Panelists at NERC’s 2021 GridSecCon on Tuesday warned that adversaries are mounting more and more sophisticated cyberattacks against the U.S. electric grid, a trend that will only continue.
This year’s conference, organized by NERC’s Electricity Information Sharing and Analysis Center (E-ISAC) and hosted by the ERO and the Texas Reliability Entity, was held online, after last year’s event was canceled because of the COVID-19 pandemic.
In the “Year of Supply Chain Lessons” panel, attendees discussed the recent trend of malicious actors inserting themselves into the update channels for major software utilities such as SolarWinds’ Orion network management platform and Kaseya’s Virtual System Administrator remote monitoring and management program. In this way the attackers were able to infiltrate the computer systems of thousands of organizations; in the case of SolarWinds, the victims included FERC and the Department of Energy. (See FERC Pushes Cyber Incentives.)
“The proof is that they worked — the event against Kaseya, the event against us,” said Tim Brown, chief information security officer at SolarWinds. “Basically, the very thoughtful actor says, ‘How can I get into environments without … necessarily touching those environments directly?’”
Targeting the distribution points for major software represents a major leap forward from previous supply chain attacks, which focused on physically inserting spying equipment into hardware components, said Allan Liska, senior security architect at cybersecurity company Recorded Future. Hardware supply chain attacks are relatively labor-intensive and easy to mitigate, as they require the accurate insertion of devices that the victim can remove when detected; but identifying which lines of code are malicious out of millions in a typical software package can be incredibly difficult.
Compounding the risk is the limited number of suppliers of these critical software components: One problem faced by many victims of the SolarWinds hack was the difficulty finding another piece of software with the same functionality, meaning companies had to keep using the tool after it was known to be compromised.
“The reality of our industry [is that] our crown jewels, our [industrial control system] environments, our [operational technology] environments, probably come from one of a very few companies,” said Brian Barrios, vice president of cybersecurity and information technology compliance at Southern California Edison (SCE) (NYSE:EIX). “I know most of the companies that are attending this conference probably have thousands of vendors … but when you think about our crown jewels, it could be a very limited number of companies.”
Government, Industry Must Work in Tandem
Barrios asked the other panelists if a government-supplied software blacklist or whitelist — meaning a list of suppliers that cannot be used, or a list specifying the only suppliers that can be used, respectively — would help to secure their systems. The subject has come up repeatedly at other security conferences, such as FERC’s recent reliability technical conference, typically without enthusiastic response. (See Cybersecurity, Climate Change Lead FERC Conference.) The same was true on Tuesday, with participants suggesting such lists create more problems than they solve.
“We’ve seen several of our well known and respected suppliers be placed on a blacklist, because maybe they had a small engineering presence in a threat actor country,” said Zach Tudor, associate director for national and homeland security at Idaho National Laboratory. “How do people get off the lists? How do we not inadvertently select people, but also second-tier suppliers? There’s a lot of complexity in there. … It may well be that components are whitelisted, [but] without adequate supply chain security, you may not know some of those things.”
Tudor noted that in response to the recent cybersecurity incidents, the partnership between private industry and the government is “really starting to gain momentum,” through forums like the E-ISAC and government organizations as the Cybersecurity and Infrastructure Security Agency (CISA), which has “done a great job … earning that trust over time.”
This collaboration will only grow in importance, suggested Andrew Serwin, U.S. chair and global co-chair of the data protection, privacy and security practice at DLA Piper. As the sophistication of threat actors continues to grow, so too will the understanding that utilities should not be expected to brave a hazardous cyber landscape alone.
“No one would expect SCE to have a physical army that could repel the Chinese army if they invaded Los Angeles,” Serwin said. “But somehow, we expect SCE to be able to do that in cyber[space]. … I’m not sure it’s fair to stick a private company with a liability that’s extremely high when you are dealing with a foreign adversary. … You can have the best program in the world, and they’re probably going to get in no matter what.”
In the competition to become a top supply-chain hub for the East Coast offshore wind industry, Virginia is looking to harness the workforce, facilities and experience embedded in the Port of Portsmouth to give it the edge in the effort to create a supply chain to serve not only its own wind industry but those of other states along the coast.
The experience accrued at the state’s break-bulk and container ports, and the workforce of longshoremen there, coupled with the fact that there is plenty of space in and around the port, make it a natural location for an offshore wind hub, speakers at the Virginia Clean Energy Summit said Tuesday.
“We have some assets that just aren’t matched elsewhere on the East Coast,” Matt Smith, director of offshore wind for the Hampton Roads Alliance, an economic development organization, said as he moderated a forum panel called “Positioning Virginia as the supply chain hub for Offshore Wind on the East Coast.”
He said the port is looking to “become a hub that can support projects up and down the East Coast, and that may entail component manufacturing, bases for vessels, ongoing operations and maintenance.”
“Our port infrastructure is by far the best suited to support the industry on the East Coast,” he said. “We have the largest and very skilled maritime workforce. And Virginia is continually rated as a top state for business.”
Tough Competition
To fulfill that ambition, the port will have to overcome several contenders making similarly aggressive moves to serve the 18 projects in development along the coast, of which 11 are advanced in the permitting stage. Among the contenders are Maryland and New Jersey, which is vigorously creating the New Jersey Wind Port on the Delaware River, about 250 miles to the North of Portsmouth. (See New Jersey Shoots for Key East Coast Wind Role.)
A key advantage for the Port of Portsmouth over some ports to the North of Virginia, is that vessels leaving the Virginia port loaded with turbines — which are transported upright — do not pass under a bridge, said Chris Gullickson, director of economic development for the Port of Virginia.
“There’s obviously a robust base of manufacturing maritime skills that exist” in the port, Gullickson said. “It’s in the fabric of our community, working either on the waterfront, or being involved in maritime activity.”
Port of Virginia officials have said in the past that they realized early on that even terminals built to handle container and bulk vessels did not have the capacity to handle the size and weight of the offshore wind components. In response, the port spent $40 million on infrastructure upgrades.
Dominion Energy is developing a 2.6-GW, 180-turbine wind project 27 miles off the coast of Virginia Beach with a predicted date to be in service of 2026. The Port of Virginia in August announced an agreement with the developer to lease 72 acres of its Portsmouth Marine Terminal for 10 years to support the development of the wind project. (See Dominion Secures 10-Year Va. Port Lease for OSW Staging.)
Ørsted, which is developing wind farms off the shore of Delaware and New Jersey, reached an agreement last year with the Port of Virginia for an initial 1.7-acre lease at the Portsmouth Marine Terminal through 2026, with an option to expand to an additional 40 acres.
The Texas Public Utility Commission on Tuesday announced eight appointees to the Texas Energy Reliability Council (TERC), a 25-person, cross-industry group created in the wake of February’s devastating winter storm to help guide efforts that address critical infrastructure issues.
Hunt Energy Network CEO Pat Wood, former chair of both the PUC and FERC, was named as one of three “thought leaders” representing energy sectors without an advocate on the council. His company develops and operates distributed energy resources.
The other thought leaders are Thomas McAndrew, founder and CEO of backup power provider Enchanted Rock, and Charlie Hemmeline, executive director of the Texas Solar Power Association.
The PUC also named five members to represent various electric sectors:
Lori Simpson, Exelon’s director of wholesale market development, for entities that provide dispatchable energy;
Liz Jones, Oncor’s vice president of regulatory affairs, for transmission and distribution utilities;
Catherine Webking, general counsel for the Texas Energy Association for Marketers, for retail electric providers;
Tom Hancock, Garland Power & Light’s deputy general manager, for municipally owned utilities; and
Clif Lange, South Texas Electric Cooperative’s manager of wholesale marketing, for electric cooperatives.
Texas Gov. Greg Abbott in September also appointed interim ERCOT CEO Brad Jones and five other members representing industrial concern to the council. (See “Brad Jones Named to Reliability Council,” ERCOT Mothballed Resources Return to Year-round Ops.)
TERC was created earlier this year by legislation to ensure that Texas’ energy and electric industries “meet high-priority human needs and address critical infrastructure concerns” and to “enhance [the industries’] coordination and communication.”
“It’s a very, very broad group of individuals,” Lange said during a Gulf Coast Power Association workshop Tuesday. “Natural gas and electric coordination was certainly an area that was lacking [during the winter storm]. This will facilitate discussion and improve coordination and provide a single location for a lot of this information to be exchanged.”
The Texas Railroad Commission (RRC), which regulates the state’s gas and oil industries, has five representatives on TERC.
W. Nim Kidd, chief of the state’s Division of Emergency Management, has been named TERC’s presiding officer. Other senior leaders include PUC Chair Peter Lake; RRC Chair Wayne Christian; Jon Niermann, chair of the Texas Commission on Environmental Quality; and J. Bruce Bugg Jr., chair of the Texas Transportation Commission.
The council has already held an organizational meeting and will meet for the first time as a full group on Monday.
The Maine Department of Environmental Protection (DEP) held a hearing Tuesday to determine whether it should revoke Central Maine Power’s (CMP) permit to construct the New England Clean Energy Connect (NECEC) transmission line in the western part of the state.
There is no deadline for the decision in the DEP proceeding, but the agency has the option to suspend the construction permit temporarily or revoke it entirely, forcing CMP to apply for a new one. DEP Commissioner Melanie Loyzim opened the proceeding after a Maine Superior Court ruling in August vacated a 1-mile public land lease to CMP. Loyzim said the court’s decision represented a change in circumstance that could warrant a permit suspension.
CMP argued in the hearing that the decision on the land lease should not hold up or halt construction of the entire 145-mile transmission corridor, presenting two alternative routes the company could take to avoid the lease area.
The company also said it is considering running the transmission line underground, which it argued wouldn’t change recreational use of the state public land or potential alternatives.
If the DEP delays the project until an appeal of the court’s ruling is settled, which likely won’t happen until June 2022, it will cost CMP an extra $67 million, said Thorn Dickinson, CEO and president of NECEC Transmission, the affiliate running the hydropower transmission project already under construction.
The utility also has a December 2023 target date for completion of the line, and delays could put negotiated energy benefits for Maine and Massachusetts residents at risk, he said.
Opponents argued that ongoing construction of the transmission line is causing irreparable damage to the jack pine forests of western Maine, while the project could be halted by the legislature or the state land lawsuit.
“Any trees allowed to regenerate in the cleared corridor will be severely limited and will not achieve the middle and older age height diversity needed by wildlife,” said Roger Merchant of Glenburn, Maine, a licensed forester.
The same impacts would occur in the proposed alternative routes, which could take the 90-foot-wide corridor about 90 years to recover, Merchant said.
One alternative route would run through the Moosehead Conservation Easement Area, but Karin Tilberg, president of the Forest Society of Maine, said in an Oct. 19 email to DEP and Dickinson that a power line would not be permitted in the area.
However, supporters of the line argue the transmission line, which would bring renewable hydroelectric energy from Québec to the New England grid, benefits the health and environment of Maine.
“Climate change is the most serious threat to Maine’s environment,” said Tony Buxton, general counsel to the Industrial Energy Consumer’s Group.
A suspension or revocation of the construction permit for the line would be “contrary to the public interest,” Buxton said.
In a virtual public comment session following the hearing, William Frederic of Starks said if CMP halts construction of the line, he will lose his job and “the chance to make a difference to the future of our planet.”
The hearing comes two weeks before Mainers will vote on ballot referendum Question 1, which, if passed, would put the project before the state legislature, requiring two-thirds majority in both houses for the project to proceed.
“There are no climate change benefits from a project that can’t be completed,” said attorney James Kilbreth, representing the Natural Resources Defense Council of Maine. “Voters could decide to stop the project altogether.”
A plan that will serve as a roadmap for California to reach its 2045 decarbonization goal may be delayed by six months after a state environmental justice committee asked for more time to finish its work.
Members of the Environmental Justice Advisory Committee (EJAC) last week agreed to send a letter to Gov. Gavin Newsom requesting a six-month extension for adopting the plan, moving the deadline to mid-2023 rather than the end of 2022.
The California Air Resources Board (CARB) convened the committee in May to make recommendations on the agency’s 2022 scoping plan, which will serve as a blueprint for the state to reach carbon neutrality by 2045.
Under AB 32, the Global Warming Solutions Act of 2006, CARB must update the scoping plan every five years. The most recent update was in 2017.
But the committee’s letter to Newsom notes that AB 32 allows the governor to adjust scoping plan deadlines “in the event of extraordinary circumstances.”
The extraordinary circumstances in this case include the COVID-19 pandemic as well as extreme weather events such as large wildfires across the state, committee members wrote. These events have made it difficult for EJAC members to conduct outreach on the scoping plan with the communities they represent.
Another extraordinary circumstance, according to the committee, is “the need to allow time for sufficient and meaningful community engagement that was absent from prior scoping plan processes.”
EJAC consists of representatives of communities most heavily impacted by air pollution, including low-income or minority populations. The committee is a requirement of AB 32. CARB appointed some committee members in May and added others in August.
The timeline for EJAC’s work on the 2022 scoping plan was the focus of discussion during the committee’s Oct. 12 meeting.
CARB is asking EJAC to weigh in on scenarios being considered in the scoping plan. In general, the four scenarios being discussed include decarbonization by 2035 or 2045, either with or without a “full suite of technology options,” such as engineered carbon removal.
CARB staff agreed to shift the deadline for the committee to provide input on the scenarios by a month, from the original Oct. 22 deadline to Nov. 24. After that, a consultant will perform modeling on the scenarios in a step that will lead to a final draft scenario.
EJAC member Catherine Garoupa White, executive director of the Central Valley Air Quality Coalition, said during last week’s meeting that she opposed moving ahead with scenario modeling until the community has a chance to weigh in.
She said she was troubled that the strategies presented included continuing cap and trade and carbon capture and sequestration.
“I want to be very clear and on record that I cannot support moving forward with modeling scenarios before we have a public process, because that does not do justice to hearing from the most impacted community members,” Garoupa White said. “What issues they’re experiencing, and how to make sure we’re matching the solutions to that.”
EJAC member Connie Cho, a justice catalyst legal fellow with Communities for a Better Environment, asked whether CARB would support the committee’s request to the governor for a deadline extension.
CARB Executive Officer Richard Corey said that wasn’t possible.
“When it comes to statutory changes, changes to law, it’s the administration that takes positions, agencies don’t take positions,” Corey said. “I can’t weigh in on a proposed change to the law.”
Similarly, CARB Chairwoman Liane Randolph would defer to the administration, he said.
Corey noted that while the scoping plan is important, it’s just one step toward achieving climate goals.
“It is a precursor to rule development, regulation development … all of which take time,” Corey said, adding that later steps would also include opportunities for public involvement.
EJAC members submitted a proposed timeline for the scoping plan that includes extending the period for scenario workshops to the end of November. That would help ensure that committee members understand the material well enough to share it with communities they represent.
Community outreach meetings would be held in December and January. Committee members would then report back on feedback received, which would be used to shape scenarios.
The EJAC would conduct another round of public outreach when CARB releases a draft scoping plan, a step expected in December 2022 or January 2023 under the committee’s timeline.
The CARB board would then meet to approve the scoping plan in June 2023.
New Jersey is looking to jump-start the introduction of electric school buses in the state with millions of dollars in bus purchases — including a proposed $45-million pilot program in 18 school districts — along with guidance from private contractors that successfully introduced EV buses in other states and are saying the state needs to think big.
The proposal, soon to be introduced in the legislature, would offer a more aggressive approach than an existing, $10 million pilot proposal to fund three test projects, A1819, Sen. Patrick J. Diegnan Jr. (D) told an Oct. 13 forum on how to introduce electric buses into New Jersey. The earlier bill passed the Assembly on a 57-14 vote and is now before the state Senate Economic Growth Committee.
The event focused on providing key stakeholders with insights on the experiences of school districts and private bus companies that have introduced electric buses in other parts of the country, and the challenges facing New Jersey as it seeks to follow suit.
Diegnan’s new proposal would create a three-year pilot that would require three of the 18 school districts in the program to be located in environmental justice communities. A primary goal of the program would be to provide data on the use and efficiency of electric buses, which could then be used to promote electrification to other school districts, said Diegnan, who was also a sponsor of the earlier legislation.
“By doing this demonstration project we’re going to know how long does the battery last. Is there a problem with maintenance? What’s going to happen when the air conditioning is on in the summer? Is that going to affect it?” Diegnan said. “So rather than guessing where should we have the charging stations, this program will really put in place reliable information that we can use to move this forward.”
Diegnan said he hopes to get the bill introduced and passed by December, and the pilot program ready to start in the fall of 2022.
New Jersey had 15,703 school buses in 2019, none of them electric, and no electric buses have been registered with the state since, according to information from Atlas Public Policy. Only 1% of the nation’s 480,000 school buses are electric, according to the World Resources Institute (WRI), which helped organize the forum with the Electrification Coalition.
Aiming for Large Scale
Several speakers with experience introducing electric bus programs in other states encouraged New Jersey to move quickly and boldly, saying that the technology already has shown its worth elsewhere in the country. That approach will help overcome challenges to bus electrification, which they said include the difficulty of creating new infrastructure, adjusting to new technology and overcoming the sticker shock of high-priced zero-emission buses.
“What you want to think about are ways to encourage school districts to scale their electrification efforts” and think bigger, said Matt Stanberry, managing director of Highland Electric, a Massachusetts-based provider of turnkey electric fleet solutions, such as electric bus fleet “subscriptions.” “What we really want to be thinking about is creating seeds for electrification at scale.
“If you come in with a mindset of ‘I’m going to start with a single deployment,’ you’re sort of dead before you start,” Stanberry said. “You’ve got to be thinking about how do I set myself up to enable that scale, so I’ve got a plan for it? How do I limit the number of times that I’m breaking ground, busting up concrete, to lay in infrastructure?”
Jim Woods, director of business development for First Student, which provides student transportation to school districts, said that the urgency is so great that companies like his need to think in grander terms. The company has committed to electrifying 20,000 buses, more than half its fleet, over the next 10 years.
“Doing one or two buses here and there, you know, up to five buses, which is becoming more and more easy to do, is a good start,” he said. “But it’s not the way that we’re going to get there. We need to do this on a large scale.”
Grants Totaling $20 Million
Converting to electric buses is one plank of the New Jersey effort to get 330,000 electric vehicles on the road by 2025 and reach 100% clean energy by 2050. The state is mid-way through enacting a rule proposal to encourage the creation of medium- and heavy-duty EV charging stations that would service electric buses and medium- and heavy-duty trucks. (See: NJ’s EV Charger Rules Face Scrutiny.)
Electric school buses are key to the state’s effort not only because they help fight climate change and cut children’s exposure to the pollution generated by diesel engines, but also because they are well suited for the task, said Justin Balik, WRI’s senior manager for state policy for transportation. The limited range of electric vehicles, a primary concern for other types of transportation, is less of a factor on school routes, he said.
“Electric school buses can operate in 90% of the routes that are out there,” Balik said.
Electric school buses will become increasingly cost-competitive with traditional diesel vehicles over the next decade. | Atlas Public Policy
With transportation accounting for about 42% of carbon emissions in New Jersey, the state has placed a high priority on reducing those emissions via funds from the state’s portion of the Volkswagen Settlement and the Regional Greenhouse Gas Initiative (RGGI). The state awarded $100 million, in large part to transportation, from the two funds in January, including $6.5 million for 17 school buses. (See NJ RGGI Spending Focuses on Transportation.)
Peg Hanna, assistant director of the air monitoring and mobile source programs at New Jersey Department of Environmental Protection (DEP), told the forum that the state will soon announce another $20 million for electric school buses and trucks. Offering a contrast to the widespread perception that electric vehicles of all types are prohibitively expensive, Hanna said that “the projections show that we are expected to reach cost parity — a total cost of ownership parity — by 2025.”
A report released in March by Environment New Jersey and NJPIRG, a public interest advocacy group, said although the $312,000 price of a new electric bus is close to three times more than a new diesel bus, the lower fuel and maintenance costs for an electric vehicle would mean that school districts would save between $80,000 and $130,000 over the 16-year life of each school bus. (See: Environmentalists Call for Faster Transition to Electric Buses in NJ).
The fuel cost per mile for an electric bus will drop from $2.83 in 2020 to about $1.87 in 2030, at which point it will be cheaper than the cost of diesel, about $2.45 per school bus mile, according to information from Atlas Public Policy.
Hanna added that the transition to from diesel to electric school buses must be a collaborative effort.
“Converting to electric school buses and electric vehicles is not something that New Jersey government agencies are going to do solo,” she said. “We really need a combination of stakeholders, and a combination of approaches if we’re going to get there.”
Helping School Districts Jump In
Making it happen requires vigorous community support for school districts and the willingness to make tough decisions that will involve a sizable, upfront investment, said Stanberry of Highland Electric. The company has projects in development in 20 states, including a contract with Maryland’s Montgomery County Public Schools, which will lease 326 electric school buses over four years. (See: Schools’ ‘Budget Neutral’ Bus Deal Could Accelerate BEB Growth).
Financial support from the state is also essential, said Jacqueline Piero, vice president of policy for Nuvve, a San Diego provider of vehicle-to-grid technology that allows EVs to send electricity back onto the grid. One way to make electric buses more financially attractive and acceptable to school districts is to shape the way that support is delivered, she said.
State officials should structure incentive programs around vouchers or rebates, which enable districts to receive reimbursement for investing in electric buses, rather than grants, Piero said
“We found that it’s not just giving schools money; it’s how you give them money that actually can make a huge difference in whether or not they’re able to pull the trigger and electrify,” she said. “We are finding that schools are much more able and willing to engage when they see a more direct process.”
Programs in which the state provides a rebate after the purchase is made are a more direct way to get funds to school districts, but they need to have the money to spend up front, said Piero, who also encouraged the state to produce “step-by-step guides” that explain to school districts how to electrify their fleet and avoid pitfalls. Otherwise, she said, “they can end up with incompatible systems that they’ve cobbled together.”
Woods, of First Student, said school districts and bus companies need to look to the future and ensure that the steps they take early on in an electrification process, especially when it comes to infrastructure, will serve them well as they grow. He noted that to ensure that First Student can secure enough clean electricity to power its buses, the company has partnered with NextEra Energy, which invests in clean energy infrastructure and utilities.
“Infrastructure is one of the biggest challenges,” Woods said. “Putting five buses on a site with a $1,500 charger is not too difficult. Doing 50 buses is entirely a different story.”
He said the company’s purchase of 260 buses from Lion Electric, a California electric bus manufacturer, to put into service in Quebec, Canada, reflects the economies of scale needed to make electric buses viable.
“School districts have limited budgets,” and companies like his need to help them electrify their bus fleets “at a near diesel equivalent cost,” to make the task successful, he said.
“If we don’t have the volume to drive down pricing, then buses are going to continue to be expensive,” he said. “But somehow we’ve got to get beyond the hurdle of that initial expense.”
Two years ago this month, the Connecticut Public Utilities Regulatory Authority approved a sprawling plan to modernize the state’s electric grid.
PURA established four objectives for its Equitable Modern Grid framework centered on Connecticut’s green economy, decarbonization, energy affordability in underserved communities and reliability. It also identified 11 near-term tracks to investigate in three phases.
During a recent webinar to recap progress to date, including three final decisions among the 11 tracks, PURA Chair Marissa Gillett said that while Connecticut’s electric infrastructure continues to age, there is a concurrent reliance on it “to meet our daily needs.”
There is an emphasis on equity that permeates the initiative, including the final decisions on electric storage and zero-emissions vehicles, which contain incentive adders for underserved communities.
“Equity is an important lens that we approach this process with,” Gillett said. “And while I think as an industry, we are starting to do a better job thinking about equitable outcomes, what I think we need to do more of is think about how we inject equity into the process of developing and pursuing those initiatives.”
Gillett added what she said might seem like a commonsense observation: equitable outcomes are borne from fair access to developing them.
For example, PURA was directed through a bill passed by the General Assembly earlier this year to establish a nine-year electric storage program starting next year, which targets deployment of at least 580 MW and supports the state’s goal to reach 1,000 MW by the end of 2030. Storage systems will be compensated through an upfront incentive of $7,500 administered by the Connecticut Green Bank and performance-based incentives provided by Eversource Energy and United Illuminating. There is also a target to deploy 40% of storage in low-to-moderate income communities.
PURA also set up a nine-year program for zero-emissions vehicles starting in 2022, which includes a study by the Rocky Mountain Institute to identify how to best address and offer electrified transportation mobility options for low-to-moderate-income communities. Stefanie Keohane, supervisor in PURA’s clean and affordable energy unit, said there is “recognition and acknowledgment” that many in Connecticut may not have personal vehicles or be able to purchase or lease an electric vehicle. Still, there should be equity work that ensures “that the benefits of transportation electrification are shared among all those in Connecticut.”
Despite PURA identifying 11 tracks for the Equitable Modern Grid framework, Gillett said it is not “an exhaustive list.”
“There could have easily been hundreds, if not thousands, of tracks in [grid modernization], and we recognize that we haven’t identified the last of the work,” Gillett said.
Ambitions do not restrict PURA although its current staffing levels offer “constraints,” according to Gillett. Stakeholder engagement in PURA’s public proceedings and constructive feedback through public comments are also critical, though Gillett acknowledged one underreported aspect of that commitment, which is time, especially with non-traditional stakeholders.
“Stakeholder fatigue is a very real challenge that I think is not spoken about enough, and with our desire to emphasize the engagement from non-traditional stakeholders, we want to be cognizant of those limited resources as well,” Gillett said.
WESTBOROUGH, Mass. — Continued discussion of eliminating the minimum offer price rule (MOPR) from ISO-NE’s capacity markets and Order 2222 compliance took up a sizeable portion of the agenda during a two-day, in-person meeting last week of the NEPOOL Markets Committee.
The New England Power Generators Association and Advanced Energy Economy laid out their complaints with the RTO’s proposals at the session, the first in-person meeting of the MC since March 2020 because of the COVID-19 pandemic.
ISO-NE Proposes Review Mechanism
As part of its MOPR elimination, ISO-NE proposes a narrow, buyer-side market power review mechanism where new capacity resources qualified to participate in an upcoming Forward Capacity Auction will follow one of three lanes:
de minimis lane
supported purpose lane
full assessment lane
New resources with a qualified capacity below a de minimis size threshold — yet to be determined — enter that lane and will not be reviewed for buyer-side market power. The RTO’s tariff presently provides de minimis exemptions to certain supply-side market power reviews. The threshold will similarly focus future buyer-side market power reviews on larger new resources. As a result, ISO-NE anticipates that a de minimis threshold will likely exempt most new capacity resources currently subject to review under the MOPR.
All remaining resources — small in number but constituting most of the new qualified capacity offered in the Forward Capacity Market — would need to proceed down the supported purpose or full assessment lanes.
A new capacity resource that can demonstrate that it meets certain criteria — such as the absence of any load-side interest or arrangement or that it is a development to meet a specific state regulatory requirement or policy — would go down the supported purpose lane and will not need further evaluation by the Internal Market Monitor. This will allow resources built to further state decarbonization goals and contribute to the region’s capacity supply to participate in the Forward Capacity Market, which is consistent with the overall objective of the MOPR’s removal, ISO-NE said.
New resources that do not qualify for the de minimis or supported purpose lanes will undergo a more thorough buyer-side market power evaluation by the IMM. In addition, those resources must comply with the new certification requirement, which requires an affidavit stating that they are not participating in the auction to reduce the clearing price. They may be required to provide project-specific confidential information to facilitate an assessment of buyer-side market power and mitigation.
Bruce Anderson, vice president of market and regulatory affairs for the New England Power Generators Association (NEPGA), said in a presentation to the committee that ISO-NE’s MOPR elimination proposal “allows for uncompetitive rates and fails to create a proper balance between consumer and investor interests” in the FCM.
Under the ISO-NE mitigation proposal, new capacity resources may be offered at any price, whether competitive or not, eliminating the critical relationship between competitive offers and competitive rates, NEPGA said.
If the RTO eliminates the MOPR at all, NEPGA said it should be done at the same time as it enacts “capacity accreditation reform and meaningful forward reserve pricing.”
NEPGA said ISO-NE has acknowledged its MOPR elimination proposal would create “a greater risk of inefficient retirements” and “gaps” in the wholesale markets that the generators said must be fixed by the accreditation and forward reserve changes.
“Delaying the remedies for the two existing gaps in the wholesale markets, while creating a third issue to be remedied, is poor planning and should be avoided through the concurrent application of these wholesale market design changes,” NEPGA said.
NEPGA also said that ISO-NE has not explained how the FCA will produce competitive clearing prices when there is no review of new capacity resource offers for competitiveness. Additionally, NEPGA said that the RTO has not determined how it, or the Internal Market Monitor, can testify to the competitiveness of the FCA clearing price without any transparency on new capacity resource offers.
Eliminating the MOPR without “counter-balancing changes” violates the need for wholesale markets to balance consumer and investor interests properly, NEPGA said.
AEE Offers Amendments for Order 2222 Compliance Proposal
ISO-NE’s Order 2222 proposal does not meet FERC’s directive to enable distributed energy resources (DERs) to offer wholesale market services they are technically capable of providing through aggregation, Jeff Dennis, managing director and general counsel for Advanced Energy Economy, said in a presentation.
Without viable participation models for many DERs, New England will forego the option to pursue cost savings, market efficiencies and reliability benefits through wholesale markets, AEE added.
AEE proposed a series of five individual amendments that are not part of an overall package, including allowing submetered load to participate as demand response and submetering by third parties.
Load reductions from a DER allow customers who cannot participate at the customer meter, because of the cost of metering and/or widely variable load, to participate with a dispatchable device behind the meter, AEE said. It said CAISO uses a FERC-approved DR model that allows submetered EV charging equipment to participate as DR under Order 745.
Allowing third-party metering permits aggregators to meter the injection, withdrawal and load reduction of all DERs within each aggregation without requiring reconstitution by meter readers. Third parties bear costs of additional equipment and do reconstitution when required. The arrangement would facilitate DER aggregation deployment sooner and in the areas with no advanced metering infrastructure, AEE said.
The precedent cited by AEE is the NYISO DER participation model that allows third parties to provide metering and meter data services for wholesale market participation. It defines the roles, responsibilities, equipment and data quality standards while describing the processes for data processing and analysis. It also provides checks and balances to ensure data accuracy.
ISO-NE must make its Order 2222 compliance filing by Feb. 2, 2022.
BOSTON — When Avangrid Renewables (NYSE: AGR) and Copenhagen Infrastructure Partners began talking to banks about financing their Vineyard Wind project back in 2019, more than 60 institutions took the company’s calls.
“We explored all the possibilities, and we saw so much interest,” CFO Álvaro Ortega Sebastián said.
The lenders’ ardor was not dampened when the Trump administration, also in 2019, postponed Vineyard Wind’s final environmental impact statement to conduct an expanded analysis of “cumulative impacts” from the multiple offshore projects proposed for New England.
The 800-MW project, 15 miles off the coast of Martha’s Vineyard, eventually narrowed the group of banks to nine. When Vineyard Wind wanted to close this year, the lineup was intact, Sebastián told the American Clean Power Association’s Offshore WINDPOWER 2021 conference last week.
“We came back in 2021 with the same group just to give them the opportunity to come up to the market with us at the same [interest rates and other terms] that we thought we should go out with, and they were all able to be there,” Sebastián said.
In September, Vineyard Wind I became the first commercial-scale offshore wind project in the U.S. to achieve financial close, having raised approximately $2.3 billion in construction and term loan financing from nine banks.
While developers still face challenges in financing OSW projects, lenders are eager to get involved, Sebastián and other speakers told the conference.
Atlantic Shores is further back in the development cycle than Vineyard Wind I. In July, it was awarded a contract by the New Jersey Board of Public Utilities to develop 1,510 MW in OSW energy. A joint venture between EDF Renewables North America and Shell New Energies US (NYSE:RDS.A), its lease area is located approximately 10-20 miles off the coast of New Jersey between Atlantic City and Barnegat Light.
Joris Veldhoven, the company’s commercial and finance director, told the conference the company would explore equity financing as well as “various forms of debt,” and export credit agencies — which provide loans, loan guarantees and insurance to promote exports — over the next two-plus years.
Given that Vineyard Wind encountered a situation where it had to stop and start again, Sebastián said by beginning the process with the banks in 2019, it was able “to reduce most of the work” as it moved forward this year.
“There’s a lot of back and forth between all the parties involved to negotiate the term price, so the earlier you start, the better,” Sebastián said. “But not too early because things can change over time.”
Mayflower Wind is developing a lease area 30 miles south of Martha’s Vineyard and 20 miles south of Nantucket that it hopes will generate 2,000 MW by the mid-2020s. It is owned by Shell and Ocean Winds, a joint venture by EDP Renewables and ENGIE.
CFO Justin Johns said the companies’ balance sheets and existing banking relationships “gives us a lot of flexibility as to when and how we execute.
“I would expect that we’re going to use non-recourse project financing similar to how we’ve done in Europe, and that will involve working to achieve the most competitive terms in the market,” Johns said. Non-recourse debt, such as a typical home mortgage, is secured by collateral; lenders cannot go after the borrower’s other assets in the event of a default.
OSW projects also currently qualify for an investment tax credit of 30% as long as construction starts by the end of 2025. U.S. Sen. Ed Markey (D-Mass.) introduced a bill in September that would create a 30% investment tax credit for American manufacturers to produce qualified OSW components and dedicated vessels. There would also be production tax credits for select OSW components to “prevent bottlenecks” in the supply chain. (See related story, Offshore WINDPOWER 2021 Conference Briefs: Oct 13-14, 2021.)
Markey’s legislation could get folded into the budget reconciliation bill Democrats are trying to push through Congress. However, Johns said any legislation passed could be a net benefit to the OSW industry if it accounts for all the variables, including the industry’s relative immaturity.
“It depends, but it should be a net benefit if it’s structured right with a view for offshore wind in recognition of where we are with the supply chain,” Johns said. “It needs to recognize U.S. offshore wind is at a much earlier stage. It depends on how that bill is implemented at the agency level. There definitely is potential there, but it needs to be done right.”
FERC has approved the release of up to $2 million from NERC’s financial reserves, allowing the ERO to move ahead with its plans to leave its current office space in Atlanta (RR20-6).
NERC will use the $2 million, to be paid from its Operating Contingency Reserve (OCR), to exercise the early termination clause in the lease for its office in the Atlanta Financial Center. The organization requested FERC’s permission for the expenditure on Sept. 15 because approval is required to spend more than $500,000 from the OCR. (See NERC Seeks FERC Approval to Fund Office Move.)
The lease on NERC’s office in the Atlanta Financial Center is set to expire in 2025. The early termination clause, which must be exercised by Oct. 31, would allow it to exit the lease by October 2022. In its September filing, NERC asked the commission to limit the comment period on its proposal to 14 days, which would allow FERC to deliberate and render a decision by Oct. 15, allowing NERC more time to execute the termination.
NERC also told FERC in September that it has negotiated a lease for a new office space; the location of the new office has not been publicly revealed, but the organization said it expects to save more than $900,000 per year in “budgeted rent and facility expense” after the move. Total out-of-pocket costs for the move to be funded by NERC in 2021 are about $2.7 million, including the early termination fee.
Last month NERC’s Board of Trustees authorized management to execute the lease for the new office and to draw another $773,000 from its reserves in 2022 to fund the move. (See NERC Board Approves Atlanta Office Move.) From that total, $64,000 will be spent from the OCR and the remainder will come from NERC’s Future Obligations Reserve, a fund that CFO Andy Sharp said was set aside by the organization earlier to “subsidize the remaining term of the Atlanta lease.”
NERC’s new landlord has also agreed to pay the majority of the construction, furnishing and move costs, which will allow a “reasonable payback” of the early termination charge, Sharp said.
The use of the reserves means that NERC will not have to change the assessments on regional entities in its 2022 budget. In addition, the ending balance of the OCR in 2022 is projected to be 5.5% of the revised budget, even considering the new expenditures; this is well within the policy target range of 3.5 to 7.5%.
In addition to the financial benefits, the new office space is 40% smaller than the current space. Because NERC plans to allow more employees to work remotely in the future, building on its experience with the COVID-19 pandemic, a smaller footprint will ensure its space does not sit empty. The new space also offers free parking to NERC employees — another benefit to the ERO’s budget — more transportation options, including nearby rail and bus stops, and an adjacent hotel and conference center.
