Published: May 12, 2023
By: Danielle Powers, Chief Executive Officer
There is no question that expanding the electric transmission system is a key factor in achieving the nation’s clean energy goals. The most efficient way to ensure that this happens, however, is being strongly debated.
FERC Order 1000 established reforms in transmission planning and cost allocation, and eliminated the Right of First Refusal (ROFR) for those incumbent utilities involved in regional or inter-regional infrastructure construction, with limited exceptions.1 In Order 1000, FERC reasoned that by eliminating long-standing monopolies, competition would be created, and innovation and cost savings would result. In eliminating utilities’ monopoly over regional transmission, however, FERC expressly left it to states to enact their own ROFR laws.
Utilities in Kansas, Missouri, Oklahoma, Mississippi, and Montana have successfully persuaded lawmakers to prioritize ROFR legislation. Indiana recently passed ROFR legislation, and legislation is anticipated in other midwestern states this year. States including North and South Dakota, Nebraska, Texas, Iowa, and Michigan have ROFR laws in place.
ROFR issues are also being re-examined at the federal level. Questions around the effectiveness of competition in transmission have prompted the FERC to consider giving incumbent utilities the right to build regional transmission if they partner with one or more unaffiliated, non-incumbent partners.
Critics of the ROFR argue that it can limit competition and innovation in the industry. By granting the incumbent transmission provider the first opportunity to continue providing service, it can create a barrier to entry for other providers who may be better suited to meet the needs of the market. Additionally, the ROFR can limit consumers’ ability to access alternative sources of energy and limit the development of renewable energy sources.
These arguments have recently carried the day in Iowa, where the battle over who should be able to build and own the regional transmission projects necessary to support grid reliability and the shift toward renewable energy is currently playing out.
The Iowa Supreme Court recently halted a 2020 order giving incumbent utilities in Iowa the right of first refusal to build proposed transmission projects. Stating that the 2020 law would stifle competition and harm the business interests of out-of-state companies, the Iowa Supreme Court sent the case back to the district court to decide whether the ROFR is unconstitutional. The temporary injunction affects five transmission projects totaling about $2.64 billion that ITC Midwest, MidAmerican Energy and Cedar Falls Utilities intend to build in Iowa. The projects are part of the Midcontinent Independent System Operator’s Long Range Transmission Planning Tranche 1 projects, approved last year.
The battle over who builds the grid of the future will continue to be fiercely debated. Protracted debate, however, risks the grid transformation necessary to enable a clean energy future.
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All views expressed by the author are solely the author’s current views and do not reflect the views of Concentric Energy Advisors, Inc., its affiliates, subsidiaries, or related companies. The author’s views are based upon information the author considers reliable at the time of publication. However, neither Concentric Energy Advisors, Inc., nor its affiliates, subsidiaries, and related companies warrant the information’s completeness or accuracy, and it should not be relied upon as such.
1 An incumbent utility is defined as an entity that develops a transmission project within its own retail distribution service territory or footprint.
Published: April 25, 2023
By: Concentric Staff Writer
Nuclear fusion took another step forward as the Nuclear Regulatory Commission (“NRC”) on April 13 directed its staff to develop a regulatory framework for nuclear fusion energy systems.
The directive approved staff’s limited-scope Option 2 to license and regulate fusion energy systems, saying staff should take into account systems that have already been licensed and are regulated by Agreement States—states that have entered into formal agreements with the NRC to assume regulatory authority over certain radioactive materials and activities within their borders.
Fusion technology received a boost in 2021 when the National Ignition Facility at Lawrence Livermore National Laboratory achieved a milestone of performing a fusion reaction that produced more energy than was put into it. NRC does not license fusion facilities as it does the more common fission technology, but has established guidelines and safety protocols for its safe operation.
In an FAQ, the International Atomic Energy Agency (“IAEA”) describes nuclear fusion as a merging of atoms, rather than a chain-reaction fission process, that does not generate long-lived radioactive nuclear waste. The IAEA further describes fusion reactors as inherently safe because fusion energy production is not based on a chain reaction.
The NRC in the directive said staff should evaluate whether “controls-by-design approaches, export controls, or other controls are necessary for near-term fusion energy systems.” Staff is to consult with Agreement States and notify the agency if future fusion design presents hazards sufficiently beyond those of near-term fusion technologies.
Staff should develop a new volume of its series of reports known as NUREG-1556, “Consolidated Guidance About Materials Licenses,” the NRC said, dedicated to fusion energy systems.
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All views expressed by the author are solely the author’s current views and do not reflect the views of Concentric Energy Advisors, Inc., its affiliates, subsidiaries, or related companies. The author’s views are based upon information the author considers reliable at the time of publication. However, neither Concentric Energy Advisors, Inc., nor its affiliates, subsidiaries, and related companies warrant the information’s completeness or accuracy, and it should not be relied upon as such.
Published: March 16, 2023
By: Concentric Staff Writer
It is no secret that hydrogen, the most abundant and lightest element in the universe, is also one of the most powerful. Research in recent years is moving closer towards expanding its commercial applications to power generation and transportation.
Hydrogen has many applications and is already in widespread use in industrial processes such as refining petroleum, treating metals, making fertilizer, and processing foods, according to the U.S. Energy Information Administration. It is even used by the National Aeronautics and Space Administration for rocket fuel and fuel cells that power spacecraft. Now, new efforts are underway aimed at making hydrogen an everyday part of the power sector and the U.S. vehicle fleet.
The Inflation Reduction Act (“IRA”), passed in the summer of 2022, has created a surge in the development of the hydrogen resource. In December 2022, the U.S. Department of Energy (“DOE”) responded to concept papers submitted for a program created by the IRA, known as the Regional Clean Hydrogen program. DOE, in a news release, said the program “will be a central driver in helping communities across the country benefit from clean energy investments, good-paying jobs, and improved energy security—all while supporting President Joe Biden’s goal of a net-zero carbon economy by 2050.”
DOE describes hydrogen hubs as a network of clean-hydrogen producers, consumers, and “connective infrastructure in close proximity.” The 79 concept papers from states and their partners submitted to DOE flow from the $7 billion funding opportunity the agency issued in September 2022. The concept papers requested nearly $60 billion total, eight to nine times the amount of the funding solicitation, and proposed almost $150 billion in private capital for projects with many different technologies and in every region of the country. DOE said it sought the best hydrogen-based solutions possible and the concept paper solicitation was aimed at getting a better understanding of what final funding applications might look like. The concept papers were judged based on a series of criteria, including qualifications, experience, and capabilities of the applicant; expected contributions toward a national hydrogen network; plans to develop production, end-use, and connective facilities; and community benefits.
One of the concept papers that received an encouragement letter from DOE is the Western Interstate Hydrogen Hub, a project between the states of Colorado, New Mexico, Utah, and Wyoming. The four states are keen on developing hydrogen as a safe, clean, and sustainable energy resource.
“This strategy will help to meet the region’s diverse energy needs and policy goals, including reducing greenhouse gas emissions, using a broad range of feedstock to develop hydrogen, ensuring economic competitiveness, and supporting communities on the front lines of the energy transition,” the four-state coalition said in a December press release. According to DOE, an “encouragement” letter does not mean a project will be selected, and those that received “discouragement” notices are still free to apply. The encouragement letters mean the applicant is “on the right path” to submitting a full application, and the agency said there will be heavy competition for the funding, even among entities that received encouragement letters.
Other hydrogen hub projects selected by DOE for letters of encouragement include efforts in the Northwest, one by Obsidian Renewables and another by the governments of Washington and Oregon; the Halo Hub, a partnership between Arkansas, Louisiana, and Oklahoma; the Appalachian Regional Clean Hydrogen Hub in West Virginia, supported by that state, Kentucky, Ohio, and Maryland; the HyVelocity Hub in Texas; and others.
Hydrogen is also being explored for electricity generation with several projects underway to convert former natural gas-burning plants to burn hydrogen. One is the 485-MW Long Ridge Energy Generation Project in Ohio, which will run on a 95-percent natural gas, 5-percent hydrogen blend in a gas turbine with plans to burn pure hydrogen eventually. Intermountain Power Agency in Utah also plans to convert to hydrogen from coal, and there is a plan to convert the 830-MW Scattergood Generating Station in Los Angeles to hydrogen from natural gas. The Los Angeles City Council on Feb. 8 in a 12-0 vote approved allowing the Los Angeles Department of Water & Power (“LADWP”) to move forward with a competitive bidding process for the project, but also approved a separate resolution requiring LADWP to closely communicate with the council on its progress.
However, hydrogen is not popular with most environmental groups—Food & Water Watch (“F&WW”) has indicated its opposition to the hydrogen hubs program. Environmental groups say it is an effort by the fossil fuel industry to support natural gas, which is used to produce “blue hydrogen.” Separately, “green hydrogen” is hydrogen produced from renewable resources. According to French utility company Engie, the most common way to create green hydrogen is electrolysis using water and electricity produced from non-carbon-emitting resources, or using another technique known as pyro-gasification in which heat is applied to biomass such as wood or agricultural waste to produce a complex gas from which hydrogen is extracted.
F&WW, which also opposes the Scattergood repowering, says corporations are pushing hydrogen to keep fossil-fuel facilities alive and that burning hydrogen produces smog through the production of nitrogen oxides. Turbine manufacturer Mitsubishi says its hydrogen turbines that burn 70 percent hydrogen and 30 percent natural gas produce about the same carbon dioxide emissions as burning straight natural gas.
Hydrogen fuel cells, which are already being used in commercially available vehicles, generate electricity by combining hydrogen and oxygen to produce electricity, water, and heat in a process similar to that of a battery. Fuel cells, depending on size, are used for a range of applications, from consumer products such as laptop computers and cellphones to power grids, backup generation, and microgrid applications.
At the end of October 2021, there were about 166 operating fuel cell electric power generations at 113 facilities making up about 260 MW of generation capacity. The largest such facility is the 16-MW Bridgeport Fuel Cell in Connecticut, followed by the Red Lion Energy Center in Delaware, which has five fuel cells totaling 25 MW.
On the transportation side, hydrogen is not only being explored for ground-based vehicles, but also airplanes. ZeroAvia, founded in 2018, is focused on repowering existing aircraft with electric motors, fuel cells, and hydrogen. It has signed memoranda of understanding with several aircraft manufacturers to attain help in certifying the technology. ZeroAvia hopes to develop a 600-kilowatt powertrain by 2025 for an aircraft with 19 seats able to fly up to 300 nautical miles. In 2027, it hopes to launch a modular 2- to 5-megawatt drivetrain, able to retrofit aircraft with up to 80 seats for flights up to 700 miles, and higher-output drivetrains in later years.
Hydrogen vehicles utilize electric motors powered by hydrogen fuel cells. Toyota has been a leader in this area, with several models publicly available. However, unlike electric vehicles, hydrogen vehicles still have a relatively high fuel cost per gallon of hydrogen, and a higher up-front purchase price, and the hydrogen-station network needed to support these vehicles is still in its nascent stages.
According to DOE, transporting hydrogen requires either a pipeline network of cryogenic liquid tanker trucks or gaseous tube trailers. Development of pipelines must be in areas with substantial, stable hydrogen demand in the area of hundreds of tons per day. Liquification plants, tankers, and trailers are deployed in areas where demand is at a smaller scale or emerging. Additional infrastructure is needed at the point of hydrogen use, including compression, storage, dispensing, metering, and contaminant detection and purification technologies.
Several companies are capable of delivering bulk hydrogen today, DOE said, and some infrastructure is in place because of its usage in industrial applications, but more research and development, expansion of the supply chain, and new deployments will be needed before it is in widespread application. Some of the biggest challenges are in the areas of reducing cost, increasing its efficiency, maintaining hydrogen purity, and minimizing leakage from infrastructure, the agency said. The necessary infrastructure will depend on the region and the type of market—urban, interstate, or rural—but these options will also evolve as demand grows and technology improves. If all the various pieces fall into place, hydrogen might enjoy a long future as a vital power source in the U.S. energy mix.
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All views expressed by the author are solely the author’s current views and do not reflect the views of Concentric Energy Advisors, Inc., its affiliates, subsidiaries, or related companies. The author’s views are based upon information the author considers reliable at the time of publication. However, neither Concentric Energy Advisors, Inc., nor its affiliates, subsidiaries, and related companies warrant the information’s completeness or accuracy, and it should not be relied upon as such.
Published: March 16, 2023
By: Danielle Powers, Chief Executive Officer
The Massachusetts Department of Energy Resources (“MA DOER”) issued the framework for its proposed Forward Clean Energy Market (“FCEM”) in January of 2023, and invited written comments on the proposal. Comments were submitted by numerous interested parties, including market participants, utility ratepayers, advocacy groups, and concerned citizens. A review of the submitted comments revealed some common themes.
One of the most consistently submitted comments was the desire for a robust stakeholder process. Many parties requested that the MA DOER work with other New England states to establish a formal public stakeholder process to consider, discuss and debate the FCEM proposal via technical conferences and public comment periods. The parties reasoned that this would allow the involvement of stakeholders not directly involved in the energy markets (e.g., ratepayers, community groups, and environmental advocates) and give a voice to those ineligible to participate in meetings involving the design and operation of the New England energy markets. An open and transparent stakeholder process is critical in moving a proposal forward and designing a market with the greatest chance of success.
In addition, several parties recognized that the proposed market design is highly complex. This complexity can potentially restrict competition by developers and clean-energy resource suppliers, and substantially limit the possible benefits of the proposed market. In addition, it will take years to resolve questions and details around jurisdiction, governance structure, interaction with existing wholesale markets, multiple products and multiple commitment periods, and the auction mechanism.
The existing capacity market took dozens of meetings among over 80 stakeholders for almost two years to finalize and implement, and the proposed FCEM is far more complex than the current market. It is reasonable to assume that this market would not be implemented until 2025 for a 2028 delivery period at best. This delay is a critical issue in achieving the objectives of the FCEM.
The comments submitted also recognized the importance of alignment between the FCEM and the existing regional wholesale markets. For the FCEM to successfully meet region-wide policy goals and reliability needs, the market must be compatible with the existing wholesale markets administered by ISO New England. While this does not require FCEM and current wholesale market integration, the need to consider the obligations, requirements, and revenues associated with the FCEM in the existing wholesale markets is unavoidable.
Finally, several comments on the proposed FCEM centered around the failure of the existing capacity market in New England in advancing the state’s climate mandates and integrating these mandates into the competitive markets. This criticism is unfounded. The competitive energy markets are designed to provide reliable wholesale electricity at competitive prices, not to address public policy mandates.
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All views expressed in this summary are solely the current views of the Author and do not necessarily reflect the views of Concentric Energy Advisors, Inc., its affiliates, subsidiaries, and related companies, and the clients of Concentric Energy Advisors. The Author’s views are based upon information the Author considers reliable at the time of publication.