Smart Grid is abuzz recently. The Obama Administration outlined a nine-point Smart Grid plan on June 13 that includes funding Smart Grid projects in rural areas and making Smart Grid successes and failures publically available. As a result of the American Recovery and Reinvestment Act, the Obama Administration has already invested $4.5 billion in recovery investments into Smart Grid projects, which has resulted in the installation of over five million smart meters and more.
The new plan includes a commitment to invest a minimum of $250 million in loans for Smart Grid projects in the rural U.S. and the creation of a non-profit called Grid 21 focused on consumer tools. In addition, the Administration has launched an initiative that will seek to share the lessons learned from the Smart Grid stimulus investments, and a “Renewable Energy Rapid Response Team” has also been created that will review clean power and transmission line projects and improve federal coordination for getting clean power projects deployed.
Cameron Brooks, senior director of market development and policy strategy at Tendril, a Smart Grid software developer, said the loan for rural Smart Grid development should be viewed like a down payment that rural utilities can choose to build upon. “There’s an element of establishing the foundation upon which others can innovate.”
The investment into rural areas will help aid transmission in parts of the country that are lacking adequate transmission, said John Christens, vice president of Smart Energy Services for the consulting company Capgemini. But more importantly, Christens said, the government will be making Smart Grid information more readily available through the new plan. “The government is saying it will serve as an ombudsman, publishing the results of pilot programs and smart meter programs. This is a statement of further commitment by the government to establish better standards of grid interoperability.”
Brooks said the Grid 21 campaign, which will grant customers more detailed and faster access to information on their own meter, is a great step forward for Smart Grid. “Very few meters have any information that goes directly into the home, but this plan is looking at ways that can nudge industry and regulators about this issue.”
But while Smart Grid developments are seemingly welcomed and spurred on by the White House and renewable energy advocates, are they embraced by the power industry as a whole? Or is Smart Grid still perceived as a dark, ominous path with potential pitfalls along the way?
Smart Grid “Undefined”
According to a recent Black & Veatch survey of 700 U.S. electric utility employees, almost half of respondents stated that the term Smart Grid is still “undefined” or “somewhat undefined” across the industry. Additionally, 58 percent of respondents indicated a negative impression of how well utilities have made their business cases for Smart Grid initiatives. So according to utility employees, it seems that Smart Grid is still a mystery, and one that isn’t being developed sufficiently.
Part of the solution, according to the Black & Veatch report, could be the cultivation of an industry-wide definition of “Smart Grid.” Black & Veatch suggests that individual utilities could answer the question: “How can we create a common, working definition of the term within our stakeholder community that can be used to ensure a basis of understanding for discussions?”
But does Smart Grid really need to be defined? Not everyone thinks so. Christens said a standard definition isn’t needed because every utility has a different definition of what their Smart Grid innovations look like, ranging from smart meter implementation to incentivizing customers to install rooftop solar or windmills in their backyards.
Brooks said a clear definition of Smart Grid is not hindering developments, but lack of access to customer tools is. “But that’s what the Administration is working on,” he said.
Understanding the Perks
Christens said it’s more important for the industry to understand the benefits of Smart Grid rather than grapple for a definition. “In general, the benefits will be to help utilities avoid outages and to tailor prices to demand.”
According to a report released in April by the Electric Power Research Institute, it will cost between $338 billion to $476 billion to implement a fully functional Smart Grid. However, benefits associated with the Smart Grid would range between $1.3 trillion and $2 trillion.
In the end, Christens said it is up to the industry or the government to help teach the lessons learned through Smart Grid initiatives, such as San Diego Gas & Electric’s (SDG&E’s) new $3.6 billion Smart Grid plan. SDG&E’s plan aims for a smarter grid driven by customers. Many of the utility’s customers are installing rooftop solar systems on their homes, and San Diego has one of the highest numbers of electric vehicles in any U.S. city.
Learning from Smart Grid initiatives such as SDG&E’s could be the greatest lessons for the power industry as it continues to form a 21st Century grid. And the way the new Smart Grid plan is designed, access to information could be the key to Smart Grid developments.
Thursday, June 16, 2011
Friday, June 10, 2011
When electricity loses its buzz
Last Friday night, I found myself standing under a set of immense transmission lines in Coweta, Okla., listening to the buzz of traveling electricity. Some friends of mine own a piece of land blanketed by rolling hills dotted with transmission lines. In between a game of Capture the Flag and kickball, just before dusk, when everyone in northeastern Oklahoma flips on the lights, I listened to the buzz and soaked in the miracle of it all.
While the magic of electricity left me with that momentary tingly feeling, the reality of what’s missing in the power industry is enough to leave me with a migraine. The buzz of transmission towers, while still fascinating in the year 2011, was a 20th century development. For the most part, things in the power industry are as they’ve always been. The industry is aging, without much adaptation to the times at hand.
In the book “Perfect Power,” Robert Galvin, founder of the Galvin Electricity Initiative, and Kurt Yeager, former CEO of the Electric Power Research Institute, propone that it’s time for a breakthrough in the power industry. One of the questions posed: “Is the electrical industry stuck in a 20th century time warp?”
Over the last couple decades, the communications industry has undergone a dramatic change. Most of us grew up in homes where cell phones weren’t even on the radar scale, and we were content with our AT&T home telephone. Never did we imagine that we would someday carry a telephone in our pockets and have dozens of phone service providers to choose from.
“What consumers have today is the electrical performance and choice equivalent of the old analog, black rotary-dial telephone,” Galvin writes.
Just like the communications monopolies of times past, Galvin (former CEO of Motorola), asserts that monopoly utilities operate their base business on how much electricity they sell rather than on the quality, reliability and efficiency of service. Yet, consumers do not have a choice of where to get their electricity from.
While the American networks of electrification were heralded as the “the greatest engineering achievements of the 20th century” by the U.S. National Academy of Engineering, the industry seems to have reached a place of complacency, dominated by aging equipment, blackouts and the aforementioned monopoly utilities.
One of the “Perfect Power” solutions for bringing the power industry out of the “20th century mindset” is the implementation of smart microgrids. “This approach will set the tone for comprehensive, creative solutions rather than timid patchwork answers.”
Are smart microgrids the key to launching the power industry from being an aging entity to becoming a progressive, developing system? I’ll be discussing “Perfect Power” in future blog entries, and would love to hear your thoughts on the Smart Grid and other concepts to advancing the power industry.
While the magic of electricity left me with that momentary tingly feeling, the reality of what’s missing in the power industry is enough to leave me with a migraine. The buzz of transmission towers, while still fascinating in the year 2011, was a 20th century development. For the most part, things in the power industry are as they’ve always been. The industry is aging, without much adaptation to the times at hand.
In the book “Perfect Power,” Robert Galvin, founder of the Galvin Electricity Initiative, and Kurt Yeager, former CEO of the Electric Power Research Institute, propone that it’s time for a breakthrough in the power industry. One of the questions posed: “Is the electrical industry stuck in a 20th century time warp?”
Over the last couple decades, the communications industry has undergone a dramatic change. Most of us grew up in homes where cell phones weren’t even on the radar scale, and we were content with our AT&T home telephone. Never did we imagine that we would someday carry a telephone in our pockets and have dozens of phone service providers to choose from.
“What consumers have today is the electrical performance and choice equivalent of the old analog, black rotary-dial telephone,” Galvin writes.
Just like the communications monopolies of times past, Galvin (former CEO of Motorola), asserts that monopoly utilities operate their base business on how much electricity they sell rather than on the quality, reliability and efficiency of service. Yet, consumers do not have a choice of where to get their electricity from.
While the American networks of electrification were heralded as the “the greatest engineering achievements of the 20th century” by the U.S. National Academy of Engineering, the industry seems to have reached a place of complacency, dominated by aging equipment, blackouts and the aforementioned monopoly utilities.
One of the “Perfect Power” solutions for bringing the power industry out of the “20th century mindset” is the implementation of smart microgrids. “This approach will set the tone for comprehensive, creative solutions rather than timid patchwork answers.”
Are smart microgrids the key to launching the power industry from being an aging entity to becoming a progressive, developing system? I’ll be discussing “Perfect Power” in future blog entries, and would love to hear your thoughts on the Smart Grid and other concepts to advancing the power industry.
Monday, May 23, 2011
Bode at Windpower 2011: BPA “allowing the status quo to continue”
“It’s a violation of contract. It’s allowing the status quo to continue and doing so at the expense of an industry that is just now scaling up to size,” said Denise Bode, CEO of the American Wind Energy Association (AWEA), regarding Bonneville Power Administration’s (BPA’s) decision to temporarily limit output from non-hydropower resources.
Bode addressed BPA’s actions during a press conference at the Windpower 2011 Conference and Exhibition in Anaheim, Calif. on May 23. High seasonal river flows and hydroelectric generation in the Pacific Northwest led BPA to issue an interim decision on May 13 to address what it called a “potentially imminent need” to temporarily limit wind generation and other sources.
“We’ve been begging Bonneville to take action and move forward,” Bode said. “Now when they’re in trouble, they shut down the only other renewable sector besides hydro and they let the coal keep burning.”
BPA, however, says it is limiting the output of all non-hydroelectric energy, including fossil-fuel and other thermal generation and wind energy, according to a BPA press release. BPA says the action was required to protect salmon and steelhead, maintain the reliability of the power grid and avoid shifting costs to BPA’s customers.
Governor Brian Schweitzer of Montana, who also participated in the press conference, said that BPA has been short-sided regarding its decision to limit wind power. “What they don’t have is transmission capacity to get the electricity to market. If we don’t move now, five and ten years from now, it’s going to be much greater as we come out of this recession.”
While BPA is under AWEA’s scrutiny, the state of California is receiving AWEA’s high praises for the continued success of its goal to have 33 percent of its electric generation from renewable sources by 2020. Bode said that since Senate Bill 2X was signed into law, interest in California wind portfolios has exploded.
“It’s like the floodgates have opened,” Bode said.
The wind industry now supports 15 wind-related manufacturing facilities in California. In addition, 4,000 to 5,000 permanent workers help maintain and operate the 3,177 MW of wind power already online in California, equaling 3 to 5 percent of the state’s generation, depending on peaking needs.
Bode also applauded the role that wind energy played during the March earthquake and tsunami in Japan. None of the wind turbines in Japan were impacted by the disasters, Bode said, evidence to the quality of the product. However, wind generation was limited at times due to transmission issues.
“Japan’s story really told the story for a need for diversification. Renewable resources should be a part of every portfolio.”
Bode addressed BPA’s actions during a press conference at the Windpower 2011 Conference and Exhibition in Anaheim, Calif. on May 23. High seasonal river flows and hydroelectric generation in the Pacific Northwest led BPA to issue an interim decision on May 13 to address what it called a “potentially imminent need” to temporarily limit wind generation and other sources.
“We’ve been begging Bonneville to take action and move forward,” Bode said. “Now when they’re in trouble, they shut down the only other renewable sector besides hydro and they let the coal keep burning.”
BPA, however, says it is limiting the output of all non-hydroelectric energy, including fossil-fuel and other thermal generation and wind energy, according to a BPA press release. BPA says the action was required to protect salmon and steelhead, maintain the reliability of the power grid and avoid shifting costs to BPA’s customers.
Governor Brian Schweitzer of Montana, who also participated in the press conference, said that BPA has been short-sided regarding its decision to limit wind power. “What they don’t have is transmission capacity to get the electricity to market. If we don’t move now, five and ten years from now, it’s going to be much greater as we come out of this recession.”
While BPA is under AWEA’s scrutiny, the state of California is receiving AWEA’s high praises for the continued success of its goal to have 33 percent of its electric generation from renewable sources by 2020. Bode said that since Senate Bill 2X was signed into law, interest in California wind portfolios has exploded.
“It’s like the floodgates have opened,” Bode said.
The wind industry now supports 15 wind-related manufacturing facilities in California. In addition, 4,000 to 5,000 permanent workers help maintain and operate the 3,177 MW of wind power already online in California, equaling 3 to 5 percent of the state’s generation, depending on peaking needs.
Bode also applauded the role that wind energy played during the March earthquake and tsunami in Japan. None of the wind turbines in Japan were impacted by the disasters, Bode said, evidence to the quality of the product. However, wind generation was limited at times due to transmission issues.
“Japan’s story really told the story for a need for diversification. Renewable resources should be a part of every portfolio.”
Thursday, May 19, 2011
Would you like to add solar to your order?
Solar energy augmentation projects are being cooked up world over. Traditional coal and natural gas-fired plants are adding solar to their plants -- both as a way to generate more power, but perhaps also as a way to create a more positive public image.
On April 13, Areva was awarded a contract to install a solar thermal addition to CS Energy’s coal-fired Kogan Creek power station in Queensland, Australia. Adding solar energy to the Kogan Creek power station will increase its output by up to 44 MW in peak solar conditions to the current 750 MW.
Solar boosts like these are taking place in the U.S. as well. My colleague Brian Wheeler wrote a story for our May issue of Power Engineering on Florida Power & Light’s Martin Next Generation Solar Energy Center located near Indiantown, Fla., which started operations in December 2010. Thousands of parabolic mirrors concentrate the sun’s thermal energy onto heat collection elements that contain a heat transfer fluid called Dowtherm A. The fluid heats up and is pumped through heat exchangers, producing steam from feed water supplied by the existing plant. The steam is sent to existing Nooter-Erikson combined-cycle heat recovery steam generators. It is expected that 100 additional megawatts with be generated through this steam process, adding to the pre-existing 1,150 MW of generation.
Various studies are taking place to increase the effectiveness of solar-augmented coal plants, such as at Tri-State’s 245 MW Escalante Station in Prewitt, N.M. With a goal of increasing power plant efficiency while incorporating renewable technologies, Tri-State entered into an agreement with the Electric Power Research Institute in 2009 to host the case study. The ongoing project attempts to provide a conceptual design study, analyze options to retrofit the existing power plant and identify new plant design options.
Here are a few reasons why adding solar to an existing facility just makes sense:
1. Cooling. In the case of the Martin Next Generation Solar Energy Center and other CSP projects, the water needed for cooling is already available via feed water from the existing plant.
2. Transmission. Existing power plants are already connected to the grid, preventing problems with access to transmission that new concentrated solar power (CSP) plants often face.
3. Financials. Advocates of solar augmentation also argue that the technique achieves higher thermal to electric conversion efficiency and potentially lower costs compared to stand-alone solar facilities. Also, the addition of a solar component allows access to renewable energy credit markets and other fiscal incentives for clean energy.
For more on traditional power plants that have added solar to their “generation menu,” check out this story that ran in the November 2010 Power Engineering. Order up!
On April 13, Areva was awarded a contract to install a solar thermal addition to CS Energy’s coal-fired Kogan Creek power station in Queensland, Australia. Adding solar energy to the Kogan Creek power station will increase its output by up to 44 MW in peak solar conditions to the current 750 MW.
Solar boosts like these are taking place in the U.S. as well. My colleague Brian Wheeler wrote a story for our May issue of Power Engineering on Florida Power & Light’s Martin Next Generation Solar Energy Center located near Indiantown, Fla., which started operations in December 2010. Thousands of parabolic mirrors concentrate the sun’s thermal energy onto heat collection elements that contain a heat transfer fluid called Dowtherm A. The fluid heats up and is pumped through heat exchangers, producing steam from feed water supplied by the existing plant. The steam is sent to existing Nooter-Erikson combined-cycle heat recovery steam generators. It is expected that 100 additional megawatts with be generated through this steam process, adding to the pre-existing 1,150 MW of generation.
Various studies are taking place to increase the effectiveness of solar-augmented coal plants, such as at Tri-State’s 245 MW Escalante Station in Prewitt, N.M. With a goal of increasing power plant efficiency while incorporating renewable technologies, Tri-State entered into an agreement with the Electric Power Research Institute in 2009 to host the case study. The ongoing project attempts to provide a conceptual design study, analyze options to retrofit the existing power plant and identify new plant design options.
Here are a few reasons why adding solar to an existing facility just makes sense:
1. Cooling. In the case of the Martin Next Generation Solar Energy Center and other CSP projects, the water needed for cooling is already available via feed water from the existing plant.
2. Transmission. Existing power plants are already connected to the grid, preventing problems with access to transmission that new concentrated solar power (CSP) plants often face.
3. Financials. Advocates of solar augmentation also argue that the technique achieves higher thermal to electric conversion efficiency and potentially lower costs compared to stand-alone solar facilities. Also, the addition of a solar component allows access to renewable energy credit markets and other fiscal incentives for clean energy.
For more on traditional power plants that have added solar to their “generation menu,” check out this story that ran in the November 2010 Power Engineering. Order up!
Friday, April 15, 2011
EPA's hint to coal generators (shhh...it's natural gas!)
As a newlywed 10 months into marriage, I’m still learning that dropping hints is not always the strongest form of communication. I might mention to my husband all week long things like, “Doesn’t queso from such-and-such restaurant sound good?” Then the weekend rolls around, and he still innocently asks, “What kind of restaurant should we try?” Sometimes hints aren’t picked up on. Or even if they are, they aren’t always acted upon. But still, it's often more comfortable, less abrasive to use hints in place of direct communication. It seems to me that the Environmental Protection Agency is a hint-dropper. The Administration doesn’t come out and force conversions from coal to natural gas or renewables. But through nagging mechanisms even more powerful than those possessed by the cast of Desperate Housewives, the EPA can make life tough on coal-fired generators. On April 14, I attended an EPA hearing in Tulsa, Okla. concerning an ongoing debate over three coal-fired plants that are not under compliance of EPA’s Clean Air Visibility Rule. The plants are Oklahoma Gas and Electric (OG&E) Company’s Muskogee and Sooner Stations, and AEP-Public Service Company of Oklahoma’s Red Rock Station. According to the rule, the stations must achieve EPA’s emission limit for SO2 – 0.15 lb/mmBtu, or 95 percent removal. OG&E said it would cost about $10,000 per ton to reduce SO2 emissions to those levels through the use of scrubber technology at its two plants. The Oklahoma Department of Environmental Quality (ODEQ) has submitted a State Implementation Plan (SIP), recommending Best Available Retrofit Technology (BART) switches for the plants. However, the EPA identified the SIP as one that “does not meet one or more of the required elements.” Why doesn’t it meet the requirements? Steve Thompson, executive director of ODEQ, said the BART alternative in the SIP “reduces SO2 emissions more than the primary requirements in EPA’s Federal Implementation Plan.” So what about that is unacceptable to the EPA? Coal is still being burned. Visibility could still be affected to some degree in federal wildlife areas – the heart of the issue. EPA states that “switches to natural gas are an acceptable method,” as a spokesperson from Oklahoma natural gas producer Chesapeake Energy pointed out at the hearing. Oklahoma has an abundant supply of natural gas. Larry Nichols, CEO of Devon Energy, told me during a March interview that the company’s work in the Cana shale in western Oklahoma which has already netted 11 trillion cubic feet – larger than Devon’s four discoveries in the Gulf of Mexico. So a shortage of a natural gas supply would be close to impossible if these power companies were to do a partial or total switch. It’s not just these Oklahoma coal plants that will soon be replaced by natural gas or another form of “cleaner” energy. On April 14, Tennessee Valley Authority announced the retirement of 18 coal-fired units. In many cases, it’s easier to retire a plant than to retrofit it, especially older plants. Barney Racine, software development manger for the environmental solutions group of Honeywell Process Solutions, said the EPA’s focus is not so much on SO2 control, but rather a complete retreat from coal. “They’re not necessarily driving legislation from the emissions monitoring standpoint, but from the incentive side – the cost to burn coal vs. natural gas.” Some coal will undoubtedly remain in the generation mix in the coming decades, but EPA will continue to drop hints that other forms of generation are preferable. While natural gas prices are low, many coal-fired generators will, reluctantly or not, make the switch. EPA’s hint will be taken with a grain of salt, or perhaps in some cases, enforced. And hopefully through tactful hints rather than a means of force even more powerful than the EPA's, I’ll get my chips and queso this weekend.
Wednesday, April 13, 2011
What stands in the way of California’s 33 percent renewables goal?
On April 12, California Governor Jerry Brown signed Senate Bill 2X into law, requiring that 33 percent of the state’s electric generation come from renewable sources by 2020.
Under S.B. 2X, all load-serving entities must meet a 20 percent renewables target by Dec. 31, 2013, a 25 percent target by the end of 2016, and achieve the 33 percent criterion by the end of 2020.
S.B. 2X applies to all electricity retailers in the state – investor-owned utilities, municipal utilities and independent sellers. The current 20 percent renewable energy requirement applies only to investor-owned utilities and independent power producers.
One municipal utility, the Los Angeles Department of Water and Power, has already reached the 2013 goal of generating 20 percent of its power from renewables. Smaller municipal utilities like Glendale, Anaheim, Pasadena and Burbank, are behind at this stage in terms of how much renewable power they have in their portfolios, said Dario Frommer, partner at Mayer Brown law firm.
Most investor-owned utilities in California are hovering just under 20 percent renewables now. While it may seem that investor-owned utilities are close to meeting the 2013 goal, many of these projects are in litigation over siting issues and may not be completed in time to meet the 2013 target, Frommer said.
“It’s incumbent on the political leaders to address the siting issues that are creating problems for financing,” Frommer said. “Those issues are an impediment to realizing the 33 percent goal.”
Concerns over siting issues and financing may abound, but S.B. 2X is expected to bring stronger solar and wind markets to the state. During the signing ceremony, U.S. Energy Secretary Steven Chu said he sees the measure as a model for other states. Chu also announced a tentative commitment of $1.2 billion in loan guarantees for a 250 MW solar energy project in San Luis Obispo County.
Jenya Meydbray, CEO of Berkeley-based PV Evolution Labs, said S.B. 2X creates long-term sustainability in the California solar market. “The lack of long-term policy foresight has been one big challenge for solar manufacturers in North America. This new law solidifies California’s dedication to developing a sustainable solar market, which will in turn enhance solar’s viability as a job-creating industry.”
Solar won’t be the only renewable energy form to brighten in the Golden State. According to the American Wind Energy Association (AWEA) Annual Market Report for 2010, California came in third for the most wind capacity installed in 2010, totaling 3,177 MW of total capacity. Wind growth in California is expected to continue with the implementation of S.B. 2X, said Denise Bode, CEO of AWEA.
“California understands the direct link between sound policy and renewable energy’s multiple benefits … California has already seen the jobs and economic development that follow when the right policies are put in place to create a stable business and investment environment,” Bode said.
Since it was passed during a special legislative session, S.B. 2X is not expected to take effect until early July.
Under S.B. 2X, all load-serving entities must meet a 20 percent renewables target by Dec. 31, 2013, a 25 percent target by the end of 2016, and achieve the 33 percent criterion by the end of 2020.
S.B. 2X applies to all electricity retailers in the state – investor-owned utilities, municipal utilities and independent sellers. The current 20 percent renewable energy requirement applies only to investor-owned utilities and independent power producers.
One municipal utility, the Los Angeles Department of Water and Power, has already reached the 2013 goal of generating 20 percent of its power from renewables. Smaller municipal utilities like Glendale, Anaheim, Pasadena and Burbank, are behind at this stage in terms of how much renewable power they have in their portfolios, said Dario Frommer, partner at Mayer Brown law firm.
Most investor-owned utilities in California are hovering just under 20 percent renewables now. While it may seem that investor-owned utilities are close to meeting the 2013 goal, many of these projects are in litigation over siting issues and may not be completed in time to meet the 2013 target, Frommer said.
“It’s incumbent on the political leaders to address the siting issues that are creating problems for financing,” Frommer said. “Those issues are an impediment to realizing the 33 percent goal.”
Concerns over siting issues and financing may abound, but S.B. 2X is expected to bring stronger solar and wind markets to the state. During the signing ceremony, U.S. Energy Secretary Steven Chu said he sees the measure as a model for other states. Chu also announced a tentative commitment of $1.2 billion in loan guarantees for a 250 MW solar energy project in San Luis Obispo County.
Jenya Meydbray, CEO of Berkeley-based PV Evolution Labs, said S.B. 2X creates long-term sustainability in the California solar market. “The lack of long-term policy foresight has been one big challenge for solar manufacturers in North America. This new law solidifies California’s dedication to developing a sustainable solar market, which will in turn enhance solar’s viability as a job-creating industry.”
Solar won’t be the only renewable energy form to brighten in the Golden State. According to the American Wind Energy Association (AWEA) Annual Market Report for 2010, California came in third for the most wind capacity installed in 2010, totaling 3,177 MW of total capacity. Wind growth in California is expected to continue with the implementation of S.B. 2X, said Denise Bode, CEO of AWEA.
“California understands the direct link between sound policy and renewable energy’s multiple benefits … California has already seen the jobs and economic development that follow when the right policies are put in place to create a stable business and investment environment,” Bode said.
Since it was passed during a special legislative session, S.B. 2X is not expected to take effect until early July.
Monday, April 4, 2011
Filling the nuclear development void
As Japan and the world pick up the pieces leftover from Fukushima, the looming question is: What form(s) of energy will fill the nuclear void? Some countries, including China and Germany, have already decided to phase out nuclear developments that were underway, looking to solar or energy imports instead.
Our online audience expressed their opinions on how the nuclear development void could be filled in an online poll last week. The results show that 49 percent of poll participants expect natural gas to see the biggest gain if nuclear is suspended or delayed. That’s no surprise, with the current low prices of natural gas and the development of numerous shale gas plays in the U.S. and abroad.
A few days after the Fukushima disaster, I conducted the annual Executive Gas roundtable, which will appear in the May issue of Power Engineering magazine. Five leaders from the gas industry shared their thoughts on the natural gas industry, as well as impacts that Fukushima may have on the U.S. power industry.
John Adams, senior vice president of Power Operations at Calpine, pointed out that the predicted Nuclear Renaissance included 34 nuclear plants being licensed to go forward in the U.S. Yet of those 34, only “a handful looked like they were going to make it or were proceeding on a fast, timely basis.” Even before Fukushima, the Nuclear Renaissance was panning out to be more like a tiny ripple in the energy pond.
“Now we have this tragedy on top of it, which will actually slow it further,” Adams said.
Larry Nichols, CEO of gas exploration and production company Devon Energy, said the Japan tragedy is opening up legislators’ eyes to lower risk forms of energy.
“The nuclear problems in Japan will focus the minds of both the public and policy-makers on why we would provide loan guarantees of $38 billion for new nuclear plants. All the while we have such an abundant, cheap and clean resource like natural gas, which comes with minimal risk,” Nichols said.
Confirmations of those statements are now frequently popping up. A recent study from the Energy Information Administration found that the U.S. has twice the amount of projected recoverable natural gas (827 Tcf) than previously thought.
“Natural gas will take a much more dominant role as we go forward, moving from 20 percent to 40 percent over the next 25 years,” said Ed Walsh, executive vice president for Black & Veatch’s global energy business.
All right, enough about natural gas already. Solar is expected to be another big filler if nuclear growth in the U.S. slows down. Solar growth continues to grow in California, where on March 30 The California Assembly approved a bill that gives utilities until 2020 to have 33 percent of their generation sources come from renewable energy. New Jersey continues to make strides in solar growth as well. According to an April 4 speech by Rhone Resch, president of the Solar Energy Industries Association, the New Jersey solar market grew by 139 percent in 2010 and more than 100 MW was installed.
It is likely that nuclear development in the U.S. will not continue quite as was planned. However, as of March 15, President Barack Obama said that regulators should continue with the approval of construction licenses for new nuclear power plants despite Japan's nuclear crisis.
If a nuclear development slow or halt does occur, it’s likely that all forms of energy will work to fill the void. If natural gas prices reach a place of stability, a large portion of the nuclear development void will likely be filled by gas. Solar will also have its role, as well as hydro, wind, geothermal and biomass. Coal may even play a filler role through the use of supercritical and ultra-supercritical technologies could reduce carbon emissions and boost efficiencies, as well as IGCC plants.
Wednesday, March 9, 2011
Time for a Philosophy Shift
The Renewable Energy World Conference & Expo North America kicked off on March 8 with a unique perspective of the condition of the U.S. electric grid presented by Kurt Yeager, executive director of the Galvin Electric Institute and former president and CEO of the Electric Power Research Institute. Yeager stressed during his keynote address that electricity is at a point technologically “where we can reinvent Thomas Edison.” Much of that revitalization, Yeager said, will come through the continual development of a smarter grid.
While Smart Grid has a tendency to tack on a number of different name badges, Yeager defined it in three ways: Moving from analog to an electronically-monitored power system, a two-way consumer services gateway, and the reintroduction of direct current (DC)/microgrids.
In order for Smart Grid to work, electricity providers must develop a user-centric view, Yeager said.
“Smart Grid is a transactive network. The user becomes a partner, not a prisoner of the network.”
A smarter grid is also essential to grid reliability. Yeager presented a few astonishing numbers associated with grid reliability. The average consumer in the U.S. is without power four hours each year. That may seem like a drop in the bucket, but not in comparison to Japan, where consumers are without power seven minutes a year, and Singapore, where the average citizen would hardly notice the average seven electricity-deprived seconds a year.
Yeager noted that President Barack Obama’s goal to achieve 80 percent clean energy by 2035 is doable, but “we can’t do it without fundamentally changing the rules.” The principle shift, he said, needs to occur with smart grid developments. Yeager’s recommendations for change include providing consumers with a choice of access to real-time electricity prices, holding utilities publicly accountable to specific system performance standards, and expanding net metering to include physical aggregation and carbon portfolio standards.
A future in which customer-specific data belongs to the customer should be the electric future of America, Yeager said. If an individual has control over every other area of his or her personal life (bank account, stocks, cell phone bill) through technology devices galore, it should be no different with an individual’s electricity usage. The road to a smarter grid starts with a perspective shift from the electric industry, rather than following a lengthy to-do list. Thinking beyond what has already been done will be necessary if the electric industry is going to “reinvent Edison.”
While Smart Grid has a tendency to tack on a number of different name badges, Yeager defined it in three ways: Moving from analog to an electronically-monitored power system, a two-way consumer services gateway, and the reintroduction of direct current (DC)/microgrids.
In order for Smart Grid to work, electricity providers must develop a user-centric view, Yeager said.
“Smart Grid is a transactive network. The user becomes a partner, not a prisoner of the network.”
A smarter grid is also essential to grid reliability. Yeager presented a few astonishing numbers associated with grid reliability. The average consumer in the U.S. is without power four hours each year. That may seem like a drop in the bucket, but not in comparison to Japan, where consumers are without power seven minutes a year, and Singapore, where the average citizen would hardly notice the average seven electricity-deprived seconds a year.
Yeager noted that President Barack Obama’s goal to achieve 80 percent clean energy by 2035 is doable, but “we can’t do it without fundamentally changing the rules.” The principle shift, he said, needs to occur with smart grid developments. Yeager’s recommendations for change include providing consumers with a choice of access to real-time electricity prices, holding utilities publicly accountable to specific system performance standards, and expanding net metering to include physical aggregation and carbon portfolio standards.
A future in which customer-specific data belongs to the customer should be the electric future of America, Yeager said. If an individual has control over every other area of his or her personal life (bank account, stocks, cell phone bill) through technology devices galore, it should be no different with an individual’s electricity usage. The road to a smarter grid starts with a perspective shift from the electric industry, rather than following a lengthy to-do list. Thinking beyond what has already been done will be necessary if the electric industry is going to “reinvent Edison.”
Thursday, March 3, 2011
EPA’s Delay in GHG Reporting
On March 1, EPA announced an extension of the deadline to begin reporting greenhouse gases, which was slated to begin on March 31. A new deadline has not been announced, but the reason behind the delay will be the determining factor in how long the extension lasts.
Like most modern technology, EPA’s online reporting system, Electronic Greenhouse Gas Reporting Tool (e-GGRT), has not proven itself to be 100 percent e-GRRRREAT. According to Lisa Jaegar, associate at Bracewell & Giuliani LLP, e-GGRT was not available during some periods leading up to the Jan. 30, 2011 deadline to submit the requisite Certificate of Representation. Now, delays continue as the “Geek Squad” at EPA tries to sort out the technical difficulties (no, they aren’t outsourcing to Best Buy, but it might not be a bad idea).
“The reason the deadline has been changed is that EPA is continuing to test the system,” said Liz Williamson, associate at Winston & Strawn LLP. “We’re anticipating that it will probably be this summer when the first reporting requirement will be under e-GGRT.”
As a resource to GHG-reporting entities, EPA has posted a list of Frequently Asked Questions on its web site. Additionally, EPA is offering a number of training sessions to assist with learning e-GGRT and the rulemaking (by the way, the next scheduled training session is March 9).
While the extension was welcomed, it offers only a partial relief to reporting entities. Many companies have already sought technical clarifications from EPA to ensure they are monitoring or calculating emissions appropriately, Jaegar said. One of the main challenges to reporting GHGs is not the CO2 component of the reporting, but the reporting of the other five GHGs involved in the rulemaking: methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).
“The CO2 is a little more straightforward because we’ve been collecting this data for a long time. But for the other five GHGs, it’s much more of a chore to collect the baseline data,” said Jay Holloway, associate with Winston & Strawn LLP.
In the end, it’s likely that every state except Texas (and possibly Wyoming) will enter GHG data under an EPA-approved state plan when the new deadline comes around. But for companies calculating and entering GHG data, this is just another collision in the “train-wreck” of regulations the industry is encountering. For now, however, the GHG train has slowed a bit, and companies may have a chance to gain a better understanding of what is expected.
Like most modern technology, EPA’s online reporting system, Electronic Greenhouse Gas Reporting Tool (e-GGRT), has not proven itself to be 100 percent e-GRRRREAT. According to Lisa Jaegar, associate at Bracewell & Giuliani LLP, e-GGRT was not available during some periods leading up to the Jan. 30, 2011 deadline to submit the requisite Certificate of Representation. Now, delays continue as the “Geek Squad” at EPA tries to sort out the technical difficulties (no, they aren’t outsourcing to Best Buy, but it might not be a bad idea).
“The reason the deadline has been changed is that EPA is continuing to test the system,” said Liz Williamson, associate at Winston & Strawn LLP. “We’re anticipating that it will probably be this summer when the first reporting requirement will be under e-GGRT.”
As a resource to GHG-reporting entities, EPA has posted a list of Frequently Asked Questions on its web site. Additionally, EPA is offering a number of training sessions to assist with learning e-GGRT and the rulemaking (by the way, the next scheduled training session is March 9).
While the extension was welcomed, it offers only a partial relief to reporting entities. Many companies have already sought technical clarifications from EPA to ensure they are monitoring or calculating emissions appropriately, Jaegar said. One of the main challenges to reporting GHGs is not the CO2 component of the reporting, but the reporting of the other five GHGs involved in the rulemaking: methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).
“The CO2 is a little more straightforward because we’ve been collecting this data for a long time. But for the other five GHGs, it’s much more of a chore to collect the baseline data,” said Jay Holloway, associate with Winston & Strawn LLP.
In the end, it’s likely that every state except Texas (and possibly Wyoming) will enter GHG data under an EPA-approved state plan when the new deadline comes around. But for companies calculating and entering GHG data, this is just another collision in the “train-wreck” of regulations the industry is encountering. For now, however, the GHG train has slowed a bit, and companies may have a chance to gain a better understanding of what is expected.
Thursday, February 10, 2011
Greenhouse gas regulations: Fact or fiction?
To what can greenhouse gas standards for fossil-fuel fired plants be compared? Remember the children’s story Jumanji? Perhaps you saw the 1995 Robin Williams’ movie based on the story. Two kids play an old magic board-game that releases a man trapped for decades, as well as a number of dangers that can only be ended by finishing the game. But as long as the kids follow the instructions and complete the game, they are promised survival.
Such is the state of the fossil-fuel fired sector when it comes to complying with greenhouse gas regulations. But compliance is no game, and the road to it is far from fiction.
“Read the instructions and follow the rules, and things can get pretty hair-rising. But if you follow the rules, you can survive it,” said a power industry representative on Feb. 4, comparing emissions regulatory compliance with Jumanji. This was one of the many comments made during the EPA-hosted listening session on greenhouse gas standards for fossil-fuel fired power plants and petroleum refineries. This first of five listening sessions was intended for electric power industry representatives.
Much of the commentary centered on a push for a sector-wide generation performance standard. Some industry representatives said EPA should offer a fleet-wide approach to allow averaging and the use of offsets. Some suggested that an emissions rate-based approach would be the most innovative and least burdensome way to implement a performance standard.
Gina McCarthy, assistant administrator for the EPA office of air and radiation, said that EPA’s goal is not to decide on a number for greenhouse gases that ought to be reached. “It’s not a cap and trade program. We do not have a greenhouse gas number that we’re looking to achieve.”
While the greenhouse gas facet of the Clean Air Act is in question, other regulations have already taken a toll on the industry. A representative from FirstEnergy Corp. mentioned retrofits recently made at the W.H. Sammis Plant in Stratton, Ohio. Efficiency on the units was lost after scrubbers were installed, the representative said. “How do we maintain our efficiency as we go forward?” Price signals help FirstEnergy and other merchants determine how to invest in their fleet, the representative said, urging EPA to set a price signal.
New Source Performance Standards (NSPS) are also a topic of debate. A representative from the American Public Power Association urged the EPA to take its time “to get NSPS right,” adding that EPA is not under a court under to have standards finalized by July.
“I will not tell you what the breadth of the New Source Performance Standard is going to look like,” McCarthy said. “EPA is interested in walking before running.”
“Walking before running” – could this be an implication that EPA will take its time in finalizing NSPS? The listening sessions and public commentary may lead EPA to prolong decisions that have many in the power industry have been rushed. Time will tell. Until then, coal-fired power producers will continue to jump through hoops, fight monsters, and weather the storms that come with living the stranger than fiction story that is emissions control compliance.
If you are unable to participate in one of the listening sessions, EPA is accepting written comments on the planned rulemakings until March 18, 2011.
Such is the state of the fossil-fuel fired sector when it comes to complying with greenhouse gas regulations. But compliance is no game, and the road to it is far from fiction.
“Read the instructions and follow the rules, and things can get pretty hair-rising. But if you follow the rules, you can survive it,” said a power industry representative on Feb. 4, comparing emissions regulatory compliance with Jumanji. This was one of the many comments made during the EPA-hosted listening session on greenhouse gas standards for fossil-fuel fired power plants and petroleum refineries. This first of five listening sessions was intended for electric power industry representatives.
Much of the commentary centered on a push for a sector-wide generation performance standard. Some industry representatives said EPA should offer a fleet-wide approach to allow averaging and the use of offsets. Some suggested that an emissions rate-based approach would be the most innovative and least burdensome way to implement a performance standard.
Gina McCarthy, assistant administrator for the EPA office of air and radiation, said that EPA’s goal is not to decide on a number for greenhouse gases that ought to be reached. “It’s not a cap and trade program. We do not have a greenhouse gas number that we’re looking to achieve.”
While the greenhouse gas facet of the Clean Air Act is in question, other regulations have already taken a toll on the industry. A representative from FirstEnergy Corp. mentioned retrofits recently made at the W.H. Sammis Plant in Stratton, Ohio. Efficiency on the units was lost after scrubbers were installed, the representative said. “How do we maintain our efficiency as we go forward?” Price signals help FirstEnergy and other merchants determine how to invest in their fleet, the representative said, urging EPA to set a price signal.
New Source Performance Standards (NSPS) are also a topic of debate. A representative from the American Public Power Association urged the EPA to take its time “to get NSPS right,” adding that EPA is not under a court under to have standards finalized by July.
“I will not tell you what the breadth of the New Source Performance Standard is going to look like,” McCarthy said. “EPA is interested in walking before running.”
“Walking before running” – could this be an implication that EPA will take its time in finalizing NSPS? The listening sessions and public commentary may lead EPA to prolong decisions that have many in the power industry have been rushed. Time will tell. Until then, coal-fired power producers will continue to jump through hoops, fight monsters, and weather the storms that come with living the stranger than fiction story that is emissions control compliance.
If you are unable to participate in one of the listening sessions, EPA is accepting written comments on the planned rulemakings until March 18, 2011.
Wednesday, January 26, 2011
What is “clean energy,” President Obama?
President Barack Obama has launched what is to be a new era of clean energy development in the U.S., announcing that this could be a “Sputnik moment.” During the Jan. 25 State of the Union address, he urged Americans to rally around a new goal: Obtaining 80 percent of America's electricity from clean energy sources by 2035.
While to some, Obama’s announcement means the accelerated growth of renewable energy, “clean energy” can be broadly defined. To conservationists, "clean energy" would likely mean 100 percent renewable energy. To others, "clean energy" could mean 100 percent clean coal. My understanding is that President Obama is referring to a combination of all the resources -- renewable energy, nuclear, natural gas, and yes, even clean coal.
“It is a very ambitious goal, and it is also a very vague and broad goal,” said Jeff Davis, co-head of the renewable energy practice at the Mayer Brown law firm.
Currently, the U.S. coal fleet generates roughly half of all electrical output. “There are reports that we’ll still be using the same percentage from coal in 2035. It will just be clean coal,” Davis said. According to the North American Electric Reliability Corporation, coal-fired generation will drop to less than one-third of total generation by 2030 – less than half, but still a sizeable amount.
While the definition of clean coal is unclear, renewable energy is expected to continue to grow in the coming decades. Davis said that the ripening of this “low-hanging fruit” – wind and solar is “key to the continued support of clean energy.”
In order to reach the goal of 80 percent clean energy by 2035, Denise Bode, CEO of the American Wind Energy Association, said renewable energy incentives and policies must reach a place of predictability allowing that “energy sources that will never run out ... instead of keeping renewable energy on a constant one-year footing.”
In December, the U.S. House approved the passage of a tax bill that includes a one-year extension of Section 1603 (Treasury Grant Program). Incentives for renewables typically have been extended one year at a time, leaving renewable energy industries little room to plan long-term projects and investments.
“It’s time to reorient the tax code to predictable policies,” Bode said. “Predictability of the permanent incentives for conventional energy sources is as important as the amounts.”
Davis said that incentives for renewable energy are a must, but the source for funding incentives is questionable. “A large part of the State of the Union address focused on deficits and reducing them, but at the same time the President is talking about providing incentives for clean energy. How do we pay for these incentives?”
The President seemed to signal that energy incentives could come from the reduction of oil subsidies. The oil subsidies vs. renewable energy incentives debate will be an interesting one to watch as it unfolds in the new Congress, given the historic way in which the different sides of the aisle have voted.
According to Obama, clean energy is an “investment that will strengthen our security, protect our planet and create countless new jobs for our people.” If clean energy is defined as renewable energy, then this goal could prove to be lofty. But if clean energy is a mix of clean coal, nuclear, renewable energy and natural gas, then this goal is undoudtedly attainable. The current and proposed U.S. Environmental Protection Agency (EPA) emissions control regulations alone are enough to guarantee that all existing coal in 2035 will be "clean."
“It’s advantageous to define the goal broadly in order to achieve it,” Davis said.
While the bar has been set, it will be up to Congress to pass legislation that allows the goal of 80 percent clean energy by 2035 to come to pass.
While to some, Obama’s announcement means the accelerated growth of renewable energy, “clean energy” can be broadly defined. To conservationists, "clean energy" would likely mean 100 percent renewable energy. To others, "clean energy" could mean 100 percent clean coal. My understanding is that President Obama is referring to a combination of all the resources -- renewable energy, nuclear, natural gas, and yes, even clean coal.
“It is a very ambitious goal, and it is also a very vague and broad goal,” said Jeff Davis, co-head of the renewable energy practice at the Mayer Brown law firm.
Currently, the U.S. coal fleet generates roughly half of all electrical output. “There are reports that we’ll still be using the same percentage from coal in 2035. It will just be clean coal,” Davis said. According to the North American Electric Reliability Corporation, coal-fired generation will drop to less than one-third of total generation by 2030 – less than half, but still a sizeable amount.
While the definition of clean coal is unclear, renewable energy is expected to continue to grow in the coming decades. Davis said that the ripening of this “low-hanging fruit” – wind and solar is “key to the continued support of clean energy.”
In order to reach the goal of 80 percent clean energy by 2035, Denise Bode, CEO of the American Wind Energy Association, said renewable energy incentives and policies must reach a place of predictability allowing that “energy sources that will never run out ... instead of keeping renewable energy on a constant one-year footing.”
In December, the U.S. House approved the passage of a tax bill that includes a one-year extension of Section 1603 (Treasury Grant Program). Incentives for renewables typically have been extended one year at a time, leaving renewable energy industries little room to plan long-term projects and investments.
“It’s time to reorient the tax code to predictable policies,” Bode said. “Predictability of the permanent incentives for conventional energy sources is as important as the amounts.”
Davis said that incentives for renewable energy are a must, but the source for funding incentives is questionable. “A large part of the State of the Union address focused on deficits and reducing them, but at the same time the President is talking about providing incentives for clean energy. How do we pay for these incentives?”
The President seemed to signal that energy incentives could come from the reduction of oil subsidies. The oil subsidies vs. renewable energy incentives debate will be an interesting one to watch as it unfolds in the new Congress, given the historic way in which the different sides of the aisle have voted.
According to Obama, clean energy is an “investment that will strengthen our security, protect our planet and create countless new jobs for our people.” If clean energy is defined as renewable energy, then this goal could prove to be lofty. But if clean energy is a mix of clean coal, nuclear, renewable energy and natural gas, then this goal is undoudtedly attainable. The current and proposed U.S. Environmental Protection Agency (EPA) emissions control regulations alone are enough to guarantee that all existing coal in 2035 will be "clean."
“It’s advantageous to define the goal broadly in order to achieve it,” Davis said.
While the bar has been set, it will be up to Congress to pass legislation that allows the goal of 80 percent clean energy by 2035 to come to pass.
Wednesday, January 19, 2011
Greenhouse gas regulations and political hijinks
How will greenhouse gas (GHG) regulations affect new and stationary sources? Will GHGs play a role in the 2012 presidential elections? During a recent Bracewell & Giuliani LLP press conference, partners such as former EPA air administrator Jeff Holmstead, congressional/refining expert Scott Segal and former EPA enforcement official Rich Alonso took part in a discussion centering on these topics.
On Dec. 23, 2010, the EPA issued its plan for establishing greenhouse gas pollution standards under the Clean Air Act (CAA) in 2011. This included reference to New Source Performance Standards, which set the level of pollution new facilities may emit and address air pollution from existing facilities.
Holmstead said EPA is incorrect to say that new and modified sources are not yet regulated; “There’s just no standard for what they have to meet. Right now, developers are faced with undergoing a process that gives them a standard, but don’t yet know what the standard is going to be or how they’re going to get there.” This uncertainty, Holmstead said, has caused the construction moratorium.
“EPA is acknowledging that it’s going to be a couple years before people see these new permits.”
However, NSPS are more favorable than the typical EPA permitting processes, Holmstead said, and this could impact the effectiveness of the end product. “This is the big issue that EPA faces: if they do what’s sensible and reasonable for coal-fired power, they might get a 2 to 5 percent reduction in greenhouse gases.
EPA may not be willing to undergo this less strenuous process in order to reduce emissions by a few percentage points, Holmstead said.
Texas, where a federal court has denied the state’s attempts to delay U.S. environmental regulators from imposing regulations on greenhouse gases, will face construction being put on hold for at least a couple years, Holmstead said.
“I’m confident in saying that nobody in Texas will have legitimate authority to build a new project in at least two years, and that would be lightning speed.”
Segal spoke on how EPA regulations could affect political positions, and vice versa. Delays of one to two years in regards to emissions rule-making “could set up an unfortunate collision course with the presidential election.” A three-year delay on EPA’s behalf could allow the Agency to “operate from the position of political hijinks.”
While discussions have been made on how Congress will handle the greenhouse gas regulations, Segal said that Senate’s reaction to the standards will be something to watch. “Harry Reid has been a strong defender of premium renewable energy.” Among the 10 Senate Republicans, 100 percent voted for the last floor vote on a resolution of disapproval for global greenhouse gases. In addition, of the 21 Democrats up for re-election, 10 are from states in which a vote seen as favorable to greenhouse gas regulatory authority “would be a political liability.”
“That doesn’t mean they’re going to vote in favor of an amendment, it just means in 2012, they would have some ‘splainin’ to do if they voted against it,” Segal said.
The Bracewell & Giuliani team also discussed the Jan. 12 EPA announcement to defer biomass from greenhouse gas permitting requirements for three years. Alonso said that because biofuels are not yet under the structure of the CAA, this provides an incentive to build biomass. However, Alonso said that EPA has created a problem for itself.
“They have announced this as a three-year delay, but it’s not clear if this is legal.” Alonso said this policy will likely be challenged “because biomass does emit carbon.”
On Dec. 23, 2010, the EPA issued its plan for establishing greenhouse gas pollution standards under the Clean Air Act (CAA) in 2011. This included reference to New Source Performance Standards, which set the level of pollution new facilities may emit and address air pollution from existing facilities.
Holmstead said EPA is incorrect to say that new and modified sources are not yet regulated; “There’s just no standard for what they have to meet. Right now, developers are faced with undergoing a process that gives them a standard, but don’t yet know what the standard is going to be or how they’re going to get there.” This uncertainty, Holmstead said, has caused the construction moratorium.
“EPA is acknowledging that it’s going to be a couple years before people see these new permits.”
However, NSPS are more favorable than the typical EPA permitting processes, Holmstead said, and this could impact the effectiveness of the end product. “This is the big issue that EPA faces: if they do what’s sensible and reasonable for coal-fired power, they might get a 2 to 5 percent reduction in greenhouse gases.
EPA may not be willing to undergo this less strenuous process in order to reduce emissions by a few percentage points, Holmstead said.
Texas, where a federal court has denied the state’s attempts to delay U.S. environmental regulators from imposing regulations on greenhouse gases, will face construction being put on hold for at least a couple years, Holmstead said.
“I’m confident in saying that nobody in Texas will have legitimate authority to build a new project in at least two years, and that would be lightning speed.”
Segal spoke on how EPA regulations could affect political positions, and vice versa. Delays of one to two years in regards to emissions rule-making “could set up an unfortunate collision course with the presidential election.” A three-year delay on EPA’s behalf could allow the Agency to “operate from the position of political hijinks.”
While discussions have been made on how Congress will handle the greenhouse gas regulations, Segal said that Senate’s reaction to the standards will be something to watch. “Harry Reid has been a strong defender of premium renewable energy.” Among the 10 Senate Republicans, 100 percent voted for the last floor vote on a resolution of disapproval for global greenhouse gases. In addition, of the 21 Democrats up for re-election, 10 are from states in which a vote seen as favorable to greenhouse gas regulatory authority “would be a political liability.”
“That doesn’t mean they’re going to vote in favor of an amendment, it just means in 2012, they would have some ‘splainin’ to do if they voted against it,” Segal said.
The Bracewell & Giuliani team also discussed the Jan. 12 EPA announcement to defer biomass from greenhouse gas permitting requirements for three years. Alonso said that because biofuels are not yet under the structure of the CAA, this provides an incentive to build biomass. However, Alonso said that EPA has created a problem for itself.
“They have announced this as a three-year delay, but it’s not clear if this is legal.” Alonso said this policy will likely be challenged “because biomass does emit carbon.”
Tuesday, January 11, 2011
Power industry of 2011, meet environmental regulations
Welcome to 2011! Amidst news of falling natural gas prices and wind power projects meeting dead ends, most power generators will have a unified focus this year: preparing for EPA regulations in the hopper.
Waiting on regulation announcements and researching what needs to happen at power plants in order to meet standards – these seem to be in the crystal ball for the power markets this year. 2011 has commenced with a focus on greenhouse gas emissions regulations, as the EPA seeks to create a federal standard for greenhouse gases, and lawmakers have protested through at least four different bills to date. These bills seek to thwart greenhouse gas regulations from taking effect for two years.
Meanwhile, Texas and the EPA are involved in the fiercest part of the greenhouse gas regulations spat, as Texas is the only state that has refused to issue a greenhouse gas permit process. EPA filed a brief with the DC Circuit Court of Appeals in Washington on Jan. 6 saying that EPA is the “ultimate supervisor’’ if a state fails to develop or enforce an acceptable plan. Twelve other states continue to work with EPA to develop process guidelines.
On Jan. 7, Texas filed a brief with the Court saying that EPA did not follow procedures to seize control of the state’s permit process and did not provide sufficient notice or open the decision to comment. Texas and the EPA expect a ruling from the Court this week in their case.
Aside from greenhouse gas regulations, a number of other regulations are slated to be proposed or enforced in 2011 (see page 5 of this ICF International study). The North American Electric Reliability Council (NERC) predicts that these four rules could have the greatest impact on electric reliability:
-Clean Water Act Section 316(b), Cooling Water Intake Structures
-Coal Combustion Residuals Disposal regulations
-Clean Air Transport Rule
-Title III of the Clean Air Act; National Emission Standards for Hazardous Air Pollutants (NESHAP) for the electric power industry or Maximum Achievable Control Technology (MACT) Standard
In its 2010 Long-Term Reliability Assessment, NERC stated that the proposed rulemaking adds a degree of uncertainty to future planning of generation capacity needs. When considering the repercussions of these regulations on existing and planned generation capacity over the next 10 years, NERC found that, “Depending on the outcome of any or all of these regulations, the results may accelerate the retirement of some fossil fuel–fired power plants.”
John Moura, technical analyst for NERC, said the timing of several regulations being enacted in a short period of time will have its effect on electric reliability.
“The major driver of concern is going to be the time the industry has to react to these issues,” Moura said.
Recent studies by ICF International, NERC and Credit Suisse estimate anywhere from 10 to 75 GW of coal capacity are at risk for retirement by 2020. Retiring such a large percentage of the fleet could put electric reliability at risk, as could retrofits, Moura said.
“A utility has to take a unit offline to put a scrubber in. That kind of coordination in a condensed period of time can really create some issues both in the adequacy and in the operating reliability.”
2011 – a year for both regulation enforcement and the introduction of new proposals. Generators will seek to comply with new regulations and prepare for future regulations, while attempting to grow the North American electric system into an even more reliable, flawless network.
Waiting on regulation announcements and researching what needs to happen at power plants in order to meet standards – these seem to be in the crystal ball for the power markets this year. 2011 has commenced with a focus on greenhouse gas emissions regulations, as the EPA seeks to create a federal standard for greenhouse gases, and lawmakers have protested through at least four different bills to date. These bills seek to thwart greenhouse gas regulations from taking effect for two years.
Meanwhile, Texas and the EPA are involved in the fiercest part of the greenhouse gas regulations spat, as Texas is the only state that has refused to issue a greenhouse gas permit process. EPA filed a brief with the DC Circuit Court of Appeals in Washington on Jan. 6 saying that EPA is the “ultimate supervisor’’ if a state fails to develop or enforce an acceptable plan. Twelve other states continue to work with EPA to develop process guidelines.
On Jan. 7, Texas filed a brief with the Court saying that EPA did not follow procedures to seize control of the state’s permit process and did not provide sufficient notice or open the decision to comment. Texas and the EPA expect a ruling from the Court this week in their case.
Aside from greenhouse gas regulations, a number of other regulations are slated to be proposed or enforced in 2011 (see page 5 of this ICF International study). The North American Electric Reliability Council (NERC) predicts that these four rules could have the greatest impact on electric reliability:
-Clean Water Act Section 316(b), Cooling Water Intake Structures
-Coal Combustion Residuals Disposal regulations
-Clean Air Transport Rule
-Title III of the Clean Air Act; National Emission Standards for Hazardous Air Pollutants (NESHAP) for the electric power industry or Maximum Achievable Control Technology (MACT) Standard
In its 2010 Long-Term Reliability Assessment, NERC stated that the proposed rulemaking adds a degree of uncertainty to future planning of generation capacity needs. When considering the repercussions of these regulations on existing and planned generation capacity over the next 10 years, NERC found that, “Depending on the outcome of any or all of these regulations, the results may accelerate the retirement of some fossil fuel–fired power plants.”
John Moura, technical analyst for NERC, said the timing of several regulations being enacted in a short period of time will have its effect on electric reliability.
“The major driver of concern is going to be the time the industry has to react to these issues,” Moura said.
Recent studies by ICF International, NERC and Credit Suisse estimate anywhere from 10 to 75 GW of coal capacity are at risk for retirement by 2020. Retiring such a large percentage of the fleet could put electric reliability at risk, as could retrofits, Moura said.
“A utility has to take a unit offline to put a scrubber in. That kind of coordination in a condensed period of time can really create some issues both in the adequacy and in the operating reliability.”
2011 – a year for both regulation enforcement and the introduction of new proposals. Generators will seek to comply with new regulations and prepare for future regulations, while attempting to grow the North American electric system into an even more reliable, flawless network.
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