Search
`
August 28, 2024

Posted on

DOE Launches $675M Program to Build Critical Mineral Supply Chain

The U.S. Department of Energy is consolidating its portfolio of critical mineral research and development programs in a bid to build a domestic supply chain of materials needed to decarbonize the national economy.

The new, wide-ranging Critical Materials Research, Development, Demonstration and Commercialization Application (RDD&CA) program will be funded with $675 million from the Infrastructure Investment and Jobs Act (IIJA).

In a request for information released Tuesday, the DOE said the program with the tongue-twisting abbreviation would “integrate, expand and accelerate DOE’s strategy to build resilient, diverse, sustainable and secure domestic supply chains that support the clean energy transition and decarbonize energy, industrial, manufacturing and transportation sectors while promoting safe, sustainable, economic and environmentally just solutions to meet current and future needs.”

According to the RFI, the RDD&CA program was authorized in the Energy Act of 2020, the bipartisan package passed in December of that year. The funding in the IIJA includes $600 million to be used over four years to promote critical materials recycling, innovation, efficiency and alternatives. Another $75 million will provide two years of funding for the development of a Critical Material Supply Chain Research Facility, also authorized by the Energy Act.

The projects using this combined funding will “make our nation more secure by increasing our ability to source, process and manufacture critical materials right here at home,” Energy Secretary Jennifer Granholm said in a press release announcing the RFI. “The [IIJA] is supporting DOE’s effort to invest in the building blocks of clean energy technologies, which will revitalize America’s manufacturing leadership.”

U.S. dependence on China and other foreign sources for the critical minerals needed for a range of clean technologies — for example, the lithium-ion batteries used in electric vehicles — has long been an easy target for Republican critics of President Biden’s clean energy goals. According to DOE, global demand for critical materials in general could grow by 400 to 600% over the next several decades, while demand for lithium and graphite, also used in EV batteries, could increase by as much as 4,000%.

China controls up to 80% of lithium refining capacity and 60% of battery component manufacturing, according to figures from BloombergNEF.

The need for building out a domestic supply chain for these critical materials has also provided an opportunity for bipartisan agreement — such as the funding for the RDD&CA in the IIJA.

An additional $140 million in the law is being used to support the development of “a new facility to demonstrate the commercial feasibility of a full-scale rare earth element and critical minerals extraction and separation refinery using unconventional resources,” such as coal waste and ash and acid mine drainage. An RFI for that project was released in February.

Critical mineral supply chains could also get a boost from advanced manufacturing credits in the Inflation Reduction Act, passed by the Senate on Sunday and now awaiting a vote in the House of Representatives. Battery cells and modules are eligible for credits of $10 to $35 per kWh of capacity, and a range of critical minerals will be able to take a 10% tax credit on their production costs.

In 5 Years

The DOE defines critical materials “based on [their] importance to a range of energy technologies and the potential for supply risk,” the RFI says.

The Critical Material RDD&CA will take a “material-by-material approach,” prioritizing the following minerals:

      • neodymium, praseodymium and dysprosium, used for magnets in wind turbines and electric and fuel cell vehicle motors;
      • lithium, cobalt, nickel, graphite and manganese, used for lithium-based batteries needed for energy storage;
      • platinum group metals used for catalytic converters in fuel cells and in electrolyzers for green hydrogen production;
      • gallium, used for light emitting diodes and wide bandgap power electronics in high voltage power generation;
      • germanium, used for microchips needed for sensors, data and control in smart manufacturing.

The new initiative will also be based on DOE’s core “pillars” for supply chain buildout, which include diversifying and expanding domestic critical mineral supplies, developing substitutes and promoting efficiency across the supply chain, as well as a circular economy approach to repair, reuse, recycling and remanufacturing.

The RFI lays out tentative program priorities for each of the critical mineral groups. For example, DOE envisions a range of research and development activities, pilots and demonstration projects for all aspects of the supply chain for neodymium, praseodymium and dysprosium, from mining and processing to recycling. A tighter focus is used for lithium, cobalt and other key battery minerals, with R&D and pilots planned only for mining, extraction and coproduction, in which multiple materials are produced together and bring in similar revenue streams.

DOE is looking for input and ideas on how best to organize and execute the program, with comments due by Sept. 9. The RFI includes a range of questions, from what criteria should be used to measure program success, to concerns about “the ideal timing and desirable features, terms and conditions of off-take agreements that would stimulate the private sector investment necessary” to achieve program goals.

Questions also focus on community benefits and engagement, including job creation, labor standards and workforce training, especially in disadvantaged and low-income communities.

How long it will take to develop a domestic supply chain for critical minerals is also a core concern. “What are the most high-impact opportunities to diversify supply, develop substitutes, increase material and manufacturing efficiency and drive reuse and recycle of critical materials for energy technologies … in the next 5 years?” the DOE asks. “What quantitative impact could the Critical Materials RDD&CA program have on domestic supply chains in 5 years?”

Posted on

PJM Sees Additional $603M ‘Data Center Alley’ Transmission Spend

VALLEY FORGE, Pa. — Dominion Energy (NYSE:D) plans $603 million in additional transmission spending to serve the unprecedented growth of data centers near Dulles Airport in Virginia, and FirstEnergy (NYSE:FE) is also reporting an explosion of data center demand, PJM officials said Tuesday.

“We’ve seen a lot of data center growth in this particular area, Loudon County,” Ken Seiler, PJM vice president of planning, told the Transmission Expansion Advisory Committee. “Seventy percent of the world’s Internet traffic flows through there. Over the last few months [data center demand has] ramped up tremendously. … We’re trying to a get a handle on what the projected growth rate and if it’s sustainable.

“We’ve never seen anything like this, being so concentrated,” he added. “And we don’t see any evidence it’s going to be stopping anytime soon.”

PJM designated Dominion to construct a $603 million “immediate need” project to address short-term reliability issues through 2025.

Data Center Alley (PJM) Content.jpgPJM and Dominion are attempting to serve unprecedented growth of data centers near Dulles Airport in Virginia by building new transmission between new Wishing Star and Mars substations. Existing data centers are identified in green; those in design/construction (red); in planning (dark blue) and inquiry stage (yellow). | PJM

Seiler said PJM is looking for “broader, regional-scale projects” to solve reliability problems beyond 2025, to serve anticipated load growth of more than 10,000 MW over next five years in the Dominion transmission zone and FirstEnergy zone in Northern Virginia and Frederick County, Md.

PJM announced the Dominion immediate need project last month, but provided the first cost data and details at Tuesday’s TEAC meeting. (See PJM Orders Dominion ‘Immediate Need’ Projects to Serve Load Jump in ‘Data Center Alley’.)

The project will include a new Wishing Star substation ($180 million); a new Mars substation ($167 million); 500-kV and 230-kV line extensions ($132 million); Brambleton substation upgrades ($12 million), Loudoun breaker replacements ($5 million); 230-kV Line #2079/Davis Drive upgrades ($15 million) and risk/contingency/escalation costs ($92 million).

The required service date is June 1, 2025.

Dominion is already constructing 11 “supplemental” transmission upgrades estimated at $197 million and two “baseline” transmission upgrades totaling more than $32 million to address load growth in the area, dubbed “Data Center Alley.”

Earlier in the TEAC, Dominion described solutions for 13 supplemental projects totaling $366 million, all but two of them the result of data centers or other “customer service” drivers.

Seiler said PJM and Dominion will be coordinating outages and using demand response and behind-the-meter generation to protect existing loads during construction. “Any and all things are on the table at this point,” Seiler said.

In addition, the PJM planning team will be “assembling late this month to consider what additional options do we have to determine what the long-term regional solution will be,” he added.

Data centers have grown from 30 MW each to 60 MW and “even as high as 90 MW,” said Seiler. Data center campuses have grown from 200 MW to as much as 600 MW each, he said. Seiler said data centers are only providing Dominion two year’s notice or less of when they want to begin operations.

Dominion’s load is growing by 3% per year for 2022-2027, all of it from data centers, while PJM’s load growth has been 0.4% or less annually. (See “Data Center Alley,” Dominion CEO: SCC Order for OSW Performance Guarantee ‘Untenable’.)

Cost Allocation

“It’s a little too soon to tell yet,” Seiler said when asked about cost allocation of the upgrades. “Right now, I don’t have those numbers available.”

But he noted that PJM rules require regional allocations for double-circuit 345-kV lines and above.

“The way our rules are set up today, anything double-circuit 345-kV and above — and you’re talking 500 [kV] here in some cases — will be allocated 50% on a load-ratio share,” he explained in an interview after the meeting. “… Then, the lower voltage stuff is all contained within the Dominion zone, or [based on] the distribution factors and where that power flows — so, whoever benefits from it. So, we have to run [analyses on] all that.”

The supplemental projects described Tuesday will be allocated to Dominion’s zone but also included in the base cases PJM uses to evaluate potential regional solutions Seiler said.

Posted on

Dominion CEO: SCC Order for OSW Performance Guarantee ‘Untenable’

Three days after the Virginia State Corporation Commission approved Dominion Energy’s (NYSE:D) 2.6-GW Coastal Virginia Offshore Wind (CVOW) project, the utility’s CEO, Robert Blue, said the 42% capacity performance guarantee in the decision is “extremely disappointing” and “untenable.”

The guarantee “would require DEV [Dominion Energy Virginia] to financially guarantee the weather, among other factors beyond its control, for the life of the project,” Blue said during Dominion’s second-quarter earnings call on Monday.

“Given a project of this magnitude, however, the commission’s performance guarantee creates an unprecedented layer of financial one-way risk to DEV and is inconsistent with the utility risk profile expected by our investors,” he said. “We plan to actively engage with stakeholders on the unintended consequences of that provision and are reviewing all public policy options including reconsideration or an appeal.”

The performance guarantee was part of the SCC decision approving a $78.7 million rate hike for the project while warning that the state legislature left ratepayers facing “unprecedented risks” of cost overruns and delays on the $21.5 billion project. (See related story, Virginia Regulators OK $79M Rate Hike for Dominion OSW Project.)

The performance guarantee was one of several measures the SCC put in place with the goal of controlling costs and protecting ratepayers. However, the commission acknowledged that the guarantee would not protect customers from cost overruns or abandonment costs.

Dominion is, in fact, projecting a lifetime capacity of 42% for CVOW over 30 years. But, Blue said, “there are obviously factors that can affect the output of any generation facility notwithstanding a reasonable and prudent action [of] the operator, including natural disasters, acts of war or terrorism, changes in law or policy, regional transmission constraints, or a host of other uncontrollable circumstances.”

He also noted that the SCC did not impose a performance guarantee when approving Dominion’s previous solar energy projects in 2021, saying they were not required for projects developed to comply with the 2020 Virginia Clean Economy Act. “The same outcome should be made here,” he said.

While the performance guarantee was clearly top of mind for Blue, the call also covered the potential impact for Dominion of the Inflation Reduction Act and its 15% minimum corporate tax, the utility’s upcoming plan to invest $1.5 billion in new solar, and the explosion of data centers and power demand in Northern Virginia.

Data Center Alley

Dominion has connected 70 data centers in its Virginia service territory since 2019, with more than 2,600 MW of capacity, Blue said. Now dubbed Data Center Alley, eastern Loudon County is the center of that growth, with more than 25 million square feet of data centers now online and another 4 million square feet in development, according to the county’s Department of Economic Development.

Data centers now represent 20% of Dominion’s electricity sales, and on top of that growth, Blue says the peak demand of individual data centers in the region is also growing. Further, once a new data center is online, he said, it is ramping up to full demand more quickly than previously.

“A single data center typically has demand of 30 MW,” he said. “However, we’re now receiving individual requests for demand of 60 MW or greater.”

PJM has predicted a 2,600-MW jump in peak demand from Dominion’s system by 2027 — a 12% increase from its load predictions a year ago and the same capacity as the CVOW project, which is scheduled to be completed in late 2026, Blue said.

In response, Dominion is planning to accelerate its plans for two new 500-kV transmission lines in the area, but the utility is facing potential transmission constraints in the future and has put a “pause on new data center connections while we work on solutions to alleviate the constraints as quickly as possible,” Blue said.

The utility is “reviewing the current capacity constraint analysis, including performing additional in-depth analysis substation by substation; engaging further with customers and other stakeholders … to pace new connections’ ramp-up schedules, and reviewing a variety of technical alternatives to address areas of concentrated load,” Blue said.

Dominion recently submitted plans for the first 500-kV line to PJM and expects to file for approval from the SCC “in the coming weeks,” Blue said. The utility also expects “to resume new connections in the near term, but how much and how quickly is still be determined,” he said.

But Buddy Rizer, executive director of economic development for Loudon County, said officials there are “still trying to figure out what it means. We don’t know how many of the 4 million square feet [in development] will have power.”

“Dominion surprised everyone” with the pause, which was announced late in July, he said. The pause is also causing uncertainty for additional projects in the early stages of development, he said.

Blue provided no information on how many projects might be affected by the pause in interconnections, but he said any slowdown is not expected to hurt electricity sales or revenue. The pause is also not affecting any data centers outside Loudon County, he said.

“We expect to overcome any headwinds by the acceleration of needed new-build transmission projects from later in the long-term plan to earlier,” which will increase capital investment and recovery in the utility’s five-year capital growth plan, he said.

Inflation Reduction Act

Responding to analyst questions about the IRA, Blue called the bill, passed by the Senate on Sunday, “still a moving target” as the House of Representatives prepares to consider the bill later this week, with a possible vote coming as soon as Friday. (See related story, Senate Passes Inflation Reduction Act.)

While additional amendments could still pop up, Blue rated the bill on a “really high level” as “pretty good — really positive from a decarbonization incentive perspective; really positive from a utility, customer perspective.” For example, Dominion and its customers stand to benefit from the IRA’s extension of the wind production tax credit and its nuclear and clean energy tax credits, he said.

Blue also predicted that the IRA’s 15% corporate minimum tax rate could have a negligible impact for the utility, which is already a “cash taxpayer” but is “shielded by our inventory of tax credits,” which have kept the company’s tax rate around 5.25%.

Applying the company’s tax credits to the 15% minimum tax rate could cut that figure even further to 3.75%, he said.

Nuclear and Solar

The SCC has also approved Dominion’s application to recover costs of close to $4 billion for extending the licenses of its North Anna and Surry nuclear plants. The two units at North Anna generate about 1.9 GW, and Surry’s two units 1.6 GW. Together, they provide about 30% of Virginia’s power, according to Dominion.

The utility is also preparing its next clean energy filing in the coming weeks, which will include about a dozen solar and energy storage projects. “The filing will represent at least $1.5 billion of utility-owned and [recovery] eligible investment, further de-risking our growth capital plan,” Blue said.

Earnings

The company announced a GAAP net loss of $453 million ($0.58/share) for the second quarter, compared with net income of $285 million ($0.33/share) for the same period in 2021.

Non-GAAP operating earnings for the second quarter were $658 million ($0.77/share), compared to $628 million ($0.76/share) for the same period in 2021.

According to CFO James Chapman, the difference between GAAP and operating earnings reflect the impact of economic hedging activities, gains and losses on nuclear decommissioning trust funds, charges associated with the sale of Kewaunee nuclear power station in Wisconsin, regulated asset retirements and other adjustments.

Posted on

Counterflow: 45Q: Money for Nothing

tesla powerwallSteve Huntoon | Steve Huntoon

Binge watching the earlier Star Trek series (highly recommended), there is this enigmatic, fantastically powerful entity, Q. Now it seems that the Manchin-Schumer package is going to create an enigmatic, fantastically powerful Q for the Internal Revenue Code.

Up until now this section 45Q has been a limited source of tax credits for carbon capture projects. BTW, 87% of the tax credit claims didn’t comply with IRS requirements.[1] As for direct grant subsidies for carbon capture, GAO recently reported that DOE spent $684 million in taxpayer money for six carbon capture coal projects of which zero are operating.[2]

Under Manchin-Schumer the 45Q spigot will be opened wide with taxpayers on the hook for carbon capture at power plants and elsewhere at a cost of $85/ton, and for direct carbon capture at a cost of $180/ton.[3]

Why would taxpayers want to:

  • pay twice the cost for one type of carbon capture versus another?[4]
  • pay a multiple of the tax credit cost of emission reductions from wind and solar generation of about $32/ton?[5]
  • pay many multiples the cost of carbon offset credits that range from $7-$22/ton?[6]
  • pay an even bigger multiple of the cost of emission reductions from LED lighting of $5/ton?[7]

Money — both public and private — is inherently limited for any and all purposes. Not spending efficiently inherently undermines the task at hand.[8]

The 45Q Cost Is Likely to Be Ginormous, Contrary to Congressional Claims

The Joint Committee on Taxation and the Congressional Research Service claim that new 45Q is going to cost U.S. taxpayers an average of $323 million per year over the next 10 years.[9]

That seems fanciful.

45Q supporters say they want to stop the massive shift from coal to natural gas and renewables,[10] the shift that is responsible for enormous reductions in carbon emissions.[11]

These supporters presumably know what they need, and they lobbied for the $85/ton level. And won. The Carbon Capture Coalition says: “The bill includes all of the Carbon Capture Coalition’s top legislative priorities for the 117th Congress.”[12]

This Coalition goes on to say that the bill could deliver 210-250 million tons of annual emission reductions.[13] So at $85/ton that would be about $20 billion per year.

Princeton’s ZERO Lab projects this level of annual emission reductions is reached in 2031, increasing rapidly to 450 million tons by 2035,[14] when the annual cost would be about $40 billion per year.

So let’s call it about $30 billion per year, and contrast that with the Joint Committee on Taxation/CRS claim of $323 million per year. Congress is understating taxpayers’ cost of new 45Q by a factor of about 100. A mere bagatelle.

One More Thing

There’s another problem with the credit to the extent it succeeds in heading off coal retirements that would otherwise occur. That’s because coal plants with carbon capture still emit about as much carbon as new gas plants without carbon capture.[15] So in those instances taxpayers would be paying an enormous subsidy for nothing.

Of course new (and existing) gas plants could install carbon capture. But the incentive is relatively small because (ironically) there’s so much less carbon to capture. New gas plants also will have to confront the prospect of low energy prices when so much other generation — wind, solar and now coal — will have low if not negative marginal costs.

My head hurts.

P.S. This discussion of 45Q isn’t intended to imply that the bill overall isn’t better than nothing, especially since the alternative might be nothing for a long time. But taxpayers deserve better when it comes to provisions like this one.

 

[2] https://www.gao.gov/assets/gao-22-105111.pdf, Table 1 on page 7. This table shows the Petra Nova project as operating, but as reported by GAO it was suspended in May 2020 and has not resumed operations. So DOE funding is 0 for 6. The GAO report reveals shocking mismanagement of taxpayer dollars by DOE.

[4] The Carbon Capture Coalition advocated these levels based on the relative costs of the two carbon capture technologies, https://carboncapturecoalition.org/wp-content/uploads/2021/09/Proposed-AJP-and-Infrastructure-Investments-1.pdf. This doesn’t make sense: Why pay twice as much to subsidize one technology just because it costs twice as much?

[5] https://www.catf.us/wp-content/uploads/2017/12/CATF_FactSheet_Cost_of_CO2_Avoided.pdf, adjusting the $48.76/ton value, based on a PTC of $23/MWh, for the current/future PTC of $15/MWh.

[7] The average light bulb in the U.S. is on 1.6 hours per day averaging 47.7 watts, which is 27.86 kwh/year. https://www1.eere.energy.gov/buildings/publications/pdfs/ssl/2012_residential-lighting-study.pdf. LED bulbs use 84% less electricity, cost about $2.50 each, and last 25,000 hours or more, for a lifetime of 42.8 years at 1.6 hours/day. Incandescent bulbs over a collective lifetime of 42.8 years would use a total of 1,192 kwh, which reduced by 84% is a savings of 1,001 kwh, which is 1 MWh. Reduced electric use reduces carbon emissions at 0.47 tons/MWh, https://www.catf.us/wp-content/uploads/2017/12/CATF_FactSheet_Cost_of_CO2_Avoided.pdf, so reducing emissions by 1 MWh at a cost of $2.50/bulb costs $5.30/ton.

[8] One example I’ve discussed before is offshore v. onshore wind where the former takes 11 times the subsidy for a given MWh of generation, which means we can get on average 11 times more onshore wind from a given dollar of subsidy. https://energy-counsel.com/docs/Offshore-Wind-Edifice-Complex.pdf. Ditto rooftop v. grid solar.

[9] Joint Committee on Taxation, https://www.finance.senate.gov/imo/media/doc/7.29.22%20Estimate%20of%20Manchin%20Schumer%20agreement.pdf, Title I, Subtitle D, Part 1, line 4, the total for years 2022-2031 divided by 10; adopted by the Congressional Research Service, https://crsreports.congress.gov/product/pdf/R/R47202, Table 5.

[10] https://www.eenews.net/articles/big-payout-more-co2-greens-split-over-dems-ccs-plan/, quoting the head of the Wyoming Mining Association: “From the industry standpoint, we see it as necessary to keep coal viable going forward.”

[11] Gas plants displacing coal plants are responsible for 90% of the carbon emission reductions in PJM. https://www.energy-counsel.com/docs/NRDC-Prescribes-More-Carbon-Emissions.pdf. Also, https://www.energy-counsel.com/docs/we-see-through-a-glass-darkly.pdf.

[13] Id.

[15] A study of Wyoming coal plants says that coal plant emissions after carbon capture would be 0.29 kg/kwh, https://pubs.acs.org/doi/pdf/10.1021/acs.est.1c08837, page 9876, which converts to 650 lbs/MWh. EPA data on new gas plants shows average carbon emissions of 777 lbs/MWh, https://www.epa.gov/system/files/documents/2022-01/egrid2020_data.xlsx, PLNT2016 tab, column PLCO2RTA, for sample plants Riviera Beach, Colorado Bend II and Cape Canaveral.

Posted on

ERCOT Briefs: Week of Aug. 1, 2022

Grid Operator has Set 38 Records this Summer — so Far

Records are meant to be broken, as the saying goes.

Just ask the folks at ERCOT, which has set 38 peak-demand records since May for all-time, monthly and weekend highs. The grid operator’s all-time peak has been broken 11 times, and it has exceeded the previous 74.8-GW record that dated back to 2019 on 33 days since June 12, as 100-degree Fahrenheit temperatures in Texas have become the norm.

ERCOT’s all-time record for average hourly demand now stands at 79.8 GW. The grid operator predicted in May that demand would peak at 77.3 GW during August. The Texas Interconnection has held up so far even as temperatures approach those set during the state’s record-breaking summer of 2011.

Interim ERCOT CEO Brad Jones said Wednesday in an interview with NBC News that his team is preparing for the possibility that this summer’s extreme heat could top 2011’s, the hottest on record.

“We are approaching a 2011 summer, and the grid is holding together, and I have high confidence that it will continue to do so throughout the summer,” Jones said last month.

Staff have continued to maintain their conservative operations posture, setting aside several thousand megawatts every day in operating reserves. ERCOT has issued eight operating condition notices, its lowest-level market communication. The most recent one expired last Thursday.

Staff have also deployed non-spinning reserves once this summer and asked for voluntary conservation measures three times. “We want to be respectful of Texans, so we will only call for conservation if we need it,” they said in an email to RTO Insider.

ERCOT’s weather forecast calls for increased rain chances and cloud cover this week as unsettled weather patterns take shape over the state. The forecast predicts highs of 100 or more are still likely over the next week, but “105+ degree highs will be much harder to come by.”

There’s still plenty of summer left, however, and with it, the chance for more records.

Greer Steps down from TAC

The Technical Advisory Committee has lost one of its more vocal and experienced members with last week’s announcement by Morgan Stanley’s Clayton Greer that he is leaving his firm to pursue an outside opportunity.

“For the amusement of some and the relief of many — and mainly because I have to — I will be stepping down from [TAC] after almost 20 years of faithful service,” Greer said in an email to the committee.

Greer praised those he sat alongside for nearly two decades (“You are some of the most professional individuals I’ve had the pleasure of working with.”) and hinted at the work that lies ahead for TAC and its relationships with ERCOT’s new Board of Directors and a revamped Public Utility Commission.

“The [stakeholder] process actually works to create a market that has, until recently, operated in an extraordinarily efficient manner to maintain reliability and save money for ratepayers,” he said. “I firmly believe it will get back there someday, but there will obviously be some bumps and bruises along the way. I have always been amazed at how we can be beating each other up over policy one minute and then enjoying lunch together the next.

“I’m confident that the wisdom and talent in TAC is more than up to facing the challenges coming quickly upon the market as crypto loads, storage, distributed load and generation resources, and renewable resources continue to be added to the grid at a rapid pace,” he continued. “My wish for all of you is that you have the chance to experience some of the stakeholder processes provided in the other markets. I think if you did, you would be amazed at how well our process here works for the benefit of all involved.”

“Clayton’s contributions to the ERCOT market and the stakeholder process have been invaluable over the years,” said TAC Chair Clif Lange, of South Texas Electric Cooperative. “His candor and depth of expertise are unmatched and will be greatly missed. When others were unable or unwilling to comment on controversial items, Clayton was never afraid to point out when the emperor had no clothes.”

Greer was an outspoken critic of emergency response service (ERS). He regularly voted against revision requests related to the market, which he and others see as a capacity market for a subset of market participants. During the July TAC meeting, he cast the lone opposing vote against a measure that raised ERCOT’s ERS budget to $75 million, saying, as he has before, that the grid operator was paying to dispatch a service participants had already deployed.

“I am most thankful that I was able to vote ‘no’ on an ERS [revision request] one last time,” he wrote in a postscript to his email. “That made my year.”

Peakers Return to Seasonal Ops

Garland Power & Light has notified ERCOT that it plans to suspend year-round operations at two gas-fired peaker units and return them to seasonal status.

According to the utility’s notification of suspension of operations (NSO) to the grid operator, the two Spencer Road Generating Station units will operate from March 1 to Nov. 30.

Spencer 4 has a maximum summer sustainable rating of 57 MW, and Spencer 5 has a 61-MW rating. The units date back to 1966 and 1973, respectively.

ERCOT is conducting a reliability analysis to determine whether the units are still needed for system operations.

The grid operator also recently approved Greenville Electric Utility System’s NSO to return a steam unit to seasonal operations. GEUS 1 will operate from June 1 until Sept. 30. (See “Steam Unit Goes Seasonal,” ERCOT Briefs: Week of July 4, 2022.)

The unit has a summer seasonal net max sustainable rating of 17.5 MW. It went into operation in 2010.

Posted on

Abbott Fills out Texas PUC with 5th Member

Texas Gov. Greg Abbott on Friday appointed long-time ExxonMobil employee Kathleen Jackson to the Public Utility Commission, bringing the agency that regulates the state’s electricity industry to its full five-person membership.

Jackson’s term expires in September 2027. She previously served on the Texas Water Development Board, where she was first appointed in 2014. She is a registered professional engineer and has a diverse background representing agricultural, environmental, industrial and wholesale-supply interests.

She has been a public affairs spokesperson since 1997 for an ExxonMobil refinery in Beaumont, where she lives. Jackson joined the company in 1977 after receiving a degree in chemical engineering from North Carolina State University.

Legislation last year expanded the PUC’s seats from three to five. All three previous commissioners left the PUC in the aftermath of the February 2021 winter storm that almost collapsed the ERCOT grid.

Posted on

Vistra Stays the Course Despite Q2 Loss

During his first earnings conference call as CEO of Vistra (NYSE:VST), Jim Burke said Friday that he continues to remain confident in the company’s value proposition, even as it turned in a major second-quarter loss.

The Texas-based company reported a loss of nearly $1.4 billion in net income for the second quarter, driven by an increase in forward power prices requiring it to record mark-to-market hedging losses for GAAP purposes. The company had a $35 million profit for the same period a year ago.

Adjusted EBITDA from ongoing operations came in at $761 million during the quarter, down from $854 million a year ago. Vistra uses adjusted EBITDA as a performance measure, saying it believes that outside analysis of its business is improved by visibility into both net income prepared in accordance with GAAP and adjusted EBITDA.

“I continue to remain confident … because we intend to remain focused on the four key strategic priorities we initially defined in” 2021, Burke told financial analysts.

Vistra management said then it intends to “unlock … earnings power” through:

      • its integrated business model of generation and retail that provides stability in volatile commodity markets;
      • managing liquidity needs by supporting its hedging strategy;
      • focusing on shareholder returns through an “upsized” $3.25 billion share repurchase program; and
      • executing on its zero-carbon Vistra Zero initiative.

Burke said Vistra had bought back $1.6 billion of its shares, representing about 14.6% of outstanding shares as of last November, and that the board of directors has authorized buying back an additional $1.65 billion in shares before the year ends.

“Our confidence in our outlook is reinforced by the upsizing of the share repurchase program,” said Burke, who was named in March to succeed the retired Curt Morgan as CEO, effective Aug. 1. (See Burke to Succeed Morgan as Vistra’s CEO.)

Vistra said it had brought online an additional 418 MW of capacity as part of its Vistra Zero program: the 260-MW DeCordova Energy Storage Facility, the 50-MW Brightside Solar Facility and the 108-MW Emerald Grove Solar Facility. Along with the 2,425-MW Comanche Peak nuclear plant, the projects bring Vistra Zero’s portfolio to nearly 3.3 GW, with plans to grow that to 7.3 GW by 2026.

Burke said Vistra is tracking ahead of its 60% greenhouse gas emissions-reduction target by 2030. “We anticipate Vistra Zero will more than replace the earnings of the retiring coal units,” he said.

The company also restored 98% of its 400-MW Moss Landing Energy Storage Facility in California, which has been shut down several times after battery overheating incidents. Burke said Vistra will eventually restore the world’s largest storage facility to full capacity.

Vistra shares dropped nearly 4% on Friday, closing down $1 at $24.62. Its stock closed at $24.74 on Monday.

Posted on

Dragos: Ransomware ‘More Impactful’ in Q2

Ransomware continues to pose a serious problem for critical infrastructure and industrial organizations despite a slight drop in the number of incidents in the second quarter of 2022, according to a report from cybersecurity firm Dragos released on Tuesday.

Dragos bases its quarterly ransomware assessments on information from “publicly disclosed incidents, network telemetry and Dark Web posting.” The most recent report identified 125 distinct ransomware incidents in the second quarter, down from 158 in the first quarter; 23 of the 37 ransomware groups targeting industry and infrastructure that Dragos monitors were active, as opposed to 22 in the previous period.

This latest report focuses in part on the churn witnessed in the ransomware ecosystem, most notably the apparent shutdown of the Conti cybercrime gang in May after its attack on the government of Costa Rica drew the attention of the U.S. State Department. According to reports from cyber intelligence companies, the gang gained a foothold in a computer system of Costa Rica’s Finance Ministry, subsequently spreading to multiple government agencies and leading officials to declare a state of emergency.

Conti announced it was shutting down operations in May and took all its websites offline the following month. Dragos attributed the drop in cyber incidents primarily to this shutdown but said it is highly likely that the group has not gone away for good. Instead, experts believe the gang has split into smaller subgroups that joined or started new criminal operations with other cybercrime veterans.

One example is the group Black Basta, which claimed responsibility for an attack against agriculture equipment manufacturer and distributor AGCO in May. Dragos said researchers suspect that Black Basta, which it called “significant [and] threatening,” is being managed by former members of Conti and REvil, a notorious gang responsible for last year’s attack on global meat company JBS and itself suspected of being an offshoot of the DarkSide hacking group that attacked Colonial Pipeline. (See Glick Calls for Pipeline Cyber Standards After Colonial Attack.)

Most of the global ransomware targets last quarter were in Europe; Dragos recorded 46 attacks, or 37% of the total, in the continent. North America came next, with 36 attacks — 29% of the total, down from 42% in the first quarter — followed by Asia with 32. South America, the Middle East and Africa were apparently much less enticing targets, with six, four and one attack, respectively.

Eighty-six of the attacks in the second quarter were directed against the manufacturing sector; automotive companies bore the brunt with seven attacks. The energy sector tied for second with food and beverage companies, at 10 attacks each.

Dragos said that the second quarter’s attacks, though less numerous, were “more impactful,” noting an attack on factories operated by Foxconn in Mexico that caused the facilities to be shut down for several weeks. Operational technology networks continue to be a major target, and the firm warned that even attacks that only manage to penetrate a company’s information technology can still “negatively impact OT operations” if the networks interact.

Dragos predicted that fresh ransomware groups will continue to pop up in the third quarter, either made up of veterans or newcomers to the cybercrime world. In light of “continuous political tension between Russia and Western countries,” the firm said it could forecast continued targeting of OT operations with “moderate confidence.”

Posted on

IRA ‘Better than Most’ Bills, Gas Industry Rep Says

The Inflation Reduction Act (IRA) has “a lot of positive elements” that would support the natural gas industry’s efforts to provide decarbonization solutions for reaching net-zero emissions by 2050, Rick Murphy, managing director at the American Gas Association, said Tuesday.

“We have been hard at work digging through this 800-page or so piece of legislation … and we do think that [it] is better than most other proposed legislation that has surfaced over the last year,” Murphy said during an E-Dialogues webinar on natural gas in a net-zero future.

Senate Majority Leader Chuck Schumer (D-N.Y.) and Sen. Joe Manchin (D-W.Va.) reached a deal July 27 on a climate package for the IRA, which passed the U.S. Senate on Sunday. (See Senate Passes Inflation Reduction Act.) Speaker Nancy Pelosi (D-Calif.) has promised that the U.S. House of Representatives will pass the legislation without changes.

There are measures in the IRA that Murphy said align with the AGA’s Net-Zero Emissions Opportunities for Gas Utilities report released in February. He lauded opportunities in the legislation to advance renewable natural gas and hydrogen through tax credits as “very positive.”

“There are incentives for combined heat and power, particularly if [CHP] is then matched up with renewable sources of natural gas,” he said.

The legislation represents a “watershed moment” for understanding the role of a diverse set of renewables for the U.S. energy grid, said Mary Moerlins, director of environmental policy and corporate responsibility at NW Natural (NYSE:NWN). “This is the first time that we’ve seen, at a federal level, the recognition of the importance of renewable gases and the development of them to decarbonize the pipeline delivery system.”

The IRA also represents the first federal legislation that references gas heat pumps (GHP), according to Murphy. Residential GHPs and GHP water heater purchases would be eligible for a tax credit.

GHP technology is not available for residential use in the U.S. yet, but some utilities are pushing for their introduction to the market “late next year, or early the following year,” Jerome Ryan, director of SaveGreen at New Jersey Natural Gas (NYSE:NJR), said during the webinar.

NJ Natural Gas is one of 14 organizations that founded the North American Gas Heat Pump Collaborative. “We formed that collaborative to try to introduce market transformation for GHPs so that they can come to market and start to help us on this decarbonization journey,” Ryan said.

The technology uses natural gas instead of electricity for the compression functions of a heat pump and can use water as a refrigerant instead of less environmentally friendly refrigerants often used in electric-based heat pumps.

“We see a huge leap forward in efficiency with the introduction of gas heat pumps,” Ryan said.

Carl Garofalo, director of sustainability solutions at Southern Company Gas (NYSE:SO), highlighted the bill’s weatherization rebates as an opportunity to address the energy efficiency of “entire homes, especially for low-income customers.”

He said those rebates will allow homeowners to combine end-use energy efficiency upgrades for furnaces or water heaters with whole-building envelope improvements.

“If you address the entire building and improve your insulation, doors and windows and then put that better equipment into it, it’s really going to move the needle,” he said. “We look forward to leveraging the dollars that are in that portion” of the bill.

Murphy called energy efficiency programs that are administered by U.S. gas utilities the “cornerstone” of any decarbonization strategy.

“Over the last 40 years, the number of residential gas customers has grown by 71%, and during that time, overall, the demand has remained relatively flat,” he said. “These efficiency programs have been extremely beneficial in helping to address the energy demand across not only the residential sector, but all the other sectors that [gas utilities] serve.”

Posted on

Startup EV Makers Inching Toward Profitable Production

Ohio-based Lordstown Motors (NASDAQ:RIDE) said it will begin manufacturing its light-duty electric truck model, the Endurance, in the next six to eight weeks, with deliveries to commercial customers in the fourth quarter. Sales to the public are expected later.

The company affirmed the start-of-production target during its second-quarter earnings call Aug. 4. It had announced last November that it would push back production to the third quarter of this year, citing supply chain problems.

Last week’s announcement was just the latest twist in a long road to manufacturing and profitability for the startup, putting the company in the lead of a small parade of entrepreneurial groups struggling to engineer and manufacture novel electric vehicle models, while the behemoth, “legacy” carmakers prepare to mass produce their own models.

General Motors (NYSE:GM), for example, announced in June that it was slashing the sticker price of its Chevy Bolt by $6,000 to a starting price of $25,600. That price cut, which made the Bolt the least costly EV, came before the latest effort by Congress to pass legislation addressing climate change.

Chevy Bolt (Chevrolet) Alt FI.jpgChevy Bolt | Chevrolet

The Inflation Reduction Act, approved by the Senate on Sunday and in line for approval by the House of Representatives this week, would renew the current $7,500 tax credit for the purchase of a new EV but without the limit on the number of vehicles sold. It would also be available at the point of sale rather than in the consumer’s next tax filing.

The credit runs through the end of 2032. The legislation would require that the vehicle be made in the U.S. and that materials in the battery must come from the U.S. or countries with which the U.S. has free-trade agreements. But those provisions would not fully kick-in until 2024.

In addition to announcing that production is on-track, Lordstown last week reported an operating profit of $61.2 million, largely because the company completed the sale of its 6.2 million square-foot production facility, a former GM assembly plant, to Foxconn for $230 million. The company is still looking for more capital.

The sale of the plant is at the center of a joint venture with Foxconn, making Lordstown the Taiwanese company’s “primary development partner in North America,” according to Lordstown.

“I am excited by my expanded role as CEO of Lordstown and the joint venture with Foxconn,” said Edward Hightower, who took over leadership of the company July 12. “In Q2, we made significant progress towards our plan to launch the Endurance in Q3 of 2022 and begin sales in Q4.

“We look forward to getting the Endurance into customers’ hands, as we think they are going to love it. We have also started pre-development work on the first vehicle under our joint venture. Our team is excited to create and launch future products while leveraging the Foxconn EV ecosystem.”

Fisker

A future competitor to Lordstown, Fisker (NYSE:FSR) also reported second-quarter results last week. The company announced it has contracted with Foxconn to build an electric SUV it will call the PEAR at the former Lordstown plant beginning in 2024. The price will begin at just below $30,000. The company expects the car to qualify for the federal tax credit.

The company plans to build a minimum of 250,000 Pears and has already received 4,000 requests for reservations.

Fisker Ocean (Fisker) Alt FI.jpgFisker Ocean | Fisker

Fisker has also logged 5,000 reservations for its first vehicle, the Ocean, a larger, luxury SUV that is also not yet in production. The company said it expects to begin producing the car with a contract manufacturer in November at a plant in Europe. Consumers paid a $5,000, nonrefundable deposit to make the reservations.

CEO Henrik Fisker, a Danish-American auto designer based in Los Angeles, said the company has built 55 prototypes of the Ocean and that crash tests of some of the vehicles indicate it will achieve a five-star rating, the highest possible, next year when the National Highway Traffic Safety Administration conducts its own tests.

Mr. Fisker added that he had driven the car on a high-speed track in Italy, as well as on city streets in Los Angeles.

“I can promise anybody this is going to be one of the best handling SUVs in the world, hands down, specifically when you combine the actual cornering and driving ability and performance compared with comfort,” he said. “It’s easy to make a super sporty car, and it’s easy to make a super comfortable car, but combining the two for everyday use is super difficult, and we have really achieved this.”

Canoo Motors

Canoo Motors (NASDAQ:GOEV), based in Justin, Texas, which defines itself as a technology company first and carmaker second, reported its second-quarter results Monday afternoon, revealing it has already logged more than 10,000 orders.

Canoo Pickup Truck (Canoo) Alt FI.jpgCanoo Pickup Truck | Canoo

The company is targeting commercial as well as individual consumers with a “lifestyle vehicle” available in 2023. The company has already built 89 prototype vehicles, some of which have already been used as commercial delivery vehicles, while others have been used in crash testing.

During the analyst call, Ramesh Murthy, chief accounting officer, said Walmart has ordered 5,000 vehicles from the company for use as delivery vehicles. The contract includes an option to buy 10,000 more.

NASA has also awarded Canoo a contract to build an EV for the Artemis program to return humans to the Moon in 2025, and the U.S. Army has selected the company’s EVs for testing in its program to electrify its vehicle fleet.

Canoo reported it spent $115.5 million during the quarter on research and development, Murthy told analysts.

“We have customers; we have access to capital. We have a strategy that benefits our company and shareholders against the backdrop of this global economic condition. We are making it happen,” he said.

Executive Chairman and CEO Tony Aquila said all versions of the vehicle will be built on the same platform, which has only 1,800 parts currently and will have 1,600 parts when commercial production begins.

“Over the past five quarters, we have worked to guide the market to understand our different approach and that we are a technology-first-centric advanced mobility company, and that we understand true total cost of ownership because we come from the service maintenance repair technology side of the industry.”

The company appears to have a “Made in America” focus.

“During the quarter we saw many legacy OEMs struggling with quantity … and their reliance on Chinese-made parts and technologies. … The majority of our focus to date has been on technology and real product validation. Our decision to prioritize domestic manufacturing at the end of last year was the right move.”