As stewards of the U.S. electrical system, grid operators have a well-deserved reputation for caution. With the mandate to provide reliable, affordable energy as their bottom line, they typically favor time-tested approaches over radical innovations and can be slow to embrace new technologies until they’ve stood up to lengthy scrutiny. But the past two decades have seen some rapid shifts in U.S. electrical systems, with power consumption plateauing even as new fleets of renewable power stations come online. With more changes on the horizon, operators have had to move quickly to keep pace, using modeling and simulation to work out the complexities in the new power system.
New England’s governors have set an ambitious course to fast-track the construction of hundreds of miles of new transmission lines and pipelines to help bring down the cost of electricity and natural gas in the region, where consumers are paying much higher prices than most other places in the United States. While the plan unveiled in early December commits the governors’ combined political will to the task, it remains to be seen whether the best of intentions can overcome market barriers, inadequate incentives and old-fashioned not-in-my-backyard sentiments that have bedeviled past efforts to build energy infrastructure in the six-state region.
In 2012, Michigan environmentalists pushed a constitutional amendment onto the ballot that would have strengthened the state’s renewable energy portfolio standard, requiring 25 percent clean energy by 2025. Snyder opposed it, and it failed. But this past month, something remarkable happened. Snyder gave a speech announcing a commitment to weaning Michigan off coal power and replacing it with renewables, and reducing demand through energy efficiency. Snyder called on the legislature to pass a bill by 2015 setting a higher renewable portfolio standard, although he did not specify a target. He also emphasized his desire to transition away from coal, saying, “There is an opportunity to really reduce the amount of coal we use in terms of energy generated in Michigan. I’m very excited to see that percentage go down very significantly over this next 10-year horizon because coal is not a preferred fuel for a variety of reasons.”
Even as they close out the year with record production levels, biodiesel makers are facing an uncertain year at best in 2014. Producers will begin the year without their tax credit, a $1-a-gallon production incentive that has spurred the expansion of facilities and new participants entering the market. The measure is set to expire along with a raft of other renewable energy incentives Dec. 31 They are also facing the prospect of U.S. EPA retreating from aggressive production goals for the industry for the first time since the nation had a biofuels mandate put into place.
As the rest of the world prepares to toast the new year, the wind industry is hard at work on its own year-end tradition, rushing to make sure projects qualify for an important subsidy before it is set to vanish at the stroke of midnight on Tuesday. Developers are signing deals, ordering equipment and lurching ahead with construction starts to qualify for a tax credit that is worth 2.3 cents a kilowatt-hour for the first 10 years of production. This month, giant turbine-makers like Vestas and Siemens have announced major new orders, including a deal worth more than $1 billion with MidAmerican Energy, an Iowa-based utility majority-owned by Warren E. Buffett’s Berkshire Hathaway, and another with the Cape Wind project in Nantucket Sound.
Berkshire Hathaway’s MidAmerican Energy subsidiary just bought over 1 gigawatt (GW) of wind turbine capacity from Siemens (NYSE: SI ) . Construction sites across Iowa are linked to MidAmerican’s expansion and reconductoring of its transmission system. MidAmerican Energy bought 448 turbines for an undisclosed price. Current installed capacity cost for wind turbines is about $2,000 per kilowatt (kW.) The total price tag could exceed $2 billion, and this is reputedly the largest wind turbine order to date.
It’s tax extender time. This year, Congress let about 55 different tax breaks expire on Dec. 31. The full array includes everything from a credit for corporate R&D to tax relief for underwater homeowners. The list also includes a batch of energy tax breaks, such as a credit for wind farms that generate electricity or a deduction for commuters who take the bus to work. Those are now gone.
Baucus’ impending exit also likely leaves tax reform in limbo for the coming year, although Wyden could draw on some ideas from the outgoing chairman’s radical proposal to replace more than 40 energy-related incentives with a trio of tax credits to promote “clean” fuels, low-emissions electricity, and carbon capture and sequestration. More pressing, though, will be the fate of more than a dozen temporary breaks, such as the production tax credit, that expired Dec. 31 and that Wyden has said should be renewed posthaste. House Republicans, by contrast, have shown little enthusiasm for dealing with these provisions, known as “tax extenders,” which encompass incentives for industries throughout the economy.
In exchange for the right to kill eagles, a San Diego-based wind developer offered to retrofit 75 power poles to reduce eagle deaths near California’s Lake San Antonio, prime winter habitat for the iconic birds. Another California developer agreed to upgrade 11 “problem” power poles, idle certain wind turbines and donate $20,000 for eagle conservation.
The law, passed under former Democratic Gov. John Baldacci, set aggressive goals for adding wind power while simplifying the regulatory process in much of the state. Current Republican Gov. Paul LePage has been a wind-power critic, but Ms. Williams said wholesale changes have been a tough sell under both Democratic and GOP control. There have been efforts to rein in wind-farm development on the edges. Mr. Dunphy sponsored a bill this year that he said would give some sparsely populated unorganized territories, which lack local government, more say over wind projects. The proposed change didn’t make it through the Senate, but Mr. Dunphy is continuing the push with the governor’s support.