An Ignoble Experiment

2. Dominion fuel cell park a pathway for energy security and ingenuity

Investor owned utility Northern Indiana Public Service Company (NIPSCO) has filed a proposal to expand its voluntary feed-in tariff (FIT) program, FIT 2.0. The proposed renewable energy purchasing program enables NIPSCO to procure 16 MW of electricity from small-scale, renewable electricity projects within its service territory. The program's predecessor, FIT 1.0, created 30 MW of market capacity for local renewables.

Indiana is unique having voluntary feed-in tariffs to promote the development of renewable energy resources. The expansion is natural given the program's success.

"Feed-in tariffs are the world's most successful policy for deploying local renewable energy in a straightforward and cost-effective manner," said Craig Lewis, executive director of the Clean Coalition. "In addition, given that feed-in tariffs avoid critical issues associated with net metering, by maintaining customer loads and eliminating multi-tenant complexities, utilities and communities across the country should be implementing feed-in tariffs."

FIT 2.0 is the result of a months-long settlement process between NIPSCO and numerous parties including the Indiana Office of Utility Consumer Counselor, Sierra Club, Citizens Action Coalition, and Indiana Distributed Energy Alliance, which the Clean Coalition advised. The groups worked long and hard to develop a continuation of the program that would be fair across the board, including to those ratepayers who are not participating.

Under FIT 2.0, NIPSCO will offer 15-year solar, wind and biomass project contracts.

Projects submitted to NIPSCO within 90 days of the program launch date will be entered into a blind lottery. To ensure a more efficient program by deterring non-viable bids from clogging the lottery and project queue, the Clean Coalition recommended requiring a non-refundable application fee of $25 plus $1 for each kilowatt of project capacity, which was incorporated into the final settlement agreement.

A decision from the Indiana Utility Regulatory Commission on the settlement agreement is expected during the first quarter of 2015.

For more:
- see the settlement agreement

Read more about: feed in tariff, Clean Coalition
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By Barbara Vergetis Lundin

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3. APPA research supports plea to FERC to dump mandatory capacity markets

U.S. Environmental Protection Agency (EPA) Administrator Gina McCarthy recently showcased how affordable fuel cell solutions support energy policy, the environment, and economic development at local, state and federal levels. Case in point: The 15 MW Dominion Bridgeport fuel cell park in Bridgeport, Connecticut, which demonstrates how fuel cell power generation enhances the resiliency of the electric grid with low carbon power production and exemplifies urban renewal being cited within a city.

EPA Administrator Gina McCarthy visits Dominion's Bridgeport fuel cell park. Credit: FuelCell Energy

At her tour of the fuel cell park, McCarthy said that innovative solutions such as the Bridgeport fuel cell park reflect the pathway for American energy security and ingenuity.

The project is located on a remediated brownfield site using only about 1 1/2 acres of land to provide 15 megawatts of continuous renewable power. The city is receiving tax revenue from what was a vacant lot. The State of Connecticut is receiving tax revenue from a variety of sources, job creation in the state, and progress toward the state's renewable portfolio standard.

The 15 MW Bridgeport fuel cell park adds to Dominion's existing 2,100 MW of carbon emission-free power from its Millstone Power Station and 5 MW from its Somers solar facility, which are all generating clean, reliable electricity for Connecticut. The Bridgeport fuel cell park avoids the annual emission of approximately 297 tons of nitrogen oxide (NOx) and more than 67,600 tons of carbon dioxide (CO2), equivalent to removing approximately 12,900 cars from the road.

Fuel cell parks, in general, can help solve power generation challenges for utilities as the combination of near-zero pollutants, modest land-use needs, and their quiet operating nature facilitates their siting in urban locations. Fuel cell parks offer a multitude of advantages for utilities. For example, distributed generation locates power close to where it is used, enhancing the resiliency of the grid and provides continuous renewable power around the clock that is not reliant on weather or time of day.

For more:
- see this article

Read more about: fuel cell
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By Barbara Vergetis Lundin

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4. China becoming major player in gas generation

Just 2.4 percent, at the most, of generation capacity constructed in 2013 was developed solely for sale into organized electricity markets, according to a report released by the American Public Power Association (APPA). In 2013, almost all new generation capacity was supported by long-term power purchase agreements or ownership, and only 6 percent of all capacity constructed that year was built within the footprints of one of the regional transmission organizations (RTO) with mandatory capacity markets, the report, "Power Plants Are Not Built on Spec: 2014 Update," says.

APPA reviewed the financial arrangements behind the construction of new generation capacity of 14,738 MW, or 94 percent of the total capacity constructed in 2013, and found two predominant sources of funding for this new capacity. Two-thirds of the capacity was built with purchased power agreements for the sale of the power (64 percent of agreements were with a utility and 2 percent with an end-use customer or non-utility retail supplier); another 31.6 percent was constructed under ownership by the utility (29.6 percent) or customer (2 percent); and 2.4 percent was built solely for sale into an RTO market.

The vast majority of the 2.4 percent of the capacity built only for market sales received some type of external funding. Only 0.1 percent of the new capacity was constructed for sale solely into the markets without any financial assistance.

The new capacity built in the RTOs with mandatory capacity markets represents only 6 percent of the total capacity, yet just more than one-fourth of the nation's electricity customers reside in the states in those RTOs -- PJM, ISO NE and the NY ISO. Further, about one-fourth of the expected coal-plant retirements over the next three years are projected to be in the PJM footprint. ISO NE is also facing significant baseload plant retirements.

The APPA study underscores a central flaw in the mandatory capacity markets -- they do not support the stable long-term financial arrangements required to build new power plants. As the electricity industry faces new challenges from environmental regulations, baseload retirements, and an increased reliance on natural gas, it is crucial that the RTOs and the Federal Energy Regulatory Commission (FERC) revisit the mandatory capacity markets paradigm, APPA says.

"It's evident that the mandatory capacity markets are not delivering benefits to electricity customers. They are not even markets," said APPA President and CEO Sue Kelly. "Billions of dollars are flowing from the pockets of bill-paying customers to generators and capacity providers, and our study shows that the vast majority of these dollars are being spent to prop up a market structure that does not work. At some point, we just have to stop the music."

APPA encourages approaches to resource development that incorporate long-term planning, bilateral contracting, utility ownership, and demand-side approaches, and continues to advocate that the FERC mandate a transition from mandatory capacity markets to voluntary residual markets, where states and local public power and cooperative utilities will be able to procure the capacity they need through bilateral contracts -- allowing states and utilities to determine the optimal mix of resources and structure their portfolios to lower costs, maximize reliability and be good environmental stewards.

For more:
- see this resolution

By Barbara Vergetis Lundin

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5. EPCs could be changing how they do renewable energy business

China's gas power generation capacity is expected to rise from 43.8 GW in 2013 to 85.5 GW by 2020, according to research and consulting firm GlobalData. Driven by China's need to adopt cleaner fuels for power generation and reduce its reliance on coal -- which accounts for 62 percent of the country's total installed capacity -- GlobalData predicts the country will see a boost in gas turbine installations.

In 2013, China's gas power generation market was valued at $652 million and is forecast by GlobalData to increase to almost $1.7 billion by 2017. A rise in infrastructure investments, expansion in the country's distributed power generation market, and favorable policies supporting gas power generation will also allow the gas turbine market to grow in this period, according to GlobalData.

"While gas power generation is still at a nascent stage in China, improvements in the country's gas infrastructure mean that it has experienced rapid growth, from 16.7 GW in 2007 to 43.8 GW in 2013, leading to a positive impact on gas turbine installations," said Sowmyavadhana Srinivasan, senior power analyst, GlobalData. "Rising electricity demand will also drive the market, with over 35 GW of capacity coming online between 2014 and 2020, making China a major global player."

Gas turbines of more than 200 MW will account for approximately 49 percent of capacity additions during this period, followed by 30 MW to 120 MW turbines with a share of 35 percent, Srinivasan said.

However, a potential rise in China's natural gas prices could pose a challenge to further growth in the country's gas power generation capacity and consequently its turbine market for thermal power.

"The future of natural gas prices for China's power sector is uncertain. The country relied heavily on natural gas imports to meet domestic demand during 2006 to 2013, and increasing dependence could force the Chinese government to align domestic gas prices with international standards," said Srinivasan. "Such an increase could adversely affect utilities' profit margins, as electricity prices are also regulated by the government, meaning that fuel cost rises cannot be passed directly to customers."

For more:
- see this report

Related Article:
Coal, natural gas driving turbine surge

Read more about: natural gas, GlobalData
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By Barbara Vergetis Lundin

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