Section 1603 extension marks another renewable energy victory

2010 has seen a number of efforts by renewable energy developers to position renewable energy as a bigger power player. Renewable energy proponents fought for the defeat of Proposition 23 in California during the November election. And most recently, renewable energy advocates gained the extension of Section 1603 (Treasury Grant Program).

Shortly before midnight on Dec. 16, the U.S. House approved the passage of a tax bill that includes a one-year extension of the grant program. The program was created by the American Recovery and Reinvestment Act (Section 1603) to provide commercial solar installations with a cash grant in lieu of the 30 percent solar investment tax credit (ITC). The extension was heralded by groups like the Solar Energy Industries Association (SEIA) and the American Wind Energy Association (AWEA).

“It took a year of tireless effort from the entire solar industry and our champions in Congress to get an extension of the 1603 program,” said Rhone Resch, CEO of SEIA.

“The inclusion of renewable energy in the tax bill is a clear indication of strong bipartisan support for the wind industry,” said Denise Bode, CEO of AWEA.

Renewable energy projects that start construction before Dec. 31, 2011 will receive a 30 percent cash grant. Since many renewable energy developers were in a holding pattern until the decision to “extend or not to extend” was made, some projects that were scheduled to start by the end of this year are now being corralled.

Borrego Solar, a developer based in San Diego, Calif., has benefitted from the increasing industry interest in solar investments bolstered by the Treasury Grant Program. Mike Hall, CEO, said the one-year extension is a relatively small victory but will allow projects more time for “baking.”

“I don’t think there will be a lot of projects that will fall out. This guarantees that the solar industry will grow in 2011 and 2012.”

Maria Schnitzer, director of solar services for AWS Truepower, a wind and solar forecasting company, said recently the company has seen continued activity in preconstruction site assessment, although it is “not as strong as in years past for wind.” However, activity in solar forecasting is increasing, she said. As a result of the Treasury Grant Program extension, Schnitzer said she expects to see more business in long term forecasting for the preconstruction phases and operational assessments for projects that are already in the ground.

The extension of the Treasury Grant Program is a victory with a bittersweet ending for most developers, as longer term extensions are needed to provide greater stability to the market.

“We would like to see a permanent commitment to renewable energy policy in the U.S.,” Schnitzer said.

“While the one-year extension is great, we need to find a longer extension,” Hall said.

POWER-GEN International keynote address: Regaining industry-wide momentum

Conference and exhibition attendees streamed into the Valencia Ballroom of the Orlando Convention Center the morning of Dec. 14 for the kickoff session of POWER-GEN International 2010. The keynote address, “Regaining Momentum,” included presentations and a Q&A session with Dr. Terry Michalske, director of the Savannah River National Laboratory, Dr. René Umlauft, CEO of the renewable energy division for Siemens AG, Susan Tomasky, president of AEP Transmission, and David Fiorelli, president and CEO for the business development group at Tenaska.

With developing countries expected to drive energy demand and global carbon emissions in the upcoming decades, Michalske said nuclear must play a strong role in reducing emissions by 2050. An increasing portion of nuclear growth will be in the development of small modular reactors (SMRs), he said.

“Small modular reactors could be game-changing technology to take us to the new energy future,” Michalske said, asserting the benefits of SMRs: high efficiency, the ability to be monitored remotely, and a long fuel lifetime (up to 30 years).

One of the most important challenges in nuclear is getting through the regulatory approval for a carbon legislation, Michalske said. “It will take a concerted effort between the industry and government in order to move this forward.”

However, in 2009, 3 percent of worldwide generation came from renewable energy. That number is expected to rise to 17 percent by 2030, Siemens AG’s Umlauft said, with much of the increase coming from India and China. Half of renewable growth will come from wind power, 31 percent from solar, 15 percent from biomass, and 4 percent from geothermal and other sources, he said.

Umlauft said manufacturing wind turbines at a national level will create jobs and drive costs down, leading to the proposed jump in wind generation. A 20 to 30 percent reduction of onshore wind costs is expected in the next few years as a result of manufacturing changes.

While storage is often viewed as the “holy grail” of renewable energy development, Umlauft said other tools should be developed first. These tools include the creation of longer transmission lines, prediction methods for wind and solar and Smart Grid innovations.

Speaking on the need for transmission to help power generation companies regain a foothold in the economy, Tomasky of AEP Transmission said in her opening statements, “We are beginning to see the market of transmission as a business for building transmission.”

Transmission needs to be an important issue because of dramatic shifts in the generation profile that have taken place, the necessity to integrate electrically isolated large scale renewables, and the emissions control regulations that will require the retrofitting or retirement of some coal-fired plants, she said.

“Our present system is … ill-equipped to integrate large-scale renewable resources,” Tomasky said. “Renewable resources are often located in areas of the country where there is little or no transmission infrastructure.”

She said that wind generation presents a “chicken and egg issue”: Generators are hesitant to put transmission in place, and transmission is not often pursued until the generation is committed.

“Getting wind into the system requires a much more robust transmission system.”

Tomasky also said that while incentives for renewables may be uncertain, incentives for new technologies are most likely to survive. “Anything we can do to demonstrate to FERC that we’re building a smarter grid is an opportunity for return.”

Fiorelli spoke on the need for developing cleaner coal. Though the long-term effects of shale gas on gas prices are still unknown, it appears that prices and volatility of natural gas will continue to fall, he said. When combined with regulations concerns like the transport rule and rules for mercury, hazardous air pollutants and CO₂, producers should begin looking towards clean coal options before being met with the possibility of detrimental outcomes for coal plants.

Tenaska has recently developed two integrated gas combined cycle (IGCC) plants, the Taylorville Energy Center in Taylorville, Ill., and the Trailblazer Energy Center, a PC plant with Fluor carbon capture technology to be located in west Texas.

During the Q&A session, Tenaska’s Fiorelli said productivity in policy-making seems to slow with every new election. “We need people to establish policy, write rules and regulations, and then get out of the way,” Fiorelli said.

Under greenhouse gas regulations, Fiorelli said, first movers could receive bonus allowances to support project economics even under low or moderate carbon price scenarios, adding to the incentives to move toward clean coal.

Hines Energy Complex: combustion turbines, cooling ponds and gators, oh my!

Technical tour attendees visited Progress Energy’s 1912-MW Hines Energy Complex located seven miles outside of Bartow, Fla. on Dec. 13. The complex has four combined cycle units fueled by gas and oil. The first unit began commercial operation in 1999 and subsequent units began operation in 2003, 2005 and 2007.

The construction of the complex was a 15-year project beginning in 1992 that took place on a reclaimed phosphate mining area. Aside from the construction of the four units, the size of the cooling ponds was increased from 722 acres to 1196 acres, and cooling towers were built.

The first power block has two Westinghouse 501FC combustion turbines, a Westinghouse BB245/72R steam turbine and two Foster-Wheeler heat recovery steam generators. The second power block has two Siemens 501FD combustion turbines, a Siemens HE steam turbine and two NEM heat recovery steam generators. The third power block has two Siemens 501FD combustion turbines, a Siemens HE steam turbine and two Nooter/Erikson heat recovery steam generators. The fourth power block is comprised of two GE 7FA combustion turbines, a GE D11 reheat steam turbine and two Nooter/Erikson heat recovery steam generators. Units 1-4 also feature dry low NOx controls with Selective Catalytic Reduction.

Marty Drango, plant manager, noted that output from all of the turbines is greater during the winter months (by less than 100 MW) because combustion turbines depend on air density. Density is greater during winter months, especially in the humid Florida climate.

The cooling ponds onsite have required a good deal of maintenance, and plant operators estimate that 475,000 pounds of tilapia have been removed from the ponds. Fish are not the only creatures that have made appearances at the Hines Energy Complex. Progress Energy Florida rebuilt 1,500 acres of wildlife habitat on the formerly mined property adjacent to the Hines Energy Complex. In the process of rebuilding the habitat, Hines staff members have seen the return of alligators, bobcats, deer, hogs, eagles, ospreys, spoonbills and turkeys, among other animals. Hines Energy Complex management estimates as many as 2,000 alligators dwell in the cooling ponds.

Treasury Grant Program extension in Senate’s hands

Proponents of renewable energy have staked high hopes on the extension of the Treasury Grant Program, which has provided cash grants for renewable energy projects in lieu of the Investment Tax Credit (ITC). The cash grant program is set to expire at the end of this year, which has caused many renewable energy developers to become tentative about project planning.

All bets are on now after the Senate proposed a one-year extension of the program under the text of the tax bill introduced on Dec. 9, according to the American Wind Energy Association (AWEA). A cloture vote on the tax bill is scheduled for Dec. 13 at 3 p.m.

Sen. Dianne Feinstein, D-Calif., led a group of 17 senators and 81 House members in calling for the Treasury's cash grant program to be included in tax legislation. In letters requesting the extension, senators and members of the House urged their leaders to renew the grant program, calling it essential to wind, solar and other renewable energy industries. Some senators said they would have difficulty supporting tax legislation that failed to include the Treasury Grant Program’s extension.
According to the Solar Energy Industries Association (SEIA), through February of 2010 the program had already financed over 300 solar projects and created more than 10,000 new jobs. In addition to dealing with the short term problem of the tax credit market, it has also allowed many small- and medium-sized businesses to take advantage of the cash subsidy without having to use the full ITC.

A study by Lawrence Berkeley National Laboratory found the wind energy projects that were made possible by the Treasury Grant Program were responsible for more than 55,000 jobs.

"Factories across the country will restart production lines, recall workers and avoid layoffs that would have followed the loss of this key incentive for wind energy, which with consistent policies like this one can generate 20 percent of America's electricity within 20 years," Denise Bode, CEO of the American Wind Energy Association, said in a statement on Dec. 9.