Monthly Archives: August 2012

Why We Must Extend The Production Tax Credit For Wind Energy

This commentary was originally posted on the Texas Clean Air Matters blog.

Prior to the August recess, the U.S. Senate Finance Committee passed a 55-item tax extender package known as the Family and Business Tax Cut Certainty Act of 2012.  The bill is now up for consideration in the House Ways and Means Committee. Included in this package is a one-year extension of the Production Tax Credit (PTC) for wind energy. The PTC is sound economic, energy and environmental policy, and our congressional leaders would do well to support the package and the PTC extension when it comes up for a final vote.

Texas’ current success in wind energy development has been assisted by the PTC. The PTC provides a 2.2 percent tax credit per kilowatt hour of energy generated to private wind investors if their wind farms are developed, constructed and are producing. This program has increased private investment and development of wind energy, and has lead to an expansion of jobs throughout our country, but particularly in rural Texas.

With Texas being the national leader in wind installations and a manufacturing hub for the wind industry, wind farms have appeared throughout our state, and related jobs are in high demand. The wind industry provides quality and high-paying jobs, gives our state an economic boost and provides environmental benefits. Texas is the first state to reach 10,000 megawatts of wind energy installations, which power the equivalent of 2.7 million homes. The wind industry also provides land lease payments to local landowners in Texas to the tune of $31 million annually.  

Nationally, the wind energy industry supports 75,000 direct and indirect jobs, more than 400 manufacturing facilities, and is responsible for 35 percent of all new energy generation since 2007 – more than coal or nuclear energy combined.

The PTC and the tax extender package are not guaranteed to pass either the House or Senate. As uncertainty in this industry continues, developments and projects in Texas and around the country are at risk if Congress does not act quickly. EDF is asking Congress to support a tax credit that continues to help the wind energy industry grow into self-sufficiency.

Please contact your member of Congress today and ask for their support of the Production Tax Credit and the Family and Business Tax Cut Certainty Act.

Posted in Texas / Read 1 Response

Recycling That White Plume Of Smoke On I-95

Today, President Obama signed an Executive Order to facilitate investments in capturing waste heat and developing combined heat and power at many of our industrial facilities (“CHP” projects).  This energy efficiency strategy can save manufacturers as much as $100 billion in energy costs over the next decade, and offers a type of “renewable” energy as the heat is already available, but too often vented to the atmosphere.  According to Oak Ridge National Labs, many industrial operations have an efficiency of 45% or less; waste heat recycling can increase the efficiency of these systems to 80% by capturing waste heat and putting it back to work.

You may have never thought about waste heat, but you’ve probably seen it many times:  visualize driving through an industrial area and seeing white smoke coming out of smokestacks.  These plumes often comprise heat and steam, and thus represent a wasted resource that we should be capturing and converting to useable energy. 

The Executive Order should spur prompt actions by federal and state agencies to facilitate projects.  Examples of possible actions are streamlining state permitting, crediting projects toward state clean air requirements, sharing state best practices, and working to better engage utilities in partnering on projects. 

CHP projects will not only help our industrial facilities save money on energy costs, but investing in these projects create jobs across a wide variety of businesses engaged in making components, designing and constructing systems, and operating the new energy resources.  For example, a recent study by Duke University on recycling industrial waste energy highlighted the six main components needed in each project:  boiler/steam generators, steam turbines, generators, condenser/cooling tower, steel piping and electrical parts such as wires and switchgear. 

These components represent standard, high value components made by businesses across the U.S., particularly the Midwest and Texas, but also companies in Oklahoma, Georgia, Illinois, and Arizona.  All of these components use smaller parts such as basic bearings, valves, fans, rotors, and so on, not to mention the extensive steel piping used in each project.  One project in Port Arthur, Texas used 2.5 miles of steam pipeline – good news for the steelworkers. 

In addition to the job of manufacturing all these parts, CHP projects require workers to install the components on-site, such as welders, pipefitters, design engineers, and traditional construction workers.  On completion, often 15-20 new workers are hired to run the new steam plant/power facility.  The CHP project developer, Recycled Energy Development, notes that the cost savings and increased competitiveness at a project completed for West Virginia Alloys enabled the plant to retain its entire workforce, rather than face job cuts of 20%. 

So, every time you pass a white plume of smoke on the highway, be glad that today’s Executive Order moves us one step closer to eliminating this waste and helping America’s industries be more competitive.

Posted in Energy Efficiency, Washington, DC / Read 3 Responses

On-Bill Repayment In California

This commentary was originally posted on the EDF California Dream 2.0 Blog.

Moving Forward with OBR for Commercial Properties

Earlier this year, the California Public Utilities Commission (“CPUC”) issued a decision requiring the state’s investor-owned utilities to establish several financing programs, including an On-Bill Repayment (“OBR”) program for commercial properties. OBR programs allow property owners to finance energy efficiency and/or renewable energy projects with third-party banks or other investors. Property owners repay their loan via their utility bill and that obligation stays linked to the meter upon a sale of the property.

EDF has been working closely with the utilities, environmental groups, financial institutions, project developers and other key stakeholders to craft a program that provides low-cost financing for retrofits, does not require ratepayer subsidies and has maximum flexibility to allow vendors and investors to decide how best to serve their customers’ needs. We are cautiously optimistic that the utility proposal will meet these objectives when it is released to the public on October 1, 2012.

The CPUC, however, believes that they currently do not have the regulatory authority to extend the OBR program to residential properties. EDF has been pursuing legislation to grant this authority to the CPUC, but, at this time, we do not expect that it will pass in the 2012 legislative session. EDF plans to re-introduce the residential-focused legislation in 2013 with a broad range of supporters, including several key members of the legislature.

EDF has also begun work to establish OBR programs in Ohio, North Carolina and Texas. So far, the reception has been quite positive in each state and we are hopeful that OBR may be a market-based, clean energy solution that has appeal across the political spectrum.

Posted in California, On-bill repayment / Tagged , | Comments are closed

Another outpouring of support for California’s cap-and-trade regulation

With only two and a half months remaining until North America’s largest carbon market goes “live,” it’s no surprise that economic experts from around the nation are standing up and voicing support for California’s program. Just last weekend, 56 economists from both in-state and out-of-state academic institutions, and some NGOs, sent a letter to Governor Brown commending him for his leadership and recommending the state move forward with the planned auction component of cap-and-trade.

The Air Resources Board’s currently adopted regulation distributes most allowances for free, but does auction some as well, thus taking into consideration the needs of both California consumers and California businesses. In the first two years of the program, businesses will receive approximately 90% of allowances for free. After that, the amount auctioned increases, though CARB has committed to continuing to study this option to protect businesses from foreign competition.

In the letter, economists from 34 different colleges and universities, along with several from NGOs and think tank organizations, reiterated an important point: regardless of whether emissions permits are sold or given away for free, regulated businesses are likely going to pass through costs and change the price of the products they sell. And, while it might be appropriate to give some allowances away to protect businesses from foreign competition, polluters should not be able to profit from the program without making real reductions. It’s also important, the economists noted, to preserve the state’s ability to put the revenue to beneficial use cutting climate change pollution.

The legislature, the governor’s office, and many stakeholders, including EDF, have been considering what beneficial uses of proceeds from the allowance auction might look like. EDF’s report Invest to Grow covers this subject in detail.

State law already requires that the money from the auction be spent in ways that further the purpose of AB 32 – cutting climate change pollution – and there are many opportunities within that constraint. Further, the budget passed by the Legislature and signed by the governor in July calls for a large portion of proceeds to relieve pressure on the state’s much strained budget. Several other bills are also being considered in this final week of the legislative session that aim to address priorities and guidelines for auction revenue investments.

EDF will continue to explore the win-win opportunities that auction proceeds creates in more depth with a series of upcoming blog posts.

Posted in General / Comments are closed

America’s Military Renewables Plan Fast-Tracked And Mission Critical

By: Jillian Jordan, EDF Energy Marketing & Communications Intern

This months’ announcement from the White House calling for green energy bids and its plan to fast-track wind and solar projects delivered a clear message that renewable energy is something the American military – and its government – whole-heartily believes in. The federal government’s Renewable Energy Partnership Plan (Plan), headed by the Department of Defense (DoD) and the Department of the Interior (DOI), is pushing new project development on and near numerous military installations to the tune of $7 billion dollars.

Even more compelling is the fact that clean energy is now considered part of America’s national security plan by key political figures and the DoD. The White House’s Heather Zichal, Deputy Assistant for Energy and Climate Change, has commended this strategic move towards clean energy and endorsed the Plan as “operationally necessary, financially prudent and mission critical.”

So mission critical, in fact, that the Army has planned the incorporation of renewables as a high-priority tactic for saving lives. Military convoys have long been known to be one of the most dangerous operations, costing more lives than many other career fields in the armed forces. When supplies like gasoline run out, transportation troops are assigned the duty of delivering them through hostile territory. For every 24 fuel resupply missions, one American life is lost – which constitutes one out of every eight deaths in Iraq. Using clean energy actually saves lives for today’s military. The less fossil fuel used and the less dependent we are on oil, the less convoy trips are needed for refueling and to run diesel generators that power military tents, therefore minimizing the risk for American troops. 

The alternative energy infrastructure projects under the Plan will create jobs favoring local economies, produce about 7,200 megawatts of energy and utilize millions of acres of public lands and offshore areas that are best suited for wind and solar projects, all while meeting the goals of the federal Energy Policy Act of 2005. Under the Act, the military has voluntary plans for 25% of its energy produced by clean sources by 2025.

“Developing renewable energy is the right thing to do for national security, as well as for the environment and our economy,” Secretary of Defense Leon E. Panetta said. “Renewable energy projects built on these lands will provide reliable, local sources of power for military installations; allow for a continued energy supply if the commercial power grid gets disrupted; and will help lower utility costs.”

In addition to becoming independent from the national grid, utility costs have been upwards of $4 billion annually and the task force assigned to the Plan is determined to lower the DoD’s energy bill and curtail energy usage. But, above all, the goal is to maintain the military’s ability to remain powered during mission-critical times. Conditions of the Plan offer an added safety net in the event of a massive blackout or, for a worst-case-scenario attack on America’s power grid.

Preliminary site evaluation began with DOI’s Smart from the Start initiative under Secretary of the Interior Ken Salazar.  Pilot projects are currently underway in Arizona, California, Nevada and Wyoming, with more fast-tracked proposals to be announced in the next few weeks. The Renewable Energy Partnership Plan signed between the two agencies would allow the military to purchase power produced from homegrown, renewable energy sources, which could lead to a reduction in clean energy costs and an overall boost to the alternative energy sector.

Of the DOI’s 28 million acres, 16 million of which were designated for defense, 13 million that are rich in resources and ideal for wind, solar and geothermal power generation. “Our nation’s military lands hold great renewable energy potential, and this partnership will help ensure that we’re tapping into these resources with a smart and focused approach to power our military, reduce energy costs, and grow our nation’s energy independence,” Salazar said.

Posted in Renewable Energy, Washington, DC / Read 5 Responses

Demand Response Means Big Money for Big Users

After a full week of triple digit temperatures in central Texas, the forecast this weekend for highs in the mid-90’s seems like a blessing both for our thermostat and for the unending topic of this blog series: our electric grid.  Officials from the Public Utility Commission (PUC) and the Electric Reliability Council of Texas (ERCOT) have been worried about the strain on our electric grid all summer long, but they aren’t just worried about this summer.  The energy crunch is an issue that we know will be with us until we deal with it; we can’t rely on dancing cats to ease the crunch. We need real solutions to avoid real problems in the future. 

It doesn’t have to be that way though, and it doesn’t need to cost as much as some worry it will, but that’s assuming that the PUC and ERCOT are able to move quickly and decisively to encourage demand response.  In our blog post last week we focused on the benefits of demand response for residential customers and small businesses, and that’s probably where the greatest overall potential lies.  But the quickest return – and the most financially savvy electric customers – might lie in the commercial and industrial markets today.  Fortunately two great examples in other parts of the country show how we could be doing more for those markets in demand response as well.

 “Making the Most of Your Energy” in NYC

Large commercial buildings typically face a number of hurdles when trying to upgrade their energy systems – particularly those with multiple tenants.  In New York City, the Rockefeller Group Development Corporation saw these hurdles as an opportunity for a new approach to energy management.  By selling their demand reductions to the grid, in the manner we’ve proposed for ERCOT, they managed to reduce energy usage by 60,000 kWh per month and reduced peak demand by 1.4 MW.  McGraw Hill now receives a net income (after payments for the financed upgrade) of $500,000 annually.

Rules in ERCOT might allow for this kind of savings already in some small ancillary services markets, so long as their metering system complies with ERCOT protocols.  Those ERCOT demand response markets are capped and already oversubscribed; leaving developers who want to build smart buildings or upgrade older ones are looking to other markets for their business.

Meanwhile, in the heartland….

We mean Warrick County, Indiana specifically. Alcoa, one of the world’s leading aluminum producers has worked with their grid operator Midwest ISO (MISO) to develop a completely new approach to industrial demand response that has blown the doors off of the possibilities for Texas’ industrial sector.  The market for aluminum is ruthless, and Before Alcoa anything that gives Alcoa a leg up helps them preserve critical jobs and tax income in their communities around the country. 

With this new market, Alcoa has managed to maintain international competitiveness for their Warrick County plant and is looking to expand demand response to their aluminum smelters in other parts of the country.  In Texas, where Alcoa’s Rockdale smelters are were not able already struggling to maintain international competitiveness and have been idled as a result, , new markets like the pilot project announced by ERCOT on Monday could mean the difference for other industries between staying profitable and shutting down operations.

Whether it’s in the city or the country, a big user or a small mom and pop store, demand response markets offer a new benefit to customers if the market rules allow customers to compete with other resources.  As we discussed earlier this week, the potential for these resources in Texas would help us meet 15 percent of our peak demand needs according to ERCOT’s Brattle Report.  That potential stretches across all types of customers, and must be part of the solution to the energy crunch in Texas if we want to keep rates down and maintain reliability.

Posted in Demand Response, General, Texas / Comments are closed