Post-Election Prognostications on Energy Policy

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Nathan Smith Darrell Henry Jason Smith and David Meyer speak on energy policy panel at E2Tech Expo 2016 photo by Kay MannOn November 17, 2016, E2Tech hosted its second annual expo at the University of Southern Maine in Portland. The expo them this year was, “Energizing Maine’s Future: Building a Roadmap to Maine’s Energy Future”. The main question that E2Tech asked of the day’s speakers was, “How would you advise the state of Maine in advancing its energy, environmental and clean technology goals?” Green Energy Maine was there and brings you this report.

There was also a focus on developing the workforce that will be needed to deliver that future. To address that, Glen Cummings, President of USM was on hand to offer the assistance of the University of Maine. Cummings remarked, “it is our desire to move to a place where every one of our students at USM has an opportunity to do a paid internship in the course of their studies. We will first focus on students in the honors program, then branch out to the greater student body”.

The first two morning forums examined the state of and prospects for policy change in the energy sector, post-election. Two different panels addressed the national and state-level scenarios.

THE NATIONAL POLICY PERSPECTIVE

Todd Griset, a partner in the energy & telecommunications practice group at Preti Flaherty, moderated this first panel. He posed the following question: “international and federal energy policies have an impact on Maine’s energy landscape. With the 2016 Election now behind us, how are global and national issues affecting resources, infrastructure, investments, policies, and markets across the energy sector?

Darrell Henry a partner at Gavel Resources in Washington DC photo by Kay MannThe first panelist to speak was Darrell Henry, a partner at Gavel Resources in Washington, DC (a government relations firm).

According to Henry, the energy world will change dramatically from the way thing were in the past 8 years, to the “New World Energy Order of Trump”. Executive orders are easy to repeal and legislative regulations are hard to repeal. There will be some difficulty with changing regulations if the Republicans do not gain 2/3 of Senate seats. Henry then listed some goals that Trump has set out:

1) terminate carbon regulation by executive order;

2) encourage more oil and gas production;

3) build more and more energy infrastructure.

He added that the Federal Energy Regulatory Commission (FERC) will have 3 new policy appointees under Trump; one will be the chair.

State level clean energy policies will not be affected by federal policies. Congress will not terminate the investors’ tax credit or the production tax credit for solar and wind power (ITC and PTC). With the demise of the Clean Power Plan (CPP), nuclear power generation plants may face an uphill battle. While federal level carbon regulation is effectively dead, not all is lost for those supporting carbon reduction; the hope lies at state and regional level programs, such as the Regional Greenhouse Gas Initiative, or RGGI. States that are committed to the CPP may continue on their own courses. The question will be how this will affect existing generation utilities’ plans and whether coal can make a comeback.

Henry said that Trump values the hydrofracturing for gas and oil, so we can expect to see a rebirth of the Keystone XL pipeline project. Henry predicted that in the time remaining in the Obama administration, we will see frenetic issuance of executive orders and other “midnight legislation” put in place.

David Meyer a senior advisor at the Office of Electricity Delivery and Energy Reliability US Department of Energy photo by Kay MannThe second speaker was David Meyer, a senior advisor at the Office of Electricity Delivery and Energy Reliability, US Department of Energy.

We have seen a growing interconnectedness across the electricity, natural gas, IT infrastructure and transportation sectors.  The result is that we need to take an all-energy perspective in building this energy roadmap for Maine. There is a massive electricity transformation in the works, stemming from new technologies and services, the digitization the the entire electricity supply system, major price changes in fuels, and broad support for low-carbon resources.

Because of all these changes, there is no stable end-state in sight and we can expect long-term uncertainties in the market. Planners need to build optionality and flexibility in the  system, taking a sustained, holistic view. The conceptual approach that the DOE calls “grid architecture”  is a systematic, rigorous way to think about YOUR energy system, one component or subsystem at a time, without losing sight of the big picture. It is not prescriptive but analytical.

The DOE is working to balance the six “ilities”: reliability, affordability, flexibility, resilience, security and environmental sustainability. The process starts with analysis of the status quo and goals, then mapping how to reach them. DOE has no less than 88 projects for grid modernization underway in its laboratories.

Jason Smith the manager of environmental policy and external affairs at the Edison Electric Institute photo by Kay MannThe third panelist was Jason Smith, the manager of environmental policy and external affairs at the Edison Electric Institute, a trade association representing investor-owned utilities.

Smith framed his remarks by noting that this is a $990 billion industry and that carbon emissions have been reduced by 21% since 2005. He outlined four major trends that he sees going on:

1. Grid modernization is transforming the grid. Smart meters are a critical tool that requires capital investment. Many states are being the catalysts for this investment. The grid must be valued while embracing new technologies such as digitization, data analytics, controls systems and storage technologies.

2. The personalization of energy services is going on at every level, through the integration of energy management tools. tailored services, connectedness for solar and wind and actionable advice. Distributed energy resources (DERs) are growing, driven by customer demand. The electrification of transit, airports, seaports and fleets are all growing.

3.There is a transformation to the use of clean energy. Some of the drivers are low natural gas prices, environmental regulations, declining technology costs and the demand for source diversification. In the past 10 years, we have moved to the point where 1/3 of US power generation comes from zero emissions sources (nuclear and renewables). Utilities have installed about 60% of today’s solar capacity and 100% of our wind capacity. Many corporate buyers are driving demand to meet their sustainability goals.

4. Grid security, both cyber and physical security, have gained importance. The industry is putting considerable resources into securing and protecting the nation’s critical grid assets as a top priority. Collaboration between industry and government is essential. An incident response program has been developed.

Smith summarized by saying that the industry’s goal is to balance affordability, security and reliability of power.

Nathan Smith vice president of The Cadmus Group photo by Kay MannThe fourth speaker on this panel was Nathan Smith, vice president of The Cadmus Group (a technical and strategic consulting firm for players of all roles in this industry).

Mr. Smith predicted that the trend toward development of renewables will continue and that climate change regulation will continue to influence planning. Energy efficiency programs have been wildly successful will continue. We can expect regulatory shifts, as yet undetermined. Executive orders will be issued that are likely to counteract existing executive orders limiting greenhouse gas emissions. For example, National Environmental Policy Act (NEPA) guidance on considering greenhouse gas emissions for federal projects will probably go away. The social cost of carbon, which was set at $36 per metric ton, will likely also be removed from the decision making process.

The Department of Defense’s energy directives are likely to stay in place as they affect the energy security and independence for our defense forces. The EPA’s “Endangerment Finding for Greenhouse Gases” is probably safe, as are the clean water and clean air acts, according to Smith. The Clean Power Plan, Methane Rule and Clean Water Rule are likely to be challenged.

Policies that are subject to executive decision include participation in the Paris agreement, oil, gas and coal leasing on federal lands and pipeline permitting.

Some programs whose fates are unknown are: the rigor with which laws and regulations will be enforced, vehicle fuel efficiency standards and renewable fuel standards. Voluntary programs may replace those methane reduction programs if they are challenged or removed. The rise in popularity of electric vehicles and other plug-in vehicles is driving the formation of public-private partnerships to develop more charging infrastructure.

AUDIENCE QUESTIONS:

Q: Policy changes such as time of use and net metering are needed in the system in order to help people to adopt new technologies that can save them money.

Meyer: Utilities are reluctant to make investments without the promise of a return. State public utilities commissions (PUC’s) must force them to do so, if changes like these are to go forward. This is starting to happen in the east and there is a progress westward.

Smith: PUC commissioners across the country are looking at rule changes. Education of both customers and commissioners as to the benefits of these changes is needed.

Q: To Mr. Henry: How might a proposal be received if it were revenue neutral as opposed to a carbon tax?

Henry: It could be a short term success.

Jason Smith: The US delegation to Marakesh’s roadmap to 2050 was just released yesterday in Morocco. It contains deep decarbonization strategies.

Q: Before solar was $1.50 per watt, it was $10 per watt. It is important to have all generation technologies. Wht is the Edison Partnership doing to cement relationships with the solar industry?

J. Smith: We are for all forms of energy generation, including solar. We partnered with the World Resources Institute (WRI) to form a corporate buyers’ principle to pledge to acquire a large amount to renewable energy by 2050 to meet customer demands.

Q: What actions are being taken to encourage electrification of transportation?

Nathan Smith: Consumers respond to low oil prices by buying SUV’s. There is the concern that highways are paid for by gasoline taxes and EV’s don’t pay them. EV’s are becoming smart, driverless vehicles, more and more. The Dept of Transportation is addressing these concerns and there are no answers yet.

Jason Smith: The infrastructure implications are huge. Who bears the costs? Private companies must engage with utilities to find best solutions.

Darrell Henry: The Us Parks Service set up a charging station deep inside Yosemite Park, further in than most EV’s could run on a single charge. A driver for the consumer model is that they must see the product as more desirable than conventional vehicles. There has to be a balance for policy and industry; I see it coming sooner at the state level than at the federal level.

Maine State level policy panel speaks at the E2Tech Expo 2016 photo by Kay MannTHE STATE LEVEL POLICY PERSPECTIVE

Energy is the backbone of almost everything we do. Maine, in particular, has a unique energy profile with two-thirds of Maine’s electricity coming from renewable resources – including biomass, hydro, and wind – and limited access to natural gas. The Northeastern U.S. has some of the highest electricity rates in the country, while Maine has the lowest rates in New England. Maine is also one of the most oil-dependent states in the country for heating its homes, businesses, and factories and driving its cars, trucks, and boats. On the innovation side, Maine’s wind, water, and woods position the state for economic growth in the alternative energy sector. What's next for energy policies and programs in Maine? Sarah Tracy, a partner at Pierce Atwood moderated this panel.

James LaBrecque Technical Advisor on Energy to Governor Paul LePage photo by Kay MannThe first speaker was James LaBrecque, Technical Advisor on Energy to Governor Paul LePage.

According to LaBrecque, energy policies must not be based on politically favorable projects but rather on product performance per unit cost.

LaBrecque mentioned that the primary policy goals for this administration are to reduce energy costs to further economic development. He posited that our peak electric power problem is caused by refrigeration and air conditioning, so policies must allow HVAC efficiency technologies to compete equally with solar and wind. As an illustration, LaBrecque gave an example of how the cost of refrigeration can be reduced using misters, subcoolers and heat reclamation at a lower cost than the use of solar panels. He emphasized that the market should determine which energy technologies are chosen based on the return on investment.

He also pointed to what he referred to as “social issues”, for example, he said he has observed school buses holding a low number of students stuck in traffic jams, when elimination of idling could reduce carbon emissions. Another example was variable frequency drive units, which if not controlled properly can actually waste energy. He cited a number of examples of wasted energy that he found at the University of Maine at Orono. Heat, in particular, is being wasted or “dumped” when it could be used to heat water.

To LaBrecque’s mind, Maine energy policies must target oil as Maine is an oil state. We have the 5th smallest carbon footprint in the country from electricity generation. Our oil consumption is primarily from transportation and home heating. Each state’s energy policy has to be tailored to fit its own energy uses.

“Gas by wire” is what LaBrecque calls electricity generated from natural gas; he says that half of the gas used to generate electricity is wasted. When this power is used to run heat pumps, it is the most efficient use of the gas.

On the subject of energy storage, LaBrecque quipped that Maine has the best storage system: 435,000 oil tanks in home cellars. He says that this is equivalent to seven Maine Yankee power plants operating at full capacity.

Dr Bruce Williamson a Commissioner serving on the Maine Public Utilities Commission photo by Kay MannThe second speaker on the panel was Dr. Bruce Williamson, a Commissioner serving on the Maine Public Utilities Commission.

Dr. Williamson began by saying that he thought the greatest challenge for the state energy roadmap team will be to identify those initiatives give our state the competitive advantage over neighboring states.

He mentioned that the concept of microgids, built around distributed generation, is currently in favor in New York state. However, if the sum of the costs for establishing microgids is greater than the cost of centralized generation, then the lower cost method must be chosen. In certain geographies, microgrids are a more economical power delivery model. How to support the lowest cost model for a state’s geography becomes the question. The analysis requires clear-headed thinking, asking questions such as, “Are there common costs created by groups of microgrids?”.  It’s the famous “commons problem”, similar to that being faced by the lobster fishery. Demand response and load shedding have their place.

The Maine Aqua Ventus offshore wind power project raises concerns on view shed at Mohegan Island. We need to proceed with eyes wide open, weighing costs and benefits. Floating offshore wind turbines have unique corrosion problems that land-based turbines do not have, according to Williamson. The reason Europe developed offshore wind plants was that they ran out of space on land. They are regretting the decision as the maintenance costs are great. Deepwater navigation safety practices around offshore wind has been borrowed from oilfield safety practices. A bank of wind turbines in humid conditions may create a bank of fog behind it, causing navigation problems not seen in oilfields.

The manufacturers of offshore wind turbines are all European at this time. All the coastal states have college programs cultivating skilled workers in the offshore wind industry. UMaine may hold the key to deepwater, floating turbine technology; this may give Maine a competitive advantage. The shallow water steel platforms used in Europe are used in other Atlantic coast states.

Maine Representative Martin Grohman who serves on the Energy Utilities and Technology Committee Maine State Legislature photo by Kay MannThe third to speak on the state panel was Representative Martin Grohman, who serves on the Energy, Utilities & Technology Committee, Maine State Legislature.

Grohman said that Maine has the potential to have the cheapest and cleanest power in the nation. Some of the friction in the market is from trying to match load demand to the supply market. This offers opportunities and challenges to power supply manufacturers to meet the demand. There is a bell curve of electrical service customers, in which medium-sized businesses use the lion’s share of the power. Demand charges are levied in kilowatts rather than kilowatt hours. Graham said that the EUTC would like to work to address this cost for businesses.

Grohman observed that renewable energy development businesses are cold-blooded capitalists, too. Solar power is getting a lot of press and efficiency is making quiet inroads that have a huge impacts.

AUDIENCE QUESTIONS

Q: There is a “duck back“ in the demand curve created by renewable supply: the excessive supply of solar power in afternoons creates a lull in demand. Why are opportunities in biomass given less attention when it is a dispatchable fuel? We need to explore underutilized resources and Maine is the most heavily forested state in the union. Is there an honest accounting of avoided carbon emissions when dispatchable generators are curtailed during peak solar production hours?

Williamson: This has been looked at as an inefficiency associated with ramping to accommodate distributed generation.

LaBrecque: Maine could supply the entire US with all its energy needs for 2.5 days with biomass. There is much more energy density in oil.

Q: Energy efficiency is the place to start. The marketplace is not always rational; decisions are made based on emotions and other factors. Sometimes society has to make small investments to move us ahead.

LaBreque: The governor wants programs that have immediate payback.

All photos by Kay Mann.

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