Monday, October 16, 2017

Solar Tariff Case May Throw Shade on Growing Solar Industry

By Lev Blumenstein, Energy Fellow
Department of Energy

In April, the United States International Trade Commission began an investigation under section 201 the Trade Act of 1974 into whether U.S. manufacturers of crystalline silicon photovoltaic (CSPV) cells were being harmed by imports of cheap solar panels. CSPV cells and panels are the most common commercially available type of solar cells and panels. The impetus for the investigation was a petition filed by Suniva. The company, which manufactures CSPVs cells in the United States, filed for bankruptcy shortly before filing its petition. In May, SolarWorld, another U.S. manufacturer, joined Suniva’s petition. On September 22, 2017, the Commission unanimously found that the two manufacturers were harmed by imports of cheap solar panels.

The Commission’s next step is to determine possible trade remedies. The remedies sought by Suniva would double the cost of imported CSPV cells and panels. The Commission is scheduled to present its findings and recommendations to President Trump by November 13, 2017. The Trump Administration will then have sixty days to issue a final decision.

This represents one of the Administration’s first opportunities to put its protectionist tariff rhetoric into practice. The Administration should think long and hard before reflexively imposing tariffs that would double the cost of CSPV cells and panels. This decision, like most decisions involving international trade, does not fall neatly into a United States vs. the World dichotomy. Nor does this issue neatly divide the solar industry between manufacturers and installers. Opposition to the tariffs cuts across partisan and sectoral lines. Numerous manufacturers, utility holding companies, and even the American Legislative Exchange Council have declared their opposition to the complaint filed by Suniva and SolarWorld.

Over the past several years, the American energy industry has undergone large shifts. The solar industry employs an estimated 373,807 people in the United States. That is twice as many jobs as the coal industry and roughly equal with the entire natural gas industry. Two percent of all new jobs in the United States are in the solar industry. Over 50% of those jobs involve the installation and repair of solar panels. Solar manufacturing employs about 15% of solar related jobs. An analysis by Greentech Media estimates that the increased cost of CSPV cell and panels would reduce the amount of solar installed in the United States by over half. The solar industry estimates that such a reduction in demand would cost the American economy 88,000 jobs.

President Trump has expressed a strong desire to impose taxes on foreign goods and promote American energy. However, imposing the tariffs sought by Suniva and SolarWorld would result in immediate harm to American workers, including many from states that voted for him. He should exercise his authority and decline to impose the sought after tariffs.

Tuesday, October 10, 2017

Hurricanes Harvey, Irma and Maria Teach America a Lesson it Should Have Learned Years Ago: It is Time to Invest in a More Resilient Electric Grid

By Casille Systermans, Policy Extern

Three major hurricanes hit the United States this year. About 300,000 Americans lost power because of Hurricane Harvey. Utility companies estimate that 16 million Americans in the Southeast lost power because of Hurricane Irma. In Puerto Rico, 3.4 million Americans are without power and are unlikely to have it restored for months because of Hurricane Maria. This is not the first time that millions of Americans have been left without power for weeks because of a major hurricane, but it should be the last.

For coastal states and territories, major hurricanes are an inevitability. Additionally, future storms are likely going to be more powerful because of rising ocean temperatures caused by climate change. Powerful hurricanes are expensive. Hurricane Katrina, currently the costliest hurricane on record, caused $108 billion dollars in damage, and that doesn’t include the economic impacts, like lost wages and disruption of trade and other economic activity, associated with the recovery period. The total cost associated with Harvey and Irma has not been determined yet; however, they both have the potential to surpass the damage costs associated with Katrina. Additionally, the impacts of hurricanes are more than just economic. For example, in Hollywood, Florida, 11 senior citizens died when their nursing home lost power during Hurricane Irma.

The damage caused by major hurricanes can be mitigated if utilities invest in building a more resilient electric grid. First, utilities should start investing significant resources into distributed generation and storage systems, which can keep power running during and after major storm events. Any investments in distributed generation and storage should be grid connected and have the ability to provide power to other homes or businesses in the area. Additionally, wherever feasible, power lines should be moved underground. In Longboat Key, Florida, about 60 percent of the power lines are buried underground, and the areas with buried power lines did not lose power for any significant period during Hurricane Irma. In areas where is not feasible to move powerlines underground, utilities should invest in strengthening power lines by, for example, switching to steel power lines. Even with steel power lines, trees can still represent a threat to power lines during wind events. Therefore, utilities and local governments should invest in keeping trees near powerlines well-trimmed. Finally, since it is impossible to ensure that power will never be disrupted, utilities should maintain a disaster response plan to ensure that when power outages do occur, the power is restored as quickly and efficiently as possible.

There is no one-shot solution to building a more resilient electric grid, and therefore utilities should employ an all of the above strategy when planning to upgrade the electric grid. Cost is often cited as the primary obstacle to large-scale investment in upgrading the electric grid. The long-term benefits of investing in a more resilient energy grid far outweigh the short-term costs associated with that investment. For example, last year Longboat Key voters elected to borrow $50 million to bury all existing powerlines underground; however, it is much cheaper to put new power lines underground. Florida Power and Light (FPL) customers are currently paying a special charge to cover $318.5 million in Hurricane Matthew clean-up costs. Hurricane Matthew hit Florida in 2016 and is currently the ninth-costliest hurricane on record. However, even with the lowest cost estimates for Hurricanes Irma, Maria and Harvey, Matthew is projected to become the twelfth-costliest hurricane on record. FPL customers are destined to receive another special charge for Hurricane Irma recovery. By investing more money upfront to strengthen the electric grid, utilities can cut down on future recovery costs for inevitable future hurricanes.

The recent storms that have devastated Texas, Florida and Puerto Rico highlight the need to update the grid and underscore the simple truth that cost should no longer be used as an excuse to avoid investing in a resilient electric grid. America has experienced large-scale devastation from hurricanes before, and while it is certain that America will be hit by more hurricanes in the future, it is possible to avoid large-scale damage and prolonged power outages if America begins preparing for future storms now. The first step is investing in a more resilient electric grid throughout the east and gulf coasts and the Caribbean.

Monday, October 2, 2017

Similar Cost, Less Risk: The Argument for Solar Photovoltaic as a Preferred Resource

By: Natascha Smith, Energy Fellow

Since solar photovoltaic technology became popular in the 1950s, many critics have questioned the economic viability of solar energy. For decades, utility-scale solar generation failed to reach grid parity, or the point at which the levelized cost of solar energy matches the market price of electricity, without the need for subsidies or incentives. Luckily, recent investments in solar research and development have yielded substantial benefits to this growing energy sector. The Department of Energy’s SunShot initiative announced on September 12th that the cost of utility-scale photovoltaic power reached its 2020 goal of $0.06 per kilowatt-hour three years early. This means that utility-scale solar energy is now at a price point that is market-competitive with traditional forms of electricity.

Achieving grid parity has done more than allay the concerns of solar critics; it has also set up solar to take on a new role as a preferred generation resource in the integrated resource planning process. An Integrated Resource Plan (IRP) acts as a roadmap for how a utility plans to meet its long-term energy needs, with the end goal of identifying the best mix of resources to provide a reliable supply of energy at the least cost and risk to the utility and its customers. To achieve this goal, the Oregon Public Utility Commission, which oversees and approves IRPs developed by Oregon’s investor-owned utilities, requires utilities to examine all environmental compliance costs associated with energy resource options, including state and federal energy policies.

Now is arguably solar energy’s chance to shine. Having reached a competitive price point, utility-scale solar generation has similar costs as fossil-fuel resources, but with fewer risks. With solar, utilities can evade the lengthy and often expensive process of meeting pollution control standards, plus they avoid the risk that the external costs of carbon may be internalized by future regulation. For Oregon utilities subject to the coal-to-clean bill, which the state adopted in 2016, solar has the added benefit of helping utilities meet the requirement of producing at least 50 percent of electricity from renewable sources by 2040. When determining what mix of resources will help it meet its long-term needs, utilities cannot ignore that solar’s cost competitiveness and low risk gives it a leg up on traditional generation resources, namely coal and natural gas plants. The IRP process is sure to show that utility-scale solar is a key component of a least cost/ least risk resource portfolio.

With Oregon utilities required to complete an IRP every two years, utility-scale solar should be playing a larger role in Oregon’s electricity generation in the relatively near future. The solar industry has done its part to reach grid parity; now it is time for the utilities and Public Utility Commission to do theirs by ensuring that utility-scale solar is treated as a preferred generation resource in utility resource plans.

Thursday, September 21, 2017

EPA and BLM Methane Rules are Now in Effect for Oil and Gas Operations. Now What?

By Lev Blumenstein, Energy Law Fellow
Image Credit: Wild Earth Guardians (2014)

Methane is a potent greenhouse gas (GHG). Over a hundred-year-period, it has twenty-five times the global warming potential of carbon dioxide (CO2). Both the United States Environmental Protection Agency (EPA) and the federal Bureau of Land Management (BLM) recently issued rules regulating fugitive methane emissions generated during oil and gas operations. The rules have the potential to meaningfully reduce GHG emissions from America’s energy sector, but an uncertain regulatory environment threatens to undercut the anticipated reduction in GHG emissions.

EPA’s Methane Rule
On June 3, 2016, EPA issued a rule regulating methane emissions from new, reconstructed, and modified oil and gas operations. Additionally, the rule directs well operators to inspect existing well sites for methane leaks and repair any leaks they discover. EPA estimates that the avoided emissions will total 6.9 million metric tons of CO2 equivalent (CO2e) in 2020 and 11 million metric tons of CO2e in 2025.[1]

The regulations went into effect on August 2, 2016, and an initial survey to discover leaks was to have been completed by June 3, 2017. In April 2017, the new EPA Administrator, Scott Pruitt, announced his intent to reconsider provisions of the rule and issue a ninety-day stay of the June 3, 2017, compliance date.[2] On June 5, 2017, EPA issued an official notice of reconsideration of the regulation and a retroactive ninety-day stay of the compliance date. EPA then announced its intention to stay the entire rule for two years while it reconsidered the rule. Environmental groups sued.[3] On July 3, 2017, the United States Court of Appeals for the District of Columbia vacated EPA’s stay during the pendency of its reconsideration of the final rule.

BLM’s Natural Gas Rule
On November 18, 2016, BLM promulgated a rule regulating natural gas that is lost during oil and gas operations on federal and Indian land. BLM estimated that 114 billion cubic feet of natural gas was vented, flared, or leaked in 2014, which is enough to supply 1.5 million households with natural gas for a year.[4] BLM anticipates that the rule will avoid up to 4.5 million tons of CO2e emissions per year.[5] In May, the regulation unexpectedly survived a Senate vote to repeal it under the Congressional Review Act. On June 15, 2017, BLM announced that it is postponing the compliance deadline for many provisions of the rule during the pendency of litigation concerning the rule.[6] A number of states and environmental groups filed a lawsuit challenging BLM’s stay in the United States District Court for the District of Northern California.[7]

An Uncertain Future for Federal Methane Rules?

The methane rules are now in effect, but their future effectiveness is uncertain in three key respects. First, through notice and comment rulemaking, the agencies may rescind or modify the rules in the next few years. Both EPA and BLM have announced their intent to revisit their rules. Operators may postpone rectifying sources of fugitive emissions in anticipation of a regulatory rollback. Second, courts could find the rules invalid. Third, the agencies may deprioritize enforcement of the rules. This is a more serious issue if BLM deprioritizes enforcement. There is no applicable citizen suit provision that would allow private citizens to directly sue emitters who violate BLM’s methane regulations.

EPA’s methane rule is different. Private citizens may directly sue emitters of fugitive methane emissions covered by EPA’s regulation. However, private citizens are not as effective as EPA in ensuring widespread compliance with regulations for two important reasons. First, private citizens may not leverage the threat of criminal prosecution. Second, private citizens lack the administrative, financial, legal, scientific, and technical resources available to the federal government. Nevertheless, the threat of a potential citizen suit should prompt most emitters to comply with EPA’s regulations for now, even if the Administration sends clear signals that it will not prioritize enforcement of EPA’s methane rule.

The regulatory uncertainty and the difficulty in challenging a possible decision by BLM to deprioritize enforcement of its methane rule threaten to undercut the potential gains from EPA and BLM’s rules.  

[6] Waste Prevention, Production Subject to Royalties, and Resource Conservation; Postponement of Certain Compliance Dates, 82 Fed. Reg. 27,430, 27,431 (June 15, 2017). Wyoming, Montana, North Dakota, Texas, and energy trade groups challenged the validity of BLM’s methane rule. Wyoming v. U.S. Dep’t of the Interior, No. 2:16-cv-00285-SWS (D. Wyo. Nov. 18, 2016).
[7] California v. U.S. Bureau of Land Mgmt., No. 3:17-cv-03804-EDL (N.D. Cal. July 5, 2017).

Monday, September 18, 2017

Grid Defection: Environmentally Unjust and Bad for Renewable Energy in the Long Term?

By Casille Systermans, Policy Extern
Image Credit: NREL

Solar power is a rapidly growing industry with the potential to provide significant environmental and economic benefits to society. One solar technology option that is becoming more affordable and more widely available is solar-plus-battery systems, which allow home or business owners to install solar panels with a battery back-up on their property. These systems have the potential to allow energy customers to produce all the energy they need on site. This in turn gives customers the option to disconnect or “defect” from the electricity grid entirely. While increasing the amount of solar-plus-batter systems providing energy in the United States is certainly a positive thing, grid-defection is a separate issue and it is important to consider the major environmental justice concerns associated with large-scale grid defection, as well as the potentially negative consequences large-scale grid defection can have on the long-term goal of achieving an entirely renewable energy grid.  

When customers defect from their utility, the utility company loses a customer and ultimately sells less energy. If grid defection becomes wide spread and utilities lose a large portion of their customer base, they will likely end up having to raise rates for the customers that remain to pay for their stranded costs. As rates rise more and more, more customers will be financially incentivized to defect from the grid, causing the utility’s customer base to shrink further and rates to rise even more. This is commonly referred to as the utility death spiral.

The problem with this scenario is that the customers who remain with the utility are more likely to be low-income customers who cannot afford the up-front cost associated with solar-plus-battery systems. Low-income communities and families already have disproportionately high energy cost burdens and are more likely to be negatively impacted by the pollution associated with traditional fossil fuel energy sources. Transitioning to a renewable energy system should not exacerbate environmental justice concerns by placing the burden of this transition on marginalized communities. Large-scale grid defection has the potential do just that by leaving the poor with the bill for large fossil resources and grid infrastructure that were built to benefit everyone.

It is possible to mitigate the economic harm to poor communities caused by large scale grid defection by charging customers to defect, requiring the utility to absorb their stranded costs rather than raise rates or adopting other mitigation policies. However, the impact on poor communities is not the only potential problem associated with large scale grid defection. In the long-term, large-scale grid defection could lead to a sub-optimal energy system.

Solar-plus-battery systems have the potential to be hugely beneficial in facilitating a transition to a fully renewable energy system and expanding use of solar-plus-battery systems does not require grid-defection. Instead, solar power and battery power should be part of comprehensive energy reform.  Distributed generation is essential to achieving an 100% renewable energy grid and instead of viewing solar-plus-battery systems as a threat to traditional utilities, they should be treated as a key part of a larger renewable energy transition plan.

Renewable energy advocates and utility regulators need to consider environmental justice concerns when they choose which policies to pursue and how best to encourage a renewable energy transition. Poor and minority communities are more likely to be affected by pollution and environmental degradation and it is unfair to ask those same communities to pay higher energy rates so that others can defect from the grid. Solar and battery power are only going to become more prevalent and it is essential that the energy community encourages and manages that growth in a just manner.