Page 258 – RTO Insider

June 21, 2023November 29, 2023

Washington Looks to Lead on Clean Aviation

Washington is expanding efforts to make the state a leader in emissions-free aviation, Gov. Jay Inslee signaled at the Paris Air Show this week.

Inslee on Monday joined ZeroAvia CEO Val Miftakhov at the air show to announce that the state will invest $350,000 to aid ZeroAvia’s expansion at Boeing’s Paine Field in Everett, Wash., where the company is working to develop an electric engine to be installed in Dash 8-4000 76-seat aircraft. The state previously provided $350,000 to ZeroAvia in 2022.

Meanwhile, another Washington-based project will begin to use renewable energy and water to transform carbon dioxide into a synthetic aviation fuel.

Inslee is in Paris because aviation is a major state industry. The sector also accounts for 2.5% of the world’s carbon emissions, according to governor’s office.

ZeroAvia is developing hydrogen-electric planes, targeting a 300-mile range for nine- to 19-seat aircraft by 2025, and a 700-mile range for 40- to 80-seat aircraft by 2027. The company says it is has secured $10 billion in pre-orders from several airlines.

“ZeroAvia is a key member of the rapidly growing ecosystem of world-leading innovators located in Washington state who are building the future of sustainable aviation fuels and zero-emission propulsion systems,” Inslee said in a press release.

In the same release, Miftakhov said: “The support from Governor Inslee and the Washington Department of Commerce enables us to push forward quickly on our targets for commercial flight of up to 20-seat aircraft by 2025, and up to 80-seat aircraft by 2027.”

In April, the Washington legislature appropriated $6.5 million to build a sustainable aviation fuel (SAF) research center at Paine Field with the effort to be led by Washington State University.

‘Perfect Location’

In the second announcement, Inslee and SAF producer Twelve announced the company will break ground next month on a Moses Lake plant to produce jet fuel from renewable electricity, water, and CO₂ — which will be sourced from landfills and waste from food processing plants. The company has dubbed its fuel E-Jet.

“Commercial-scale production of E-Jet fuel is a major milestone in our mission of creating a world run on air,” Twelve CEO Nicholas Flanders said in a statement. “Washington is the perfect location for our facility, with its abundant renewable energy resources to power our carbon transformation process and longstanding global leadership in the aviation industry.”

SkyNRG recently announced plans to build a $800 million sustainable aviation fuels plant at an undisclosed location in Washington. It was encouraged by the state legislature passing a major tax break for such plants.

The new law sets a business-and-occupation tax rate of 0.275 percent for any plant that would produce annually at least 20 million gallons of low-carbon jet fuel. Most B&O tax rates in Washington range from 0.47 percent to 0.9 percent. A B&O tax is a tax on the business’ gross receipts.

The law’s purpose is to construct an alternative jet fuel plant in Washington. A few years ago, the predicted cost of building such a plant was at least $1 billion.

June 21, 2023July 9, 2023

TransWest Express Transmission Line Breaks Ground

The TransWest Express transmission project, designed to carry 3,000 MW of Wyoming wind power to the Southwest and California, broke ground Tuesday on a typically windy day in Carbon County, Wyo.

Energy Secretary Jennifer Granholm, Interior Secretary Deb Haaland and Wyoming Gov. Mark Gordon participated in the ceremonial groundbreaking at a cattle ranch where the line’s northern HVDC terminal will be built.

The Biden administration said the groundbreaking represented a milestone in its push for faster transmission buildout.

“The TransWest Express project will accelerate our nation’s transition to a clean energy economy by unlocking renewable resources, creating jobs, lowering costs and boosting local economies,” Haaland said in a statement.

TransWest got the go-ahead to build in April, when the U.S. Bureau of Land Management issued a notice to proceed. It was the final step in an approval process that began 15 years ago. (See TransWest Express to Break Ground After BLM Approval.)

The 732-mile high-voltage line will be capable of transmitting 3,000 MW of energy from wind farms near Rawlins, Wyo., to consumers in California, where it is regarded as an important component of the state’s push to achieve 100% clean energy by 2045.

To meet the goal, the state will need to import as much as 10 GW of out-of-state wind by 2040, at least half of it from Wyoming, according to projections by the California Public Utilities Commission and California Energy Commission.

CAISO’s inaugural 20-year transmission outlook estimated that carrying wind from the Great Plains and Rocky Mountain states to California to achieve 100% clean energy would cost $12 billion.

Last summer, TransWest’s developers asked to join CAISO as a participating transmission owner under a new subscriber model, in which a line’s subscribing customers pay its costs. The ISO’s Board of Governors approved the request in December, and FERC approved the agreement between CAISO and TransWest in March as a step toward PTO status. (See FERC OKs CAISO-TransWest Move Toward PTO Status.)

If the arrangement wins final FERC approval, CAISO will operate the line, and its entire capacity will be allocated to the Power Company of Wyoming (PCW), owner of the 3,000-MW Chokecherry and Sierra Madre Wind Energy Project being constructed in the south-central part of the state. FERC approved the arrangement in February 2022.

Both TransWest and PCW are wholly owned affiliates of The Anschutz Corp., a privately held company controlled by billionaire Phillip Anschutz.

Once built, TransWest will consist of 732 miles of transmission lines in three linked segments: a 405-mile, 3,000-MW HVDC system between Wyoming and Utah; a 278-mile, 1,500-MW HVAC line between Utah and Nevada; and a 49-mile, 1,500-MW HVAC transmission line in Nevada.

It will connect in Utah to lines serving the Los Angeles Department of Water and Power and in Nevada to CAISO’s balancing authority area.

Construction is expected to begin by the end of this year, with energization scheduled for 2027, TransWest has said. The line is expected to create about 1,000 jobs during its construction phase.

Other major Western lines being developed to transmit wind energy from the Great Plains and Rocky Mountains include PacifiCorp’s Gateway South transmission line across Wyoming, Colorado and Utah. PacifiCorp, owned by billionaire Warren Buffet’s Berkshire Hathaway, plans to add more than 3.7 GW of new wind power by 2040 in Wyoming and five other Western states.

Pattern Energy’s SunZia transmission project, a 550-mile line from New Mexico to Arizona, received route approval from BLM in May, with construction expected to start this summer. The line will carry energy from Pattern’s 3,500-MW SunZia Wind project in central New Mexico to markets in Arizona and California.

June 21, 2023June 26, 2023

ACEEE Highlights Efficiency’s Benefits to Grid Decarbonization

The American Council for an Energy-Efficient Economy released a report Wednesday finding that increasing efficiency would help avoid most of the annual load that must be met with non-renewable resources on a net-zero-emissions grid, even without widespread electrification.

“While the role of energy efficiency is well established in global and economy-wide decarbonization efforts, its value proposition is positioned to change as the electricity consumption it offsets decarbonizes,” the report said. “Because solar and wind are carbon-free energy sources, energy efficiency has been perceived by some as a less valuable decarbonization tool in a high renewable energy future.”

Efficiency can offset between 31 to 46% of net peak load by 2030 and 39 to 86% by 2050, varying between the five regions studied in the report, called “Energy Efficiency in a High Renewable Energy Future.”

“These results hold regardless of the speed of renewable energy deployment, though we find that energy efficiency is likely to be more valuable in avoiding total electricity system costs under a more rapid supply-side decarbonization scenario,” the report said.

Efficiency measures that affect thermal space conditioning loads (heating and cooling) are likely to have the greatest impact on both energy savings and avoided costs through 2050, the report said.

The resource could prove especially valuable for low-income housing, which often is inefficient, and low-income consumers face a higher burden in paying for energy, which can be mitigated by using less overall.

The paper included a review of literature around decarbonizing the grid and found some of those focused on the supply-side alone, ignoring efficiency. However, those that do include the resource list it as among the most important tools needed to meet decarbonization goals.

“Our modeling finds that energy efficiency measures reduce burdens on the power sector, avoiding billions of dollars’ worth of energy and capacity costs in 2030, and two to three times as much in 2050 even with high deployment of renewable energy,” the report said. “We estimate that by 2050 annual power sector savings will range between $10 billion and $19 billion per grid region analyzed.”

The study specifically modeled California, Texas, the Southeast, Midwest and Northwest, using two renewable energy scenarios: one with electric sector decarbonization by 2050, and another where the job is mostly done by 2035.

Examples of energy-efficient interventions include improving a building’s thermal envelope through insulation and other weatherization techniques, upgrading heating and cooling systems, installing smart thermostats, converting to heat pumps and upgrading appliances. The report looked into 12 efficiency measures and found that thermal envelope improvements would be the most impactful.

The impact of improving buildings’ thermal envelopes varies by region and has the biggest impact in areas with lower baseline energy codes, lower-quality existing building stock and more extreme temperatures, which the study said includes Texas and the Southeast.

“To maximize electricity system benefits through demand-side interventions, utilities should prioritize thermal space conditioning measures within their portfolios,” the paper said. “Replacing low-performance air source heat pumps or electric furnaces with high-performance air source heat pump models will guarantee savings and lower demand on the grid.”

Getting energy-efficient equipment in place often has a limited window around when customers are replacing old equipment, so the paper recommended that educational materials be rolled out well before then so they are aware of the options when the time comes.

The commercial sector has tremendous potential for efficiency, with the paper suggesting utilities have programs that have robust integrated efficiency offerings for them that deal with heating, cooling, ventilation, insulation, lighting and energy-management systems.

The report’s literature review found that many studies do not compare efficiency’s demand-side impacts along with the supply-side resources such as solar, wind or natural gas.

“Consequently, energy efficiency measures do not emerge from least-cost energy system optimizations as a resource of choice, which may reduce their procurement,” the paper said. “Capacity expansion models should therefore ensure that all supply- and demand-side resources are fairly compared against each other, and not marginalized by default.”

June 21, 2023October 29, 2023

Moody’s: NY Evolved from the Pandemic, Challenges Ahead

ALBANY, N.Y. — New York has emerged from the COVID-19 pandemic forever changed and now faces a growing list of challenges — including climate change and uncertainty in energy prices — that it must adapt to, according to a presentation given by Moody’s Analytics during NYISO’s Spring Economic Conference last week.

Moody’s economists believe a national recession is avoidable but that New York has a troubling future ahead as it continues to recover from the systemic shocks experienced during the pandemic while confronting a changing work culture, unfamiliar housing and demographic dynamics, and climate change.

Moody economists’ subjective probability of a U.S. recession in 12 months | Moody’s Analytics

Energy and resource prices also remain a sticking point for the economy, but Moody’s noted that prices have come into clearer focus as pandemic-era volatility abates and geopolitical tensions cause fewer fluctuations.

“It was a very mild winter … and that helped keep a lid on prices,” said Adam Kamins, a senior director at Moody’s. “We’ve also seen the U.S. and OPEC fill the hole left by the lack of supply from Russia; while on Russia’s end, they have been able to increase exports to countries like China and India at relatively cheap prices.

“That has all been good news for the affordability of oil and gas and brought it down to a much more stable place,” he said. “Our expectation is that we’re going to see continued increases in prices for the next year or so, but by 2024 prices will begin to come down as more U.S. supply comes online.”

Questions & Discussion

Kamins answered NYISO stakeholders’ questions, including concerns about natural gas and climate change impacts.

Given the recent volatility of energy prices, Anthony Abate, lead energy market adviser with the New York Power Authority, asked whether Moody’s was comfortable with assuming that the new normal for natural gas prices would be around $5/MMBtu instead of the previous $3 range.

Outlook for energy prices becoming clearer | Moody’s Analytics

“Natural gas prices have a lot of variation,” Kamins said. “And there are lots of factors, including geopolitical ones, that no model can pick up … All of this means that there’s a high degree of uncertainty around these forecasts.”

“Our model suggests prices will move upward, but I would not take that to the bank,” he added.

Erin Hogan of the state’s Utility Intervention Unit pointed out that gas supplies are unlikely to be a limiting factor but rather pipeline congestion will be more determinative of prices. She asked whether building more pipeline capacity could influence price.

“It could,” Kamins said. “But there are some potential supply issues just around the fact that drillers have been hesitant to drill because they want to keep prices as high as they can … and so that could keep a ceiling on supply that puts upward pressure on prices. But I think that you’re right that the bigger limiting factor would be capacity.

“We thought there’d be a glut of U.S. oil and gas production after Russia’s invasion, but producers are being very disciplined and want to keep supply in check to keep prices relatively high,” he said.

New York at most risk for climate change impacts | Moody’s Analytics

Abate also asked how Moody’s has begun reflecting the growing threat of climate change in its state models or assessments to help predict future outcomes.

Kamins said that “we have made adjustments to our baseline forecasts” that typically include “some state intervention,” but “we also create custom forecasts that show the more extreme outcomes in terms of either more severe damage from climate change or a more complete and early intervention.”

In an email to RTO Insider, Kamins referred to his recently published whitepaper to provide context on how Moody’s accounts for climate change in its forecasts, writing, “we used our model to account for transition risk based on the industrial composition of states and metro areas.

“Then we used exposure scores from RMS [Risk Management Solutions] … to adjust upward or downward for acute and chronic physical risk for individual economies based on their level of risk relative to a
weighted average.”

MISO Committed to Crackdown on Interconnection Queue Submittals, Departures

MISO appears set on restricting the interconnection requests it will accept and under what conditions they can leave the line in order to purge speculative generation projects from its queue.

Staff again this week said they need to toughen rules around entering and exiting the interconnection queue so that MISO doesn’t devote time to studying projects that aren’t a sure thing. The RTO debuted its plan in late May. (See MISO Wants Tougher Obligations on Queue Entry and Exit.)

The collection of changes will likely include more expensive milestone payments, a clampdown on penalty-free withdrawals, stricter proof that developers have secured land and reinforcing harm calculations so withdrawing projects have a better chance of owing money as they exit the queue.

MISO plans to present a straw proposal at the July 19 Planning Advisory Committee meeting.

“We’ve come to the point where we need to make some enhancements to the queue intake process so we’re getting better projects and a smaller number of projects, and we need to do that before we have a ‘23 cycle,” MISO’s Andy Witmeier said at Tuesday’s Interconnection Process Working Group.

Witmeier said if MISO kicks off the 2023 queue cycle with its existing rules in place, it will likely be hit with 200 GW of new interconnection requests. Last year, the grid operator fielded 171 GW of requests. MISO’s current queue contains 1,379 active projects totaling a little more than 237 GW.

“As the queues get larger, they slow down because there are more points of interconnection, more dispatch assumptions and more potential overloads to study,” he explained. He said a queue comprised of fewer, more successful projects will lead to faster queue processing and more cost certainty on transmission upgrades.

Most of the projects in MISO’s queue that haven’t yet proceeded to generator interconnection agreements are experiencing delays. All entrants in the 2021 and 2022 cycles are trailing the queue’s approximate yearlong timeline because of studies MISO must undertake.

Witmeier said he’s already been in private discussions with “key” stakeholders to put together a proposal.

MISO is aiming to file its proposal with FERC by early September, get FERC permission on the plan by early November and close the currently open-ended 2023 queue application window in late November or early December, months later than usual. MISO has been keeping the 2023 queue deadline fluid while it works out how it can make its bursting-at-the-seams queue more scalable.

Witmeier said it’s currently much too easy for speculative projects to enter the queue and then drop out penalty-free, getting “all their money back with interest.” He said MISO needs to “weed out” the number of submissions.

He said withdrawn projects should be on the hook for some fees for disturbing other projects’ network upgrade cost estimates.

Witmeier also said MISO’s $4,000/MW second milestone payment could be ratcheted up to about $10,000/MW, considering current inflation trends and his opinion that MISO’s milestone fees are already too low in the first place.

He said in the past five to six years, MISO has levied harm payments on withdrawing projects for the consequences to lower-queued projects “fewer than a dozen times.” He said that’s evidence that MISO’s harm calculation payments are “way too lenient and need to be adjusted.”

“We are responding to consumer demand, but we realize that an unmanageably large queue doesn’t work for anyone,” Invenergy’s Sophia Dossin said.

Witmeier added that developers don’t tell MISO why they’re dropping out of the queue, whether that’s land or permitting issues or climbing network upgrade costs.

Stakeholders asked if MISO has considered limiting the number of interconnection requests or megawatt values that individual customers can submit per annual cycle.

Witmeier said that while MISO has discussed enacting a “hard cap” on individual developers, he said the RTO runs the risk of discriminatory treatment and still more proposed generation than MISO load can snap up. He said large developers typically account for only about a third of queue submittals and are often better prepared than their smaller counterparts when submitting projects.

“It would certainly help competition but is that better?” he asked hypothetically.

June 21, 2023December 24, 2023

Washington Lawmakers Field Ideas on Shifting from Guzzlers to EVs

Pickup trucks, vans and SUVs account for a disproportionate share of the gasoline consumed in Washington state.

On Tuesday, an engineering and consulting firm offered state lawmakers on the Senate-House Joint Transportation Committee ideas on how to replace those gas guzzlers with electric vehicles.

Jeff Doyle, a project technical leader from the Seattle office of Boston-based CDM Smith, told lawmakers that 10% of Washington’s vehicles account for 26% of the gasoline consumed in the state. Meanwhile, 6.3% of the state’s vehicle burn more than 1,000 gallons of fuel a year — the majority of those being pickup trucks, vans and SUVs.

The owners of those so-called “high-consumption fuel users” value them for their hauling and towing, Doyle said. Also, they are used for heavy commuting, rideshare programs and delivery services.

CDM Smith provide four suggestions to encourage owners of those heavy fuel users to switch to EVs:

- - - Incentivizing owners to lease EVs for trips that don’t require medium-duty capacity. CDM Smith said the heavier vehicles average 25,000 miles annually, compared with an average of 9,000 miles a year for all vehicles. The incentives could be based on miles driven in the leased EVs.
    - Incentivizing trade-ins of fuel-burning pickup trucks and vans for EVs. The incentives could be based on miles driven annually in the new vehicles or on how much fuel is expected to be saved by switching to electric.
    - Creating a program in which drivers switch to EVs but are provided financial assistance to rent high-consumption fuel users when they need a vehicle to haul or tow. This program would be phased out as more medium-duty electric trucks and vans hit the market.
    - Providing rebates to all drivers — light- and medium-duty — to install electric chargers at their homes. The State Legislature has already exempted such installations from the state’s sales tax.

According to CDM Smith, gas-powered vehicle models still far outnumber EVs on dealer lots in the U.S. The company’s breakdown showed:

- - - 138 models of gas-powered light-duty cars, compared with 25 EV models;
    - 174 models of gas-powered SUVs, compared with 22 electric models;
    - 34 models of gas-powered pickup trucks, compared with four electric;
    - 23 models of gas-powered vans, compared with one electric.

CDM Smith acknowledged that EVs are currently more expensive than gas vehicles but said their price tags are shrinking.

While some lawmakers asked clarifying questions on the presentation, none offered comments.

June 21, 2023June 25, 2023

NY Completes Smart Path Tx Upgrades

ALBANY, N.Y. — New York on Tuesday finished upgrading 78 miles of transmission lines that will enable the reliable transmission of clean energy from the north to the rest of the state.

The Smart Path project rebuilt and replaced aging transmission poles made from wood with steel ones capable of supporting 345 kV lines, as well as upgraded substations along the project’s path (18-T-0207).

The $484 million worth of upgrades span from Massena in St. Lawrence County to Croghan in Lewis County and were undertaken by LS Power Grid New York and the New York Power Authority (NYPA).

The newly energized Moses-Adirondack Smart Path line will operate at the 230 kV level until the completion of the attaching Smart Path Connect project, which rebuilds roughly 100 miles of transmission lines in the North Country and the Mohawk Valley.

The Smart Path Connect project is a partnership between NYPA and National Grid and construction is scheduled to run until December 2025.

These Smart Path projects are among the many transmission projects New York is developing to support its growing clean energy fleet. The announcement mentioned the Propel NY transmission proposal, which was selected by NYISO’s board to enable the delivery of offshore wind energy from Long Island to the rest of the state. (See NYISO Board Selects NYPA-Transco Project for Long Island Tx Needs.)

Comments

The office of New York Gov. Kathy Hochul announced the completion of Smart Path and included statements from several high-ranking officials.

Justin E. Driscoll, acting president of NYPA, said, “the Moses-Adirondack Smart Path transmission line was the Power Authority’s oldest asset, built in 1942, acquired by the Authority in the early ‘50s, and now it has become one of our newest. I am immensely proud of the Power Authority team, the skilled laborers, and contractors who completed this challenging work on this major transmission artery safely under unusually difficult circumstances.”

Democratic state Sen. Kevin Parker, chair of the Energy & Telecommunications Committee, said, “we must embrace the opportunities to modernize our energy systems and invest in clean and sustainable solutions that ensure the resilience of our infrastructure, the protection of our environment, and the well-being of our communities.”

Democratic Assemblymember Didi Barrett, chair of the Energy Committee, said, “the newly completed Smart Path Transmission Project is integral to enhancing resiliency and modernizing the grid, which is necessary to achieve our climate goals, and will provide up to 900,000 homes with clean electricity.”

Bill Brown Jr., business manager of the International Brotherhood of Electrical Workers, which represents many of the workers who performed much of the specialized transmission construction like stringing lines by helicopter, also shared a comment.

“Our members will continue to offer the expertise and dedication necessary to help support Gov. Hochul and New York State in its efforts to support green energy,” said Brown.

June 21, 2023March 22, 2024

NYISO Selects Propel Project for Long Island Transmission

ALBANY, N.Y. — NYISO on Tuesday announced its Board of Directions selected a proposal from Propel NY Energy to fulfill the Long Island Public Policy Transmission Needs (PPTN) solicitation to unbottle local constraints and enable the export of future offshore wind energy throughout New York.

Propel NY, a partnership between the New York Power Authority and NY Transco, will build its Alternative Solution 5 project with the Long Island Power Authority and Consolidated Edison, with the goal of “advancing the state closer to its goal of 9,000 MW of offshore wind energy by 2035,” the board said.

NYISO estimated that the project will cost $3.26 billion. The developers will build a network of new transmission lines and substations connecting Long Island to New York City and estimate they will break ground in 2026. It has a required in-service date of May 2030.

Propel NY’s project (Project ID: T051) emerged as NYISO’s preference in early May and quickly obtained stakeholder votes of recommendation for approval before moving forward to the board for approval. (See “Long Island PPTN,” NYISO TPAS Briefs: June 16, 2023.)

In an interview with RTO Insider, Philip Toia, president of development at NYPA, and Paul Haering, vice president of capital investment at New York Transco, shared how excited they are to help deliver clean energy throughout New York and bring the state closer to its decarbonization goals.

Propel NY’s project “reinforces the backbone of the transmission system in Long Island,” Toia said.

It “checks a number of boxes that the NYISO evaluates, including transfer capability, expandability and operability,” said Haering.

The project will build six new underground transmission lines, including five 345-kV lines, that go between three ties connecting Long Island to the New York City metropolitan area and four new substations. It also upgrades several LIPA-operated facilities.

Haering said, “The goal of the PPTN was to improve the transfer capabilities between Long Island and New York City,” and the Alternative Solution 5 “proposal is going to greatly increase that capability” by enabling “offshore wind to get upstate” while “improving the ability for energy from upstate to get back onto Long Island when the wind isn’t blowing.”

Toia said there could be a few challenges, including unclogging an already a congested Long Island transmission system, getting community stakeholders involved via consistent outreach and permitting processes.

Haering noted ongoing supply chain disruptions also could be problematic should key components like high-voltage cables become unavailable. He added that their teams have worked aggressively to ensure that all the manpower, resources and equipment are available to execute the project.

Transmission projects in general, particularly those in crowded regions such as New York City and its eastern suburbs on Long Island, can draw opposition and pushback. Propel NY is taking an “early, often and inclusive” stakeholder approach to build support and head off opposition, Haering said.

Shannon Baxevanis, communications and stakeholder lead at NY Transco, said, “For the last two years, we’ve been undertaking an education and awareness effort with stakeholders that are within the [project’s] geographic footprint.”

Baxevanis said these have mostly been high-level conversations with politicians, economic development organizations, and environment or advocacy groups, but “that will really morph into a more developed granular ground game.”

“We are going street-by-street, neighborhood-by-neighborhood, getting to know residents, making them aware of what the project is and giving them the conduit to have a voice in our process,” she added.

Haering applauded the PPTN process, saying, “It is the poster child for how it should be done.”

Toia added, “We have confidence in the [PPTN’s] open process,” and, “when you look at New York, there’s a multitude of pathways for transmission to be built. … It’s an all-hands-on deck approach that has been successful for the state.”

RTO Insider asked about renewable and offshore wind development more broadly and whether New York could achieve its ambitious decarbonization goals.

Toia admitted the goals are aggressive but was confident that they could be reached via effective transmission development.

“Transmission is key to ensuring that renewable energy that is being built is able to get to the market and is not bottlenecked anywhere,” he said.

Haering pointed out that “because of our knowledge of the system, it was recognized by NYISO and its independent consultant that our project had some of the least amount of risk as compared to some of the other proposals,” and so, “hopefully that means this project will be delivered on time and on budget for the benefit of ratepayers.”

Haering said they anticipate filing relevant Article VII paperwork, which is the application material required for major New York transmission facilities, with the state’s Public Service Commission in the first half of 2024.

June 20, 2023December 5, 2023

DOE Under Secretary: Industrial Decarb Should Happen This Decade

WASHINGTON ― David Crane is serious about deadlines. As director of the Department of Energy’s Office of Clean Energy Demonstrations (OCED), one of his first jobs was turning down requests from 12 governors ― many of them Democrats ― to extend the deadline for concept papers for regional hydrogen hubs to be funded with $7 billion from the Infrastructure Investment and Jobs Act.

“Of course, all these Department of Government Relations folks … they’re like, ‘Of course we’re going to do that,’” he recalled during a “fireside chat” at the Bipartisan Policy Center (BPC) on June 14. “I’m like, ‘Hell no! We’re not going to do that,’ and we didn’t delay. … I’m not slowing down for anything or anyone. …”

“We have $20 billion in active solicitations out there right now,” said Crane, who was CEO of independent power producer NRG from 2003 to 2015. “[For] all that money, the people will be selected by the end of the year. So, the government is moving fast. The government is moving at private sector speed. So, it’s time to put up or shut up.”

Crane had come to the BPC straight from DOE, where he had just been sworn in as the agency’s first under secretary for infrastructure, confirmed by the Senate on a 56-43 vote on June 7. On top of the OCED, he will now also oversee the Loan Programs Office and other initiatives funded through the Infrastructure, Investment and Jobs Act (IIJA), with a special focus on industrial decarbonization.

In addition to the hydrogen hubs, OCED’s portfolio of projects includes large-scale carbon capture pilots, regional direct air capture hubs, advanced nuclear reactor demonstration projects and long-duration energy storage projects. The final applications for the hydrogen hubs were due April 7 ― again, with no deadline extensions ― and announcements on selected projects are expected in the fall, according to the latest OCED update.

Crane’s conversation with Sasha Mackler, executive director of BPC’s energy program, capped an event focused on the future outlook for U.S. energy innovation, and the work of the BPC-sponsored American Energy Innovation Council (AEIC). Launched in 2010 by Microsoft founder Bill Gates and other non-energy CEOs, the AEIC has advocated for more public funding for the research and development needed to bring new energy technologies from the lab to the marketplace.

Even with the billions for energy innovation in the IIJA and the Inflation Reduction Act, government funding can still be critical for getting emerging technologies over the “valley of death,” the gap in funding between proof-of-concept and commercialization, said Norman Augustine, former CEO of Lockheed Martin and another AEIC founding member.

“One of the problems of energy [is] once you’ve got a laboratory prototype, you’re a long way from knowing, one, that you could scale it and, two, where it’s useful, and perhaps more importantly … is it economically viable,” Augustine said, during a panel discussion on the history of the AEIC and the evolving state of energy innovation.

“The basic assumption here is that industry has got to be the ultimate user” of innovative technologies, he said. But to advance new technologies at scale and unlock private investment will require government support minus government bureaucracy, he said.

Crane sees at least part of the solution in a new approach to public-private partnerships. “We’ve introduced something I call, ‘the credo,’ where it’s transparency, it’s replicability, its urgency, it’s shared success and it’s timeliness,” he said.

The focus on speed here is meant as a message to the private sector, Crane said. “If there’s anyone … who thinks that they’ve got time to just ponder whether they want to work with the government, you are sadly mistaken.”

The energy transition is going to be private-sector-led, but “government-enabled and government-accelerated,” he said.

‘Air of Inevitability’

Crane has a history of energy industry disruption, going back to his tenure as CEO of NRG Energy from 2003 to 2015. Under his leadership, the company began closing coal plants and deployed a number of renewable energy projects, including the Ivanpah concentrated solar project, which placed thousands of reflecting mirrors and three massive solar power towers in the Mojave Desert.

Crane was fired from NRG in December 2015, after the company’s stock price tumbled 63% in 11 months — a history that provoked tough questioning from Democrats and Republicans during his confirmation hearing before the Senate Energy and Natural Resources Committee in November 2022.

Crane defended his record, noting that a number of independent power producers had seen similar losses at that time, and that his long experience “at the intersection of big capital and big energy projects” gave him the skill set needed at the OCED. (See Former NRG CEO Faces Tough Questions at Senate ENR Hearing.)

With confirmation now behind him, Crane next wants to push heavy industry and heavy-duty land transportation sectors to raise their ambitions and cut their timelines for decarbonization.

“When the environmentalists labeled aluminum, steel, concrete, chemicals [and] petrochemicals as hard-to-abate sectors, they gave those industries sort of an easy pass to deep decarbonization in the 2030s, not the 2020s,” he said. With $6.3 billion in IIJA funding, Crane wants to kick industrial decarbonization timelines back into the 2020s.

“We need to create an air of inevitability that these things are going to happen so that everyone’s moving in the same direction,” he said. While the industry will always have first movers and fast followers that do early projects, “we just don’t want a lot of slow-moving laggards,” he said.

Creating early-stage demand for emerging technologies, like green hydrogen, will be another challenge, Crane said. He called the IRA “pretty inspired legislation,” but noted that “it mainly sort of [incentivizes] supply, and the history of energy … is that demand formation always lags supply.”

Crane pointed to DOE’s Clean Hydrogen Commercial Liftoff report, which identifies a buildout of hydrogen infrastructure ― first hubs and then wider storage and distribution systems ― as critical for unlocking new commercial applications and, ultimately, investment.

While not providing details, Crane said this kind of demand-building is a priority for DOE, the White House and other agencies.

Global Challenges

Speaking on the panel, Tom Steyer, co-executive chair of climate-focused investment firm Galvanize Climate Solutions, sees a similar sense of inevitability forming around the deployment of clean energy in the coming decade.

Permitting, supply chains and other logistical barriers notwithstanding, solar and wind will be the dominant energy sources, said Steyer, who briefly ran for president in 2020. At the same time, emerging technologies “where we have the technologies but not the market acceptance” will be facing “the same challenges about getting to scale.”

But Steyer sees impending growth in “the level of human capability in this sector. The number of people ― whether they’re repeat CEOs, entrepreneurs, venture [capitalists], young people coming out of college, grad school or just wanting to work in these areas ― [is] fantastic,” he said.

“Companies that have the technology, but need product-market fit to scale, that is going to be so much better than people broadly know,” Steyer said. “I think it’s going to knock people’s socks off.”

Steyer stressed that U.S. energy innovation must also respond to the global challenges of less developed and emerging economies in the Southern Hemisphere, where millions of people have no regular access to electricity, emit relatively small amounts of greenhouse gases but may be particularly vulnerable to the impacts of climate change.

“We have to develop and drive down these cost curves and have technology that is available to people in those countries so that it’s a good deal for them to do clean; it’s a good deal for them to build the structures that will not emit” GHGs, he said.

402 Days

For Crane, the obstacles ahead are political, technical and temporal. With congressional Republicans and some Democrats scrutinizing every IIJA and IRA dollar DOE is spending, he said, OCED is “parsing every word” in each of the statutes.

“If it’s in the statute, we do it exactly as the statute says,” he said.

Such scrutiny, however, may run into the technical and market realities of scaling new technologies. “None of these emerging clean energy scale-ups are going to go exactly as you say; so, you’ve got to be prepared,” Crane said. Federal, state and local policy —both mandates and incentives — will be needed to create markets for new technologies.

“Not everything we’re going to do is going to work,” he said, calling instead for a “portfolio” approach to innovation and risk. “We’ve got to be prepared to try some things. … If nothing we ever do fails, then we didn’t take enough chances.”

And the clock is ticking. Speaking at Crane’s swearing-in, Energy Secretary Jennifer Granholm reminded DOE staff that they have 402 business days until the end of the current administration in January 2025.

“That puts us all on a war footing, moving at an impossible pace,” Crane said. “We’re not taking anything for granted.”

June 20, 2023June 26, 2023

NJ BPU Outlines $150M Building Decarbonization Plan

The New Jersey Board of Public Utilities has released a $50 million-a-year, three-year plan to cut building carbon emissions by prioritizing a shift from delivered fossil fuels to electric heat pumps.

The proposal, which would work in conjunction with energy efficiency (EE) programs, outlines a series of possible building decarbonization (BD) start-up programs that target single and multifamily residential buildings as well as commercial buildings, placing a priority on low- and moderate-income customers.

The proposal arrives as state efforts to cut building emissions face resistance from the fossil fuel sector as well as business groups concerned about cost and whether the state will force building owners to make the transition.

The plan follows the strategy outlined in the state’s 2019 Energy Masterplan, which calls for buildings to be “decarbonized and largely electrified by 2050,” with fossil-fuel heating boilers and water heaters replaced by electric space heating and cooling systems and water heaters.

The decarbonization straw proposal is one of three plans in the second, three-year program cycle developed by the BPU, known as Triennium 2, to create energy efficiency and carbon emissions reduction programs as required by the New Jersey Clean Energy Act of 2018. (See NJ’s 3-year Energy Efficiency Plan Faces Scrutiny.) Another proposal released as part of Triennium 2 sets out the general goals and incentive mechanisms and a third part lays out demand response proposals.

“New Jersey’s ambitious greenhouse gas reduction goals require significant reductions in emissions from buildings on a rapid trajectory,” the proposal states. “This BD program is being launched as a first step towards large scale transformation in New Jersey’s buildings sector, while recognizing the likely market transformation that will result from federal EE and heat pump rebates.”

Working With Utilities

Joseph L. Fiordaliso, president of the BPU, called the proposal “an important step to work with utilities to measure and consider both energy savings and building emissions.”

The programs outlined in the proposal include:

- the “design, launch and test” of programs offered by utilities to target the installation of space and water heating appliances in the residential and multifamily sectors, with a priority on low- and moderate-income customers;
- a solicitation of programs to be offered by utilities to the commercial sector to encourage the switch to electric heat pumps, including proposals to encourage smaller commercial buildings to make the change, possibly incorporating district geothermal systems;
- the development of “programmatic infrastructure to effectively market, deliver and track BD program impacts and costs;”
- strategies to increase “market knowledge, infrastructure and capacity” to accelerate the shift to building decarbonization, and reduce the cost of pursuing it; and
- an effort to collect performance and “market transformation-related metrics” and prepare evaluation studies.

The BPU staff’s intent in compiling the program proposals was to “initiate programs of large enough scale in Triennium 2 to achieve some material economies, market adoption, and lessons learned, while managing the total cost to a target level that is well below that of EE programs,” the proposal states.

The state estimates the BD programs combined will cost $50 million a year for three years, allocating the funds to the state’s four utilities in relation to the portion of territory they serve.

Seeking ‘Climate Friendly’ Technologies

The release of the proposal follows Gov. Phil Murphy’s unveiling in February of a sweeping package of new clean energy initiatives that called for all electricity sold in the state to be clean energy by 2035, rather than the previous goal of 2050. The package also called for the state to install electric heating and cooling equipment in 400,000 homes and 20,000 commercial properties by 2030. (See NJ Governor Sets Out Accelerated Emissions Targets.)

In a separate initiative, Murphy created a Clean Buildings Working Group to study the issue. (See Murphy Outlines NJ Building Electrification Push.)

Commercial and industrial buildings emit 17% of the state’s greenhouse gases, well behind transportation (42%) and electricity generation (19%), according to the state’s National Electric Vehicle Infrastructure plan.

The shift to electricity has stoked resistance from business groups, which worry about the cost and express concern that the state will “mandate” a shift to electrical heating and hot water. They back a bill, S2671, that would prohibit any state agency from mandating the use of electric building energy systems until the release of a government report on the costs and benefits of electric heating.

So far, however, the bill has not advanced in either house. State officials say there is no such mandate, and they will drive the transition by persuading the public of the benefits of electric heating and water delivery and by offering incentives.

Fossil fuel interests say the state should explore alternatives before plunging into what they say will be a highly expensive bet on electricity. And the New Jersey Department of Environmental Protection backed off introducing a ban on new commercial-size fossil fuel boilers in a rules package enacted in January after opposition from business and fuel groups. (See NJ Backs off Ban on Commercial-size Fossil Fuel Boilers.)

Catherine Klinger, executive director of the Governor’s Office of Climate Action and the Green Economy, said the plan would “increase utility customers’ access to money-saving energy efficiency measures and climate-friendly heating and cooling technologies.”

“Comfortable building temperatures should not create emissions that contribute to the climate crisis,” she said. “Utilities will be asked to help educate customers about the benefits of home electrification and open up access to federal incentives that put money back into customers’ pockets when they adopt heat pumps.”