are also included.
The proposed standards, for which PennFuture submitted testimony, suggested a fleet-wide standard of 54.5 miles per gallon by 2025, resulting in a 5 percent improvement in annual fuel economy. This is expected to result in a total savings of 4 billion barrels of oil, and reduce oil consumption by more than 2 million barrels a day by 2025.
ARPA-E says energy storage is no weird science
As for state-based initiatives, clean energy powerhouse California is moving forward with a mandate requiring utilities to invest in energy storage systems and services. With wind and solar, as well as other clean energy generation, comes the need for more energy storage to keep intermittent electricity flows to a minimum and ensure grid stability. The California Public Utilities Commission will make its final decision in a year as to whether to adopt an energy storage procurement target.
DEP Hosts Natural Gas Vehicle Seminars
The new Natural Gas Energy Development Program, created from impact fees generated by Act 13, will be coordinated by DEP to facilitate and distribute competitive grant funds of $20 million to convert or purchase eligible vehicles to natural gas.
The agency is also looking to learn more about prospective fleet projects across the state and encourages regional transit officials and others involved in fleet management to complete a Natural Gas Vehicle Prospective Project Survey. DEP plans to work with those who submit a survey on pre-planning activities prior to accepting grant applications.
Also worth keeping in mind is the Alternative Fuels Incentive Grant available to assist with costs related to the purchase of new alternative fuel vehicles (natural gas, propane, electric, or hydrogen fuel cells).
Clean Energy News
Considered the "Good Neighbor" provision of the Clean Air Act, many states which are already meeting the rule’s provisions are reducing power plant emissions of sulfur dioxide by 73 percent, and nitrogen oxide by 53 percent, from 2005 levels. For now, air pollution from neighboring states will be regulated by a rule enacted during the George W. Bush administration in 2005. Concerned groups are trying to identify other options that explicitly give states the legal authority to petition the EPA to require upwind states to reduce emissions.
Read more about the CSAPR decision on PennFuture’s environmental law blog, A Bear in the Woods.
So, how do the lights stay on?
Rural clean energy innovation gets a boost from the USDA
Other USDA funding opportunities include the one hundred and six projects in 29 states that will receive funding to produce renewable energy and make energy efficiency upgrades, monies being made available through the USDA's Rural Energy for American Program (REAP). Earlier this summer, Secretary Tom Vilsack announced $7.4 million in REAP funding for 450 projects nationwide, including 11 projects in Pennsylvania. The funding represents momentum for building capacity in the agricultural community, and the ability for rural small businesses to reduce their energy use and costs while leveraging renewable energy opportunities. As for the August REAP funding allocations, Pennsylvania received funding for two projects, both to farms. Key Steer Farm and Harmony Springs Farm will each receive $50,000 in funding to install solar photovoltaic systems.
PennFuture Energy Center Blog recap
The regulations at issue were adopted under the federal Clean Air Act's "good neighbor" provision, which requires upwind states to prevent sources within their borders from emitting air pollutants in amounts that contribute significantly to a downwind state's nonattainment of federal air quality standards. Its purpose is to establish a workable approach to interstate air pollution issues that have huge public health implications.
By a vote of 2-1, the court found that the Environmental Protection Agency had overstepped its legal authority in developing the rule. As a result, the Court vacated the offending provisions.
This ruling raises several concerns. First, it creates uncertainty over the timing and magnitude of the emissions restrictions that ultimately will be imposed on sources in upwind states. Also, delays in establishing regulations and requirements to upgrade or build cleaner generation will result in foregone emissions reductions and will fail to send clear market signals to make investments in cleaner generation, such as natural gas, renewable energy, and efficiency.
The EPA must continue administering the provisions of its previously-adopted Clean Air Interstate Rule pending adoption of a valid replacement, or until the U.S. Supreme Court agrees to review this decision and overturns it.
EME Homer City Generation, L.P. v. EPA, No. 11-1302.
Read more at PennFuture's Environmental Law Blog, A Bear in the Woods.
The nation’s best and brightest renewable energy leaders, energy efficiency experts, policy makers, financiers, and advocates will be on hand to address the gathering and, yet, the conference is small enough that anyone attending will be able to network with the speakers easily. You’ll hear from national energy leaders including former Pennsylvania Governor Ed Rendell; current Delaware Governor Jack Markell, chair of the National Governors Association; Kathleen McGinty, former chair of the White House Council on Environmental Quality; and Philadelphia Mayor Michael Nutter. We’ll kick off the conference with a private tour of the U.S. Department of Energy’s Energy Efficient Buildings Hub at the Philadelphia Navy Yard, and pause midway for a networking event that’s a singular opportunity to connect with key influencers and decision makers.
Don’t wait this clean energy train is leaving the station and you need to be along for the ride. Register today, and we’ll be there to greet you in Philadelphia next week!
NGV Technical Assistance & NGEDP Introduction
Pennsylvania's Natural Gas Vehicle Grant Program & Information on Fleet
Please contact John Alexander at John@MidAtlanticBX.com for more information.
Yesss RT @NRDC With U.S. hybrid sales up 63% this year, @Toyota and @Honda are moving production to our shores. http://bit.ly/TJHyHT #54mpg
#CleanEnergyNOW RT @ClimateDesk #PHOTOS: The worst #drought in half a century, in images. Via @TheAtlantic http://bit.ly/PMzm9J
Third-party owned #solar generates $1 billion for Calif. economy, says @Sunrun It's high noon: time for fossil fuels to give up their windfall Could a carbon tax help the U.S. avert the "fiscal cliff?" New #PNC Tower in #Pgh aspires to be greenest in world--and probably will be. Read on: http://bloom.bg/TXbRuH
Green Power Update, produced by the PennFuture Energy Center, is a digest about developments in technology, policy and capital and how they are helping to move Pennsylvania toward a clean energy economy.