Increased Renewable Energy, Natural Gas Generation Likely to Cut Summer Coal Demand: EIA
June 15, 2023
by Paul Ciampoli
APPA News Director
June 15, 2023
The U.S. Energy Information Administration is forecasting that the largest increases in U.S. electricity generation this summer will come from solar, wind, and natural gas-fired power plants because of new generating capacity coming online. The rising generation from these sources will likely be offset by reduced generation from coal-fired power plants.
Natural gas remains the primary source of generation in the electric power sector, “and we expect U.S. natural gas-fired generation will grow by 3%, or 16.7 terawatt-hours, this summer compared with last year,” it said.
Additional natural gas-fired generating capacity and favorable fuel costs are the primary drivers of the forecast increase in generation from natural gas this summer.
A large share of the new generating capacity built in the United States over the past few years is powered by solar or wind. The U.S. electric power sector added an estimated 14.5 gigawatts of solar generating capacity and about 8.0 GW of wind capacity during the 12 months ending May 31, 2023.
EIA forecasts that U.S. wind-powered generation this summer will be 7% (5.8 TWh) higher than last summer.
EIA expects that new solar capacity will lead to a 24% (10.8 TWh) increase in solar generation this summer compared with last summer.
Many solar projects are also being built with associated battery storage systems to help provide power when solar and wind resources are low. The electric power sector has added an estimated 5.3 GW of battery capacity in the past 12 months, a nearly 90% increase, EIA said.
“In addition to the continuing growth in generation from renewable energy sources, we forecast 4.5 TWh more nuclear generation this summer than in summer 2022 as result of the planned opening of a new reactor at the Vogtle nuclear power plant.”
Georgia Power announced on May 29 that Vogtle Unit 3 has safely reached 100 percent power, marking a major milestone towards commercial operation. This milestone marks the maximum energy the unit is licensed to produce in the reactor core and is the first time the unit has reached its expected output of approximately 1,100 electric MW.
Southern Nuclear will operate Vogtle 3 and a second new unit, Vogtle 4, on behalf of the co-owners: Georgia Power, Oglethorpe Power and public power utilities MEAG Power and Dalton Utilities. MEAG Power is a 22.7% co-owner of Plant Vogtle, including the new units, while Dalton Utilities is a 1.6% co-owner of the plant.
EIA expects the increase in summer generation from solar, wind, and nuclear power to contribute to reduced generation from coal-fired power plants.
Between June 2022 and May 2023, about 11 GW of U.S. coal capacity retired, and EIA expects 15% (36.0 TWh) less U.S. coal-fired generation this summer compared with last summer.
Energy Storage Market Sees Decline in Installations
June 15, 2023
by Paul Ciampoli
APPA News Director
June 15, 2023
Across all segments of the industry, the U.S. energy storage market added 2,145 megawatt hours in the first quarter of 2023, a 26% decrease from the fourth quarter of 2022, according to a new report released June 14.
The grid-scale segment installed 1,553 MWh in Q1 2023, recording the second-straight quarterly decline and falling 33% below first quarter 2022 installations, according to the report released by the American Clean Power Association and Wood Mackenzie.
California and Texas continue to drive the market, accounting for 84% of Q1 activity, but project delays contributed to the declining environment, according to the latest U.S. Energy Storage Monitor report.”
Wood Mackenzie has forecasted 2023 additions from the grid-scale project pipeline at 8.9 GW and 10.5 GW across all segments. While the forecasted capacity for 2023 decreased slightly quarter-over-quarter, total additions for all segments are still expected to double by end-of-year 2023 from 2022.
“We are seeing the effects of supply chain issues and interconnection queue backlogs hinder market growth,” said Vanessa Witte, senior analyst with Wood Mackenzie’s energy storage team. “This is the first consecutive quarterly decline we have seen in the energy storage market since 2015 when installations were much smaller in volume and more unpredictable. While the market has faced challenges, we do anticipate a stronger second quarter, as many project CODs have been pushed, but are still very viable.”
Community, commercial, and industrial installations bounced back in Q1 after four consecutive quarters of lower-than-average activity. In total, the CCI market installed 203.3 MWh for its second-highest quarter on record and 145% above year-over-year numbers.
Residential storage recorded its second-highest quarter on record at 388.2 MWh but there was a decline from Q4 2022 installed capacity. This marked the first QoQ decline for the residential sector in nearly two years.
“Our outlook for the storage sector is still bullish, with projected growth strong through 2027. Near-term we will see some challenges, but we expect them to be corrected and activity to increase as more renewable generation will drive the need for storage,” said Witte.
Federal Energy Regulators Finalize Rules to Bolster Reliability Against Extreme Weather Threats
June 15, 2023
by Paul Ciampoli
APPA News Director
June 15, 2023
The Federal Energy Regulatory Commission on June 15 finalized two rules intended to help improve reliability of the bulk power system against threats of extreme weather.
One rule directs the North American Electric Reliability Corporation to develop a new or modified reliability standard to require transmission system planning for extreme heat and cold weather conditions over wide geographical areas, including studying the impact of concurrent failures of bulk power system generation and transmission equipment and implementing corrective actions as needed.
In a presentation at FERC’s open meeting, Commission staff noted that NERC must develop a new reliability standard or modifications to the current transmission planning Reliability Standard, TPL-001-5.1, no later than 18 months from the date of publication of the final rule in the Federal Register.
Specifically, the final rule directs NERC to develop a new or modified reliability standard that addresses three major concerns.
First, the draft final rule requires the proposed standard to define benchmark events based on prior extreme heat and cold weather events and/or future meteorological projections.
Second, the proposed standard must require planning entities to develop planning cases for extreme heat and cold weather events using steady state and transient stability analyses that cover a range of extreme weather scenarios, including the expected resource mix’s availability during extreme weather conditions and the wide-area impacts of extreme weather.
Third, to the extent these planning studies discover specified instances when performance requirements during extreme heat and cold weather events are not met, the proposed standard must require planners to develop corrective action plans to allow the performance requirements to be met.
The second rule directs transmission providers to submit one-time reports describing their policies and processes for conducting extreme weather vulnerability assessments and identifying mitigation strategies (Docket Nos. RM22-16, AD21-13).
FERC staff noted that an extreme weather vulnerability assessment — as defined in the final rule — is any analysis that identifies where and under what conditions jurisdictional transmission assets and operations are at risk from the impacts of extreme weather events, how those risks will manifest themselves, and what the consequences will be for system operations.
The final rule directs FERC-jurisdictional transmission providers to file one-time informational reports describing how they conduct extreme weather vulnerability assessments, if at all.
Specifically, transmission providers will need to report how they: 1) establish a scope; 2) develop inputs; 3) identify vulnerabilities and exposure to extreme weather hazards; 4) estimate the costs of impacts; and 5) use the results of vulnerability assessments to develop risk mitigation measures.
FERC staff said the reports would provide the Commission with a fuller record as to whether and how transmission providers assess and mitigate vulnerabilities to extreme weather and will enable coordination among transmission providers as well as information sharing on best practices.
The final rule reflects certain changes from a related Notice of Proposed Rulemaking, FERC staff said. The changes include requiring reporting on how transmission providers define extreme weather and requiring reporting on how Regional Transmission Organizations and Independent System Operators account for differences between transmission owner members’ assumptions and results.
The new rules stem from the Commission’s June 2021 technical conference on Climate Change, Extreme Weather and Electric System Reliability.
Both rules take effect 90 days after publication in the Federal Register.
FERC Approves Final Rule Aimed at Improving Credit Risk Management in Wholesale Power Markets
June 15, 2023
by Paul Ciampoli
APPA News Director
June 15, 2023
The Federal Energy Regulatory Commission on June 15 approved a final rule designed to improve credit risk management in the organized wholesale electric power markets operated by regional transmission organizations and independent system operators.
The Commission’s final rule will allow RTOs and ISOs to share credit-related information among themselves so they can better assess market participants’ credit risks.
The final rule explains that permitting the sharing of credit-related information among RTOs and ISOs could improve their ability to assess market participants’ credit exposure across multiple electric power markets.
It also could enable market operators to respond to credit events more quickly and effectively, thereby minimizing the overall risks of unexpected defaults by market participants.
The market operators’ tariffs currently contain confidentiality provisions that act as barriers to such information sharing.
The final rule and a July 2022 Notice of Proposed Rulemaking “demonstrate the Commission’s commitment to ensuring that market rules minimize the overall risks of unexpected defaults by market participants and respond to concerns raised” at a February 2021, FERC staff technical conference on principles and best practices for credit risk management in organized wholesale electric markets, FERC said.
The final rule takes effect 60 days after publication in the Federal Register.
APPA Welcomes Release of Elective Payment of Energy Tax Credit Guidance
June 14, 2023
by Paul Ciampoli
APPA News Director
June 14, 2023
The American Public Power Association on June 14 said that it is glad to see the release of the notice of proposed rulemaking for elective payments made possible by the Inflation Reduction Act.
The guidance was released by the Internal Revenue Service and the Treasury Department.
“We are still reviewing the proposed rules and expect to file comments but appreciate greatly the work that has been done to date to reach this point,” APPA said in a statement.
Prior to the IRA, utilities serving nearly 30 percent of the nation’s customers were excluded from receiving energy incentives delivered through the tax code, meaning the vast majority of wind, solar, and other non-hydropower renewable generation is owned by merchant generators with roughly 60 percent of the value of associated tax credits going to banks, insurance companies, and other financial “owners.”
“Elective payment of tax credits has the potential to be revolutionary for such investments, unlocking the ability for public power communities to own and control such projects, rather than going hat in hand to Wall Street hoping to find a willing investor. That means local decision-making driving local generation and jobs,” APPA said.
APPA noted that one caveat is that to claim energy tax credits through elective payment, the qualifying project must meet domestic content requirements.
Draft proposed domestic content regulations released by Treasury last month, though, appear quite challenging to meet from a substantive and logistical standpoint, APPA said. That means many entities wishing to claim direct payment may have to rely on waivers from the domestic content requirement for elective payments.
As a result, APPA “eagerly awaits guidance on these waivers, which if drafted correctly could mean elective payment spurring local clean energy resource development.”
The proposed rules that will be formally published in the Federal Register on June 21, 2023, include:
- Pre-Filing Registration Requirements for Certain Tax Credit Elections
- Section 6417 Elective Payment of Applicable Credits;
- Section 6418 Transfer of Certain Credits
House Committee Passes Bill That Retains Direct Payment of Certain Energy Tax Credits
June 14, 2023
by Paul Ciampoli
APPA News Director
June 14, 2023
The House Committee on Ways and Means on June 13 passed legislation that retains direct payment of certain energy tax credits but repeals some aspects of the energy tax provisions of the Inflation Reduction Act.
H.R. 3938, the Build It in America Act, would repeal the Clean Energy Production Credit, the Clean Energy Investment Credit, the Previously-Owned Clean Vehicle Credit and the Commercial Clean Energy Vehicle Credit.
At this point, it is not clear when the measure might be considered by the House and Senate Finance Committee Chairman Ron Wyden (D-OR) has said the repeal of the energy tax provisions will not be considered in his committee.
Under the bill, in general, there would be no production tax credit for wind, solar, closed-loop biomass, open-loop biomass, geothermal energy, municipal solid waste, qualified hydropower production, and marine and hydrokinetic renewable energy facilities construction of which begins after December 31, 202; and
Also, there would be no investment tax credit for solar energy property, fuel cell property, geothermal power property, fiber optic solar and electrochromic glass property, small wind property, waste energy recovery property, energy storage technology property, biogas property, microgrid controller property, combined heat and power system property placed in service after December 31, 2024.
The American Public Power Association strongly supports the use of refundable direct payment tax credits as a way of ensuring access to energy tax credits for projects owned by public power.
As a result, it is glad to see the decision to retain access to refundable direct payment tax credits for other tax credits, including the production tax credit, investment tax credit, carbon capture credit, the storage credit, and the advance nuclear tax credits.
At the same time, the Association said that by repealing the new “tech-neutral” production and investment tax credits created under IRA and allowing the current ITC and PTC to expire after 2024, the bill would inject needless uncertainty into ongoing federal incentives for these investments, putting in jeopardy public power’s ability to reliably and affordably make the investments needed to transition to a cleaner generation resource mix.
Researchers Envision Making Backup Energy Storage Available by Rail
June 13, 2023
by Peter Maloney
APPA News
June 13, 2023
A new paper from researchers at Lawrence Berkeley National Laboratory details how railways could provide an energy storage network that offers a flexible option for backup power for the grid.
In the paper, Leveraging rail-based mobile energy storage to increase grid reliability in the face of climate uncertainty, published in Nature Energy, the researchers compared the cost of deploying batteries on rail cars for low-frequency events, such as weather related power outages, with the investment costs of stationary energy storage and transmission lines.
The study looked at historical freight rail flows, costs, and scheduling constraints to see whether railroads could be summoned to transport batteries for high-impact events, given that grid operators typically have at least a few days’ notice, and sometimes up to a week, when extreme weather is coming. The paper’s authors found that mobile energy storage could travel between major power markets along existing rail lines within a week without disrupting freight schedules.
In cases where the trains need to cover distances of about 250 miles or less, rail-based energy storage could make more sense from a cost perspective than building stationary battery banks to fill supply gaps that happen during less than 1 percent of the year’s total hours, the researchers found. At that range, transmission lines are more cost effective than rail lines, if the batteries are used more frequently, the researchers added.
When distances grow to more than 930 miles, rail transport of energy storage becomes cheaper than transmission lines for low-frequency events, the paper found. Bringing energy storage to weather-affected areas by rail could save the power sector upwards of 60 percent of the total cost of a new transmission line or 30 percent of the total cost of stationary battery storage, the authors concluded.
While both new transmission lines and banks of batteries to store energy will be needed to meet demand and provide backup power for a grid that is increasing powered by intermittent renewable resources, “we wanted to explore additional, complementary technologies,” Natalie Popovich, a Berkeley Lab research scientist and co-author of the study, said in a statement. “We have trains that can carry a gigawatt-hour of battery storage, but no one has thought in a cohesive way about how we can couple this resource with the electric grid.”
The paper cited New York State with its robust freight capacity and current transmission constraints between upstate clean energy generation and downstate load centers, as an example of where rail-based mobile energy storage could work well. In other cases, the authors said, it may make sense for multiple states to share the additional capacity from a rail-based battery bank.
“This is not necessarily a resource that needs to be in one region,” Jill Moraski, a graduate student at the University of California Berkeley, researcher at Berkeley Lab, and the paper’s lead author, said in a statement. “It can operate similar to an insurance policy, where you spread the coverage across risks for a wide geographic region.”
The authors acknowledged that regulatory and infrastructure hurdles exist. For instance, there are not adequate interconnections to take power off a train and plug it into the grid, nor are there approval processes, pricing regimes nor regulatory frameworks in place.
They also acknowledged that extending energy storage across the rail network is not a replacement for expansion of the existing transmission infrastructure, but it could be an important complement.
“Our paper gives a top-level overview of how rail-based mobile energy storage could benefit today’s grid, in today’s climate,” Moraski said.
House Bill Would Retain Direct Payment of Certain Energy Tax Credits
June 12, 2023
by Paul Ciampoli
APPA News Director
June 12, 2023
A plan released on June 9 by House Committee on Ways and Means Republicans to repeal some aspects of the energy tax provisions of the Inflation Reduction Act would retain direct payment of certain energy tax credits.
The American Public Power Association strongly supports the use of refundable direct payment tax credits as a way of ensuring access to energy tax credits for projects owned by public power.
The bill, H.R. 3938, the Build It in America Act, is scheduled to be considered by the committee on June 13.
The bill would repeal the Clean Energy Production Credit, the Clean Energy Investment Credit, the Previously-Owned Clean Vehicle Credit and the Commercial Clean Energy Vehicle Credit. It would also modify the Clean Vehicle Credit.
The bill retains access to refundable direct payment tax credits for other tax credits, including the production tax credit, investment tax credit, carbon capture credit, the storage credit, and the advance nuclear tax credits.
Treasury, IRS Release Additional Details on Applying for Energy Credit Program
June 5, 2023
by Paul Ciampoli
APPA News Director
June 5, 2023
The U.S. Department of the Treasury and the Internal Revenue Service on May 31 released guidance that provides additional information about the application process and technical guidance for the expanded Qualifying Advanced Energy Project Credit program under the Internal Revenue Code.
Treasury and IRS established the expanded program under section 48C of the Internal Revenue Code on February 13, 2023.
The guidance is available on the IRS website.
The Qualifying Advanced Energy Project Credit renews and expands a tax credit created in 2009 through the American Recovery and Reinvestment Act.
It provides incentives for clean energy manufacturing and recycling, industrial decarbonization, and critical materials processing, refining, and recycling.
A broad variety of projects are eligible to apply for an investment tax credit of up to 30 percent, ranging from manufacturing of fuel cells and components for geothermal electricity and hydropower, to producing carbon capture equipment or installing it at an industrial facility, to critical minerals processing.
The Inflation Reduction Act provided $10 billion in new funding for the Qualifying Advanced Energy Project Credit program. Congress required that at least $4 billion be reserved for projects in communities with closed coal mines or retired coal-fired power plants. The initial funding round will include $4 billion, with about $1.6 billion reserved for projects in these designated coal communities.
To apply, taxpayers will submit concept papers describing the proposed project. Taxpayers whose concept papers receive a favorable review will be encouraged to submit a full application.
Concept paper submissions will be accepted starting June 30, 2023, and the deadline for concept papers will be July 31, 2023. Starting on May 31, taxpayers can access information and materials for preparing their concept papers.
More information for potential applicants, including a 48C mapping tool and an upcoming informational webinar, is available on the Department of Energy’s 48C webpage.
Treasury and IRS also released a Notice of Proposed Rulemaking for the Low-Income Communities Bonus Credit program under Section 48(e) of the Internal Revenue Code, which was established earlier this year.
The NPRM proposes rules for the application process and technical guidance for this program, which provides up to a 20-percentage point boost to the Investment Tax Credit for up to 1.8 gigawatts annually of solar and wind energy projects (with maximum output of less than 5 megawatts) located in low-income communities or otherwise serving low-income populations.
The NPRM reflects recommendations from a broad array of industry and environmental justice stakeholders to evaluate applications on an expedited basis and provide applicants clarity as quickly as possible.
Treasury and IRS intend to release final guidance related to the 2023 program prior to applications opening later this year.
Treasury, IRS Release Additional Details on Applying for Energy Credit Program
June 5, 2023
by Paul Ciampoli
APPA News Director
June 5, 2023
The U.S. Department of the Treasury and the Internal Revenue Service on May 31 released guidance that provides additional information about the application process and technical guidance for the expanded Qualifying Advanced Energy Project Credit program under the Internal Revenue Code.
Treasury and IRS established the expanded program under section 48C of the Internal Revenue Code on February 13, 2023.
The guidance is available on the IRS website.
The Qualifying Advanced Energy Project Credit renews and expands a tax credit created in 2009 through the American Recovery and Reinvestment Act.
It provides incentives for clean energy manufacturing and recycling, industrial decarbonization, and critical materials processing, refining, and recycling.
A broad variety of projects are eligible to apply for an investment tax credit of up to 30 percent, ranging from manufacturing of fuel cells and components for geothermal electricity and hydropower, to producing carbon capture equipment or installing it at an industrial facility, to critical minerals processing.
The Inflation Reduction Act provided $10 billion in new funding for the Qualifying Advanced Energy Project Credit program. Congress required that at least $4 billion be reserved for projects in communities with closed coal mines or retired coal-fired power plants. The initial funding round will include $4 billion, with about $1.6 billion reserved for projects in these designated coal communities.
To apply, taxpayers will submit concept papers describing the proposed project. Taxpayers whose concept papers receive a favorable review will be encouraged to submit a full application.
Concept paper submissions will be accepted starting June 30, 2023, and the deadline for concept papers will be July 31, 2023. Starting on May 31, taxpayers can access information and materials for preparing their concept papers.
More information for potential applicants, including a 48C mapping tool and an upcoming informational webinar, is available on the Department of Energy’s 48C webpage.
Treasury and IRS also released a Notice of Proposed Rulemaking for the Low-Income Communities Bonus Credit program under Section 48(e) of the Internal Revenue Code, which was established earlier this year.
The NPRM proposes rules for the application process and technical guidance for this program, which provides up to a 20-percentage point boost to the Investment Tax Credit for up to 1.8 gigawatts annually of solar and wind energy projects (with maximum output of less than 5 megawatts) located in low-income communities or otherwise serving low-income populations.
The NPRM reflects recommendations from a broad array of industry and environmental justice stakeholders to evaluate applications on an expedited basis and provide applicants clarity as quickly as possible.
Treasury and IRS intend to release final guidance related to the 2023 program prior to applications opening later this year.