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November 5, 2024

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ERCOT, Texas PUC, Gas Industry Agree Valuable Lessons Learned

AUSTIN, Texas — ERCOT staff and state regulatory representatives agreed the electricity and gas industries have learned valuable lessons from the February 2021 winter storm, lessons that are now being put into place to winterize and protect critical facilities in the supply chain.

“One of the big lessons we learned coming out of [Winter Storm] Uri was we can’t be stagnant,” Thomas Gleeson, the Public Utility Commission’s executive director, said during the Texas Reliability Entity’s Extreme Events Resiliency Workshop on Sept. 20-21.

Texas RE staff moderated a series of discussions on grid resilience topics with industry experts during the two-day event.

Gleeson chairs the Electric Supply Chain Security and Mapping Committee, which was created by legislation following last year’s storm to prevent mistakenly shutting down critical gas infrastructure during a load shed. The group completed the map’s first version in April, easily beating its Sept. 1 deadline. It identified 65,000 facilities, 60,000 miles of electric transmission lines and 21,000 miles of gas transmission pipeline.

While the mapping committee met in private because it is dealing with critical infrastructure, it did hold two public meetings.

“The goal [of the open meetings] is to rebuild public trust. We need to be out there talking to folks about what we’re doing, why the map has to stay secure and private,” Gleeson said. “It’s important for us to explain the work that we’re doing to ensure to Texans that we are providing them with the best grid that we can.”

Working on a separate path, PUC staff developed expanded weather preparation rules for generators and transmission utilities to ensure reliability during both summer and winter weather events. The PUC adopted those rules on Thursday.

Natalie Dubiel, an attorney for the Texas Railroad Commission, thanked the mapping committee for its work, which started a six-month clock for the regulatory body to adopt its own weatherization rules. The RRC, which oversees the state’s natural gas and oil industries, had its rule in place Sept. 19, beating its deadline by almost six weeks.

“The rule is fairly dense,” Dubiel said. “We did want to get it in place before that timeline just to give our operators a chance to prepare for this upcoming winter, particularly given that this is a whole new area of jurisdiction that the Railroad Commission did not have.”

Rule 3.66, as it’s known, applies to gas supply chain and pipeline facilities. Their operators must implement “weather emergency preparation measures” by Dec. 1 each year that ensure sustained operations during a weather emergency and correct weather-related forced stoppages that prevented sustained operation because of previous weather emergencies.

Dubiel said the RRC broadened the definition of energy emergency to cover more than just load-shed events.

“There may be times the grid is constrained and demand is high. We want gas flowing,” she said.

David Kezell 2022-09-21 (RTO Insider LLC) FI.jpgDavid Kezell, ERCOT | © RTO Insider LLC

“We’re better prepared than we were last year,” said ERCOT’s David Kezell, who joined the grid operator as its first director of weatherization and inspection last October.

ERCOT developed an inspector training program, hired inspectors and sent them out into the field before last winter to check on generators that failed during the 2021 storm. Kezell said market participants demonstrated “high levels of compliance” last winter. Going forward, inspections will occur before both the winter and summer seasons for generation resources and transmission facilities.

“This really is a team effort. … Where the rubber meets the road is in the facilities and the people that are doing the work,” he said. “We’ve got a new structure in terms of state law. The actual technicians have to do a good job of doing their job, so we applaud them for the effort that they’re going through.”

Cold Weather Standard Nears Approval

Mark Henry, Texas RE’s director of reliability services and registration, said he expects the NERC Board of Trustees to approve the EOP-012-1 (extreme cold weather preparedness and operations) standard during its October meeting, with FERC approval then coming before year-end.

The standard passed NERC’s membership on its second attempt earlier in September. The standard, part of NERC’s Project 2021-07 (extreme cold weather grid operations, preparedness and coordination) in response to the mass outages caused by the February 2021 winter storm, was posted for comment in May. (See “Updates on Standards Projects,” NERC Board of Trustees/MRC Briefs: Aug. 17-18, 2022.)

“There’s a little bit more bite and specificity to [the standard],” Henry said.

The standard revises some requirements instituted after the 2019 cold weather event involving MISO and SPP. It adds freeze-protection criteria to freeze-protection systems; a five-year review of minimum temperatures, cold-weather plans and freeze-protection measures; and corrective action plans for freezing events.

It will take effect April 1, 2023.

Work continues on a second standards authorization request for the 2023/24 winter, Henry said. This phase of Project 2021-07 would set requirements for identifying cold-weather critical components and systems for each generating unit and implementing freeze-protection measures; determining the generating capacity that can be relied upon during “local forecasted cold weather”; and protecting critical natural gas loads from load shed.

Early Projection for Mild Winter 

ERCOT’s in-house meteorologist, Chris Coleman, promised his audience they will eventually see a respite from one of Texas’ hottest summers on record. Winter is coming, he said, but it has a greater potential to trend warmer than colder.

The potential of a third-straight La Niña winter is one reason why. Coleman said that since 1950, there have been 26 La Niña winters in Texas. Fourteen of those have fallen in the warmest third of all winters, but three have fallen in the coldest third.

Chris Coleman 2022-09-21 (RTO Insider LLC) Alt FI.jpgERCOT’s Chris Coleman reviews the 2022 summer with workshop attendees. | © RTO Insider LLC

 

“There is some correlation between La Niña and the unlikelihood of a cold winter,” he said. “There’s no correlation between La Niña and a winter with an extreme cold event.”

It can happen, though. Since 1894, Dallas has had 14 winters where the temperatures have reached 5 degrees Fahrenheit or lower. Two of those occurred during La Niña.

“When I say it’s going to be a warm winter, there could still be a day or two, or a week or two, that’s extremely cold,” Coleman said. “You can get some pretty dramatic changes in the winter.”

June through July was the second hottest period for Texas, topped only by 2011. Those months were also the 39th driest on record — 2011 is No. 1 there too — and the fifth driest this century. Austin has recorded 68 100-degree days this year, San Antonio 58, Dallas 47 and Houston 22. One more 100-degree day in Austin would move 2022 into second place for days over the century mark, behind only 2011.

“If you’re getting close to records, you might as well just break the record,” Coleman said. “In fact, I get upset when it’s 99 degrees. ‘Just give me that 100. It’s not like it feels that much different.’”

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NJ BPU Approves Easement Plan for 1st OSW Project

The New Jersey Board of Public Utilities (BPU) on Wednesday approved an easement sought by the state’s first offshore wind project, Ocean Wind 1, to run transmission onshore through Ocean City to a substation, removing a key obstacle to the project.

With little comment, the five-member board unanimously approved an order that said developer Ørsted had demonstrated that the easement for transmission to run underground across land developed with money from the state Green Acres program was “reasonably necessary” to the construction and operation of the wind project. Green Acres funds are awarded to develop parks and open space. The order also granted the project a series of consents needed to obtain environmental and other permits.

The BPU’s approval, in the face of opposition from Ocean City’s governing body and residents, opens the way for Ørsted to seek easement and permit approval from the New Jersey Department of Environmental Protection (DEP), which is needed for the project to get federal backing. Ocean City had asked the BPU to delay the project while an administrative hearing and environmental studies of the cable route are conducted.

However, the project still needs the BPU’s approval in a second case, in which the developer needs permission to run transmission on land owned by Cape May County and that government’s consent on permit approvals.

The Ocean City case was first test of a controversial law enacted in July 2021 that allowed offshore wind developers to site power cables and equipment on public land regardless of local or state government opposition. The outcome of the case could provide a roadmap for other projects facing similar opposition in the future.

The reasonably-necessary standard was set out in the law, which specifically prohibited municipal and county governments, and state agencies, from preventing the placement of offshore wind equipment if the BPU gave its approval. (See NJ Lawmakers Back Offshore Wind Bills.) Several speakers at public hearings into the easement argued that the law effectively disenfranchised local officials and removed their authority to make decisions on issues that would affect their residents.

Ørsted is seeking a 30-foot-wide easement running the length of the island on which the city is located, which is about 8 miles long. A 275-kV line will connect Ocean Wind’s turbines, about 15 miles offshore, to the PJM grid at a substation sited on a now closed coal-fired power plant in neighboring Upper Township.

Without the law in place, and the BPU’s power to override local authorities, the project would have needed Ocean City’s consent for several permit approvals, including Waterfront Development, Wetlands Act of 1970, Coastal Area Facilities Review Act, Flood Hazard Area Control Act and Freshwater Wetlands Protection Act, and a Tidelands License, among other permits, according to the order.

Those permits are required for the DEP to “issue a federal consistency determination, which is a prerequisite for Bureau of Ocean Energy Management’s (BOEM) approval of the project’s construction and operations plan,” according to the order.

The 1,100-MW Ocean Wind project, which was approved in 2019, was the first of three approved offshore wind farms by the state so far. The BPU has also approved the 1,148-MW Ocean Wind 2 and the 1,510-MW Atlantic Shores, and the state expects to hold a third solicitation, for 1,200 MW, in the first quarter of 2023. (See related story, NJ Seeks Stakeholder Input for 3rd OSW Solicitation.)

The BPU’s ruling came the day before it holds two online hearings on another easement for an underground transmission line from the Ocean Wind 1 project across land owned by Cape May County. In that case, Ørsted’s petition says Cape May officials have not responded to its efforts to secure approvals.

Public Opposition

Although the Ocean Wind project is strongly supported by government officials and embraced by environmentalists, Ocean City opposes the project, as do local residents, who say the nearly 100 turbines will tarnish their ocean view. Also opposed are commercial fishermen, who say it will hurt their ability to fish, and tourism interests, who fear fewer visitors will come to enjoy a shoreline with turbines on the horizon. (See Ørsted NJ Wind Project Faces Local Opposition.)

The board’s approval Wednesday in the Ocean City case followed two public hearings into the easement application and an online session in which Ørsted and the city presented oral arguments. Speakers in the two hearings opposed to the easement focused as much on their concerns about the project as a whole, and offshore wind in general, as on the details of the easement and how it would affect the community.

Mike DeVlieger, a former Ocean City councilman, said that “overwhelmingly our community is against this, and it’s not even close.” He added that “this presents medical concerns; it can present environmental concerns.”

But environmentalists argued that the threat of climate change is so serious that radical action was needed, and any potential disruption would not reach an unacceptable level.  

Dorothy F. McCrosson, solicitor for the city, argued that Ocean Wind 1 could avoid the conflict with Ocean City if it opted to send the transmission through nearby Egg Harbor instead. In that scenario the beach and wetlands would not be disturbed and the streets would not be excavated.

She said the alternative route would present no disruption to Ocean City, but Ørsted had dismissed it earlier because it would be more expensive.

But attorney Gregory Eisenstark, representing Ocean Wind 1, said that once the construction was complete, there would be minimal disruption because the lines would be underground. He argued that the main reason that the city opposes the project “has to do with Ocean City’s overall objection to offshore wind.”

He argued that under the reasonably-necessary standard set out in the law, the route chosen by Ørsted just had to be a reasonable one. “It doesn’t have to be the best one. It doesn’t have to be the lowest-cost one.”

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ISO-NE Weighs in on FERC’s Proposed Interconnection Changes

ISO-NE repeated a familiar refrain on Wednesday while presenting its initial take on FERC’s interconnection Notice of Proposed Rulemaking: give us flexibility and make sure our region’s particular needs can be met.

The rulemaking is intended to help free up what FERC commissioners see as a backlog slowing the development of new generation and in turn threatening reliability. (See FERC Proposes Interconnection Process Overhaul).

But in a presentation to NEPOOL’s Transmission Committee on Wednesday, ISO-NE made clear that it sees its own interconnection challenges as less daunting than what some of the other, larger RTOs are facing.

“New England does not currently suffer interconnection queue backlogs to the same extent as other regions,” said Al McBride, the grid operator’s director of transmission strategy and services.

ISO-NE is still readying its formal comments, but in the preliminary ideas presented to stakeholders, McBride emphasized that the proposed changes to the interconnection process for RTOs are “expansive” and would involve trade-offs about how grid operators spend their time.

In recent years, McBride noted, ISO-NE has integrated its interconnection planning with the Forward Capacity Market, launched the Elective Transmission Upgrades project, and adopted clustering procedures which let projects be evaluated together.

Those changes shouldn’t be overwritten by whatever comes out of the NOPR, the grid operator is arguing.

“It will be important to explain that it will be preferable to retain some aspects of these enhancements under allowances for regional differences, which is consistent with the NOPR,” McBride said in his presentation.

For example, the NOPR calls for a new cluster study process, which in some ways clashes with what ISO-NE is already doing.

Another point of the NOPR, which is likely to be among its most contentious, is that the proposed rule would carry with it new firm deadlines for interconnection studies and penalties for transmission providers if they aren’t met. Those new features would replace the existing “reasonable efforts” standards.

ISO-NE is wary of the proposed new penalties for several reasons: McBride warned that adding a punishment could introduce the potential for litigation or administrative processes that could distract and divert resources away from conducting the actual studies at the heart of the interconnection process.

And he also noted that sometimes delays aren’t the fault of ISO-NE.

The deadline for comments to FERC on the NOPR is Oct. 13, with reply comments due on Nov. 14.

NEPOOL counsel also published draft stakeholder comments on the NOPR last week, with the theme the same: allow for flexibility.

“NEPOOL urges the Commission to allow for variations from the pro forma procedures and agreements in any ISO/RTO compliance with and implementation of the final rule, to the extent justified under the independent entity variation standard,” the comments read.

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NYC Traffic Congestion Pricing Aims to Tackle Climate, Enflames Emotions

New York City is on the verge of implementing the nation’s first traffic congestion pricing scheme, titled the Central Business District Tolling Program (CBDTP), which will seek to generate revenue and reduce pollution across the city.

NYC Central Business District Tolling Program (MTA) Content.jpgMTA’s Central Business District Tolling Program Area | MTA

The CBDTP would electronically charge motorists up to $35 when entering Manhattan below 60th Street to reduce traffic while raising revenue to fund improvements to the Metropolitan Transportation Authority’s (MTA) subway and bus systems.

Passed by the New York State Legislature in 2019, the plan was originally slated to be implemented in 2021, but lack of federal environmental guidance, the COVID-19 pandemic and a changing governorship because of political scandals delayed the project until at least 2024.

The MTA, which has been slow to recover from the unprecedented drop in ridership during the pandemic, estimates that the CBDTP will generate $1 billion annually.

Despite potential economic benefits and grassroots pressure to act on climate change, there has been fierce opposition to the plan, specifically around the proposed costs and the shifting of pollution to the city’s outer boroughs.

History & Details

A congestion pricing scheme for the city was first proposed in 2007 as a disincentivizing fee that would reduce traffic and generate revenue but was only formally approved in the state’s 2019 budget.

The legislation was initially light on details but created exemptions for emergency vehicles, residents who reside inside the tolled zone but earn less than $60,000, and disabled persons.

One critical detail that was known about that the CBDTP was that it would operate through electronic sensors connected to the E-ZPass system.

Although officials have not settled on a fee scale, authorities have stated that E-ZPass holders entering the CBD at peak times would pay between $9 and $23, while those without one and pay the toll by mail can expect to spend as much as $35 during peak times. Discounts would be enabled during off-peak and overnight periods.

The CBDTP’s biggest gaps are around how different types of vehicles, particularly delivery trucks, private taxi services such as Uber and the famous yellow taxis, would pay these tolls. Critics have also complained about the lack of distinction being made between commercial and noncommercial vehicles.

Some proposals that may allay these concerns, but are still under consideration, include setting fee caps on vehicles that have entered the CBD more than once, creating further exemptions for certain classes of passenger vehicles, or even having the MTA’s own buses pay the toll.

Despite these concerns, supporters are delighted by the prospect that the city may implement a decades-long quest to unclog its jammed streets. They and the MTA have pointed to Stockholm, London and Singapore as examples of how congestion pricing schemes not only reduced traffic but also reduced greenhouse gas emissions.

According to the Federal Highway Administration (FHWA), Stockholm’s congestion program resulted in a 25% reduction in congestion, a nearly 15% reduction in emissions and at least a 6% increase in use of public transport, while London’s program led to a 20% drop in emissions, a 30% increase in average vehicle speed and a 25% drop in traffic.

The momentum behind the CBDTP briefly stalled in anticipation of an environmental review that needed to be conducted by both the federal government and state agencies but was delayed during the Trump administration.

Environmental Assessment

The FHWA’s long-awaited environmental assessment (EA), released Aug. 10, evaluated the effects of the CBDTP across seven different tolling scenarios.

The EA found that all scenarios would reduce traffic into Manhattan by as much as 20% for personal vehicles and up to 80% for trucks, though this could lead to a 2.6% increase in trucks driving outside the borough, including through North Jersey.

NYC Traffic (NYMTC Hub Bound Travel Data Report) Content.jpgTotal Number of People Entering Manhattan CBD in 2019 | NYMTC Hub Bound Travel Data Report

The report promisingly found evidence that New Yorkers would ditch their personal vehicles for public transportation and that certain scenarios resulted in reductions of as much as 12% of pollution in the CBD.

The EA was required because tolls would be collected on federally funded roads, and a study needed to examine any impacts that the program would have on disadvantaged communities.

In this regard, the report found that certain environmental justice communities could experience reductions in traffic, though these would be offset by traffic increases in areas where toll-dodgers shifted their driving.

The EA’s findings gave some congestion pricing supporters pause as they feared that localized concerns would narrow the CBDTP, which they believe is critical to reducing the city’s overall pollution, tackling the climate crisis and providing funding to a mass transit system still recovering from the pandemic.

The EA did in fact create considerable public backlash, particularly from those located in the South Bronx, Staten Island, Nassau County and Bergen County, N.J., who would feel the brunt of both the environmental and economic consequences from the CBDTP.

In fact, the backlash was so strong that the EA’s public commenting period was extended until Sept. 23 to allow more time for public input after being initially slated to conclude on Sept. 9.

Detractors & Supporters

The debate rages on, and New Jersey Gov. Phil Murphy (D) was the latest contributor.

Murphy said he was opposed to the CBDTP because the recent EA was too “long and complex.” He also said residents had little time to digest its findings nor had any involvement in the planning process, yet they would suffer from the costs without receiving “any direct benefit from the revenues.”

The governor, however, remains supportive of a congestion pricing scheme intended to reduce traffic and emissions. But he alleged that the CBDTP’s primary goal is “revenue production.”

Similarly, New York Mayor Eric Adams (D) supports congestion pricing, but he recently said that the city had “very little input” on the program, and it required more exemptions for disadvantaged and disabled citizens, who he claims will struggle to afford the tolls.

Opposition has forcefully come from U.S. Rep. Nicole Malliotakis (R), who represents New York’s 11th congressional district covering Staten Island and Southern Brooklyn. She said at one recent public hearing that the CBDTP “is being jammed down the throats of the people.”

These sentiments were echoed by U.S. Rep. Josh Gottheimer (D), who represents New Jersey’s 5th congressional district covering parts of North Jersey, including much of Bergen County. Gottheimer said in a hearing that the plan will “drain our families’ pocketbooks” while doing “nothing to actually help the environment or ease congestion.”

Another House Democrat, Ritchie Torres, who represents New York’s 15th congressional district covering the South Bronx, said in a statement that he is concerned about “any plan that threatens to intensify diesel truck traffic on the Cross Bronx Expressway” because it “would raise serious concerns about public health and racial equity.”

Despite fierce opposition, the CBDTP still has supporters.

Brooklyn Borough President Antonio Reynoso (D) recently said at a hearing that “for our city to continue to function, we must get people out of their cars and back onto reliable public transportation.”

Meanwhile, New York Gov. Kathy Hochul has remained supportive of the CBDTP, having said during the Democratic gubernatorial primaries earlier this year that she “supports congestion pricing 100%” and has shown little sign of working against its implementation.

Additionally, many participants during the public commenting period expressed support for the plan because of the potential reduction in traffic, increased speed of public transport, improved air quality in many parts of the city and reduced pollution.

Supporters also countered their detractors by claiming that the amount of people who will shift to mass transit, as well as the upgrades to these systems, will offset localized concerns.

Outlook

Without significant pushback, however, the CBDTP is poised to be approved in mid-2023 and implemented by early-2024.

With the recent completion of the FHWA’s review and the conclusion of the public commenting period, the next steps will be for MTA to share the public’s feedback with the FHWA, which is then expected make a formal decision on the EA in January 2023.

If the FHWA’s final review finds no significant impact from the CBDTP stemming from the public comments, a six-person Traffic Mobility Review Board (TMRB) will finalize toll rates and detail how a credit system will be implemented.

Should the FHWA find any issues, however, it may require a more thorough environmental impact statement, which is what some critics, such as Murphy, have been requesting. Ultimately, the final arrangement will be voted on by MTA board members.

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Report Blames Antivirus Software for EMS Deadlock

Software designed to provide computer security had the ironic consequence of rendering an electric utility’s essential systems unusable for over a half-hour, and then for more than an hour the following weekend, according to a new Lessons Learned report published by NERC on Wednesday.

The incident outlined in the Loss of Energy Management System Functionality due to Server Resource Deadlock document began with an antivirus software suite installed on production servers for the utility’s energyy management system (EMS). When exposed to certain malware signatures found in the EMS production environment, the software deadlocked — meaning that a process or thread entered a waiting state that it could not exit because it needed resources in use by another waiting process.

As with all of NERC’s Lessons Learned reports, specific details about the event — including the location, date, utilities and regional entities involved — were not provided in order to keep the focus off individual companies. The goal of the documents is not to identify wrongdoing or deficiencies but to educate entities on potential issues that may not be covered by existing reliability standards. At the same time, NERC emphasizes that “implementation of these lessons learned is not a substitute for compliance with” NERC’s standards.

The “flaw was latent in the engine” of the antivirus software, but the registered entity’s staff did not detect it in testing because the production servers had “extremely high file I/O [input/output]” compared to the test environment, resulting in “more opportunity for the antivirus engine to deadlock.”

After the servers locked they were “effectively … unavailable to operators” and left the entity unable to control bulk electric system elements at affected substations. As a result, operators could not calculate reporting area control error (ACE), control performance standards, or implement automatic generation control. In addition, the entity’s state estimator and real-time contingency analysis (RTCA) were not solving, and the EMS could not perform its real-time monitoring and alarming functions.

The first deadlock lasted 31 minutes. NERC said in the report that the entity was able to implement alternative processes for most, if not all, of the affected functions. For example, personnel at regional dispatch centers were able to monitor BES substations and notify the entity of any unusual conditions, while the reliability coordinator took over solving the RTCA and calculated reporting ACE until the utility could restore the system.

The utility’s incident response team (IRT) resolved the first deadlock by disabling non-critical services on the active EMS servers. By this point the provider of the antivirus software had identified a flawed signature as the likely root cause. The IRT applied a new signature and re-enabled non-critical services.

The second deadlock occurred five days later, and the entity implemented its response measures again. After failing to restart the EMS processes through a soft reboot, the IRT decided “to quarantine the impacted server for forensic analysis and to perform a hard reboot of the servers.” Meanwhile, the team again disabled non-critical services on the active EMS servers, which were not re-enabled until the IRT had tested and verified their safety.

This time the deadlock lasted 81 minutes before EMS functions were fully restored. The IRT’s forensic analysis of the affected server determined that the deadlock occurred when the EMS processes, backup services processes, and anti-malware processes ran simultaneously. In addition, the vendor discovered the flaw in the malware engine that ultimately caused the problem.

NERC identified several lessons from the utility’s experience: first, after the initial deadlock the entity accepted the antivirus vendor’s misdiagnosis of the root cause as a signature flaw at face value rather than performing its own testing. Because the actual underlying issue was not addressed, the system remained vulnerable to the same flaw. NERC suggested that entities implement “a more rigorous testing process … during incident response to verify the root cause.”

Next, the report suggested that having staff present — both in the central control center and in the “war room” where the IRT coordinated its response — provided a major help, with a “shared physical space [that] allowed the team to decompose a complex problem [and] maintain momentum and energy during the long response.” Conversely, the ability to remotely and securely connect to the EMS systems, implemented in 2018, “shaved significant time off the response” compared to having to drive onsite to gain physical access.

NERC also noted that with “modern EMS technology environments [making] incidents more complex to respond to,” multiple teams had to coordinate their actions to restore stability to the system. The organization said responders should be prepared with a central response toolkit and scenario-based training so that they can be prepared to use their tools in the proper way. The ability to quarantine the impacted server was also noted approvingly because it allowed the IRT to perform in-depth analysis without affecting active production equipment.

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Jigar Shah: LPO Offers Cleantech Startups ‘Bridge to Bankability’

Before taking over the U.S. Department of Energy’s Loan Programs Office (LPO) in March 2021, Jigar Shah was a well known and widely respected cleantech entrepreneur and investor, with a bent for highly quotable, provocative statements. Being in government hasn’t slowed him down much.

In the last 18 months, Shah has taken the LPO from a largely dormant part of DOE with a core of about 80 employees, to an office of 175 now processing applications for 84 loans totaling $86.5 billion, as well as “another 200 or so advanced pre-consultations,” some of which will turn into applications, he said.

Shah was one of a string of Biden administration officials at the conservative-leaning National Clean Energy Week (NCEW) Policy Symposium, a three-day online conference, sponsored by Citizens for Responsible Energy Solutions (CRES) Forum. Amid recorded statements from a small army of Republican lawmakers, the officials avoided politics, instead using bottom-line, market-based arguments to talk up government’s role in supporting clean energy technologies as they go from development to startups to competitors in U.S. and global markets. (See related story, GOP Prescribes Natural Gas, Nuclear, Deregulation for Clean Energy Transition.)

The billions in clean energy funding in the Infrastructure Investment and Jobs Act and the Inflation Reduction Act have transformed DOE from an agency that does basic research and demonstration projects to a major player in clean technology commercialization, Shah said during a Wednesday “fireside chat.”

Besides staffing up the LPO, he said, “We were able to … really define what our risk box is with Congress, [the Office of Management and Budget] and the Treasury Department, so we now have a fundamental agreement across all of those groups around how much risk we’re supposed to take and which risks we’re supposed to take. We can communicate that clearly to applicants so that we’re not wasting people’s time.”

Shah credited President Biden and Energy Secretary Jennifer Granholm for giving the office the high-level “cover” it needed to revive the loan program. He recruited former executives from cleantech companies to “come in to really mentor a lot of the potential applicants into the program, and that’s been hugely important. Getting through the Loan Programs Office is not a core skill that many CEOs and CFOs have,” he said.

“For a long time, the words that we used [were] a lot around ‘demonstration’; we need to demonstrate the technology at scale, and once that demonstration happens, the private sector will take over. I think that is patently false. I think everyone agrees it’s patently false, and people are now starting to use the vernacular that we’ve put in place around this ‘bridge to bankability,’” he said.

Shah laid out four “major milestones” on that bridge: going from demonstration, to scaling projects so engineering, procurement and construction contractors are comfortable building multiple plants, which in turn results in a learning curve that ultimately reduces costs and, finally, allows access to commercial markets and cheaper capital.

The LPO is working closely with commercial markets, he said. “They’re looking over our shoulder all the time and saying, ‘Hey, entrepreneur, we’d love to do deal No. 2; we’d love to do deal No. 4 … depending on where they are. We’re … making sure that people can actually look over our shoulder because we want to shorten the amount of time it takes to full market acceptance.”

Shah said his office is not picking winners or losers, but he added that not all applicants have the patience and persistence to go through the tough LPO application and due diligence process. In July, for example, the office announced it had closed a $102.1 million loan to Syrah Technologies for the expansion of a Louisiana plant producing graphite-based active anode material, a critical material used in lithium-ion batteries for electric vehicles and other clean energy technologies.

“We’re certainly helping everyone who comes into the office, from people who use natural gas as a feedstock, to people who are doing nuclear, to people who are doing geothermal and hydro or critical minerals,” Shah said. “We do pick winners in the sense that we want people who can get through our [application process]. … We believe this transition is going to come from people who are persistent, who can get through all the necessary documentation we need to get through the process.

“When you do a $3 billion project, and many of our projects are $3 [billion] to $5 billion projects, by definition it disrupts somebody. It’s really hard to blend that right into the landscape,” Shah said. “So, what does it look like to do good community engagement? What does it look like to find the labor necessary to be able to build these projects? What does it look like to just source the materials that you need from friendlier countries and from our own country and to build up that manufacturing supply chain?

“I think applicants into the Loan Programs Office today understand that asking those tough questions really results in a better project, a project that has better support from the community and, from our perspective, has a greater likeliness of being repaid over the 30-year period of time,” he said.

Ex-Im

The Export-Import Bank (Ex-Im) has been supporting the export of U.S. renewable energy technology since 2002, said Judith Pryor, first vice president and board vice chair of the independent federal agency that, according to her, “punches above its weight.”

In 2019, Congress expanded the bank’s mandate “to include energy storage and energy-efficiency technologies and instructed Ex-Im to make available 5% of its financing authority to support it,” Pryor said during a Wednesday presentation at NCEW.

The bank provides financing to U.S. firms to export their products, as well as loans and guarantees to help foreign buyers purchase those goods. Pryor listed several renewable energy projects the bank had funded, for example, providing an $8.7 million loan guarantee that allowed thin-film solar manufacturer First Solar to beat out competition from China for a 9-MW project in Guatemala.

“It’s a critical time” for the bank to provide support for clean energy, she said. “U.S. industry has some top-notch offerings in this space and … we are hearing firsthand the need for these products and the desire to buy American,” Pryor said. “We’re seeing more and more applications each day here at Ex-Im, especially related to storage.”

The bank can offer extended terms of up to 18 years to foreign buyers, she said.

Another key initiative at the bank is a domestic finance initiative called “Make More in America,” Pryor said. Authorized in a February 2021 executive order on supply chains, “what it allows Ex-Im to do for the very first time is provide support across the entire lifecycle of an export, from capital investment, to enabling production capacity here at home, to exporting credit insurance and buyer financing to win specific sales. …

“If we set aside the urgent need to transition to a cleaner, greener future for just a moment and look at this through a business lens, there’s simply no reason U.S. companies shouldn’t take advantage of an industry experiencing double- and triple-digit growth,” she said.

SelectUSA

A complement to Ex-Im, the Commerce Department’s SelectUSA is “the governmentwide initiative dedicated to advancing foreign direct investment to the United States,” Executive Director Jasjit Singh said.

The office sees renewable energy as a big draw for foreign direct investment (FDI), Singh said at NCEW on Thursday, noting that the U.S. is now the “premier destination to invest in new clean energy technologies.”

Between 2010 and 2019, annual investment in renewables grew from $29.4 billion to more than $55.4 billion, he said. Greenfield FDI — in which a foreign country creates a new U.S. subsidiary with new plants — has  also been strong, outpacing investments in fossil fuels every year since 2013, except for 2019, Singh said.

“The pace and scale of the transformation that’s underway in the U.S. renewable market offers a valuable opportunity for investors,” he said.

SelectUSA provides market research and counseling to U.S. companies and economic development organizations to help them develop FDI strategies, while also providing reports to foreign investors on local resources, “such as workforce statistics, access to ports, general electricity rates, state and federal tax rates, and more,” he said.

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Hertz and BP Plan Nationwide Charger Network for Rental EVs

Hertz and BP will collaborate on a nationwide network of charging stations for EVs rented by Hertz, which expects to electrify a quarter of its fleet by the end of 2024.

The companies on Tuesday announced a memorandum of understanding that expands initiatives both already had begun.

They said BP Pulse would power the new network and would also take over management of Hertz’s existing electric vehicle charging infrastructure. The planned network of fast-charging hubs would be available to taxi and ride-sharing drivers and the general public, as well, they said.

Hertz (NASDAQ:HTZ) already offers tens of thousands of EVs at approximately 500 locations across 38 states. Last week, it announced it would buy up to 175,000 new EVs from General Motors over the next five years. 

With this expansion, Hertz estimated its customers would drive more than 8 billion miles in its EVs through 2027, eliminating 1.8 million metric tons of carbon dioxide equivalent emissions from gasoline-powered vehicles.

BP (NYSE:BP), one of the world’s largest petroleum companies, hopes to become a net-zero company by 2050. It acquired fleet charging and energy management company Amply Power in 2021 and renamed it BP Pulse.

The rebranded company began installing charging infrastructure at 25 Hertz locations earlier this year. Its goal is a worldwide network of more than 100,000 chargers for cars and trucks by 2030, 90% of them with rapid or ultra-fast capacity.

BP Pulse’s management software is designed for optimum fleet charging efficiency, and it is partnering with fleet operators to help reach its 100,000-charger goal.

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PG&E Moves to Spin off Generation, Sell Minority Stake

Pacific Gas and Electric has asked California regulators to approve a plan that would allow the company to sell a minority stake in a newly formed generation subsidiary, with proceeds to be used to fund capital investment projects such as wildfire mitigation and clean energy.

PG&E on Wednesday filed an application with the California Public Utilities Commission for approval to transfer all of its non-nuclear generation assets to a new subsidiary called Pacific Generation, a move that would enable the utility to sell up to 49.9% of equity interests in the division to one or more investors.

“The creation and minority sale of Pacific Generation represent the best path forward for raising equity capital while balancing a variety of important objectives, including meeting PG&E’s near-term capital needs and continuing to provide safe, reliable and affordable service,” PG&E Corp. CFO Chris Foster said in a release posted on the company’s website.

The subsidiary, which would be regulated by the CPUC, would control about 5.6 GW of output, including 62 hydroelectric facilities — and associated reservoirs — with 2,700 MW of capacity; 152 MW of utility-owned solar plants; 1,350 MW of battery and pumped hydro storage; and three natural gas-fired plants rated at a combined 1,400 MW of capacity.

“PG&E would maintain control and majority ownership of Pacific Generation and would use proceeds from the transaction to fund PG&E’s capital investment plans such as wildfire mitigation work, safety and reliability projects, and clean energy investments,” the utility said in its release.

The deal would not involve PG&E’s largest generating asset, the 2.2-GW Diablo Canyon nuclear plant, which had been slated for closure in 2025 but will likely get an extended life because of grid reliability concerns in California. (See Diablo Extension Effort Gears up.)

In documents filed with the U.S. Securities and Exchange Commission on Wednesday, PG&E said Pacific Generation would be a “standalone” subsidiary with separate management and its own board of directors.

The filing showed the new company would assume a rate base of about $3.5 billion from the transferred assets, representing about 7% of PG&E’s total rate base. The company’s revenue requirement would be set through CPUC general rate-case and cost-of-capital proceedings, and its operations would “be capitalized in line with authorized CPUC capital structure.”

The SEC filing also contended that PG&E customers would benefit from the arrangement because the utility would retain owned generation with no rate impact, and sale proceeds would be invested back into the PG&E system. Existing investors stand to benefit from the sale by gaining an “additional capital source for generation safety and reliability investment” and avoiding a decline in the value of their holdings, the company said.

“PG&E can raise equity through the minority sale that would otherwise need to be raised by the issuance of new common stock, thereby avoiding dilution for shareholders,” company spokesperson Paul Moreno told RTO Insider in an email. “The subsidiary would be subject to rate regulation under the CPUC. There would be no increase in total rates charged to customers and no increase in energy bills.”

PG&E could not say how much it expects to earn from the sale.

“We plan to run a competitive process to maximize value and can’t comment at this stage on expected proceeds. Utility asset valuations in the private sector continue to be very strong, and we expect to capitalize on this dynamic to deliver premium value to our shareholders,” Moreno said.

According to the SEC filing, PG&E plans to file with FERC next month to seek approval for the plan and to transfer its hydroelectric licenses to the new subsidiary. The company plans to launch its sales process in the first quarter of 2023 and expects FERC approval of the hydro license transfers in the first half of the year. That would be followed by an expected CPUC decision in July and a FERC ruling on the investors later in the year. PG&E plans to close the transaction by the end of 2023.

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NERC Physical Security Reports: Drones, Target Practice and Petty Thefts

Fall has begun, so the nation’s transmission lines can expect to once again become a target. Specifically those porcelain or glass insulators.

Tony Burt (NERC) Content.jpgTony Burt, NERC | NERC

“Insulators on transmission lines are still a very popular target for people out in rural areas with a gun,” NERC’s Tony Burt said during his 2022 physical security overview at the ERO’s 10th Annual Monitoring and Situational Awareness Technical Conference on Sept. 22.

“Usually, about this time of year, we’re going to see an uptick in that,” said Burt, a physical security analyst in NERC’s Bulk Power Situational Awareness group. “There’s really not a lot we can do about it. People are just going to shoot insulators, because they’re a cool target, I guess; show your buddy how far you can shoot or how accurate you are.”

When it does happen, it may show up on a Department of Energy OE-417 report or a NERC EOP-004 filing — along with wayward drones, petty thefts and even protests near bulk electric system (BES) control centers, Burt said.

In 2020, NERC received three reports of physical threats to BES control centers, followed by one in 2021. There were none in the first half of this year, just as there were none in 2019. “Largely, those were due to civil unrest in major metropolitan areas. During that time, there were a lot of protests going on, as you’ll recall. Some of those control centers [were] in downtown areas or in areas where the protests were going on, and the protests might have gotten a little too close,” he said. “No impact to the BES operations, but an event nonetheless.”

BPSA incident reports (NERC) Content.jpgBPSA incident reports | NERC

 

The most prevalent source of reports is also the most prosaic, Burt said.

“The majority of the … reports we see are theft-related; I don’t think I’m going to knock anybody’s socks off with that information,” he said. “You know, whether it be copper theft or construction materials or something that’s been left in a substation, or a catalytic converter ripped out of a vehicle that’s been left in a substation, or tools or anything else that criminals can get their hands on. Largely, when we see events where substation break-ins are taking place, it’s because of theft. That’s just the way it is.”

One new source of reports is drones that have crashed in utility facilities. Burt said it’s hard to tell if the drone operators had “a nefarious intent” or whether it’s just a curious and inexperienced operator.

“I think we really have to remember that we operate things that are pretty cool-looking to people that aren’t in the industry and don’t know about them. … They want to get cool video.”

Such incidents generally result in reports to local law enforcement, Burt said.

“Most times now, entities are getting law enforcement at some level involved in these things, because we don’t know why somebody’s out there taking pictures of a substation, or a power plant, or a transmission corridor or whatever. They may be writing a magazine article; they may be planning some nefarious plot that we’re not currently aware of.

“Back in the beginning of all of the standards … the FBI was the first one everybody wanted to call when something like this happened — because we thought they cared,” Burt recalled. “And over time, and being in different situations, [we realized] the local FBI office always doesn’t know what to do with that, or … as an engineer, they may not even know who the heck you are.”

Geospatial Displays Help Identify Trends

NERC shares physical security data in different forums, including with the regional entities, Burt said. “We’re always looking for trends; we’re always looking for something that we can get in front of, or we can share with people to say, ‘Hey, this is the current threat landscape.’”

To help identify trends, Burt’s group is beginning to use geospatial representations for some events.

“We’ve had instances where we’ve noticed a cluster of like events in different areas. You get different entities together, because, you know, although we can see all the reports, the other entities can’t, and they don’t know that their neighbor may have had similar incidents.”

Without the ability to “get in front of” trends, Burt said, “all of this data is just numbers.”

Warm Weather Miscreants

Although the 2022 data Burt shared ran only through the second quarter, the OE-417 reports included 57 incidents of “damage or destruction to its facility that results from actual or suspected human action” — more than in each of the last three full years.

“But we’re also getting to the time of year when the weather is getting worse,” Burt said. “And for whatever reason, criminals don’t like to go out in bad weather.”

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Hydrogen Technologies a Major Theme at GCEAF

PITTSBURGH — The Biden administration’s commitment to reshaping the nation’s economy by replacing oil and gas with renewable energy, including green hydrogen, was a dominant theme at the Global Clean Energy Action Forum last week.

The three-day, fast-paced conference held at the David L. Lawrence Convention Center in the heart of downtown Pittsburgh drew more than 6,000 participants from the U.S. and 31 countries and featured more than 60 energy-focused seminars, programs and discussion panels featuring global experts.

Energy Secretary Jennifer Granholm used the conference to announce that the DOE had finally issued a request for proposal allowing industries and local governments to compete for $7 billion in federal matching grants to develop four to six “hydrogen hubs.”  

The hubs will be designed to concentrate clean hydrogen production for use by nearby industries — power plants, steel and cement makers, and fertilizer producers. The Infrastructure Investment and Jobs Act, approved by Congress last year, allocated $8 billion for hubs and an another $1.5 billion for associated services.

Industries in Houston are among the competitors for hub funding. (See Report Sees Houston at Center of Gulf Coast Hydrogen Hub.)

“We have been doing a lot of work and building that stakeholder coalition and putting together not only the hub piece of it, but all the other parts of the ecosystem that need to accompany that,” said Brett Perlman, CEO of the Center for Houston’s Future, in one of the discussion groups.

The day before Granholm’s announcement, the European Commission approved up to $5.2 billion in public funding to assist in the development of industrial-sized electrolyzers and pipelines. The 28 member nations of the E.U. will contribute to the fund.  

A theme that repeatedly emerged in most of the eight hydrogen-focused seminars was that the mass production of electrolyzers, which use electricity to produce hydrogen from water, must be ramped up as quickly as possible if nations are to have any chance of producing the prodigious amounts of green hydrogen that will be necessary to alter the pace of climate change.

The technology was repeatedly described as well understood. While megawatt-sized electrolyzers have never been built, engineers often describe the process of building very large electrolyzers as a “bolt-on” process, suggesting that ramping up in size will not be a problem.

Very few GCEAF participants voiced any doubt that hydrogen could replace conventional fossil fuels in most applications, given enough time. But time is the issue for advocates of clean energy, a mission Granholm crystalized in her pre-conference remarks in a single sentence: “It’s all about pushing, pushing, pushing to deploy, deploy, deploy clean energy solutions.”

John Kerry, special presidential envoy for climate, repeated the oft-quoted line that hydrogen is the Swiss Army knife of energy, meaning it can be substituted for many conventional fuels, assuming the technology to use it has been developed and manufactured — a goal that will require hundreds of billions of dollars in government and private investment.

That includes large gas turbines able to burn 100% hydrogen, an objective that Mitsubishi Power doesn’t think it can achieve in its larger turbines until 2045.

Working the Supply and Demand Sides

The dramatic reduction in carbon emissions that could be achieved by switching from fossil fuel to clean hydrogen — if only in the transportation sector — became clear during one panel discussion.

Natascha Viljoen, CEO of Anglo American Platinum, a mining company with operations in South Africa, made the connection between the electrification of heavy trucking and global carbon pollution.

The company pulled the enormous diesel engine from one of its three-story tall mining dump trucks that are built to haul 315 tons of ore and replaced it with a fuel cell system running on hydrogen produced by electrolyzers using electricity from a 140-MW solar farm.

The conversion of the giant truck from diesel to hydrogen is the equivalent of taking a half million cars off the road, she said.

“We use 40 of these trucks in our fleet,” she added in reference to the platinum mining division. “Across our broader company, we use 400 of these trucks.”

Kurt-Christoph von Knobelsdorff, CEO of NOW GmbH, a consulting company coordinating the German government’s efforts to replace natural gas with hydrogen, noted in one panel discussion that Germany is aiming to completely change its fossil energy system as quickly as possible.

“Hydrogen is so new, and it’s just a tiny bit of the world’s energy mix. If you really want to get it going, you need to work both on the supply and the demand side. It really is a chicken and egg,” he said.

“The idea is that you have to bring supply and demand together. You have to try to do it at scale so that investors can come in. And you have to create visibility over the long term, so that the financial packages can come together as well,” he said.

NOW GmbH has calculated that to produce affordable hydrogen, renewable power prices must be 2 to 2.5 cents/kWh.  “We are not very far from that,” he said. The Biden administration has targeted the price of hydrogen at $1/kg by 2030.

“But to do this on a massive scale, industry will have to ramp up the installed global capacity of wind and solar farms, which now represent less than 5% of the power generated globally,” von Knobelsdorff said.

Another theme running through several of the hydrogen seminars was that close international cooperative efforts could speed up development of both hydrogen production and the wind and solar installations needed to support it. Offshore wind was mentioned as a source of the enormous amounts of renewable power that will be necessary to run the still-to-be-mass-produced electrolyzers generating the megatonnage of hydrogen.

Germany and Japan are both developing plans to help companies build solar and wind farms dedicated to producing hydrogen in nations with more sun and wind, and then converting it to ammonia for shipping. Germany has already signed a non-binding memorandum of understanding with the Canadian government to import hydrogen produced by still-to-be-built wind farms on Canada’s Atlantic coast. Germany and Australia have issued a joint notice of intent to study the feasibility of creating a hydrogen supply chain.

Moving the hydrogen thousands of miles will require converting it to a “hydrogen carrier,” typically a liquid such as ammonia or ethanol. Ammonia is a chemical familiar to many industries, Shell USA president Gretchen Watkins said in another session.