What if renewable energy technology existed that negated the need for the Production Tax Credit (PTC)? And what if this technology wasn’t being introduced to the market?

 Undoubtedly, the most talked about story in renewable energy in the U.S. thus-far in 2012 has been the fight to extend the PTC. It provides a 2.2¢/kWh tax incentive to producers of renewable energy, such as wind. Proponents argue that the PTC is a necessary incentive to help the wind industry produce a greater percentage of U.S. electricity.

The U.S. Department of Energy has stated in its published goals as well as throughout its funding announcements that it would like to see technology improve to the point where tax incentives are unnecessary. Current natural-gas prices make it difficult to hit that goal. However, if many of the technologies already prototyped were introduced to wind-turbine market, the production cost of energy could drop to a point where it would be cost competitive with gas at almost any price.

Over the past 18 months, our extensive research of the wind industry’s patent landscape has led us to identify more than 5,000 U.S. patents and applications for horizontal axis, utility-scale wind turbines covering today’s technology and dating all the way back to 1919.  Sifting through more than 8.1 million US patents and millions more pending applications to find the relevant results, which were then analyzed and classified, has been at the heart of identifying the technology trends in the industry.  From these we have identified many technologies which are languishing, yet would be useful on a commercially available wind turbine.

The analysis of the patent landscape revealed the rate for new technology introduction. The analysis included understanding the historical pace of innovation and comparing patent-protected innovations to the known deployment of various technologies on wind turbines. The accompanying chart shows that the issued patents in an industrial equipment industry sector like wind turbines describe a historical trend of innovation.

Even though pending patent applications typically do not publish until 18 months after filing, they still provide an indication of newer technologies which have not yet been commercialized. Therefore, we see a tremendous pendency of new technologies looking for a commercial home. These technologies have found their way into the innovation and patent-prosecution process, but are not yet making their way into commercial industry.

One reason for the discrepancy is that turbine OEMs are often not incentivized to introduce new technologies unless they face particular technical challenges, such as noise mitigation, O&M cost reduction, enhanced low voltage ride-through capability, or a production or availability improvement. If they can sell their turbines to a developer or owner-operator who has a power-purchase agreement (PPA) for a project which is high enough for the turbine OEM to achieve its margin, then they will bid their existing fleet – machines already in production.

It’s when PPA prices trend downwards – as we have seen in the U.S. market – that the margins of turbine OEMs get squeezed. Then they look to develop new turbine technologies and product offerings to make a step change in the production cost of energy (COE) and restore the manufacturer’s profits.

Of course, the risk premium associated with the introduction of a new turbine product or platform, and the R&D associated with development, testing, as well as risk reduction is often prohibitive to introducing the new technology. This is particularly true in a cost competitive and margin-sensitive market where financing of new turbines has been expensive.

Furthermore, the industry has matured over the past 15 years to an extent that it currently faces a point of diminishing returns on R&D investment. There is incrementally less cost-of-energy benefit for every R&D dollar spent on new technology.

But while it takes more investment to get continued benefits, the pace of innovation in wind is actually increasing. Patent issuances and application filings are up, with approximately 30 new applications publishing each week.  This trend continues, even as the industry continues to consolidate and more industrial conglomerates such as GE, Siemens, Samsung and Alstom, compete to gain Tier 1 status in the wind sector and build their patent portfolios to match.

In the immediate term, the extension of the PTC is a fundamental necessity for the stability of the industry. Policy uncertainty does not provide the industry confidence to invest in workers, factories, or new technology. However, if the currently proposed PTC phase-out becomes part of the final language of the tax-credit-extension legislation, we would hope the industry hears the call to arms for the development and commercialization of new technologies which can further reduce the cost of energy and eliminate the need for a PTC.

About the author

Philip Totaro is the Principal at Totaro & Associates, a consulting firm focused on innovation strategy, risk mitigation, market research and product development for the wind industry.

Windpower Engineering & Development

Congressman Dave Reichert has over 37 years of public service, coming a long way from Detroit Lakes, Minnesota as the oldest of seven children and grandson of the town marshal. Reichert was a member of the U.S. Air Force Reserve and eventually King County sheriff, the first elected sheriff to take the position in 30 years. While he held the position, voilent crime in the country significantly dropped. He also attracted national recognition as head of the Green River Task Force, solving the largest serial murder case in U.S. history. As sheriff, he spoke out strongly against domestic voilence and advocated family values.

These efforts earned Reichert the National Sheriffs’ Association’s “Sheriff of the Year” award in 2004. He is a two-time Medal of Valor Award recipient from the King County Sheriff’s Office and was honored with several other awards as well.

Reichert served as president of the Washington State Sheriffs’ Association and an executive board member of the Washington Association of Sheriffs and Police Chiefs. He has also served on advisory boards including the King County Criminal Justice Council and the King County Domestic Violence Council. He co-chaired the Washington State Partners in Crisis, a coalition targeting mental health issues. Reichert also was a leader in the fight against Meth. He currently serves as a member of the Special Olympics of Washington State Board of Directors.

Reichert advocates the PTC extension to spur domestic manufacturing and reduce energy costs. “Renewable energy resources play an important and increasing role in America’s total energy supply,” he says. “The certainty this bill will provide can further spur this vital sector, increase economic development, and create jobs.”
Reichert graduated with an A.A. degree from Concordia Lutheran College in Portland where he played football and met his wife. The Reicherts have three grown children and six grandchildren.

Windpower Engineering & Development

Elected to the US House of Representatives in 1996, Blumenauer has created a role as Congress’ chief spokesperson for Livable Communities: places where people are safe, healthy and economically secure. From 1996 to 2007, he served on the Transportation and Infrastructure Committee, where he was a strong advocate for federal policies that address transportation alternatives, provide housing choices, support sustainable economies and improve the environment. He was a member of the Foreign Affairs Committee from 2001 to 2007 and vice-chair of the the Select Committee on Energy Independence and Global Warming from 2007 to 2010. He is also an avid supporter of biking to “burn calories not fossil fuel,” as he told The New York Times.

Windpower Engineering & Development

Texas Wind 2012 will feature more than 30 hours of information exchange through keynotes, breakout sessions, and networking events in the heart of downtown San Antonio. Seminars and expo will take place at the historic Sheraton Gunter Hotel in the midst of the Riverwalk, the Alamo, and all that the Nation’s seventh largest city has to offer.

Seminar topics will include wind policy outlook and intensive strategies, initiatives to increase wind project profitability, wind transmission expansion, wind supply chain manufacturing and transportation, homeland security issues and solutions, retail and wholesale market opportunities, regional project case studies, public outreach, workforce development, university and college programs, Wind Law 2012 continuing legal education about wind policy, and Texas wind energy in the media.

Registration, exhibitor, and sponsorship information and online sign-up are available at www.TexasWind.info. Early registration rates are in effect through June.

Windpower Engineering & Development

The Switch CEO Jukka-Pekka Mäkinen

As wind and solar compete as serious contenders in generating more energy for the world, the energy produced must be as cheap, if not cheaper, than that of fossil-based sources, and the quality of energy equally as high.

The formula for lowering the cost of energy from any source is ultimately simple: Lower overall capital investment costs, equipment lifetime operation and maintenance (O&M) costs, and fuel costs while boosting the amount of energy generated. This formula becomes even more attractive with wind and solar – because the fuel is already free.

The Switch has taken a closer look at four ways to lower the costs of energy that affect the remaining variables. Here’s how:

A race is on to lower the cost of energy. Although this applies to all kinds of energy, it is even more crucial with new energy sources. To help renewables pick up speed in being accepted, The Switch has considered the key variables that lower the cost of energy production with wind and solar. Here’s what we think:

1. Raise annual energy production

High availability and great efficiency curves make for a winning combination to boost annual energy production (AEP).

Availability
The simplest way to increase AEP is to keep turbines or solar plants up and running. Though the wind and sun may come and go, the equipment must continue to operate and produce a constant stream of high quality energy.

Five years ago, our company made a decision to pioneer permanent-magnet generators (PMG) for wind turbines as its contribution to raising AEP. PMGs are known for their use of permanent magnets, requiring no external power source to initiate a magnetic field. Today, PMG technology is preferred by the market majority because it ensures fewer failures thanks to no wearing parts and less maintenance.

Since 2007, the company has had field-proven experience in offshore wind conditions from its 4.25 MW direct-drive PMG deliveries to ScanWind. These wind turbines have also set significant records in availability. The Switch PMG drive trains typically average 97% availability or higher in all operating conditions.

By minimizing equipment downtime and scheduling regular maintenance and tune-ups for low wind or solar periods, it is possible to keep renewable energy producing equipment operating at its highest availability. The Switch products all feature a highly serviceable design to minimize the need for maintenance and increase production time.

Efficiency
When it comes to efficiency curves, PMGs excel. Operating at peak efficiency or power does not account for better AEP rates. Rather, improved AEP comes from the amount of time a wind turbine spends generating electricity over all wind speeds.

PMGs demonstrate higher efficiency at partial loads where they spend the greatest number of their operating hours, resulting in a proven higher efficiency curve. Moreover, PMGs start producing power at lower wind speeds, letting them add more power to AEP rates.

Each of The Switch’s PMG-based drive trains delivers efficient curves over the entire wind speed range. In an independent study by NextWind’s Rain Byars, the advantage of using PMG becomes clearer at lower wind speeds due to the PMG’s performance capability at partial loads. The use of PMGs result in 1.4 to 6.9% more energy on a consistent basis per year, depending on the wind class.¹

2. Minimize total life cycle costs

The Switch manufacturers permanent generators and their controls.

Cutting back on total life cycle costs (TLC) means scrutinizing the expenses associated with both the initial capital investment as well as the O&M costs over the lifetime of the equipment. These two essential expenses must be optimized to bring about the best long-term results.

Capital investment
Going for a low-cost initial equipment investment may not always be wise. In fact, it may even lead to higher hidden expenses when it comes to O&M costs throughout the equipment’s lifetime of 20 years or more.

A double-fed induction generator (DFIG) has been estimated to cost about 30% less in initial investment costs because it uses a partial converter rather than a full-power converter. However, it is important to factor in all additional costs of getting the DFIG connected to the grid according to the latest international grid code requirements, because this may entail more costly connectivity methods and lost production time.

We begin each project with a view to minimize TLC. We start by optimizing the design for each wind and solar customer through our design process that involves close collaboration with customers. Every solution is purpose-built for the specific environment in which it will operate. By placing more focus up front on selecting the right, rugged design, we can significantly lower O&M costs over the equipment’s lifetime.

To lower costs, some designs include magnet placement in the generator to minimize their use, special high-humidity systems to avoid disturbances, and optimized weight-efficiency ratios to best match the desired turbine design.

Operation and maintenance
All solutions from the company require minimal maintenance and feature a serviceable design to speed maintenance routines. When maintenance is scheduled for low seasons in wind and solar, it is cheaper and faster. Moreover, when a recommended maintenance program is followed, it is possible to minimize breakdowns and ensure smooth operation.

Our remote equipment monitoring and 24/7 technical support let customers easily implement a proactive service plan, avoiding unexpected downtime and costly failures. Moreover, PMG technology lets us optimize the entire drive train and offer the greatest possible flexibility to find a solution that reduces O&M costs.

One example of this is the FusionDrive concept, which improves the entire drive train design by removing all high-speed components that are more prone to failure. The lightweight product also saves in tower costs. Another example is direct-drive PMG, which eliminates the entire gearbox, and with it, the slip rings and speed measurements.

When comparing the maintenance costs of a PMG turbine with a DFIG turbine, the potential savings are considerable. The estimated maintenance time between failures (MTBF) for a PMG and full-power converter is 8,000 hours compared to only 1,500 hours for a DFIG.¹ In practice, this means servicing once per year for a PMG turbine versus five times per year for a DFIG turbine. The downtime during a maintenance day account for thousands of dollars in lost energy along with associated labor and maintenance equipment costs.

3. Extend the lifetime of equipment

Typical renewable energy generating units, like wind turbines or solar panels, have an estimated operating lifetime of 20 years with today’s technology. By lengthening this time with an additional three to five years, the cost of energy can be lowered significantly. In fact, current designs from The Switch have already been calculated to last longer than 20 years.

A good purpose-built design, well-selected materials and components, and a carefully planned maintenance program can lengthen the lifetime of the equipment substantially. For example, a well-designed drive train minimizes cogging torque, reducing the amount of vibration and lengthening the lifetime of all components.

The Switch has implemented its Model Factory concept, which enables low-cost volume production. This systematic approach allows the consistent, industrialized production of each renewable energy module.

Our proprietary Model Factory concept begins with an optimized supply chain specified by the precise needs of each customer. This guarantees the best possible component quality. It even includes continuous access to critical components, such as the rare earth magnets used in PMG units. Model Factory locations can be flexibly placed wherever needed, even close to the energy generation site. This allows the production of standardized serial products with local expertise and assures the lowest landed cost for each customer.

Another way to extend the lifetime of equipment and increase its production efficiency is through upgrades, retrofitting, and recycling of components. The Switch offers several simple plug-and-play designs to retrofit older DFIG turbines into modern PMG versions that meet the challenging international grid code requirements.

4. Boost the quality of electricity

In the end, the success of renewable energy depends on the quality of electricity it feeds into the grid. News from recent incidents of wind turbines not connected to the grid has overshadowed some of the earlier favorable progress. Now the industry and governments alike are responding – with stricter and more uniform grid code regulations.

Renewable energy products from our company have always demonstrated superior grid connections. Our full-power converters support fault ride-through and fulfill the world’s strictest grid code requirements, including the German BDEW 2008. Our 3-MW units have been tested on site and passed all grid code requirements, even for the latest Chinese regulations. Low flicker, electrical noise emission and THD of <1.5%, the lowest of any in the entire industry, also support the final quality of electricity fed to the grid.

The company believes in the future of new energy as a major contributor to the world’s growing energy needs. But the only way to succeed is to make sure the costs of producing high quality electricity are as low as they can possibly be.

The Switch
theswitch.com

Windpower Engineering & Development

Historically, federal incentives for renewable energy development in the U.S. largely consisted of the investment and production tax credits (ITC and PTC), the accelerated depreciation benefit for renewable energy property [the Modified Accelerated Cost Recovery System (MACRS), and the bonus depreciation]. The ITC and PTC provide financial incentives for development of renewable energy projects in the form of tax credits that can be used to offset taxes paid on company profits. Given that many renewable energy companies are relatively nascent and small, their tax liability is often less than the value of the tax credits received; therefore, some project developers are unable to immediately recoup the value of these tax credits directly. Typically, these developers have relied on third-party tax equity investors to monetize the value of the main federal incentives for renewable energy project development.

However, in the wake of the 2008/2009 financial crisis, the pool of tax equity investors significantly decreased, limiting the ability of renewable energy project developers to recoup the value of these tax credits. To minimize stagnation in the renewable energy industry as a result of the weakened tax equity market, the Congress created the §1603 Treasury grant program under the American Recovery and Reinvestment Act (the stimulus program). This program offers renewable energy project developers a one-time cash payment—in lieu of the ITC and PTC and equal in value to the ITC (30% of total eligible costs of a project for most types of energy property)—thereby reducing the need for project developers to secure tax equity partners.

Although the primary intent of the §1603 program was to minimize the impact of the weakened tax-equity market on renewable project development, as part of the Recovery Act, the program also had “the near term goal of creating and retaining jobs” in the renewable energy sector.

In some cases, says NREL, totals may not equal the sum of components do to independent rounding and preservation of significant figures.

This analysis responds to a request from the Department of Energy Office of Energy Efficiency and Renewable Energy (DOE-EERE) to the National Renewable Energy Laboratory (NREL) to estimate the direct and indirect jobs and economic impacts of projects supported by the §1603 Treasury grant program. The analysis employs the Jobs and Economic Development Impacts (JEDI) models to estimate the gross jobs, earnings, and economic output supported by the construction and operation of solar photovoltaic (PV) and large wind (greater than 1 MW) projects funded by the §1603 grant program. As a gross analysis, this analysis does not include impacts from displaced energy or associated jobs, earnings
Through November 10, 2011, the §1603 grant program has provided about $9.0 billion in funds to over 23,000 photovoltaic (PV) and large wind projects, comprising 13.5 GW of electric generating capacity. This represents roughly 50% of total non-hydropower renewable capacity additions in 2009 to 2011.

The estimated gross jobs, earnings, and economic output supported by the PV and large wind projects that received §1603 funds are summarized below and in
Table ES-1:

• Construction- and installation-related expenditures are estimated to have supported an average of 52,000 to 75,000 direct and indirect jobs per year over the program’s operational period (2009 to 2011). This represents a total of 150,000 to 220,000 job-years. These expenditures are also estimated to have supported $9 billion to $14 billion in total earnings and $26 billion to $44 billion in economic output over this period. This represents an average of $3.2 billion to $4.9 billion per year in total earnings and $9 billion to $15 billion per year in output.

• Indirect jobs, or jobs in the manufacturing and associated supply-chain sectors, account for a significantly larger share of the estimated jobs (43,000 to 66,000 jobs/year) than those directly supporting the design, development, and construction/installation of systems (9,400/year).

• The annual operation and maintenance (O&M) of these PV and wind systems are estimated to support between 5,100 and 5,500 direct and indirect jobs per year on an ongoing basis over the 20 to 30-year estimated life of the systems.

Similar to the construction phase, the number of jobs directly supporting the O&M of the systems is significantly less than the number of jobs supporting manufacturing and associated supply chains (910 and 4,200 to 4,600 jobs per year, respectively).

The estimated ranges reported reflect uncertainty in the domestic content of a system and its components—the portion of total project expenditures spent on U.S.-manufactured equipment and materials such as turbines, towers, modules, or inverters. Based on a review of a number of studies specifically addressing domestic content for these types of systems, and recognizing the complexity and changing nature of solar and wind supply chains, a range for domestic content was applied in the analysis. This included a low of 30% to a high of 70% for both solar and wind systems, spanning the ranges observed in the literature. The lower end of the impact estimates noted above reflects the 30% domestic content assumption while the higher end reflects the 70% assumption. While this range reflects the implications of uncertainty in one key input to the economic impact estimates, it should not be construed as fully bounding uncertainty in the ultimate estimates of the economic impacts. Total investment in these projects, which includes capital investments from all private, regional, state, and federal sources (including §1603 funds), is estimated to exceed $30 billion. These PV and large wind projects account for about 94% of the total generation capacity of projects funded under the §1603 program and represent 92% of total payments.

The results presented in this report cannot be attributed to the §1603 grant program alone. Some projects supported by a §1603 award may have progressed without the award, while others may have progressed only as a direct result of the program; therefore, the jobs and economic impact estimates can only be attributed to the total investment in the projects.

In addition, this effort represents a preliminary analysis of the gross impacts of the PV and large wind projects supported under the §1603 grant program rather than precise forecasts of the national economic and job-related impacts from these projects. Understanding the net employment and economic impacts of these projects would require a more detailed analysis of the types of jobs supported as a result of changes in the use of existing power plants and associated fuels, electric utility revenues, and household and business energy expenditures. Similarly, estimating jobs associated with possible alternative spending of federal funds used to support §1603 projects would require additional analysis.

Lastly, this analysis solely focuses on the jobs, earnings, and economic output supported by projects funded by the §1603 program. For a discussion of the impacts of the §1603 program on installed renewable generation capacity, project financing, and tax-equity markets, see Brown and Sherlock and Bolinger et al. The full report is here: http://www.nrel.gov/docs/fy12osti/52739.pdf

NREL
NREL.gov

Windpower Engineering & Development

The Land-Based Wind Energy Guidelines are voluntary recommendations providing guidance to private developers, state and federal agencies, and tribes in the development of utility-scale, community-scale, and distributed wind projects. The USFWS’s tiered process is intended to help identify sites with low risk to wildlife, assess potential adverse effects to species of concern and their habitat, and mitigate and monitor these impacts. This approach provides information to the developer at several key decision points, influencing whether to abandon a potential project site, proceed with development, or collect additional information to further evaluate a project.

Communications between developers and USFWS staff and input from the USFWS are key Guidelines components. In particular, the USFWS recommends that a developer consult with USFWS staff as early in the project development process as possible and prior to completing the site-specific studies within Tier 3 that will determine whether a site is developed and how the project will be designed to avoid or mitigate potential impacts. The USFWS aims to provide project recommendations within 60 days of receiving information from a developer. The USFWS underscores that the Guidelines are voluntary and decisions are ultimately in the hands of the developer, but the USFWS retains authority to evaluate whether a developer’s efforts to mitigate impacts are sufficient, to determine significance, and to refer for prosecution any unlawful take the USFWS believes is reasonably related to a failure to incorporate USFWS recommendations or insufficient adherence to the Guidelines.

The Guidelines delineate five tiers. Tiers 1, 2, and 3 are pre-construction steps to help identify, avoid, and minimize risks to species of concern. Tiers 4 and 5 provide post-construction guidance to assess whether actions taken in earlier tiers to avoid or minimize impacts are successful and to determine whether additional steps are necessary to compensate for impacts. Each tier includes a set of three to seven key questions and a list of decision points, as well as recommended study designs, methods, or metrics to guide the investigation and ultimate decisions associated with that tier. The USFWS anticipates that it will likely not be necessary to implement all of the tiers, or every element of a given tier, for each project.

Tier 1 – Preliminary Site Evaluation. This involves screening a broad geographical area to avoid areas of high sensitivity and determine if species of concern or their habitat are present at specific potential sites. Tier 1 provides a discussion of methods and metrics.

Tier 2 – Site Characterization. This calls for a relatively broad characterization of one or more potential project sites to determine probability of significant adverse impacts. This tier includes at least one reconnaissance-level site visit and investigation of previously conducted studies, databases, or other published information for the area. Tier 2 includes a discussion of methods and metrics.

Tier 3 – Field Studies to Document Site Wildlife and Habitat and Predict Project Impacts. Here, the developer evaluates the probability of significant adverse impacts through quantitative site-specific field studies. Based on this information, the developer will decide to continue or abandon a specific site and, if development goes forward, potentially make decisions to design or operate the project to avoid or minimize significant adverse impacts. Tier 3 includes recommended study design considerations and technical resources.

Tier 4 – Post-Construction Studies to Estimate Impacts. These will be implemented according to the outcome of the investigations and studies in Tiers 1, 2, and 3. Some level of post-construction study is anticipated for most projects. Tier 4 studies assess whether predictions of fatality risk and direct and indirect impacts to habitat were correct. Studies to evaluate habitat impacts such as species of habitat fragmentation concern will be necessary only when Tier 3 studies indicate the potential for significant adverse impacts for such species. Tier 4 provides protocol design considerations and study objectives.

Tier 5 – Other Post-Construction Studies. This involves additional site-specific studies that may be called for based on Tier 4 studies. The Guidelines say that Tier 5 studies will not be necessary for most projects, and underscore that the tiered decision-making process steers projects away from sites where Tier 5 studies would be necessary. Tier 5 studies analyze factors associated with potentially significant impacts indicated in Tier 4 analyses, identify why mitigation measures implemented for a project were not adequate, and assess demographic effects on local populations of species of concern when demographic information is important.

U.S. Fish and Wildlife Service
www.fws.gov

Windpower Engineering & Development

To understand the challenges ahead, first consider what FERC is trying to “fix.” The Commission concluded that the lack of a requirement for transmission providers to consider transmission needs at the local or regional level driven by public policy requirements—such as clean energy requirements—made its existing transmission planning requirements inadequate. In remarks about the rule, FERC Chairman Jon Wellinghoff recognized a changing mix of generation resources seeking to use the transmission system. In fact, even the Open Access Transmission Tariffs (OATTs) for centralized markets in certain states with RPS standards, ISO-New England and PJM for example, do not yet specifically provide for public policy-driven transmission projects. FERC also concluded that there were few existing procedures for identifying and evaluating the benefits of interregional transmission projects. The rule also eliminated the right of first refusal (ROFR) in OATTs under certain circumstances. In certain regions, independent developers have attributed difficulties constructing certain types of transmission projects to ROFRs granted to incumbent transmission providers.

Order 1000 requires transmission providers to revise their OATTs to include a process for identifying transmission needs driven by public policy requirements, and for evaluating possible solutions. Order 1000 does not mandate that transmission be built for public policy purposes.

Also, transmission providers’ OATTs will now include a process to allocate the costs for such a project. The rule establishes guiding cost-allocation principles consistent for all regions with the central concept being “beneficiary pays.” One such principle is that an acceptable cost allocation proposal would allocate costs for new transmission facilities in a manner that is at least “roughly commensurate” with the benefit received by those who will pay these costs. Consistently, the principles also provide that entities that receive no benefits from transmission projects should not be allocated costs for those facilities. FERC’s principles for regional and interregional cost allocation do not mandate how beneficiaries are to be identified or which cost-allocation methods should be implemented. A transmission provider could rely on the same cost allocation for market efficiency, reliability, and public policy transmission projects.

Order 1000 is not a fill-in-the-blank rule, so its implementation will be intense and contentious. Submittals on regional transmission projects are due to FERC by October 11, 2012.Order 1000 noted that FERC is not seeking to undermine progress already underway or already accomplished. Those centralized markets (ISOs or RTOs) with transmission planning procedures in place that take public policy objectives into account will likely have the smoothest compliance, and their existing methods will likely continue. For example, Midwest ISO (MISO), Southwest Power Pool (SPP), and California ISO (CAISO) have provisions to consider public-policy projects, including cost allocation provisions, and may not have to make significant revision to their OATTs. Thus, MISO, SPP, and CAISO may implement the rule’s requirements quicker.

For regions outside an ISO or RTO, the first step, identifying a region, may be challenging. In addition, transmission providers outside centralized markets will need to propose how they will allocate project costs within the region, once it is identified. In areas of the country where there are no RPS requirements, FERC might accept a less detailed plan for considering public policy driven processes.

Compliance submittals do not immediately become effective upon filing with FERC, and proposed tariff changes must be accepted for filing by FERC order. The Commission has stated that if stakeholders cannot reach consensus or near consensus during a compliance period, the FERC will resolve compliance issues. This may incent compromise. There is a real opportunity for states to lead the way among stakeholders on consensus proposals.

Transmission providers must return to FERC with their interregional plans by April 11, 2013. As to interregional efforts, best practice is for transmission providers to proceed simultaneously with the interregional and regional efforts rather than wait to consider interregional plans until the October 2012 regional submittal has been made. Interregional issues may be particularly difficult outside of an ISO or RTO context. However, interregional transmission planning and cost allocation will likely be less formal than the regional process, possibly allowing transmission providers with more flexibility on the level of detail included in their FERC submittal.

FERC may issue a subsequent order(s) that modifies Order 1000. Therefore, in addition to the implementation hurtles that result from developing the compliance filings and FERC processing the compliance filings, there is a chance that FERC could clarify, modify, or even reverse some of its findings in Order 1000.

Over 60 entities, including transmission providers, transmission customers, state commissions and industry trade groups, have asked FERC to change course. Also, those who asked FERC to change course may appeal Order 1000 to the U.S. Court of Appeals asking the court to take action. However, a court decision on appeal of Order 1000 could be years away. In the interim, unless and until the FERC or a court decides to stay the effectiveness of Order 1000, the rule remains effective.

The combination of eliminating certain ROFRs, the mandate to consider public policy requirements, and the requirement for interregional planning should lead to increased opportunities for transmission investment, particularly for bringing location-constrained renewable resources onto the grid. Therefore, the long-term outlook for public policy-driven transmission projects is favorable. The shorter-term outlook is more challenging outside regions that have already made progress in this regard. It may be a long process before ISOs and other regions have effective cost allocation proposals for public policy projects in place. However, once the process is complete and cost-allocation methods are in place, additional certainty will likely spur investment in transmission. With a long lead-time for compliance filings and FERC consideration and approval, it may be more attractive in the shorter term for developers to consider merchant or participant-funded transmission projects to the extent that defined cost allocation rules are not already in place. WPE

By: Cathy McCarthy, Co-head of Dewey & LeBoeuf’s Energy Regulatory Department www.deweyleboeuf.com

Windpower Engineering & Development

Wind energy is a cost-competitive source of energy for Ontario. A new price of 11.5 cents per kWh for wind energy has been established as part of the FIT review process. “We believe that this new price will prove extremely challenging for many projects and could prevent a number of them from proceeding. This is particularly true for smaller projects and new entrants to the industry, reducing the number of communities and the diversity of players able to contribute to and benefit from the government’s ambitious objectives,” says Robert Hornung, President of CanWEA. “Our industry will work to meet this challenge, and we look forward to participating in future discussions on FIT pricing scheduled for the end of 2012 with a view to facilitating broad participation by organizations and communities seeking to support investments in clean energy and green jobs in Ontario.”

The Ontario Government has made an important commitment to improve the efficiency of the Renewable Energy Approvals process and CanWEA is looking forward to understanding the full details and working with the Ontario Government to facilitate implementation. New initiatives to facilitate greater municipal and community engagement in wind energy development are also welcomed by CanWEA and are consistent with our mandate to support the responsible and sustainable development of wind energy. The foundation of this approach can be found in our Best Practices for Community Engagement and Public Consultation – which were informed through discussions with dozens of municipal leaders.

CanWEA
Canwea.ca

Windpower Engineering & Development

Once again proving the success of the Production Tax Credit in tandem with continuing technology improvements in creating jobs and driving billions of dollars of private investment, the wind power industry posted one of its busiest first quarters ever, according to the American Wind Energy Association’s (AWEA) first-quarter market report for 2012.

The U.S. saw 1,695 megawatts (MW) of wind capacity installed in the first quarter, with 788 additional turbines—largely made in the USA—producing clean, affordable, power in 17 states. No other first quarter has been as strong for the American wind power industry, which has tapped the Production Tax Credit (PTC), the industry’s primary policy driver, to establish a strong and efficient—and still growing—manufacturing supply chain here in the U.S. The 1,695 MW installed brings the total installed wind power capacity in the U.S. to 48,611 MW.

But in spite of the success of the industry and the PTC, policy uncertainty threatens the very future of American wind power. The PTC, which keeps taxes low on one of the greatest sources of new American manufacturing jobs and has broad bipartisan support, is set to expire at the end of the year, and already the supply chain is feeling the effects of the uncertainty. A recent study found that extending the PTC will allow the industry to grow to 100,000 jobs in just four years, while an expiration will eliminate 37,000 jobs.

The wind energy industry installed 52 percent more megawatts in the first quarter than it did the same quarter in 2011. Continuing a trend that became evident at the end of last year, under-construction numbers were also exceptionally strong in the first quarter, clocking in at 8,916 MW, with 2,284 of that total starting construction just this quarter. Also notable: construction is taking place in 31 states and Puerto Rico.

“The last five years have been marked by unprecedented policy stability, and in response wind power has delivered,” said AWEA CEO Denise Bode. “American wind power contributed 35 percent of all new electric generating capacity between 2007 and 2011, and today it employs 75,000 people.

“The choice is clear: with policy certainty, we’ll grow to 100,000 jobs in just a few years. Without it, 37,000 jobs will disappear, particularly in U.S. wind manufacturing. It’s up to Congress to act now and extend the PTC.”

As for wind project development hotspots during the first quarter, California (370 MW), Oregon (308 MW) and Texas (254 MW)were the leading states for adding the most wind power. Rounding out the top 5 were and Washington (127 MW) and Pennsylvania (121 MW).

One notable trend, previously highlighted in AWEA’s 2011 annual market report, continued to emerge in the first-quarter numbers: with ever-improving technology, wind power is accessing wind resources in geographic areas considered to have inadequate wind resource just a few years ago. That trend is reflected in the states with the most growth in 2012′s first quarter. Top on that list isNew Hampshire with a head-turning growth of 388 percent, followed by Arizona (72 percent),Massachusetts (17 percent) and Pennsylvania (15 percent). Wind power veteran Oregonrounded out the top five with 12 percent.

Yet despite the productive first quarter, wind industry jobs remain on the line and layoffs are predicted to start quickly in the industry’s supply chain. New graphics, recently released by AWEA, link the 37,000 industry jobs in jeopardy with the industry project development and turbine manufacturing cycle, showing how those jobs would be lost within a year if Congress does not extend the PTC soon.

Just last week, the House Ways and Means Committee met to prioritize a list of possible tax extensions that deserve swift action by Congress. The PTC extension, led by Congressmen Dave Reichert (R-Wash.), Earl Blumenauer (D-Ore.), and Steve King (R-Iowa), was one of the most talked-about pieces of legislation because of the number of jobs at risk, particularly in manufacturing The PTC remains one of the most bipartisan bills in Congress, with 21 House Republicans joining Democrats in supporting the Reichert-Blumenauer bill for an extension. Throwing their support behind the PTC is a broad spectrum of organizations including the U.S. Chamber of Commerce, National Association of Manufacturers, the American Farm Bureau Federation, the Edison Electric Institute, the Western Governors’ Association, and the United Steelworkers.

Other highlights of the first quarter and the U.S. Wind Industry First Quarter Market Report 2012that AWEA released today include the top 5 states for under construction:

The public version of the AWEA First Quarter Market Report is available here. The full version of the AWEA First Quarter Market Report as part of the AWEA Wind Market Analysis Suite can be accessed by logging into the AWEA Member Center.. The full version of the quarterly report includes a list of under-construction projects, project activity by region, power purchase agreements, requests for proposals and analysis of power offtake agreements.

AWEA
www.awea.org

Windpower Engineering & Development