Of the $194 trillion in investments that BloombergNEF projects will be needed for the world to even get close to limiting climate change to 1.5 degrees Celsius by 2050, 47% will be targeted at electric vehicle sales, according to BNEF CEO Jon Moore.
Transportation electrification is the key theme at the two-day BNEF Summit in San Francisco, and Moore opened the event on Monday with a rundown of the numbers its analysis shows will be driving the transition, whether it is based purely on economics or on the 2050 net-zero targets set by the 2015 Paris Agreement.
BNEF CEO Jon Moore | BNEF
“Assuming we chose the most economic solutions … that gets us to 2.6 degrees, so not in line with Paris,” Moore said. Based only on targets, “we can actually bend the curve to about 1.77; so not to 1.5, but 1.77.”
Similarly, according to BNEF’s 2022 New Energy Outlook, greenhouse gas emissions from transportation could peak in 2024 in a net-zero scenario, versus 2028 in the economic scenario.
Moore’s numbers showed other significant gaps between BNEF’s economic transition scenario (ETS) and its net-zero scenario (NZS). For example, a transition based on economics would generate $119 trillion in investments — about 33% less than $194 trillion for net zero — with again almost half going to EV sales.
Either way, he said, “the scale of investment required, literally in the next 30 years, will be huge.” Moore sees encouraging signs in the $466 billion in investment that transportation electrification snagged in 2022, which was “up 54% year on year, which is … pretty amazing.”
Passenger vehicles drew the lion’s share of those dollars, and will continue as a major factor, he said, adding that more than 10 million EVs were sold globally last year. They will also account for more than half of EV battery demand, which could total as much as 6.6 TWh by 2035 in the NZS, Moore said. BNEF see similar, dramatic growth in lithium demand, reaching 5.9 million metric tons by 2035 — an 18-fold increase over 2020.
EV sales will account for almost half of all climate investments over the next decades, whether in an economic or net-zero transition. | BNEF
“So, lithium will become absolutely key as an enabler and as a potential bottleneck in the transition,” he said.
The Inflation Reduction Act could at least jump-start the supply chain buildout needed to meet that demand. BNEF has tracked more than $27 billion in supply chain investments since the law was passed, with about 60% of that total going toward EV battery plants.
One interesting point, Moore said, is that in the NZS, EV battery demand peaks in 2035, not 2050, “because if you want to, by 2050, decarbonize your fleet, you really have to be selling a decade or so earlier.”
Aviation is Hydrogen’s Sweet Spot
Moore framed BNEF’s figures as the company’s attempt to cut the “noise” in energy analysis — that is, the biases and errors in judgment that can skew figures.
Minimizing that noise — with extensive research and algorithms — is “really important because we’re going to spend tens, hundreds of trillions on the energy transition,” Moore said. “Every error in judgment that we make, every deviation from how the world progresses, is either an underinvestment or an overinvestment, so it’s actually very expensive.”
Disagreement is inevitable, he said, but “the idea is to bring down the cone of disagreement.”
“Economics alone won’t get us to net zero,” Moore said. “We’re going to need to bend the curve somehow, and policy is going to be one of the ways that we will do that.”
Policy could be critical in increasing the amount of clean power on the grid, as BNEF is anticipating that carbon-free electricity will account for just over one-half of the GHG emissions reductions needed to keep climate change to 1.77 C.
Wind and solar account for 65% of global power supply by 2050 in the ETS, versus 76% in the NZS, Moore said. Green hydrogen, bioenergy and carbon capture will play smaller but significant roles, together providing about 20% of emissions reductions by 2050, he said.
The IRA has triggered a wave of new investment in a North American EV supply chain. | BNEF
The IRA could have a significant impact here as well, by stimulating “a lot of different technologies,” Moore said. BNEF sees the law’s clean energy incentives expanding solar from about 40,000 GW to 50,000 GW by 2030, and wind from 25,000 GW to 35,000 GW.
The use of green hydrogen will also grow, Moore said, but BNEF sees aviation as its main market, followed by shipping and then transportation.
Hydrogen use in aviation will be for “short and medium haul,” he said. “For long haul, there will be biofuels and synthetic kerosene.
“For shipping, it will be ammonia and methanol from hydrogen, and on the road, it’s about 10% of [heavy-duty vehicles] and 15% of buses,” he said.
But BNEF sees hydrogen and electricity as complementary — with each serving different sectors — as opposed to competing. Aviation, shipping and steel will be “hydrogen-centric,” Moore said, while buildings, roads and other industries will be “electricity-centric.”
Staff Working to Understand Forced Outages in December Storm
ERCOT told its stakeholders last week that it is gathering information from its generators about the high number of outages during the December winter storm.
Staff told the Technical Advisory Committee during its Jan. 24 meeting that they have sent requests for information and its weatherization teams to generator resources that suffered forced outages during the Dec. 22-24 event. Thermal outages peaked around 13 GW, and gas supplies were again curtailed as an unwelcome reminder of the deadly February 2021 winter storm that killed hundreds of Texans and caused billions in economic damages. (See “ERCOT: December Storm ‘Non-event’,” PUC Closes in on ERCOT’s Market Redesign.)
Dan Woodfin, vice president of system operations, promised a more comprehensive report, saying staff are combining the information from the RFIs and will analyze the more detailed information.
Saying that ERCOT’s outage scheduler tends to understate outages, Independent Market Monitor Carrie Bivens asked Woodfin whether staff intended to do a true-up with telemetered values.
“Our intention is to look at telemetry and values, the outage scheduler and the results of the RFI, and kind of put it all together,” he said.
ERCOT’s preliminary analysis found gas restrictions in North Texas and operational flow orders issued to prevent gas flowing beyond contract maximums resulted in some curtailments and generation capacity. It also found that reduced renewable generation was not a large factor during the event.
Load peaked at 73.96 GW on Dec. 23, a 16-GW increase from ERCOT’s previous December record. The grid operator’s models projected a nearly 71-GW peak as the storm approached. Woodfin said other grid operators had similar problems predicting load, but that ERCOT’s miss had little effect on market reliability.
NRG Energy’s Bill Barnes took exception to the remark.
“You’re always going to get some type of market response based on ERCOT’s forecast. We look at it as a really big input into our decision-making,” he told Woodfin. “When there’s an under-forecast, that will probably result in a lower offer into the day-ahead [market], which is an economic commitment, which would mean you would have to take other additional [out-of-market] actions. The response that you get from the market? A lot of that comes from … what you guys think.”
Staff plan to engage with TAC’s Wholesale Market Subcommittee on the forecast error.
ERCOT deployed nearly 2.7 GW of its new firm fuel supply service (FFSS) Dec. 22-25 during the event. However, it failed to notify all market participants of the deployment or recall, as required under its protocols, and staff made system changes in January to correct the error.
Staff are drafting new protocols to improve existing language as they prepare for the next FFSS obligation period later this year. The changes are expected to improve the process for approving or instructing the restocking of fuel; offer disclosure reporting; incorporate an alternative FFSS resource concept; and improve qualified scheduling entities’ (QSEs) process for FFSS testing.
RUCs Continue to Increase
ERCOT staff’s annual report on reliability unit commitments led some stakeholders to call for market-based solutions after a second consecutive year of heavy RUC usage.
The grid operator said 8,244.8 instructed RUC resource-hours in 2022 resulted in 7,910.5 effective hours. That was up from the 3,853.1 effective resource-hours in 2021 and a significant increase from the two years prior, when a total of 421.8 effective resource-hours were deployed.
The increased usage is a result of ERCOT’s reliance since the 2021 winter storm on a conservative operations posture that maintains more reserves sooner. Bivens told lawmakers last year that the practice could add more than $1 billion to customers’ bills in 2022.
“We have a giant increase in RUCing some really old generators,” David Kee, CPS Energy’s director of energy market policy, told staff. “It’s causing some concerns in my shop, and we’re thinking about what we’re doing to these generators. … We’re basically running them into the ground. The more you lean on these generators and bring them online for reliability reasons, you’re going to find they’re going to break.”
ERCOT’s Dave Maggio said the average age of RUCed units was between 40 and 60 years. More than 87% of the effective resource-hours addressed capacity concerns, with 12.9% needed for local thermal congestion or voltage concerns; all of 2020’s RUCs were used to meet local congestion or voltage issues after a hurricane damaged transmission facilities in the Rio Grande Valley.
Pressed on staff’s “desire” to reduce RUCs, Kenan Ögelman, vice president of commercial operations, agreed there is a “potential better approach to procuring coverage for the uncertainty that we are dealing with.”
Ögelman said the grid operator expects to continue conservative operations but will be “looking at” modifications or improvements to RUCs. A long-term, market-based solution focused on revenue adequacy resides at the Public Utility Commission, he said, but priorities have yet to be established.
ERCOT paid out $34.11 million in RUC make-whole payments last year that was almost exclusively covered by capacity-short charges. It also clawed back $24.85 million. Those numbers were $404,000 and $484,000 in 2020, respectively.
Staff also said the delayed real-time co-optimization (RTC) project will be brought before the Board of Directors in June after they perform due diligence on the market mechanism favored by the Independent Market Monitor and many market participants.
ERCOT’s Matt Mereness said the project, put on hold almost two years ago after the 2021 winter storm, still has a $51.6 million budget line item and a three-and-a-half-year timeline “because we haven’t revisited it.”
The RTC tool would expand ERCOT’s real-time market by clearing energy and ancillary services every five minutes, as most other grid operators already do. The PUC in 2018 directed ERCOT to add RTC in 2018; it opened a rulemaking in December 2020 for its implementation (51588).
The project’s impact analysis will have to be revisited because of inflation’s toll. Staff will also reassess its scope with an eye of resuming RTC work in July.
“From a reliability perspective, it’s the next thing that we really do need,” Mereness said. “We’re not blind to the risk of this project of getting going, but we also know that we need to move forward on it. The reality is there are things going on at the commission. As that work [for ERCOT] comes out, it will have to be prioritized with other work.”
Subcommittee to Charter Credit Group
TAC delegated the soon-to-be-disbanded Market Credit Working Group (MCWG) to develop a proposed charter, structure and name for a new working group that will report directly to the committee. The group will then replace the MCWG, which had provided input on credit-risk management issues to TAC’s Wholesale Markets Subcommittee.
The stakeholder group will give market participants a voice in market credit issues after the board’s Reliability & Markets Committee determined that staff should report to it on credit issues, and it moved in December to disband the Credit Working Group (CWG). The group was shifted last year to the R&M’s purview from the Finance & Audit Committee, where it had been since 2004. (See “ERCOT Gets 1st Adjunct Member,” ERCOT Board of Directors Briefs: Dec. 19-20, 2022.)
Speaking for Reliant Energy Retail Services, Barnes, a regular CWG attendee, pushed for the new group to include credit professionals, saying his company’s credit pro recommended a voting structure. Other members stressed the importance of market diversity within the group.
The new group’s responsibilities will likely include a credit review of all future nodal protocol revision requests, as required by NPRR1157 and formerly carried out by the CWG.
TAC Elects 2023 Leadership
Jupiter Power’s Caitlin Smith and South Texas Electric Cooperative’s Clif Lange take their leadership seats for TAC. | ERCOT
Committee members re-elected by acclamation South Texas Electric Cooperative’s Clif Lange as their chair for 2023. Having recently been promoted as the cooperative’s general manager, Lange has asked that TAC meetings be moved to Tuesdays this year.
Members also elected Jupiter Power’s Caitlin Smith as vice chair. American Electric Power’s Richard Ross also ran for the position.
The committee’s 2023 subcommittee leadership was approved as part of the combination ballot:
Protocol Revision Subcommittee (PRS): Martha Henson (Oncor) as chair and Diana Coleman (CPS Energy) as vice chair.
Retail Market Subcommittee: Deborah McKeever (Oncor) as chair and John Schatz (Luminant) as vice chair.
Reliability and Operations Subcommittee: Chase Smith (Southern Power) as chair and Katie Rich (Golden Spread Electric Cooperative) as vice chair.
Wholesale Market Subcommittee: Eric Blakey (Pedernales Electric Cooperative) as chair and Jim Lee (CenterPoint Energy) as vice chair.
Most of the leadership are holdovers, with McKeever and Schatz switching positions. Coleman, Blakey and Lee are all new to their roles.
Members Endorse Five NPRRs
TAC unanimously approved NPRR1144, which provides a limited exception to the requirement that loads included in an ERCOT-polled settlement (EPS) metering facility’s netting arrangement only be connected to the grid through the facility’s metering point(s). The exception would allow no more than 500 kW of auxiliary load connected to a station service transformer be connected to a transmission or distribution service provider’s (TSP/DSP) facilities through a separately metered point using an open transition load transfer switch listed for emergency use.
The measure passed 29-0, with CenterPoint abstaining.
TAC unanimously endorsed four other NPRRs on a combination ballot with a change to the Planning Guide (PGRR) that, if approved by the board, would:
NPRR1147: set fast frequency response’s ancillary service offer floor 1 cent/MW lower than other responsive reserve services categories to allow FFR’s procurement up to the current limit, without proration with other categories.
NPRR1149: charge QSEs an ancillary service failed quantity if their supply responsibility is not met in real time by their portfolio’s resources, based on a comparison of their real-time telemetry.
NPRR1151: eliminate the protocol requirement that the PRS hold at least one meeting per month.
NPRR1153: add two existing fees (public information request labor and ERCOT training) to the grid operator’s fee schedule; create a $500 registration fee for resource entities, TSPs and DSPs, and subordinate QSEs; delete the system administration fee’s current value and the map sales fee; and restructure existing fees for generator interconnection or modification, full interconnection study applications and wide area networks.
PGRR102: require resource entities and interconnecting entities to provide operations dynamic model quality test results that demonstrate appropriate performance for submitted operations dynamic models, and make non-substantive clarifying changes.
A Virginia Senate committee on Monday cleared a bill that would expand Dominion Energy’s community solar target sevenfold while changing how some consumers who use the resource are billed.
Dominion (NYSE:D), the largest utility in the commonwealth, has a target of just 200 MW for community solar, which is set to start rolling out after this July when the firm completes an update to its “customer information platform,” according to the Coalition for Community Solar Access.
The Senate Committee on Commerce and Labor voted 12-3 to clear Senate Bill 1266, which would increase Dominion’s target to 10% of its peak load.
Ten percent is the share the industry has pushed for in other states, CCSA Mid Atlantic Regional Director Charlie Coggeshall said in an interview. “That ends up being over 1.5 GW, so it’s a significant jump from 200 MW, but we think that the scale is appropriate to the size of the utility and the size of the market,” Coggeshall said.
The Dominion bill cleared the committee on a straight party line vote after sponsor Sen. Scott Surovell (D) and Katharine Bond, Dominion’s vice president of public policy, state, and local affairs testified that they could work through the issues they disagree on.
Minimum Bill
The two sides still disagree on the “minimum bill,” which is meant to ensure that those participating in the program do not shift costs to other customers.
Virginia is one of 22 states with competitive community solar policies, according to the Coalition for Community Solar Access. | Coalition for Community Solar Access
Minimum bills are used to ensure that customers receiving credits for their solar generation also pay their share of the grid’s costs, but Coggeshall said the SCC’s order makes community solar unaffordable for all but low-income customers, who are exempt from the minimum.
Because the minimum bill never applied to low-income customers, all development has been focused on that sector, Surovell said. “What we thought was going to be the small part of the program is going to be the whole program, and none of them are going to be contributing towards all the costs that everybody else pays,” he added.
Surovell’s bill would require the SCC to open a new proceeding to set the minimum bill, striking language in the current shared solar law that requires that participating customers “should pay all the infrastructure and services costs associated with the utility providing service to them.”
The bill would require the SCC to consider the benefits of solar in setting that minimum bill, which include avoided transmission costs and cleaner overall generation, said Surovell.
Dominion wants to ensure that the costs of serving those customers with the grid power they will still rely on are recovered.
Another community solar bill sponsored by Surovell and Sen. John S. Edwards (D), SB 1083, for American Electric Power’s Appalachian Power Company (NASDAQ:AEP), was held over for more work at the subcommittee level. But Surovell told the full committee he hopes to move that bill forward too. Appalachian Power’s 10% target would be about 350 MW.
“Appalachian Power supports shared solar projects, but feels strongly those participating in the program should be the one to absorb the cost,” the utility said in a statement to NetZero Insider. “Shifting program costs to nonparticipating customers isn’t just or fair, especially at a time when the company is trying to keep costs and rate increases at a minimum.”
Tax Credits
Beyond fixing the issues CCSA has with the current Virginia program, new federal tax credits for clean energy are also a reason behind the legislative push.
“With the passage of the Inflation Reduction Act — and especially with Dominion’s programs focused already on low-income participation and bonus incentives that you can take advantage of [in] the Inflation Reduction Act — it felt like this was a good opportunity to pursue this session,” Coggeshall said.
Gov. Glenn Youngkin (R) included support for community solar in his energy plan released last year, which called out “shared solar” as a way to reduce barriers some customers face in installing distributed solar on their own.
Appeal Rejected
Solar advocates asked the SCC for rehearing on the minimum bill issue, but that request was rejected in an order the state regulator issued in October. Advocates claimed that the minimum bill would lead to difficulties in launching the shared solar market in Virginia.
“The commission concludes, however, that those difficulties — which if they occur would stem from ensuring that shared solar customers pay a fair share of the costs of providing electric service — are not unreasonable,” the commission said in its order.
Coggeshall said the minimum bill, which is volumetric, is often higher than $55 because that estimate assumes a $1 placeholder charge from Dominion, which actually tends to be $10-$20 on most customer’s bills.
“What that results in is completely undermining the economics for the program, at least with regards to non-low-income participation,” he added.
While community solar benefits low-income customers, only focusing on them leaves out a big part of the market and means Virginia’s program is less well rounded, Coggeshall said.
The coalition released the results of recent polling, which found broad and bipartisan support for expanding community solar in Virginia. The survey of 786 registered voters in Virginia was done by co/efficient, and it found that 73% of them want to participate in a shared solar program as long as it saves money.
Divided Government
Virginia has a divided government with Democrats still running the state Senate while Republicans control the House and the governorship. But given Youngkin’s signals that his office does not oppose growing community solar and support in the Senate, Coggeshall was hopeful the legislation would move forward this session.
“The big question I think is on the House side, whether they will be on board or not,” he said.
CCSA has a national goal of signing up 10 million people to split up 30 GW of community solar by 2030. So far, less than 5 GW of community solar has been installed around the country. CCSA said Virginia is one of 22 states with competitive community solar policies. The group says it wants to add 10 more states to reach its 30 GW goal.
A Nevada mining project that could produce enough lithium for 370,000 electric vehicles a year has received a conditional loan offer of $700 million from the Department of Energy.
The funds would go toward Ioneer’s Rhyolite Ridge lithium-boron project in Esmeralda County, Nev. If finalized, the loan would finance the on-site processing of lithium carbonate.
Ioneer said a term sheet for the DOE loan had been finalized, with a loan of up to $700 million and a term of 10 years. The conditional commitment indicates DOE expects to support the project, subject to conditions such as legal, contractual and financial requirements, Ioneer said.
Ioneer Managing Director Bernard Rowe called the proposed loan “the most significant milestone in the history of the company.”
“The term sheet and conditional commitment from DOE demonstrates its strong support for the Rhyolite Ridge project and, if finalized, the loan would be the first-ever by the DOE to provide financing for the processing component of a project where lithium is extracted and refined at site,” Ioneer said this month.
The loan would be made under DOE’s Advanced Technology Vehicles Manufacturing loan program. Lithium is a key component of EV batteries, and DOE estimates the loan could support lithium production for about 370,000 EVs each year.
Developing a U.S. supply chain for critical materials such as lithium is a national priority, according to DOE.
“Onshoring the critical materials supply chain is an important step toward energy independence, lower costs for American consumers and protection from global supply bottlenecks,” DOE said in announcing the loan.
Production in 2026
Demand for lithium is surging as EV adoption grows. The top lithium-producing countries are Australia, Chile and China. Interest in domestic lithium production is strong, but the U.S. has only one lithium mine in operation: Albemarle’s mine at Silver Peak in Nevada.
Ioneer described Rhyolite Ridge as the most advanced undeveloped lithium project in the U.S. Production at the facility is expected to start in 2026.
The project will be a drill-and-blast operation. Lithium and boron products will be made through a process with zero CO2 emissions from electricity generation, the company said.
Boron, in the form of boric acid, will account for about 30% of the project’s revenue. Boron has a wide range of industrial uses, and Ioneer said the co-production of boron will help the company keep its lithium costs down.
Ioneer is partnering with Sibanye-Stillwater, a global mining and metals processing company that has committed $490 million for a 50% stake in the Rhyolite Ridge project.
And Ioneer has offtake agreements with three entities so far. EcoPro Innovation plans to use lithium carbonate from Rhyolite Ridge at its South Korea battery plant. In July, Ioneer signed agreements with Ford Motor and Prime Planet Energy Solutions, which is a joint venture between Toyota and Panasonic.
Permitting Process
In December, the Bureau of Land Management published a notice of intent to prepare an environmental impact statement for the Rhyolite Ridge project. Ioneer called the notice a major milestone toward finishing the permitting process.
The Nevada Department of Environmental Protection issued a water pollution control permit for the project in 2021.
The company has also taken steps in response to the listing of Tiehm’s buckwheat as an endangered species. The plant is found at Rhyolite Ridge.
Ioneer has spent $1.2 million on research to preserve the buckwheat and revised its operations plan to avoid direct impacts to the plant. A Tiehm’s buckwheat greenhouse has been built and is now in operation.
DOE said the Rhyolite Ridge project is expected to be in operation for 26 years, although Ioneer said on its website that there is “significant potential for this to increase.” After operations are finished, the land will be reclaimed and revegetated, according to DOE.
Canadian long-duration energy storage company Zinc8 Energy Solutions plans to build its first factory in Kingston, N.Y., the company and Gov. Kathy Hochul announced Thursday.
The firm’s five-year, $68 million plan calls for it to be the anchor tenant in iPark87, a sprawling former IBM campus. The state will provide up to $9 million in tax credits through its Excelsior Jobs Program (EJP), contingent on Zinc8 creating up to 500 jobs there.
Zinc8 CEO Ron MacDonald announced in September that the company would set up manufacturing in the U.S. to take advantage of the recently approved Inflation Reduction Act’s tax credits for domestic production of its zinc-air energy storage system.
The Zinc8 ESS is a modular design, adaptable to numerous configurations with the same subsystems. Because its capacity is determined solely by the size of the zinc storage tank, it is readily scalable from 20 kW to 50 MW and can provide eight or more hours power, the company says.
Zinc8, a small operation in Vancouver, is in the pre-commercial/demonstration phase of the technology for which it holds 21 patents and has five more patents pending. It hopes to begin production in 2024 and start scaling up in 2025.
Zinc8 Energy Solutions’ zinc-air long-duration energy-storage battery system is shown. | Zinc8 Energy Solutions
The company has been on New York’s radar as the state moves to slash its carbon footprint and build a clean-energy economy.
The New York Power Authority selected it as a winner in an innovation challenge for its proposal to build a 100-kW/1-MWh demonstration project at the University at Buffalo, and the New York State Energy Research and Development Authority provided a grant to defray the cost of its 100-KW/1.5-MWh demonstration project at a New York City apartment complex.
The company joined Scale For ClimateTech, the New York City-based manufacturing accelerator supported by NYSERDA. And U.S. Senate Majority Leader Chuck Schumer (D-N.Y.) pitched the Kingston site to MacDonald in July 2022.
Hochul recently announced a goal of installing 6 GW of installed energy storage capacity in New York state. MacDonald said in a news release that New York’s push for green energy, and storage in particular, helped Zinc8 decide to locate its factory there.
“We’re excited by the level of support and interest we’ve received towards locating a manufacturing facility and creating jobs in the state of New York,” he said. “The EJP tax incentives offered to companies looking to create jobs and help build a green economy is an additional layer of funding that can be utilized concurrently with other financing, including state, municipal and federal funding packages, which help companies like Zinc8 access additional sources of capital and expand their business plans.”
“Creating good jobs that will lead to a greener, more sustainable New York for our children and grandchildren is not only beneficial to our economy; it’s the right thing to do for our planet,” Hochul said In her own news release. “Zinc8’s cutting edge, clean energy storage technology is another tool that will allow us to achieve our bold climate agenda and continue to make New York state a leader in advancing the green economy.”
SPP’s Markets and Operations Policy Committee on Friday approved two revision requests related to resource adequacy requirements that members had set aside during their regular quarterly meeting earlier this month.
The special conference call became necessary when MOPC deferred action on the RRs after several late changes were shared with members the night before the January meeting began. The committee directed SPP staff and the Market Monitoring Unit to re-engage with stakeholder groups to ensure members still agreed with the changes. (See “Members Defer on PRM Deficiency RRs,” SPP MOPC Briefs: Jan. 17-18, 2023.)
“We’ve kind of taken them on a roadshow,” the MMU’s John Luallen told MOPC during the call.
Taken together, RR536 and RR537 would provide load-responsible entities with a short-term, non-punitive alternative approach to deficiency payments for the summer resource adequacy requirement (RAR). Staff have been working on the mitigation strategy since July, when SPP increased the planning reserve margin (PRM) from 12% to 15%, effective this year. That left some members complaining they would not have enough time to meet the requirements. (See SPP Board of Directors Briefs: Dec. 6, 2022.)
The Supply Adequacy, Cost Allocation and Regional Tariff groups all approved the RRs last week by a combined vote of 75-1, with 28 abstentions, making only various non-substantive terminology edits.
MOPC then endorsed the tariff revisions in separate electronic ballots. Solar and storage developer Savion cast the only dissenting vote. The measures will now go before SPP’s Board of Directors and Regional State Committee this week for final approval. Staff hope to gain FERC’s approval in time to accredit resources for the summer season (June 1-Aug. 31).
Stakeholders modified RR536 to clarify that LREs can make a sufficiency payment only when the PRM is increased within the previous two years and the LRE demonstrates it had adequate capacity to meet the PRM before it was changed. A deficiency cannot result from selling accredited capacity to another region after the PRM’s increase is approved.
Under the change, capacity can only be claimed for accreditation by one asset owner in the SPP footprint. Capacity used to resolve deficiencies cannot be sold to another region for the applicable resource adequacy requirement season.
The measure includes the MMU’s proposed sufficiency valuation curve to value capacity in the market. The curve starts at twice the cost of new entry (CONE) at or below the sum of noncoincident peak loads, then slopes downward to a net CONE value when regional accreditation reaches the PRM. When the region has sufficient accredited capacity, the net CONE drops down to zero at 115% of the PRM.
RR537 emerged from the last-minute stakeholder process with revised language that removes a tariff violation when LREs fail to make a resource adequacy payment. As modified, LREs would be deemed sufficient for the adequacy requirement with a deficiency payment.
The change was also modified to clarify that only capacity resolving deficiency is obligated to stay in SPP; the obligation only applies to a specific RAR season; and that a deficiency payment is based on a kilowatt-year.
CRSP Faces Tx Rate Issues
The grid operator is working to address concerns by one of nine entities evaluating membership in its RTO West offering over its restrictions as a federal power marketer.
The Western Area Power Administration’s Colorado River Storage Project (CRSP) in November requested changes to the terms and conditions for RTO membership, approved last July. Those terms were to be effective March 1, but SPP’s Strategic Planning Committee endorsed a four-month extension to July 1 and additional terms and conditions during its Jan. 18-19 meeting.
The new terms include crediting CRSP’s point-to-point (PTP) transmission service and a federal service exemption (FSE) of replacement energy to satisfy its statutory load obligations.
The board will consider staff’s recommendation during its quarterly meeting Tuesday. The changes are contingent upon WAPA publishing its intent to join the RTO West in the Federal Register by Feb. 28.
Asked what SPP would do should other obstacles pop up before July, Bruce Rew, senior vice president of operations, said, “We would have to see what options we have that point to see if there’s some alternative that we can do to satisfy their situation.”
Rew said that about 88% of CRSP’s transmission obligations sink outside its zone, leaving the remaining 12% exposed to rate increases because of SPP’s treatment of PTP revenues. Low water levels in the Colorado River and the federal hydropower system also pose a risk, as the project’s transmission system was built to move federal hydro, he told stakeholders during the MOPC and SPC meetings.
Staff and other RTO West-interested parties, working together, agreed that CRSP would maintain PTP revenue from its reservations to pay for facilities in its transmission zone. This would apply to service delivered either inside or outside the SPP RTO footprint, with the contractual or statutory load obligations distributed solely to the project.
Because SPP’s tariff won’t allow CRSP’s replacement energy as an FSE, thus subjecting it to additional costs, staff and the other Western parties recommended the replacement energy be delivered to the CRSP zone and be subject to tariff provisions and charges. However, replacement energy delivered from CRSP’s zone will be eligible for an FSE; ineligible transmission purchases will receive auction revenue or transmission congestion rights.
CRSP sells about 5.3 GW of power to customers in Arizona, Utah, Colorado, New Mexico, Nevada, Wyoming and Texas over transmission facilities either owned or leased by WAPA.
SPP is also evaluating options to pull in the implementation schedule for its Markets+ offering in the Western Interconnection, an “RTO-light” market for those utilities not ready for full RTO membership. (See Governance, Resource Adequacy Key to SPP’s Markets+.)
The grid operator has projected an initial phase establishing market rules and tariff language will take about 21 months, followed by another three years to develop the day-ahead market.
The Western Resource Adequacy Program, a key part of the Markets+ offering, has attained funding commitments to move the program forward, and SPP has replied to a FERC deficiency letter over its tariff filing, the RTO’s Antoine Lucas told the SPC. Operations and forward-showing programs and systems will be implemented later this year, he said.
The SPC also approved a task force’s recommendation to add changes needed to include competitive upgrades to project monitoring processes as part of its business practice related to transmission projects.
The Transmission Owner Selection Process Task Force has reviewed 19 key areas to improve the competitive project selection process. It has reached consensus on 12 areas.
Xcel Energy (NASDAQ:XEL) on Thursday announced plans to develop long-duration storage systems at two retiring coal plant sites, part of an accelerating timeline for transitioning away from coal as a fuel resource.
The Minneapolis-based company has entered into definitive agreements with clean energy developer Form Energy to deploy its iron-air battery systems in a pair of pilot projects. Xcel said the storage technology will allow it to integrate more renewable energy into its system and maintain reliability as it continues to retire coal plants in the coming years.
“We are starting to get on a treadmill of shutting down our coal plants,” CFO Brian Van Abel told financial analysts Thursday during the company’s year-end earnings conference call.
The 10-MW/1,000-MWh multiday systems — capable of providing 10 MW of instantaneous power for up to 100 hours — will be installed at the Sherburne County Generating Station in Becker, Minn., and the Comanche Generating Station in Pueblo, Colo. Both projects are expected to come online as early as 2025 and are subject to regulatory approvals.
“Our partnership with Form Energy opens the door to significantly improve how we deliver carbon-free energy,” CEO Bob Frenzel said in a statement.
The company remains on track to reduce carbon emissions 80% by 2030 and to deliver carbon-free electricity by 2050, Frenzel said. Pursuing advanced storage opportunities will “balance” Xcel’s system needs.
Xcel said in October it would quit burning coal by 2031 when it retires the final Comanche plant. It plans to shutter the 1.1-GW Tolk Generating Station in West Texas in 2028, more than four years earlier than planned. (See Xcel Energy to Quit Burning Coal in 2030.)
The company reported earnings for the year of $1.74 billion ($3.17/share), up from 2021’s performance of $1.6 billion ($2.96/share). Earnings for the fourth quarter came in at $379 million ($0.69/share), compared to $315 million ($0.58/share) for the same period a year ago.
The quarterly earnings were on par with Zacks Investment Research’s consensus estimate; the quarterly revenues of $4.05 billion exceeded the Zacks estimate of $3.54 billion.
Xcel’s share price closed the week at $68.43, off just 13 cents from its pre-earnings close of $68.56.
New York said Friday that its latest offshore wind solicitation drew a record level of response for an East Coast state: more than 100 proposals from six developers for eight new projects.
The New York State Energy Research and Development Authority, which is shepherding the state’s offshore wind buildout, said it would post summaries of the proposals after reviewing them. After the solicitation closed at 3 p.m. Thursday, five of the developers publicly announced their intentions.
“The high volume of quality proposals from leading global energy developers is a testament to the state’s ability to attract strong competition and significant investments in New York’s clean energy economy, ports and the development of long-term domestic supply chain,” NYSERDA said in an email. “Following a rigorous evaluation period, NYSERDA expects to announce the awards in spring 2023.”
Among the state’s priorities in this third solicitation was development of an in-state supply chain. One of the oldest names in the power industry, General Electric (NYSE:GE), will potentially help make that happen.
GE said Thursday that if there were enough orders for projects in New York waters, it would build two factories in Coeymans, 130 miles up the Hudson River from New York Harbor: one for nacelles, and one for blades for the next generation of GE’s Haliade-X offshore turbine.
Ørsted and Eversource Energy (NYSE:ES) already have contracted with Riggs Distler to build foundation components at the Port of Coeymans for their Sunrise Wind project.
At the nearby Port of Albany, a manufacturing plant for turbine towers is planned by a partnership that includes Equinor.
The move would be a reversal of sorts for GE, which was born in 1892 in Schenectady, not far from Coeymans. The conglomerate, which is now dissolving, long ago moved its headquarters out of Schenectady and has been shrinking its footprint there and elsewhere in upstate New York for decades through cutbacks, closures, spinoffs and business sales.
“As a leading manufacturer and innovator in developing renewable energy technology, GE is ideally positioned to help New York secure its vision of becoming a leading manufacturing hub for offshore wind technology,” Scott Strazik, CEO of the new GE Vernova, the company’s portfolio of energy businesses, said in a statement. “Our proposal leverages GE’s unique and unparalleled expertise, resources and track record — including a 130-year legacy of manufacturing in New York — to make this vision a reality in a durable and sustainable way.”
Notices of intent to submit proposals in this third solicitation were due Dec. 1. NYSERDA said it received notices from Attentive Energy, Bay State Wind, Beacon Wind, Community Offshore Wind, Invenergy Wind Offshore and Vineyard Offshore Wind.
Publicly announcing their intentions Thursday and Friday were:
Vineyard Offshore, which proposed two projects — Excelsior and Liberty Wind — with a combined capacity of 2.6 GW. They would entail the largest investment to date in the U.S. supply chain infrastructure for the young offshore wind industry and provide more than $15 billion in direct economic benefits, Vineyard said. The proposal is backed by Copenhagen Infrastructure Partners, with is building Vineyard Wind I off Massachusetts in a 50/50 venture with Avangrid.
Community Offshore Wind, a joint venture of RWE and National Grid Ventures, which said it would create more than 4,600 jobs, deliver more than $3 billion in economic benefits and collaborate with GE on the factories as it developed a 1.3-GW wind farm.
Leading Light Wind, a partnership between Invenergy and energyRE, which proposed a wind farm generating up to 2.1 GW of power and offering up to $13.3 billion in economic benefits to the state. Leading Light noted that it is the only American-led wind developer in the New York Bight, and that the two partner firms are developing the $11 billion Clean Path NY transmission project with the New York Power Authority.
Equinor and BP, already partners on Beacon Wind 1 and Empire Wind 1 and 2 off the New York coast, which submitted a proposal for a 1,360-MW installation in the Beacon Wind 2 lease area. In a news release Thursday, Equinor and BP said their plan would complement the 3.3-GW combined output of the three other wind farms and generate more than $11 billion in new economic activity statewide.
Ørsted and Eversource, already partners on South Fork Wind and Sunrise Wind off the New York coast, which submitted multiple bids with different configurations. The common factor, according to the companies, would be billions of dollars in economic activity, strides for economic justice, prioritization of disadvantaged communities and minority- and women-owned businesses, and furtherance of the state’s climate goals. Ørsted and Eversource are also partners in Bay State Wind.
FERC on Monday conditionally accepted the New York Power Authority’s (NYPA) proposal to revise its formula rate template in response to its need to bring on large amounts of clean generation.
In its filing with FERC, NYPA sought to “update the allocation methodology for administrative and general costs and expenses as well as depreciation and net plant costs for general plant (A&G), incorporate a transmission rate incentive and a cost containment mechanism for the Smart Path Connect Project, and make certain technical and clarifying improvements to the formula rate template,” the commission noted in the order (ER23-491).
A political subdivision of the state of New York, NYPA is classified as both a “municipality” and “state instrumentality” under the Federal Power Act. The agency has no specific service territory, but it generates, transmits and sells electricity at the wholesale and retail levels throughout New York. Since the creation of NYISO, NYPA has recovered the cost of its transmission facilities through the NYPA Transmission Access Charge (NTAC), which is assessed to most loads in NYISO on a load-ratio share basis.
In seeking the revisions, NYPA asserted that, because of New York’s aggressive climate change initiatives, the organization’s “business focus and investment profile has shifted such that transmission development and construction are the dominant activities,” meaning that the current “single factor ratio allocator is no longer the appropriate allocation.”
NYPA proposed using a “multifactor modified Massachusetts Method of allocation,” arguing that the method “uses an equally weighted average of direct labor, net plant, and net revenue ratios” and “has broad regulatory acceptance and aligns with utility practice.”
The Municipal Electric Utilities Association of New York (MEUA) disagreed, contending that NYPA “failed to demonstrate how the adoption of a multi-factor allocation of A&G costs is just and reasonable.” MEUA argued that using the Massachusetts Method “will likely assign a larger portion of A&G costs to the transmission function recovered in NTAC rates and less to its other profit centers.”
NYPA responded that the changes are simple “nomenclature changes” that would not “have material impacts” nor impose “A&G costs on NYPA’s transmission customers,” providing the commission no reason to rule against the proposals.
However, FERC said its preliminary analysis indicated that NYPA’s revisions might not meet its standard for justness and reasonableness and set the issue to a settlement judge hearing.
“We note that the proposed Formula Rate Template revisions to implement the proposed change in the A&G allocator go beyond NYPA’s assertion that the revisions are only changes in nomenclature or a non-ratemaking change,” the commission wrote. “Further, the incorporation of an allocation methodology is not an ‘accounting change,’ as NYPA asserts. Specifically, the proposed changes to the Formula Rate Template provide for a changed allocation of A&G costs to ratepayers and provide for changes to the Formula Rate Template that allow for the use of new inputs for those costs.”
The commission also pointed out that the Massachusetts Method is typically used by holding companies to allocate A&G costs between the non-revenue generating holding company and its subsidiaries.
“NYPA, however, is a corporate municipal instrumentality and a political subdivision of the State of New York. NYPA’s proposal includes no support for its claim that the Massachusetts Method is appropriate for its specific circumstances and structure,” the commission said.
FERC accepted NYPA’s filing for the proposed rate revisions, making them effective Jan. 23 but subject to refund pending the outcome of the hearing. The commission encouraged parties to the proceeding to reach a settlement before hearing procedures commence within 45 days of the order.
A trend of job changes and departures in California’s three major energy agencies has continued during the past two months, as officials opted to leave CAISO, the Public Utilities Commission and the Energy Commission, allowing Gov. Gavin Newsom to appoint replacements.
At CAISO, Governor Ashutosh Bhagwat opted not to seek another term after 12 years of service. Bhagwat chaired the Board of Governors last year; his most recent term ended Dec. 31.
“It has been a truly fantastic 12-year run, like nothing else I’ve had in my life,” Bhagwat said during the board’s last meeting of the year Dec 15. “I’ve enjoyed it thoroughly.”
The University of California, Davis, law professor plans to leave the board by the end of February or as soon as Newsom names his successor
At the CPUC, Commissioner Clifford Rechtschaffen chose to leave when his six-year term ended in December. Former Gov. Jerry Brown appointed Rechtschaffen, his senior adviser on climate and energy issues, to serve on the CPUC beginning in January 2017.
“My term at the CPUC was very rewarding, but I just turned 65, and I’m ready to move on to the next phase in my professional life, including doing some teaching again,” Rechtschaffen, a professor at Golden Gate University School of Law in San Francisco and graduate of Yale Law School, said in an email to RTO Insider.
On Dec. 22, Newsom said he was appointing Karen Douglas, his senior energy adviser and former member of the CEC, to fill the open CPUC seat left by Rechtschaffen.
A month later, Newsom’s office announced that CEC Commissioner Kourtney Vaccaro had been appointed technical adviser to Douglas at the CPUC. Vaccaro had served on the CEC since March 2022. She previously worked as Douglas’ top adviser at the CEC, where she had held multiple positions including chief counsel.
Newsom must next appoint a new CEC commissioner. The position requires confirmation by the State Senate, as do seats on the CAISO board and CPUC.
The series of personnel changes are similar to those that occurred in December 2021 and early 2022, when Newsom chose Douglas as his energy adviser, named Vaccaro to the CEC and appointed his senior energy adviser, Alice Reynolds, as the new CPUC president.
Earlier in 2021, Newsom appointed CEC Deputy Director Siva Gunda as a commissioner and chose then-CEC General Counsel Darcie Houck to fill an open spot on the CPUC, after he selected CPUC Commissioner Liane Randolph to head the influential California Air Resources Board.
Once the latest round of changes is complete, all five commissioners of the CPUC, four of five CAISO governors and the majority of CEC commissioners will be Newsom appointees. The governor has sought to exercise control over the state’s energy institutions with an aggressive climate agenda and efforts to keep the lights on following rolling blackouts ordered by CAISO in August 2020.
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