BOEM proposes Massachusetts offshore wind lease auction

Tuesday, April 10, 2018

U.S. ocean energy regulators have announced the proposed lease sale of two new areas offshore Massachusetts for commercial wind energy leasing, totaling about 390,000 acres.

On April 6, 2018, U.S. Secretary of the Interior Ryan Zinke announced that the Bureau of Ocean Energy Management would publish a Proposed Sale Notice for Commercial Leasing for Wind Power on the Outer Continental Shelf Offshore Massachusetts on April 11, 2018.

Through that Proposed Sale Notice, BOEM described its plans to conduct Atlantic Wind Lease Sale 4A. That auction would offer two lease areas offshore Massachusetts for potential commercial wind energy development: Lease OCS-A 0502 consisting of 248,015 acres, and Lease OCS-A 0503 consisting of 140,554 acres. These lease areas were previously offered in 2015, but were not sold.

The Proposed Sale Notice solicits reaffirmations of continued interest from previously qualified prospective bidders -- including 11 entities that qualified to participate in the 2015 Massachusetts lease sale. It also solicits qualification packages from any prospective bidders that BOEM has not previously qualified for a Massachusetts lease sale. The proposal also comes with a 60-day public comment period.

Following the public comment period, if BOEM proceeds with the Massachusetts lease auction, the agency will eventually publish a Final Sale Notice announcing the time and date of the lease sale. 

To date, the Bureau of Ocean Energy Management has awarded 13 commercial offshore wind leases, including sites off every state from Massachusetts to North Carolina.

Virginia might join RGGI, if compatible

Monday, April 9, 2018

Will Virginia adopt regulations for greenhouse gas emissions trading that enable it to join nine other states participating in the Regional Greenhouse Gas Initiative?

The Regional Greenhouse Gas Initiative, or RGGI, is the first mandatory market-based program in the United States to reduce greenhouse gas emissions. RGGI was formed in 2007 by agreement of participating states. At present, nine states participate in RGGI: Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont. Each participating state has adopted regulations under its own state laws, based on a model rule which requires the electric power sector to cap and reduce CO2 emissions, and which creates markets for trading emission allowances.

Virginia has not been a RGGI participant, but earlier this year the Virginia Department of Environmental Quality proposed a regulation to address carbon emissions from electric power generation. The proposed Virginia regulation would establish a Virginia component of a CO2 Budget Trading Program, much like RGGI.

On April 9, 2018, the nine states participating in RGGI submitted comments on key key program elements identified in Virginia’s proposed regulation for emissions trading, including the regulatory compatibility of Virginia’s proposal with RGGI’s existing 2017 Model Rule. In those comments, the RGGI states encourage "Virginia’s progress towards implementing a market-based program to reduce greenhouse gas emissions" and cite benefits from both the RGGI program and expanding its trading markets.

The RGGI states' comments also note the importance of ensuring that Virginia would be fully compatible with RGGI before entering it. The comments identify potential topics for assessing Virginia's potential compatibility as including "the alignment of key program elements, consistency in the use of regulatory language (such as the definitions of particular terms), and comparable stringency of the program as a whole." For example, the states encouraged Virginia to be more ambitious in setting a tighter state budget for annual covered carbon emissions than its proposed 33-34 million tons.

The Virginia Department of Environmental Quality's proposed carbon regulations remain pending before that agency.

ISO-NE Pay for Performance starts June 2018

Tuesday, April 3, 2018

The operator of New England's electric grid and wholesale electricity markets has adopted a new design for its capacity market, called “Pay For Performance” or PFP, which will become effective on June 1, 2018. As of that date, capacity payments will reward power resources that make investments to successfully boost performance during periods of system stress, while resources that don’t perform will forfeit capacity payments. According to grid operator ISO New England, Inc., these capacity market reforms represent “a significant evolution of the Forward Capacity Market.”

Since 2008, ISO-NE has operated a wholesale market for electric capacity, in addition to markets for energy and ancillary services. According to the grid operator, its Forward Capacity Market (FCM) ensures that the New England power system will have sufficient resources to meet the future demand for electricity. The market design features annual Forward Capacity Auctions held three years in advance of the operating period, in which resources compete to obtain a commitment to supply capacity in exchange for a market-priced capacity payment.

ISO-NE first proposed a version of PFP in 2014 as a means to address what it characterized as "capacity resource performance issues in New England." According to an article by ISO-NE's chief executive officer, ISO-NE felt that the prevailing capacity market design increasingly failed to incentivize resource performance during times of system stress. The grid operator reported "escalating incidents of poor generator performance that have threatened bulk power system reliability," and identified a "broken linkage" between capacity payments and actual performance under the previous rules.

According to ISO-NE, its Pay for Performance reform "firmly connects capacity payments to resource performance." It is designed to increase financial incentives for resource owners to make investments to ensure their resource’s reliability during periods of scarcity.

The Pay for Performance market design is based on a “two-settlement approach” such as is used in forward markets for electricity and other commodities.

In a first stage, a market participant takes on a Capacity Supply Obligation – a forward obligation to provide a specified amount of capacity from its resource – in exchange for a Capacity Base Payment. That base payment is determined by multiplying the resource’s Capacity Supply Obligation (in megawatts) by the relevant clearing price – either the clearing price from a Forward Capacity Auction or reconfiguration auction, or a bilateral contract price. Once a market participant has taken on a Capacity Supply Obligation in exchange for the Capacity Base Payment, the participant has a physical, resource-specific obligation to cover a share of the system’s energy and reserve requirements during reserve deficiencies.

In a second stage, the participant is subject to a settlement for deviations from its committed share. Under PFP, this second payment, which can be positive or negative, is called the Capacity Performance Payment. If a resource delivers more than its share of the system’s requirements during a capacity scarcity condition, it will be paid an additional amount for that incremental production; if it delivers less than its share, it must “buy out” of its position by paying other resources that did deliver.

Tariff revisions were accepted by the FERC in 2014 and 2015, and ISO-NE has subsequently developed further changes to its tariff to implement the program. The revised tariff is scheduled to take effect on June 1, 2018.

FERC tech conference on DER aggregation

Monday, April 2, 2018

How should distributed energy resources be allowed to aggregate and participate in organized wholesale electricity markets? How could increased adoption of distributed energy resources affect the bulk power system? U.S. energy regulators have announced a two-day technical conference to be held in April 2018 to discuss these and other issues relating to distributed energy resources.

Distributed energy resources, or DERs, are generally small, geographically dispersed electric resources, installed and operated on the distribution system at voltage levels below the typical bulk power system levels of 100kV. Traditional DERs have featured distributed generation like rooftop solar panels or on-site combined heat and power plants, but the term now encompasses other resources including energy efficiency, microgrids, and even new technologies like energy storage. These distributed energy resources can be cost-effective alternatives to traditional utility infrastructure and business models, and can also have reliability and environmental benefits.

The Federal Energy Regulatory Commission has scheduled a technical conference on DERs for April 10 and 11, 2018. According to a supplemental notice, the Commission hopes to gather additional information to inform its decision on DER aggregation reforms proposed in the Commission's 2016 Notice of Proposed Rulemaking on Electric Storage Participation in Markets Operated by Regional Transmission Organizations and Independent System Operators. The Commission also hopes to gather information on the potential effects of DERs on the bulk power system.

Vineyard Wind construction and operations plan to be reviewed

Friday, March 30, 2018

U.S. ocean energy regulators have announced their intent to study the environmental impacts of approving an offshore wind developer's plans to construct and operate an 800-megawatt wind energy facility offshore Massachusetts.

At issue is a proposal by Vineyard Wind LLC to construct and operate an 800-megawatt (MW) wind energy facility offshore Massachusetts. The project area, a lease for which was awarded to Offshore MW LLC by the U.S. Bureau of Ocean Energy Management in 2015, is located about 14 miles from the islands of Martha’s Vineyard and Nantucket, in water with depths of about 121 to 161 feet.

Vineyard Wind proposed a Construction and Operations Plan for its project in December 2017, potentially to be constructed as two 400 MW phases, up to five years apart. The project would entail the installation of up to 106 wind turbine generators, each with a capacity between 8 and 10 MW, with two or four offshore substations or electrical service platforms. Potential export cable landfalls include the towns of Yarmouth, Barnstable, and Nantucket, and on-shore construction and staging at the New Bedford Marine Commerce Terminal facility.

On March 29, 2018, the U.S. Bureau of Ocean Energy Management (BOEM) announced its publication of a Notice of Intent to prepare an Environmental Impact Statement for Vineyawrd Wind's Construction and Operations Plan. BOEM has opened a 30-day public comment period, during which it will conduct five public scoping meetings and accept comments that will be used to inform preparation of the EIS.

BOEM recently proposed revised its regulatory processes by publishing draft guidelines for the use of “Design Envelopes” in Construction and Operations Plans for offshore wind energy facilities, which it said would allow developers greater flexibility. Vineyard Wind's is said to be the first to use this design envelope approach in its proposed COP.

Report on US electric grid physical security

Wednesday, March 28, 2018

Since a 2013 rifle attack on a critical electric power substation in California, the U.S. electric power sector has generally moved toward greater physical security for critical assets, according to a report published by the Congressional Research Service. But the report says bulk power security "remains a work in progress," and suggests further investment -- and policy reforms -- may follow.

The report published on March 19, 2018 -- NERC Standards for Bulk Power Physical Security: Is the Grid More Secure? -- begins with the premise that securing the electric power grid is among the nation's highest priorities for critical infrastructure protection. It notes that a 2013 rifle attack on an electric transmission substation in California which caused widespread power outages also broadened policy attention from cybersecurity to encompass the physical security of assets critical to the power grid.

In response, Congress enacted legislation to strengthen power grid physical security and to facilitate its recovery from disruption. Section 1104 of the Fixing America’s Surface Transportation (FAST) Act contains provisions to protect or restore the reliability of critical electric infrastructure or defense of critical electric infrastructure during a grid security emergency. The Federal Energy Regulatory Commission (FERC) and the nation's electric reliability organization NERC also took action to develop new reliability standards for the physical security of bulk power critical infrastructure.

But physical security risks may persist. The report references a September 2016 rifle attack on a Garkane Energy Cooperative transformer substation in Utah as illustrating this persistence. The report notes that while it is probably accurate to conclude that the grid is more physically secure than it was in 2013, "it has not necessarily reached the level of physical security needed based on the sector's own assessments of risk.

The report notes Congress's continued concern about the physical security of the electric grid. It identifies possible areas for further policy focus as including "security implementation oversight, cost recovery, hardening vs. resilience, and the quality of threat information."

Meanwhile, cybersecurity has remained a priority. An October 2017 FERC report describing the results of its audits of regulated companies' cybersecurity protection processes and procedures noted that most met the applicable mandatory standards. But earlier this month, NERC fined an anonymous utility $2.7 million for alleged violations of reliability standards in connection with a data security breach, and the U.S. Department of Homeland Security issued warnings about Russian hackers targeting computer systems controlling energy and other critical infrastructure.

Interest in shoring up the security of energy infrastructure and systems -- both from physical attacks as well as cyber threats -- appears poised to drive continued discussions, regulation, and investment.

Can challenges or prize competitions solve water supply problems?

Monday, March 26, 2018

How can challenges or prize competitions help society address barriers that may prevent long-term access to low-cost water supplies?

The U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy (EERE) has published a Request for Information, seeking information from the public to understand the key technical and other barriers that may prevent long-term access to low-cost water supplies that could be best addressed through challenges and prize competitions.

Water is essential for human health, economic growth, and agricultural productivity, and plays significant roles in the U.S. energy sector. The Department of Energy uses the term "energy-water nexus" to describe the interconnected nature of energy and water systems. While the U.S. has generally benefited from access to low-cost water supplies, according to the Energy Department, "new challenges are emerging that, if left unaddressed, could threaten this paradigm" including competing uses and water quality problems.

The Energy Department operates a variety of programs to advance domestic energy policy, including programs focused on research and development and grant funding. But could the Department of Energy be more effective by offering challenges or prize competitions? Unlike traditional R&D funding in which participants are selected up front with funding provided at the beginning in order to pursue a target or goal, challenges and prize competitions typically define a problem and offer a reward to anyone finding a solution.

Challenges and prize competitions have been adopted by the federal government as well as private actors. Since 2010, federal entities have awarded millions of dollars in prize money and other incentives through over 740 challenges and prize competitions, and nonprofits and private companies have launched many more.

In a Request for Information published in the Federal Register on March 19, 2018, the Energy Department identified challenges and prize competitions as "tools and approaches the Federal government and others can use to engage a broad range of stakeholders, including the general public, to develop solutions to difficult problems. Challenges and prize competitions rely on competitive structures to drive innovation among participants and usually offer rewards (financial and/or other) to winners and/or finalists."

Through the request, the Energy Department asks for public feedback on a variety of issues relating to using prizes and challenges to solve problems around the energy-water nexus, including an identification of challenges whose solution would allow for a significant increase in the volume of available water produced from non-traditional sources, significant improvements in industrial and power-sector water efficiency, or reductions in the cost to treat and deliver drinking water and wastewater to consumers without harming water quality.

Responses to the Request for Information are due no later than 5:00 p.m. (ET) on May 14, 2018.