NextEra Energy on Tuesday discussed the continued growth of its renewable energy portfolio in a positive second-quarter 2023 earnings report.
Subsidiary Florida Power & Light placed 225 MW of new solar capacity into service in the quarter, bringing its total for the first half of the year to nearly 1,200 MW, while subsidiary NextEra Energy Resources added 1,215 MW of solar, 150 MW of wind and 300 MW of storage.
“As we indicated in our recent 10-year site plan, solar continues to be the lowest-cost alternative for our customers,” NextEra Energy Chief Financial Officer Kirk Crews said in a conference call with financial analysts.
The challenges surrounding solar power development in 2022 appear to have subsided, he added: “After a period of underlying commodity price inflation, supply chain disruption and trade policy risk premiums, we are finally seeing signs of stability.”
CEO John Ketchum said: “All those ’22 projects that got delayed into ’23 are now starting to go into commercial operation. That’s really good news.”
NextEra Energy has announced intentions to decarbonize its operations, and Crews said Tuesday that remains the plan.
“We believe renewables remain economically attractive to alternative forms of generation,” he said. “Today, we have a pipeline of roughly 250 gigawatts of renewables and storage projects in various stages of development. This includes projects in early stage diligence and our current backlog and is supported by roughly 145 gigawatts of interconnection queue positions.”
This last point is important, Ketchum said.
“I would challenge you to find anybody in the industry that has even close to that number of projects with interconnection capacity,” he told an analyst during the Q&A portion of the call. “Given the demand we’re seeing in the market, if you have a site ready to go with interconnection capacity, that’s the hard part. Finding the customer right now is not the hard part.”
NextEra Energy signed its first contract for a standalone battery energy storage facility co-located with a wind farm in the second quarter, Crews said, and expects to use storage to further monetize its 29 GW renewables portfolio.
Ketchum said this strategy change with storage is possible because of financial changes — investment tax credits under the Inflation Reduction Act — and because of market changes.
“We are starting to see an opportunity, particularly in MISO and SPP, in ERCOT, where capacity values and reliability are being priced higher than … we’ve seen them in the past, given some of the shortfalls that they have in those markets and that just happens to coincide with where most of our wind is,” he said.
Ketchum also emphasized that NextEra’s wind portfolio is not exposed to the highly publicized quality control problems afflicting some turbine manufacturers.
“We do almost all of our business with GE,” he said. “We have done a little bit with Siemens, and I know there’s been some press on Siemens recently. We don’t have any of the Siemens Gamesa turbines in our fleet. I just want to make that very clear.”
During Tuesday’s call, the executive team also discussed second-quarter financials for NextEra Energy Partners LP.
The company completed acquisition of 690 MW of wind and solar assets in the second quarter, pushing its renewable portfolio past the 10 GW mark, but it also ran into one of the limits of wind power: varying wind speed.
The second quarter of 2022 saw the strongest wind in 30 years, 112% of the long-term average. The second quarter of 2023 saw the weakest wind in 30 years, just 86% of the long-term average.
Adjusted EBITDA generated by existing projects declined by approximately $99 million, though new projects and other revenue canceled much of that loss.
NextEra Energy Partners’ stock closed down 4.07% in trading Tuesday. NextEra Energy stock dropped 0.19%.
The standards development team (SDT) revising NERC’s cold weather standard has more work ahead of it after industry respondents put the freeze on their latest proposed revisions with a negative segment-weighted vote of more than 56%.
The comment and formal ballot period for EOP-012-2 (Extreme cold weather preparedness and operations) — and its implementation plan — closed Thursday. The revised standard received 101 votes in favor from members of the selected ballot body, while 141 voted against it; 31 abstained, and 28 did not respond.
EOP-012-2 is intended to revise EOP-012-1, which FERC approved in February along with EOP-011-3 (Emergency operations). (See FERC Orders New Reliability Standards in Response to Uri.) Both standards were created by Project 2021-07 in response to the recommendations in FERC and NERC’s joint inquiry into the 2021 winter storm that nearly led to the collapse of the Texas Interconnection. They require generator owners (GOs) to implement several measures to prevent their units from freezing during extreme cold weather events.
In its order, the commission criticized EOP-012-1 for including “undefined terms, broad limitations, exceptions and exemptions, and prolonged compliance periods.” It directed NERC to clarify these issues while adding a deadline for completing corrective action plans and a shorter grace period for GOs’ implementation than the five years originally given. After the SDT for Project 2021-07 revised the standard, NERC’s Standards Committee approved its submission for comment and ballot in a special call last month.
Respondents Call Revisions Unclear
In addition to giving their approval on the overall standard, respondents also addressed the SDT’s questions about specific language and requirements incorporated into EOP-012-2. These included:
whether the proposed definition of generator cold weather constraints — technical, operational or economic limitations that would prevent GOs from implementing freeze protection measures — provided the clarity the FERC order required;
whether the standard meets FERC’s recommendation that GOs account for the cooling effects of precipitation in their temperature data; and
whether the two timeframes proposed in the standard for corrective action plans — 24 months for addressing existing equipment or freeze protection, and 48 months for implementing new equipment or freeze protection — are appropriate.
Responding to the first question, Thomas Foltz of American Electric Power said the proposed definition of “commercial constraint” still lacks clarity. The standard — which states that a commercial constraint exists when implementing freeze protection would result in the unit not being in service at the time of evaluation — leaves open the question of what utilities should do about equipment reaching the end of its life, Foltz said. That could leave utilities that decide not to implement expensive modifications on nearly retired units open to the accusation of “choosing economics over reliability.”
Foltz suggested revising the definition to include measures that “require unreasonably expensive modifications [or] significant expenditures on equipment with minimal remaining life.”
Regarding the requirement to account for precipitation in temperature data, Robert Follini of Avista said the standard would require utilities “simply … to perform a wind chill calculation, with an ambiguous 20-mph wind speed.” Follini pointed out that because “some regions or facilities are more protected from wind effects than others, and there is no direct correlation between extreme cold weather temperatures and wind,” the requested number likely would have little relevance to utilities’ practical winter preparations.
Finally, Donald Lock of Talen Generation objected to the timeframes for corrective action plans, saying “it is impossible to fully understand what it is that a generator owner is being asked to do at this time” because of ambiguity in the other requirements of the standard and the large number of generating facilities and units with which an entity might have to deal.
He said that while some of NERC’s other standards require similar timeframes, those typically refer to a much smaller number of units and a much smaller scope of action. Lock concluded that it isimply is not possible to say with certainty how long a retrofit campaign involving an entire generation fleet might take, and therefore the inclusion of such a requirement would be a mistake.
New York City transit officials began working to implement their controversial congestion pricing scheme last week as New Jersey filed a lawsuit seeking to block it.
The Metropolitan Transportation Authority’s Traffic Mobility Review Board (TMRB), the six-member panel that will issue a recommended tolling structure, held its first meeting July 19 but did not make any decisions on the Central Business District Tolling Program.
The CBDTP, designed to reduce pollution and generate funds for mass transit and climate projects, received federal approval in May. (See NYC Congestion Pricing Plan Gets Federal Go-ahead.) Passenger cars entering Manhattan below 60th Street could be charged as much as $23 and trucks $82 during peak hours.
On July 21, New Jersey Gov. Phil Murphy (D) announced that his administration filed a lawsuit seeking to block the tolling scheme, blasting the federal government and the city for moving ahead on a policy that directly impacts New Jersey but is being implemented without its involvement.
“After refusing to conduct a full environmental review of the MTA’s poorly designed tolling program, the FHWA [Federal Highway Administration] has unlawfully fast-tracked the agency’s attempt to line its own coffers at the expense of New Jersey families,” Murphy said.
Murphy alleges that the government did not conduct a proper environmental review of the CBDTP, violating both the National Environmental Protection Act and the Clean Air Act.
Officials in the outer boroughs, fearing the plan could increase their own traffic, also have been unhappy. “If this plan goes forward, residents of Brooklyn, Queens, the Bronx and Staten Island will be treated as tourists in this city, and not equal citizens,” Staten Island Borough President Vito Fossella said at a briefing. “To sit here and then say to the people of Staten Island that you’re going to pay more, and your air quality’s going to be worse, doesn’t make any sense.”
The TMRB said 122 types of toll exemptions have been requested, including for “parents,” “artists” and “passenger cars.”
John Samuelsen, international president of the Transport Workers Union, received applause at the board meeting after saying the proposed nighttime carve-out, which would exempt tolls from midnight to 4 a.m., would hurt shift- and low-income workers.
John Durso, president of the Long Island Federation of Labor, also was concerned about those with low incomes. “If I get hit twice, once when I come in and once when I come home, and I am not making thousands of dollars, then that’s either taking food out of my kid’s mouth or paying my rent,” he said. “You can’t understand what it does to you when you’re pinching pennies.”
The MTA said about 700,000 vehicles enter the Central Business District daily, reducing average traffic speeds to only 7 miles per hour. “Congestion is bad for the economy, the environment and the quality of life for people who live in the CBD,” it said.
The agency has proposed providing discounts or tax credits to low-income residents. It said some proceeds could accelerate the replacement of diesel trucks with lower-emission vehicles and expand electric truck charging infrastructure.
The agency said similar programs in Stockholm and London reduced carbon dioxide emissions by 10-14% and 20%, respectively. But London’s program also has been controversial, with some blaming it for Labor’s poor results in elections last week.
BURIEN, Wash. — Washington’s Democratic leaders last week struck back at critics who blame the state’s 6-month-old cap-and-trade program for producing the highest gasoline prices in the U.S.
That criticism came after Washington this month posted average pump prices of $4.959/gallon, far exceeding the national average of $3.54 and surpassing other expensive markets in the West. Soaring prices have prompted cap-and-trade opponents to criticize the program’s architects for not anticipating that oil companies would pass on to their customers the costs of buying carbon allowances. (See Cap-and-trade Driving up Washington Gasoline Prices, Critics Say.)
But on Thursday, Gov. Jay Inslee and Democratic legislative leaders counterattacked during a press conference in the Seattle suburb of Burien, accusing oil companies of taking advantage of cap-and-trade to gouge consumers.
“They are not just passing [the costs] on, they are padding their profits,” Inslee said at a Highline Public Schools transportation depot with four electric school buses in the background.
At the conference, Inslee’s office unveiled figures showing that Shell’s profits increased from $3.2 billion in the first quarter of 2021 to $9.6 billion during the same period this year. Over the same period, Exxon Mobil’s profits grew from $2.7 billion to $11.4 billion and Chevron’s profits jumped from $1.4 billion to $6.6 billion.
That equals a roughly $20 billion increase in profits over two years for the three companies.
“I can tell you that the gas and oil industry is not going bankrupt,” Inslee said.
During the conference, Democratic state lawmakers revealed they plan to introduce a bill next January to force oil companies to open up their finances to show if they are gouging gasoline customers while misdirecting the blame on the cap-and-trade system. Sen. Joe Nguyen (D) said he believes oil companies are raising prices long before they actually have to pay cap-and-trade auction prices.
Another bill could address any gouging discovered by the state, Nyugen and House Majority Leader Joe Fitzgibbon (D) said.
Inslee speculated that California’s efforts to force transparency on the oil industry in light of that state’s cap-and-trade program has led the industry to put increased economic pressure on Washington, whose second-in-the-nation cap-and-trade program went into effect early this year.
In the state’s first two carbon allowance auctions, prices reached $48.50/metric ton in February and $56.01 in May. Between the two auctions, Washington sold more than 17 million allowances. The auctions have raised almost $300 million for fiscal 2024, which began July 1, and $557 million for fiscal 2025, which still has three more quarterly auctions to come.
The revenues have far exceeded government projections.
Critics Strike Back
The oil industry and Republican legislators slammed Inslee after his conference Thursday.
Sen. John Braun, leader of the Senate Republican Caucus, said the conference was “a blatant attempt to scapegoat one of his favorite boogeymen, which is the oil industry.”
“It is patently ridiculous to assume the oil companies would just absorb the hit from the governor’s ‘Cap and Gouge’ plan,” Braun said in a statement. “The simple truth is that companies pass increases in their overhead on to their customers through higher prices — just as small business and gig workers pass along increased costs from taxes and regulations to their customers in the form of higher prices.”
“The governor’s and my Democratic colleagues were simply less than transparent in 2021 about the obvious consequences of their carbon-pricing scheme,” said Sen. Lynda Wilson, the Republican caucus’s budget leader. “They knew full well how this would raise the cost of gas, which is part of the agenda to push people away from internal-combustion engines and into either electric vehicles or public transit.”
In a separate written statement, Catherine Reheis-Boyd, president of the Western States Petroleum Association, said: “Rather than ‘strategically misrepresenting’ the issue to the public, the governor and lawmakers can help consumers and business in the state by working with us to fix the cap-and-trade program. They claimed the program would cost ‘pennies,’ but Washington’s consumers are now paying 50 cents per gallon for just the cap-and-trade program. In total, the state has collected more than $850 million from just two auctions, and there are three more ahead this year. It’s time for the political rhetoric to end and the real work to rein in the skyrocketing costs of this regulation to begin.”
The nation’s largest public housing authority is trying to jumpstart development of lower-voltage cooking equipment so more of its half-million residents can switch away from gas stoves.
The New York City Housing Authority said Monday it expects this autumn to launch the Induction Stove Challenge, which will call on appliance manufacturers to design and build energy-efficient stoves that can operate on 120-volt/20-amp circuits.
Induction stoves typically operate on 220 volts and 40 or even 50 amps.
NYCHA’s 177,569 housing units typically are equipped with a gas stove and 120-volt line. Upgrading the electric wiring would be impossibly expensive, even if tens of billions of dollars’ worth of deferred maintenance costs had not already accrued in the authority’s 2,411 buildings.
NYCHA wants to replace gas ranges so residents can benefit from indoor-air quality improvements, and as part of larger building decarbonization efforts.
NYCHA is joining with the New York State Energy Research and Development Authority and New York Power Authority on the initiative. They will establish performance criteria and product specifications for the induction stoves, then expect to issue a request for proposals this year, and hope to select one or more manufacturers to design and test the new ranges.
Once testing is complete, NYCHA plans to pilot these lower-voltage stoves and induction-capable cookware in 100 units.
Eventually, NYCHA wants to remove gas stoves from all the buildings it owns, but initially it will aim for 10,000 apartments. It hopes this will be a broad-enough scale that other building owners and will see induction cooking as an affordable option and manufacturers will see the potential for a larger market.
To help build that demand pipeline, NYSERDA has hired the Building Decarbonization Coalition to engage other states and property owners on the project.
The Induction Stove Challenge follows a demonstration project that put induction stoves in 10 units of a NYCHA building in the Bronx.
The stoves were a hit with the residents, and indoor air quality improved. But the effort demonstrated the site’s limits, as well.
The appliances had to be dispersed throughout the building so as not to overload the circuitry — once one apartment got an induction stove, no units directly above or below could get one.
That’s why NYCHA is excited about the possibility of running induction stoves with the standard 120-volt wiring.
“If energy-efficient induction stoves can be redesigned to function in NYCHA buildings,” NYCHA CEO Lisa Bova-Hiatt said in a news release, “it sets an amazing precedent for what can be done with existing infrastructure, some forward thinking, and the necessary funding.”
The New York Public Service Commission on Monday petitioned the D.C. Circuit Court of Appeals to review FERC’s approval of NYISO’s proposal to use a 17-year amortization period in capacity auction demand curves (ER21-502).
NYISO proposed to move from a 20-year amortization period — the assumed time that a hypothetical peaking plant is expected to be operational — to 17 years in response to state legislation that set strict net-zero requirements that are forcing fossil plants to retire sooner.
After rejecting it twice previously, FERC accepted the ISO’s proposal in May on remand from the D.C. Circuit. (See FERC Accepts NYISO’s 17-Year Amortization Period Proposal.) The commission’s rejection had been challenged by the Independent Power Producers of New York.
“The unjustified shortening of the amortization period will needlessly increase capacity auction charges by hundreds of millions of dollars,” the PSC said. The commission’s decision “must be reversed because it fails to provide the requisite ‘reasoned analysis.’”
The ISO’s revisions were part of a suite of changes called the demand curve reset, which altered the assumptions and scope for capability years 2021/22 through 2024/25 to predict the volume of megawatts needed to meet demand.
Stakeholders discussed new proposals to revise PJM’s capacity market and discussed updates to the RTO’s risk modeling methodology during a meeting of the Critical Issue Fast Path (CIFP) process July 17.
The meeting included a second proposal from Daymark Energy Advisors and the East Kentucky Power Cooperative (EKPC) that would modify PJM’s proposal and a presentation from American Municipal Power (AMP) that suggested several changes to the Independent Market Monitor’s proposal.
Daymark CEO Marc Montalvo described its second joint package with EKPC as a trimmed-down version of the PJM proposal, with changes including retaining the annual Base Residual Auction structure instead of moving to a seasonal auction and preserving the fixed resource requirement structure. (See “Daymark and EKPC Propose Base and Emergency Capacity,” PJM Completes CIFP Presentation; Stakeholders Present Alternatives.)
While the proposal retains PJM’s proposed marginal effective load-carrying capability (ELCC) accreditation model, Montalvo said it’s not the preferred long-term solution for a forward market structure as more renewables come online.
The proposal would use an hourly reimbursement model that would pay resources for the capacity they provide in each hour of a delivery year, meaning they would offer their committed capacity into the real-time and day-ahead markets and follow dispatch. Generators would not be paid for their capacity for hours in which they do not do so.
Natural gas resources that have an offer in the markets but are called on too late to nominate for fuel according to the gas pipeline procurement timelines would retain their capacity commitment. Montalvo said the interaction between the gas and electric timelines are an operational issue and ensuring that dispatch doesn’t conflict would be PJM’s responsibility.
Resources would be able to engage in bilateral contracts to meet their capacity obligations and would be expected to do so when prolonged outages are anticipated.
Montalvo said the objective in drafting the proposal was to create a penalty framework that incentivizes performance without jeopardizing the viability of long-term resources when they’re assessed.
AMP Suggests Changes to Monitor Package
AMP’s Lynn Horning gave an overview of several changes the organization believes would build on the sustainable capacity market design proposed by the Monitor.
AMP has its own CIFP proposal that would create subannual accreditation and replace the Capacity Performance penalty construct with a reward and penalty system built around testing performance and providing “pay as you go” capacity payments. (See “AMP Seeks Subannual Accreditation,” PJM Stakeholders Refine CIFP Capacity Market Proposals.)
Horning said the Monitor’s proposal has the benefit of focusing on defining demand for each hour and matching that with adequate load. It also includes locational elements and simplifies the auction clearing process. She said the Monitor’s proposal to create a new accreditation model, the modified equivalent availability factor, also is preferable to PJM’s marginal ELCC approach because it avoids the latter’s interactive effects and improving the focus on real-time operations.
The changes to the Monitor’s proposal made by AMP include allowing natural gas generators to submit start, notification and minimum run time parameters on a shorter time frame based on pipeline conditions and to permit them to reflect a wider breadth of costs related to pipeline service in capacity or energy offers.
The AMP proposal also calls for retaining energy efficiency resources in the capacity market — the Monitor’s package would remove them — and differentiating the availability of demand- and supply-side demand response resources.
Planned capacity resources would be required to notify PJM if they plan to submit an offer in the BRA prior to the posting of the planning parameters for that delivery year, which has been a topic of stakeholder discussion since the absence of planned resources in the 2024/25 BRA was attributed to PJM delaying the release of auction results last year. Resources that do not indicate that they plan to participate in the auction would be permitted to offer only energy bids. (See FERC OKs PJM Proposal to Revise Capacity Auction Rules.)
AMP also called for a second CIFP phase to discuss holding BRAs closer to their associated delivery year, creating a subannual procurement system with time-of-day procurement assessments and exploring additional ways of creating comparability between the capacity market and FRR systems.
PJM Updates Risk Analysis Figures
PJM also presented updated reliability risk modeling figures, aiming to capture a broader range of threats to reliability and evaluate the differences between how an expected unserved energy (EUE) method of deriving the requirement would capture risk and the status quo loss-of-load expectation. (See PJM Continues CIFP Discussion of Seasonal Capacity Market Proposal.)
The new data pare back the preliminary findings PJM presented at the May 30 CIFP meeting, which showed a sharp shift in risk toward winter, particularly under the EUE model. While the new data still have risk concentrated in the winter, the season now makes up only about 64% of the risk under the baseline model, rather than the 96% in the preliminary data.
The presentation also included three additional models that include a longer historical weather lookback — going back 50 years instead of 30 — and two adding in climate change adjustments as well. The longer historical lookback increases the winter risk to 71%, but the two climate change variants both swing risk back to being predominantly in the summer.
Method A, which results in the higher summer risk, estimates the trend that climate change is having on seasonal minimum, mean and maximum temperatures to create adjustments that are applied to historical temperatures to consider how past weather would manifest under future climate conditions. Method B follows the same system, but only for mean temperatures.
AUSTIN, Texas — The National Association of Regulatory Utility Commissioners’ annual Summer Policy Summit attracted more than 1,000 state and federal regulators and their staffs; industry representatives; consumer advocates; and other stakeholders July 16-19 for discussions on understanding and preparing for the grid challenges that lie ahead.
NERC’s recent summer reliability assessment lent considerable fodder to the discussions, with its warning that extreme weather, plant retirements and transmission outages have made supply shortfalls more likely across much of the U.S. The report also stressed the need to maintain and expand a dispatchable baseload generation fleet to keep pace with the higher demands that electrification and climate change are placing on the grid. (See West, Texas, Midwest at Risk of Summer Shortfalls, NERC Says.)
Speaking on a panel discussing the reliability challenges, Stan Connally, Southern Co.’s executive vice president of operations, said shrinking reserve margins are complicating the task of balancing clean energy with affordability.
“Frankly, I think one of the risks as we move forward here is we let those priorities get out of balance,” he said. “It’s just important that we continue having these reliability conversations, because at the end of the day, and in these very, very extreme conditions, our customers need us to have the lights on. Air conditioning matters, right?
“Resource adequacy is a big deal. Shrinking reserve margins are something we have to pay attention to around resource adequacy,” Connally added. “We have an aging fleet. We also have a growing solar base. … Mixing that all together to ensure resource adequacy for the long term has to be center stage of our planning.”
Fellow panelist Stacey Doré, Vistra’s chief strategy and sustainability officer, said her company’s diversified fleet gives it a unique advantage in achieving balance between reliability, affordability and sustainability.
“We do see near-term reliability risks because we think that the projections show that thermal generation is going to be retiring at a faster pace than we can make up for with other assets in the long term,” she said. “We’re all trying to get to the place where we have enough carbon-free, reliable generation to replace those thermal assets … but the pace at which that is happening is not keeping up with the pace at which thermal assets are retiring.”
SPP COO Lanny Nickell said the transition to renewables and decarbonization will continue to take place, “whether or not you like it.” With clean energy goals set for 2050 and progress to be made by 2030, he said he used to be more worried about 2030 than 2050.
“Unfortunately, over the last several months, I’m no longer as worried about 2030 as I am about right now,” Nickell said. “Our analysis has indicated there’s a growing amount of risk that we can’t sustain. We’ve seen about 8,000 MW of thermal generation retired over the last seven, eight years. In that same time frame, we’ve seen about 24,000 MW of wind generation added. That sounds like a pretty good tradeoff. It hasn’t been, and our loss-of-load expectation studies that we have to perform every other year are indicating an increased risk associated with that transition.
“It may sound like we’re three Chicken Littles up here trying to scare everybody, but there are solutions. It’s just a lot of these solutions will take time to see the full effect,” he added.
Nickell reminded the audience that transmission is “an important tool in the toolkit” and offered resilience as an example. Instead of valuing transmission for its reliability and production cost savings through reduced congestion, he said, grid operators also should realize the importance of shipping energy across their seams.
“After Winter Storm Uri, we came to realize that resilience has got to be one of those measures,” he said, noting that when the storm took thermal resources offline in February 2021, SPP was able to meet 14% of its demand with imports from MISO and PJM. “We were importing on a transmission system that’s never seen this much energy flow across it … because we had strong interconnections throughout much of the East and to the West. That’s the value of resilience. It’s like insurance. You don’t really want to have to use it, but man, you’re thankful when you have it.”
Valuing Energy Efficiency
Speaking on a panel debating extreme weather’s reliability implications, former FERC and Texas regulatory staffer Alison Silverstein pointed out that energy efficiency doesn’t need to be accredited for effective load-carrying capability (ELCC) “because it doesn’t break down.”
She said that with an “intentional strategic demand response,” the industry will be able to take advantage of two areas that have “important synergistic effects” for the wind and solar fleet.
“With the right choices and energy efficiency and demand response, you are bringing down the peak overall,” Silverstein said. “With the amount that you need to fill in the evening as the wind is ramping up and the solar is dropping, you have less of a gap to fill out every hour. The more we can do to make our homes and buildings more energy efficient, the less we have to do in terms of that kind of ramping and the less vulnerable we are to the ELCC for this kind of thorough plan.”
Texas established the nation’s first energy efficiency resource standard (EERS) in 1999 by requiring utilities to achieve a specified amount of energy efficiency savings annually. It has since been leapfrogged by 26 other states and now has the weakest EERS in the country, according to a 2021 white paper by the American Council for an Energy-Efficient Economy.
Silverstein posited that the state’s roughly 4 million poorly insulated homes, more than a third of the total stock, is one reason ERCOT has been able to meet record demand this summer. (See ERCOT Demand Exceeds 82 GW for 1st Time.)
“It’s because 45% of Texans are low income and energy insecure. They are setting their thermostats at unsafe levels,” she said. “They are doing voluntary conservation of electricity, not because they’re trying to be good public citizens for the reliability of the grid, but because they can’t afford to consume enough electricity to stay comfortable. If they were able to consume more electricity, our demand would be significantly higher, and [ERCOT CEO] Pablo [Vegas] is going to be pacing the back of the control room.”
Remembering the 2003 Blackout
NARUC President Michael Caron, a commissioner on the Connecticut Public Utilities Regulatory Authority, kicked off the summit by moderating a panel marking the 20-year anniversary of the 2003 Northeast Blackout. The memories of that day still linger with the panelists.
“I think about this every day and before I go to bed at night, which explains the bags [under my eyes]. It was terrifying,” NERC CEO Jim Robb said. “I never thought I would be in the role that I am today.”
Texas Public Utility Commissioner Jimmy Glotfelty was on vacation camping with his family and several others in New Mexico, having just helped stand up an electricity office in the U.S. Department of Energy. Like other government officials, he left D.C. for much of the month. Fortunately, he had access to the camp site’s “communications center,” a closet with one phone and a fax machine.
“I spent the next two and a half days in that phone booth on phone calls with folks from NERC, our [National] Labs, folks from the White House and in Canada, trying to figure out how we would do this investigation, which we’ve never done before and had no real understanding of how to jumpstart it,” Glotfelty said. “We found the path forward that really started the Monday after the blackout, sending teams out to the utilities, out to the ISOs, to NERC, and put a plan together to really study what happened. So, we had all sorts of phone calls back and forth, and it was an interesting place to be for the biggest blackout in North American history.”
Suedeen Kelly was in FERC’s library the day of the blackout preparing for a Senate hearing on her nomination to be a commissioner.
“You felt disbelief at first and then shock and horror, and then a realization that I was soon to join an institution that was amazingly well prepared to try and do something about this,” she said.
An interim report identified the cause — a software bug that left operators unaware they had to shed load after transmission lines drooping into vegetation caused the initial outage — but did not make any recommendations. That came early in 2004 from an independent commission formed by President George W. Bush and Canadian Prime Minister Jean Chrétien.
The report team ran into a late roadblock when the Canadians said the final report had to be translated into French.
“‘How long will that take?’” Glotfelty remembered asking. “‘Three weeks.’ We said, ‘No way.’ We ended up getting support from the State Department, which translated the report in two days.”
The report and the Energy Policy Act of 2005 led to numerous changes in the industry. Most important, it gave greater authority to NERC to enforce standards that previously had been treated as guidelines. It also led to changes in how operators handled transmission outages.
“The greatest thing we did was shed load,” Glotfelty said, referring to ERCOT’s response during the 2021 winter storm that almost brought the Texas grid to its knees. “What happened in 2003 was the wrong action. System operators were scared to shed load. They figured they would get fired or their companies would get beat up by their regulators.
“In Texas, we did that. People still got fired, but we saved the system,” he added. “We saved 30 days of economic and human suffering by shedding load and making sure the transmission system stayed viable. So that was really an important understanding from the 2003 blackout.”
Asked whether the country might see another blackout like the one 20 years ago, Robb said, “I feel generally quite good about how the risks of 20 years ago were addressed.” Indeed, his organization’s recent State of Reliability report found that the North American bulk power system generally remains highly reliable and resilient.
“If you look at the performance of the electric grid as we define it from a reliability perspective, we have made substantial improvements, but the risk profile continues to grow,” Robb added, pointing to renewables’ growing share of the fuel mix. “We are working with our partners — NARUC, the gas sector, the technology sector — to try to figure out how we can solve these issues that nobody can solve with an edict. There’s been a lot of evolution of the model that was created, but I think we should all be extraordinarily [confident].”
Will EPA Rule Accelerate Change?
EPA’s recent proposed regulations to reduce carbon emissions from fossil-fired power plants under Section 111 of the Clean Air Act would set nationwide standards on plants based on whether they are new or existing, their fuel type, frequency of usage, capacity and how long they plan to operate. (See EPA Proposes New Emissions Standards for Power Plants.)
Naturally, the proposal has raised concerns within the industry.
“We are the reliability watchdogs for North America, and we don’t dissect the particularities of this rule,” said NERC’s Fritz Hirst, director of legislative and regulatory affairs. He compared his agency to the Night’s Watch, which protects the main setting of the television series “Game of Thrones” but holds no allegiance to any of the show’s feuding kings and lords.
“Our role was to provide this common good, but I think it is kind of obvious to say that this rule will continue to accelerate the pace of change,” Hirst said. “In NERC’s view, managing the pace of change is the central challenge for reliability.”
In the short term, natural gas will continue to be a primary fuel source, GridLab Executive Director Ric O’Connell said.
“Natural gas just a couple of decades ago was kind of a hobby fuel, right? It was the summer-peaking fuel,” he said. “Natural gas has really come from kind of the sidelines … now it is 40% of our electric generation. The electric system is the largest user of the gas system, and we haven’t really changed the way we contract and think about delivery of gas. It’s now a year-round baseload fuel, and in the winter, it’s really competing with other uses like heating.”
Emily Sanford Fisher, Edison Electric Institute’s executive vice president of clean energy, said with coal fuel’s use down to less than 20% of the nation’s fuel mix, non-emitting resources (renewables and nuclear) account for more than 40% of electricity consumption.
“The industry is in a different spot,” Fisher said, noting that about 50 of EEI’s members have made voluntary commitments to reduce their emissions to zero or net zero, albeit “not on the time frame that EPA puts out.”
“That means that we are generally in agreement about where the industry is headed, and this is really a question about pace and timing and the role of technology,” Fisher said. “Interestingly, all of the conversation in 2014-2015 was about coal. All of the conversation today is really about the role of natural gas, and that reflects this change in our generation mix. You can see from the rule that EPA is pretty concerned about our reliance on gas, and we’d like to make sure that it puts some bumpers around how much gas generation remains a part of our mix.”
Time is Now for Nuclear
One month after taking the stage during Edison Electric Institute’s thought leadership forum to promote nuclear energy’s role in a carbon-free future, Julie Kozeracki, a senior adviser with the Department of Energy’s Loan Programs Office, returned to Austin to highlight advanced nuclear reactors. (See “Nuclear Needs a Breakthrough,” Overheard at EEI 2023.)
Kozeracki said she has been leading a DOE initiative on nuclear commercialization that has resulted in a report, “Pathways to Commercial Liftoff: Advanced Nuclear.” It says advanced nuclear technologies, such as Gen III+ reactors similar to conventional generators and Gen IV reactors that use novel fuels, provide a “proven option” to supply the 550 to 770 GW of additional clean, firm capacity necessary to reach net zero.
“We see there being a need for 200 GW of new nuclear capacity, in addition to the roughly 100 GW we have operating today,” Kozeracki said. “That’s because in any decarbonization scenario, we see there being a need for upwards of 700 or 800 GW of clean, firm capacity. Because regardless of whether you build a ton of renewables or a crazy amount of renewables, you need some firm capacity to help balance the intermittency of renewable generation. And nuclear is one of the only options proven at scale.”
She put in a plug for small modular reactors, saying they can provide more certainty of hitting cost targets and likely will play an important role in the early scale-up. Kozeracki said commitments for new nuclear are needed as soon as possible.
“The time to start on that was yesterday,” she said. “The choices in front of us are not between new nuclear, which could feel risky or expensive, because your other options are also going to be risky and expensive. It’s really important to recognize that nuclear has a vital role to play in getting to decarbonization at scale, and anything we can do to start those conversations and those decisions sooner is going to be really critical for getting us on the path there.
“Everyone keeps saying that they want to be fourth, and they would like someone else to go first, second or third. But you can’t have a fourth reactor if folks don’t sign up for one, two and three.”
Arizona’s decision to join the U.S. Climate Alliance could rev the state’s clean energy economy, some observers said, but others warned that politics could get in the way.
Gov. Katie Hobbs (D) announced this month that Arizona has joined the Alliance, a coalition that includes 23 states, Guam and Puerto Rico. Alliance members promise to pursue policies to reduce climate pollution and promote clean energy deployment.
“Together, we are creating green jobs and businesses, ensuring clean air and water for Arizonans, lowering energy costs and preparing more effectively for a changing climate,” Hobbs said in announcing the move.
Hobbs’ announcement came around the time Gov. Joe Lombardo withdrew Nevada from the Alliance, citing conflicts with the state’s policy of developing a diverse energy portfolio that includes natural gas. (See Nevada Exits US Climate Alliance.)
Michael Barrio, a senior policy principal at Advanced Energy United, highlighted the potential economic benefits of Alliance membership for Arizona. AEU is a business association aimed at achieving 100% clean energy in the U.S.
By joining the Alliance, “we’re really opening the doors to investment,” Barrio told NetZero Insider.
Businesses are attracted to states with a stable and predictable clean energy framework, Barrio said. He noted that a growing number of businesses — including large companies such as Meta — are making clean energy commitments.
“Arizona is signaling that this is a state where those kinds of commitments can be fulfilled,” Barrio said.
Attorney Court Rich, director of the Regulatory and Renewable Energy Department at Scottsdale-based Rose Law Group, said clean energy and related technology represent a “massive” economic opportunity for Arizona. Hobbs has sent a strong message of support by joining the Alliance, Rich said.
“But given state politics, and a GOP-controlled legislature and utility commission, we need everyone on board to make sure Arizona maximizes its potential to be a leader in the clean energy economy,” Rich told NetZero Insider.
“At the end of the day, I would be surprised if joining the Alliance has any impact on Arizona’s actions on emissions,” he added.
Arizona already is making clean energy-related economic progress. A report this year from Climate Power, a strategic communications organization, found that investments in clean energy projects led to 12,720 jobs in Arizona from the time the Inflation Reduction Act became law in August 2022 through March 2023.
Among 191 new clean energy projects nationwide, the report pointed to LG Energy Solution’s plans to build a $5.5 billion battery manufacturing complex in Queen Creek, Ariz., where it will make batteries for EVs and energy storage systems.
States Working Together
U.S. Climate Alliance members take action through steps such as adopting climate action plans, setting zero-emission vehicle standards and developing building performance standards. Hobbs’ office didn’t respond to requests for details on the administration’s next steps regarding climate change.
Diane Brown, executive director of the Arizona Public Interest Research Group, said Hobbs and her newly created Office of Resiliency have “hit the ground running” in terms of pursuing federal funds for clean transportation and clean energy and working with a wide array of stakeholders to address climate change and its impacts.
Membership in the U.S. Climate Alliance will give Arizona a chance to collaborate with other states on best climate practices, Brown said.
“The result of developing and implementing strong climate change mitigation policies will not only reduce climate pollution, but can save consumers money, protect air quality and promote public health,” Brown told NetZero Insider.
Beyond Pledges
Another commitment from Alliance states is to reduce net greenhouse gas emissions by at least 26% by 2025 and 50% by 2030, as compared to 2005 levels, and reach net zero by 2050.
A report this month from the Environmental Defense Fund (EDF) looked at the impact on national climate progress of 24 Climate Alliance states hitting their 2025 and 2030 targets.
Hitting the state targets would reduce by 43% the national emissions gap — the difference between projected emissions and a Biden administration goal to cut nationwide emissions by at least 50% by 2030, the report found.
In updated figures provided to NetZero Insider last week, factoring in Arizona’s membership in the U.S. Climate Alliance and Nevada’s withdrawal, EDF found that the national emissions gap would shrink by 44% if states reach their targets.
But many states are struggling to meet their commitments, the report found. The 24 states in the report are on track to collectively reduce net emissions by 20 to 23% by 2025, short of the 26% target, and by 27 to 39% in 2030, compared to the 50% reduction target.
Pam Kiely, EDF’s associate vice president for U.S. climate, said governors “must drastically step up ambitious and comprehensive policies to cut pollution in line with their goals.” And the Inflation Reduction Act gives them an opportunity to do so, Kiely said.
“Generating that collective impact requires moving beyond just pledges — governors have to deliver on their promises,” Kiely said.
The state most heavily dependent on home heating oil is making significant strides in its campaign to get electric heat pumps in more homes.
Maine Gov. Janet Mills (D) said Friday that 104,000 of the systems have been installed with help from a series of initiatives begun after she took office in 2019.
The goal had been 100,000 by 2025, so she set a new goal: 175,000 additional heat pumps by 2027. Success would mean a significant portion of the state’s 750,000 housing units had at least partially decarbonized.
Maine is a state that would seem at once ideally suited and highly challenging for heat pumps. Few areas have natural gas distribution infrastructure and only 1 in 13 households use it as the primary heating fuel, according to the U.S. Energy Information Administration. As a result, about 60% of Mainers heat with oil as of September 2022, more than any other state.
Air-source heat pumps are less expensive to operate than oil furnaces and can have a lesser impact on the environment. But there is some lingering skepticism in the public mind about their efficacy during cold snaps, and Maine is one of the coldest states in the nation.
The Maine Energy Marketers Association, whose members sell all manner of fuels, is trying to ensure the public is aware of the potential shortcomings of heat pump technology.
However, state residents seem to be voting with their pocketbooks: The number of heat pumps installed statewide has climbed from about 40,000 in 2019 to roughly 145,000 now.
Mills’ office said Friday that heat pump rebates through Efficiency Maine and a low-income heat pump program at MaineHousing have been instrumental in getting the technology installed in the state’s residential and commercial structures.
Efficiency Maine pitches federal tax credits to accompany the state rebates for installation. Together with savings on operating costs, a homeowner can recoup the purchase cost in as little four to six years, the program’s website says, depending on whether they qualify for a low- and moderate-income adder.
Efficiency Maine does, however, warn that a fuel-burning backup system is needed in temperatures below minus 15 degrees.
Legislation Mills signed in 2019 to encourage and subsidize property owner adoption of heat pumps was accompanied by another important effort: development of a workforce to install all those heat pumps.
The state’s community college system expanded its heat pump training courses and has trained 558 technicians to date.
The heat pump campaign is part of a larger effort by Maine to fight climate change. Mills last year signed a law setting the goal for carbon neutrality as 2045 and this year proposed moving the 100% clean energy target date from 2050 to 2040.
Clean energy is important to the climate impact of heat pumps. As the Maine Energy Marketers Association points out, heat pumps are not as green as they seem if the electricity that powers them comes from burning carbon.
White House National Climate Adviser Ali Zaidi joined Mills for her announcement Friday.
“Maine is paving the way for states across the country seeking to build a clean energy future that protects our climate and creates good-paying jobs for all Americans,” he said in a news release.
Mills added: “Our transition to heat pumps is creating good-paying jobs, curbing our reliance on fossil fuels and cutting costs for Maine families, all while making them more comfortable in their homes — a hat trick for our state.”
