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November 20, 2024

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Treasury Previews ‘Phase 2’ of IRA Tax Credit Rollout

Starting in 2024, consumers buying an electric vehicle that qualifies for a $7,500 tax credit under the Inflation Reduction Act (IRA) will be able to transfer that credit directly to the dealer selling them the EV.

“This will effectively lower the vehicle purchase price by providing customers with an upside-down payment on their vehicle at the point of sale that equals the value of the credit instead of having to wait to claim that credit on their tax return next year,” said Lily Batchelder, assistant secretary for tax policy at the U.S. Department of the Treasury.

Speaking during a Thursday press call, Batchelder said the Internal Revenue Service will launch an online portal in January that will allow dealers “to submit clean vehicle sales information to the IRS and promptly receive payments for the transfer credits.”

Batchelder and Deputy Secretary of the Treasury Wally Adeyemo were on the call to preview what the Treasury Department is calling Phase 2 of its implementation of the IRA’s clean energy tax credits and the specific guidance that the agency will release this fall.

During the past year, since passage of the IRA, Treasury’s focus was “on the core elements needed to accelerate the significant economic and climate benefits of the law,” Adeyemo said. In addition, “Treasury prioritized guidance on all the bonus provisions to ensure companies and other entities planning projects were able to pencil out new projects and secure financing across a wide range of technologies,” he said.

The focus in Phase 2 will be “boosting America’s manufacturing to create good-paying jobs and strengthening our security, to remove choke points that will hurt our ability to lower costs and meet our economic and climate goals,” he said.

Taking a victory lap for the billions in private investment the law has unleashed, Adeyemo noted that “companies have announced more than 200 new projects, totaling more than $110 billion in investment in building America’s clean energy economy.”

A Treasury Department analysis released last month found that “investments [in] electric vehicles and batteries are concentrated in communities with lower wages, lower college graduation rates and lower employment rates. The law is working as intended,” he said.

Clarity on Content

But the past year also has been a bumpy one for Treasury and the IRS as they rolled out successive guidelines for the IRA’s many tax credits. The law’s domestic content provisions — for EVs and other clean energy equipment — have been an ongoing flashpoint.

Sen. Joe Manchin (D-W.Va.), a key architect of the IRA, has been a constant critic, arguing that Treasury has not followed the letter of the law on domestic content, which was intended to boost the domestic supply chain for EVs and EV batteries, but instead has benefited foreign automakers. (See IRA’s EV Tax Credits Spark Senate Debate.)

The solar industry also has said qualifying solar panels for the domestic content credits has been more complicated than expected. “Without full clarity on qualifications and processes, developers, manufacturers and financiers are often left in limbo,” said Michelle Davis, head of global solar for industry analyst Wood Mackenzie, in a third-quarter market report released Thursday,

“As a result, the full benefits of the IRA, in the form of more development of solar projects that meet various policy objectives, won’t manifest until developers, asset owners and financiers have enough regulatory clarity to make confident investments,” Davis said.

Batchelder acknowledged more work is ahead on the domestic content provisions, as part of the agency’s work on all the clean energy tax credits expanded or created by the IRA.

Treasury’s priorities for guidance to be released in the coming months include:

    • The Section 45X advanced manufacturing tax credits aimed at incentivizing production of clean energy equipment, from solar panels and wind turbine blades to inverters and batteries, to be issued by the end of the year.
    • New energy efficient home credits, which will incentivize home builders to use the most up-to-date efficiency standards in their new construction.
    • Tax credits for clean hydrogen and sustainable aviation fuel, with initial guidance coming again by the end of the year.

The Bottom Line

A key question ahead for Treasury and the Biden administration is just how much the IRA tax credits will cost. Although originally estimated at $370 billion, a recent update from the Congressional Budget Office added about $180 billion to the law’s bottom line, according to a New York Times report.

Batchelder noted Treasury set aside at least $1.6 billion for 48C tax credits for clean energy projects in “energy communities” with closed coal plants but, so far, the Department of Energy has received concept papers from potential applicants seeking a total of $11 billion in tax credits.

Responding to a reporter’s question, a Treasury official said while the IRA was a historic investment in clean energy, China continues to invest about five times as much into its energy system, and the entrepreneurs and businesses getting money from the IRA are putting their dollars into the U.S. economy.

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NERC: Coal, Natural Gas Stockpiles ‘Adequate’ Ahead of Winter Months

Supplies of coal and natural gas are likely to be less of a concern for the North American electric grid this winter, according to a member of the team developing NERC’s 2023-2024 Winter Reliability Assessment (WRA).

NERC fuel

Stephen Coterillo, NERC | NERC

Speaking at the ERO’s Preparation for Severe Cold Weather webinar on Thursday, Stephen Coterillo, an engineer with NERC’s Reliability Assessment department, previewed findings from this year’s WRA. The team has been working on the report since July.

NERC’s WRAs cover the months of December through February and typically are based on demand and generation availability forecasts provided by regional entities, utilities and other stakeholders. This year’s assessment also will include information gathered as part of the ERO’s first-ever Level 3 alert, which was issued this year after NERC’s Board of Directors approved it at its meeting in May. (See “ERO to Issue First Level 3 Alert May 15,” NERC Board of Trustees/MRC Briefs: May 10-11, 2023.)

Coterillo cautioned the team has not finished processing the data, but he told webinar attendees he could share some preliminary findings. These include the rising stockpiles of coal, which are “trending toward an adequate level,” and natural gas storage levels, which are above the five-year average for this point in the year. According to data from the Energy Information Administration, natural gas underground storage in the lower 48 states was more than 3,000 Bcf, higher than any year since 2017 except for 2019.

“This is definitely a welcome change from prior years, where supply chain issues, coupled with global supply concerns, caused lower inventory levels of stored coal and natural gas headed into the winter season,” Coterillo said.

However, while the fuel levels are a welcome sign for the ERO overall, Coterillo also highlighted several areas of concern that will be featured in the upcoming report. First, several assessment areas — including Manitoba, SPP and British Columbia — reported their anticipated reserve margins have fallen from the previous year’s assessment.

In the case of British Columbia, the reduced reserve margin risks dropping below the area’s reference margin level, which, as in many assessment areas, is higher than last year’s. Coterillo attributed the declining reserve margins in SPP and other areas to increases in peak demand and generator retirements.

Coterillo also singled out MISO, which is projecting a significantly higher reference margin compared to last year, for comment. Noting the RTO has “recently re-evaluated the reference margin for cold weather operations,” Coterillo said MISO “opted for a higher [reference] margin to cover this impact for winters going forward.”

Finally, the team previewed its extreme condition risk analysis for the upcoming winter. The risk analysis is based on data provided by each assessment area, including their anticipated resources for the winter and projected maintenance outages and forced outages. The analysis then factors in a potential extreme low-generation scenario, as well as projected peak demand under both normal and extreme conditions, to identify any areas where resources may not be sufficient at some point during the season.

NERC plans to publish this year’s WRA in the middle of November.

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ERCOT Voltage Drop Leads to EEA Level 2

DFW AIRPORT, Texas — A frequency drop Wednesday evening leading to a dip in operating reserves forced ERCOT to enter emergency operations for the first time since the disastrous February 2021 winter storm.

The EEA 2 was issued to maintain critical system frequency because of low power reserves. Grid frequency is the balancing of the flow of electricity between 60.1 Hz and 59.9 Hz and must be maintained at that level on the entire ERCOT grid. Thursday night, the frequency dipped to 59.77 Hz.

The grid operator issued a Level 2 energy emergency alert at 7:26 p.m. CT when operating reserves dropped below the 2,300-MW threshold as solar energy ramped down during near-record peak demand. It said frequency dipped to 59.77 Hz, below the 60.1-59.9 Hz critical system range; the EEA allowed ERCOT to use additional reserve resources.

“To protect the stability of the electric system, ERCOT has access to additional reserve sources only available during emergency conditions,” CEO Pablo Vegas said in a press release.

In its first public acknowledgement of the event, ERCOT said in a Thursday evening email to the media that the event was triggered by a transmission limitation that restricted the flow of generation out of South Texas to the rest of the grid.

ERCOT exited the Level 2 EEA  about an hour and 15 minutes later, dropping down to Level 1. Operations returned to normal about 10 minutes after that.

Wholesale prices spiked at $5,070/kWh during the alert after having ranged from $20 to $60/kWh earlier in the day.

Speaking at SPP’s Resource Adequacy Summit at Dallas/Fort Worth International Airport, Texas Public Utility Commissioner Will McAdams said the commission is compiling a report and it plans to publish Sept. 13. The report will be discussed during the PUC’s open meeting Sept. 14.

“Full debrief, for the public,” McAdams said.

The event occurred during the normal evening period, when the sun sets and, along with it, solar production drops. ERCOT staff have met demand during that time period until Wednesday, when the drop was too precipitous. Solar energy regularly has been providing more than 12 GW this summer, with a peak of 13.73 GW in August.

“A key part of the story is that it’s hotter at 8 p.m. than it used to be,” tweeted Michael Webber, a professor at the University of Texas at Austin leading clean energy technology research. “After more than two months of high temperatures, the streets, sidewalks building materials and soil all become hotter and therefore keep the temps higher for longer after sundown.”

Energy storage contributed a record 2.17 GW of energy during the EEA, according to Grid Status. Generation outages were within ERCOT’s normal expectations of 5 to 6 GW.

Dan Woodfin, ERCOT | © RTO Insider LLC

“We need more dispatchable capacity to cover those time frames where our tightest timeframe isn’t even in the peak demand time of the day anymore,” Dan Woodfin, ERCOT’s vice president of system operations, said during a panel discussion at the Resource Adequacy Summit. “We’ve got roughly 13 GW of solar online every day. It’s when the sun goes down and so every day, it becomes an issue of whether the load is going to go down enough, and the wind comes up enough to make up for the solar going down. And it goes down really fast.”

Demand peaked at 82.7 GW on Wednesday, enough to set a new high for September. However, that was far below ERCOT’s still-unofficial peak demand record of 85.44 GW, recorded Aug. 10.

ERCOT issued a conservation appeal at 4:54 p.m. Wednesday for the hours between 6 and 9 p.m. The Texas grid already was operating under a weather watch through Friday, with the state’s largest cities expecting triple-digit temperatures into the weekend.

It made another call for voluntary conservation, its 11th of the summer, for Thursday evening.

ERCOT has called for reductions by large electric customers and has worked with neighboring RTOs to deploy switchable resources. On Thursday, it also requested U.S. Department of Energy authorization to allow its generating units to operate up to their maximum output levels, if needed. The DOE approved the request that day.

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Clean Energy Groups Protest NYISO DER Proposal

Renewable energy advocates filed a protest with FERC Thursday arguing that NYISO’s proposal to facilitate participation of distributed energy resource aggregations in its market would discriminate against smaller aggregations (ER23-2040).

The protest by Advanced Energy United (AEU) and the Advanced Energy Management Alliance (AEMA) comes after NYISO’s response to a FERC deficiency notice asking the ISO to clarify several aspects of its proposals to comply with Order 2222, which requires RTOs and ISOs to design rules giving aggregations market access. The complaints align closely with previous protests by the two groups.

In the protest, the groups argued NYISO failed to justify its 10-kW minimum requirement for DER aggregation participation. They also contended the ISO’s plan to restrict single resource type aggregations from using metering service entities is illogical and its requirement that demand response resources submit cost-basis data is impossible to fulfill because that data doesn’t exist.

AEU and AEMA focused particularly on the 10-kW rule, maintaining the requirement doesn’t “withstand scrutiny” and basing the DER aggregation minimum participation model on historical emergency demand response and special case resource programs is inappropriate because the “resource types and sizes are different.”

The two organizations also questioned NYISO’s administrative reasons for limiting DER participation, arguing that if the ISO thought it would be burdensome to register all types of DERs then it should either hire more staff or ask FERC for a limited waiver to give it more time to review smaller DER aggregations.

AEU and AEMA also criticized NYISO’s failure to propose an end date for its 10-kW requirement, which they said violates the objectives of Order 2222.

The groups asked the commission to reject NYISO’s proposals, saying the ISO’s response to FERC’s deficiency notice fails to adequately explain or justify the shortcomings the commission identified.

In addressing FERC’s letter last month, the ISO stuck to its previous arguments, claiming it did not have the bandwidth to allow all resources to immediately participate and saying any further delays would hinder implementation of its DER aggregation plans and potentially disrupt its demand response programs. (See FERC Seeks More Info on NYISO DER Aggregation Proposal.)

NYISO’s response did confirm it expects to complete its DER aggregation software development by Sept. 1 and aims to implement its participation model shortly after.

FERC must respond to NYISO’s deficiency letter within 60 days.

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NEPOOL Participants Committee Briefs: Sept. 7, 2023

COO Report

ISO-NE’s energy market value was about $300 million in August, down from $580 million in July and $1.1 billion in August of 2022, COO Vamsi Chadalavada told the NEPOOL Participants Committee on Thursday.

Chadalavada noted that natural gas prices were 83% lower than the August 2022 average. Net commitment period compensation payments were about $800,000 lower than the previous month and $4.4 million lower than August 2022.

The peak load for the month occurred Aug. 21, which triggered an abnormal conditions alert. Overall, monthly temperatures were lower than historical August averages.

Chadalavada’s report noted that annual 2023 emissions are down from 2022 levels through early August, with the biggest reductions coming from decreased oil combustion.

Budget Clarifications

Prior to the meeting, ISO-NE published a set of responses to questions from the states regarding the organization’s draft 2024 budget. The RTO has proposed a 21.5% budget increase for the coming year. (See ISO-NE Proposes 21.5% Budget Increase for 2024.)

“The budget reflects increases necessary to successfully transition to the clean energy future, as well as catch up on inflation costs that were higher than previously budgeted,” ISO-NE wrote. “While the inflationary pressures will subside, there will still be a need to increase resources in the foreseeable future. At this point, we are still assessing what may be needed for a post-transition paradigm.”

ISO-NE told states that managing the grid amid the energy transition will require increased resources and personnel.

“The number of assets in New England will grow to hundreds of thousands/1 million-plus in number,” ISO-NE wrote, adding that the complexity of its system will increase as it manages more behind-the-meter resources and non-dispatchable weather-dependent resources, as well as shifting load patterns.

“This complexity will increase the workload in ways that are straightforward (e.g., higher volume of asset registrations and transmission interconnections to study and manage) and less straightforward (e.g., changes to adapt the markets and operating procedures, including forecasting, to the aforementioned growth in complexity),” the RTO said.

ISO-NE also elaborated on the portion of the budget increase allocated to existing employee salaries, noting that an ongoing analysis led by an independent consulting firm has indicated that the RTO’s base salaries are below market. The organization said that the unfinished aspects of this analysis will inform future budget decisions and “affect both the 2024 and 2025 salary budgets.”

The PC will vote on the budget at the Oct. 5 meeting, which will be followed by a vote by the ISO-NE Board of Directors. The RTO said it hopes to file the budget with FERC in mid-October.

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Fishermen Quit RI Coastal Board in Anger

The panel of fishers advising Rhode Island’s coastal regulator has abruptly quit, accusing the agency of bias toward the offshore wind development they fear will harm the seafood industry.

All nine members of the Rhode Island Fisherman’s Advisory Board signed a letter of resignation to the Rhode Island Coastal Resources Management Council (CRMC) on Aug. 31.

They said they no longer would participate in the state’s Ocean Special Area Management Plan because its review of utility-scale wind power proposals had become “political theater,” a mockery of what the Ocean SAMP was designed to accomplish.

“It has become abundantly clear that the Rhode Island CRMC has made deference to offshore wind developers its top priority regardless of the requirements of the Ocean SAMP, the cost to the environment or the impacts to Rhode Island’s fishing industry,” they wrote.

The fishers said the CRMC ridiculed their expertise as anecdotal while placating developers and downplaying the impact of their projects.

The fishers cited potential damage to cod spawning grounds and population-level impacts to Atlantic cod because of these projects, as well as significant long-term impacts on the state’s fishing industry, in violation of the Ocean SAMPs enforceable policy.

“We will not allow our names to be connected in any way to Council approvals now amounting to wholesale ocean destruction,” they wrote. “Rhode Island is supposed to be the Ocean State, not the Windmill State.”

The letter is one of many attacks by the fishing industry on the offshore wind industry as it develops along the Northeast coast.

The industry is worried about the effect of wind power construction and operation on marine ecosystems and the effect on fishing fleets. There has been limited reassurance offered in return.

The U.S. Bureau of Ocean Energy Management has noted in environmental impact statements that there likely are to be project-specific effects on local commercial and sport fishing industries. BOEM also expects a cumulative impact from all the projects being planned in relatively compact zones on the Outer Continental Shelf from Cape Cod to Cape May.

Other reports have flagged the lack of scientific knowledge about the exact effects large wind farms will have on the ocean — because these are the first to be built in this part of the world, and because the turbines installed here likely are to be larger than those in use elsewhere.

Finally, National Marine Fisheries Service scientists have warned the ability to assess wind farms’ impact on fisheries will be compromised because research work in the vicinity must be curtailed for safety reasons.

State and federal policymakers are rushing to encourage offshore wind development as a climate-protective measure, simultaneously attempting to build a supply chain, infrastructure and body of scientific knowledge.

Rhode Island and its fishing industry are at the heart of all this — nine federal wind energy lease areas are designated in a trapezoidal area of the Atlantic south of the state. Construction is underway on two wind farms there and a third has been greenlighted.

Rhode Island leaders hope to make the state an onshore hub for offshore wind construction and maintenance and hope to import hundreds of megawatts from the ocean for in-state use.

The state already is home to Block Island Wind. With a nameplate capacity of only 30 MW, it is not considered utility-scale, but it holds the distinction of being the nation’s first offshore wind farm.

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NYISO to Ask FERC for Order 2023 Compliance Extension

RENSSELAER, N.Y. — NYISO on Wednesday said it plans to file a motion with FERC for an extension on the compliance deadline for Order 2023, according to a presentation given to stakeholders.

Thinh Nguyen, NYISO senior manager of interconnection projects, told the Transmission Planning Advisory Subcommittee (TPAS) and Electric System Planning Working Group (ESPWG) meeting that the ISO has 90 days to make its request to the commission, following the order’s publication in the Federal Register that day.

Nguyen added that NYISO plans to hold meetings focused on the interconnection queue and Order 2023 compliance that will be held after regular TPAS sessions and be potentially named the Interconnection Issues Task Force.

NYISO’s presentation also noted how, though it and several other RTOs have already asked FERC for a rehearing on Order 2023, the ISO might still comply with the order, as it is unclear if the commission will grant a rehearing (RM22-14). (See FERC Order 2023 Gets Rehearing Requests from Around the Industry.)

The ISO has been actively working to streamline its congested interconnection queue, and while it believes Order 2023 could improve efficiencies, it also cautioned stakeholders that it believes some of FERC’s directives may be legally inconsistent or counterproductive to the order’s goals.

Stakeholders probed NYISO staff for detailed information about the transition process and its potential implications.

Doreen Saia, an attorney with Greenberg Traurig, asked whether much of the transition was still to be determined or if the ISO could share some specifics.

Nguyen acknowledged that many of the specific details are to be determined but added that “for us to make a meaningful transition, we may need to sit down and figure out what this new process will look like and come up with a transition rule that will complement our own study process.”

Mark Reeder, representing the Alliance for Clean Energy New York, asked about the frequency of the newly proposed task force’s meetings and the expected outcomes.

“It’s too early to decide whether these will be biweekly or monthly meetings, but we want to make sure that when we host these meetings that we are coming to stakeholders with meaningful information rather than just general updates,” Nguyen said.

NYISO promised to return to stakeholders with more details on how it proposes to comply with Order 2023 and how proposed revisions might impact current interconnection processes.

Comprehensive Reliability Plan

NYISO also presented an updated draft of the Comprehensive Reliability Plan, with additional sections for dispatchable emission-free resources (DEFRs) and other developing technologies, as well as the short-term reliability needs recently identified in New York City.

The newly added “Beyond the CRP — Road to 2040” section, featuring DEFRs, was included in response to stakeholder requests. (See “Comprehensive Reliability Plan,” NYISO Proposes 48 Market Projects for 2024.) The CRP, which is the last part of the reliability planning process, is conducted every two years and evaluates the future risks to reliability and the viability of proposed solutions identified in earlier Reliability Needs Assessments.

FERC Order 2023

Historical generating capacity fuel mix in New York (2000-2023) | | NYISO

Mark Younger, president of Hudson Energy Economics, and Kevin Lang, partner at Couch White, questioned NYISO’s reliance on NERC data for reliability assessments, rather than using New York-specific data. Younger said New York City certainly has a reliability need in the short term but argued that using state data might lead to a more accurate accounting of potential shortfalls.

ISO staff said they are discussing the subject internally, though they emphasized that confidentiality concerns are a main reason New York data is not used.

NYISO aims to release its final CRP draft by late September and will seek committee approval in October.

Class Year & Expedited Deliverability Study Update

NYISO reported that 84 projects are officially part of Class Year 2023 and released a list of the 16 projects that have executed their expedited deliverability study (EDS) agreements.

The CY study assesses the feasibility of new projects looking to enter NYISO’s grid, while the EDS process is a more fast-tracked grid feasibility assessment for prioritized energy projects.

NYISO Manager of Facility Studies Wenjin Yan said the ISO must first finalize the EDS base case and estimated the study would finish next January.

Reeder suggested the ISO should consider tariff changes to allow for later entry into the EDS and consider starting another study after the current one is completed in early 2024 to enable projects to move ahead more quickly.

Yan said NYISO anticipates presenting CY23 for committee approval in July and August 2024.

NYC PPTN

NYISO gave a quick update on the New York City public policy transmission needs assessment, stating that the ISO is finalizing the baseline case and will share the data with developers upon completion.

The ISO reminded stakeholders, however, that the information would only be given to developers who have completed the requisite Critical Energy Infrastructure Information Non-Disclosure Agreement. According to both staff and stakeholders present, there is no set deadline for completing a CEII agreement.

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NJ BPU President Fiordaliso Dies

Joseph L. Fiordaliso, who led the New Jersey Board of Public Utilities as it embraced an aggressive and sweeping clean energy agenda marked by a major investment in offshore wind, has died, Gov. Phil Murphy (D) said Thursday.

Fiordaliso, 78, a BPU commissioner since 2005 and a former deputy chief of staff to former Gov. Richard Codey, spoke frequently about the need to adopt aggressive policies to combat climate change, saying he did not want future generations to look back at the agency’s efforts and question why it didn’t do more.

“Climate is changing,” he said at the board’s most recent meeting, on Aug. 16, shortly before it voted to enact a permanent community solar program after two well-received pilot programs. “And we all better be adults about the fact that we have to do something about it, not hide our heads in the sand. Because it’s not going to get any better; it’s only going to get worse.”

Fiordaliso’s death leaves the agency leaderless as it confronts increasing challenges to the state’s clean energy investment and especially the OSW program, which is facing community and special interest opposition and several lawsuits, as well as developer concerns about increasing costs that have raised questions about project viability.

The passing of the president removes a key font of experience on the board. Three of the four remaining BPU commissioners — Democrats Christine Guhl-Sadovy and Zenon Christodoulou, and Republican Marian Abdou — joined the board in the past year. The fourth, Republican Mary-Anna Holden, was appointed in 2012.

Under New Jersey law, the governor picks the BPU president and the senate can either confirm or reject the candidate.

Murphy, in a statement announcing Fiordaliso’s death, called Fiordaliso a “consummate public servant, a trusted colleague and a good friend.” The governor’s office did not say how or when Fiordaliso died, but the Associated Press said he died Wednesday.

“As president of the BPU since the beginning of my administration, Joe skillfully led our work to responsibly transition to a clean energy economy while always putting the needs of consumers first,” Murphy said. “Every time you saw Joe he was wearing his signature offshore wind pin or handing one out to anyone and everyone he met.”

To Fiordaliso, the pin — fashioned in the shape of a wind turbine — demonstrated support for the OSW program. But it drew criticism from opponents who saw in it a sign that he was too closely aligned with the OSW sector. The pin even drew the attention of a Republican lawmaker who quizzed Fiordaliso about it at a recent budget hearing.

Fiordaliso, however, said his interest was in doing what was best for the state and for ratepayers. In fact, at the board’s June meeting, he lashed out at the state’s two offshore wind developers who he said had created “delay after delay after delay … almost since Day 1.

“So I’m issuing a recommendation to those developers: Put your nose to the grindstone, and let’s get this going again,” he warned them. “Because my patience is short, and your delays are intolerable. And if you can’t do that, we have to have a very intense discussion.” (See NJ BPU Pulls Offshore Tx Project Mod from Agenda After Complaint.)

Top Priority

Murphy, who appointed Fiordaliso as BPU president on Jan. 15, 2018, has set a target for the state to develop 11 GW of OSW capacity by 2040. The BPU has approved three projects, totaling 3.758 GW, in two solicitations and is expected to announce the winners of a third round early in 2024, which could add 4 GW. In addition, the state has moved aggressively to jump-start a logistics sector to support the OSW projects, along with those of other states, which include the development of the New Jersey Wind Port to handle material and equipment for use in the projects. (See NJ Opens Third OSW Solicitation Seeking 4 GW+.)

Doug O’Malley, executive director of Environment New Jersey, an environmental group, said that Fiordaliso’s lengthy tenure as a BPU commissioner meant he was present in, and accrued a great depth knowledge of, the early years of the solar sector in the early 2000s. The BPU’s support helped put the state in the forefront of solar capacity development.

Fiordaliso also saw the inactivity on OSW during the tenure of Republican Gov. Chris Christie, from 2010 to 2018, and the BPU’s aggressive embrace of OSW when Murphy appointed Fiordaliso as the agency’s president will be a key plank of his legacy, O’Malley said.

“Wind was arguably the top priority for President Fiordaliso,” he said. “He cared deeply about offshore wind as kind of a new technology that you can harness.”

“Obviously, offshore wind has had choppy waters this year,” he said. “But we would not be in the position we are in without President Fiordaliso’s leadership.”

Other parts of the BPU’s aggressive agenda under Fiordaliso also have ruffled feathers. The agency is facing criticism from Republicans and business groups over the expense of the clean energy programs, including the lack of clarity on how much it will cost ratepayers. The programs include extensive subsidies for the purchase of electric vehicles (EVs) and trucks and the development of charging sites, proposals for subsidies of energy storage systems and plans to promote the use of electric heat and water systems in buildings and reduce the use of fossil fuels.

The New Jersey Business and Industry Association (NJBIA), which frequently disagreed with the BPU over cost concerns and the focus on electricity instead of other alternative energy forms, said in a statement prompted by his death that Fiordaliso was “truly and passionately committed to his job and its many missions.”

“Even when we didn’t agree on policy issues, President Fiordaliso always had an open door, took part in many NJBIA events and had receptive ears to our concerns,” said the statement from CEO Michele Siekerka.

Anjuli Ramos-Busot, director of the Sierra Club of New Jersey, released a statement that called Fiordaliso a “fighter for renewables and a proud supporter of offshore wind.

“He understood the severity of climate change and had a vision for the BPU to combat it,” she said.

Tough Upbringing

Fiordaliso grew up in a cold-water apartment in Newark, and he never forgot his roots as he was putting together policy, O’Malley said. That was particularly evident in Fiordaliso’s support for the state community solar program, which provides discounted clean energy to low- and moderate-income ratepayers, O’Malley said. (See NJ Opens Community Solar and Nuclear Support Programs.)

“He was a big supporter of making clean energy, especially solar, more accessible for more people,” O’Malley said. “He wanted to make sure the clean energy could reach every New Jersey resident.”

Fiordaliso graduated with a degree in business education from Montclair State University and was a teacher from 1967 to 1986, according to the university’s website. He was director of government relations for the Saint Barnabas Health Care System and served three terms as mayor of Livingston, N.J.

He was a member of the National Association of Regulatory Utility Commissioners’ Committee on Critical Infrastructure and Committee on Energy Resources and the Environment and also sat on the Executive Committee for the Regional Greenhouse Gas Initiative (RGGI) and RGGI’s Strategic Communications Team, according to the BPU website.

He also was board member of the Organization of PJM States Inc. and of the advisory council to the board of directors of the Electric Power Research Institute. In May 2023, FERC appointed Fiordaliso to the Joint Federal-State Task Force on Electric Transmission.

At the BPU’s meeting last month, Fiordaliso introduced several interns and spoke about the role of the board.

“We are doing work that’s going to help, hopefully save future generations,” he said. “It’s not many times in one’s career, and I’ve been working a long time, that you can actually say that I’m doing something that is going to affect future generations in a positive way.”

He noted that he had spent all but five years of his working life in the public sector.

“It is one of the most gratifying experiences I think a human being can have,” he said. “You may not make a million dollars but the satisfaction that you get from doing what you do is certainly worth a million dollars.”

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Report Touts Value of Demand Response, Flags Challenges Facing It

A new report dives into the role demand response (DR) and distributed energy resources (DER) play in the reliability of the rapidly evolving North American power grid.

“Unlocking the Full Potential of DERs: Overcoming Capacity Pricing and Other Barriers to Ensure Grid Reliability” is a collaboration by energy consultant Wood Mackenzie and DER developer CPower.

The report notes what the North American Electric Reliability Corporation and others have warned about: Large swaths of the United States face a growing risk of outages in peak demand periods or during emergencies as the nation moves from a centralized, predictable power flow to a distributed, dynamic grid.

The report continues:

While DR is not a baseload resource, it has proved highly reliable under severe conditions as traditional dispatchable power is supplanted by intermittent renewables.

DR, as the largest class of DER, is an increasingly important part of the resource stack in energy markets — the diverse sizes, locations and types of DR assets adds resilience and flexibility.

DR needs strong, consistent capacity price signals to promote enrollment and retention. These signals include ensuring that wholesale energy prices do not erode capacity prices; maintaining capacity pricing stability and predictability for customers who want to participate in DR programs, especially commercial/industrial customers; and addressing the common misconception that DR has zero costs and can stay in a capacity market as the price rides down to zero.

DR carries no capital costs but there are administrative and opportunity costs — so it is easy, even advantageous, for customers to stop participating when prices fall.

Adequate capacity pricing and capacity accreditation for DR are important.

The right price signals, such as a price floor, would reassure participants about the viability of the DR market.

CPower is developing what it calls the “Customer-Powered Grid” through DER monetization and virtual power plants — it has 6.3 GW of capacity at 20,000 sites across the U.S. It is owned by LS Power.

Wood Mackenzie provides global research, analysis and consulting in energy, renewables and natural resources.

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Environmental Orgs Request Rehearing on ISO-NE Reliability Program

The Sierra Club, the Union of Concerned Scientists and the Conservation Law Foundation jointly filed for rehearing Tuesday over FERC’s approval of changes to ISO-NE’s Inventoried Energy Program (IEP) (ER23-1588), arguing that ISO-NE failed to adequately justify the program and that it likely would increase costs for consumers.

The groups wrote that FERC’s approval of the program “errs in failing to examine whether tripling the costs of the [IEP] is just and reasonable in light of the lack of evidence that IEP payments would incent oil and gas generators to procure more fuel than they would otherwise.”

The nonprofits added that the commission’s decision also “errs in failing to consider new information about winter energy adequacy that is relevant to the need for the IEP, and thus to whether consumers would receive benefits proportionate to the enormous additional cost proposed.”

ISO-NE’s IEP is intended to compensate generators for keeping stored fuel onsite to ensure the region’s winter grid reliability, while the disputed changes to the program include the introduction of indexed rates meant to reflect changes in natural gas prices.

In ISO-NE’s original filing of the IEP changes, the RTO argued the changes “are designed to align key parameters of the IEP rates, terms and conditions with current market conditions and to make other improvements necessary to attract sufficient investment in incremental inventoried energy to support winter reliability.”

FERC unanimously approved ISO-NE’s proposed changes in an August ruling. (See FERC Approves Updates to ISO-NE Inventoried Energy Program.) In the order, FERC dismissed a range of complaints from the organizations and state consumer advocates related to the cost and justification of the program.

“The purpose of the Inventoried Energy Program is to incentivize resources to maintain inventoried energy to support winter reliability, and ISO-NE’s proposed revisions are designed to improve the program’s ability to achieve this goal,” FERC wrote.

In the rehearing request, the environmental organizations called FERC’s ruling “arbitrary and capricious.”

The groups wrote that FERC did not adequately consider the effect of changes to the region’s winter risk profile since the creation of the IEP, or whether the program actually would spur changes in behavior of generators. (See Study: Limited Exposure to Supply Shortfall for ISO-NE During Extreme Weather.)

“Most of the generators who receive a payment under the IEP, they’re already obligated to perform as capacity resources,” Casey Roberts, senior attorney with the Sierra Club Environmental Law Program, told RTO Insider. “In order to do that, they have to have fuel, otherwise they can’t run.”

Roberts argued FERC’s lack of scrutiny of the program’s justification and benefits sets a bad precedent for the approval of reliability programs.

“This really goes down to FERC’s core responsibility of protecting consumers from paying excessive rates,” Roberts said.

If FERC stands by its ruling, the environmental organizations could appeal FERC’s decision in court.

In June 2022, the U.S. Court of Appeals ruled the IEP could not compensate coal, hydro, biomass and nuclear generators because the incentive would not change their inventory operations. However, the court left the rest of the IEP in place, ruling that oil, natural gas and refuse generators are eligible for payments. (See Court Strikes a Blow to ISO-NE Winter Plan.)