Search
`
November 5, 2024

Posted on

DeSantis Rejects $346 Million in IRA Energy Efficiency Funds

Florida Gov. Ron DeSantis (R) looks to be ramping up his 2024 presidential campaign by rejecting a growing list of federal and state clean energy initiatives.

Last month, the governor used a line-item veto to turn down a $5 million federal grant that would have allowed Florida to hire and train staff to administer $346 million from the Inflation Reduction Act. The money would have provided rebates to consumers for a range of energy-efficient home upgrades, according to a report from Bloomberg News.

The line-item veto was part of a package of funding cuts DeSantis made in the state budget on June 15. In letters sent to the U.S. Department of Energy on June 19, Brooks Rumenik, executive director of the Florida Department of Agriculture and Consumer Services’ Office of Energy, said the state was “respectfully” withdrawing its applications for the grants, as reported by The Capitolist, a website covering Florida news and politics.

Earlier this month, DeSantis vetoed a bill (SB 284) that would have triggered widespread electrification of vehicles owned by state and local government agencies. The bill, which passed both houses in the Florida Legislature with overwhelming bipartisan support, would have required state and local governments to base vehicle purchases on overall cost of ownership rather than fuel efficiency, as reported by the Orlando Sentinel.

While electric vehicles are more expensive to purchase, their costs for fuel and maintenance are lower than gas-powered cars. Savings from electrifying state and local government fleets were projected to be $277 million, according to estimates from Advanced Energy United.

DeSantis’ critics framed both actions as purely political, criticizing the governor for putting his presidential ambitions ahead of the state’s consumers, who are currently under an extreme heat watch.

The rejected energy efficiency funding would “directly benefit homeowners and renters, and these rebates mean that people in Florida would get lower utility [bills] and healthier and more comfortable homes, as well as lower greenhouse gas emissions,” said Lowell Ungar, director of federal policy for the American Council for an Energy-Efficient Economy.

With the SB 284 veto, DeSantis was playing to Iowa voters, said state Rep. Anna Eskamani (D). “The Iowa caucus voters who are all about ethanol don’t see electric vehicles as something that is economically in their favor,” Eskamani told the Sentinel. “DeSantis is catering to his Iowa voters, not passing policy for Floridians.”

The governor’s veto caught many by surprise because of the wide support the bill had from Republicans and the Florida Natural Gas Association.

“It was a common sense, good governance bill. There is nothing in this bill that any person in America should be against,” former state Sen. Jeff Brandes (R) told the Sentinel. However, no efforts have been made to overturn the veto, the Sentinel reported.

Campaign Narratives

DeSantis’ vetoes could play into President Joe Biden’s current effort to shape the campaign narrative by promoting the economic benefits the IRA has brought to Southern states, whose lawmakers voted against the law.

Visiting South Carolina on July 6, Biden noted that since the passage of the IRA, clean energy companies had brought $11 billion in new investment to the state. Inverter manufacturer Enphase Energy is putting $60 million into two new manufacturing lines in the state, and Redwood Materials, a battery recycling company, is investing $3.5 billion in a new plant to be located near Charleston, Biden said.

A White House fact sheet quoted the state’s Republican lawmakers hailing the new investments in clean energy manufacturing, even though they voted against the IRA.

South Carolina and Georgia have drawn the most new clean energy business, according to the American Clean Power Association (ACP), with solar and battery manufacturers flocking to the states. An ACP map tracking new clean energy investments identifies only two in Florida, both expansions of existing facilities. Jinko Solar is expanding a photovoltaic plant in Jacksonville, and General Electric is investing $20 million to build out a plant where it is manufacturing onshore wind turbines.

Posted on

NAESB Wrapping up Gas-electric Harmonization Forum

The North American Energy Standards Board (NAESB) is to vote on recommendations to improve coordination between the electric and natural gas industries this week, with plans to send them on to FERC and NERC by the end of the month, a co-chair of the effort said Tuesday.

The NAESB Gas-Electric Harmonization Forum is close to wrapping up the effort, which started in the aftermath of the February 2021 winter storm that left millions without power in Texas for days, forum co-chair Robert Gee said at a press briefing held by the United States Energy Association. (See NAESB Confirms Gas-electric Forum in the Works.)

“We’re coming out with a set of recommendations we’re going to give to NERC and FERC at the end of this month,” said Gee, who runs consulting firm Gee Strategies Group. “Some of them will result in the creation of business standards by NAESB. Others will be policy calls that we’re going to ask FERC and NERC to weigh in on, particularly FERC.”

Then it will be up to the commission, with input from stakeholders in both industries, to carry them out. If they “fail to move the needle” enough, then it might be time for Congress to step in, Gee said, but FERC should be able to make changes that improve coordination between the two increasingly interdependent industries.

Gee and his co-chairs have released a set of strawman recommendations, and other stakeholders have filed comments on those ahead of a conference call set for Thursday. Voting on the recommendations will follow that call before the final package is submitted at the end of the month.

The strawman recommendations include many aimed at improving the two industries’ awareness of what is happening on their respective systems, especially when they are stressed by high demand. They say states with competitive markets should work to ensure that natural gas markets are fully functioning 24/7 in preparation for events when demand is expected to rise sharply for both power and gas. FERC rules already require interstate pipelines to schedule and operate 24/7 to support the wholesale gas market, but the commission would have to step in when state authorities lack the ability to make gas available at all hours during high-demand events.

The recommendations also call on ISO/RTOs to move up the day-ahead scheduling process to better align with the natural gas day and, if not already under consideration, to launch stakeholder processes to consider multiday-ahead scheduling.

FERC and state regulators who oversee competitive energy markets should consider whether market mechanisms are enough to ensure that generators have the needed arrangements to secure firm gas, storage or other ways to mitigate supply shortfalls during cold snaps. If not, then they should consider nonmarket solutions to ensure fuel availability, including funding mechanisms borne or shared by consumers, the recommendations say.

Though even with a firm contract, generators during cold weather events have found that they cannot access natural gas, Gee said.

“We need to revise the system so that the power generators are able to access gas on a contractual basis going into a long weekend — let’s say a three-day weekend, where we’ve had most of these acute shortages occur primarily in the winter — to allow them to access gas when it’s liquid, under terms and conditions which are economically acceptable to them,” Gee said.

Such long weekends exacerbate the guesswork generators do when it comes to buying gas: They might wind up with less than needed, or have to take more, facing costs either way, he added.

“We need to figure out a way to rationalize that process where we can synchronize also and harmonize what’s called the gas day and the electric day, and the contracting practices so that it elevates the power generators’ ability to access fuel during critical peak periods, without having to undertake an unreasonable economic risk in contracting for gas,” Gee said.

FERC has had such gas-electric coordination issues on its plate for years, but it has been able to get by without making major reforms of the industries for more than a decade, he added.

One cooperative in Virginia had signed up for firm natural gas deliveries, but during the December winter storm last year, it did not receive any and was unable to produce power when electric demand was spiking, said National Rural Electric Cooperative Association CEO Jim Matheson.

“There’s not the most obvious answer of where you balance those risks, but it does create more pressure on the electric sector because, at the end of the day, the electric sector is the one supposed to keep the lights on all the time,” Matheson said. “And you’ve got these competing dynamics that don’t always match up as well as you’d like. And particularly in the extreme storm events, that’s where it gets so much more complicated.”

Efforts to better harmonize the two industries and their scheduling practices are definitely needed to improve their performance in the future, he added.

The Electric Power Supply Association weighed in on the strawman proposal, agreeing that demand for electricity and natural gas will continue to rise, especially during cold weather events. Better coordination is important going forward, and the trade group supports using markets to accomplish that.

“Resolving the pain points that have emerged between the gas and electric sectors as they have moved much closer together in securing supply and accessing delivery infrastructure has been and will only grow more essential to meet our nation’s power needs,” CEO Todd Snitchler said in a statement. “EPSA and our members have been deeply engaged in ongoing efforts to address gas-electric coordination, improve reliability and help ensure that consumers and our critical services have access to cost-effective, reliable power at all times. We are optimistic that improvements will be made and hope our recommendations will provide constructive insight to develop durable solutions to this urgent issue.”

Posted on

Critical Minerals Sector Meeting Sharply Higher Demand

Demand for minerals critical to solar, battery and other clean energy technologies has doubled in the past five years to reach a value of $320 billion, the International Energy Agency reports.

And the mineral development industry is expanding to meet the increased demand, with a 50% increase in investment in lithium in 2022 alone and large increases in cobalt, copper and nickel mining.

The IEA on Tuesday issued the first of what it plans to be an annual review of the energy transition minerals sector — “Critical Minerals Market Report 2023” — and said the developments behind the data are an important factor in the speed and affordability of clean energy transitions underway around the world.

“We are encouraged by the rapid growth in the market for critical minerals, which are crucial for the world to achieve its energy and climate goals,” IEA Executive Director Fatih Birol said in a news release. “Even so, major challenges remain. Much more needs to be done to ensure supply chains for critical minerals are secure and sustainable.”

IEA analysis indicates that if all critical mineral projects are carried out as planned, supply could meet the demand projected under the myriad climate pledges announced by governments worldwide.

But the risk of project delays and technology-specific shortfalls persists, IEA said, and the demand for materials would increase under certain climate-protection scenarios.

Other supply-side challenges include matching supply to demand, diversifying supply sources and maintaining supply in a clean and responsible manner.

Beyond exploration and production capacity, other metrics are a mixed bag in the report:

    • Supplier diversity is not improving — the market share held in 2022 by the top three critical mineral producers is unchanged or even larger than three years earlier.
    • There is uneven progress on ESG practices.
    • Community investment, worker safety and gender balance are improving.
    • Greenhouse gas emissions during production are high and not decreasing.
    • Water use nearly doubled from 2018 to 2021.
    • Delays and cost overruns have been common on past projects.
    • Thin inventory levels limit the ability to cushion supply-chain disruptions.
    • Recent commodity price decreases could cool investment interest in new projects, with strong medium-term implications for the sector.

Also new on the IEA website is an interactive data explorer for 37 critical minerals from arsenic to zirconium that shows the projected demand for them through 2050 under multiple clean energy transition models.

The agency said it would continue to work to drive progress in the critical minerals space, including by bringing stakeholders together at its Critical Minerals and Clean Energy Summit in September.

Posted on

Youngkin Announces Grant Program for Offshore Wind Supply Chain

Virginia Gov. Glenn Youngkin (R) on Tuesday announced the launch of the Virginia Offshore Wind Supplier Development Grant, which is designed to give incentives to existing manufacturers in the commonwealth to enter into production that supports offshore wind.

The program was approved in legislation adopted last year and is administered by the Virginia Economic Development Partnership (VEDP). It offers competitive grants to assist manufacturers that want to enter the field by offsetting capital expenditures in equipment used for offshore wind.

“With a central East Coast location, one of the highest concentrations of skilled maritime talent, world-class port infrastructure and a competitive cost of doing business, Virginia has emerged as a leader in the U.S. offshore wind supply chain,” Youngkin said. “This new grant will strengthen the industry ecosystem in the commonwealth while driving economic development and job growth and is a strategic investment that supports our plan to guarantee abundant, clean energy for Virginia’s future.”

Legislators approved $2.5 million from the general fund for the grant program, which runs for three years starting this month. Funds will be disbursed as reimbursements for purchased equipment and grant awards will range from $20,000 to $250,000. Purchases made before July 1, 2023, are not eligible.

The grants can defray the cost of investments in real property and/or tangible personal property but cannot be used for maintenance or repair of existing equipment. The grants can be applied to replace old equipment if that leads to an increase in production.

The grants are limited to companies that make investments of at least $40,000 in the next 36 months. Applicants must have fewer than 250 full-time employees and be registered as a vendor in the Virginia Offshore Wind Supply Chain Partnership Directory at the time of application.

Applicants will have to maintain their local employment levels, as verified by the commonwealth, at the awarded location through the life of the grant. They must have a legal presence within Virginia for at least a year and be in good standing with the State Corporation Commission before applying.

VEDP will review the applications and conduct due diligence, while the Virginia Offshore Wind Supplier Development Grant Review Committee will meet every three months to review those applications and authorize grants.

“The Virginia Offshore Wind Supplier Development Grant will leverage the commonwealth’s existing offshore wind leadership position and advance our competitive advantage in emerging supply chains and technologies,” said Secretary of Commerce and Trade Caren Merrick. “This program invites Virginia manufacturers to diversify their portfolio to supply the industry, ultimately advancing our goal for the commonwealth to become the market leader in offshore wind technology, development and deployment.”

Posted on

Natural Gas Power Generation Expected to Set Record

The U.S. Energy Information Administration on Tuesday forecast record-high amounts of electricity would be generated by burning natural gas this summer.

High demand for power was cited as a cause, along with low gas prices and power industry trends.

EIA said extensive use of air conditioning during hot weather is expected to raise demand for electricity.

Fuel prices are another driver, EIA said in its July Short-Term Energy Outlook, issued Tuesday. Electric utilities’ cost for coal was 9% higher in the second quarter of 2023 than in the same period in 2022, while natural gas was 66% lower. This gave them a nearly equal cost per million BTU.

As a result, EIA predicts 4% more electrical generation from natural gas in July and August 2023 than in the same two months of 2022.

EIA also predicts a 6% year-over-year increase in July and August in power generated by renewable sources, which are seeing rapid growth in installed capacity.

“This is an interesting time to monitor the United States’ electricity mix,” EIA Administrator Joe DeCarolis said in the news release. “As coal provides less and less power to the grid, we expect the contributions of natural gas and renewables in particular to increase.”

EIA said about 6,000 MW of new combined cycle natural gas turbine capacity and nearly 15,000 MW of wind and solar capacity have come online so far in 2023.

Other details from the July Short-Term Energy Outlook:

    • Natural gas is expected to account for 41% of U.S. power generation in 2023 and 40% in 2024, compared with 37% in 2021.
    • Coal is projected to drop from 23% in 2021 to 15% in 2024.
    • Renewables are expected to rise from 20% in 2021 to 25% in 2024.
    • As a result, U.S. carbon dioxide emissions are expected to decline from 4,964 billion metric tons last year to 4,789 this year and to 4,774 next year.
    • Nuclear holds steady around 19% to 20% in the four years of actual and projected data.
    • Wind power generation far exceeds solar, with installed wind capacity expected to reach 148.7 GW nationwide this year vs. 98.8 GW for solar.
    • Installed solar capacity is expanding much more quickly than wind: Year-over-year increases of 17.2%, 38.2% and 32.2% are recorded or projected for solar in 2022, 2023 and 2024, compared with 6.2%, 5.6% and 4.1% for wind.
Posted on

EV Charging Efforts Ramp up on West Coast

California, Oregon and Washington have jointly applied for federal grant money to build a public charging network for electric trucks across the three states.

The proposed West Coast Truck Charging and Fueling Corridor Project would include 34 truck charging stations and five hydrogen fueling stations. The stations would be primarily along Interstate 5, with some locations on “key connecting corridors,” such as I-710 in the Los Angeles area.

Departments of transportation from California, Oregon and Washington, together with the California Energy Commission (CEC), applied for charging network funding last month from the U.S. DOT’s Charging and Fueling Infrastructure competitive grant program.

The plan was discussed during a joint CEC and California Department of Transportation (Caltrans) workshop. Caltrans declined to reveal the amount of grant funding requested, saying the proposal is under confidential review by the Federal Highway Administration.

The workshop also provided an update on California’s deployment plan for the National Electric Vehicle Infrastructure (NEVI) formula program.

‘Wild West’ of Connector Types

The goal of the $5 billion NEVI program is to establish a nationwide network of public EV chargers along designated alternative fuel corridors. California’s expected share of the funds is $384 million over five years.

One question that kept cropping up during the workshop was how California plans to handle the move toward North American Charging Standard (NACS) charging connectors.

Automakers including Ford, General Motors, Rivian and Volvo announced recently that they would adopt Tesla’s NACS connector as Tesla begins opening its Supercharger network to non-Tesla vehicles.

But federal NEVI guidance requires charging stations to be equipped with the rival combined charging system (CCS) connectors. Each station must have at least four CCS connectors that combined allow four vehicles to charge simultaneously.

That still leaves room for NACS connectors at ports that have more than one connector, according to Energy Commission Specialist Brian Fauble.

“As long as one of those connectors [is] CCS, the other connector can be any other connector, be it NACS, or CHAdeMO, or anything else,” Fauble said. “These other connectors can still be done, as long as you’re still meeting the port requirement of one CCS per port.”

Kentucky has added a requirement that charging stations funded through NEVI include NACS connectors in addition to CCS plugs, Reuters reported last week. Texas and Washington state might do the same.

California isn’t ready to follow suit, officials said during the workshop.

“It’s a little bit of a Wild West scenario right now with things changing so rapidly,” said Jim McKinney in CEC’s Fuels and Transportation Division. “We’re monitoring this and trying to decide how to proceed.”

McKinney said the NACS situation will not impact CEC’s initial NEVI solicitation, which is expected to go out during the third quarter of this year.

California divided its roughly 6,600 miles of alternative fuel corridors into segments that were then gathered into “corridor groups” and ranked by priority. (See Calif. Lays Groundwork for NEVI Solicitations.)

The state’s first NEVI solicitation will cover six corridor groups with 28 new stations and 291 ports.

Complementary Programs

The West Coast Truck Charging and Fueling Corridor Project would be “very complementary” to NEVI, Jimmy O’Dea, Caltrans’ assistant deputy director for transportation electrification, said during the workshop.

O’Dea said there are now only four publicly accessible truck charging stations across the West Coast.

“This would be a significant addition to the industry that we know is growing so rapidly,” he said.

Charging stations included in the project would each have at least five 350-kW dual-port chargers. Stations along I-710 would each have 10 chargers to serve drayage trucks working at the California seaports.

The stations would also support a megawatt charging system upgrade.

Each of the five hydrogen fueling stations would host two dispensers and have a 10,000-kg-per-day capacity.

Some commenters urged CEC to use a portion of NEVI funding for medium- and heavy-duty truck charging.

Sean Waters, vice president of compliance and regulatory affairs for Daimler Truck North America, said some of the NEVI-funded stations should be configured with a pull-through charging lane that could accommodate cars or large trucks.

While recharging at depots is common for trucks today, more fleets could be looking for public charging in the future due to high costs and infrastructure constraints of “behind-the-fence” charging equipment, Waters said in written comments to the CEC.

“Light-duty vehicles can utilize sites designed for medium- and heavy-duty vehicles, but the opposite is not possible,” Waters noted.

Posted on

Newsom Expresses ‘Sense of Urgency’ on Energy Buildout

California Gov. Gavin Newsom (D) on Monday signed a $311 billion state budget and infrastructure bills aimed at building generation and transmission to ensure reliability as the state transitions to 100% clean energy.

The fiscal year 2023/24 budget retains 95% of last year’s $54 billion, five-year annual commitment for climate initiatives, including roughly $10 billion for electric vehicle infrastructure and incentives.

In his budget plan released in January, Newsom had proposed slashing $6 billion from climate commitment because of this year’s tax revenue shortfall, but he agreed with lawmakers to cut only $2.9 billion.

Negotiations with lawmakers also produced the five-bill infrastructure package that Newsom signed Monday.

The bills included Senate Bill 149, which will streamline judicial review of clean energy and transportation projects by requiring that challenges to the projects under the California Environmental Quality Act (CEQA) be resolved by the courts within 270 days, including appeals. (See Newsom Stresses Role of Permitting in Calif. Energy Transition.)

Another bill, SB 147, will allow the incidental taking of fully protected species under the state’s Endangered Species Act during the construction of infrastructure projects. It also declassifies the peregrine falcon, brown pelican and thicktail chub, a small fish, as protected species.

Environmental groups and some Democratic lawmakers opposed the measures, but Newsom said keeping the lights on and building out clean energy and transmission ought to take precedence over lengthy environmental reviews.

“We’ve got to move to build those projects, and we’ve got to remove some hurdles,” Newsom said. “I know there’s a purity of thinking … that we can live with rules and regulations that require nine years of processes to deliver the reliability that the people of the state deserve, but I just don’t see that from the prism of where I’m operating from.”

The last three summers, when the state struggled with blackouts and near misses, were “challenging,” he said.

Avoiding future repeats will require adding thousands of new megawatts annually, CAISO and the California Public Utilities Commission have said. In May, the CAISO Board of Governors passed its 2022/23 transmission plan, which calls for 45 projects totaling $7.3 billion to add 70 GW of new resources over the next 10 years.

“That’s exactly why this infrastructure package was so important,” Newsom said, thumping his lectern. “I want you to know that I have short-term confidence but long-term anxiety if we do not deliver on these large-scale utility” projects.

Newsom said he feels “a deep sense of urgency” about building out energy capacity. California needs to build faster, including to compete for billions of dollars in federal funding from the Inflation Reduction Act and programs.

“I don’t want to just come up here and lament about extreme heat, extreme droughts, extreme weather,” he said. “I want to actually deliver, not just on goals and ambition, but on projects. And so, I’m in a different mindset, sort of a hardheaded pragmatism. You know, let’s get moving.”

Posted on

NYISO Defends DER Aggregation Proposal, 10-kW Minimum

NYISO asked FERC last week to reject protests by state regulators and clean energy groups over the ISO’s proposal for integrating distributed energy resource aggregations into its markets, defending its call for a 10-kW minimum for participation (ER23-2040).

In June, NYISO proposed a 10-kW minimum capability for individual DER participation in aggregations, along with new metering and telemetry requirements for DERs. (See “DER Revisions,” NYISO CEO Delivers ‘State of the Grid’ to Management Committee.)

The ISO said the 10-kW minimum was needed to save staff time reviewing aggregations for interconnection and enabling it to integrate new software and procedures without significant hassle.

But the New York Public Service Commission, Advanced Energy Management Alliance and Advanced Energy United said the ISO’s proposals were unclear and ran afoul of FERC Order 2222 and that more time was needed to evaluate their impact.

In a joint protest, AEMA and AEU took exception to several of NYISO’s proposals, including limiting the ability to use a third-party meter service in homogeneous aggregations, eliminating bid-based and locational-based marginal price-based reference prices, and the transition mechanisms through which transmission operators will upgrade their system to allow DER aggregations.

The two organizations were most concerned about the proposed 10-kW minimum requirement, calling it “fundamentally at odds with FERC’s findings in Order No. 2222.”

“Other wholesale markets, such as ERCOT, have developed rules that allow residential scale participation,” they said. Despite pledging a “goal” to accommodate small DERs, NYISO’s “filing gives no commitment or timeframe to do so,” the groups said.

“Failing to allow such resources to provide wholesale services they are technically capable of providing absent an arbitrary and unjustified minimum capacity requirement is unjust and unreasonable and presents an undue barrier to market participation that will undermine competition and reliability to the detriment of customers,” they added.

The PSC was also concerned about the 10-kW proposal, saying in its protest that the requirement was “unduly restrictive and inconsistent with the directives of Order No. 2222.”

The ISO responded that it “has spent more than 15 months working with its stakeholders to develop the business practice manual provisions that detail how the DER and aggregation participation model will be implemented.”

While saying it was “sympathetic” to stakeholder concerns, the ISO said their proposed remedies would be administratively burdensome and could further delay the introduction of DER aggregations into its markets.

The ISO has requested FERC rule on its proposal by July 31, saying it hopes to implement DER aggregation as early as Aug. 1.

Posted on

Murphy Signs OSW Tax Credit Bill

New Jersey Gov. Phil Murphy signed legislation Thursday that will allow the state’s first offshore wind project to benefit from federal tax credits.

Murphy signed the bill, A5651, in a press conference at a new factory built by German manufacturer EEW to build monopiles for use in the foundations of offshore wind turbines. The Senate and the General Assembly passed the bill 21-14 and 46-30, respectively, on June 30 in the last session before the legislature recessed for the summer. The legislature will not return until after the November elections.

Unlike other states, New Jersey doesn’t allow wind developers to receive the benefits of tax credits awarded under federal laws such as the Inflation Reduction Act. Instead, the state receives the benefits for use to help ratepayers.

The new law allows the state’s first OSW project, Ocean Wind 1, to receive the tax credit benefits, but it does not allow other wind projects in the state to get the same benefits. (See NJ Lawmakers Back Ørsted’s Tax Credit Plea.)

Murphy hailed the bill as “absolutely critical to moving our entire offshore wind industry forward and cementing our leadership in this new industry.”

“I cannot emphasize this enough: We have a once-in-a-generation opportunity right now to bring tens of thousands of overwhelmingly union jobs and billions of dollars of investment to our state with offshore wind,” he said at the conference at the Port of Paulsboro, flanked by massive monopiles under preparation for eventual use in the foundations of a wind turbine. He said they were the first ever monopiles built on U.S. soil.

“New Jersey is literally building the foundation for our nation’s entire wind industry, and this bill will allow these projects to expand and create even more jobs,” he said.

The New Jersey Board of Public Utilities approved Ocean Wind 1, from Danish developer Ørsted, in 2019. The BPU also has approved the 1,148-MW Ocean Wind 2 and 1,510-MW Atlantic Shores. The state’s third solicitation, launched by the BPU in March, could result in the award of capacity totaling 4 GW or more. (See NJ Opens Third OSW Solicitation Seeking 4 GW+.)

A think-tank report published June 5 on the state’s rapidly growing OSW sector said the construction of a second phase of the EEW factory was “more than a year behind schedule” because of funding issues, in large part because Ørsted could not access the federal tax credits. Speaking before the legislature’s votes last month, the developer said federal tax credits were intended to advance industry development. The company said it already has invested $160 million in the EEW factory and “is poised to increase this investment.” (See NJ OSW Projects Face Public Funding Scrutiny.)

After the bill was passed, Atlantic Shores CEO Joris Veldhoven said in a statement that the approval “reaffirms the state’s commitment to offshore wind” and called on it to enact an “industry-wide solution, one that stabilizes all current projects including Atlantic Shores … the largest offshore wind project in the state of New Jersey.”

“We need immediate action that also supports the Atlantic Shores project,” he said.

Budget Signed, but Other Bills Remain

The OSW tax credit bill was one of several clean energy-related bills advanced by the legislature on June 30.

Murphy also last week signed a bill, S2024, that enacts a $54.3 billion state budget that includes a $40 million Green Fund that the governor said would “leverage both private capital and federal funds.” The governor announced the fund in February but since has said little about it; nor has the New Jersey Economic Development Authority (EDA), which will administer it. Murphy’s budget book at that time said the fund was designed to “attract up to $280 million in private capital to advance projects to advance the state’s new and bold environmental goals.” (See NJ Launches $80M Clean Energy Loan Fund for Small Business.)

The signed budget also contains an additional $10 million “to support the continued installation of EV charging infrastructure throughout the state,” according to a statement put out by Murphy’s office.

The legislature also sent to Murphy a bill, S3044, that would put in place the funding for the first year of a three-year, $45-million pilot program enacted in 2022 that will be the state’s most aggressive move into replacing diesel buses with electric-powered buses. The bill passed the Assembly with a 49-27 vote and the Senate by 26-9.

The 2022 bill, A1282, required the New Jersey Department of Environmental Protection (DEP) to create a program under which six districts or contractors each year would take students to school with electric buses to assess the reliability and effectiveness of using them in place of diesel-powered vehicles. The performance of the buses would be evaluated on factors such as costs, maintenance, fuel use and speed, and data would be collected and submitted to the DEP. (See Electric School Bus Pilot Awaits NJ Governor’s Signature.)

In a less divisive vote, the Senate on June 30 passed 37-0 a bill, S427, that would provide corporate business tax credits to incentivize building owners to retrofit their warehouses to be solar ready. The bill now is before the Assembly Environment and Solid Waste Committee.

Buildings must be at least 100,000 square feet in size and create a “solar-ready zone” that accounts for at least 40% of the space. The credit, which would be available once solar panels are installed on the roof, would be at maximum the lesser of two options: 50% of the cost incurred in retrofitting the building for solar or $250,000.

The Senate also voted 27-13 to pass a bill, S2185, that would require the BPU to develop a pilot program to provide incentives to developers and others that install energy storage systems, and then create regulations for a permanent program. The program would seek to help develop a range of storage, from customer-sited energy storage systems to larger systems connected to the grid. (See Clean Energy Bills Stack up in NJ Legislature.) The bill now will be heard by the Assembly Appropriations Committee.

The Assembly advanced a bill, A5442, that would direct the BPU to study how best to market and promote large-scale geothermal heat pump systems and look at the feasibility and benefits of mounting such a campaign. After the 76-1 vote, the bill now is before the Senate Environment and Energy Committee.

Posted on

Ohio Legislators Raise Concerns About Cost Impact of Illinois’ CEJA

Ohio lawmakers are raising concerns about how Illinois’ Climate and Equitable Jobs Act (CEJA) will impact their state’s ratepayers after PJM last year found that power plant retirements stemming from the law could require $2 billion in new transmission to maintain reliability.

Ohio House Public Utilities Committee Chair Dick Stein (R) and Senate Energy and Utility Committee Chair Bill Reineke (R), along with 10 other colleagues, sent a letter to PJM’s Board of Managers last month saying that while the RTO’s markets have done well for the state in the past, they were worried that could be changing.

“We are becoming increasingly concerned that the actions of PJM, FERC and other PJM states may jeopardize the successful, competitive market model that Ohio has nurtured,” the letter said. “We appreciate that PJM has brought concerns related to generation retirements and looming reliability challenges to our attention. Needless to say, we are quite concerned about reports that the PJM region is on the precipice of power shortages that could lead to blackouts for our consumers that need electricity.” (See PJM Chief: Retirements Need to Slow down.)

The legislators said those looming reliability issues are exacerbated by CEJA provisions that mandate closure of fossil fuel plants, which requires the phaseout of coal and natural gas units by specified dates starting in 2030, with the last plants to shut down in 2045. The law requires the Illinois government to collaborate with PJM and MISO starting in 2025 to analyze the impact of its provisions on reliability.

PJM has released a “very initial snapshot” of what the retirements could mean, including increased east-to-west power flows and up to $2 billion in transmission upgrades. That analysis did not include any of the new generation that CEJA incentives are expected to bring online. (See Illinois Climate Bill Could Force $2B in Tx Upgrades, PJM Says.)

A table from PJM showing the RTO’s initial estimates of what transmission upgrades might be required to reliably retire the power plants in Illinois impacted by CEJA. | PJM

Stein met with PJM after sending the letter, to which the RTO said in a statement it would formally respond soon.

“The loss of affordable and reliable coal and oil energy generation and the implementation of 100% renewables could potentially put a strain on the energy grid,” Stein said in a statement after the meeting. “Ohioans should not be burdened by cost increases that are caused by the policy choices of other states.”

The $2 billion is very preliminary, and now is the time for PJM, and the experts on the grid that it employs, to look into the issue more formally, former Illinois Commerce Commissioner Erin O’Connell Diaz said in an interview.

“It’s appropriate that the legislators of Ohio are concerned about it because there are a lot of costs that can flow out of different types of legislation,” said O’Connell-Diaz, who now runs consulting company FutureFWD.

While plant retirements generally create some new transmission costs, she said, ratepayers in Illinois and other states with similar clean energy policies are going to be paying to bring on clean energy, which will produce cheap power for the grid that Ohio will benefit from in the form of lower prices. The RTOs can quantify those kinds of benefits going forward as well, she said.

‘Shark-infested Waters’

The Natural Resources Defense Council supported CEJA, as it has similar laws in other states. Tom Rutigliano, of NRDC’s Sustainable FERC Project, argued that the Ohio legislators were mostly concerned about attacking renewables, but he also called for more coordination from the RTO.

“This letter is more focused on partisan, anti-renewable jabs than meaningful transmission or reliability solutions,” Rutigliano said in a statement.  “Ohio officials’ efforts would be better directed toward following Illinois’s lead and working on collaborative, forward-looking reliability solutions, rather than attempting to close off their borders to clean, affordable energy. The request for further studies from PJM would be a distraction from what is needed to support a successful energy transition. Ultimately, this letter is a reminder that states need clear leadership, proactive planning and coordination from PJM.”

Former FERC Commissioner Tony Clark, a senior adviser at Wilkinson Barker Knauer, said such disputes among states have regularly come up and are likely to continue, especially in regions like PJM with varying energy policies. It is not ultimately feasible to isolate the impact of one state’s policies in regional markets, whether it is generation or (outside of the State Agreement Approach) transmission, he said.

“FERC has to allocate those costs based on court precedent with cost-causers and cost-payers being ‘roughly commensurate,’” Clark said. He said PJM’s strong minimum offer price rule (MOPR) represented “an attempt to try to isolate some of those costs, but the commission has backed off from that in recent years. It is, I think, taking a path where effectively the capacity markets are likely to wither a bit in terms of their revenue streams, and they seem to be more focused on trying to get more and more out of the energy and ancillary service markets. But even in those, you’re going to have spillover effects from any sort of market [or] public policy intervention in one state; it’s very hard to isolate it from others in an integrated market.”

If FERC had tried to keep the MOPR in place, states with strong clean energy policies would have pulled out of PJM and other markets, which put the federal regulator in a no-win situation in terms of market integrity, he added.

PJM states have been at odds over other issues in the past.  A dispute over cost allocation more than a decade ago led to the “roughly commensurate” court precedent Clark cited. O’Connell-Diaz said she hoped for compromise on the dispute because any litigation would take years to resolve, and the industry needs to be focused on the reliable transition to a cleaner grid.

“But again, you put the overlay of the politics on it, and it’s shark-infested waters, isn’t it?” O’Connell-Diaz said. “And so, again, I go back to we really need to kind of wipe that away. You know, utility regulatory bodies should really have to be above all that that pressure. They need to be able to think clearly without any kind of political connotations.”

However, that is not an easy thing to do today, she added.