- Clean Power Marketing Group
- Energy Exchange
- Energy Trust Blog
- Energy Current
- Blog – 2GreenEnergy.com
- Blog – E-Smart Solar
- Clean Energy Blog - SACE | Southern Alliance for Clean Energy
- Latham's Clean Energy Law Report
With RE+ now in our rearview mirror (and our feet almost recovered!), let’s get ready for a big finish to 2023. This year is expected to be the biggest ever for solar installations. No doubt 2024 is sure to keep pace. Now is the time to double down on your clean energy marketing efforts — and get your plans in place for next year.
Never before has the industry seen so much forward momentum, especially with the Inflation Reduction Act providing a consistent guidepath for the future. Looking forward to 2024, more people, companies and communities than ever before will be evaluating solar, energy storage, and other climate solutions. How will you ensure your company is the one they choose?It starts with having a plan. Know your audience.
B2B and B2C clean energy marketing are different animals but share certain aspects in common. One of these is the importance of understanding your target audience(s). Dive deep to appreciate their needs. Know how they make buying decisions. Then you can build a marketing plan informed by customer personas based on exactly who you’re targeting, and why.
Who is your ideal customer?
To create your customer personas, go beyond a mere list of demographics like median income and education level (B2C) or job title and industry (B2B). What are your prospects’ buying motivations, pain points and content preferences? And most importantly, what do they need to know to make the purchase decision?
Here are some thoughts to get you started, by audience segments.
Business-to-ConsumerWhat’s their relationship to energy? Why are they interested in solar or other renewable options? What are their questions? How much will solar cost upfront, what are the finance options? How long will it take to see a return on investment? Where do they spend their time – online and off? Whose advice do they trust? Neighbors, friends, relatives, business associates? B2C customer pain points may include financial pressures, grid issues, climate change worries, and neighborhood concerns about solar aesthetics.
Business-to-BusinessWhat industry are they in and what’s driving their interest in solar and/or energy storage? What are the commercial financing options for clean energy? Are they qualified? What’s their role in decision-making? Do they have adequate internal support for the decision? Where do they go to get their information? Media, industry sources? Whose advice do they trust? Thought leaders, colleagues, industry associations, other vendors? B2B pain points include investor pressure, meeting sustainability goals, rising utility costs, and their brand’s reputation. Five ways to learn about your audience Talk to your salespeople. Often. No one knows better than your sales reps who your prospects are and what drives them to action. Ask your sales team about the conversations they’re having with prospects — the pain points and stumbling blocks they encounter will point to where you need to focus your content marketing efforts. Develop “voice of the customer” interviews and conduct these interviews regularly. As you’re developing case studies, use the opportunity to gain additional insight into your customers’ decision-making process and their wants and needs. Reviews. Check review sites for what’s important to customers (both yours and your competitors). Google Reviews is fast taking the lead on reviews of solar installation companies. Yelp, SolarReviews and EnergySage are also good sources. Don’t neglect secondary research. There can be gems of insight there. Here are a couple of examples of what you can find. The commercial market’s challenges in converting to solar. Who receives the tax credit? This is one of many questions pestering prospects as they explore the complexities of solar financing. While new solutions via the IRA are emerging, there is plenty of opportunity for education. About consumer attitudes on clean energy. Roughly 67 percent of Americans prefer clean energy over fossil fuels but aren’t ready to leave oil and gas completely behind. Although they want the US to prioritize spending on clean energy, they express concern (aka fear) about the financial cost of transitioning too quickly toward clean energy. This suggests that more education is needed to assuage their fears. Social media can provide rich insight into attitudes toward clean energy for B2B or B2C. Good news is you don’t have to wade through all the comments on social; there are tools to extract this information. One guerilla marketing approach is to use Linked In to research your audience and develop an account-based marketing approach to gain insight into your personas. Know Your Competition
Fluency in the clean energy market will give you insight into your competitors.
Research your competitors directlyReview their websites regularly with an eye on their services and market positioning. Read their blog posts, social media, job postings, and press releases. Subscribe to their newsletter if they have one. Attend industry events. Ask customers who else they are talking to or what other solutions they’re considering. Components of an Effective Marketing Plan
Regardless of your industry segment or stage of business, every clean energy company needs a marketing plan that includes, at minimum, the following components:
Goals: Tied to business objectives. While “raising awareness” and “increasing leads” are good high-level objectives, your goals should be expressed in numbers, always.* Target audiences: Include personas crafted from your research above. Positioning and Messaging: Who are you up against, competitively? How will you tell your unique story? Strategies: How will you get there? Content marketing, advertising, PR, SEO, digital marketing, events, referral programs — these are all often-used strategies in the clean energy market. How will you build an effective marketing mix? Tactics: What are the specific activities and deliverables that will drive your success? Measurement: How will you know when you’re successful? What tools do you need to have in place to measure the program?
*Key Point: Marketing objectives should be tied to business objectives. If the business wants to increase revenue by X%, your marketing team can work backwards from there to establish the number of qualified leads necessary (given known industry averages and your own sales conversion rates) to achieve those goals.
Marketing can also have a strong role in increasing your sales conversion rates. This is why content marketing is a cornerstone of most solar energy companies’ marketing plans. And that’s the focus for our next blog.Clean Energy Agency Partnerships
Our industry is moving at warp speed. An effective clean energy marketing strategy requires a relentless focus on the customer, with specialized, proven marketing expertise.
Consider partnering with a marketing agency specializing in clean energy and climate solutions. A company adept at navigating the intricacies of this industry and the resources to develop a marketing strategy that delivers results.
Clean Power Marketing Group has helped leaders in the industry grow their businesses for more than a decade.
If you’d like help developing your 2024 marketing strategy, please get in touch.
Solar energy generates 4 percent of the world’s electricity, according to The International Energy Agency — the result of record-breaking growth in clean energy over the last 20-plus years. That’s the good news. At the same time, 8 million metric tons of solar panels are nearing the end of their (25-30 year) life expectancy and could be headed to landfills by 2030. Not so good.
Preparing for this onslaught of decommissioned solar panels requires us to advance the solar panel recycling process. It’s a critical step to fortify the solar industry’s effectiveness and reputation as a sustainable source of clean energy.Current disposal methods are inefficient — and can be toxic
Solar panels can be recycled, but only 10 percent currently are. The rest go to landfills because of the expense and complexity of recycling. There are two reasons why this is a problem.
1.Many solar panels contain cadmium and lead, which are considered hazardous waste.They could contaminate the soil, then the groundwater. They contribute 2,039 tons of greenhouse gas emissions for every 205 tons of solar PV waste.
2. Not recycling solar panels wastes valuable materials, driving the need for new raw materials. Proper recycling could recover them.Solar panel recycling is complex and expensive
The process of recycling solar panels involves separating a solar panel’s materials. Today, this is still too difficult and expensive. NREL estimates the per panel costs at $1-$5 (landfill) versus $5-$45 (recycling).Methods of Solar Panel Recycling
This involves dismantling solar panels to extract their components — removing the panel’s aluminum frame, for example. The remaining glass, silicon, and wiring are then ground separately. The success of this process depends on how well a panel’s components are separated.
A promising new method separates a panel’s elements on a molecular level. The French start-up called ROSI Solar is using this technology.
Reusing is another facet of recycling where materials are extracted from a solar panel so they can have another life.Good news: Solar panel recycling is now a growth market
Recyclable materials from solar panels are valued at $170 million. And that number is set to grow exponentially. CleanTechnica predicts they’ll be worth more than $2.7 billion in 2030.
The solar market’s growth is accelerating the recycling market expansion. A win/win for consumers and businesses for two reasons: It will lower prices and preserve valuable raw materials.The latest solar recycling technology
One start-up claims to have an even better solution. Solarcycle says its proprietary technology can extract 95 percent of high-value metals in solar panels and reuse or repurpose them in the supply chain. They say each recycled solar panel saves 97 pounds of CO2.More good news: Government policies are making it easier to recycle
The US Department of Energy (DOE) has developed a new recycling initiative aiming to be simpler and less expensive. They’ve invested $56 million, which they anticipate will incentivize the manufacturing and recycling of solar.
States are taking action.
Washington, by 2025, will require solar companies to take back and recycle solar panels at no cost to the consumer.
The California Solar Initiative (CSI) incentivizes solar manufacturers to participate in recycling programs.
Massachusetts and New York developed initiatives to inform the public about the correct disposal of solar panels.Solar takeback programs
More solar companies have instituted takeback programs that cover the cost of recycling and disposal of end-of-life solar panels.One Company’s Ambitious Recycling Program SunPower has long been a leader in solar energy installations and solar panel recycling. (Photo credit: Woody Welch)
SunPower is a leader in the solar industry and has modeled ESG values for many years. Their recycling program takes a multi-pronged approach.A production process that minimizes waste and extracts valuable materials to be reused. They’ve incorporated recycled materials in solar panel frames. A recycling collection program where customers can return old or damaged solar panels. Partnering with a third-party certified recycling facility that agrees to its environmental and social responsibility standards. What to do next
A new landscape of companies are planting the seeds of progress for solar panel recycling. Their efforts, coupled with government incentives and new technology, are moving us in the right direction.
A reminder about the crucial need to reuse precious metals in solar panels. For example, two rare elements used, gallium and indium, are expensive, and there is concern that their supply is increasingly limited. Recovering them for reuse will lessen supply chain problems, ultimately reducing the cost of solar.
Check to see if your solar panel supplier has a solar takeback program. Ask questions about their supply chain sourcing strategy. If you’re a solar panel manufacturer, do your due diligence. Make sure your products are made sustainably, and if you don’t yet have a recycling strategy, build one.Looking for expert clean energy marketing and sustainability advice? Talk to CPMG.
Clean Power Marketing Group works with clean energy innovators, helping them grow in all the right ways.
Contact us to learn more.
Where do you see the most opportunity in the IRA?
It has become clear that in addition to being a climate-focused bill, the IRA is also a domestic manufacturing bill. And the push for US manufacturing seems to be the least appreciated part of the legislation. We’re in the middle of a years-long trade dispute with China that has impacted climate tech sectors like solar, and China now dominates many of the key manufacturing sectors necessary for decarbonization – solar, wind, energy storage and EVs. So fundamentally, this bill is about building a US supply chain.
The goals of domestic manufacturing and carbon reduction are somewhat at odds. Both goals are important, but it’s going to take a long time to build a strong base of domestic manufacturing in these sectors. We do not want to be 100% beholden to potentially unfriendly actors for the key minerals and products needed for the energy transition.
Nextracker is one of the companies dedicated to growing solar manufacturing in the U.S., and recently announced the reopening of Bethlehelm Steel in Pittsburgh to produce steel for its trackers. DOE Secretary Jennifer Granholm attended the dedication ceremony.
Another area of opportunity we are excited about are the clean hydrogen credits, which have the potential to fundamentally shift the economics of those projects. The subsidy is meaningful — up to $3/kg. The general view is that “dirty” or grey hydrogen costs around $1-2/kg, and clean hydrogen has been more like $8-10/kg, so even with the subsidy it’s still more expensive, but it’s getting there. We believe that green hydrogen will be competitive with grey hydrogen much sooner than most are predicting. The green hydrogen credits in the legislation will accelerate that.
How will the Act change your investment strategy?
Of course I’m very happy about the IRA, and I think it will help greatly in terms of accelerating the energy transition. But as an investor I don’t think it will change our general approach to the market. We launched this fund at a time when legislation like the IRA seemed unlikely. We are very focused on companies that have technologies and value propositions that are sustainable without subsidies – where the fundamental economics are just better than the alternatives. I’m bullish on all the sectors we’re investing in regardless of any additional government support.
Having said that, if there’s one thing that might change in our investment strategy as a result of the IRA, I would look more closely at companies trying to compete with China with US assembly and manufacturing. In the past, a differentiated technology often wasn’t enough to compete with the brute force cost reduction and scale employed by China. With the IRA, I think it’s going to increase the chances for success for some US startups.
There’s been some criticism of the IRA for its emphasis on US manufacturing because it could slow down the price reductions that have enabled the adoption of solar. Do you think there could be unintentional negative effects on solar or will this push solar (and storage) to the tipping point?
I believe establishing a US supply chain for solar, wind and energy storage is vitally important, and worth the potential of a slowdown in cost reductions, or even some cost increases in these critical technologies. I do think this will put pressure on China and other countries to behave better in order to keep market share in the US, which is the largest market in the world for these technologies (outside of China itself). It gives the US leverage in trade negotiations.
My biggest fears about the impact of additional subsidies on these industries is that they will delay the necessary cost reductions and efficiency increases that we need. Solar is a great example – consumers in the US pay 2-3x more for residential solar than they do in other major markets, like Europe and Australia. We are horribly inefficient at the “soft costs” – sales, marketing, permitting, installation. We really need to figure out how to lower these costs, and not use these incentives as an excuse to sit back and make more money. Solar shouldn’t be $3-4/watt for consumers, it should be $1-2/watt, so we need to figure out how to do that.
Let’s talk about the EV incentives. How do you think they will change the market for EVs?
The EV credits are interesting – because in order to get the full credits, you need a substantial amount of domestic content. Again, this is a way to incentivize US manufacturing. But how this plays out may not necessarily be favorable to EV adoption. I’m in the market for a new EV, and the day the bill was passed the Hyundai Ioniq 5 I was thinking about buying suddenly became ineligible for a credit. But, shortly after the bill was signed, Hyundai announced that it is moving up their plans for a US assembly plant. So the bill’s strategy to incentivize a US supply chain is already working.
It’s important to note that the IRA does not include EV charging infrastructure but the previously passed Infrastructure Law does include incentives for a buildout of EV charging networks.
The Act sets the stage for significant investment in the production and use of clean hydrogen in the United States. Could you talk about your investments in green hydrogen?
One of the companies we’re invested in is Ohmium, which designs and manufactures electrolyzers for green hydrogen. We believe this company can be competitive with fossil-fuels based-hydrogen without subsidies, within the next three to five years, based on their technology and manufacturing roadmap, and the availability of low-cost, renewable electricity.
Ohmium is a California-based company with manufacturing in India. And they weren’t really focused on the US as an end market initially, because other regions, like Europe, the Middle East and India, have been more aggressively pursuing green hydrogen. But, momentum has been growing in the US, and it will be interesting to see whether the IRA increases that. I suspect it will.
What are some of your other portfolio companies we should know about?
One of our portfolio companies is Resilient Power, which is building extremely compact, solid-state, high-power EV charging hardware for fleet electrification at lower cost than traditional solutions. We’re very excited about the investment in Resilient by Amazon, who has plans to be net zero by 2040, with 100,000 EVs in their fleet by 2040. Resilient Power is the type of solution that Amazon needs to accomplish that.. This is a technology that could re-write the distribution grid, as well as unblock the major supply chain constraints that we are dealing with on the grid.
Another company we’re excited about is DroneBase, which enables the low-cost inspection of critical infrastructure, including over 60GW of solar and wind projects worldwide, as well as utility infrastructure. The technology and services they supply are key to keeping the energy transition infrastructure operating efficiently.
For more information, contact email@example.com
Solar energy companies have been fighting the good fight on solar policy for so long that when news broke that the Inflation Reduction Act (IRA) would include $369 billion (with a B) for climate and energy, it seemed almost too good to be true. But there it is, in black and white: a 10-year extension of the solar ITC, a standalone energy storage tax credit, and enough EV incentives to enable consumers to affordably enjoy complete clean energy systems for their homes.
Once the bill passes the House, which appears imminent, and is signed into law, it will give the solar industry better tailwinds than we’ve ever had. It’s not a leap of faith to expect that market demand – from both consumers and businesses — will be swift.
How can you take advantage of the momentum?
Now is the time to reassess your marketing strategies to make sure you’re ready for the rollout of the Act. Is your web site as engaging and effective as it could be? Is it up to date with the latest incentive information from the bill as well as local incentives?
Do your blog posts and social media channels educate and inform your prospects, not just about the process of going solar, but about the advantages of choosing your company in particular?
Is your brand message clear and distinct?
While demand for solar is bound to be strong over the next few years, the competitive “noise” is likely to increase too. Making sure your company has a clear and differentiated brand message has never been more important.
Clean Power Marketing Group can help. We’ve been working with solar companies across the country since 2015. Because we understand renewable energy – and more importantly, how to talk about it in a clear, powerful and persuasive manner – we hit the ground running to build marketing campaigns and processes that help close sales more efficiently.
Are your marketing and sales systems talking to each other?
It is more important than ever for solar companies to quickly respond to sales inquiries, answer questions, close deals and complete installations on time. It is crucial, especially at this moment, that consumers and businesses alike have a positive experience when they install solar — beginning with the first conversation to the completion of the project. The future of our industry – and our planet – depends on it.
You want your customers to be not only delighted with the experience, but to become advocates about solar in general — and your company in particular.
We’ll help you put in place the right strategies to build and nurture your pipeline. This includes everything from auditing your web site to make sure it’s operating efficiently to optimizing customer reviews as well as developing content like blogs, case studies, email marketing, sales tools and videos. Think of us as a virtual extension of your marketing team.
We can also test your sales systems to make sure your response time is competitive and that leads are being handled with care. This combination of marketing and operations follow-through ensures that your marketing dollars are well-spent, with excellent ROI.
The IRA is indeed good news, but we have miles to go before we reach our emissions goals. As an industry, we’ve been waiting for this moment. Together, we will succeed – beyond our expectations.
Working in clean energy is more than a job; it’s a calling. The public has a general understanding of the industry, its importance to the environment, and to all of us who share the planet. But beyond those basics, odds are their knowledge is limited to seeing solar panels on buildings or windmills across a landscape.
This is why it’s absolutely critical for your organization to tell your story in a compelling, engaging manner that connects authentically with your customers and prospects. So how can you tell your unique story and improve your content marketing for clean energy?Finding Your ‘Why’
As Simon Sinek so eloquently and powerfully described in his now legendary TED Talk, “Start with Why,” most customers are not interested in “what” you’re selling. Especially when they can buy it from multiple vendors.
Customers are much more interested in the “Why.” Why are you in renewable energy? Why do you believe in this product? Why are you such a passionate advocate? That is the story your customers want to know. And if you tell that story well, those customers will follow you from education and consideration to purchase and even advocacy. And there’s no better spokesman for your product than a customer who is thrilled and wants to share their experience.Better Content Starts Here
Here’s a simple, three-step guide to creating clean energy content that tells your story in a way that compels your audience to take meaningful action.
1) Master the Basics
“Content is king” is more than an aphorism; it’s a reminder for marketers that your story has value. Every piece of content you publish should be informed by your story, whether it’s a blog post or a case study or an entire web site.
Let’s use wind turbines as an example. Customers, from individuals to large companies, purchase wind turbines for one purpose above all others: to produce a clean, reliable, cost-efficient source of energy that does not pollute or add carbon to the atmosphere. They may be purchasing a turbine, but that’s just the “what.” They’ll buy the turbine from you because they understand your commitment to the environment and want to be part of that commitment.
2) Create Content that Converts
Only publish content that you would read if you were an otherwise disinterested party. Focus less on speeds and feeds of your solution and more on the benefits it provides.
Learn how to introduce yourself to new readers, and casually remind those who know you of why you do what you do. And why you’re committed to helping every customer succeed.
Polish your “Elevator Pitch” to ensure it focuses more on the reasons you are in business. Then connect your why with what the customer can expect to gain from building a relationship with you.
One of our clients recently summed their pitch up this way:
We are in this business because it’s time to solve the climate crisis. The renewable energy solutions we offer help our customers reduce their carbon emissions, improve resiliency and save money too.
Mission-focused, benefit-packed, and only 32 words!
Practice your pitch with people who know you, and make sure it comes across as authentically “you.” After a while, your elevator pitch will be second nature because it will no longer be just a “pitch.” It will be an authentic and compelling explanation of what you do and why it matters to your customer – and it will show up naturally in every piece of content you create.
Skillfully use Calls to Action (CTAs) to guide your prospects and customers through the purchasing journey. Educate whenever possible. Share new industry developments. Link to interesting articles. By demonstrating your commitment to and knowledge of the industry, you will inspire your customers to trust you and take the next step.
3) Measure Content Effectiveness
Here’s the cold hard truth: if you’re not going to monitor the performance of your content (especially digital content), then you might as well not have any. That’s how crucial it is to understanding performance metrics.
You can find most of this data in your website analytics, which includes page views, new users and return users, as well as from your social media accounts. Monitoring click-through-rates, or CTR, is another quick way to assess how well your content is translating to clicks to a product link on your website or a “contact us” form.
If you’re a renewable energy company struggling to break through with your communications, contact us. We’re glad to help discover and tell your story in a way that will engage your audience to start a conversation that converts.
It’s no secret that the future of energy lies in harnessing renewable sources, like solar, wind and energy storage. The recent IPCC report highlighted the urgency of the clean energy transition. For those of us involved in marketing clean energy and other climate solutions, our jobs just went from challenging…to critical.
How can you make your marketing efforts more effective when the planet’s clock is so relentlessly ticking?What To Do Setting the Right Goals
Perhaps it goes without saying, but we’ll say it anyway: Marketing goals should be specific, measurable and achievable — and carefully aligned with business objectives. Engage the management team in setting the goals. Talk with your sales team to understand what kind of help they need to support their efforts. At this stage you are listening more than talking.The Customer Journey
Before setting down to doing the marketing work, take a beat to understand your customer’s journey. It can be tempting to skip this step in the interest of time, but don’t do it. If you do, you’ll only have to revisit the journey when your marketing efforts fall short.
Like other buying decisions, the customer journey for renewable energy starts with awareness – the realization that a consumer or business needs or wants the product or service you offer. While climate reports help spike awareness of the need to take action, it’s not always easy to connect the dots on how a particular product or service can help. This is where a well-timed, consistent content strategy is crucial.
According to the Content Marketing Institute, 50% of content created was intended to generate awareness and spark interest within this first step. Not surprisingly, this is where we find our first “do” on the list: content marketing.Yes, Content is Still King
Content is still the cornerstone of digital marketing. In marketing clean energy, compelling content – with credible proof points, testimonials and highly evocative visuals – is the linchpin of an effective marketing plan.
Blogs will be one of your biggest sources of inbound traffic, and original press releases or newsletters generate two times more traffic compared to sharing articles. Additionally, blogs grant opportunities for better search engine optimization – a key metric for analyzing user data and the performance of your web site. For example, blogs that pop up on the first page of your SERP (search engine results page) typically have clear headers with key search terms, meta descriptions and are longer than you might think – averaging just under 1500 words.
Content of interest to your readers could be as simple as photos of the finished system or interviews that describe the customer’s journey to clean energy. All of these are grist for the content mill, to be shared through email marketing, social channels and more. Sharing these examples shows dedication to customer satisfaction and a willingness to constantly improve.Email Marketing
Once you’ve written a blog don’t forget to share it – everywhere. Email marketing is still one of the best ways to do this – in fact, email marketing has the highest return on investment for B2B companies, achieving a whopping 4400% return. This is to say that for every dollar spent, the return can average around $44.
For B2B companies, marketing emails are most effective when they feature original content that is informative and educational — and most of all, interesting. Good content is like a good story: It has an arc. For example, if you’re a solar company who sells to commercial businesses, customer case studies will be a key part of your content arsenal. Businesses need to see that other businesses, particularly those in their own industry, have successfully made the transition to renewables — and how.Investing in quality photos of your installed projects has tremendous ROI. Photo Credit: Woody Welch Social Media: Is it Really Worth it?
One of the most frequent questions we get as a B2B marketing agency is, what role do social channels play in the decision-making process? The answer, not surprisingly, is significant. B2B customers are people too, and they have media habits that are not that different from consumers. But that doesn’t mean you have to be equally active on all social media platforms. It’s better to choose two or three channels and focus on authentic engagement as well as posting. For B2B clean energy, Linked In and Twitter are perhaps the most influential social channels, though even Youtube videos can play their part (yes, people watch Youtube videos at work).
According to LinkedIn data, 80% of B2B leads come from the platform. When posted content from the company page is shared by employees, the click-through rates from that reposted content is twice as high as the original post. Not all posts have to be blogs; listicles, or “list posts,” are short-form content that outline the important information in quick bullet points. Listicles are very effective, as they generate twice as many shares as “how to” tutorials and outperform infographics as a whole.
Once your prospects are aware of your business, they embark on the consideration part of the buying process, in which your product or service undergoes a comparative process with competitors. Content that differentiates your company is effective in this stage, but social media still plays a part, especially if you’re posting informative articles on those platforms, specifically LinkedIn.
Social media can even be useful during the decision-making phase, the final destination of the purchasing journey. Compared to LinkedIn, Twitter is more effective at showing the human side of the business – opinions, conversations with other industry leaders and customer interaction. Twitter will probably not be the last point of sale, but it can sway customer opinion.What Not To Do
Knowing what to do to make your clean energy marketing most effective is helpful, but knowing what not to do may be even more important. Some of the “don’ts” in this list may seem intuitive, but they bear repeating.Not responding = Not engaging
Engagement keeps your company top-of-mind, and reassures customers and prospects that your company is responsive. If you’re not able to respond to customer questions, either through email or social media, then you’re not engaging. The customer made the effort to reach out to your company, and they expect that effort to be reciprocated.Failing to Track Engagement Data
Understanding clickthrough rates, bounces, inbound traffic, length of time spent and SEO are all terms that are imperative to analyzing the current state of your marketing performance. These data points, though not exhaustive, are relatively easy to access and allow for both specific and general insights into your marketing effectiveness.
Most social media platforms house this data natively within the apps and can be accessed through user settings. You can use a social media platform like Hootsuite to measure social efforts, with Google Analytics providing fairly rich analysis of social’s role in your web site performance. A robust email platform like Mailchimp can drill down into email marketing performance such as A/B testing.Using Social Media not Conducive for B2B
By now, we hope you understand that platforms like TikTok, Pinterest, Snapchat and, in some cases, Instagram and Facebook, are not as effective for B2B marketing.These platforms target different audiences, which makes it difficult to cater posts to the ideal consumer population. For companies in the renewables sector, LinkedIn appeals to a slightly older demographic, although millennials are fast catching up on the platform. Twitter is powerful in the RE world too, when you do your homework on hashtags and influencers. (You know who you are out there…)Bringing It All Together
Whether you are new to the world of renewable energy marketing or a veteran of the industry, it’s important to reassess marketing efforts on a regular basis. If you’re new to digital marketing, the best way to get started is just to dive in – there is a bit of a learning curve, so don’t get overwhelmed. For seasoned marketers, it’s advantageous to monitor your current marketing status and opportunities for growth.
We know clean energy marketing can be a difficult job, but it’s never been more urgent.
Contact us for help along the way!
Most people believe climate change is real. But they don’t know what to do about it. Here’s how to link awareness to action with climate solutions like solar.Talking about climate change won’t solve the problem, but it’s a good place to start.
Why do we care more about natural disasters in our own cities and states than halfway around the world? As climate scientist Katherine Hayhoe explains: “That’s a problem called psychological distancing.”
This is the same reason why an estimated 72% of American adults believe global warming is real, but only 43% believe it will affect them personally, according to an ongoing study of climate opinion by the Yale Program on Climate Change Communication.
Until we see the signs of climate change in our own backyards, we just don’t get it. But do we have to wait for an unmitigated climate disaster in our local area before we do something about it? Hayhoe says no.Katharine Hayhoe. Image: Ashley Rodgers/Texas Tech University
“The most important thing you can do about climate change is what we are NOT doing: talk about it,” Hayhoe said on a recent webinar for the University of Central London’s Institute of Sustainable Resources. “It’s not sufficient, obviously, but it’s a necessary first step. It knocks over the first domino in a long train of dominoes that leads us to a brighter future.”
Despite the increased coverage of climate issues, only 35% of the American public say they talk about climate change “at least occasionally.”Climate cocktail conversations?
A UN “Champion of the Earth,” Hayhoe is also an evangelical Christian who lives and teaches in Texas. Her book, Saving Us: A Climate Scientist’s Case for Hope and Healing in a Divided World, has been called one of the most important books to date on climate change. Not because of doomsday facts but because of its message of hope.
Hayhoe’s perspective is grounded in data, but her communications style is warm and personable. Instead of spewing facts to her audiences, she takes a different route to changing people’s attitudes on climate by first seeking to find common ground.
You know, the kind of conversation you used to strike up at a cocktail party filled with people of diverse opinions. Remember those?
“It’s about connecting with our hearts, not our heads,” Hayhoe explains. “To change an adult or anybody past the age of about 10 years old is almost impossible. But we don’t have to do that.”
“If they’re a human living on Planet Earth they have every reason to care about climate change. So we have to connect with what they care about,” she says. “If they hunt or fish, they have every reason to care about climate change. Whoever they are, whatever they care about–we can help them care about climate…by having a conversation about our shared values.”Shared Values? That sounds deep…
Let’s go back to the cocktail party. You don’t strike up a conversation with someone you don’t know by going deep on politics. You ask about their lives, their family, their work, their interests, first.
It’s no different when talking about climate change.
The #TalkingClimate Handbook is an excellent resource created by psychologists and sociologists who’ve been studying how to have hard conversation since the ’90s. It provides practical advice on how to have constructive, interesting conversations about climate change.
Rule #1 is: Respect your conversational partner and find common ground.
Be curious about your audience. Ask questions. What do they care about? Listen to their answers. Really listen. There you will find some common ground to build on.Making the Leap to Climate Solutions
There’s a natural fear that the more we talk about climate change, the more disheartened we will become. Even though a majority of people believe climate change is happening, only 50% think they can do anything about it. This is a problem Hayhoe refers to as “solution aversion” — meaning the solution seems to painful or risky.
This makes trustworthy communications about climate solutions paramount.
People tend to filter their information through three different lenses:Is the information relevant to my needs? Is it believable? Is the message respectful and compelling?
That’s why it’s important that the solution being presented is proven, and solutions like rooftop solar and electric vehicles clearly are. A strong educational content campaign communicates can be incredibly powerful in this regard. IF it’s relatable, believable and hype-free.Know Your Audience
Finding the right message, tone and delivery for your message boils down to how well you know your audience. Some of this is obvious. Talking about climate solutions to a homeowner differs from how we would talk to a business. Consumers care about climate for the changes it may cause to their lifestyle, their livelihood and their families.
The savings message of solar is important, for instance, but a growing segment of the consumer audience now feels a personal sense of responsibility for the planet – and a desire to take some kind of definitive action. So does it make sense anymore to hammer away at a savings message without linking to a climate action benefit?
When it comes to B2B, the audience is still made up of people. But their motivation for adopting climate solutions is grounded in the practical risks their business is now expected to face in the event of extreme weather. Any climate solution has to address the need for resiliency — and make economic sense. But we can also connect their decision to the pressing need for businesses to take action on curbing carbon emissions.
Segmenting your business audience by the industry they’re in — and the issues they care most about — is a highly effective way to build a successful B2B content marketing campaign. Geographic segmentation also helps.
A commercial real estate owner in suburban Chicago facing dwindling occupancy rates needs to generate higher net operating income. A vineyard owner in California worries about fires. Yet both may come to the conclusion that offsite solar is a good way to address their concerns while doing something tangible for the planet at the same time.
The bottom line is that your audiences care about the climate for different reasons. Knowing what those reasons are – and developing content that speaks to those motivations – is the surest path to convincing them to take action.Ready to develop some great content for your audiences?
We’re ready to help. Contact us to get started today.
For more information on how to talk about climate change, download the #TalkingClimate Handbook.
New Year’s resolutions on climate action are too quaint for where we stand today: fighting an existential battle that is already well underway. The 2021 United Nations Report on Climate Change repeated the clarion call from its last report with even greater urgency: We are rapidly running out of time to limit global warming beyond 1.5 degrees Celsius over pre-industrial levels.
As 2022 kicks off, companies face challenges on many fronts: COVID has yet to loosen its grip, and supply chain constraints continue to vex many industries as record-breaking winter storms blanket parts of the U.S., including vital transportation routes. The climate crisis may seem like a distant threat when you’re facing such immediate concerns. But the truth is, your customers are experiencing a rising sense that climate change is here to stay, and they’re frustrated with the lack of a comprehensive, coherent response plan from both the public and private sector.
For purpose-driven companies, this is where a strong marketing campaign comes in — one that links the reality of climate change with equally real, actionable solutions such as rooftop solar energy, electric vehicles and other sustainable products.Photo by Markus Spiske/Unsplash
Let’s start with the good news: Public support for climate solutions is growing.
American attitudes on climate have been changing, according to Climate Change in the American Mind (CCAM), a research study conducted twice yearly from 2008 through 2020 by the Yale Program for Climate Change Communication in association with George Mason University.
Americans who think global warming is happening outnumber those who do not by a factor of four to one.
While geographic differences in opinion do exist, Americans are, by and large, waking up to the realities of climate change. A majority of Americans (64%) say they are at least “somewhat worried” about climate change. One in four Americans say they are “very worried.”
And perhaps most significantly, two out of three Americans (64%) now feel a personal sense of responsibility to help reduce global warming, according to researchers.
Now more than ever, Americans are ready to fight climate change with solutions that they can personally control.
Going Local: What Do Climate Attitudes Look Like Where You Live?
It’s all well and good to look at national public opinion, but when it comes to American consumer behavior, location matters. The Yale Public Opinion Maps provide details on the differences in public opinion down to each state, county and even Congressional district. (For a deeper dive on how American views and actions differ by sociodemographic and political factors, check out the CCAM Explorer tool.)
For those in the business of sustainable products and solutions, Yale’s Six Americas tool (first developed in 2008, evolved yearly since then) segments the American public into six audiences that each respond to the issue of climate change in their own unique ways:
Over the years, the proportion of the public that falls into the “Alarmed” category has increased – from 17% in 2008 to 26% today, while the number who are “Disengaged” has decreased. Clearly we are seeing the rise of a more climate-active public, as you can see from the graph below:Global Warming’s Six Americas is an audience segmentation tool designed to help people better understand their own climate views as well as others.
Moving from Climate Alarm to Adoption of Climate Solutions
At the heart of the climate action movement is the need to translate the rising concern over the climate crisis into actionable solutions.
Importantly, researchers point out that while the “Alarmed” category of respondents are convinced global warming is real and support strong climate policies, they do not have an equally strong understanding of what they or others can do to solve the problem.
This is why it’s so crucial to put forward a solutions-based message to the climate crisis.
For example, until now, solar marketing campaigns have focused primarily on the financial benefits of solar—and it’s been an effective strategy with a certain demographic. But the evolving attitudes of Americans toward climate suggest that a climate solution message could also play well. When 55% of the public is either “alarmed” or “concerned” about climate change, it begs the question: Are you presenting your message in the most compelling way to every sector of your audience?
One way to check is to use the Six Americas Super Short Survey as a barometer on where your audience stands on climate. With four simple questions you can segment your audience into actionable categories. You can even gamify the tool with landing pages that help you further segment your audience with key demographics.
All of this is to help you better understand your customers and prospects so that you can generate the content they’re interested in – and the solutions they are increasingly focused on adopting.
For more information on how to better segment your audience and make climate action a key part of your 2022 marketing strategy, reach out to us at Clean Power Marketing Group.
by Nancy Edwards, Managing Partner
Clean Power Marketing Group
Environmental, social and governance (ESG) investing is having a watershed year, and for the solar industry, this momentum is great news. But solar companies may need to up the ante on their own sustainability efforts.
As more organizations face the daily realities of climate impacts on their operations, supply chains, and ultimately, their bottom lines, ESG investing is at an all-time high. Covid-19 seems to be contributing to this trend. According to a recent survey by CoreData, 60% of fund selectors globally have become more focused on ESG since the start of the pandemic.Photo Credit: Woody Welch
At the same time, cities, states and companies are making net zero pledges as never before. More than 700 cities in 53 countries worldwide have committed to halve emissions by 2030 and reach net zero carbon emissions by 2050.
Meeting climate commitments will involve a quantum energy shift unlike any we’ve seen in our lifetimes.
But achieving net zero targets is much harder than setting them, and doing so in a way that considers every social and environmental implication is even more difficult, as recent allegations of forced labor in the Chinese solar supply chain attest.The Solar Sustainability Challenge
Solar and sustainability would seem to go hand in hand, but that’s not necessarily the case. For years, solar companies – from global manufacturers to local installation companies — have put ESG on the back burner, in part because the very product they’re offering is seen as inherently sustainable. But the new emphasis on sustainable supply chains means that’s simply not enough.
“It is a really big deal when, for an energy technology that is supposed to be clean, there are headlines about dirty processes, waste or poor labor relationships,” says Dustin Mulvaney, a professor at San José State University and author of several books on solar and sustainability, in a recent PV Magazine article. “Headlines like this could actually dissuade people to adopt and support solar – and solar depends to some extent on public support.”First Movers in Solar ESG
Many solar companies, however, are taking leading roles in sustainability and ESG. SunPower was one of the first panel manufacturers to prioritize ESG. SunPower Maxeon DC panels were the industry’s first to become Cradle-to-Cradle Certified, an independent certification that scores a product’s environmental and social performance across five critical sustainability categories: material health, material reuse, renewable energy and carbon management, water stewardship, and social fairness.
Maxeon Solar, the SunPower spinoff now responsible for its manufacturing sites outside the U.S., is carrying the torch forward with renewed emphasis on all areas of ESG. Both companies are signatories to the United Nations Sustainable Development Goals, and both recently published their 2020 sustainability reports (see SunPower’s here and Maxeon’s here).Aligning Your Solar Business With Your Customers’ ESG Strategies
Organizations with robust ESG strategies make ideal customers for solar companies. There’s no need to convince them of the benefits of solar from an economic, environmental and social perspective. They’re already focused on the right goals.
But many solar companies struggle to put the same emphasis on sustainability that brings commercial customers to them in the first place.Photo credit: Woody Welch
Over the past three years alone, the U.S. solar industry has doubled, in spite of the pandemic. Solar had a record-setting Q1 2021, according to the U.S. Solar Market Insight Report, with every sector — residential, commercial and utility-scale – growing significantly year over year.
With that kind of growth, solar companies should expect to set aside a portion of their budgets to build, measure and evaluate sustainability programs. Making sure your solar company has an ESG strategy in place will avert any sustainability concerns as your customers implement supply chain requirements.Enter the Solar Supply Chain Traceability Protocol
The Solar Energy Industries Alliance (SEIA) recently introduced the Solar Supply Chain Protocol to help solar companies ensure the sustainability of its products. While not exhaustive, the protocol gives solar companies something that was sorely lacking until now: a roadmap for both identifying the source of a product’s material inputs and tracing its movements throughout the supply chain.
“The solar energy industry has a responsibility to mitigate and manage its full range of social and environmental impacts, which include respecting the human rights of workers, ensuring that the rights of communities and other stakeholders are respected, and making business operations safe and environmentally responsible.”
SEIA Solar Supply Chain ProtocolESG for Solar Companies: Where to Start
A sound ESG strategy involves more than just ensuring a sustainable supply chain — although this is a substantial effort. It involves every aspect of a business – from environmental practices to community involvement to hiring practices and social equity initiatives.
Developing an ESG strategy starts with engaging stakeholders, including employees, customers, investors, suppliers and partners. Doing so enables the material sustainability issues a company needs to focus on to emerge from those who have a real stake in the company.
by Woody Welch
Shining the best light on your renewable energy projects is imperative when trying to convey an effective marketing message. Investing in professional, creative photography and video will pay for itself many times over in the highly visual world we live in today. Here are some tips on how to create visual assets with great ROI from our talented partner and friend, Woody Welch, who has traveled far and wide shooting some of the most stunning solar photos and videos in the industry.
The word photography comes from Latin, with photo meaning light and graph meaning to write or draw. What we are doing when we take a photo is writing with light. When it comes to marketing your clean energy company, it pays to ask yourself, “Am I shining the best light on my projects?”
There are many variables when shooting photos of any renewable energy project. Here are my top 10 tips for getting the best return on investment from your photography and video assets.Credit: Woody Welch
1.) Photograph your solar energy projects in the best light. Shooting at mid-day can actually work well because of the connection with the sun (what I call the “plug-in” moment) or the “angle of incidence.” This plug-in message can often be conveyed throughout the day instead of just at the golden hour at the beginning and end of the day. The angle of incidence is captured when the sun is at a 45-degree angle to your project, casting the sun’s reflection directly into the lens, whether it be an aerial photo, on a rooftop or on the ground.
2.) Use the golden hour to create drama and emotion in your projects. This one is simple: Wake up early and shoot the hour starting at sunrise or shoot the hour before sunset and a little after. Additionally you can photograph mid-morning or late afternoon to get shadows to help create depth perception.Credit: Woody Welch
3.) Hire a professional, not a hobbyist. It seems today that everyone is a drone photographer and there are as many fly-by-night shooters as there are raindrops in a thunderstorm. Take the time to look at the professionals’ work. Make certain that their BODY of work is not just a few images they got lucky with but rather multiple groups of great images of many projects that show they have consistently produced value for their clients. A great photographer will produce excellent work for EVERY client. They may cost more up front but your ROI will be vastly better in the short and long run.
Quick story to highlight this point: I had a client in the high-cost market of LA try a low-cost photographer once instead of paying my team market rate to do the job right the first time. The client was back in less than six months and more than willing to pay my professional prices because he understood the value my photos brought to a sales situation. Here’s what he said to me:
“Your images speak for me. I don’t have to talk when I use your images in my decks. They speak a thousand words and allow me to do what I do best instead of spending hours explaining what it is I do.”
He is still my client 15 years later.
4.) Make sure your photographer is using the highest quality and best camera and/or drone possible. You’ll want to be able to use your visual assets in all situations, from full-screen websites to trade show displays. If you expect your company to grow, as most solar companies today do, prepare for growth with high-ROI digital assets.
5.) Have a plan for campaign-based media placement and a schedule. Don’t invest in high-quality, high-ROI assets unless your plan is in place. If you don’t have an in-house marketing team, hire one like CPMG to help maximize your return on investment.
6.) Plan plan plan! Dot all your I’s and cross your T’s. Make all contacts with property managers, and get advance clearance for properties and permissions from the FAA for drone flights (where applicable). All properties around airports will not be able to be documented with a drone. Also cities like DC have no-fly zones and you will have to get permission sometimes months in advance. If you hire a reputable photographer, they will do the heavy lifting for you.Credit: Woody Welch
7.) Have backup plans for your backup plans and a thorough rain contingency plan. For obvious reasons, you cannot shoot solar projects in the rain. Additionally your message will be diluted if you shoot in cloudy or overcast weather. Please don’t make me explain this one.
8.) Be prepared for high-resolution file workflow and build a DAM (Digital Asset Management system) to double or triple archive your visual assets. This is literally an insurance expense and an investment in efficiency that will pay dividends over the life of the images.
9.) Eliminate variables. Much of photography is about eliminating what is not important in any given image. Many of our clients have sections in their brand standards manuals for visual asset creation to make sure all of their photographers and videographers are “on the same page” and capture assets that feel and look the same creating consistency throughout their assets. This is a much bigger deal than most folks think it is.
10.) Budget for high-quality assets and plan and prepare for success! Great photography and video can go viral, create more traffic to your website (especially with the right visual SEO), and even win clients. Yes, even that. The right emotional tone in one video or a single photo can create a powerful connection to a customer, even in the commercial solar world.
There are so many factors involved in creating great photography and videos that deliver short- and long-term ROI. When photography is on message, technically precise and of the highest quality possible, your ROI will be many times greater than if you go the cheap and easy route.
Woody Welch, founder and CEO of Earth Repairian Media and owner of Wood E. Photography, has been in the trenches in the energy industry for over 25 years, documenting some of the world’s largest renewable energy projects, directing commercials and video stories and creating high-ROI, on-message imagery for Fortune 500 clients on time and on budget every time. Get in touch today to transform your solar marketing with powerful visual assets.
By EDF Blogs
By John Rutecki
As we wrap up a summer of sweltering heat waves and dangerous air quality, new poll results show strong majorities of Pennsylvanians want action to address the climate crisis. The poll from EDF Action, Earthworks Action Fund, Sierra Club and Clean Air Task Force Action found that the majority of Pennsylvanians support one of the best ways to slow the current rate of warming — cutting methane pollution.
Methane from fossil fuel operations, agriculture and other industries is responsible for at least 30% of current warming.
With the U.S. EPA finalizing its nationwide methane rule for oil and gas producers this fall, Gov. Shapiro has the opportunity to give the majority of Pennsylvanians what they want by delivering a strong state implementation plan to reduce methane emissions.
Keystone state voters overwhelmingly support methane regulations
The poll found a strong majority of voters in Pennsylvania, 69%, support the EPA strengthening and finalizing stricter limits on methane emissions from the oil and gas industry, and 73% of Pennsylvanian swing voters support stronger methane limits. When asked about potential outcomes of the EPA setting stronger limits on methane emissions, most Pennsylvania voters agreed that there would be positive impacts on climate change (57%), air quality (66%) and family health (63%).
Pennsylvanians want climate action; methane offers an opportunity for Gov. Shapiro to deliver
Click To Tweet
Supporting strong methane regulations also gives elected officials a boost. The poll found that on a ballot centering methane, the candidate supporting strong regulations had a substantial lead over the candidate opposed to them. When presented with head-to-head arguments for and against methane regulations, voters still supported the regulations 55% to 44%.
Pennsylvania voters were also more likely to agree that stronger safeguards will create more jobs through innovation and new technologies (56%).
EPA proposed rule includes policies popular with voters
The EPA’s proposed rule would rein in methane by requiring inspections at all oil and gas wellsites, including at leak-prone low-producing wells, which make up nearly 90% of Pennsylvania’s wells. The current proposal also phases out pollution from new and existing pneumatic controllers, which are the second largest source of methane pollution.
These policies are popular with Pennsylvanians. The poll found a majority of Pennsylvania voters support regular inspections of leaks at all oil and gas wells, tougher equipment standards and monitoring of large “super emitter” emissions events. It’s also important — and 60% of Pennsylvania voters agree — that the EPA strengthen its proposal to eliminate routine flaring at oil and gas sites.
The people of the Commonwealth want decisive climate action. The upcoming EPA methane rule is an essential opportunity to protect Pennsylvanians from pollution. And once final, these rules will offer the Shapiro Administration a critical opportunity to deliver on these popular policies through a strong and quickly adopted state implementation plan. Limiting methane emissions from oil and gas will protect Pennsylvania’s climate, air quality and communities. It’s an opportunity to give Pennsylvanians what they want — leadership on efforts to cut methane pollution from oil and gas.
By Adam Peltz
Louisiana has a long history of oil and gas development, with 50,000 wells distributed across the state and along the coast. The state has a responsibility to ensure none of these wells become an environmental or economic liability.
About a third of these wells are non-producing but registered as having future utility, meaning the operator claims that they could be economically productive in the future. As a result, the operator isn’t required to plug the well. However, once wells are idled for more than three years, just one in five ever return to service. Often they will only see a tiny fraction of their former production levels.
Ultimately, in the absence of policy change, many of these wells will become orphaned and their operators will disappear. If the orphan wells are ever to get plugged, the state and the people of Louisiana will have to shoulder the costs.
This matters because old, unplugged wells cause a host of economic, environmental and even public health and safety problems. They can leak methane and toxic air pollution, contaminate water, reduce property values and prevent other economic uses of the land and the geology.
Louisiana’s efforts to plug old oil and gas wells could create thousands of new jobs, safeguard environment
Click To Tweet
Louisiana already has around 4,300 orphaned wells, a backlog that developed because of decades of underinvestment. The federal government is providing Louisiana over $100 million dollars through 2030 to plug these wells. 500 of them have been plugged this year alone. But the state has a long way to go. There are 17,000 wells currently in future utility status, 50 percent of which have not produced in five or more years, and tens of thousands of low-producing wells that are likely to apply for the same status in the near future. Without better planning and policy, the list of wells that require taxpayer funding to plug could grow many times longer.
To stem the tide of well orphaning, the Louisiana Department of Resources has proposed a new rule that limits extensions of future utility status. The longer a well stays in that status, the more fees operators will have to pay. This provides an economic incentive for operators to plug their wells as opposed to keeping them in this idle status.
This important reform will not only help the hundreds of thousands of people who live near these wells but will create a wave of job creation in Louisiana’s oil patch. These will be well-paid positions, generating far more economic activity than any future production from these wells.
Louisiana is on a path toward responsible stewardship of its oil and gas resources, which includes ensuring that all oil and gas wells are plugged in a timely fashion, at the end of their useful lives, by their operators. Doing so not only protects the people living near these wells and reduces climate impact but also unleashes tremendous economic potential. This comes directly from well closure jobs and indirectly by facilitating new clean energy uses for some wells and well sites. This year’s reforms curbing long-term well idling are a key step toward Louisiana’s clean energy jobs future.
By Erin Murphy
The New York Public Service Commission recently approved a certified natural gas pilot program proposed by Con Edison, the gas and electric utility for much of New York City. Under the pilot, Con Edison may pay a premium for limited amounts of natural gas that is purportedly certified as having lower methane emissions than the gas Con Ed typically purchases to serve its customers. Methane, the principal component of natural gas, is a potent greenhouse gas that contributes to climate change. Research shows that a rapid, full-scale effort to reduce methane emissions — including from the oil and gas industry — could slow the current rate of warming by as much as 30%.
There are several reasons to be skeptical about whether this scheme delivers real environmental benefits and if it is worth the premium price Con Ed will pay, and ultimately pass along to customers. This pilot program should make good progress in answering these questions.
What is differentiated gas and why is industry so focused on it?
In some respects, differentiated natural gas, which is purported to be more environmentally friendly than other gas, is not new. Some oil and gas companies and utilities have been talking about “green gas” or “responsibly sourced gas” for years as regulators and the public have focused on methane pollution from industry. A newer, rapidly growing industry practice is “certifying” natural gas as having lower methane emissions or other desirable attributes.
Enverus Intelligence estimated that producer-certified gas would make up nearly a fifth of the North American natural gas market by the end of 2022. MiQ, one of the leading certification entities, states that it currently certifies 4% of global gas supply. Domestic and international purchasers, concerned about the impacts of climate change, appear to be willing to pay more for low-emission gas — one estimate puts this premium at 3-5 cents /MMBtu. Kinder Morgan launched a certified gas pooling service for shippers in 2022 — though its first annual report indicated that it received no bids for the service. The state of California recently considered, and wisely rejected, legislation that would have required the state to purchase only certified gas, without setting any meaningful standards for certification.
But without a standard definition for certified gas, certifying entities assess different aspects of performance — methane emissions, water protections, community protections, etc. — at drastically different levels of operation and with little or no transparency into their technologies and methods.
New York utility regulator approves a first-of-its-kind Certified Gas Pilot Program. Now what?
Click To Tweet
Why certified gas may not be a solution
EDF has worked on the problem of oil and gas methane pollution for over a decade, and our experience tells us that claims of reduced methane intensity must be viewed with healthy skepticism. Industry progress in reducing the methane pollution associated with natural gas production, transportation and use is checkered at best. Few companies currently do the kind of robust measurement-based accurate monitoring and reporting necessary to sustain a claim that the gas they produce is fundamentally cleaner than the industry average, and none we’re aware of do so with the kind of transparency required to enable independent verification that the so called certified gas is really worth the premium price.
EDF recognizes the value of industry efforts to reduce the methane footprint of the gas it produces. And we are supportive of efforts to create price signals in global gas markets for products that can be empirically demonstrated to pack less of a climate punch than non-differentiated gas. But without robust, uniform standards for transparency, measurement, reporting and verification, gas certification can become just an exercise in greenwashing.
EDF has identified primary concerns with gas “certification” programs:Lack of transparency. With no uniform and mandatory standards for certification, it is critical that those seeking to differentiate their natural gas based on methane intensity provide complete transparency around their criteria and methodologies. While some certifying entities have endeavored to open their books, others have not. Lack of robust measurement, reporting and verification standards. Without strong and uniform standards on the measurement and verification of emissions from any particular supply chain, it is impossible to reach reliable conclusions about the climate impact of purportedly differentiated natural gas. This creates ample opportunity for customer confusion or misinformation. The potential for firms to cherry-pick which sites to certify within their portfolio. Companies can choose to seek certification of better performing facilities while leaving older, leakier facilities outside of the analysis. Thus, certification doesn’t accurately depict the practices or overall emissions of the operator. Limited coverage across firms. Voluntary certifications lack sufficient coverage of industry that is needed to achieve meaningful emissions reductions at the national or global scale.
Third-party certification is no substitute for comprehensive nationwide standards to reduce industry methane emissions — particularly because federal requirements can apply to all oil and gas facilities, not just those cherry-picked for voluntary certification programs. Finally, differentiated gas products cannot distract from the urgent imperative to reduce overall reliance on methane natural gas to mitigate the climate crisis.
Con Edison’s pilot should ensure accountability and send a market signal
The recently-approved pilot program requires detailed annual reporting that will provide valuable information to help the public, the NY Public Service Commission and Con Edison evaluate the efficacy of differentiated gas products to reduce methane emissions from the oil and gas supply chain. EDF is proud of our work to insist these reporting requirements be included as a condition of approving this pilot. The final version of the pilot includes guardrails and accountability measures, as proposed in EDF’s expert testimony. These additions could help signal to the market that purchasers want to see purported “certifications” backed up by implementation and publicly available data.
In approving the proposal, the Commission concluded that the value of certified gas is uncertain and a pilot program is appropriate to determine if certified gas “can be used to reduce GHG emissions during the transition period to a decarbonized gas system.”
Meanwhile, in a separate proceeding regarding implementation of the Climate Leadership and Community Protection Act, New York utilities have proposed that methane intensities claimed by third-party certifiers should be incorporated into annual GHG emissions reporting to evaluate utility compliance with the state climate law. This proposal is inappropriate and inconsistent with the Commission’s finding that further evaluation of certified gas products is needed to determine whether third-party certification is even reducing emissions. As EDF stated in recent comments, the Commission must not incorporate unverified and questionable GHG emissions data into reporting frameworks.
The New York Public Service Commission and utility regulators around the country must be vigilant to protect customers from costly projects that do not yield genuine reductions in greenhouse gas emissions.
By EDF Blogs
UPDATE: Since the publication of this blog post on April 27, 2023, the New York Public Service Commission has made meaningful progress within its new Medium- and Heavy-Duty Electric Vehicle Charging Infrastructure proceeding. The PSC accepted comments on its initial questions from several dozen parties including EDF, and technical conferences are expected this fall. Despite this, the proceeding will likely continue into next year, leaving many early adopter fleets without sufficient access to charging infrastructure and potentially setting the state behind on its electrification goals. With deadlines from the Advanced Clean Trucks rule and emissions reductions goals from the Climate Leadership and Community Protection Act rapidly approaching, now is the time to kickstart the deployment of truck and bus charging infrastructure in New York. The state must implement interim solutions while the PSC continues to move forward. Primarily, changes can be made to the medium- and heavy-duty make-ready pilot program by expanding its eligibility to be more accessible to different types of fleets, depot owners and repair shops. Additionally, the program’s budget can be expanded, as the Commission’s Staff has already proposed. The Commission must also work with its sister agencies including the New York State Energy Research and Development Authority and the Department of Transportation to support near-term deployments of charging infrastructure. Not only will these solutions help provide the charging infrastructure that fleets need now, but the PSC will have the learnings it needs to have a full-scale medium- and heavy-duty charging program in the future. Environmental Defense Fund commends the PSC for the progress made so far on the proceeding and is looking forward to working with the commission to ensure no time is wasted in deploying necessary charging infrastructure improvements.
After much anticipation, New York is taking a significant step to accelerate the rollout of zero-emission trucks and buses. Last week, the New York Public Service Commission formally opened a proceeding aiming to deploy the charging infrastructure needed to serve medium- and heavy-duty electric vehicles. This is a critical opportunity for the state and its utilities to make real progress towards achieving New York’s ambitious climate and truck and bus electrification goals.
New York is already on its way to get these vehicles on its roads and to meet these targets — having adopted California’s Advanced Clean Trucks Rule in 2021, which requires auto manufacturers to invest in, produce and sell an increasing percentage of zero-emission trucks. The state also aims for all new school buses to be electric by 2027, with school bus fleets ready to fully electrify by 2035. But to carry these objectives through, regulators and utilities must ensure that there is sufficient charging infrastructure to adequately support the coming zero-emission vehicles.
Although New York has existing pilot charging programs, several issues in the current programs have limited their use. To fix this, EDF, along with a group of other non-profits, filed a petition with the PSC in 2022 calling for this dedicated, comprehensive proceeding. While improvements to the current pilot programs are coming, the issue of truck and bus charging will not be solved by nibbling around the edges of past programs.
New York Public Service Commission turns the wheel on truck and bus charging infrastructure
Click To Tweet
For these charging programs to be effective, there must be a holistic effort that includes support for make-ready infrastructure, requirements for extensive marketing and outreach, proactive planning and managed charging, such as:Robust support for make-ready infrastructure — Make-ready infrastructure, which includes the infrastructure needed to bring electricity from the grid to a customer’s meter and on to their chargers and the grid upgrades to power the new chargers, represents a substantial up-front cost for electrifying fleets. Covering some or all of these costs will lower the cost of electrification and encourage multi-state fleets to prioritize a transition to zero-emission vehicles in New York. Recent analysis commissioned by EDF shows that spreading truck and bus make-ready costs across all utility customers can actually benefit them, as the added utility revenue from these vehicles charging matches or outpaces the costs involved. This could drive down electricity prices for all ratepayers while providing strong encouragement to fleets to electrify. Robust Marketing, Education, and Outreach — Developing programs that help both fleets and utilities share information must be a focus of the proceeding. The PSC must require the utilities to actively identify and reach out to fleets to discuss their electrification plans and how they can help in the electrification process. This work will give the utilities access to the best available information on how fleet electrification may impact their systems and what upgrades will be needed and when. The PSC must also ensure that community groups and environmental justice organizations have clear, real opportunities to share their priorities and concerns around truck and bus electrification, both as part of this proceeding and throughout the implementation of the utilities’ programs. Proactive Forecasting and Planning — Expanding New York’s grid capacity is paramount to support a transition to zero-emission trucks and buses. The earliest fleets to electrify have been more likely to do so at sites where sufficient grid capacity already exists for their chargers. However, as medium- and heavy-duty vehicle electrification becomes widespread, bringing additional fleets online will require distribution system upgrades that can take several years. This timeline conflicts with New York’s rapid electrification targets, as well as the normal purchase timeline for these vehicles. To shorten this timeline, utilities need the authority, with proper oversight and guardrails on spending, to start work on system upgrades where necessary in advance of fleet electrification. The PSC has recognized this, directing the proceeding to identify “high priority infrastructure upgrades before issues stemming from capacity needs arise.” Distributed Energy Resources and Vehicle-Grid Integration as Grid and Fleet Solutions — While distributed energy resources and vehicle-grid integration can add up-front costs to projects, they can also provide long-term benefits. Tools like on-site solar and battery storage can help fleets decrease their charging costs by shifting charging away from high-demand periods on the grid and reducing a fleet’s peak demand. Fleets can also implement managed charging to control when and how quickly charging happens to decrease costs and grid impacts. During the highest demand periods, vehicle-to-grid technology allows EVs to send power back to the grid if necessary. These solutions benefit the entire grid by reducing customers’ impacts on the system, mitigating the grid upgrades needed to serve them and reducing the cost to ratepayers.
The PSC now has an opportunity to be a national leader in the transition to zero-emission truck and bus deployment and push the state closer to its climate goals. Widespread adoption of zero emission trucks and buses will reduce greenhouse gas emissions and harmful local air pollution, benefiting the climate and the health of communities throughout the state. The proceeding must now move quickly and thoughtfully to support the near-term tasks needed to expand and improve charging infrastructure. It is long-awaited, much-needed and EDF is excited to continue to engage in this critical work.
One of the Inflation Reduction Act’s key provisions is a powerful tax credit to spark the development and adoption of clean, low-carbon aviation fuels. Climate pollution from aircraft is often overlooked, but if aviation were a country, it would be among the top 10 greenhouse gas emitters.
The Biden administration is about to make a crucial decision on which fuels should be eligible for the tax credits. Getting this right is critical to whether this government subsidy will be money well spent.
Sustainable aviation fuel can come from agricultural crops, waste, or electrochemical processes that form e-fuels, a combination of carbon dioxide captured from industry or directly from the air and hydrogen extracted from water. The degree to which any of these alternatives is better for the climate than fossil fuels has everything to do with how the raw materials are sourced and converted into SAF. There are many instances where the alternatives — whether derived from animal fat, cooking oil or hydrogen — aren’t better than the conventional oil-based fuel they’re intended to replace. So we must ensure that any alternative fuel meets rigorous environmental standards to protect our ecosystems and communities.
Generous tax subsidies for sustainable aviation fuels in the U.S.? Yes, but details matter.
Click To Tweet
The bottom line? Not all SAF is created equal, and therefore not all SAF deserves the generous subsidy that the IRA tax credit offers. When it comes to SAF, the details matter, and the Biden administration has an obligation to ask the tough questions of any company coming forward to claim this tax credit. After all, it is the American taxpayer who is ultimately footing the bill, and we have a right to expect that only the best fuels that provide real benefits to climate, health and the environment will qualify for this extraordinary benefit.
The good news is that there are plenty of examples of alternative aviation fuels that can meet a high bar. What’s also true is that the Biden administration doesn’t have to start from scratch in developing the regulatory definitions and criteria necessary to assure us that the IRA SAF tax credit will be available only to the very best fuels and producers. Supply chain standards established by the International Civil Aviation Organization — the global organization that sets international safety and environmental standards for civil aviation — address many of the issues the Biden administration will have to tackle in its regulations. Biden tax officials can also look to Europe, where regulators there have wrestled with similar concerns in developing their own SAF-related policies.
Many U.S. alternative fuel companies — several of which are owned by traditional oil companies — argue that high standards will make it harder from them to bring their SAF to market. In short, industry wants the U.S. taxpayer to pay a rich premium for a lowest common denominator product.
Congress understood that industry might try to get away with doing the bare minimum to claim the SAF tax credit, which is why the IRA legislation directs the Biden administration to adopt the ICAO standards or something substantially similar when drawing up the rules to define what fuels will qualify for the credit.
Meanwhile, some in Congress are pushing to weaken the standards through legislation, changing the carefully crafted provisions that were included in the IRA. This would undermine the benefits of SAF before we even get started. These amendments should be defeated.
I am optimistic the Biden administration will do the right thing and seek science-based policies that support economic growth. Initial guidance from the U.S. Department of Treasury includes crucial safeguards with regard to sustainability certification, an important step in the right direction.
Done right, the IRA tax subsidy for SAF will make a major contribution to reducing greenhouse gas pollution and creating a competitive advantage for U.S. alternative fuel suppliers as the world increasingly looks for alternatives to oil-based aviation fuels in response to the climate crisis and energy security concerns. The measure enacted by Congress is generous. It is now up the Biden administration, and its allies in Congress, to make sure we get the full measure of what we’re paying for.
By EDF Blogs
Enthusiasm for hydrogen as a climate-friendly fuel of the future is everywhere. Hundreds of hydrogen energy projects worth more than $500 billion have been announced, and The International Energy Agency says hydrogen demand could increase sixfold by 2050.
Scientists, though, are confident that this leak-prone gas can warm the climate when it escapes into the atmosphere. Just how much warming will depend on how much hydrogen is emitted, and that remains a giant question mark. That’s why Environmental Defense Fund set out to identify the climate risks of future hydrogen emissions and help develop technology that can detect how much hydrogen escapes from today’s infrastructure.
EDF’s groundbreaking 2022 study explained how unchecked hydrogen emissions can severely undercut the climate benefit of switching from fossil fuels to hydrogen. We found that if it’s not done right, using hydrogen could be worse for the near-term climate than the fossil fuels it would replace.
But getting a grasp on real-world hydrogen emission rates is complicated because existing technology can only detect large leaks that pose safety risks at industrial facilities. The tech that can detect smaller leaks – the kind that, when multiplied by the thousands of facilities, can worsen climate change — is just now being developed.
This challenge has resulted in wildly varied estimates of the real hydrogen emission problem through the many stages of the supply chain, from production to end use.
Published in Frontiers in Energy Research, EDF’s new paper analyzed literature to date that estimates hydrogen emissions. Our goal is to provide clarity about what we do and don’t know about how much hydrogen is leaking throughout the value chain.
The bottom line? No one really knows.
Estimates of total hydrogen emissions rates across the value chain range from about 0.0003% to 20%. Estimates also vary wildly for individual stages. The largest ranges in estimated emissions rates are associated with liquid hydrogen because it is easy for it to evaporate, known as “boil-off.” Thus, the stages with the largest variation include the deep cooling process required to transform the gas into a liquid, called liquefaction (0.15%–10%), liquid transport and handling (2%–20%), and refueling (2%–15%),
If these ranges strike you as large, you’re right. They are. If we’re going to invest billions of dollars in a “climate solution” that could actually cause warming, we need better answers.
Known Unknown: Current hydrogen leak estimates vary by up to 100-fold. We need to know more before betting the farm
Click To Tweet
More Research, More Caution Needed
Based on the extremely wide ranges of the estimates, the paper echoes concerns and needs that EDF scientists and many others have been raising.
First, there are actions we can pursue now to begin minimizing hydrogen emissions — even before we fully understand where the emissions are coming from and how much is emitted. Because hydrogen (H2) is the smallest molecule in the universe, we know it is prone to leakage, and the practices that reduce methane and other gaseous energy leaks can serve as useful guides.
Second, because the science is clear that hydrogen emissions can cause global warming, we must start incorporating the climate risks of hydrogen systems into decision making when developing plans to scale up hydrogen deployment.
Third, we need high-precision hydrogen detection technology so we can determine the seriousness of the issue and identify mitigation measures and best practices. There is a significant gap in emissions data for the total hydrogen value chain that will only be filled by technology that can detect hydrogen at the parts-per-billion level, as opposed to the parts-per-million level of safety-focused detectors. EDF is leading an effort to pursue this technology and begin measuring emissions from facilities.
Together, these suggestions underscore the importance of doing all we can now to reduce leaks and tempering our hydrogen expectations until we know more. Hydrogen may very well be a game changer for some industries or countries as the world decarbonizes. But for now, we should proceed with measured caution.
By EDF Blogs
Across the country, a million or more orphaned oil and gas wells threaten the climate, public health, groundwater and surface waters and hamper local economic development. Help is on the way thanks to a major federal effort to invest $4.7 billion in closing orphan wells under the Revive Economic Growth and Reclaim Orphaned Wells Act as part of the Bipartisan Infrastructure Law, but the scale of the problem is vast.
In order to get a handle on these orphaned wells, New Mexico Sen. Ben Ray Luján , Democrat, and North Dakota Sen. Kevin Cramer, republican, worked together to secure well closure funding in BIL. Now, they have reintroduced the Abandoned Well Remediation Research and Development Act and a bipartisan group in the House led by Pennsylvania Rep. Summer Lee, Democrat, and republican Oklahoma Rep. Stephanie Bice have introduced a companion bill. This important, bipartisan legislation would invest more than $150 million over the next five years to help find an estimated 800,000 undocumented orphan wells, reuse those we can for beneficial purposes and ultimately close all of the rest more effectively and affordably. While partisan politics seem to divide the Capitol these days, it is exciting to see leaders on both sides of the aisle come together to address orphan wells.
AWRRDA supplements the REGROW Act in several important ways
AWRRDA provides funding to research how to improve well plugging, locate undocumented orphan wells and study potential uses for both orphan and end-of-life wells.
New bipartisan legislation would give U.S. orphan well management efforts a huge boost
Click To Tweet
While responsible well operators promptly plug their oil and gas wells when they run dry, many orphan wells have been abandoned for decades. They can be found in hard to reach places such as streams, farmland, under houses and backyards. Difficult locations coupled with unknown well architecture, crumbling steel casings and weird things downhole like telephone poles, rolled up carpets and even cannon balls make orphan well plugging especially challenging.
But even for more straight-forward modern wells, plugging is expensive, with costs frequently exceeding $100,000 per well. In fact, the high cost of plugging is the primary reason why operators do not plug their wells at end of life, despite legal requirements to do so. And while modern plugging techniques are fairly effective, not all plugging efforts are successful, and there are open questions about the permanency of cement plugs over very long time horizons. Researching lower cost, higher efficacy ways to plug both end-of-life and orphan wells will reduce the overall cost of plugging the one million or more orphan wells nationwide.
To plug wells, we have to know where they are. While states have counted around 125,000 documented orphan wells, scientists estimate 800,000 more undocumented orphan wells may exist from the pre-regulatory era, primarily in Appalachia. Beyond that, the EPA estimates there may be upwards of 2.5 million inactive, unplugged wells across the country. Suffice it to say, there is a lot we don’t know about the undocumented orphan well problem, but we do know it’s vast, and it is problematic for public health, the climate and the environment.
While the REGROW Act under BIL provided $30 million for the Department of Energy to help find, characterize and prioritize undocumented orphan wells for closure, and Congress provided an additional $30 million toward that effort in the December 2022 appropriations omnibus, AWRRDA would more than double the funding to help locate and plug these wells.
While we need to locate and plug the vast majority of orphaned wells, AWRRDA will also study potential beneficial uses for both orphan and end-of-life wells. For a subset of wells, there are interesting, cost-saving opportunities like geothermal heat and power, carbon dioxide storage and solution mining for critical minerals like lithium. In one DOE project currently underway in Oklahoma, researchers are using four end-of-life wells to heat a nearby elementary school and middle school. Funds from AWRRDA will help develop projects like these around the country.
While the orphan well crisis is longstanding, widespread public awareness is new and we’re still learning how many orphan wells exist and how best to handle the issue. At the same time, we are grappling with how the country can effectively manage and close over one million active and idle wells.
The bipartisan AWRRDA will help us plug and repurpose orphan wells, facilitating the outcome we all want to see: a world in which we know where wells are, use them productively and close them promptly and affordably.
By EDF Blogs
Recently, Louisiana, under the leadership of Gov. John Bel Edwards, became the latest state taking action to curb pollution and waste from oil and gas production. In a new proposal, the state says it will limit natural gas venting and flaring and attempt to reduce the risk of thousands of idle wells becoming orphaned. Both actions will help create jobs, protect taxpayers and safeguard the environment. Here’s how.
A future without excessive venting and flaring
Venting and flaring is a particularly wasteful practice in the oil and gas industry. Routine flaring occurs when operators burn off natural gas produced from oil wells instead of capturing it and selling it or putting it to productive use, while venting is the intentional release of natural gas directly into the atmosphere.
These practices not only create air and climate pollution, they also waste a valuable energy resource because methane essentially is natural gas. In 2019, Louisiana oil and gas producers wasted approximately 5.2 billion cubic feet of methane through venting and flaring alone — that’s $16 million of natural gas. That’s enough wasted gas to supply all the households in Baton Rouge for over a year and a half.
New rules could mean less waste, less pollution and more jobs for Louisiana
Click To Tweet
Reducing this waste is overwhelmingly cost-effective and can help create good-paying jobs in the fast-growing methane mitigation industry, which already boasts 32 facilities across the state.
Louisiana’s proposal would prohibit flaring at certain wells, require operators to develop a plan for how they will manage gas at any new wells, improve flare safety standards and require companies to report gas that is vented or flared. These updates will help modernize the state’s oil and gas regulations and reduce wasted gas. In the Gulf South’s first Climate Action Plan, Gov. Edwards’ administration identified that addressing methane waste from venting and flaring reduces harmful climate pollution and with this rulemaking, and now they are delivering.
Preventing catastrophic tide of orphaned wells
Another problem plaguing Louisiana is the issue of oil and gas wells that have been left by their owners to idle without producing for years or even decades to avoid the cost of proper closure. There are over 28,000 wells across the state that aren’t actively producing energy but also haven’t been permanently sealed. They represent a potential $2.5 billion taxpayer liability if not plugged by their owners — on top of the state’s current liability of $400 million from its existing documented orphan wells. And unplugged wells can cause a host of economic, environmental and even public health and safety problems by leaking methane and air toxics, contaminating groundwater and preventing economically beneficial alternative uses of the geology.
Companies can leave a well idle essentially indefinitely, and many choose to do so to avoid spending money to properly seal or plug it — with only minimal showing of potential future utility for oil and gas production. Over three-fourths of Louisiana’s idle wells are over 30 years old, and over one-third have not produced in ten years or more — with some out of production for more than five decades. Most inactive wells do not produce after a few years of being idle — instead, their risk of becoming orphaned only increases over time. This effectively operates as loophole that threatens a flood of potential orphaned wells on the horizon, ready to slam already overburdened Louisiana taxpayers with the responsibility of addressing the problem that ought to have been addressed by the industry.
Louisiana is already creating jobs through its Orphan Well Program, but requiring the oil and gas industry to plug its inactive wells would create thousands more good-paying jobs across the state.
Proactively addressing this issue and preventing these wells from adding to the state’s sizable orphan well problem is an opportunity to create jobs while safeguarding the environment and public health from future damage — and, as with venting and flaring, curbing orphan wells is a key plant of Louisiana’s Climate Action Plan.
These rules are an opportunity for Louisiana to rein in wasteful venting and flaring as well as require oil and gas companies to pay for plugging their oil and gas wells when they reach the end of their useful life. The proposals from the Edwards administration are an important step in the right direction.
By EDF Blogs
By Nini Gu
On Thursday, July 20th we saw a major shift in how methane emissions from oil and gas sources can be regulated, and to no one’s surprise it came from the nation’s leading state on this issue: Colorado.
Methane is a potent, fast acting climate pollutant causing about a quarter of current global warming, and when it leaks from oil and gas facilities, it also creates harmful air pollution. Fortunately, oil and gas methane emissions can be controlled and are one of the most affordable, actionable climate solutions we have.
Colorado’s methane pollution verification rule is a game-changer: here are three reasons why
Click To Tweet
Colorado first earned its reputation as a methane regulation trailblazer back in 2014 by establishing the nation’s earliest rules designed to reduce methane pollution from the oil and gas industry. Over the last 9 years it has continued that leadership with a series of groundbreaking actions. In 2021 the Colorado legislature set new targets to reduce oil and gas climate pollution 36% by 2025 and 60% by 2030. However, it wasn’t clear what tools operators and regulators would use to demonstrate that those new requirements were being met.
Colorado just fixed that on July 20th when the state’s Air Quality Control Commission unanimously adopted a new Greenhouse Gas Intensity Verification Rule. This rule will help Colorado stay on track to meet its pollution reduction targets and could revolutionize the way others monitor, verify and report their emissions.
The state now requires the use of real, verifiable data to quantity emissions reductions. This rule vastly improves a largely guesswork and paperwork exercise into one that will increase transparency for the public, regulators and industry. We can now know for sure if pollution reductions are actually occurring. This rule — and crucially — the subsequent protocol to be developed this year — will also help fuel an already burgeoning methane measurement industry, creating jobs and spurring innovation.
Here are the three most important features of this new rule:Requires the direct measurement of methane emissions at the production site level and the transparent reporting of measurement data.
This is the rule’s centerpiece and the fundamental reason that it’s such an important new chapter in methane emissions reduction. Across the U.S., our existing approaches for determining methane emissions use complicated calculations and emissions factors developed 30 years ago — but they’re ultimately not based in real-world methane measurements. These approaches are outdated and unreliable.
We need to know how much methane is actually being released into the atmosphere. This rule requires oil and gas operators to use real-world data to demonstrate that they are meeting the emission reduction standards adopted in 2021. AQCC recognized the importance of directly measuring the quantity of methane released, and adopted a rule rooted in this principle. Only direct measurement data can help create the necessary framework to ensure consistent usage of methane monitoring practices.
The methane measurement industry is ready for the challenge. It’s here, it’s cost-effective and it’s set to scale up to provide this crucial service. Direct measurement data will make it possible for the state to develop more accurate GHG inventories and stay on track to meet statutory climate targets.Empowers regulators to ensure the rule is appropriately implemented and that industry is following it.
Following the adoption of this rule, the Air Pollution Control Division must determine the exact details for how it will work in practice. The Division has two mandates: follow AQCC’s overall guidance (hence why the core features of the rules are so important) and create standards that hold industry accountable to the state’s oil and gas climate pollution reduction targets.
The rule gives APCD the authority to create a suite of pre-approved methane measuring programs, and the authority to review and decide on any operator-specific measurement programs that deviate from the pre-approved ones. Producers are required to keep transparent records of their strategies and emissions, which can be reviewed by APCD and will also be independently audited. APCD will maintain oversight of the auditing process.
Altogether, this rule empowers APCD to craft standards that will lead to a consistent, robust and scientifically valid structure for measuring oil and gas methane emissions throughout Colorado. The rule also places an emphasis on transparency and accountability that will help ensure the program’s long-term success. Without adequate oversight, too much discretion will fall on oil and gas operators, who are simply not equipped to self-standardize across a wide-ranging industry. The Division has to stay in charge to ensure statewide operator compliance.Establishes a public process by the Division to develop and continuously evaluate a robust companion protocol.
Two things are true: First, the July 20th rulemaking was a moment worth celebrating. Second, we still have a lot of work ahead for this rule to be successful. The devil will be in the same place he always is: the details.
In order to get consistent data from a lot of different operators we need clear guidelines for what tools they can use and how to use them. In the months ahead APCD will develop an operator protocol that will define those guidelines and make sure that each operator’s measurement program is effective.
Having clear guardrails in this protocol will be critical to the success of the verification rule, and the Division should engage with stakeholders throughout the writing process. Consistent stakeholder engagement is the best way to ensure a final product that is effective and workable.
After writing it this year, the Division will continue to evaluate the protocol annually for effectiveness and relevancy. Since the methane measurement industry is rapidly evolving, continuous evaluation allows APCD to revise and update the protocol to reflect best-available technologies and methodologies. If APCD decides to update the protocol, it will inform stakeholders and the public.
So: what does it all mean and where are we going next?
This achievement was the result of a lot of patience and hard work from a variety of different stakeholders. It took a decade of courage and innovation for one state to build this much momentum to regulate methane. With this rule being approved alongside a rapidly maturing methane measurement industry, the time is ripe for groundbreaking approaches to oil and gas pollution reduction.
With a strong protocol, Colorado can once again set a worldwide standard for bold action on reducing methane emissions from the oil and gas sector, and Governor Polis can show the nation how strong leadership, data and technology can be harnessed to solve urgent pollution problems and strengthen our economy. EDF is excited and ready to play our part in making this new chapter for methane regulations a successful one.
By EDF Blogs
School districts around the country are considering a switch to buses that use less fuel, cost less, and, most importantly, provide safe and healthy trips to and from school. Only one option wins on each of these critical criteria: electric. They eliminate the dirty tailpipe emissions of diesel and other fossil fuel models that harm vulnerable lungs, they save money on fuel and maintenance costs and they can even increase the resilience of the local electric grid.
This clear choice is why the majority of the EPA’s Clean School Bus rebate program applications were for —and nearly 100% of the first round of funding went to — electric buses.
But old technology habits die hard, and propane bus manufacturers have allied with propane lobbyists to push school districts to consider their internal combustion buses. And they’re using some of the fossil fuel industry’s old bag of tricks to take on their electric rivals.
Unfortunately, the truth is not on their side and propane does not come out on top.
On Emissions, Only Electric Buses Get an A+
Today, nearly all of the nation’s 480,000 school buses burn diesel, which emits greenhouse gasses and air pollution that harms human health. That’s one of the primary reasons federal and, increasingly, state governments are investing in a transition to cleaner fleets. And when it comes to improving the air quality our children experience on their way to and from school, nothing compares to the advantages of going electric.
Propane may be cleaner than diesel, but that’s not saying much. Diesel is among the filthiest fuels on four wheels. In addition to climate pollution, diesel exhaust has been linked to a variety of negative health outcomes, including asthma and even cancer. In a similar vein, propane is a highly flammable, asphyxiating gas that, much like its fossil fuel brethren, emits particulate matter, sulfur dioxide, carbon monoxide and methane into the environment. In fact, a study showed that in city and interstate driving, propane buses emitted more climate-harming carbon dioxide than diesel buses.
On the other hand, electric buses produce zero tailpipe emissions. That’s better for our lungs and the planet. No fossil fuel bus — including propane — can claim that.
For a Clean, Safe Ride to School, Electric Buses Get Straight A’s. Propane? Needs Improvement
Click To Tweet
Safety and Reliability? Another perfect score
Electric school buses have an average range of at least 100 miles, well over the distance of a typical route. And their long dwell times and predictable routes allow for convenient overnight charging, which typically coincides with the lowest-priced energy giving school buses the battery charge they need to operate during the day. Just as passenger electric vehicles provide drivers with quick and powerful rides, electric motors deliver school bus drivers the power and responsiveness they need to carry our children safely and reliably.
Fossil fuel bus proponents have claimed electric buses pose new fire risks. But evidence demonstrates that internal combustion vehicles are more likely to catch fire than electric vehicles. Using NTSB data, researchers calculated the rate of fires for various vehicles. The rate of gasoline fires was 1,530 per 100,000 sold. Compare that to the rate of electric vehicle fires: 25 per 100,000 sold. In fact, electric school buses have safety features that make the risk of fire even more improbable, including sophisticated battery temperature controls, weather-durable casing and vehicle design that makes battery damage less likely.
Economic and Community Benefits
Electric school buses are cheaper to operate and maintain compared to propane and diesel buses due to several factors. Electric buses have fewer moving parts and require less frequent maintenance, leading to reduced servicing expenses. Propane engines involve more complex systems, such as fuel injection and exhaust after-treatment, which can be costly to repair and maintain. Furthermore, electric buses have longer lifespans and lower maintenance requirements since they experience less wear and tear on components like engines and transmissions. Overall, these cost and maintenance advantages make electric school buses a more economical and sustainable choice for school districts, benefiting both their budgets and the environment.
Electric school buses offer significant fuel cost savings over propane buses due to their higher energy efficiency and the generally lower cost of electricity compared to propane. Fleet managers and taxpayers who transition to electric stand to see millions in savings over the total lifetime of the vehicle’s cost of ownership. Districts using electric school buses are seeing cost savings of $2,000 on fuel and $4,400 in maintenance per bus each year.
While some school districts are currently seeing inflated pricing, we anticipate costs to come down over the next few years as the market expands.
Additionally, electric buses offer school districts an advantage no other technology can match: their large batteries and predictable schedules make them perfect candidates for bidirectional charging, which allows bus batteries to power homes, schools, and critical facilities during grid emergencies and power outages.
By sending energy back to the grid and directly to buildings, they can power heaters, air conditioners, refrigerators and medical devices — and even keep the lights on at critical facilities during emergencies. The charging patterns of electric buses take advantage of lower-cost energy at night, further reducing fuel costs. And during peak demand periods (like hot summer days when school’s out), buses can make money by selling power back to the grid.
A Smart Choice with Available Funding
Admittedly, investing the upfront costs necessary to purchase new bus fleets is a big decision for school districts and local leaders. But federal and state programs now offer historic funding that can nearly eliminate the up-front costs of going electric.
More than $5 billion in grants and rebates are available for vehicle purchases, charging infrastructure and workforce development. Another $7.5 billion will fund 500,000 new public charging stations across the country, which will supplement private and depot charging stations. Many states are also funding the transition to electric school buses. For example, Illinois and Florida are allocating a portion of their Volkswagen settlement money to electric school buses, and Maryland has set target dates for their transition to electric school buses.
Various campaigns and programs are supporting this transition, like the all-inclusive fleet leasing model started by Highland Electric and other federal grant programs contained within the Inflation Reduction Act, such as the Clean Heavy-Duty Vehicle Program and commercial vehicle tax credits.
In short, electric school buses aren’t just a part of our future — they are a viable option today and the best solution for school districts seeking to improve the health of their children and communities. No other option comes close.
Melody Reis is the Senior Legislative and Regulatory Policy Manager at Moms Clean Air Force, an affiliate of EDF.
On the banks of the picturesque Wallowa Lake sits the historic. Since the lodge opened in 1923, the building has remained almost identical and has continued its involvement within the community. Throughout the years, the lodge has brought the small town of Joseph closer together and is now an integral part of the community.
After a transformative period in 2016, the lodge went up for auction, which immediately gained attention from large hotel chains and put the community at risk of losing the property to major development. In an effort to “save the lodge”, a group of local investors banded together to purchase the property as a community and preserve the local treasure. Since then, the lodge has become shareholder-owned by many members of the Wallowa County community with the Nez Perce Tribe helping to safeguard the property and banks of the Wallowa River.
To further protect and revitalize Wallowa Lake and surrounding ecosystem, in 2020 the lodge signed a conservation easement with the Nez Perce tribe. Sustaining the environment is something the lodge’s general manager, Madeline Lau, is passionate about. Lau constantly looks for new ways to incorporate sustainability into operations from avoiding single-use plastic to thinking about the buildings’ energy efficiency. “We want to maintain the lodge and continue it for future generations – which can be difficult with the number of repairs needed,” said Lau. This June, the lodge celebrated its 100th anniversary and while the lodge has undergone many modern upgrades, there is still work that needs to be done.
With a 100-year-old building comes antique infrastructure that often requires expensive renovations, which is exactly what Lau, the board of directors and the lodge’s shareholders were facing. “If we had $1,000,000 at our disposal to make all these improvements, we would do it, but we don’t,” Lau said. “From a dollar and cents perspective -this old creaky building is expensive to run, and every dollar counts when you’re a shareholder-owned business.”
After discovering a bat colony that moved into their attic causing tears in the already outdated insulation, Lau knew the lodge needed to replace the insulation so they weren’t wasting money or energy on cooling and heating costs.
This led Lau to meet Energy Trust of Oregon energy advisor Dan Piper at a Wallowa County Chamber of Commerce meeting. After hearing more about what Energy Trust does and the offerings available for businesses wanting to save energy, Lau realized “Oh, we can do this”. Lau then scheduled a time for Dan to assess the lodge’s energy performance and point out property improvements that qualify for cash incentives. Among his recommendations, Dan identified one of the lodge’s most pressing priorities – replacing the damaged attic insulation with more energy-efficient insulation.
“Having someone come in and say ‘this is where you can save money’ allowed us to recoup a huge amount of the attic expense,” said Lau.
With the help of Energy Trust, Wallowa Lake Lodge replaced all 4,000 square feet of attic insulation and received $3,600 in cash incentives including a limited time bonus incentive. The new insulation will save the lodge an estimated $4,000 in annual energy bills.
Better performing, energy-efficient insulation means the lodge will have improved temperature regulation and use less energy allowing management to put more money back into deferred maintenance projects.
“Energy efficiency is important for a small business, it helps us keep our finances in check and we want to do everything we can to positively affect our bottom line,” said Lau.
Learn more about how you can save energy at your business with support from Energy Trust of Oregon. Visit our cash incentives page here or get started on your energy-saving project by emailing firstname.lastname@example.org.
The post Wallowa Lake Lodge is saving energy and the environment appeared first on Energy Trust Blog.
With a long list of new federal tax credits available through the Inflation Reduction Act (IRA) passed in 2022, it can be hard to know where to start. Since tax credits are available through 2032, there’s time to plan your home improvements to maximize your energy and financial savings. This is the first in a series of blog posts on projects that could qualify for IRA benefits.
Before investing in big-ticket items like heating and cooling systems, it’s smart to make sure your home is properly weatherized. This means making improvements that keep air from entering and leaving your home through gaps, cracks and openings. If you add up the small gaps, cracks and leaks in a typical home, it’s the same as leaving a window open year-round.
Fall is the perfect time to address air leaks in your home before the temperature drops. This can include sealing leaky air ducts, replacing caulk or weatherstripping around doors and windows, adding insulation and installing new windows. Making these weatherization fixes alone can lower your energy bills by an average of more than $250 per year, while also improving your indoor air quality and making your home more comfortable.
When combined with bigger-ticket items like heating and cooling systems, weatherization improvements deliver even more value by helping to maximize the energy savings of those appliances. That’s because air leaks make your furnace work harder to control your home’s temperature, making it less efficient and using more energy.
“Proper sealing and insulation allows your heating and cooling systems to operate efficiently, saving you energy and lowering your bills,” said Jose Benitez, a home performance manager with HomeRx and a member of Energy Trust’s Trade Ally Network. “The most important spaces to prioritize are attics, crawl spaces and walls, especially in older homes built before building codes required specific amounts of insulation.”
For example, homeowners who weatherize while also installing an energy-efficient heat pump save between $500 and $800 more per year in energy costs than homeowners who install heat pump but don’t weatherize, according to the American Council for an Energy-Efficient Economy, and weatherization projects can pay for themselves and then some within a few years. For example, weatherization can help bring down the lifetime cost of owning and operating a heat pump by as much as $11,000.
Similar savings and cost benefits apply to other heating and cooling systems installed in weatherized homes.
When it comes to paying for weatherization improvements, Energy Trust offers insulation and window incentives to lower the upfront costs. Federal tax credits of up to $1,200 are available to offset costs of insulation and up to $600 for the cost of new windows.
“I always encourage my customers to take advantage of those offerings,” said Benitez. “There are a lot of people who aren’t aware of these incentives and the impact they can have. It only takes a few minutes. If they click ‘yes’ a couple of times, I can take care of the rest.”
Note: Requirements for federal tax credits and Energy Trust incentives may differ. Energy Trust does not give tax advice. Consult your tax professional for current information on credits available and how to apply.
The post Why weatherization is the first step you should take to enhance your home’s energy efficiency appeared first on Energy Trust Blog.
Energy Trust’s vision of clean and affordable energy for all can only be achieved by engaging with and understanding the needs of all its customers – particularly those historically overlooked by the clean energy industry.
In 2018, recognizing that people experiencing low to moderate incomes, customers living in rural areas, and members of the Black, Indigenous and people of color (BIPOC) communities had been underserved, Energy Trust began including diversity, equity and inclusion (DEI) goals in its annual and long-term plans.
Its DEI plan – a living document focused on community outreach and engagement – was developed with input from staff, advisory councils, board members, stakeholders and community partners. Staff also sought direct feedback from contractors, customers and community members during a series of summits. The concerns and ideas expressed during those listening sessions were instrumental in selecting the plan’s five goals and metrics to track progress.
Though the goals and outcomes listed in the plan are multi-year commitments, the steps taken so far this year represent meaningful progress toward impactful community engagement. A complete report on progress is included in Energy Trust’s Quarter Two 2023 Report.Goal 1: Increase Representation and Readiness
To support Energy Trust’s commitment to engaging with diverse communities respectfully and effectively, staff members have attended cultural awareness events and trainings, invited members of diverse communities to share their experiences at staff meetings, and hosted internal discussions on DEI topics.Goal 2: Shift and Share Leadership and Power
To increase the influence of community members in designing and implementing Energy Trust programs, Energy Trust is collecting feedback from customers to inform new offers and including community members in its Tribal Working Group and Diversity Advisory Council.
To support a diverse range of businesses, in the first half of 2023 Energy Trust allocated 33% of expenditures to subcontractors on contracts of more than $100,000 to Emerging Small Businesses, 37% to Women Business Enterprises and 38% to Minority Business Enterprises as certified by the state’s Office for Business Inclusion and Diversity.Goal 4: Increase Transparency and Accountability
To increase transparency and community understanding, Energy Trust will seek to surpass the equity metrics set by the Oregon Public Utility Commission. (Results will be reported in Energy Trust’s 2023 Annual Report.)Goal 5: Deepen Engagement in BIPOC, Low-Income, and Rural Communities
To open lines of communication and cultivate confidence in Energy Trust, 23 engagement activities have been completed or are underway with community-based organizations serving residential and business customers.
The post Energy Trust makes progress on diversity, equity and inclusion goals appeared first on Energy Trust Blog.
Mt. Hood Ductless, an Energy Trust of Oregon trade ally contractor, is a community-focused heating and cooling contractor that helps its customers save money on efficient heat pump installations. Many of the installations that Mt. Hood Ductless completes involve ductless heat pumps (DHPs). DHPs are an efficient option for heating and cooling multifamily and single-family residences as well as small businesses.
Mt. Hood Ductless completed two DHP installations in supportive housing developments in Dallas, Oregon, as part of Energy Trust’s Community Partner Funding initiative. Community Partner Funding provides increased incentives that participating community-based organizations can access for their clients.
Jen’s Place installed 15 DHPs in their townhouse-style apartments, and East Place Apartments installed DHPs in their five-unit complex. The DHPs were installed with no cost to the properties allowing the properties to have more resources available to support their residents. A few weeks after the projects were completed, Aaron McNally, the owner of Mt. Hood Ductless, went back to the communities and talked to the residents.
“It was really nice to hear the feedback from the customers. They said they were much more comfortable, and their utility bills were going to go way down.”
– Aaron McNally, owner, Mt. Hood Ductless
McNally prioritizes keeping Mt. Hood Ductless a small company and connecting with customers. “When you get too big, you lose some of the personal touch and connecting with customers is what is most important to me,” he explains. McNally is committed to working with non-profits and serving communities that have been traditionally underserved by utility programs. “It is important to me that my company supports people who have lower than average incomes,” McNally explains. “These are the communities that really need access to technologies like ductless heat pumps.”
In addition to his focus on serving customers with low incomes, McNally is starting a non-profit called Green NW. Green NW will teach veterans returning to civilian life and individuals from low-income communities how to perform heating and cooling installations. After completing the program, the non-profit will provide participants with job placement opportunities.
Learn more about ductless heat pumps by watching the Efficiency Minute Video.
For information about available incentives for ductless heat pumps, visit the incentives page.
The post Mt. Hood Ductless, a small business making a big impact for affordable multifamily appeared first on Energy Trust Blog.
Karla Flores Jaime is a mechanical engineer at SSOE Group, an architecture and engineering firm that designs manufacturing facilities for the automotive, pharmaceutical and semiconductor industries. She has also been an active member of the Society of Hispanic Professional Engineers (SHPE) since 2016 when she began studying engineering at Portland State University. She now serves as SHPE Oregon Professional Chapter’s president, continuing to pay it forward by supporting other Hispanic engineers.
Q: Tell us about yourself and your career. How did you get into the field of mechanical engineering?
I decided to study engineering in college because math and science came naturally to me (although I still had to work hard) and it felt like a good career choice. It was just me and my mother after my freshman year of high school in San Diego, and I wanted to be able to do something that would challenge and stimulate me and provide a secure future.
I attended the engineering program at Portland State University, which is very challenging. It takes most students at least five years to complete it. But I was determined and supported by fellow students and mentors at SHPE.
Q: How was your involvement in SHPE helpful in your engineering studies?
I feel lucky that I found SHPE early on at Portland State. There’s an immediate camaraderie with people who share not just your interests, but your background and lived experience. It’s a very supportive group. And, when you’re initially overwhelmed by all the things you’re learning in college, it helps to talk to people who’ve succeeded in your chosen field. It makes you realize it’s possible and builds excitement for the future.
Q: Have there been challenges as you’ve embarked on your career as well?
Moving from being a student to starting my career had its challenges in terms of how a work week is structured versus college classes. It was also challenging to get familiar with a new company culture. Fortunately, the teams at SSOE work so well together — it’s been really satisfying to work on large projects and be a part of creating the facilities for important industries in Oregon and other places.
Q: Why do you continue your involvement in SHPE? What are you getting out of it now that you’ve begun your engineering career?
While I was still an undergrad, I chaired the committee that puts on the regional SHPE conference, which was a deep dive into learning real-world skills — scheduling, budgeting, planning and so many other things. It was a real confidence and aptitude builder, and I made some great friends and professional connections in the process. It was also nice to have that work on my resume as I started looking for jobs after graduation.
I stay involved as a SHPE officer because it’s still a community that I get a lot of support and camaraderie from, and because I want to give back. The meetups are always gratifying, and mentoring Hispanic students is important to me. We host workshops and events that support professional and personal development, such as a recent workshop on personal finances. Providing these resources to first generation students and professionals is so crucial because many are the first in our families with the ability to not only save, but to invest.
Q: Do you have any advice for people of color and/or women entering your field?
I would say remember that there is a place for everyone at the table. Find mentors and a community who understand your experience or at least have a strong appreciation for it. In SHPE OR we use “Lift as you climb” as a reminder to help the younger generations achieve their engineering goals as older generations have helped us.
The post Karla Flores Jaime pays it forward as a young engineer appeared first on Energy Trust Blog.
Energy Trust of Oregon is offering cash incentives that can cover up to 100% of the cost for property managers of multifamily housing and manufactured home parks to create a safe cooling space in common areas, such as lobbies, dining areas, community rooms or laundry areas.
Many of Oregon’s most vulnerable citizens lack cooling in their residences and this can be dangerous during extreme heat events. This is part of a statewide effort to provide safe cooling spaces for Oregonians, especially vulnerable populations. All property owners or managers of multifamily housing and manufactured home parks in Oregon are eligible to participate in the program.
For priority properties, defined as multifamily Tribal, affordable, nonprofit-managed, senior, and agricultural workforce housing and manufactured home parks:
100% of project costs reimbursed, up to a maximum of$1,400 for portable or window air conditioners (maximum of $700 per unit) $7,000 for ductless heat pumps, heat pumps and hard-wired air conditioners
For all other properties:
60% of project costs reimbursed, up to a maximum of$800 for portable or window air conditioners (maximum of $400 per unit) $4,000 for ductless heat pumps, heat pumps and hard-wired air conditioners
Energy Trust can also provide free technical assistance to select the best equipment and cooling capacity for the available space.
Standard Incentives: Get cash rebates to install equipment that saves energy
Energy Trust of Oregon offers cash incentives for upgrading old, inefficient equipment and making common building improvements. Many types of equipment qualify including heating and cooling systems, water heating, insulation and lighting. Energy Trust’s energy advisors can help you choose from a list of approved equipment.
The Oregon State Penitentiary in Salem received $3,400 in cash incentives from Energy Trust to cover the cost of 39 new steam traps to replace the failing units.
“It’s so important to lower your costs and conduct necessary and preventative repairs. Keeping everything up to date will save you in the long run.”
– Jeff Noland, facilities energy technician, Oregon Department of Corrections
For larger projects, that are beyond standard equipment replacement, a qualified energy advisor can help you determine the best options for your space and provide an estimated project cost and incentive amount. You can use the estimate to collect bids from contractors and receive your incentive once they finish the work.
Linfield University needed new, custom steam pipe insulation to deliver heat and hot water on campus. Linfield received $91,300 in incentives to help cover the project cost. The upgrades are estimated to save the University an additional $35,900 a year on energy bills.
“We saw immediate improvements in system operation. Our water and energy use went way down as soon as the new steam loop was fired up.”
– Allison Horn, director of facilities and auxiliary services, Linfield University
Retro-commissioning: Lower energy bills with a free assessment of your current equipment
Through retrocommissioning (RCx), engineers provide an on-site walkthrough of your building to identify opportunities to save energy using the equipment you have. For example, they might find you can save energy by changing the setting on sensors, by optimizing your heating and cooling schedule or by adjusting equipment parts, like belts and valves.
After the walkthrough, you’ll receive a free report outlining the energy saving actions, along with estimated monthly savings on your energy bill.
Myrtle Crest Elementary School completed an RCx project to optimize their HVAC system control sequences. The adjustments will save the school an estimated $14,100 a year on energy bills.
How do I start saving?
An energy advisor can help you determine if your project qualifies for cash incentives or set up an on-site walkthrough. To connect with an energy advisor, email email@example.com or call 1.866.605.1676.
The post Solutions to help your business save energy and money appeared first on Energy Trust Blog.
Energy Trust and Portland General Electric have teamed up to investigate how smart inverters on individual homes can help create a smarter, more resilient electrical grid.
An inverter plays an important part in solar energy installations, converting direct current power from solar panels to alternating current, the kind of electricity used in a home. Now, the PGE Smart Solar Study is looking at how customer-owned smart inverters serve an even bigger role, helping to better manage the grid and shape Oregon’s clean energy future.
“We aim to assess how PGE can optimize the grid’s capabilities by using smart solar inverters to their fullest potential, providing a more efficient, resilient grid for our customers and making it possible to continue to add more renewable energy to our system,” said Matthew Mills, technical program manager, PGE.
Smart inverters already communicate with the grid to disconnect a solar system if there is a power outage or other problem. This study allows PGE to explore how smart inverters can be used to improve power quality—minimizing voltage irregularities—and help make the whole grid more efficient.
In 2022, Energy Trust began working with PGE on the Smart Solar Study, part of the PGE Smart Grid Test Bed. The demonstration project is now recruiting qualifying participants.
Homeowners with solar panels and qualifying smart inverters in designated North Portland, Hillsboro and South Salem test bed areas are eligible to participate in the study. They will receive $250 for signing up and a monthly $10 credit on their electric bill while they are enrolled in the study. The study runs through December 2024.
“We’re excited to work with PGE on this innovative project,” said Jeni Hall, Advanced Solar program manager for Energy Trust, who explained how Energy Trust helped identify both the smart inverter technology that will best serve the study and the areas where there are enough homes with existing solar to fit the study’s criteria. “If homeowners can benefit from their renewable energy projects through lower monthly bills and those systems can also help utilities operate the grid more efficiently, then we’re all working together to build a clean energy future.”
The post PGE’s Smart Solar Study recruiting homeowners to help strengthen the grid appeared first on Energy Trust Blog.
If you’re a rural small business owner or agricultural producer there are programs available with rebates, grants and loan opportunities to help you save money on energy-efficient equipment upgrades. These programs can help offset project costs and make operations more energy efficient in the long run.
Energy Trust of Oregon supports agricultural producers and other small businesses by offering incentives for irrigation improvements and greenhouse upgrades. At no cost to you, Energy Trust can provide assistance—from planning through completion—to help match your needs with the most cost-effective energy upgrades.
Grant and funding opportunities
Energy Trust collaborates with organizations like Oregon Department of Energy (ODOE) and Natural Resource Conservation Services (NRCS) to help businesses maximize savings on energy-efficiency upgrades. Combining multiple programs and grants with Energy Trust’s incentives and services means more opportunities for you.
Oregon Department of Energy (ODOE) administers funds from United States Department of Agriculture (USDA) to help rural small businesses and agriculture producers. ODOE’s Rural & Agricultural Energy Audit Program helps fund energy assessments to identify energy-efficiency improvements that can reduce costs and improve the sustainability of your operations. ODOE also helps businesses and producers apply for funding and incentives, such as grants, loans, tax credits and other financial incentives, that can help offset costs and make energy-efficiency improvements more affordable.Energy Assessments—ODOE administers funding from the USDA Renewable Energy Development AssistanceGrant (REDA Grant) to pay for 75% of the cost of an energy assessment that will identify improvements to help save energy. to eligible businesses which can cover 25% of the assessment cost. Visit the ODOE Rural & Agricultural Energy Audit Program website for more information. Loans and Grants—The USDA Rural Energy for America Program (REAP) provides guaranteed loan financing and grants for renewable energy systems or to make energy-efficiency improvements. Loans can cover up to 75% of project costs, grants up to 50% of project costs, or a loan and grant combination up to 75% of the total. A REDA Grant audit must be completed before applying for REAP grants.
Natural Resource Conservation Services (NRCS) in Oregon administers funds from the USDA Farm Bill to help farmers, ranchers, family forests and tribes increase conservation on private land. NRCS field offices provide free technical assistance, including resource assessments, practice design and resource monitoring. They also help farmers, ranchers and those who own or lease forest land determine which financial assistance, if any, is right for them.Get started here to learn about NRCS assistance, plus programs and current funding opportunites around the state. Learn more about the On-Farm Energy Initiative and WaterSMART initiatives in Oregon, and how they help agricultural producers improve energy efficiency and land stewardship.
Organizations across Oregon are making deep connections in rural communities. With broader visions for improving economic and resource sustainability, they help local customers match energy-efficiency and renewable energy projects with available funding opportunities, such as Energy Trust and ODOE incentives and grants.Wallowa Resources Community Energy Program connects local farmers, ranchers, businesses, municipalities, communities and investors with technical and financial services to increase energy efficiency and build renewable energy and electrification projects. Programs focus on Micro Hydropower, Solar Power, Electrification, Biomass, Energy Efficiency and Conservation. Sustainable Northwest offers no or low-cost energy assessments for farmers and small businesses, then helps identify and secure funding sources for completing energy-efficiency and renewable energy projects. WyEast Resource Conservation and Development provides on-the-ground technical assistance, education and outreach. Wy’East has worked with hundreds of agricultural producers and businesses to understand the needs, challenges and opportunities specific to rural communities. Lake County Resource Initiative (LCRI) provides free energy assessments to locally owned businesses in Lake County, Oregon, along with helpful information about how to access incentives and ways to save energy.
While it may seem complicated to combine resources and grants available through multiple organizations, let Energy Trust be your guide. Whether you have an energy-efficiency project in mind already or want ideas about where to start, we can help you maximize your knowledge, financial support and energy cost savings while protecting your land for the future.
Learn more about Energy Trust cash incentives available for agricultural producers and start reaping the rewards on your energy bills today! Questions?
The post Cultivate your savings by combining Energy Trust incentives with local resources appeared first on Energy Trust Blog.
In spring 2023, three affordable housing providers came together to celebrate their accomplishments in the first year of Energy Trust of Oregon’s Multifamily Strategic Energy Management (MFSEM) offering. The virtual gathering hosted by Energy Trust gave members of each participating organization the opportunity to share their progress towards embedding energy management into their daily operations. Through the offering, participants discovered how to educate their residents on energy use as well as new ways to save energy in their buildings. Participants’ collective efforts earned them a total of $80,000 in cash incentives and saved over 100,000 kWh of electricity across their enrolled properties.
The three organizations collectively engaged over 200 residents through 21 in-person energy conservation workshops led by program partner Community Energy Project (CEP). CEP workshops were hosted at participating properties and demonstrated a variety of ways residents can take charge of their energy and water use while staying comfortable and healthy in their homes. Residents who attended workshops were provided with free box fans in the summer and weatherization supplies in the winter.
“We appreciated participating in the CEP workshops for our residents. Our residents enjoyed the classes and learned methods of staying comfortable with less energy use,” said Deborah Theisen, Housing and Urban Development (HUD) support office manager at Schnitzer Properties. Schnitzer coordinated with CEP to offer multiple workshops in Farsi and Mandarin to reach residents more comfortable communicating in their native languages. NeighborWorks Umpqua did the same to offer a workshop in Spanish to several of their residents.
Property staff also shared tips for conserving energy with residents in the form of monthly newsletters, door hangers, posters and staffed tables in common areas.
With the guidance of energy coaches, property staff conducted assessments of their buildings in search of ways to reduce energy use. In hosting these “Treasure Hunts,” first-year participants identified over 200 energy-saving ideas, from regular cleaning of dryer vents to seasonal adjustments in outdoor lighting timers to align with daylight hours. Two properties were inspired to take a closer look at their unit turnover checklists, adding multiple items that reduce energy waste and increase unit comfort for the next resident.
Theisen shared that her organization “had always been committed to energy savings but found most opportunities too expensive to pursue.” MFSEM enrollment illuminated new opportunities and gave Schnitzer the ability to tackle projects that were already on their wish list. “Through the program, we learned about additional places where we would be able to lower our energy consumption. Working with Energy Trust to make energy upgrades that we didn’t have to pay for ahead of time – like the LED lighting upgrades – that was fantastic,” Theisen added.
In addition to savings and incentives, participants saw positive change in their organization’s culture as a result of enrolling in MFSEM. For NeighborWorks Umpqua, the offering connected staff from departments that had previously not worked together. “Multifamily SEM got our whole organization involved in thinking about our energy usage across our entire portfolio and brought together a broad group to work creatively together,” said Albion Spahn, design & construction project manager of NeighborWorks Umpqua in Roseburg. Spahn added that these connections fostered a new level of mutual respect and appreciation among NeighborWorks staff, inspiring the organization to address energy use across their five enrolled properties. All three housing providers re-enrolled in the MFSEM offering, ready for another year of learning and saving.
MFSEM partners housing providers with Energy Trust’s technical expertise to evaluate their energy use and pursue low- and no-cost ways to improve the efficiency of their buildings. Participating organizations receive cash incentives for engaging residents and staff in ways that promote long-term savings.
Learn more about how you can save energy at your multifamily property with support from Energy Trust at www.energytrust.org.
The post Multifamily Strategic Energy Management celebrates its first year appeared first on Energy Trust Blog.
Simple math isn’t always simple. As the Texas Supreme Court recently put it, “[o]nly in a legal text could the formula ‘one-half of one-eighth’ mean anything other than one-sixteenth.” No. 21-0146, 2023 WL 2053175 (Tex. 2023). Earlier this year, in Van Dyke v. Navigator Group, the Court grappled with a simple math problem that one might easily find in an elementary school classroom:
In the context of an oil and gas mineral reservation, what is “one-half of one-eighth”?
If your answer is “one-sixteenth,” you should keep reading.
The foregoing “math problem” is often referred to as the infamous “double fraction,” which was not uncommon in antique mineral conveyances entered into at the turn of the last century. The proper construction of instruments containing double-fraction language is a dilemma of increasing concern in the oil and gas industry as uncertainty grows, disputes proliferate, and courts apply varied approaches to this complicated issue. Hysaw v. Dawkins, 483 S.W.3d 1, 4 (Tex. 2016).
The dispute before the Court in Van Dyke v. Navigator Group arose out of an instrument executed in 1924, whereby George H. Mulkey and Frances E. Mulkey conveyed their ranch and the underlying minerals to G.R. White and G.W. Tom with the following reservation:
It is understood and agreed that one-half of one-eighth of all minerals and mineral rights in said land are reserved in grantors, Geo. H. Mulkey and Frances E. Mulkey, and are not conveyed herein.
For nearly ninety years, the parties and their predecessors treated the foregoing reservation as vesting both the grantors and the grantees each with one-half of the mineral interests. However, in 2013, a dispute arose putting at stake more than $44 million in accumulated royalties.
The ownership of these royalties turned on the answer to the question, what is “one-half of one-eighth”? The grantees’ successors asserted that the double fraction was merely an elementary arithmetic formula with no additional meaning, so that only a one-sixteenth interest was reserved. The grantors’ successors contended that the double fraction reflected a term of art common at the time the deed was drafted, and that the use of this term of art reserved one-half of the mineral interest to the grantor. The correct answer to this particular “math problem” didn’t just garner a passing grade, but was worth nearly $20 million.
The trial court sided with the grantees’ successors holding that one-half of one-eighth equals one-sixteenth. The court of appeals affirmed. The Texas Supreme Court agreed to consider the issue.
The Court’s analysis begins with its interpretation of the 1924 deed, which it deemed a “textual interpretation.” The Court acknowledged that “[t]he fact pattern may seem odd to those not steeped in Texas oil-and-gas law, but the legal framework for analyzing this text is the same as for any other.” Unless otherwise defined in the text, courts will adopt a term’s ordinary meaning. One fundamental premise, however, is that the text retains the same meaning today that it had when it was drafted. Thus, the ordinary meaning at the time of drafting remains the exact same meaning to which courts must later adhere.
“Words must be given the meaning they had when the text was adopted.” The test is what the language would have reasonably meant to an ordinary speaker of the language who would have understood the original text in its context at the time it was used. The Court was clear that “whatever that meaning was then remains the meaning today.”
Thus, the Court stated that its analysis did not turn on what it might think “one-half of one-eighth” would mean if written today. It simply does not matter whether that phrase would clearly mean one-sixteenth. In fact, the challenge is not particularly legal in nature. One has to first overcome the cognitive dissonance that arises because, at least at first glance, “one-half of one-eighth” seems unusually clear. Setting aside this preconception and a natural instinct to resort to basic math, the only question is whether, in the context of a mineral conveyance instrument from 1924, the double fraction reasonably references arithmetic at all?
At the time the parties executed this deed, “1/8” was widely used as a term of art to refer to the total mineral estate. Notably, it is that fraction, not 1/3, 2/7, 6/241, or any other that is so commonly used. Thus, when a court is confronted with a double fraction involving “1/8” in an instrument, the analysis must begin with a presumption that the mere use of such a double fraction was not purposeful and that it reflects the entire mineral estate, not just one-eighth of it. The Court reasoned that “it would be odd to say ‘one-half of one-eighth’ rather than simply ‘one-sixteenth’ if all that was intended by ‘one-half of one-eighth’ was 1/16.” While this presumption is rebuttable, the rebuttal must come from the document itself. The Court held that the “key point is that there must be some textually demonstrable basis to rebut the presumption.”
The Court held that “[t]he use of a double fraction in this deed, combined with the lack of anything that could rebut the presumption, is precisely why we can conclude as a matter of law that this deed did not use 1/8 in the arithmetical sense but instead reserved to the grantors a 1/2 interest in the mineral estate.” Thus, in the context of a reservation of a mineral interest under Texas law, the calculation of “one-half of one-eighth” sometimes equals one-half. And that’s why they don’t teach math in law school.
Horizontal drilling in the last decade materially altered oil and gas production in Texas. Horizontal wells allow producers to unlock vast mineral resources otherwise inaccessible to traditional vertical drilling.1 Commentors have even credited horizontal drilling as the “heart” of a “revolutionary reorientation in global energy markets, decreasing the United States’ energy dependence on foreign suppliers."2 While technology for, and development of, horizontal drilling rapidly matured, the law lags behind.3 Important questions about horizontal drilling remain unanswered by Texas courts. Among them: can a mineral lessee may drill a horizontal well that crosses lease lines without pooling authority?
According to the Austin Court of Appeals in R.R. Comm’n of Tex. & Magnolia Oil v. Opiela, No. 03-21-00258-CV, 2023 WL 4284984 (Tex. App.—Austin June 30, 2023, no pet. h.), the answer is “yes.”Background: Pooling vs. Allocation Wells and Production-Sharing Agreements (PSA)
Neighboring tracts are sometimes pooled together so that drilling operations on any particular tract are treated as occurring on all the tracts within the pooled unit. Importantly, before an operator can drill on pooled tracts, the Texas Railroad Commission (the “Commission”) must determine whether the operator has both a valid lease and pooling authority.
Horizontal wells often cross lease lines. Like vertical wells, operators may pool multiple tracts for horizontal wells. This presents a problem when a lessee is unable to form a pooled unit. Texas does not allow compulsory pooling outside of limited exceptions. Without an exception to the pooling requirements, the lessee may be at a dead-end. The Commission has responded to this concern by permitting horizontal wells that cross lease lines without pooling authority. These non-pooled horizontal wells fall within two categories: (1) wells under production-sharing agreements (“PSAs”) and (2) allocation wells.
PSAs are simply agreements between lessees and royalty owners that determines how production will be allocated among the tracts.4 At least 65% of the mineral and working interest owners must consent to the PSA for the Commission to issue a permit. An allocation well, on the other hand, horizontally crosses lease boundaries that have not been pooled and where no agreement exists among the royalty owners for production sharing.5 Both PSA-wells and allocations wells have become prevalent throughout Texas.
While the Commission permits these alternatives to pooling, Texas courts have not yet fully addressed whether these wells are legal under Texas law. Opponents of PSAs and allocation wells argue that drilling a horizontal well that crosses lease lines is an act of pooling regardless of what one calls it.6 The lessors in Opiela argued that these actions were pooling, such that the Commission would need pooling authority to issue a permit to drill.The Austin Court of Appeals Finds No Pooling Requirement Necessary for PSA wells
Specifically, the lessors in Opiela filed suit challenging a permit that allowed Magnolia Oil & Gas Operating LLC (“Magnolia”) to drill a horizontal well into a tract with minerals leased, in part. The lessors argued that the Commission erred by failing to consider their lease’s anti-pooling clause, which prohibited pooling “in any manner whatever.” Since the lessors did not consent to pool or to a PSA (and thus lacked pooling authority), lessors urged the Commission should not have permitted Magnolia to drill. This placed squarely before the Court whether a PSA well should be treated as pooling under Texas law.
The trial court reversed the Commission’s order denying plaintiff’s complaint, finding that the Commission erred by (1) finding that Magnolia showed a good-faith claim to drill, (2) adopting and applying rules for PSA wells without complying with the requirements of the Administrative Procedure Act, and (3) failing to consider the pooling clause in the plaintiff’s lease.7
The court first answered whether the Commission has the power to issue permits for multi-tract horizontal wells without pooling authority.8 After considering the history and relationship between pooling and PSAs, the court determined that PSA wells are not the same as pooling and, therefore, do not require pooling authority.9 To do so, the Court evaluated property interests involved, as well as production divisions between PSAs and pooled wells.
For pooling, the court determined the lessee cross-conveys property interest to the tracts within the pool. Finding “a portion of the royalty interest from each of the other tracts in the pool."10 In other words, “production from any tract in the pool is treated as production from every tract in the pool."11 “Proceeds from production from one of the pooled tracts are shared by all owners of the tracts in proportion to the individual tract’s proportion of the pooled acreage."12
The court reasoned PSA wells, by contrast, do not have a cross-conveyance of interest. Nor do PSA wells have to follow the production allocation requirements for pooled tracts. Instead, parties reach private agreements in PSAs for how production will be shared.13 For these reasons, the court found that PSA wells and pooling are not the same and, therefore, the Commission did not err by failing to consider the plaintiff’s lease’s anti-pooling clause.14
Next, the appellate court found the evidence failed to show that 65% of the interest owners agreed to the PSA. Without evidentiary support for the threshold requirements for a PSA, the appellate court affirmed the trial court’s conclusion that the Commission erred in finding that Magnolia showed a good-faith claim of right to drill.15 Because the appellate court determined remand was necessary, it did not reach the question of whether the Commission violated the Administrative Procedure Act.16
Finally, Magnolia requested in the alternative that the appellate court render a judgment granting the permit as an allocation well.17 Magnolia contended that, even if the record lacked evidence to show that 65% of the interest owners joined the PSA, the well could still meet all requirements of an allocation well. The court noted that it did not have the power to make such a ruling since the Order on appeal does not pertain to an allocation well permit.18Impact
While the Austin Court of Appeals did not answer all the questions surrounding PSAs and allocation wells, the case represents a major step forward for providing legal framework around horizontal drilling. And the appellate court’s decision should put operators’ minds at ease at least for now, as the holding preserves the Commission’s current approach to PSAs and hints that allocation wells will be treated in the same manner.
1 Ernest E. Smith, Applying Familiar Concepts to New Technology: Under the Traditional Oil and Gas Lease, A Lessee Does Not Need Pooling Authority to Drill A Horizontal Well That Crosses Lease Lines (Reprint, First Published 2017), 3 Oil & Gas, Nat. Resources & Energy J. 553, 554 (2017).
2 Benjamin Holliday, New Oil and Old Laws: Problems in Allocation of Production to Owners of Non-Participating Royalty Interests in the Era of Horizontal Drilling, 44 ST. MARY’S L. J. 771, 773 (2013), cited in Brief of Amicus Curiae Pioneer Natural Resources Co., in Support of Appellants.
3 Smith, 3 O.N.E. J. at 554–55.
4 Smith, 3 O.N.E. J. at 564.
5 R.R. Comm’n of Tex. & Magnolia Oil v. Opiela, No. 03-21-00258-CV, 2023 WL 4284984, at *1 (Tex. App.—Austin June 30, 2023, no pet. h.) (citing Clifton A. Squibb, The Age of Allocation: The End of Pooling As We Know It?, 45 Tex. Tech L. Rev. 929, 930 (2013)).
6 Smith, 3 O.N.E. J. at 556.
7 Opiela, 2023 WL 4284984, at *1.
8 Id. at *7.
10 Smith, 3 O.N.E. J. at 561.
11 Smith, 3 O.N.E. J. at 561.
12 Opiela, 2023 WL 4284984, at *7.
13 Id. at *8.
15 Id. at *12.
16 Id. at *10.
17 Id. at *12.
The Internal Revenue Service (IRS) and Department of the Treasury earlier this month released final regulations (the “Low-Income Community Bonus Credit Rules”) relating to the low-income community bonus credit pursuant to Section 48(e) of the Internal Revenue Code of 1986, as amended (the “Code”).Background to Low-Income Community Bonus Credits
The Inflation Reduction Act (the “Act”), passed just over one year ago, in August 2022, provided that wind and solar facilities, including any energy storage technology installed in connection with such facilities, that are less than 5 MW (AC) and placed in service in certain low-income communities may be eligible for an investment tax credit (ITC) increase of 10% or 20%. Wind and solar facilities claiming the production tax credit (PTC) under Section 45 of the Code are not eligible for the low-income community bonus credit.
In February 2023, the Department of Treasury and the IRS released Notice 2023-17 (the “Notice”), which provided a high-level overview of the low-income community bonus credit program (the “Program”) to be established under Section 48(e) of the Code and administered by the Department of Energy. The Notice provides a helpful summary of the four categories of communities that qualify for the Program. General information regarding the four categories may be found below.
2023 Allocated Capacity
700 MW (DC)
200 MW (DC)
Qualified low-income residential building project
200 MW (DC)
Qualified low-income economic benefit project
700 MW (DC)
While the Notice provided helpful details regarding several notable features of the Program, including the: (i) 1.8 GW (DC) capacity limitation for 2023, (ii) estimated timing of when Program applications would begin to be accepted, and (iii) requirement that an allocation of capacity be awarded before the facility is placed in service, the Notice did not provide detail on the Program’s application process or the specific criteria that will be used to determine whether an allocation of capacity will be awarded. As of the date of publication, the applicant portal for the Program remains pending. The Low-Income Community Bonus Credit Rules provide significantly more detail for the Program.The Low-Income Community Bonus Credit Rules
The Low-Income Community Bonus Credit Rules provide guidance on a number of issues relating to the potential increased credit amount under Section 48(e) of the Code and the Program, including additional detail regarding the increased credit categories, ownership criteria, and reporting requirements. Among the highlights:
In General:Confirms facilities must be placed in service after an allocation of capacity is awarded, and the taxpayer must report the placed in service date. Given the 5MW (AC) limit, clarifies that multiple solar or wind facilities or energy properties that are operated as part of a single project are aggregated and treated as a single facility or energy property under this section. The single project factors under IRS Notice 2018-59 apply. Confirms that, similar to the energy community bonus credits, the Nameplate Capacity Test applies to the Low-Income Community Bonus Credits. Explains that the capacity limit for each category may be reallocated to the extent one category is oversubscribed and another has excess capacity. Provides that, once an allocation of capacity is awarded under the Program, the owner must report the placement in service date to the Department of Energy, which will then determine whether the facility remains eligible under the Program. A facility will be disqualified and lose its allocation if one of the following occurs prior to or upon the facility being placed in service: (i) location of the facility changes, (ii) the net output increases to 5MW (AC) or more or the nameplate capacity decreases by the greater of 2 kW or 25% of the capacity limitation awarded (AC for wind, DC for solar), (iii) the facility can no longer satisfy the financial benefits requirement, if applicable, (iv) the eligible property that is part of the facility that received the capacity limitation award is not placed in service within four years after the date the applicant was notified of the award, or (v) the ownership criteria on which the award was based is no longer valid. Provides for a new, separate, recapture threat under Section 48(e) of the Code if (during the five-year recapture period) any of the following occur after a facility is awarded an allocation of capacity under the Program and is confirmed eligible once placed in service: (i) if a Category 3 or 4 facility fails to provide financial benefits, (ii) if a Category 3 facility ceases to allocate the benefits equitably among the occupants, (iii) f a Category 4 facility ceases to provide at least 50% of the financial benefits of the electricity produced to qualifying households or fails to provide those households the required minimum 20% bill credit discount rate, (iv) if a Category 3 facility ceases to participate in a covered housing program or other affordable housing program, or (v) output increases to 5MW (AC) or more, unless as a result of new facility under 80/20 rule. These apply even if the facility is not subject to recapture under Section 50(a) of the Code.
Reserved Capacity Limitation for Facilities Meeting Additional Selection Criteria:Provides that at least 50% of the total capacity limitation in each facility category will be reserved for qualified facilities meeting certain additional selection criteria relating to either the owner or the geographic location of the facility. As a result the capacity limitations for each category set forth above are reduced by half for facilities not meeting the below criteria. If the facility is owned by one of the following, such facility would be eligible for the 50% reserved capacity limitation: a tribal enterprise, an Alaska native corporation, a renewable energy cooperative, a qualified renewable energy company meeting certain characteristics, or a qualified tax-exempt entity. If one of the aforementioned entities is part of an ultimate partnership that owns the facility, such entity must own at least a 1% interest in each material item of partnership income, gain, loss deduction and credit and be a managing member at all times throughout the existence of the partnership for the partnership to be eligible for the reserved capacity limitation. If the qualified facility is located in one of the following, such facility would be eligible for the 50% reserved capacity limitation : a Persistent Poverty County (at least 20% of residents have experience high rates of poverty over the past 30 years) or certain census tracts designated in the Climate and Economic Justice Screening Tool at the time of application
Category 1 Facilities:Provides that there will be specific amounts of capacity limitation for eligible residential behind the meter facilities, including rooftop solar. Behind the meter facilities must satisfy all of the following and must not meet the requirements for a Category 3 facility: Must be connected with an electrical connection between the facility and the panelboard or sub-panelboard of the site where the facility is located, Must be connected on the customer side of a utility service meter before it connects to the electricity grid, and Its primary purpose is to provide electricity to the utility customer of the site where the facility is located. The remaining capacity limitation is available for applicants with front of the meter facilities.
Category 3 FacilitiesClarifies various rules relating to the requirement that the financial benefits of the electricity produced by a Category 3 facility must be allocated equitably among the occupants of the dwelling units of the Qualified Residential Property, which can be a multi-family or single-family rental property. Explains that at least 50% of the financial value of the energy produced by the facility must be equitably allocated to the occupants designated as low-income occupants under the covered housing program or other affordable housing program and provides the relevant calculation method to determine if this is satisfied. While the Low-Income Community Bonus Credit Rules clarify that a signed benefits sharing agreement between the owner and building tenants is overly burdensome, the rules provide that the facility owner must prepare a Benefits Sharing Statement. Among other items, the Benefits Sharing Statement must include the calculation of the facility’s gross financial value, net financial value and the financial value required to be distributed to building occupants. In addition, the owner must formally notify the occupants of the Qualified Residential Property of the development of the facility and the planned distribution of benefits.
Category 4 FacilitiesClarifies that the Category 4 facility must satisfy all of the following: Must serve multiple qualifying low-income households, At least 50% of the facility’s total output in kW must be assigned to such qualifying low-income households, and Each qualifying low-income household must be provided a bill credit discount rate, as defined below, of at least 20%, calculated on an annual basis. Provides that, to establish that the above are satisfied, applicants must submit documentation upon placement in service that identifies each qualifying low-income household, the output from the facility allocated to each qualifying low-income household in kW, and the method of income verification used for each qualifying low-income household. A qualifying low-income household low-income status is determined at the time the household enrolls in the subscription program. This does not need to be re-verified. May use categorical eligibility, based on the qualifying low-income household’s participation in needs-based programs, or income verification methods through credit agencies and commercial data sources.
Foley will continue to monitor these developments with respect to the Low-Income Community Bonus Credits.
The Federal Energy Regulatory Commission (“FERC” or “Commission”) unanimously issued its highly anticipated Order No. 2023, which requires many reforms to pro forma interconnection agreements and procedures under Open Access Transmission Tariffs in an attempt to decrease the time in which it takes to move electric generation projects through interconnection queues and bring electric generating facilities online. The backlog associated with interconnection queues across the country is perceived as a root cause of stymieing the country’s transition to a less carbon-focused electric grid, and is believed to be jeopardizing the reliability of our nation’s electrical grids. Currently, the average time it takes a project to move through the interconnection process is approximately five years, which is an approximate 40% increase from only a few years ago. Order No. 2023’s changes will impact developer’s at every stage of the interconnection process.
We expect large number of requests for rehearing will be submitted, and would not be surprised if FERC issues an order on rehearing altering and/or clarifying some of the findings discussed here. Nonetheless, Order 2023 will lead to significant changes in interconnection processes in many regions.
Highlights of Order 2023:All Transmission Providers to use cluster studies; All Transmission Providers to post heat maps or similar information displaying the results of each cluster study to provide a clearer sense of the potential impact of new interconnection requests at specific interconnection points; Increased deposit costs for cluster studies (but fewer of them) Evidence of executed PPAs no longer required to demonstrate commercial readiness; 20% of Network Upgrade costs must be deposited in conjunction with LGIA execution, with clear penalties assessed against such deposits for projects which later withdraw; Use of withdrawal penalty proceeds for upgrade costs in the relevant cluster; Site Control definitions Financial Penalties on Transmission Providers for missed deadlines for studies New processes and pro forma agreements for Affected Systems Transition Projects currently pending in the queue in an affected region will face hard decisions under Order 2023’s three transition options. Keeping such a pending project alive in the transitional study process will require a significant new financial commitment and assuming the risk of a significant potential withdrawal penalty.
Order No. 2023 requires Independent System Operators and Regional Transmission Organizations (“ISOs/RTOs”) to submit revisions to their pro forma interconnection procedures 90 days after the rule is published in the Federal Register. FERC will still need to review and accept the ISOs/RTOs’ tariff revisions before they become effective.
A central theme of Order No. 2023 is to require all Transmission Providers to use the cluster study approach. Cluster studies are currently used by several ISOs/RTOs and Transmission Providers, including the California Independent System Operator, the Midcontinent Independent System Operator, the New York Independent System Operator, PJM Interconnection, L.L.C., the Southwest Power Pool, NV Energy, PacifiCorp, and Public Service Company of Colorado. Cluster studies will now be required in all regions.
Another theme of Order No. 2023 is to provide interconnection customers with greater amounts of information about potential interconnection costs at a specific location or point of interconnection prior to customers submitting an interconnection request. The Commission found that its current pro forma procedures and agreements fail to adequately provide interconnection customers with cost information that is vital to their businesses and decision-making process about whether a project they proposed to interconnect is commercially viable. This lack of information has resulted in customers submitting (and subsequently withdrawing) multiple interconnection requests at various points of interconnection, knowing that not all projects will be constructed. These superfluous requests helped create the backlog ISOs/RTOs are struggling to manage. By providing interconnection customers with valuable information and implementing more stringent readiness and site control requirements, Order No. 2023 intends to reduce the time it takes to interconnect generators to the electric grid.Background
On July 15, 2021, FERC issued an Advanced Notice of Proposed Rulemaking (“ANOPR”) requesting comments on proposed generator interconnection reforms and long-term transmission planning reforms. Deciding that a single rulemaking to accomplish both reforms was too aggressive, the Commission issued separate proposed rulemaking on April 21, 2022 (“Long-Term Transmission Planning Proposal) and on June 16, 2022 (“Generator Interconnection Reform Proposal”). Order No. 2023 finalizes and adopts many of the proposed reforms outlined in the Commission’s Generator Interconnection Reform Proposal. FERC has yet to finalize its Long-Term Transmission Planning Proposal; however, a final rule may be published by the end of the year. Both proposals aim to accelerate generator interconnections and re-prioritize the investment in transmission projects needed to incorporate the new generation projects into the grid.
Through the Inflation Reduction Act and other legislative initiatives, the United States continued investment in renewable generation projects, including wind, solar, and integrated battery storage systems, has resulted in a proliferation of such projects trying to interconnect to the electric grid. ISOs/RTOs have struggled to keep up with the increased number of interconnection requests. Project developers face years of interconnection studies, uncertainty surrounding interconnection costs, and severe time delays, which makes developing and financing new generator projects exceedingly difficult. Order No. 2023 aims to focus on interconnecting projects that have the greatest chance of achieving commercial operation in a more timely and cost-efficient manner.Generator Interconnection Reform Proposals Cluster Approach
Overview of Cluster Study Approach
To the extent they have not already done so, ISOs/RTOs will now be required to adopt a cluster interconnection study method when evaluating generator interconnection requests. Under this approach, individual interconnection requests are grouped into clusters based on the time in which the requests are submitted and will be studied in those clusters. Developers submitting interconnection requests will be subject to more stringent readiness requirements (including demonstrating a certain amount of site control to construct their project) and financial commitments as their requests proceed through the interconnection queue. FERC anticipates that the cluster approach will help to diminish queue backlog in part by reducing the number of re-studies required if a project drops out of the queue. Under the serial approach currently used in many regions, a higher-queued project that modifies or withdraws its request often triggers a domino-effect of re-studies that increase the time and costs associated with interconnection.
Cost Allocation of Interconnection Upgrades
To facilitate accelerating the interconnection process under a cluster-study approach, Order No. 2023 adopts the Generator Interconnection Reform Proposal’s to allocate network upgrade costs based on a proportional impact methodology: generators in a cluster are assigned costs needed for a targeted system network upgrade, rather than project-specific network upgrades. ISOs/RTOs must update their procedures to establish a methodology for assigning costs towards these upgrades for each customer. Also, they will need to adopt certain terminology designed to avoid disputes between customers over who has the right to construct interconnection facilities.
The order does not, however, adopt the Generator Interconnection Reform Proposal’s to require later-positioned clusters to contribute to funding network upgrades in early clusters that they might benefit from. Instead, the Commission states that its revisions to its proportional impact funding mechanism, which creates an exception for the ISOs/RTOs to allocate costs for substation network upgrades that are only needed by specific generators (and not by all generators in the cluster) to those generators only, will ease such concerns. The Commission also explains that its existing crediting policy will alleviate later-in-time customers from benefitting from upgrades built by earlier-in-time customers. For system network upgrades, costs will be allocated based on each generating facility’s proportional impact on the upgrades identified in the respective cluster study. And the costs associated with any needed transmission provider’s interconnection facilities or interconnection customer’s interconnection facilities will be assigned directly to the customer(s) using those facilities. Order No. 2023 further contemplates situations where interconnection customers in a cluster agree to share interconnection facilities, and the costs associated with these facilities will be allocated on a per capita basis, based on the number of generating facilities that will use the shared interconnection facilities, unless the customers mutually agree to an alternative cost sharing mechanism.
More Stringent Financial Commitments, Withdrawal Penalties, and Readiness Requirements to Disincentivize Speculative Projects
To decrease the number of speculative projects in the interconnection queues, the Commission will require more stringent financial commitments, withdrawal penalties, and readiness requirements.
Study Deposits. Order No. 2023 requires interconnection customers to provide increased study deposits in a tiered approach based on the proposed size (measured in MW) of the generating facility, as demonstrated in the following diagram:
Size of Proposed Generating Facility Associated with Interconnection Request
Amount of Deposit
> 20 MW < 80 MW
$35,000 + $1,000/MW
≥ 80 < 200 MW
≥ 200 MW
These deposit amounts apply to large generating interconnection facilities, which are facilities that are larger than 20 MW. Unlike the Generator Interconnection Reform Proposal, the Commission will not require a phased study deposit approach that would have included multiple study deposits. Rather, the Commission states that it will require only a single initial study deposit to cut down on the administrative burden on the ISOs/RTOs to collect multiple deposits.
Demonstration of Site Control. The Order largely adopts more stringent site control demonstrations proposed in the Generator Interconnection Reform Proposal. Initially, at the time the interconnection request is submitted, the Interconnection Customer will be required to demonstrate exclusive rights to develop, construct, operate, and maintain the proposed project. The Commission did not, however, provide technology-specific land requirements. Additionally, at the time the Interconnection Customer executes the facilities study agreement and when executing or requesting the Large Generator Interconnection Agreement (“LGIA”) be filed unexecuted, it will be required to provide evidence of exclusive land rights necessary to develop their project.
The final rule adopts a definition of “reasonable evidence of site control” to mean providing documentation establishing: “(1) ownership of, a leasehold interest in, or a right to develop a site of sufficient size to construct and operate the Generating Facility; (2) an option to purchase or acquire a leasehold site of sufficient size to construct and operate the Generating Facility; or (3) any other documentation that clearly demonstrates the right of Interconnection Customer to exclusively occupy a site of sufficient size to construct and operate the Generating Facility.” Importantly, the Commission further clarified that the right to “exclusively” occupy the site means both that the right belongs only to the Interconnection Customer and that the right is “solely for purposes of a single interconnection request.” The Commission also clarified that Interconnection Customers are prohibited from submitting evidence of site control over the same parcels of land for multiple interconnection requests unless the parcel is large enough to support the construction and operation of multiple facilities. However, co-location of projects where more than one project will be located at the same site behind a single point of interconnection is allowed, but Interconnection Customers must be able to demonstrate site control and shared land use via an agreement between the parties.
According to the final rule, demonstrations of site control also include:Lease options, instead of executed leases, as long as the Interconnection Customer is the exclusive holder of the lease option(s); however, active negotiations of lease options are not sufficient; Lease agreements with the Bureau of Ocean Management (“BOEM”) for developing offshore wind projects; Lease agreements with Tribal-owners; and FERC licenses to develop generating facilities at non-powered dams; however, evidence of negotiating permits or licenses is not sufficient.
Interconnection Customers will be allowed to use a deposit instead of site control demonstrations in limited circumstances where regulatory limitations may prohibit customers from obtaining site control, e.g., when they are developing a project owned or controlled by a governmental entity. Interconnection Customers that face regulatory limitations that may prohibit them from obtaining the requisite site control may submit a deposit of $10,000/MW subject to a $500,000 floor and a cap of $2 million. The deposit will be returned once the customer can demonstrate 90% site control prior to the facility study agreement’s execution or 100% site control at or after the execution of the facilities study agreement.
Demonstration of Commercial Readiness. In a decision supported by merchant developers, the Commission will not require Interconnection Customers to provide power purchase agreements or executed term sheets as evidence of commercial readiness. Rather, the Commission adopted the Generator Interconnection Reform Proposal requiring Interconnection Customers to demonstrate commercial readiness via financial deposits that correlate to the size of the proposed project. The deposits must be made at the beginning of each phase of the cluster study process: the initial cluster study, the cluster restudy, and the facilities study. The initial commercial readiness deposit will be an amount that is two times the study deposit amount to enter the cluster study that is outlined above, while the second and third commercial readiness deposits will be based on percentages of the Interconnection Customer’s identified network upgrades. The Commission hopes that tying the second and third deposits to the size of identified network upgrades will encourage customers with large network upgrade cost estimates that makes their projects unviable, to withdraw earlier in the cluster study process to reduce any need for restudies.
LGIA Deposit. Order No. 2023 adopts the Generator Interconnection Reform Proposal to require a deposit at the time an interconnection customer executes its LGIA (or requests that the LGIA be filed unexecuted). The LGIA deposit is equal to 20% of the estimated network upgrade costs identified in the LGIA. This deposit will be subject to withdrawal penalties if the project is withdrawn after the LGIA is executed or is filed unexecuted.
Withdrawal Penalties. In an effort to further disincentivize speculative projects, Order No. 2023 subjects Interconnection Customers to withdrawal penalties that will impact any study deposit refunds they may be eligible for, in the event they withdraw their project prior to execution of the LGIA. Specifically, withdrawal penalties may apply to projects where “(1) the interconnection customer withdraws its interconnection request at any point in the interconnection process; (2) the interconnection customer’s interconnection request has been deemed withdrawn by the Transmission Provider at any point in the interconnection process; or (3) the interconnection customer’s generating facility does not reach commercial operation (such as when an interconnection customer’s LGIA is terminated prior to reaching commercial operation).”
The amount of the withdrawal penalties ranges from twice the amount of study costs up to 20% of the network upgrade costs, and the penalty amounts increase as the Interconnection Customer proceeds through the interconnection process.
Phase of Withdrawal
Total Withdrawal Penalty (if greater than study deposit)
Initial Cluster Study
Two times study costs
5% of network upgrade costs
10% of network upgrade costs
After Execution of, or After Request to File Unexecuted, the LGIA
20% of network upgrade costs
Any collected withdrawal penalty funds will be used to fund studies conducted under the cluster study process in the same cluster as the withdrawn project. The remaining withdrawal penalty funds will be used to offset net increases to required network upgrades for other customers that remain in the cluster that are directly affected by the withdrawn project. If there are any penalty funds remaining after being applied to study costs or increased network upgrades for non-withdrawn projects, the penalty funds are to be refunded to the withdrawn Interconnection Customer.
Order No. 2023 states that Transmission Providers may only impose penalties where the withdrawal has a “material impact on the cost or timing of any interconnection requests with an equal or lower queue position.” Further, the final rule exempts customers from paying a withdrawal penalty if (1) the interconnection customer withdraws its interconnection request after receiving the most recent cluster study report and the network upgrade costs assigned to the interconnection customer’s request have increased by 25% compared to the previous cluster study report, or (2) the interconnection customer withdraws its interconnection request after receiving the individual facilities study report and the network upgrade costs assigned to the interconnection customer’s request have increased by more than 100% compared to costs identified in the cluster study report.”
Transition Period Process
For Interconnection Customers whose projects have pending interconnection requests being evaluated under a serial study process, Order No. 2023 identifies three options to transition to the new interconnection rules. Note these transition processes do not apply to projects in regions where the Transmission Provider has already adopted or is currently transitioning to a cluster study process. Transmission Providers will be required to offer existing interconnection customers the following options:Option 1 – Projects can proceed under a transitional serial study process that will result in a serial interconnection facilities study; Customers must provide a deposit equal to 100% of the interconnection facility and network upgrade costs allocated to the interconnection customer in the system impact study. Option 2 – Projects can proceed under a transitional cluster study process that will be composed of a clustered system impact study and individual facilities study; or Customers must provide a deposit equal to $5 million. Option 3 – Projects can be withdrawn from the queue without penalty (and perhaps reapply before the next cluster deadline).
Withdrawal of a project that has opted to enter a transitional study will be subject to a withdrawal penalty equal to nine times the customer’s study deposit.
The options to be offered each Interconnection Customer will depend in part on a project’s current interconnection phase. Option 1 must be offered to all Interconnection Customers with a tendered facilities study agreement (whether executed or not) as of 30 days after the Transmission Provider’s Order No. 2023 initial compliance filing. Option 2 must be offered to Interconnection Customers with an assigned queue position as of 30 days after the Transmission Provider’s Order No. 2023 initial compliance filing. Either of these groups of Interconnection Customers can also avail themselves on Option 3 and withdraw their requests without penalty prior to the commencement of the transition period process.
As previously noted, Transmission Providers will have 90 days to submit revisions to their pro forma interconnection procedures after Order 2023 is published in the Federal Register. Those submissions will incorporate the transition options. Interconnection Customers will have 60 calendar days after the Commission-approved effective date of the Transmission Provider’s filing to choose a transition option and, depending on the option chosen, demonstrate site control and provide the required deposit.Reforms to Increase the Speed of Interconnection Queue Processing
Order No. 2023 Eliminates the “Reasonable Efforts” Standard
The time in which Transmission Providers are expected to review interconnection requests and perform various interconnection studies is currently guided by a “reasonable efforts” standard, which many argue has contributed to the queue backlog developers are experiencing today. Order No. 2023 eliminates this standard and will require the pro-forma Large Generator Interconnection Procedures (“LGIP”) to include penalty provisions for delayed/late studies assessed against Transmission Providers:
Type of Study
Penalty Amount (per business day beyond tariff-specified deadlines)
Affected System Studies
The final rule does include certain exemptions for study delay penalties and places a cap on penalties of 100% of the initial study deposit received for all interconnection requests in the cluster for cluster studies and restudies, 100% of the initial study deposit received for the single interconnection request in the study for facilities studies, and 100% of the study deposits that the Transmission Provider acting as an affected system operator collects for conducing the affected system study. Transmission Providers will also have the ability to appeal these penalties to the Commission.
Incorporation of Storage Resources Operating Assumptions
Order No. 2023 directs Transmission Providers to incorporate an Interconnection Customer’s planned operating assumptions for the proposed charging of a battery energy storage resource, including standalone facilities, co-located facilities, or hybrid generating/storage facilities, which may be included as an operating condition in the resource’s interconnection agreement. The order does provide an exemption to this general rule where the Transmission Provider finds the customer’s proposed operating assumptions conflict with reliability standards or good utility practices.
Affected Systems Reforms
Recognizing that the affected system study process is contributing to the interconnection queue backlog, Order No. 2023 adopts certain reforms to improve the process of assessing a generator’s impact on neighboring systems, aka “affected systems.” These reforms include the adoption of new terms, notification processes, study and cost allocation procedures, and financial penalty assessments against the affected system provider for causing certain delays in studies or restudies.
The final rule also requires Transmission Providers to study affected system interconnection requests in clusters and adopt a pro forma Affected System Study Agreement and pro forma Affected System Facilities Construction Agreement.
Under the new rule, affected system transmission providers are instructed to perform affected system studies under the Energy Resource Interconnection Service (“ERIS”) standard instead of the higher Network Resource Interconnection Service (“NRIS”) standard, which transmission providers currently have the discretion to choose, regardless of what type of service the Interconnection Customer requests on its host system. NRIS provides a higher level of interconnection service than ERIS and is often associated with higher network upgrade costs and restudies. To support this decision, the Commission stated that studying under the ERIS modeling standard “should reduce the number and total cost of affected system network upgrades assigned to affected system interconnection customers, which will reduce instances of ‘sticker shock’ from affected system network upgrades.”Compliance Timelines and Next Steps
Transmission Providers have 90 calendar days from the date Order No. 2023 is published in the Federal Register to revise their LGIP, LGIA, Small Generator Interconnection Procedures, and Small Generator Interconnection Agreements in their Tariffs. Once FERC approves the Transmission Providers’ Order No. 2023 compliance filings by issuing an order setting forth the Tariff effective date, the Transmission Provider will begin the transition study process. Once the transition study process is complete, Transmission Providers not currently utilizing a cluster study approach, will move on to the first cluster study process.
Whether or not Order No. 2023 succeeds in speeding up the time required to bring new generation facilities onto the grid remains to be seen. Equally critical to reaching that goal will be parallel efforts to adopt and implement major transmission reforms across the country, such as those included in the Commission’s Long-Term Transmission Planning Proposal.
Under the current system, transmission planning and upgrades have often been spurred by and paid for pursuant to requests submitted by individual generation projects. This contrasts with the approach taken under the Competitive Renewable Energy Zone (“CREZ”) program in the Electric Reliability Council of Texas (“ERCOT”), where major new transmission infrastructure was planned and constructed even before generator interconnection requests drove the planning. It would not be easy to design and implement a more holistic transmission planning and generator interconnection process nationwide. But such a process could lead to significant improvements in the timing and cost of needed improvements to our nation’s electric infrastructure.
This blog was republished by POWER Magazine on August 22, 2023.
The U.S. Environmental Protection Agency (EPA) in April of this year announced proposed regulations to tighten restrictions on tailpipe emissions for light and medium-duty vehicles and greenhouse gas emissions from heavy-duty vehicles beginning with the 2027 model year.
In order to meet the new requirements, the proposed regulations could effectively require automakers to produce zero-emission vehicles that would conservatively account for at least 40% of their annual sales by 2030.
Questions remain about the requirements set forth in the proposed regulations, whether the requirements are technologically achievable, and at what cost to the economy, industry, and society at large. Comments to the heavy-duty rule were due June 16, 2023, and comments to the light and medium-duty rule were due July 5, 2023. Thousands of comments were submitted on the proposals during the comment period, running the full spectrum from criticism that the proposals are too lax, to criticism that the proposals are too stringent—and everything in between.
The proposed regulations together include specific requirements for automakers to reduce their greenhouse gas emissions and criteria pollutant emissions such as particulates, or PM, and nitrogen oxides (NOx).
These standards apply to individual vehicles, but given provisions for average, banking, and trading, automakers may meet the requirements on a fleet level. Without a major technological breakthrough in emission control technology for internal combustion engines (which does not appear to be on the horizon), compliance with the new regulations would mean selling a greater number of zero-emission vehicles in order to lower the average fleet emissions.
Zero-emission vehicles effectively means electric vehicles (EVs), and while this includes hydrogen fuel cell EVs and other technologies, battery EVs constitute the bulk of the EV market. Just how many EVs automakers will have to sell will depend on a variety of factors, but early estimates range from 40% to 60% of total sales, up from 6% to 8% currently.
We take no position on whether the EPA’s de facto EV mandate is good or bad policy. We are addressing only its viability and impact. And the mandate is ambitious—even by the most conservative estimates, to meet that goal, the number of EVs sold in the U.S. will have to increase by a factor of five over the next 10 years.
The immediate and obvious response to many concerns by critics in support of the EPA goals is “Norway.” More than 80% of new vehicle sales in Norway are EVs already, and this has been the case for several years. The total fleet in Norway is greater than 50% electric. Norway passed the EPA’s 40% EV target in 2017. Neither the Norwegian electrical grid, economy, nor society appears to have suffered. This appears to be evidence that it is possible to have a highly electrified national vehicle fleet.
Norway made this transition quickly—10 years ago EVs accounted for fewer than 6% of sales—and at a time when there were far fewer options for EV buyers than at present.
It is fair to ask—how does the U.S. compare to Norway for implementing such these regulations? The clearest (and most obviously legitimate) difference is one of size. Norway’s population is 5 million, and Norway’s EV expansion was no strain on the global supply chain. Electrification of the U.S. vehicle fleet will be vastly larger and need to cover a much larger geographical area.
So what then of the technology, and the supply chain? Is it possible to achieve the EPA targets at all, regardless of sale mandates and incentives?
We do not know. What we do know is the proposed EPA requirements are not the only legal consideration for auto companies.
California law already requires that all new cars and light trucks sold in California must be zero-emission by 2035, and several other states, including Massachusetts, New Jersey, New York, Oregon, and Washington, have committed to adopt California’s requirements. These states together account for at least 25% of American car sales.
Beyond state law, it is important to recall that the supply chain is a global supply chain. And the global supply chain is responding to a global market. Many countries have implemented EV mandates, goals, and incentives. Most notably, the European Union will require 100% emission-free vehicle sales by 2035—far more aggressive than the 60% figure proposed for the U.S.
China has not publicized a specific EV target, but has already achieved 25% of sales and is growing fast. China is showing every sign of intending to increase EV expansion, and is in an excellent position to do so. China is the largest manufacturer of EVs, and its government’s command structure allows it to quickly implement policies.
Beyond the potential for new EPA mandates for the American market, EV manufacturing and supply chain capabilities will also be impacted by a much broader set of factors, including global demand. Other forces, both domestically and globally, are driving the auto industry toward the same result. Ultimately, sales of EVs in 2030 and beyond will likely be determined by many factors, including the proposed EPA regulations—but while the proposed EPA regulations are important, they will not alone define the global EV supply chain, whether or not they become effective.
Factors such as: the ability of the supply chain to keep up; the market developing (or not developing) for EVs in the U.S.; manufacturers’ ability to price EVs in line with legacy automobiles in light of differing supply challenges; and so on will also go a long way to determining whether the EPA’s current targets are viable.
In any event, even if the U.S. market misses targets, and say only hits 30% instead of 40% EV sales, such “failure” still means that tailpipe and greenhouse gas emissions would be drastically reduced while domestic EV sales increase manyfold. Goals can succeed even as they fail.
You can read the original version of this article at powermag.com
Foley & Lardner LLP served as the summit sponsor at Infocast’s CCS/Decarbonization Project Development, Finance and Investment Summit which was held in Houston on July 25 and 26. Eric Blumrosen had the pleasure of serving as the summit’s co-chair. He was impressed with not only the knowledge and insight of the various presenters and panelists, but from the abundance of energy and enthusiasm from this group in what is for all practical purposes, the founding of a nascent industry.
Fellow partner Sarah Slack co-chaired the summit with Eric, while additional Foley attorneys presented on Qualifying Beginning of Construction Section 45Q Tax Credits (Victoria Roessler) and moderated a panel discussion on Decarbonizing Industrials (Tim Spear). Partner Kyle Hayes participated in the Infocast RNG + SAF Capital Markets conference, presenting on the Status and Outlook for RNG Production and Markets.
Before sharing a few takeaways from the summit, what is CCUS? It is essentially an array of technologies aimed at mitigating climate change by capturing carbon dioxide (CO2) emissions from industrial processes and power plants, utilizing CO2 for various applications, and storing it safely underground. According to a variety of experts, CCUS technologies will play a vital role in limiting global warming to 1.5 degrees Celsius above pre-industrial levels. Moreover, CCUS is also essential in enabling the sustainable use of fossil fuels during the transition to a low-carbon economy. The global energy industry is one that is predominantly based on fossil fuels and the need for energy is only growing. CCUS is a vital technology that allows us to meet our energy demands while concurrently lowering our carbon footprint. The International Energy Agency (IEA) estimates that without CCUS, the cost of meeting climate goals would increase by approximately 70%.
While the primary benefit of CCUS lies in its ability to significantly reduce greenhouse gas emissions, another advantage of CCUS is its potential to promote economic growth. Implementing CCUS technologies can create job opportunities and stimulate investment in research and development. In addition, CCUS can offer revenue streams through enhanced oil recovery projects, where CO2 is injected into oil reservoirs to boost oil production, and through other industrial uses.
Notwithstanding the benefits, CCUS faces significant challenges that hinder its broader adoption. Currently, the major obstacle is the permitting process for CCUS sequestration projects, which is long, costly and uncertain. Establishing a predictable regulatory framework for CCUS facilities involves complex legal and environmental considerations, which may vary across different jurisdictions. Streamlining and expediting the permitting process are essential to encourage more investment in CCUS projects.
Financing is another major challenge. Building and operating CCUS facilities require substantial upfront investments, and the financial viability of these projects can depend significantly on the availability of incentives and support, particularly with sequestration projects. Governments' policies, including tax credits and other financial incentives, play a crucial role in attracting private investment in CCUS technologies.
With respect to tax credits, they have been an important driver for encouraging CCUS deployment. In the U.S., the 45Q tax credit incentivizes carbon capture projects, offering a financial incentive for each ton of CO2 captured and securely stored or used for enhanced oil recovery or other applications. However, the stability and longevity of such tax credits are essential to provide certainty to investors and ensure long-term commitment to CCUS projects which will last well beyond the tax credit scheme currently in place.
Despite the challenges, CCUS remains a crucial tool in the fight against climate change. To overcome barriers and foster its broader implementation, collaboration among governments, industries, and other stakeholders is necessary. Investing in research and development, promoting policy consistency, and supporting technological advancements are key factors in unlocking the full potential of CCUS and advancing toward a sustainable, low-carbon future.
The Federal Energy Regulatory Commission (“FERC”) recently affirmed its prior determination that where an investor’s non-independent director is appointed to the board of a public utility or public utility holding company, that appointment rebuts the presumption of a lack of control between the entities, such that the investor and public utility should be deemed “affiliates” under section 35.36(a)(9)(v) of FERC’s regulations. Under this decision, FERC found that the amount of membership interests held by the investor in the public utility or public utility holding company did not matter so long as the investor’s officer or director was appointed to a position of control over the public utility or public utility holding company. FERC’s July 3, 2023 order took its original October 20, 2022 decision in Evergy Kansas Central, Inc., et al. (“Evergy”) a step further by clarifying the appointment of an investor’s non-independent officer or director, or other appointee accountable to the investor, to the board of a public utility or public utility holding company, is a per se finding of control.
FERC’s original decision in Evergy found that the appointment of Bluescape Energy Partners, LLC’s (“Bluescape”) non-independent director to Evergy’s 13-member board of directors created an affiliate relationship between Bluescape and certain public utility affiliates of Evergy despite the fact that Bluescape owned less than 1.1% of Evergy’s outstanding voting shares of common stock. Prior to Evergy, the general rule was that affiliation between a public utility and an investor did not exist unless the investor held greater than 10% direct or indirect voting interests in a public utility, i.e., owning less than 10% of the outstanding voting securities created a rebuttable presumption that the entity/investor lacks control over the public utility.
Evergy sought rehearing of the Evergy order arguing that the Commission’s decision: (i) incorrectly applied the analysis it was required to conduct under its regulations; (ii) was a marked departure from its precedent that did not give interested parties a meaningful opportunity to comment; (iii) exceeds FERC’s authority under the Federal Power Act (“FPA”) because it unlawfully regulates director appointments; and (iv) fails to consider the practical implications of its decision.
FERC considered and responded to some, but not all of these arguments, in a rehearing order issued on July 3, 2023 (“Rehearing Order”). The Rehearing Order created a new bright-line rule by holding that “not only does the appointment of a non-independent director rebut the presumption of a lack of control, but that appointment is a per se finding of control,” which creates an affiliate relationship under FERC’s regulations. “Affiliate” is defined to include a person that FERC determines, after appropriate notice and opportunity to comment, to stand in such relation to the specified company that there is liable to be an absence of arm’s-length bargaining between the parties. FERC reasoned that the Bluescape director’s appointment to Evergy’s board precluded arm’s-length bargaining between the entities because the director has fiduciary duties to both Evergy and Bluescape.
FERC uses an affiliate analysis under its review of section FPA 205 market-based rate authorization (“MBR”) petitions to determine whether the entity seeking MBR authorization and its “affiliates” can exercise market power. Going forward, entities seeking MBR authorization must treat investors as “affiliates” if the investor has a non-independent board member appointed to the board of the public utility or public utility holding company, regardless of whether the investor owns less than 10% of the outstanding voting interests in a public utility. FERC also uses an affiliate analysis when reviewing FPA section 203 applications to determine whether a proposed transaction will have an undesirable effect on competition. The appointment of an investor’s non-independent officer or director or other appointee accountable to the investor, to the board of a public utility or public utility holding company, requires prior FERC authorization under section 203 of the FPA because such an appointment constitutes a “change in control” under the Evergy decisions.
The Evergy order has been appealed to the U.S. Court of Appeals for the Eighth Circuit in Case No. 23-1175.
The Inflation Reduction Act of 2022 (the “IRA”) and the Infrastructure Investment and Jobs Act of 2021 (the “IIJA”) set in motion an ongoing series of changes that are aimed at transforming, among other things, the automotive sector in the United States. As Foley has highlighted over the last couple years,1 the federal government has been making regular updates to rules and guidance aimed at molding the automotive transportation system into an electrified system. Two recent developments provide a glimpse into how the federal government is attempting to balance knock-on effects from the IIJA’s and IRA’s preferences for domestic production and manufacturing.The EV Tax Credit Proposed Rules
On March 31, 2023, the IRS released new proposed regulations (the “Proposed Rules”) related to the Plug-In Electric Drive Vehicle Credit (the “EV Tax Credit”) under Section 30D of the Internal Revenue Code (the “Code”), as it was amended under the IRA. The Proposed Rules provide additional guidelines and requirements relating to the purchase of qualifying new clean vehicles and the critical mineral and battery component requirements for new electric vehicles and new qualified fuel cell vehicles. The IRS closed the window for comments on the Proposed Rules on June 16, 2023. Critics of the Proposed Rules noted that they were either too restrictive or not restrictive enough with respect to pushing domestic manufacturing
As amended by the IRA, to qualify for the EV Tax Credit, a “new clean vehicle” must be manufactured by a “qualified manufacturer” and meet certain requirements (as previously discussed by Foley here) in order to be eligible. Certain additional requirements also apply to the purchaser of a new clean vehicle in order to qualify for the EV Tax Credit. The IRA also disqualifies certain vehicles from the EV Tax Credit if the battery of the vehicle contains critical minerals or battery components from a foreign entity of concern. If eligible, the maximum possible credit per vehicle available is $7,500, of which half relates to the vehicle meeting certain requirements relating to critical minerals (the “Critical Minerals Requirement”) and the other half relates to the vehicle meeting certain requirements related to battery components (the “Battery Components Requirement”).Critical Minerals Requirement
New Section 30D(e)(1)(A) provides that the Critical Minerals Requirement for a battery is met if the percentage of the value of the applicable critical minerals contained in such battery that were (i) extracted or processed in the United States, or in any country with which the United States has a free trade agreement in effect, or (ii) recycled in North America, is equal to or greater than the applicable percentage set forth in the chart below, as certified by the qualified manufacturer of the vehicle:
Date Vehicle is Placed in Service
After April 17, 2023 and before January 1, 2024
During calendar year 2024
During calendar year 2025
During calendar year 2026
After December 31, 2026
The Proposed Rules provide a three-step process for determining the percentage of the value of the applicable critical minerals that contribute toward meeting the Critical Minerals Requirement.Procurement Chains: The first step is to determine the procurement chain for each applicable critical mineral. A “procurement chain” is the common sequence of extraction, processing, or recycling activities that occur in a common set of locations, concluding in the production of constituent materials. It is possible for there to be multiple procurement chains for the same critical mineral based on different sources and locations. Qualifying Critical Minerals within each Procurement Chain: Second, each procurement chain is evaluated to determine whether the critical minerals from the chain have been (1) extracted or processed in the United States, or in any country with which the United States has a free trade agreement in effect, or (2) recycled in North America. “North America” means the territory of the United States, Canada and Mexico. This step determines the “qualifying critical minerals”. Calculate Qualifying Critical Mineral Content: Thirdly, the value of the “qualifying critical mineral content” in a battery needs to be calculated. Qualifying critical mineral content is to be defined as “the percentage of the value of the applicable critical minerals contained in the battery” that “were extracted or processed in the United States, or in any country with which the United States has a free trade agreement in effect, or were recycled in North America”. The calculation is made based on the percentage that results from dividing the total value of qualifying critical minerals by the total value of critical minerals. Battery Components Requirement
New Section 30D(e)(2)(A) provides that the Battery Components Requirement for a battery from which the electric motor of a vehicle draws electricity is met if the percentage of the value components contained in such battery that were manufactured or assembled in North America is equal to or greater than the applicable percentage set forth in the chart below, as certified by the qualified manufacturer of the vehicle:
Date Vehicle is Placed in Service
After April 17, 2023 and before January 1, 2024
During calendar year 2024 or 2025
During calendar year 2026
During calendar year 2027
During calendar year 2028
After December 31, 2028
The Proposed Rules provide a four-step process for determining the percentage of the value of the applicable battery components that contribute toward meeting the Battery Components Requirement.Components Manufactured or Assembled in North America: The manufacturers will need to determine whether each battery component in a battery was manufactured or assembled in North America. The Proposed Rule lays out treatment for “battery”, “battery cell” and “battery component” separately. Further “manufacturing” is defined as using industrial and chemical steps beginning with constituent materials and other components that do not contain constituent materials to create a new battery, where “assembly” is defined as the process for combining battery components into battery cells and battery modules. Incremental Value of Each Battery Component: Each battery component then needs to be assigned an “incremental value” and then divided into categories as to whether or not they were manufactured or assembled in North America. Sum of Total Incremental Value of Battery Components: The total incremental value of battery components should then be calculated for the applicable battery. Calculate the Qualifying Battery Component Content: Finally, the manufacturer needs to calculate the “qualifying battery component content” by finding percentage of the value of battery components contained in a battery that were manufactured or assembled in North America, determined by dividing the total incremental value of North American Battery components (determined in step 2 above) by the total incremental value of battery components (determined in step 3).
In applying these criteria to existing EV offerings, the effect does seem to be a winnowing of eligible EVs as evidenced by the U.S. Department of Energy’s listing of eligible vehicles, available here.EV Manufacturing Grants
Perhaps relatedly, the administration is also hoping to enhance the American manufacturing capacity for EVs, including its component parts. On June 28, 2023, the Office of Manufacturing and Energy Supply Chains (“MESC”) within the U.S. Department of Energy issued a Notice of Intent to Issue a Funding Opportunity Announcement relating to Domestic Manufacturing Conversion Grants. As another outgrowth of the IRA, MESC is looking to encourage domestic manufacturing capacity through $2 billion in grants, specifically deployed through grants and loan guarantees to clean vehicle manufacturers and suppliers, including component manufacturers. The opportunity will prioritize refurbishment and retooling of existing manufacturing facilities that have either ceased operation recently, or will cease operation in the near future. Funding opportunities may range from $25 million to $500 million, with MESC anticipating to make approximately 9-15 awards. Cost sharing by applicants is expected to be at least 50%. Applicants will also be judged on their Community Benefits Plan in addition to the technical merits of an application.
The notice of intent does not constitute a Funding Opportunity Announcement, and to the extent this opportunity is formalized, MESC will issue such a FOA. Nonetheless, this notice highlights yet another prong of the federal government’s overall push to transition the automotive transportation economy from internal combustion engines to electrified vehicles, with an emphasis on retooling the American economy to be a manufacturing hub for these vehicles. Funding opportunities like the one forecast in this notice of intent will hopefully enable even more EVs to be eligible for the EV Tax Credit.
Foley is continuing to monitor developments in the EV ecosystem and is available to help clients put these developments into practice for their businesses.
1 See our prior articles on EV infrastructure and EV developments from the federal government including: https://www.foley.com/en/insights/publications/2022/01/as-ev-adoption-rises-infrastructure-inflection, https://www.foley.com/en/insights/publications/2022/02/us-dot-releases-nevi-formula-program-guidance, https://www.foley.com/en/insights/publications/2022/05/doe-announces-3-billion-funding-supply-chain, https://www.foley.com/en/insights/publications/2022/06/us-dept-of-transportation-proposed-ev-charging, https://www.foley.com/en/insights/publications/2022/08/ev-charging-station-tax-credits-are-back, https://www.foley.com/en/insights/publications/2023/03/new-rules-ev-tax-credit-inflation-reduction-act, and https://www.foley.com/en/insights/publications/2023/04/us-dot-finalizes-ev-charging-infrastructure-rules.
Developing projects with renewable energy, energy storage, and hydrogen requires navigating a sophisticated collection of federal and state energy regulatory regimes. Thorny regulatory issues without a path to resolution can quickly become red flags in project M&A, debt, and tax equity transactions. On this episode of the Powered podcast, we are joined by Erin Bartlett to bring some clarity and highlight common traps for the unwary.
On the Powered podcast, Foley’s Renewable Energy Team will bring you the key issues of the day in the renewable energy sector and energy transition market, the people making projects and deals move forward, and put it all into perspective so you’re ready to tackle tomorrow.
Please subscribe to be notified of future episodes from Powered by Foley and related content from the Energy Current.
The Internal Revenue Service (“IRS”) and Department of the Treasury earlier this week released extensive proposed regulations relating to direct cash payments for certain tax credits pursuant to Section 6417 of the Internal Revenue Code (the “Code”) (the “Proposed Direct Payment Rules”) and transfers of certain tax credits pursuant to Section 6418 of the Code (the “Proposed Credit Transfer Rules”). In each case, taxpayers may rely on the proposed regulations until final regulations are promulgated, and parties interested in commenting on the Proposed Credit Transfer Rules or Proposed Direct Payment Rules before final regulations are issued may submit written comments to the IRS by August 14, 2023.
Additionally, the IRS and Treasury released temporary regulations relating to taxpayer registration requirements with respect to tax credits for which a direct cash payment will be claimed pursuant to Section 6417 of the Code and with respect to tax credits transferred pursuant to Section 6418 of the Code (the “Registration Rules”).Background to Section 6417 Direct Pay and Section 6418 Transfers
The Inflation Reduction Act (the “Act”), passed in August 2022, allows certain entities, including tax-exempt entities, states and political subdivisions, the Tennessee Valley Authority, Alaska Native Corporations, and Indian tribal governments, to claim a direct cash payment equal to the amount of certain specified credits under new Section 6417 of the Code. This election is available for the production tax credit under Section 45 of the Code (“PTC”), credits under Section 45Y relating to technology neutral PTCs beginning in 2025, the investment tax credit under Section 48 of the Code (“ITC”), credits under Section 48E relating to technology neutral ITCs beginning in 2025, and several other credits. Taxable entities may elect to claim cash payments in lieu of tax credits only with respect to the Section 45Q carbon capture and sequestration credits, Section 45V hydrogen production tax credits, and Section 45X advanced manufacturing production tax credits, and subject to certain limitations provided in the Act. The election must be made no later than the due date for the tax return of the year in which the election is made.
The Act also permits taxpayers to sell all (or a portion of) ITCs, PTCs, Section 45Y PTCs, or Section 48E ITCs (as well as certain other tax credits) to another taxpayer under new Section 6418 of the Code. The election to transfer must be made no later than the due date for the tax return of the year in which the credit is determined (or, for a transfer of the PTC or Section 45Y PTC, for each taxable year during the 10-year period beginning on the date the facility is placed in service). Once made, the election is irrevocable.
To properly sell credits, the buyer must pay for the credit in cash, and the buyer is not allowed to deduct the amount paid for such credit or subsequently transfer the credit. The payment will not be included in the gross income of the seller. Penalties apply for excessive credit transfers.Proposed Direct Payment Rules
The Proposed Direct Payment Rules provide guidance on a number of issues relating to the direct payment of certain tax credits, including additional detail regarding certain eligible entities, rules relating to how the applicable tax credit amount is determined, clarification regarding how certain taxpayers eligible for credits under Section 45Q, 45V or 45X may elect to claim cash payments under Section 6417, reporting requirements, rules related to reasonable cause to avoid the 20% penalty for excessive credit transfers, anti-abuse rules, and other election mechanics. Among the highlights:Non-profit organizations without federal tax-exempt status are not included as eligible entities under Section 6417.However, eligible entities include the government of any US territory or political subdivision and the District of Columbia. Instrumentalities and agencies of states are also permitted to receive cash payments.
Partnership and S corporations are not considered eligible entities permitted to sell ITCs and PTCs, even if all partners or shareholders, as applicable, are otherwise eligible under Section 6417.
As expected, the tax credit amount is determined without regard to the restrictions regarding use of property by tax-exempt organizations and government entities, and by treating any property with respect to which such credit is determined as used in a trade or business of the applicable entity.
To the extent the eligible entity receives any tax-exempt amounts for the specific purpose of purchasing, constructing, reconstructing, erecting, or otherwise acquiring an investment credit property, such amounts generally do not reduce the amount of cash payments that the eligible entity may receive. However, if such amounts plus the applicable credit otherwise determined with respect to the investment credit property exceeds the cost of the property, then the amount of the cash payment is subject to reduction.
If an election is made pursuant to Treasury Regulations Section 1.48-4 to pass through ITCs to a lessee of property, an election may not be made under Section 6417 with respect to such ITCs. In addition, no election may be made under Section 6417(a) for credits purchased pursuant to Section 6418. Proposed Credit Transfer Rules
The Proposed Credit Transfer Rules provide guidance on a number of issues relating to tax credit transfers, including which taxpayers may transfer credits, rules relating to recapture of certain tax credits, timing for transfers and claiming transferred credits, reporting requirements, rules related to reasonable cause to avoid the 20% penalty for excessive credit transfers, anti-abuse rules, and other election mechanics. Among the highlights:Recapture of any ITCs (and any other tax credits subject to recapture) is taken into account by the buyer. However, the transferor must notify the buyer of any recapture event, the Proposed Credit Transfer Rules expressly permit indemnification relating to recapture of the buyer by the seller, and any recapture event occurring at the partner or S corporation shareholder level of the selling partnership or S corporation, as applicable, would not result in recapture to the buyer.
As expected, for partnerships and S corporations that hold a facility or the property giving rise to the credit, the election to transfer credits must be made at the entity level. The Proposed Credit Transfer Rules do not permit individuals partners or S corporation shareholders to sell their allocable share of tax credits.
If an election is made pursuant to Treasury Regulations Section 1.48-4 to pass through ITCs to a lessee of property, the ITCs may not be transferred by the lessee. However, the purchaser of property engaged in a sale-leaseback transaction may transfer ITCs to another taxpayer.
Expressly permits arrangements using brokers to match eligible selling taxpayers with tax credit buyers, so long ownership of the tax credit does not pass to the broker or other taxpayer prior to being sold to the buyer.
For partnerships and S corporations, allows tax-exempt income resulting from a transfer of less than all eligible credits to be allocated to partners or S corporation shareholders, as applicable, that desired to transfer their share of the underlying credits.
Confirms that, with respect to a tax credit buyer, there is no gross income to a buying taxpayer when claiming an eligible credit if the amount paid for the eligible credit is less than the amount of the eligible credit transferred and claimed.
The passive activity credit rules under Section 469 of the Code would apply to tax credit buyers in determining whether they are eligible to claim purchased tax credits.
Provides guidance for taxpayers to establish reasonable cause to avoid imposition of the 20% penalty with respect to excessive credit transfers. Registration Rules
The Registration Rules adopt a pre-filing registration process for eligible entities intending to claim direct cash payments pursuant to Section 6417 of the Code and to sellers engaged in tax credit sales pursuant to Section 6418 of the Code. In connection with the pre-filing registration process, each taxpayer required to register will be required to provide certain information through an electronic registration process through an IRS portal, including the identity of the applicable taxpayer, all applicable credits with respect to which it intends to claim cash payments or sell, and each applicable credit property that contributed to the determination of such credits. These pre-filing registration procedures are intended to permit the IRS to prevent duplication, fraud, improper payments, or excessive payments. In each case, upon completion of the pre-filing registration process, the applicable electing party (either the direct payment claimant under Section 6417 of the Code or the seller of tax credits under Section 6418 of the Code) will be provided with a registration number that it will be required to include on its tax return claiming the direct cash payment or identifying the transferred tax credit, as applicable. In the case of tax credit transfers under Section 6418 of the Code, the buyer taxpayer will be required to include the applicable registration number in connection with claiming the applicable transferred credit.
Although the guidance is comprehensive, certain issues are not resolved by the guidance that was released yesterday, and Foley will continue to monitor developments relating to tax credit transfers and direct cash payments.
To those who have been with us since our inception in 2009, as well as to those who are just joining us now for the first time, here’s a brief summary of what we at 2GreenEnergy are all about. We offer:
• A platform on which we connect cleantech entrepreneurs with sources of investment capital.
• A free hot-line for those wishing to discuss any aspect of renewable energy, efficiency solutions, electric transportation, smart grid, energy storage, sustainable agriculture, i.e., any business concept within the vast subject of environmental stewardship and the alleviation of human suffering.
• Through Craig Shields’ track record of success as a marketing consultant to the Fortune 500 tech companies (see partial list here), we provide a unique approach and capability to positioning, branding, demand generation, online marketing, content development, public relations, sales channels development, the creation of relations with strategic business partners, and business development.
• A steady flow of news and opinions on cutting-edge solutions within the realm of cleantech.
• Intern programs for those wishing to hone their skills at researching and writing on topics pertaining to clean energy and sustainability more generally.
• A forum for the discussion of any facet of the technology, economics, and politics surrounding the migration to clean energy and sustainable lifestyles (i.e., this blog, with more than 7,000 posts and 16,000 comments).
• Dozens of free reports on forwarding your cleantech business concepts, e.g., the “8 Tips” shown here.
Again, we’re very happy to have you here. Hope you’ll stick around.
When we look at everything we want from government: better education, universal healthcare, common sense gun laws, etc., we see immediately why all these items are out of our reach; Big Money is interfering with our lawmaking processes.
The most obvious remedy for this is a constitutional amendment that would overturn the 2010 Supreme Court decision “Citizens United,” which provides corporations the right to spend much as they like influencing our elections. The high court found that the First Amendment’s protect of free speech applied to corporations, and now, here we are as plain U.S. citizens, disenfranchised from our democracy.
The words of the late Ruth Bader Ginsburg speak for the vast majority of American voters.
There is great deal to be said for free enterprise, but maybe there is even more to be said for putting limits on the exploitation of the desperately poor.
Ask yourself: what political philosophy put an end to child labor as depicted here, as well as the countless other atrocities? The conservatives/ libertarians or the progressives?
Twain was a humorist and not an anthropologist, and thus we can accept what he said here with a grin, even though it’s clearly untrue.
Religion was one of humankind’s first attempts to explain natural phenomena, before science came along and gave us another way forward.
The concept of a God in the sky, commanding us to worship and obey Him, in exchange for His love and protection–even after the death most of us fear–made perfect sense at the time, just as it does for many of us today.
At left is an ad whose copy reads: In addition to the damage to local communities, solar “farms” can cause deforestation, destruction of wildlife habitats and disruption of ecosystems.
Think for a moment of the places you’ve seen where utility-scale solar PV has been deployed. Do they look anything like a place that poor Bambi here might live?
As anyone with any sense at all would guess, the permitting process for solar farms is incredibly rigorous in terms of environmental consequences.
But don’t think for a minute that the fossil fuel industry isn’t going to trick you into preventing the fall of their enterprise.
This New York Times podcast on the changing perspective on the value of a college education examines the two most powerful forces at work:
1) Personal finances. Until quite recently, one of the broadest assumptions about parenting in the U.S. was that, almost without exception, children should go to college, primarily because of the “income delta.” I.e., their income stream over the course of their lifetimes has historically been significantly higher than that of their high school diploma-only counterparts. Now, the rising tuitions and other costs, exacerbated by the student loan debt burden that many graduates carry with them through the bulk of their lives, has largely destroyed this economic model.
2) Politics. Conservatives find their viewpoints underrepresented vis-à-vis liberals among students, and more importantly, professors. As a result, many modern-day Republican families find the entire college experience objectionable. This position is reinforced by right-wing media, an entity that hadn’t fully taken form and penetrated our society so deeply until the last decade or so.
One thing that never seems to be discussed in conversations like these are the intangibles, issues that are not directly related to finance or politics. It could be argued that college graduates enjoy richer lives, in a broad sense of that word, and that this should count for plenty. They are more likely to enjoy reading and museums, to travel outside the U.S., to learning foreign languages, and to take pleasure from intellectual pursuits like astrophysics and philosophy.
We need to consider the factors that affect enjoying their careers. It makes sense that teachers and doctors take a higher level of reward from their careers than auto workers or employees in the retail industries.
Of course, this is a truly subjective matter, and perhaps that’s why it’s avoided by podcasters. But it’s a shame that we have learned so little from Socrates (“the unexamined life”), and the words of Confucius, Gandhi, Marcus Aurelius, and the thousands of others who came before us, each of whom sought to teach us the value of learning, wisdom, and the pursuit of virtue.
If we have only one shot at life, shouldn’t it be our best one?
One of the great mysteries in U.S. politics is how the Democrats lost their connection to the working class. Until very recently, there was a huge stasis in this country in which labor aligned with the Democratic party, and management aligned with the Republicans.
My theory, and I know I’m not alone here, is that:
• Almost all the new wealth that came into the United States over the last 40+ went to the upper 1%, which gutted the middle class, and left more than half the country with virtually no savings, living paycheck to paycheck, and deeply frustrated.
• Educational standards declined sharply over this period of time.
• Republicans, Trump in particular, exploited this combination of ignorance and frustration, blaming the Hollywood elite, the Deep State, Dr. Fauci and other “corrupt” scientists, immigrants, people of color, and liberal “wokeism” for the financial pain that is inflicted on white America’s workers.
Having said all this, it is quite possible that the great labor strikes of the day will be effective at alerting us to the plight of labor.
It’s also true that the GOP has gone too far for even the most poorly educated Americans. Its leader by a huge margin is Donald Trump, who, by virtue of his status as a traitor to his country, doesn’t stand a prayer in the 2024 election.
In many ways, we’re a pathetic country, the butt of jokes from peoples around the globe. But even many Trump supporters have a limit, one that was crossed when the former president came within a gnat’s a** of overthrowing the U.S. government.
Yes, I did. In fact, in the early 1980s, I was a consultant to a company that owned Chevron stations all over Northern California.
That was 40 years ago, and since that time, the entire world has learned that investing in fossil fuels means profiting from the destruction of the life-supporting capacity of our planet.
And like most decent human beings, I would never again participate in that atrocity.
A couple of points on the meme here:
Nike is worth $146 billion and change. They’re among the top brands on the planet, and they don’t care what a former Yankees pitcher thinks.
The vast majority of Americans pride themselves on their concern for the well-being of others. We don’t care what a hateful moron thinks, either.
Apparently, there is still a conference for small wind, defined as anything under 25 KW, to be held this year in Jutland, a remote part of Denmark (see map).
Perhaps the site was chosen because it’s one of few places on Earth where small wind makes sense: huge wind resources, and a low, dispersed population of environmentally concerned citizens. There are only six million people in the entire country, and almost all of them in or around Copenhagen.
Check out the photo below. Wish I could be there.
We are coming to meet you this year at Husum Wind (Husum – Germany) from 12th – 15th September!
We’d love to share insights into how you can increase the risk adjusted returns for your EEG portfolio and share our view on market-based reference prices for hydrogen and ammonia across long term agreements.
Visit our booth in Hall 2 – No. 2C01 for a decent coffee and interesting company.
To guarantee a meeting slot with us, we recommend you fill out this form on the left.
Choose one most relevant topic to discuss with our team of energy sales and green hydrogen experts:
Your Hedging and Optimisation Opportunities (Utilising 1-3 year Contracts)Find out how you can increase your fixed power prices by 15-25% and optimise your “Direktvermarktungs” tender
Market-based Reference Prices for Hydrogen and Ammonia
PPA Pricing Data and Market TrendsDiscover Europe’s trusted PPA pricing data, understand how volatilities are impacting your green energy pricing and identify key markets, technologies and PPA structures that pay more
Your (future) PPA TransactionsUnderstand the key concepts of how you can optimise commercial contracts during and post EEG and/or possible combinations with storage
Reserve your meeting slot with us and expect decent coffee and valuable insights!
We’ll also be presenting at Husum Wind in Hall 2 on the following topics:12th September, 15:00-15:20 – Come and listen to Jonas Nihoej present: ‘Learn how market leaders enhance risk-adjusted returns for their EEG Portfolios’ 13th September, 15:00-15:20 – Hear Rommero Lagoeiro Carrillo discuss: ‘Benchmarking and Pricing Green Hydrogen’
See you in Husum!
When: 12th – 15th September 2023
Where: Hall 2 – No. 2C01. Messe Husum & Congress. Am Messeplatz 12-18 25813 Husum, Germany.
The long-awaited next phase of renewables-plus-storage is finally approaching the mainstream!
Our market research indicates a massive renewables-plus-storage momentum and a sizeable pipeline ready for some clarity to reach a final investment decision. How can asset owners, IPPs and Funds optimally value their hybrid projects?
Pexapark’s energy storage desk reports for duty! In this guide you will learn:Foundational considerations for the technical set-up to inform the commercial strategy of the hybrid assets The value streams available to renewables-plus-storage assets, and the challenges of capturing competing revenue streams The pros and cons of Hybrid PPA contractual arrangements available in the market, and what drives their pricing Diverse dynamics driving co-location deployment in key European markets, including the UK, Germany, Spain and the Nordics accompanied by region-specific case studies
Download our report, bringing together our in-house expertise and contributions from Fluence, a global market player in energy storage products and services, to delve into the juicy era of co-location!
Our summary for 2022 is ‘disarming price volatility’. As the strongest underlying force impacting the energy markets, the repercussions were shaking at times. But a rainbow after the storm is about to emerge.
After a truly unconventional year, we are thrilled to present our “European PPA Market Outlook 2023” report with our 50-page analysis of how its major events define our 2023 expectations.
This report will give you insights on:A 360° review of PPA deal making in 2022: How did the market perform a miracle PPA activity? The outstanding impacts of exorbitant volatility, and our outlook for key themes: Baseload vs Pay-as-Produced, Short-term PPAs, EU-wide regulatory risk assessment and more Our Top predictions for 2023: the definitive distillment of what to expect
2022 was the ultimate ‘shock therapy’ for renewables. But the learning experience and the adaptation of the market is inspiring.
Download our largest report to date to find out what the future of subsidy-free renewables holds.
Demand for reliable price data expected to hit new high in 2023 as renewables investors and lenders seek more certainty on investment and PPA decisions Joint product combines futures and fundamentals to provide a consistent valuation framework for the full lifetime of renewable energy projects
Pexapark and AFRY have formally launched the ‘Daily Valuation Curve’, a new pricing data offering that will give investors and lenders greater certainty over the lifetime value of renewable energy projects.
The result of a partnership between Pexapark and AFRY, confirmed in Q4 2022, the Daily Valuation Curve seamlessly combines Pexapark’s market-based price approach, trusted by 150+ energy companies, and AFRY’s unique fundamental price curves – which have been a long-term reference point for the energy industry for over 20 years.
By providing a consistent valuation framework and distribution of price scenarios for the short and long-term it overcomes a longstanding obstacle to reliable investment and portfolio management decisions, as well as Power Purchase Agreement (PPA) pricing.
The product has been launched at a moment when demand for reliable pricing data to support renewable energy investments is at an all-time high.
Early findings from a market survey polling over 1,255 energy market participants reveal that future prices within the liquid time horizon and fundamental price curves, combined with independent market reports, represent the top three sources of data currently used by renewables investors.
Furthermore, both future prices and fundamental price curves are expected to top the list of new data services procured by renewables investors in 2023 – followed by generation forecasts, real-time data from exchanges and power networks, as well as independent market reports.
Dr. Jan Wierzba, Senior Principal, AFRY Management Consulting, said: “These recent survey findings highlight the importance to investors of combining short-term future prices accounting for current market volatility, with long-term fundamental price curves that track changes in technologies and commodities.
But these two pieces of price information are a bit like water and oil – they do not easily mix. This is where the unique ‘blending’ methodology developed for the Daily Valuation Curve will bring great benefits for new and existing assets alike.”
Luca Pedretti, COO & Co-Founder, Pexapark, said: “PPA markets have evolved dramatically over the last year. Faced with market volatility and regulatory change, renewables stakeholders are rapidly arming themselves with data, tools and systems they need to evaluate risks, close PPAs, and make confident investment and portfolio management choices.
Innovative products such as the Daily Valuation Curve, we believe, will become a standard data set required for investment decisions that drive forward the energy transition.”
The Daily Valuation Curve is now available through Pexapark’s Price Reference Platform, PexaQuote, and to users of AFRY’s Independent Market Reports.
Pexapark is an award-winning enterprise software and advisory company, specialised in renewable energy. With more than 21,000 MW of renewable PPA transactions supported, Pexapark is the reference for buying, selling and managing renewable energy.
Founded in 2017 with the purpose of accelerating the energy transition towards net zero by creating an efficient market for renewable energy, Pexapark’s PPA reference prices increase transparency across 19 markets and 34 price zones. Our advisory team and software suite enable leading companies to close successful PPA transactions, manage their risk and grow their renewable energy revenues.
Get in touch with firstname.lastname@example.org for more information.
AFRY Management Consulting works globally to address challenges and opportunities in the energy, bioindustry, infrastructure, industrial and future mobility sectors through forward looking market analysis, strategic advice, operational and digital transformation as well as M&A and transaction services.
Stockholm / Zurich, 14 November 2022 – AFRY and Pexapark have entered a partnership to develop the market’s first ‘Daily Valuation Curve’, providing renewables investors, developers and portfolio owners with a consistent valuation framework that covers the full lifetime of renewable energy projects – from short term market-observed prices to long-term price simulations.
The new offering, combining Pexapark’s market-based pricing approach and AFRY’s fundamental price curves is designed to give renewable energy investors and lenders a consistent valuation across all investment tenors.
Renewables investors, developers and portfolio owners rely on market-based forward price curves to value their assets, close Power Purchase Agreements (PPAs), understand and manage their risks, and make investment decisions.
However, different approaches are used for different time frames: In the first 5-10 years, market-based approaches, established by Pexapark, are most effective, but renewable asset lifecycles can be up to 40 years and require fundamental curves to understand long-term investment risk. Currently there is no standardised procedure for combining these methodologies.
Investors therefore lack a single consistent approach for valuing energy positions and assessing price volatility throughout the lifetime of their projects. This poses significant risks and obstacles to confident pricing, valuation, investment and hedging decisions.
In response, the teams at AFRY and Pexapark have developed a methodology to create a single pricing curve for the entire lifetime of a renewable energy asset, combining both market data and fundamental data. This ‘Daily Valuation Curve’ seamlessly combines Pexapark’s trusted market-based pricing approach and AFRY’s industry standard up-to-40-year fundamental price curves.
Overseen by an expert committee of the two companies, this standardised ‘blended’ product will capitalise on the strengths of both trusted, alternative methodologies. It will create a much-needed, consistent valuation framework, providing greater certainty to renewable energy investors navigating market volatility and driving forward the energy transition.
Luca Pedretti, COO & Co-Founder, Pexapark, said: “To effectively value their renewable energy assets and manage risks in this new volatile world of energy trading, investors need to look both within the 10-year time horizon and beyond. Market-based and fundamental pricing methodologies are not at odds with each other, but to date the industry has simply lacked a clear framework for ‘joining the dots’.”
Dr. Jan Wierzba, Senior Principal, AFRY Management Consulting, added: “We are excited to pool our strengths, capabilities and passion to address this challenge for AFRY and Pexapark customers, and provide a trusted, versatile and convenient solution that helps investors, banks and lenders focus on their core business of financing, developing and operating renewable energy projects.”
The ‘Daily Valuation Curve’ offering will first be made available to selected AFRY and Pexapark clients, before it is rolled out more widely to users of AFRY’s Independent Market Reports and the PexaQuote platform in Q1 2023.
Pexapark is an award-winning enterprise software and advisory company, specialised in renewable energy. With more than 21,000 MW of renewable PPA transactions supported, Pexapark is the reference for buying, selling and managing renewable energy.
Pexapark’s PPA reference prices increase transparency across 19 markets and 34 price zones. Our advisory team and software suite enable leading companies to close successful PPA transactions, manage their risk and grow their renewable energy revenues.
Pexapark was founded in 2017 with the purpose of accelerating the energy transition towards net zero by creating an efficient market for renewable energy.
For more information, please get in touch with us at email@example.com
AFRY Management Consulting works globally to address challenges and opportunities in the energy, bioindustry, infrastructure, industrial and future mobility sectors through forward looking market analysis, strategic advice, operational and digital transformation as well as M&A and transaction services.
With more than 500 consultants across over 20 offices on 4 continents, and supported by 17,000 experts at AFRY in engineering, design and digitalisation, we are driven by the idea of helping our clients find solutions to business-critical questions. We don’t care much about making history. We care about making future.
You know you want a Corporate PPA and all the perks that come with it. You issue a tender and receive plenty of bids. Do you know how to read the numbers? We created a guide to explain the main drivers behind Corporate PPA pricing in simple terms.What is a Corporate PPA?
A Corporate PPA is a bi-laterally negotiated contract between an energy seller and a corporate entity looking to buy energy for own consumption. It’s a tailor made arrangement defining the duration, the volume, the price and the risk allocation between the two parties. The tenor of a PPA is usually long-term (≥10 years), but there are also shorter arrangements which are getting more popular.
Corporates can buy either straight from the asset owner (developer) or through a utility/trader which needs to manage its position. Both options can serve the purpose of a corporate PPA. Some corporates want to have close contact with the asset they are buying from, so for additionality reasons they would prefer to sign a contract with the asset owner. It’s worth noting that often utilities own generation assets as well.What determines Corporate PPA pricing?
PPAs take a long time to negotiate, although deal-making becomes quicker as the market matures. One of the most strategically important elements to agree upon is the price. The PPA price is not an independent, standalone element of the negotiation but a result of multiple negotiation points.
Pricing a PPA is dependent on some elements:
LCOE of the project – When project owners start establishing the negotiation range of the price they are willing to sell their hard-generated MWh, the very floor they will set is their Levelised Cost of Energy (LCOE) to cover their basic costs and calculate the desired profit accordingly.
LCOE is not just the project owner’s consideration. Many buyers who wish to enable new projects to get financed, built and come online (additionality) want to make sure that the PPA price they are offering achieves this goal. LCOE costs coming down over the years is a primary driver of more buyers having the ability to agree on competitive prices.
In the past, LCOE costs were significantly higher and green energy would come with a premium. Even though renewables achieved a steep decline in their costs, LCOE levels change depending on a number of factors.
For example:Supply chain ease, especially when materials need to be imported from abroad Costs of materials, which are dependant on the price of multiple commodities such as metals Development costs based on elements such the amount of bureaucracy or the price of land, or the valuation of ready-to-build projects often acquired by players not taking development risk Grid connection costs
Even though corporates signing a PPA with utilities sometimes don’t have a link to a specific project (except if the utility owns the project), LCOE is already incorporated in the utility’s price for the energy from the renewable project.
Corporates starting a negotiation for a PPA backing a new project need to ask as much as possible about how LCOE costs are evolving. Costs often change, resulting in requests from the seller to re-negotiate the initially offered PPA price.
Market-based fair value of the energy – Electricity is a particularly volatile commodity. Prices change based on market circumstances, and electricity’s fair value changes at each point in time. For example, today’s market value of electricity can be seen on the spot markets.
But PPAs are long-term contracts, so the parties need to review how much buyers pay today for electricity delivered in the future. One of the main tools to assess the long-term market value of electricity is futures and forward markets; the main elements of what is commonly referred to as the forward curve.
Daily evolution of PEXA Euro Composite, December 2018- October 2022
The forward curve is a core element of Pexapark’s benchmark PPA prices model, which is back-tested with market evidence of transacted deals pricing. Our signature PEXA Euro Composite illustrates the average PPA prices across all European markets, for all technologies, for a 10-year Pay-as-Produced (PAP) PPA starting one year ahead. Although the Index does not represent benchmark prices, it does illustrate a trend.
As pricing information for futures transactions is obtained daily from exchanges, benchmark PPA prices indicating the fair value of each PPA product are updated accordingly.
Electricity is the most volatile commodity. Day-to-day percentage price changes have reached up to 230%. However, not all periods are the same – and this is where market circumstances come into play. Realised volatility is significantly higher in a turmoil period than in a relatively stable period.
Electricity, and therefore energy, is a global game. Innumerous actors are impacting pricing on a daily basis. Therefore, the timing of when buyers and sellers sign the agreed PPA price is important.
Risk allocation and discounts – A PPA is a game of risk allocation. Every risk has a price, and depending on who’s assuming it, the PPA price evolves accordingly.
For example, the fair market value of a PPA changes depending on the volume structure.
In a Pay-as-Produced (PAP) PPA, the buyer will offtake any MWh produced at any time of the day. This means that profile risk sits with the buyer. The corporate will need to buy energy from the market during the hours that the plant is not producing.
In an Annual Baseload PPA (BLA), the producer has to deliver a determined amount of energy every hour of the year. This means that profile is mostly with the seller. Because if the plant is not producing the required amount of energy, they will have to buy from the spot markets to honour the agreement with the buyer.
Finland onshore wind 10-year PPA, PAP and BLA pricing comparison
Source: PexaQuote Note: Values hidden to protect customer value
Baseload PPAs come with a price premium because of the seller’s additional risks. Similarly, PAP is a cheaper option for the buyer, because of the profile discount applied on the buy side.
Profile risk is only one of the major risk components, and based on readily available tools such as PexaQuote can be calculated in seconds. There are major risk components such as price risk, volume risk and capture risk that also need to be reflected in the price – and this is where the negotiation game begins. The secret sauce is the ability to fairly quantify the ‘cost’ of each risk.
For example, when a corporate launches a tender and receives bids from various sellers, these will typically look fairly different. That’s because they carry different risks, and are also priced based on the seller’s appetite. A corporate needs to be in a position to learn to read the numbers between the lines.
Tenor of the PPA – To a certain extent, the length of a PPA reflects the price risk. How much does a corporate ‘charge’ the uncertainty of agreeing on a long-term fixed price? Typically, the longer the tenor, the lower the price because of the price risk discounts applied.
The tenor of a PPA is an increasing concern amid market turmoil periods, where uncertainty is high. For example, a high-pricing environment in the spot markets also results in increases in the forward curve, ‘transferring’ the potentially temporary high prices to the long term. In such occasions, some corporates may pay a higher price for a shorter-term PPA, in exchange of the limited price risk appetite they demonstrate.
German PAP solar PPA, 10-year and 5-year tenor comparison
Source: PexaQuote Note: Values hidden to protect customer valueAre corporate PPAs fixed-price?
Most corporate PPAs are fixed-price, but this doesn’t mean there are not diverse configurations. Ideally, buyers and sellers want cash flow certainty, so fixed-price serves both parties. In fixed pricing, both parties take pricing risk. The seller agrees on a price no matter whether prices could increase in the future, and the buyer takes the risk of prices decreasing over the tenor of the PPA.
Other pricing structures include configurations that have a bigger linkage to the movement of prices. It could be a floating price arrangement, where the PPA price mirrors movements in the spot markets; a floor price where the seller sets a minimum price no matter how much prices fall; or a collar price with both a floor and a ceiling.Is there a difference when pricing a virtual PPA and a physical PPA?
No, there shouldn’t be. The only time that attention needs to be paid on the price is when the point of consumption is different to the point of production. This can happen when a country has different pricing zones or cross-border PPAs. You can find out more about the topic in our dedicated guide on cross-border PPAs.
You can discuss more on corporate PPAs with our in-house experts Alex Fels, Senior PPA Origination Manager, and Jorge Seabra, PPA Originator! Feel free to reach out to firstname.lastname@example.org for a coffee!
We are excited to present Pexapark’s first report based on Europe’s most extensive industry survey on market players operating in the open markets!
In an ever-changing environment, knowledge is king. Having collected valuable data from over 1,255 individuals across 64 countries, we embarked on a mission to unravel the secret ingredients behind renewables’ ambitious plans.
This report will give you insights on:Key strategies sellers such as developers, IPPs and investment funds are adopting to support competitive growth targets Trends in corporate clean energy procurement and decarbonisation planning Data, software and capabilities deemed as most critical to market participants in the era of merchant risk
Alone we could run fast, but together we could run further. That’s why our ambitious initiative leveraged the expertise of our partners both in the engineering and the interpretation of our mega survey. Download our latest report and enjoy the dive!
Pexapark’s survey partners:
Nobel-prize economist Harry Markowitz argued that diversification is the only free lunch in investing, which was our inspiration behind the title of this report.
But what did he mean by this? It’s a reference to a good diversification strategy’s primary benefit: the ability to increase return on investment without increasing your risks!
In this guide, you will learn:Why the ability to quantify diversification benefits is an investor’s newest ally through applying the Modern Portfolio Theory (MPT) in a renewables portfolio How correlations will reveal value in your portfolio you never knew existed Key steps to reach a portfolio view, including the necessary pre-work data Material lessons learned from a real-life case study comparing five portfolios across Europe
Our guide, curated particularly to address the needs of Independent Power Producers (IPPs) and clean energy funds, dives into the details of how to quantify your diversification benefits, which could mean saving millions in unnecessary hedges. Better from simply a free lunch, right?
A well diversified portfolio can lead to numerous benefits, and the renewables industry appears to know that, in theory. What is missing though, is the ability to discover the hidden value of diversification through developing a portfolio view.
Download our guide, and enjoy the deep dive!
Encavis AG is a pan-European Independent Power Producer (IPP) and asset manager. Based in Hamburg, the SDAX-listed solar and wind operator’s own portfolio currently comprises more than 210 renewable energy plants with a total capacity of 1.97 GW.
Most of Encavis’ portfolio generates stable yields through Feed-in-Tariffs (FiTs) and Power Purchase Agreements (PPA). But this will change moving forward. As the subsidy route is increasingly unavailable and often offers fewer opportunities, Encavis has been targeting the post-subsidy business model for its future growth. This strategic decision required a series of changes and adaptations.The opportunity
Encavis had a goal: to develop a competitive edge in the changing renewables market. For an IPP to enter the next growth phase in the new era, scalability is key. And Encavis knew that.
As a guiding principle, the company set a target to grow its operational portfolio to at least 3.4 GW by 2025. Shifting from an opportunistic single-assets acquisition model, the company took matters into its own hands regarding developing its portfolio. Following the sentiment that soon the M&A market would become a seller’s one, Encavis embarked on a plethora of strategic development partnerships as the basis of the growth journey. Starting with Solarcentury in 2017, Encavis currently counts more than 12 similar partnerships across Europe.
The key idea behind the strategy is optimising portfolio effects to increase margins. “Economies of scale and economies of scope are much more important than in the past,” says Dierk Paskert, CEO at Encavis. “In the past, we were focusing on margins for every single asset, but in the future, we believe that we will achieve a significant outperformance through active management of our portfolio as a whole,” he adds.The challenge
The renewables industry has a unique oxymoron: over the past 20 years, it has generated a massive turnover by selling energy without ever needing a sales department. Of course, that’s because state subsidies were doing the trick. But not anymore. For energy players, this change requires an entire mindset shift.
“We knew that our internal structures and procedures had to change in order to cope with the new challenges in the market,” says Dierk Paskert. “We started strategising more than 18 months before implementation,” he adds.
The new shift required a complete re-engineering of the firm’s operating model, and the transition had some challenges to overcome. In the past, revenue estimations, production monitoring and marketing of the power were not of concern. But now, these moving parts need to be handled with new capabilities.Shareholder engagement
Communicating a new business model to existing shareholders is always very delicate.
“When we started the transformation journey, we could still acquire projects with FiTs, and PPAs were only a fairly small part of the market. Convincing the entire board that this change is now necessary was a first hurdle to overcome,” Paskert says.
The firm’s business model performed a 180o turn. Initially, Encavis’ model was a purely financially-driven one focussed on energy yield, where energy was merely a product but there was no managing of its value. Now, it is completely geared towards energy sales management.
“We aimed to educate our shareholders and inform them of the new risks and how we handle them. With Pexapark’s help, we did this successfully. Overall, we are running our business with the same shareholder base we had 2-3 years ago, and we are proud of this achievement,” he continues.New departments and internal re-organisation
When a firm targets a new operating model, it needs to change internal structures and set new procedures. Encavis needed to redefine how new and old departments interact.
The new departments that were clearly established after the re-organisation are:
PPA Origination – A dedicated team to handle energy sales through bi-lateral PPA contracts.
Energy Portfolio Management – The team managing the merchant exposure of the power plants. Not all the expected output is contracted through long-term contracts such as PPAs. This remaining part of each power plant needs to be actively managed in the market, because it could provide a significant upside.
Energy Risk Management – When operating in merchant markets, there are certain risks associated that were not present before. Encavis needed to identify and analyse how volatility in the electricity markets, regulatory changes or any contractual element beyond its control can affect the overall strategy and expected revenues at any time. In short, what the risk exposure is at any time.How we helped
Encavis successfully completed a 2-year long organisational transformation. Pexapark not only provided the enterprise software solutions as necessary tools for this change, but also offered hand-in-hand advisory services along every step of the way.
“Pexapark was our navigator and guide in that journey,” Paskert says. “The company brought competence to the table that we were still missing by navigating us through different tasks, challenged us, and gave us a good view of what lies ahead of us.”
The scope of services provided to Encavis included:PPA pricing data through our pricing reference platform PexaQuote and PPA Transaction advisory services for the PPA Origination desk Trading-as-a-Service (TaaS) advisory for the Energy Portfolio Management desk Risk Services for the Energy Risk Management desk
The Energy Risk Management desk was build-up from scratch, and was the most strategically important to implement. Because it involved moving Encavis’ entire portfolio to PexaMonitor – our enterprise software solution which provides real-time insights on changing risk exposure, combining pricing intelligence and physical operational data in a single view.
“In order to ensure that our revenue targets will be achieved, we have to monitor our risk exposure at any time, set our limits and make sure these are adhered to in the organisation,” Paskert says. “And when those limits are about to be reached, we now have someone raising red flags to have adequate time to act accordingly,” he adds.The future
Now that the new target operating model has been implemented at its fundamentals, the aim is to increase efficiency and scale up. Pexapark is still supporting Encavis on day-to-day adventures that come after the implementation phase, providing continued support.
“Pexapark is a very valued partner for us in running our new operation model,” Paskert says. “I haven’t come across a day where we didn’t have any learnings,” he adds.
We are looking forward to seeing Encavis reach its milestones, and we will continue to support the firm’s bold targets through the unique Pexapark way. Such transformations constitute only the beginning, and we will be there to tackle new challenges over the journey.
If you’re looking for the next phase of growth, reach out for a coffee chat to Kashif Javaid, Head of Sales at Pexapark at email@example.com to discuss your needs.
Many renewable energy players are new to the concept of an ETRM. In this article we will provide a few quick answers to the most frequently asked questions around the topic, some of which may surprise you!What is ETRM?
Energy trading risk management (ETRM) is an enterprise software solution that enables the management of energy commodities’ physical and financial trading. You may have heard of CTRM as well. The difference with Commodity Trading and Risk Management (CTRM) software is that the latter includes all kinds of commodities, not limited to energy-related ones. For example, metals, agriculture and ‘softs’ such as cotton. Therefore, the differences lies in the scope of traded commodities.Who uses ETRM system?
ETRM systems have been traditionally used by large trading houses and utilities managing a plethora of energy commodities, primarily natural gas, LNG, oil, crude oil, refined products and electricity. They have been so popular in that sector because they facilitate hundreds of transactions and deals daily, which is in line with the primary business model of trading houses, for example.
This is due to their ability to link the different steps of the trading cycle, connecting business processes conducted across the front, middle and back offices, which has proven very useful for traders and utilities.
Traders & Utilities Typical Set-Up
Execution of physical or financial contractsCapture of all trades and deals Market access & bid management
Risk ManagementMonitoring of risk exposure Hedging performance Risk reporting
Trade settlementProcess of daily trades and invoicing Management of financial transactions What are ETRM consultants?
ETRM consultants perform two functions. First, they help identify which ETRM solution best fits their client’s needs. Typically, a consultant helps the client launch a tender with what services they need and manages the request for proposals (RfP). Not all ETRM solutions offer the same functionality. The elements included in the ‘packaging’ are subject to many factors, such as the size of a portfolio, the variety of commodities included in the portfolio, and the level of sophistication the client needs.
Second, they can help with the implementation of the solution. ETRM systems are not out-of-the-box solutions, and need an integration consultant whose’ services can cost substantial multiples of the software solution itself.
The implementation phase will also require substantial internal resources. Key people need to be heavily involved, and the process will require extensive time investment on their side.Is there an ETRM for renewables?
There is no ETRM system exclusively suited for portfolios only comprising renewable energy assets. The concept of traditional ETRM systems was developed and advanced considering the needs of trading housing and utilities. These players have been managing an entirely different portfolio, out of which renewables are only a share, and have significantly different needs.
Added complexity derives from the fact that many ETRMs are based on systems developed to manage equities, bonds and currency positions which have very different risk characteristics compared to energy. Thus, every time a renewables business evolves and requirements change, there’s the risk of starting a new development cycle almost from scratch, with substantial additional cost.
That being said, there is an intense conversation across the ETRM and energy sales world about the need for an enterprise software tailored to renewables. For renewables players that do not need to manage the physical dispatch of power or navigate the time-sensitive intraday trading technicalities (which is performed by other systems, but position management comes from the ETRM), traditional ETRMs provide many features surplus to their requirements. Therefore, there’s a significant risk of paying excessively for features that would never be required by a pure renewables portfolio owner. This is the number one deal breaker.
More importantly, pure-play Independent Power Producers (IPPs) and renewable funds have particular requirements unique to their operating models, which cannot be met by traditional ETRM systems alone.
For example, it is practically impossible to have a growth strategy without the ability to quantify if a new project acquisition will be supporting the organisation’s revenue goals and if the new project will adhere to the set risk limits. This would need advanced quantitative metrics that traditional ETRMs lack.
In addition, to construct high-performing portfolios and take full advantage of diversification benefits, investors need to adopt a portfolio view and understand how the unique risks of renewables correlate – as in, measure the degree to which one risk moves with respect to another. Correlation benefits could provide natural risk hedging and increase secure revenues without increasing the risks. But only if an investor is able to identify the hidden value their portfolio has.
Likewise, renewable players need access to targeted pricing data and deal valuation tools to execute the more secure and revenue-driving PPAs. And when they do, they need to be able to run ‘What If’ scenarios to see how a new deal will impact their portfolio view and revenues.
Very importantly, as renewable investors are new to the realities of the merchant markets, they often require end-to-end guidance on building rock solid risk management processes. Similarly to how ETRM consultants offer guidance with ETRM integration processes, expert renewable risk managers can help businesses in setting up an energy risk policy, establishing best practice procedures to manage the unpredictability and volatility of electricity markets.The PexaOS
Pexapark’s Operating System for Renewables has been designed to specifically support the unique challenges of managing 100% renewables portfolios. Our enterprise-wide offering meets all the crucial day-to-day needs of renewables operators: from trading decisions, position keeping, portfolio optimisation, risk management and deal execution through to financial reporting and revenue management. It is an end-to-end solution for market players with ambitious growth strategies.
It is particularly suitable for funds and asset managers turning into Independent Power Producers (IPPs) that want to employ utility grade risk management due to their increasing exposure to market prices and associated risks.Pexapark’s ultimate renewables portfolio management process, using the PexaOS
Step 1 – Identify Risks
As a first step, you need to identify the risk drivers of your portfolio. Every portfolio holds unique and evolving risks based on: technology, location, asset performance, marketing agreements, and sales contracts. Don’t forget what risk really means: drivers that will impact the uncertainty of your revenue.
Step 2 – Develop Strategy
The main goal of a strategy is to balance risks and desired revenue targets. A comprehensive strategy needs to incorporate some key elements:Risk capacity & appetite: determining minimum revenue to stay afloat (for example OpEx and debt repayments) Risk policy: The framework that will govern your risk strategy, including expected revenue analysed by a probabilistic approach and confidence level for each scenario. Other considerations are: risk mandate to onboard and offboard risk, evaluation criteria for hedging options and overall risk management process. For example, frequency of exposure review.
Risk management needs to be systematically defined. From setting the floor and the ceiling of the hedging ratio, to reviewing the horizon of how far forward you want to optimise. In this step, it’s very important to set target levels that trigger a review. For example, market conditions, production levels or breached risk limits. And then, you lay out hedging instruments that are approved and well understood to choose from.
Step 3 – Quantify Solutions
Once you know what hedging options are suited for your target results, the next step would be to conduct an optimisation analysis and test different expected outcomes to evaluate hedging options. You’d need to use the right quantitative tools to assess the best deal and the optimal PPA volume structure and hedging ratio. This way your selection will be backed by data-driven analysis to know that at that time, you genuinely opted for the best possible solution. In addition, you’d need to pursue a ‘What if analysis’ to stress-test the impact of the deal in your portfolio.
Step 4 – Execute Hedges
Once a decision is made on the best hedging instrument, you need to employ an optimal and cost-effective execution strategy. For example, if you have opted for a 10-year pay-as-produced PPA, you must sign the best price possible, and ensure that the contract terms and conditions do not affect the price. To this end, access to first-class PPA pricing data for the volume structure and tenor of choice and country insights will give you significant power in the negotiation room.
The same PPA pricing granularity applies to short-term hedges which can be significantly higher in value depending on the market conditions. For example, an EEG revenue optimisation PPA in Germany. Or, a short-term PPA to underpin the financing of a new plant instead of a long-term one. Yes, we have seen this happening already.
Step 5 – Actively Manage
Revenues and risks need to be actively monitored. Frequent reality checks of both short-term and long-term positions will ensure that revenue targets will be met. How? Through access to readily available data to trigger correction actions when limits are breached.
The Pexa OS provide enterprise software solutions to manage portfolio risk and revenue, guidance on risk management, quantitative analysis to compare hedging options, and data transparency to get the right price. Our solution is used by leading pure-play renewables IPPSs, funds and asset managers across Europe such as Encavis, Ardian and CEE Group.
Depending on individual needs, the PexaOS can be used as a substitute to ETRM, or in a complementary manner through integration with an ETRM software.
If you’d like to learn more about the PexaOS, reach out to Kashif Javaid at firstname.lastname@example.org to book your chat. Kash has more than 10 years’ experience in traditional ETRM systems, as well as enterprise solutions exclusively suited for renewables. He will be happy to answer more of your questions!
P.S He also thoroughly enjoys sharing tips for biking adventures in the UK, so feel free to surprise him with your enquiries!
Once you get a solar system installed, you’ll probably still have questions. Some of those might be related to what kind of metering changes you’ll see, and whether there’s anything else you need to do in order to make sure your system is working correctly and everything’s set up right. You want to get the maximum value from your investment in solar power. Here are some of the most important questions to ask?
After Solar System Installation, What Happens With My Electricity Metering?
It’s not possible to just set up a solar system and start using it right away with the maximum benefits. You’ll need to work with the power company in order to be sure that you’re giving and receiving power correctly. That will reduce the chances that your new system won’t save you money, and also make sure you’re not trying to feed power through a meter that’s not designed for it. That could be harmful, but fortunately it’s also easily avoided.
Do I Need a New Meter?
You’ll need a new meter — called a bi-directional meter — after your solar system has been installed. That’s because the standard meters are only designed to send power to your home. The new meter will still be able to do that, but it will also accept power from your home. If your home is one that’s set up with three-phase power, you’ll need a special type of electric meter to handle that properly.
What Are Metering Arrangements?
Metering arrangements are the agreements you have with the power company. For example, your arrangement may be that you’ll send power to your house first and then excess power will go back to the grid. That reduces how much energy you’re consuming, so your bill will be lower.
What is a Gross Metering?
Gross meters were designed to send all the solar power your system made to the grid, instead of sending it to your house and then comparing how much you were producing with how much was being used. There was a feed-in tariff that was pre-determined, but that’s not in wide use anymore. In most cases, net metering will be a better choice for your needs, and will give you the best financial value.
What is Net Metering?
Net meters are continuously looking at how much energy you’re using versus how much is being produced. Then the data is calculated over the entire billing cycle. That helps you save money, and gives you the opportunity to send some power back to the grid, too. Doing that can give you a feed-in tariff, which can add to the financial benefit of having a solar system.
Which Metering is the Right One to Use?
The right meter is the one that works best for your situation. Due to the reduction in feed-in tariffs, though, the vast majority of people use a net metering system. Your installer can help advise you on your options.
When you understand metering and are using what works best for you, you can continue to harness the sun’s power and use it to your advantage. That will help you save on your energy bills, and even help you give back when it comes to sending power to the grid.
If you are interested in installing solar on your Blue Mountains, Penrith or Emu Plains home, contact E-Smart Solar for a quote.
We were very keen to put on a solar battery to backup our solar panels and it was a way of obviously using solar electricity into the nighttime to contribute to the greater picture, to even out the peaks and troughs because there’s a lot of people taking on solar panels. But I do like the idea of generating power close to the source and using it where we are and using the battery to sustain things through the evening for our local use and for moving to the whole grid.
We’ve put on high quality panels with this latest installation, and they’ve been very good. Our first set of panels that we installed around 2008 wasn’t nearly as efficient as the new ones so we’ve moved those to a less good part of the roof and put our best panels in the best sunspot. So many people say that panels don’t work when the sun’s not up, but we see that on a grey day, even on a wet day, we are actually producing quite a lot of power and it’s really impressive and we’re really thrilled.
I do like the way we can now also check the output of our panels through the apps, which we weren’t able to do with the panels we had in the beginning so we can see they actually perform very well.High Quality Solar Power System Installation by E-Smart Solar
I particularly wanted to get a local company (E-Smart Solar) that we knew would have to have a good reputation locally. It was good to have somebody come to the house and do a quotation, look at your situation. The team from E-Smart Solar were very consultative. They asked what we wanted every step of the way, they did very neat work and worked extremely hard and our little cottage looks very good. I also liked the fact that the battery and solar installation is quite visible so I can share it with friends and visitors and say, look, this actually works.
Planning on going solar but you’re not sure where to start? E-Smart can help you with that. Contact us today for more information.
Right now Australia’s seeing an installation boom in rooftop solar systems. Given the immense popularity of solar, it may seem like just about every household has a solar system. If you don’t have solar, maybe you are planning to get it in the future.
We often come across a subset of people who would like a solar system – and oftentimes they could get one now – but have the idea on pause in anticipation of future advances in solar battery technology. Often the reasoning is that they believe it’s necessary to wait on advances in battery tech and that until then getting a rooftop solar system doesn’t make sense for them. This misperception is common, but we want to advise why we don’t recommend waiting for breakthroughs in solar battery tech before installing solar.
Why Playing the Waiting Game with Solar Battery Tech is Unwise
Don’t get us wrong, we like to see customers being prudent and doing their research first when it comes to jumping onto a hot trend – including solar and battery tech. But it’s also necessary to recognise that oftentimes holding off on acquiring something that could begin to bring you financial, environmental and energy-saving gains simply doesn’t make sense.
This is the case when considering a solar installation on the basis of future advances in battery tech in particular. There’s certainly nothing wrong with keeping an eye on emerging advances and indeed looking forward to them. But holding off on getting solar today simply because battery tech is still developing only results in you missing out on solar today. It’s important to remember it’s possible to add a solar battery to an existing installation down the line. So ultimately the battery decision doesn’t need to delay a rooftop solar installation now.
It’s Possible to Change with the Changes in the Solar Sector
An additional concern our customers have surrounds the potential decline of existing incentives like rebates and feed-in tariffs (FIT). For some, these worries actually drive people to speed up their solar plans so they can get extra benefits while they still can. But for some people that just isn’t possible right now. Some customers also feel it may not be worth their while in future if these incentives are no longer in place like they are today.
It’s no secret that in the years to come there could be an adjustment to existing incentives surrounding solar panel installation and operation. That’s just the reality. But it’s also the case that as one incentive such as the feed-in tariff (FIT) may be scaled back, other initiatives to incentivise exporting excess solar are set to pop up. There is a rising trend in blockchain and community solar energy use. We don’t think incentives for solar will be going away. Ultimately, regardless of what adjustments may go on surrounding solar exports, a rooftop solar system is set to remain a terrific tool for slashing your power bills in the years ahead.
The Wisdom in Storing Up Solar Knowledge
If anyone now feels they’ve lost time on getting solar, it’s important they recognise thinking in-depth about a solar system can be very useful – it’s just best to channel it into the right area. Instead of focusing on the future of batteries right now, focus on gaining a strong and clear-cut insight surrounding how to seek out a quality solar installer. Also, how to maximise the benefits of a solar installation once it’s in place.
By taking this approach it’s possible to optimise the benefits of a solar installation well into the future, and – instead of waiting years – start to reap the rewards of that process today. Then, when the time is right, look to add a solar battery in the mix.
Meet our dear customer, Fiona. Read her story of what her environmental reasons are for buying a high quality solar power system.
I’m Fiona, we’re in Katoomba in the Blue Mountains. John and I are both very keen and passionate birdwatchers, and we’re conservationists and I see alternative energy as a wider umbrella that we all fit together to contribute back to the planet.
I love nature. I want things to continue to be beautiful and I think we’re part of a bigger picture and we all need to contribute to that but we need to make this planet last longer and be as beautiful as it always has been.
We’ve been very happy to become more self-sustainable, environmental and I thought doing solar energy was our first step. It was very achievable and I do like that domestic way of making a contribution to the larger picture.
Solar energy is a big part and something we have really concentrated on. We really wanted to be early adopters on taking on the solar revolution so that we could personally make a contribution that we felt we could do and we’ve actually found it quite easy to do, not as intimidating or as difficult as you’d think. We’re now completely self-sufficient without electric power. I think we’ve paid about 18 cents in power since we went solar.High efficiency solar panels
I would recommend a high quality solar. I’ve always been very keen on buying good quality products and E-Smart Solar was able to provide that. I want things to last and don’t want things to go to the tip all the time, it’s a lot of waste. If you can buy good quality stuff in the beginning, make it go for a long time. It’s good to have a local company like E-Smart Solar that will come and give you back up if there are any problems, tweak things a little bit if they need to be and if you want to expand in the future, which we plan to do.
Help the environment today by going solar. Talk to us.
The potential cost-of-living savings is always a big factor when Aussies are deciding to purchase a solar system. E-Smart Solar customers recognise once their solar system is in place, their household can begin to drive down energy bills and even earn some income back from their system exporting energy via a feed-in-tariff (FIT). But this isn’t the only area in which the right solar system can deliver big savings in the long term.
There’s a big difference between a quality solar installer and the alternative, and this applies to solar products too. If you get a reputable solar installer to install well-made components with a long-term warranty, you’ll be set to reap the rewards for years to come. So let’s look now at how a long-term warranty on solar parts can save you money.
How Warranties Work
For anyone yet to be familiar with the warranties process in Australia a quick overview will help. It’s necessary to keep in mind some variables can exist here. For example, if a manufacturer has an office in Australia they’re responsible for their warranties, yet if not, it’ll be the importer who is responsible for them. But the following is an overview of the regulations and common approaches to warranties across the nation.
Australian Consumer Warranties
As the ACCC details Australian Consumer Law (ACL) confirms goods sold in Australia must be of acceptable quality and fit for purpose. There can be certain exceptions to this. For instance, if someone clearly advertises and sells a used car for sale as ‘for parts only’, then it wouldn’t be reasonable for someone who has purchased it to complain the car wasn’t working properly. But there is no ‘opt-out’ clause for any business in following the ACL – it’s mandatory when operating in Australia. So unless the seller specifically makes a potential buyer aware parts are not of acceptable quality and fit for purpose, the buyer has a right to expect what they buy is in good working condition.
This warranty is commonly offered by an installer of a solar system. Although this does not directly cover the parts and operation of the solar system, it covers the workmanship. If it emerges that a mistake has occurred or a fault has arisen as a result of the installation and/or subsequent workmanship within the warranty period, then the installer will be on the hook to remedy it.
A manufacturer’s warranty is an important consideration when looking to save on costs over the years. This warranty is provided by a manufacturer to cover the parts (AKA panel product) and operation (AKA performance) of a solar system. A manufacturer that offers a long-term warranty sends a signal their products are made with quality parts, and they warrant their performance. Yes, a long-term warranty is by default a long time to make a promise, but given a manufacturer gets a competitive advantage over other businesses who will not warrant an extended period, it’s certainly right and fair to expect they’ll honour that promise.
Saving Time and Money
What can make a long-term manufacturing warranty so worthwhile from a savings perspective? It comes down to the two aforementioned promises that a manufacturer offers. They give an undertaking surrounding the parts and operation of their products.
If at any time during the parts warranty its components fail due to a manufacturer’s defect, the customer will have a remedy available to them. While solar systems are unquestionably a great investment, it’s no secret the upfront cost of purchase and installation can require many Aussies households to save up for a time. A long-term warranty can help ensure a household won’t be left having to fork out another chunk of cash to get new solar products. This is unfortunately something many Aussies have had to do when they’ve purchased solar products from providers who maximise affordability at the expense of quality. Ultimately these Aussies have had to eventually pay for repair or replacement – and financially this can be a very painful lesson to learn.
It’s necessary to note the inverter is of course a part of the solar system but is usually treated differently for warranty purposes. We discuss the particulars regarding inverter warranty timelines in the conclusion below.
An inferior system might work on day 1, but over time its performance can decline. This means it won’t generate as much electricity as it once did – certainly not as much as a reputable system would – and may stop working altogether! This is really unfortunate, but in absence of a performance warranty, the solar system owner has little option but to put up with the performance decline, or opt for the previously mentioned avenues of costly repairs or replacement of the whole system. Where it concerns the operation of a system with highly respected solar products, a long-term warranty on the components will ensure the system’s operation will continue effectively* during this period.
*Subject to the specific terms of the warranty.
No Daily Dramas
Obtaining a warranty from a reputable manufacturer also offers peace of mind as you go about your daily life. This is because you can usually have a far greater certainty that a trusted business will still be trading in many years’ time as opposed to one that seems to offer a ‘great’ deal today – but may not even be there next year! If utilising a questionable installer with questionable parts, the odds of them ceasing operation in time – and thus leaving customers high and dry – is far greater.
Making the Most of the Years
Warranties help provide some peace of mind when it comes to a solar installation. But it’s true there are additional steps that are always good form to practice where it concerns managing a solar installation from one year to the next. Ensuring a system gets regular checks and maintenance done is a great way to keep it in optimal condition from one year to the next.
So How Long is the Right Warranty?
E-Smart Solar are a talented team of qualified electricians and solar specialists. You can enjoy access to the very best products on the market, at the very best price.
LG Solar Panel Warranty. LG solar panels are manufactured in a fully automated manufacturing facility in Gumi, South Korea and come with a 25 year parts and labour product warranty and 25 year performance warranty held here in Australia by LG Electronics.
SMA inverters offer multi-award winning inverter design with quality European components. Their 5 year manufacturers warranty can be extended to an optional 25 years
Fronius inverters offer extended warranties (of up to 20 years) with award-winning design, and are reliable and efficient in Australian conditions
SolarEdge Inverters come with warranties of up to 12 years. They can also monitor the performance of each module for enhanced, cost-effective module-level maintenance.
Whichever combination of these warranties you acquire with your new solar system, hiring a quality solar installer that utilises trusted components and pursuing long-term warranties surrounding their system provides many benefits. There will be much greater peace of mind knowing the odds of something going wrong are far smaller, and in the unlikely event it does they’ve some additional protection to remedy it with their long-term warranties in place.
E-Smart Solar delivers only the best for our Blue Mountains and Hawkesbury customers. For more information on our warranties contact us today.
We are proud that E-Smart Solar is the first solar company in NSW to be Climate Active certified. Climate Active certification is an important step in our journey to being a more sustainable and environmentally conscious organisation.
We are located at the base of the World Heritage listed Blue Mountains, so we understand the importance of our environmental impact as a business. We have chose to be carbon neutral, hoping this heritage site can be enjoyed, as it is today, for generations to come.So what does this all mean?
The Climate Active brand is a simple yet powerful way for companies to demonstrate to customers and stakeholders that they have a credible and transparent claim of carbon neutrality. It is the only government accredited carbon neutral certification scheme in Australia.
The Climate Active brand represents Australia’s collective effort to calculate, reduce, and offset carbon emissions to lessen our negative impact on the environment. The Climate Active certification is awarded to businesses and organisations that have credibly reached a state of achieving net zero emissions, otherwise known as carbon neutrality.
“Understanding where our carbon emissions are coming from and where we can reduce these emissions has helped us manage parts of our business more efficiently.” What can homeowners do?
The best thing homeowners can do to support us is to take the time to understand the solar system they are buying. Additionally, customers can also support us through understanding that the environmental benefits of solar power are the main reason we do what we do as well as helping homeowners and business owners to reduce their carbon footprint – not just their power bills.
Speak to our expert solar team about how you can reduce your carbon footprint.
Whether solar panels lose efficiency can be partially affected by the way the panels are treated. But that’s not the only thing that could cause a lack of efficiency. The best thing you can do for your solar panels is gain knowledge about what problems to look for, so you can catch issues early. You may not be able to reverse problems, but you can stop more from happening and reduce the effects of them to increase efficiency. Don’t settle for solar panels that aren’t going to give you what you want, when you can have something far better than that by caring for your panels the right way, from the very beginning.How to Minimize a Loss of Efficiency
The location and placement of solar system panels can make a big difference in whether they’re efficient or not. Even a system that looks like it’s in the sun all the time might not be as efficient as it could be. Part of that comes from the angle of the sun, which is different during various times of the year. But another reason for a lack of efficiency is damage that can happen to the panels over time. That can lead to a slow loss of efficiency, which might not be noticed right away. Then once it’s gotten bad enough, it’s seen as a problem and there isn’t anything that can be done about it. It’s better to catch it earlier.Can Extreme Weather Conditions Damage Solar Panels?
Extreme weather conditions like hail and cyclones can certainly do harm to solar panels. The same is true with severe dust storms and other kinds of weather that’s outside the normal and expected things like rainfall and sunshine. While most typical types of storms won’t cause a big problem, it’s important to check solar systems after any major storm or weather event. That can help you catch problems quickly, and make any needed adjustments to the solar system so you can keep it working at the highest possible level for the long term.What is Degradation?
One issue that can reduce efficiency is Potential Induced Degradation, or PID. This can be caused by heat, voltage, and humidity. Because most solar systems are exposed to a combination of these, that combination can take its toll over time. Fortunately, most solar system models don’t have this problem. It’s important to buy a make and model that’s not known for having this issue, to reduce the chances of experiencing it. Another degradation issue, Light Induced Degradation (LID), occurs in the first days after system installation, when a system degrades based on its exposure to sunlight. It’s rare, but important to watch out for.What is Delamination and What Causes It?
When delamination occurs, the glass on the front and plastic on the back of a solar panel separate. That means moisture and air can get inside the panel and start to corrode and damage it. This can happen when the plastic and glass aren’t perfectly clean or properly bonded, and often creates an imminent failure in the panels. When it’s noticed, it should be handled right away. By taking good care of your system and watching out for problems, it can provide you with energy for a long time to come.
If you are interested in installing solar on your Blue Mountains or Hawkesbury home, contact E-Smart Solar for a quote.
We first started thinking about solar to be more environmental, and we’re quite environmentally aware here at home and we’d thought it’d be a great benefit better for us. We decided that it’s the right thing to do. I think it’s very important to try to be as environmental as possible, renewable energy is the way to go.
Fossil fuels are obviously causing damage to the environment so we’ve got to think about our future energy usage. It’s our environment, it’s the future. We’ve got to think about what’s going to happen, it’s just so important. We’ve got to think about climate change, biodiversity, the environment, and just got to look after the world and start somewhere.Contributions of solar in renewable energy
Renewable energy is growing and we’ve got to use it. Every little step that people can do is fantastic. Solar, solar panels, solar energy, is a small thing we can do. It’s getting less expensive all the time and it’s worth giving a go if we can. We’re actually exporting power to the grid. At the moment, we’re getting 21 cents a kilowatt which is making it a little bit more financially rewarding as well too. We’re using energy from the sun to power our house and we’re also exporting power to the grid. It’s a win-win situation.
From the initial contact we make with our clients in the Blue Mountains and Hawkesbury, we try to find out what their expectations are around what they’re going to get out of the solar system and that’ll almost always involve going to the site, meeting them face-to-face, getting a good understanding of what the site’s like and just managing their expectations about what it’s going to achieve.
If they’re looking at other solar systems online or from other providers, they might see a system that is $3,000 or $4,000 and it’s just not going to do what they think it might do. Being able to have a face-to-face with the client and explain the pros and cons of what we offer, versus what that system might offer, gives them a better understanding of what solar can do to help them.The importance of researching about Solar
There’s a lot of misinformation online about what’s good and what’s bad. So again, being able to have a face-to-face discussion with a customer is always helpful. People that do more research before we get there and before we start the conversation is always beneficial because the more educated the customer is, the more they understand and the more research a customer can do and the better the understanding they have of the products that are out there, the better the decision they will make at the end of the day.
Planning on going solar but you’re not sure where to start? E-Smart can help you with that. Contact us today for more information.
We initially did have a system put in several years ago. It was a small system of 1.5 kilowatts, but it was a start for us. It cost about $3,000 for the system at that time. The new panels are probably twice the power of the old panels and only marginally 50% bigger, giving us a greater output from the same sized space we’ve got on the house. They’re twice the efficient and we’re getting more power out of the sun. We had the old panels sided to a less efficient part of the house -the roof and so we got the new panels on the more efficient part of the roof, which was fantastic. There was a combination of the old and the new and it’s working tremendously.High efficiency solar panels
We decided to spend more on our panels this time because we wanted something that we could trust, something that was reliable and we decided that we just wanted quality solar panels. That, as well as the brand name which also gives the best performance. We wanted to have quality products.
Since we’ve had the new panels and a power wall installed, we’ve been 100% self-sufficient energy-wise. It’s all worked tremendously, it’s been seamless. If the power goes out in the street, we don’t even notice it at home. It just completely kicks in.
This summer, if you’ve noticed the stronger storms sweeping your town or the heat waves still persisting into September, you’re already on the road to taking action as part of the Clean Energy Generation. We all have the power to recognize the evidence of climate change in our own communities and take action to create a comfortable, healthy, and sustainable world where we can all thrive. And like Clean Energy Generation member Shambhavi Giri says, sometimes all it takes is showing up and wanting to learn.
Shambhavi grew up in Nepal with the tip of Mount Everest in view from her window, but as the years passed, the view of the mountain was replaced by clouds of air pollution, mostly from carbon-emitting transportation. Making this connection to climate change in her own community, Shambhavi’s passion for balancing environmental health and economic development began to bud. She now attends graduate school in Atlanta, Georgia, where she continues to witness the visible impacts and injustices of the climate crisis in the Southeast.
Read on to learn about how all of us, no matter where we are from or how old we are, can spark change as part of the Clean Energy Generation, and about an important lesson Shambhavi remembers learning from her mother: when things go south, look north.
When did you first discover your passion for the environment, and what led you to study clean energy?
I come from Nepal, which has Mount Everest, the tallest mountain peak in the world. Years ago, we could actually see Mount Everest from my house, a small white peak from our windows. As we grew up, we stopped seeing the view, and because of the pollution and the haze that started to surround it, it became completely gone. As a child I asked, why can’t we see the mountain anymore? By the time I got older, the air pollution was so bad in Nepal that almost everyone started wearing masks.
During the pandemic, because everything was shut down and people stayed home, we got to see the mountain again after a really long time. That’s what got me interested in the field of clean energy: how does a country manage to develop, and at the same time not compromise the environment? In Nepal, like anywhere else, you want to have the six-lane infrastructure, the cars, the luxurious life, but you know that some of these things are really bad for the environment.
I got my undergrad in Kathmandu, Nepal in environmental sciences. In my classes, everyone was talking about carbon emissions and how greenhouse gasses exacerbate climate change, so I did my thesis on what my university’s contribution to carbon emissions was, calculating and assessing its carbon footprint. My university was on the outskirts of the city, and everyday students and staff members had to travel about 35 kilometers to get there. It opened up my eyes to different avenues of sustainability like clean energy, including electric vehicles and how difficult it is to actually get electric vehicles implemented.
How does this interest translate to the work you do now with Georgia State University (GSU) in Atlanta?
Atlanta, unfortunately, has a very heavy energy burden, especially for low-income folks. That’s what my graduate research is all about – what are the key practices to lessen our energy burden?
My main project right now is working to transform Georgia State University’s bus fleet – 18 to 20 diesel buses that have been used here for 10 years now – into all electric vehicles. My team got a grant from the Federal Transit Administration (FTA) in July, and we’re working with different stakeholders in transportation, construction, and workforce development. All of these people are coming together to help the university replace all these diesel vehicles. Plus, GSU does not own all its vehicles, they are just under contract, so this project also gives the university an opportunity to have a transportation system that is its own. It also creates a more equitable transportation system by providing services to historically disadvantaged communities in Atlanta. These are some of the biggest value additions, besides reducing carbon emissions and the negative health impacts that diesel vehicle exhaust brings to downtown Atlanta.
My other big project is about all of the university’s other vehicles, besides the buses – everything from police cars, to landscaping vehicles, to golf carts. We’re trying to transition those vehicles to EVs. These projects are both still in the initial stages, but we’re gathering all the information that is required, modeling the environmental, social, and economic benefits. I’m asking questions like, “how many vehicles does the university own right now, how many are older than 10 years?” It is a lot of data analysis and research.
How has researching more about climate change and clean energy strengthened your passion about solving the problem?
The more you learn, the more you discover the skills you can actually use to make things count. Before, you may have an idea of how to make a difference, but it’s always fleeting. As you research and learn about techniques that can help the environment around you, it’s like converting an idea into an actual real world project. To see your ideas making changes is amazing.
In my undergrad, I joined a club where I could learn more about sustainability, and that’s where I realized the potential for people to collaborate on environmental efforts. In that club I learned I could reach out to nonprofits or university organizations and say, “Hey, we want you to come talk to us, we want to know how this works outside of university.” I shared what I learned with other students who then built their own self-sustaining environmental clubs in more rural schools and now host awesome educational events there. I carry this accomplishment close to my heart – a lot of forward giving, I would call it.
How do you avoid getting discouraged by challenges you face and the overwhelming nature of climate change?
As a middle-class Nepali girl, even thinking about coming to the U.S. to get a master’s degree was a big thing, and traveling miles away from my family to step into a new environment is a journey. A lot of my challenges have been economical. So far, I’m overcoming it with the help of financial aid, but it’s an ongoing thing: you’re given a new hurdle, you overcome it. It is the same as far as studying clean energy and the environment: I think I had already made my mind up before getting into this that things are really bad – in fact I think that is a reason I got into it. It’s hard to be optimistic for our future, but my mom raised me to think that if things go south, you try to look north.
Even though we talk about climate change a lot in the U.S., a lot of people don’t believe in the science of it, and back home, even if people believed in climate change, the problem there is that people are so busy trying to sustain their life that they think climate change cannot be one of their priorities.
It’s frustrating because climate change hits some of us harder than others. Nepal is one of those countries where even though we don’t emit as many carbon emissions, it is still one of the most vulnerable countries to climate change. It is the same for Atlanta: communities that are already overburdened and disadvantaged are the ones that have to suffer the most. It is sad that people who contribute a lot to climate change don’t necessarily understand their responsibility to mitigate it. I want to ask those people, “Why don’t you get it?”
Something I’ve learned as someone who has experience in both worlds – the less developed and the most developed – is that climate change is a global issue that is dealt with from different perspectives across the world. We’re all in this together, facing the same problem. It just goes to show how small our world really is.
What advice would you give to someone who is just starting out learning about clean energy in their community?
You have to go out there and talk to people who are actually involved in sustainability and clean energy to keep learning. For me, I just showed up – it’s really important because you never know when things will connect. I started as a research assistant last year at my university, but soon I wanted to get involved in a real world project. I kept asking everyone around, “Can you help find a place for me?” I was so open to learning and wanted to be in a place where I could use my previous experiences and add on to those, to make a difference.GET INVOLVED IN THE CLEAN ENERGY GENERATION
Like Shambhavi, we all have the power to make a difference by just getting out and being open to learning, whether it’s stopping to notice the impacts of climate change in our communities, talking to a teacher at a local college, or getting involved with an environmental organization. We all have the potential to learn more and share with others the solutions we find, and when we come together as one Clean Energy Generation, the possibilities are limitless.
The post Shambhavi Giri: Turning Lifelong Passions Into Real-World Actions appeared first on SACE | Southern Alliance for Clean Energy.
Earlier this year, in a stride toward a more sustainable future, the U.S. Environmental Protection Agency (EPA) proposed to reduce carbon pollution from coal and gas-powered power plants. Framed within section 111 of the Clean Air Act, this initiative seeks to curtail the carbon footprint that our nation’s energy sector has long created, casting a long shadow over our country’s public health and environmental safety. Under the purview of this proposal, coal power plants and some gas plants—responsible for about a quarter of the nation’s carbon emissions–will need to scale back their output of carbon pollutants. This is significant because carbon pollution from the vast majority of power plants has essentially never been regulated by the federal government despite the large share of emissions from power plants.
The EPA proposal is not due to be final until next year, but this summer, the EPA held a public comment period on the proposed rules. Public comments filed during this period included resounding support for the regulations from across the Southeast region. SACE and Clean Energy Generation members made a difference by submitting over 850 comments to the EPA supporting the proposed rules and a greener future.
We’ve compiled some of the comments from the heart of the Southeast—a chorus of voices, each echoing the urgent call for stricter carbon regulations for power plants. Commenters represent communities spanning the region that bear the brunt of pollutants emitted by these power plants and grapple with the far-reaching consequences. These voices resonate not merely as comments in an official procedure, but as personal testimonies that paint a vivid picture of the pressing need to rein in emissions. These are just a few of the growing number of individuals who are willing to stand up and take collective action as the Clean Energy Generation, demanding policies that will protect our health, our communities, and our planet.
Here’s what they said they want:A cleaner planet to safeguard our families’ well-being and that of future generations
“This is the right action to take for future generations. I worry about the mess we are leaving our grandchildren.” – Kathleen Gates, Florida.
“Please support this EPA proposed plan to help our children and grandchildren deal with this obvious climate crisis.” – Jim Carillon, Fairview, NC.
“As a physician, a mother, and a grandmother, I feel we must stop carbon pollution as soon as possible! This [carbon rule] is critical for our citizens and planet’s health.” – Katherine Sutherland, Winter Haven, Florida. (Read why Kathie also joined the Clean Energy Generation here.)A way to address climate change while holding those responsible for pollution accountable
“Please help make the U.S. a leader in fighting climate change by finalizing the strongest version of the new rules limiting carbon dioxide emissions from power plants. We are running out of time. Half measures are not enough.” – Nancy Power, Rockingham, North Carolina.
“Meaningful regulation of carbon emissions is past due and critical for the survival of our species. Thank you, President Biden, for your leadership on this issue in the face of calculated misinformation.” – Holly Schwartz, Florida.
“I support strong climate pollution controls on all power plants, whether new or old. I am a retired federal land manager and conservation planner who worked on climate change adaptation and mitigation policy for the southern US. I know how much easier and healthier life would be if the governmental authorities had stepped up to curb climate pollution instead of the people fighting to be safe and healthy. Please take this opportunity to continue to take our country in the right direction and help humanity and our planet. Thank you.” Mary Long, Tennessee.
“Meaningful action is needed to reduce power plant pollution, and EPA is best positioned to act. We have some of Tennessee’s worst fossil fuel plants, and converting to gas plants is not a good long-term solution. Regulation should encourage clean energy production and hold polluters accountable.” – Quentin Humberd, Cunningham, Tennessee.
“Please help transition the United States’ energy generation to renewables! Remove the roadblocks for solar and wind permitting, please! We must think about future generations.” – Frank Galloway, Florida.
“Clean electrical generation technology is mature and cost-competitive. Utilities can transition if Congress expedites permitting reform for wind, solar, and long-distance transmission.” Mark Gould, Charleston, South Carolina.
“I live in an area where electric providers are trying to replace coal plants with fossil gas. While I welcome the shutdown of the coal plants, my community has many concerns about methane leaks, particularly groundwater contamination. I strongly feel that our communities will be better served and healthier if we stop ALL fossil fuel expansion and work toward a just transition to an electric grid powered by clean, renewable energy.” – Laura Rastl, Clarksville, Tennessee.
The support from residents across the Southeast echoes a shared aspiration for cleaner air, healthier communities, and a planet safeguarded for future generations. Their voices speak to the urgency of action and reflect a chorus of resilience and determination to champion the cause of a greener energy landscape.What’s Next?
Through the lens of these residents, we witness the profound impact power plant emissions have had and continue to have on our region’s communities, environment, and public health. These perspectives underscore the need for stricter regulations prioritizing the transition to clean energy, which will help us realize a future unburdened by the shackles of carbon pollution.
The EPA’s proposal serves as a sign of progress that shows a path toward a more sustainable energy future, but it’s far from over. While the public comment period is closed, some utilities across our region are pushing back against the proposed rules. We need to keep up the momentum and let the EPA and our utilities know that we are not letting up on our support for these crucial rules that will make our communities and our planet healthier.
SACE is working with individuals to write letters to editors supporting strong standards to cut carbon pollution. Want to help? Reach out to email@example.com to get started!
In addition, we urge EPA to work to ensure environmental justice is delivered through these rules and that the needs of frontline communities are met, considering the environmental impacts of the rules. Also, EPA should strengthen its proposal so that it covers more existing gas plants – as is, the proposed level of coverage would only address 30% of CO2 emissions from existing gas-fired power plants, leaving the vast majority essentially unregulated.
Impassioned comments from our neighbors, like those above, points out the responsibility to act that rests with government entities and policy makers – but we should never forget that responsibility also lies with every one of us who cares about the legacy we leave for the generations that follow to hold those in power accountable. By joining this collective voice, we can build momentum as the Clean Energy Generation to shape a cleaner, healthier, and more resilient world. Join us as we support their call for meaningful change, support EPA’s proposal, and work together to usher in an era where carbon emissions no longer threaten our health and safety.
North Carolina’s HB 951 (SESSION LAW 2021-165, signed into law on October 13, 2021) authorizes the North Carolina Utilities Commission (NCUC) to take all reasonable steps to achieve a seventy percent (70%) reduction in carbon dioxide emissions from electric public utilities from 2005 levels by the year 2030 and carbon neutrality by the year 2050.So customers served by Duke Energy in North Carolina can expect their electricity to get cleaner over time, right?
Well, maybe not. Read on to see how the devil is in the details of these programs.What Exactly Does HB 951 Require?
Part of HB 951 told the NCUC to authorize new voluntary customer programs for clean energy. The language of HB 951 provides specific direction for the NCUC on the design of such programs:
shall ensure that customers who voluntarily elect to purchase renewable energy or renewable energy credits through such programs bear the full direct and indirect cost of those purchases, and that customers that do not participate in such arrangements are held harmless, and neither advantaged nor disadvantaged, from the impacts of the renewable energy procured on behalf of the program customer, and no cross-subsidization occurs. [emphasis added]
This advantage/disadvantage language is not limited to financial cost. There are other advantages to the clean energy generation anticipated in HB 951. And all customers should be entitled to their proportional share of that clean energy and the beneficial environmental attributes embodied with it.
In response, Duke Energy’s two subsidiaries in the state (Duke Energy Carolinas and Duke Energy Progress) have proposed two such programs: Green Source Advantage Choice (GSA-Choice) and Clean Energy Impact (CEI) program. The problem is that in both of these programs, customers who enroll in voluntary programs will take more than their share of the clean energy that Duke was already required to procure to serve everyone — leaving behind a residual portfolio of dirtier energy for the non-participating customers.
In our response comments, SACE used a balloon metaphor:
“It is as though systemwide emissions were a fixed quantity of CO2 in a balloon held by participants and non-participants, and participants simply squeezed one side of the balloon; the result is the same amount of CO2 in the balloon, but the bulge is held by nonparticipating customers.” [emphasis added]Is it Fair for Someone Else to “Volunteer” to Give You Dirtier Energy?
Unfortunately, the design of Duke’s proposed customer programs does not assure that any additional clean energy will be developed.
“Additionality” has become a guiding principle for these types of voluntary programs over the years. This implies that enrollment in a voluntary program causes the utility to procure more clean energy than it otherwise would have. A comparable way to refer to it would be clean energy that is “surplus to regulatory requirements,” or “regulatory surplus” — in other words, subscribing to these voluntary programs should result in more clean, renewable energy than the utility is required to provide.
If a customer actively chooses to sell their clean energy entitlement to another party (in exchange for money or some other form of value), that should be their right. But Duke Energy shouldn’t be able to deprive non-participating customers of those environmental attributes which HB 951 intended to afford to everyone.
The Center for Resource Solutions (CRS) offers a convenient, 2-page explanation of these Additionality and Regulatory Surplus concepts.Duke’s Proposed Programs are Un-Certifiable & Inequitable
As designed, the proposed programs will not work for many of the large customers who might want to use them. Many large customers, including the Clean Energy Buyers’ Alliance, Google, and the U.S. Department of Defense, have raised concerns that the proposed programs will not work for large customers because they will not result in incremental new clean energy above Duke Energy’s baseline procurement.
Many large customers rely on independent third parties to certify their renewable energy purchases to make sure that they are effective.
The Center for Resource Solutions (CRS, referenced above) is the independent body that administers the prestigious “Green-e®” certification for Renewable Energy Certificates (RECs). CRS has examined the design of the proposed Duke Energy programs and has determined that they will be unable to certify them.
Comments filed by CRS include the following:
“The Green-e® Energy program currently requires that generation used for Green-e® certified sales be surplus to regulation. Under current rules, the Green-e® Energy program would not be able to certify Duke’s Customer Programs.”
CRS’s decision is a major red flag!
Furthermore, since they simply shift clean energy that it would be supplying anyway from one customer group to another, these programs proposed by Duke Energy are fundamentally inequitable and inconsistent with the statutory language of HB 951.
SACE’s mission is to promote responsible and equitable energy choices to ensure clean, safe, and healthy communities throughout the Southeast. We support well-designed, voluntary programs that provide customers with an opportunity to secure additional clean energy beyond what is on the grid as part of a utility’s default portfolio. These proposed programs do not fit the bill.Can Duke Energy Do More?
Duke Energy has claimed that they need all the solar that it can possibly interconnect to the grid for compliance with the carbon-reduction requirements in HB 951– and they still won’t have enough for compliance. Duke Energy’s recently-filed Carbon Plan Integrated Resource Plan (CPIRP) purports that they can’t even comply with the 70% carbon reduction by 2030 as required by HB 951. So how can they possibly have any to sell in these proposed Voluntary Programs?
We proposed multiple solutions in our initial comments that could fulfill additionality or regulatory surplus criteria:
(1) proactively address interconnection challenges so that Duke Energy can interconnect more solar than the limit they forecast for future years;
(2) use of Duke Energy’s newly revised large-generator interconnection procedures (LGIP) to fast-track new zero-carbon replacement generation at the sites of fossil generators that have retired or will be retired soon, which will be leaving behind available transmission capacity;
(3) allow customers to cover incremental upgrade costs, akin to Arizona Public Service Company’s (APS) Green Power Partners Program (GPPP) “Green Commit” option;
(4) rely on storage to overcome interconnection constraints without waiting for transmission or distribution grid upgrades;
(5) avoid interconnection constraints by relying on small and rooftop facilities.
Other parties offered a few other solutions as well. It can be done, but it will take some creativity and proactivity.What’s Next?
Stay tuned – working with our allies, we will continue to try and protect the integrity of these voluntary programs.Digging Even Deeper: How Does This Conform to the GHG Protocol?
The Greenhouse Gas Protocol (GHG Protocol) is the de facto standard for greenhouse gas accounting and it classifies emissions associated with electricity consumption as Scope 2 emissions. The relevant Scope 2 Guidance provides instructions on both location-based emission inventories (based on the grid average emission factor) and use of a market-based method (based on contractual instruments).
“Companies who are consuming energy directly from a generation facility that has sold certificates (either owned/ operated equipment or a direct line) forfeit not only the right to claim those emissions in the market-based method (requiring the use of some other market-based data source such as other “replacement” certificates, a supplier-specific emission factor, or residual mix) but also the right to claim that emissions profile in the location-based method.” [emphasis added]
The location-based and market-based methods can be compatible, but it’s complicated. The Scope 2 guidance describes the use of a “residual mix” calculation — i.e., the emissions factor that’s left over after contractual instruments have been claimed/ retired/canceled.
Though we don’t think disclaimer language is sufficient to resolve the deficiencies in the proposed Customer Programs, that is one option that is being considered (at least for a portion of the Customer Programs, a so-called GSAC Clean Energy and Environmental Attribute (CEEA) “Purchase Track”).
If the NCUC allows Duke to head that direction we contend that Duke Energy should be obligated to compute that residual mix and notify non-participating customers that Duke is attributing greater emissions to them as a result of those sold through the CEEA Purchase Track.
The post Problems with Duke Energy’s Proposed Customer Programs for North Carolina appeared first on SACE | Southern Alliance for Clean Energy.
Drive through the major population centers across the Southeast United States today, and you’ll see an increasing number of both electric vehicles (EVs) on the roads and charging stations scattered in parking lots. You might see kids being picked up by an electric school bus, or riders hopping on an electric transit bus to get across the city. Drive through the region’s rural landscapes, and the number of EVs decreases, while massive EV and battery manufacturing sites rise out of fields and forests.
The Southeast’s EV market is complex and paradoxical. Our region has captured 40% of the nation’s EV assembly, EV parts, EV charging infrastructure, battery manufacturing, and battery recycling investments, and 35% of anticipated manufacturing jobs (totaling over 65,000). The Southeast has emerged as an EV and battery manufacturing powerhouse. And, though lagging behind national averages, light-duty passenger EV sales grew 50% over the past twelve months, and charging station deployment grew 66%.
Yet, the policy environment remains hostile in many states. For example, Alabama and Georgia have some of the nation’s highest EV road-use taxes; Alabama, Georgia, North Carolina, and South Carolina limit or ban EV manufacturers from selling or servicing their vehicles directly to consumers, including vehicles manufactured in those states; Georgia legislators imposed a new tax on the sale of electricity at EV charging stations; and Florida’s Governor vetoed a near-unanimous bipartisan bill that would have saved taxpayers money by prioritizing EVs for state and local government fleets.
In the “Transportation Electrification in the Southeast” fourth annual report, the Southern Alliance for Clean Energy and Atlas Public Policy highlight the data behind these complex market dynamics to provide context, showcase trends, and spotlight actions accelerating or slowing down EV adoption.
The Southeast has emerged as a leading hub for EV manufacturing and jobs, with anticipated jobs totaling 65,242. Georgia leads the nation in anticipated EV manufacturing jobs, and the Southeast is home to four of the top eight states in the country—Georgia, Tennessee, North Carolina, and South Carolina.
Anticipated EV manufacturing jobs in the Southeast grew 56% over the past 12 months, as manufacturing investments grew 97%. This 12-month growth was driven by Hyundai in Georgia, which committed $4.3 billion in battery manufacturing investments in partnership with LG Energy Solutions, and Toyota in North Carolina, which expanded its committed battery manufacturing investments to $5.9 billion. With the federal Inflation Reduction Act (IRA) injecting billions of dollars into America’s clean energy economy, the Southeast is well-positioned for continued manufacturing and job growth.EV Market Share and Sales
One of the best ways to track EV market momentum across states is to look at the market share of light-duty passenger EVs. Market share is the percentage EVs make up of all new car sales. The trend lines for all Southeast states are upward, though at different trajectories, and at the same time every state in our region continues to lag behind the national average. Georgia, Florida, and North Carolina lead the region with market shares in Q2 above 7%, double where these states were two years ago. If that doubling every two years continues, those states would see over 50% EV market share by 2030.
Market share is influenced by demographics (including the concentration of early adopter consumers), supportive or undermining public policies, and the presence of electric utility programs such as charging station rebates and discounted electricity rates. Market share is also a self-fulfilling prophecy; the more EVs on the road and in neighbors’ driveways, the more consumers are exposed to the technology and likely to consider buying one. Plus, for EV charging station companies, where the EVs are is where the business opportunity lies, and therefore where infrastructure investments are made, further supporting EV ownership in those areas.
Looking at the raw new EV sales numbers, the Southeast continues to reach new highs. Cumulative new EV sales in the Southeast grew 50% from July 2022 to June 2023, from 312,316 vehicles to 469,602 vehicles. Though Telsa still dominates the market, an increasing percentage of new EV sales are coming from legacy automakers.Charging Deployment
In the past 12 months, the Southeast saw continued progress in deploying EV chargers. Regional DC Fast Charger (DCFC) ports now total 4,401 after a 60% increase year over year, and the region now boasts 15,036 public Level 2 charging ports, a 69% increase year over year. Though all Southeast states lag behind average national charging station deployment numbers, Georgia, Florida, North Carolina, and South Carolina are all trending in line with the national growth curve.
This DCFC deployment momentum is vital as states prepare to release nearly $680 million in National EV Infrastructure (NEVI) Program funds to scale DCFC every 50 miles along the region’s primary travel corridors. NEVI comes out of the Bipartisan Infrastructure Bill (BIL) and represents the most significant public investment in EV charging ever made. Current momentum indicates increased readiness of EV infrastructure manufacturers and installers to meet the demand NEVI will stimulate.Utility Investments
Utilities represent an essential source of funding for the EV transition through direct infrastructure deployment, charger rebates, charging-as-a-service programs, make-ready infrastructure investments, supportive EV electricity rates, and funding to support vehicles such as electric school buses. The investor-owned utilities in our region significantly trail their national peers in dollars per customer invested in supporting the EV transition: the national average is $75 invested in transportation electrification per customer, whereas the Southeastern utilities range from $41 to just $3 per customer. Our region, which makes up 18% of the nation’s population, represents just 7% of all approved utility investments nationally.
“Drilling down into equity, the Southeast has seen low levels of identified equity-focused investments in transportation electrification from investor-owned utilities. From July 1, 2022, through June 2023, around $6 million in the region was approved for underserved communities, or 10% of all approved investments within the past 12 months. For reference, over the same period, 54% of utility transportation electrification filings were classified as equity investments nationally.”Public Funding
Southeast lawmakers have allocated very few state dollars to support transportation electrification outside incentive packages to entice businesses to locate and expand. However, states have accessed significant federal funding and leveraged VW Settlement funds to enable EV infrastructure deployment and electric school and transit bus purchases. Over the past 12 months, the region has accessed federal funds totaling $234 million for electric transit buses, $172 million for electric school buses, and $3 million in EV-related research and development grants, and awarded $169 million in VW Settlement funds. The total amount of federal transportation electrification funding allocated to date is $741 million, which could be dwarfed over the coming years if the region is successful at drawing down the massive amount of funding being made available through a growing list of BIL and Inflation Reduction Act (IRA) programs.Conclusion
Electric vehicle sales are on the rise, expanding significantly across the Southeast. The region continues to lead nationally in new battery production and EV manufacturing investments, with many new billion-dollar announcements throughout the Carolinas, Georgia, and Tennessee. Meanwhile, the first round of NEVI and Community Fueling Infrastructure (CFI) grant funding will inject hundreds of millions of dollars for EV charging infrastructure buildout in the Southeast. Other federal funding from BIL and IRA will continue to drive private sector investments in EV, battery, and supply chain manufacturing and jobs, provide vehicle tax credits to support consumer and fleet EV purchases, increase charging station deployments, and more. But while the market and funding opportunities have expanded, supportive policies have yet to keep pace.
The speed at which electric car, truck, and bus adoption will grow in the Southeast and the equitable access to the benefits of the growth depends largely on how the work of policymakers at the state and local level complements and enhances investments from industry and the federal government. More action now will put Southeast residents and fleet operators in the driver’s seat on their way to improved public health, a cleaner environment, and a growing economy.
The Southern Alliance for Clean Energy’s Electrify the South program leverages research, advocacy, and outreach to accelerate the equitable transition to electric transportation across the Southeast. Visit ElectrifytheSouth.org to learn more and connect with us.
The Clean Energy Generation is making progress every day here in the Southeast. From farmers in North Carolina using their land for solar panels to Black churches in Georgia going green, our clean energy future is becoming a reality.
This past spring, we shared eight stories about clean energy growth in the Southeast. Take a look at just a few of the signs of clean energy adoption we’ve seen in the past few months!Santa Rosa has its first solar farm. This flock of sheep will help maintain it.
Florida Power and Light recently commissioned the Blackwater River Solar Energy Center. It’s not only the first solar energy site in Santa Rosa County, but also part of a solar grazing pilot project — using sheep from a local farm to maintain the land’s vegetation. This concept is known as agrivoltaics, which is when land is used for both agriculture and solar photovoltaic energy generation, maintaining the area’s rural landscape. Read more.North Carolina BATT CAVE aims to innovate the future of electric travel
The only university-led battery research center in North Carolina and funded by the state, UNC Charlotte’s North Carolina Battery Complexity, Autonomous Vehicle and Electrification Research Center (BATT CAVE) is opening up NC’s booming electric vehicle industry to younger folks. The BATT Cave’s primary focus is battery safety. Read more.Farmers help Duke Energy add more renewables to its grid
Michael Dalton only uses 50 acres of his land to crop hay in Mocksville, North Carolina. The other 110 acres is leased by Duke Energy for their 15.4 megawatt Mocksville Solar Facility, which generates enough clean electricity to power 3,000 homes a year. With many threats to their crop that farmers like Dalton can’t control—like Mother Nature—this is a welcome economic boost to the small farming community. Read more.Nonprofit installs solar panels, plants flowers along 18 miles of west Georgia highway
Georgia-based nonprofit The Ray is putting “forgotten” green turf alongside highways to good use. 2,600 panels of solar power now run along an 18-mile stretch of Interstate 85 between LaGrange and West Point. Underneath these solar panels? A meadow of pollinator gardens, inviting endangered bees to pollinate. This win-win-win project is already inspiring similar ventures in Florida, Maine, Maryland, and Pennsylvania. Read more.Georgia’s Black churches look to go green
First African Baptist Church, among the oldest continuous African-American congregations in America, has its eyes on the future. The church could be among the first Black churches in Georgia to produce its own electricity—through a mix of Inflation Reduction Act-funded solar PV, charging stations, battery storage, and energy efficiency upgrades. Read more.Tennessee secured $7B in clean energy business this past year — representing nearly 80% of new investments
Since last August, Tennessee has secured $7 billion in planned investments in the construction of electric vehicles, energy storage, and solar panels. These 14 projects represent nearly 80% of all capital investments in the past year—three times more than any other sector combined. Read more.Follow along each week
These stories highlight just a few of the positive things happening in our area! Every day we see signs of hope. The Clean Energy Generation is creating a future powered by clean energy that leads to clean air and water, good jobs, and vibrant communities.
Would you like to see more stories like this? We’ve got just the thing for you! Every Thursday, we share the latest clean energy news on Instagram with #CleanEnergyNews. Join us as we celebrate the progress and signs of hope in the clean energy transition.Join the Clean Energy Generation
Together, all of us who are taking action are part of the Clean Energy Generation movement. We’re coming together to create healthier communities and a more secure and sustainable environment, starting now. No matter your age, income, zip code, or abilities, you can play a role. You don’t have to have the answers, learning more is a great way to start. Join us, and we’ll share ideas, resources, tools, and practices to show how we can all be part of the transformation.
The post Signs of Progress with Clean Energy Growth in the Southeast appeared first on SACE | Southern Alliance for Clean Energy.
On July 31, SACE’s Executive Director Dr. Stephen A. Smith appeared on the podcast “More Living with Jim Brogan” to discuss how a healthy environment allows all of us to live healthier, happier lives, and how investing in policies and tools that bolster clean energy and help us move away from polluting fossil fuels can help us get there.
Each week, Brogan and his guests discuss news and issues like lifestyle, health, financial planning, and more. The topic of clean energy is connected to each of these issues and has recently come to dominate public conversation, and for good reason: the global renewable energy market valued just under $900 billion in 2020 and is expected to reach $2 trillion by 2030.
Brogan and Dr. Smith discussed the driving force behind climate disruption, the pros and cons of solar energy, the trajectory of the electric vehicle market, and what incentives from utilities and the federal government are in place to help accelerate the clean energy transition – plus, how SACE’s mission encompasses all of this.
Listen below for Dr. Smith’s quick recap on the driving force behind climate disruption.Pros and Cons of Solar Energy in the Southeast
Not only can we rely on the sun coming up in the east and setting in the west everyday, but the price point of solar installation has decreased significantly in recent years. That’s why we see solar catapulting in deployment across the world today.
Dr. Smith discusses utility companies’ financial incentives to offset the price of installing solar, as well as technologies such as battery storage that can also save customers money.
Dr. Smith‘s personal story involves his own rooftop solar panels he installed on his family’s Knoxville, Tennessee home since 2009, the evolution of the relationship between his utility TVA and homeowners with solar panels, and the viability of solar as an investment for customers in the TVA region.The Trajectory of the Electric Vehicle Market
“All the big money is tracking in the direction of electrification,” says Dr. Smith.
Despite this, range anxiety – fear of the inability to find a charging station – remains a primary concern among potential EV buyers, but the deployment of charging stations is growing dramatically every year, and the ability to charge at your own home if you are able makes it that much easier.
Another concern, especially amid this summer’s heat waves, is the pressure that home EV charging has on the region’s already stressed electricity grid. However, Dr. Smith says, think of the grid as having peaks and valleys: residential power usage ‘peaks’ at a certain time of day – say, when we’re doing laundry and cooking dinner around 5 p.m. – and then experiences demand ‘valleys’ at other times, like when we are asleep at night. By encouraging people to charge their EVs at valley times, like plugging in your car to charge while you sleep, we can allow the grid to run more efficiently.Federal Incentives In Place Now to Support a Clean Energy Transition
The Inflation Reduction Act (IRA), passed this time last year, is the most substantial federal investment in clean energy that many of us have been waiting on for a long time. Another federal initiative called the Bipartisan Infrastructure Law (BIL) also has the power to accelerate our transition to clean energy. While these national policies alone will not be enough to combat our dependence on nonrenewables, they propel us significantly down the path. They also allow us to bring technologies and manufacturing back to the United States, such as moving battery production here from countries like China, because manufacturers cannot receive the tax incentives from the IRA unless their production happens in the states.
All of this means jobs returning to the states. As we transition to clean energy, a wealth of jobs is materializing especially in manufacturing. Here in the Southeast, we’re capturing a bulk of those as battery manufacturers, electric vehicle factories, and more decide to call the Southeast home.What’s Next?
The Southeast consistently lags behind other regions and the nation as a whole on utility energy efficiency performance investments in renewable energy, and utilities like TVA are largely to blame, for prioritizing low rates on electricity instead of bolstering renewable energy. Despite TVA’s low ‘rates’, our electricity bills are high because of inordinately high consumption patterns here in Tennessee.
An important next step is educating consumers and homeowners on ways to be efficient with their energy consumption and what programs are available to help them do that. Dr. Smith says that is where SACE steps in, alongside other members of today’s Clean Energy Generation working against climate disruption. Together, we have the power to encourage others to take advantage of the availability of the clean and renewable energy that exists all around us.GET INVOLVED IN THE CLEAN ENERGY GENERATION
There are many ways all of us can start taking action today as part of the Clean Energy Generation, whether it’s learning more about clean energy efforts in your town, taking steps to make your home more energy efficient, or getting out and talking to your community about what a clean energy future looks like for you. There’s no wrong way to get involved, and we all have what it takes to make a difference – especially when we join together as one Clean Energy Generation.
Thank you to Jim Brogan for hosting SACE’s Executive Director Stephen A. Smith on his podcast “More Living with Jim Brogan,” which you can find here.
The Advanced Clean Trucks (ACT) Expo is the country’s most significant alternative-fueled medium and heavy-duty vehicles showcase. In years past, propane and natural gas vehicles dominated the expo hall. But this year in Anaheim, California, over 12,000 conference goers attended the massive expo hall as electric vans, buses, and trucks from legacy medium and heavy-duty vehicle manufacturers and innovative all-electric start-ups took it over. Walking through the hall, it was hard to imagine anything but an electric van, truck, and bus future, especially since most vehicles on display were already in service.
Public Policy in the Driver’s Seat
The dominance of battery electric vehicles at the ACT Expo indicates where the market is headed. Supportive public policy, industry innovation, and growing consumer desire conspire to take it there.
The Inflation Reduction Act (IRA) unleashed manufacturing and consumer tax credits, including for non-tax paying entities like local, state, and tribal governments. On the manufacturing side, there is a battery production tax credit, $3 billion in loans to EV manufacturers, and $2 billion in direct grants to recently closed or at-risk auto manufacturing facilities to support retooling production lines to build EVs. On the consumer side, the capital cost barrier to buying an electric instead of a diesel vehicle is addressed with a 30% tax credit on commercial EVs, up to a maximum of $40,000 for medium and heavy-duty vehicles. EV charging stations are also eligible for a 30% tax credit on the first $100,000 in costs per charger.
Meanwhile, the Bipartisan Infrastructure Law invests in electric vehicle (EV) charging infrastructure along highways, ports, and distribution hubs; and provides grants and rebates for purchasing EVs. Together, these federal packages are incentivizing – and driving down the cost of – domestic manufacturing, reducing purchase prices for electric vans, trucks, and buses, and seeding the charging infrastructure needed to make fleet operators more comfortable with the transition.
For a deeper look at these landmark public policies, read the first blog in this series, Big Electric Vehicles are Coming Down the Road.The Market Gears Up
As important as the scope and scale of these federal programs are, their timing is equally critical.
The Covid pandemic exposed weaknesses in the global supply that significantly impacted automotive sectors. In its wake, the U.S. government and auto manufacturers recognize the need to build a more durable domestic supply by rapidly reinvesting in American manufacturing. Transportation electrification is a means by which we can invigorate domestic production while decoupling the nation from global oil market volatility and political instability, addressing the climate crisis, and improving public health by eliminating tailpipe emissions.
The technologies we need to scale electric vans, trucks, and buses have been developed and deployed in the electric car market over the past decade. Now, electric medium and heavy-duty vehicle, semiconductor, battery, and supply chain manufacturers are joining car makers in expanding production, while at the same time, EV charging infrastructure companies are standardizing the ultra-fast Megawatt Charging System to deliver 1,000 kilowatts to heavy-duty vehicle battery packs, which is staggering when considering ten years ago, the fastest charging was 50 kilowatts.
Several medium and heavy-duty fleet charging efforts are underway. Truck maker Daimler, global energy company NextEra Energy, and investment firm BlackRock recently announced a joint venture called Greenlane that aims to create a nationwide network of fast charging for battery electric and hydrogen fuel cell vehicles. And then there are Forum Mobility, WattEV, Schneider, and Prologis, which are all building large electric truck charging depots connecting California’s ports and inland distribution centers to West Coast markets.
Meanwhile, the cost of all EVs is coming down, largely thanks to battery prices that have fallen dramatically with the global upsurge in electric car purchases since 2013.
Lithium-ion Battery Pack Costs Worldwide
As lithium-ion battery costs come down, battery researchers and manufacturers are improving chemistries to boost efficiency, shifting to more abundant minerals such as iron and phosphate, and moving away from rarer minerals, especially those concentrated in nations fraught with human rights abuses, such as cobalt in the Democratic Republic of Congo.Vans, Trucks, and Buses, Oh My!
Medium and heavy-duty vehicles are purchased mainly by fleet operators to either provide a public service or make a company money. The purchase decision is, therefore, different for these larger vehicles than consumer EVs since taxpayer money and/or profitability are on the line. Furthermore, the medium and heavy-duty vehicle markets include many vehicle types that do many different jobs, and it follows that some are more straightforward to electrify than others. Focusing on easier-to-electrify vehicles now helps momentum build, technologies advance, and consumer awareness grow. Talking with industry representatives at ACT, it was clear that the electric van and bus markets are already expanding, while larger trucks and off-road vehicles are in existing testing phases and beginning to be purchased by early fleet adopters.
Zero-Emission Beachhead StrategyVans
Momentum in the medium-duty electric van market is being spawned by Amazon, Fed-Ex, UPS, and the USPS, which have all committed to and begun electrifying their delivery fleets. These delivery companies and the USPS have greenhouse gas emissions reduction goals that require their fleets’ rapid electrification. Each aligns with different electric van manufacturers: Amazon with Rivian, Fed-Ex with GMs’ BrightDrop, UPS with Arrival, and the USPS with Ford.
Delivery vans drive approximately 125 miles daily, so electric delivery vans are designed to provide 150 miles of range per charge. And because the vans come back to the store, warehouse, or distribution center at the end of the day, charging infrastructure is much cheaper and easier to install than for longer-distance trucks that require costly and complex on-road charging.
Each major courier’s contracts with their manufacturer of choice will consume product availability for the next few years. However, once initial orders are met, manufacturers will likely have reduced costs and scaled up production to meet widespread mounting fleet and consumer demand.Trucks
In 2021, trucks moved nearly 12 billion tons of freight domestically, 87% of which was shipped less than 250 miles; 44% below 100 miles, and 43% between 100 and 249 miles. Delivery vans, port and warehouse drayage trucks, and regional tractor-trailers can already get over 100 miles of all-electric range. This means that by focusing on electrifying these shorter-distance freight vehicles, we could clean up over 40% of freight transportation pollution today.
At the same time, electric vehicles, including (but not limited to) long-haul semis, garbage trucks, and fire trucks, are already being purchased by governments and companies. The heavy-duty truck sector is likely to electrify rapidly as vehicle manufacturing scales because the economics pencil out: these vehicles are cheaper to operate and maintain, providing fleet operators with a lower total cost of ownership, saving taxpayer dollars for public fleets, and increasing profits for private fleets.
Off-road applications, including forklifts, yard trucks, and rail trucks, are also ripe for electrifying. Today, these vehicles contribute heavily to air pollution, impacting the health of communities near ports, distribution centers, warehouses, and rail yards. Because the vehicles never leave the lot, installing the infrastructure to keep them charged is more manageable, like with delivery vans.Buses
Electric school bus adoption is on the rise. As of December 2022, 1,398 electric school buses were either on order, delivered, or operating. Additionally, the EPA’s Clean School Bus Rebate Program awarded over $900 million for another 2,400 electric school buses to 389 school districts nationwide. Today, 5,612 committed electric school buses are in the pipeline, four times more than what was on order, delivered, or in operation at the end of 2022.
Committed Electric School Buses in the United States
Meanwhile, electric transit buses currently comprise over 2% of the nation’s fleet, with 5,240 on the road as of 2022, a 66% increase from 2021. And with the recent announcement of $1.7 billion in Bipartisan Infrastructure Law funding through the Federal Highways Administration’s Low- and No-Emissions grant program, more electric transit buses are coming to a city near you.What to Expect
Forecasting the pace of EV adoption is tricky because there are so many variables at play. But today, many of those variables point in the same direction: aimed squarely at accelerated electric van, truck, and bus adoption.
Conducive public policy is de-risking the transition for incumbent and start-up automakers, charging infrastructure companies and investors while reducing the capital cost barriers that have blocked many fleet operators from purchasing electric options. The auto and charging infrastructure industries have matured over the past decade of light-duty EV deployment and have worked out several technological, logistical, and scaling kinks. And consumers and businesses alike are becoming increasingly motivated to address the climate crisis. For the transportation sector, which is the leading contributor to greenhouse gas emissions, electrification is the only viable market-ready solution on the table.
So expect to see in the next few years your home deliveries arrive in electric vans; goods moving along the highway in electric freight haulers; your trash picked up by electric garbage trucks; kids being picked up in electric school buses; and quiet electric transit buses roaming city streets. By 2030, it’s likely that all this increasing EV activity, along with the electric car in your driveway, will be the new normal.
The Southern Alliance for Clean Energy’s Electrify the South program leverages research, advocacy, and outreach to accelerate the equitable transition to electric transportation across the Southeast. Visit ElectrifytheSouth.org to learn more and connect with us.
The post Electric Van, Truck, and Bus Markets are Revving Up, Part 2 appeared first on SACE | Southern Alliance for Clean Energy.
The Department of Treasury just concluded a comment period on the credits, so there may be revisions. This blog post focuses on electric vehicle (EV) and charging infrastructure credits and will be updated as new information is released.
Key Takeaways:Renewable Energy: Clean Energy Tax Credits are now accessible by entities with no tax liability using Elective Pay (aka Direct Pay). Electric Vehicles: Commercial Clean Vehicle Credit, which can now be accessed by tax-exempt entities, applies to more models and EV classes (light, medium and heavy duty). EV Charging Infrastructure: Alternative Fuel Vehicle Refueling Property Credit, which can now be accessed by tax-exempt entities, can offset some of the cost of installing EV charging stations within qualifying census tracts. New Temporary Guidance from the Department of Treasury
The Inflation Reduction Act (IRA) includes several new and revised tax credits to support EV and charging infrastructure investments. Prior to passage of the IRA, many entities were ineligible for tax credits because they lack tax liability. Now, tax-exempt entities like local governments will be able to receive a direct, elective payment of tax credits for making qualifying investments. This new credit delivery mechanism is called “Elective Pay”(aka “Direct Pay”), and it will allow many local governments to speed up the deployment of EV fleets and charging infrastructure. New proposed rules from the U.S. Department of Treasury and Internal Revenue Service (IRS) clarify how the credits work, who is eligible to receive the credits, and how to access them.What is Elective (aka Direct) Pay?
Elective pay allows applicable entities (see below) that do not owe federal income tax to benefit from EV and charging infrastructure tax credits nonetheless. This works by treating the amount of the credit as an overpayment of taxes; resulting in a refund allowable for the amount of the credit.
After a local government purchases an EV or installs a charging station, they would complete a pre-filing registration with the IRS through an online process. The IRS would then provide them with a registration number for each applicable credit. Later, the local government files an annual tax return with the IRS to elect payment for the value of the tax credit by providing the registration number. The IRS would then make a refund payment to the local government for the full value of the credit.
Say, for example, a local government purchases an electric F150 for $50,000. They would complete the pre-filing registration, then file a tax return for the value of the tax credit ($7,500 for a vehicle under 14,000 pounds). The IRS would treat the $7,500 as an “overpayment of taxes” and refund the local government the $7,500, effectively making the purchase price of the vehicle $42,500.Who’s Eligible?
Under the proposed rules, applicable entities for elective pay would include:States and political subdivisions such as local governments, Indian tribal governments, U.S. territory governments and political subdivisions, Agencies and instrumentalities of state, local, tribal, and territorial governments, Tax-exempt organizations under § 501(a), including § 501(c) and § 501 (d) organizations, Alaska Native Corporations, The Tennessee Valley Authority, and Rural electric co-operatives.
However, entities that are eligible for elective pay may not use another new credit delivery mechanism called transferability.New Commercial EV Tax Credit Increases Eligibility & EV Selection
Consumers are generally familiar with the Clean Vehicle Credit for Individuals. The IRA has now expanded EV credits to include two additional credits: the Clean Vehicle Credit for Used Vehicles, and the Commercial Clean Vehicles Credit (§ 45W), or the CCVC. The new CCVC has some notable distinctions compared to the other credit mechanisms:Tax-exempt entities are eligible to use elective pay to purchase electric vehicles with the CCVC. Vehicle requirements are less stringent for the CCVC, meaning they apply to a significantly wider selection of EVs including light-, medium-, and heavy-duty EVs.
CCVC-eligible vehicles are not subject to critical mineral and battery component requirements, North American assembly requirements, MSRP or income limits. Instead, they must be made by a qualified manufacturer. Essentially, if a vehicle manufacturer is on the IRS list of qualified manufactures, the credit applies. For more information about qualifications, see here.
The CVVC credit is worth up to:$7,500 for qualified vehicles with gross vehicle weight ratings of under 14,000 lbs $40,000 for all other vehicles.
It equals the lesser of:30% of your basis in the vehicle (total cost after taxes and registration) The incremental cost of the vehicle (excess of purchase price versus a comparable ICE vehicle) The Expanded AFVRC: Increased Eligibility, Energy Justice, and Maximum Amount
The Alternative Fuel Vehicle Refueling Property Credit (§ 30C), or AFVRC, is now available to tax-exempt entities that want to install EV charging equipment on their property using elective pay. The IRA increased the amount of the allowable credit for installing EV charging equipment. In prior versions of the credit, the maximum credit amount for an entire site was $30,000. The credit is now per charging unit with a maximum of $100,000. Of note, in order to qualify for the AFVRPC, charging equipment must be placed in service in a qualifying property. To qualify, a property must be within non-urban census tracts or low-income communities (the poverty rate is at least 20 percent, or the median family income does not exceed 80 percent of statewide median family income). This qualifier offers a mechanism to close the equity gap where private capital on charging infrastructure has not been readily spent, and is in line with the Justice40 Initiative that 40 percent of the overall benefits of certain Federal investments flow to communities that have been historically underfunded and overburdened by pollution. In order to receive the maximum credit, there are prevailing wage and apprenticeship requirements. See the IRS AFVRC page for other qualifications and details.
To calculate the value of AFVRPC:The credit for qualified refueling property subject to depreciation equals 6% with a maximum credit of $100,000 for each single item of property If prevailing wage and apprenticeship requirements are met it may increase to 30% credit with the same $100,000 limits Stacking Credits with Grants
The tax credits for both vehicles and charging infrastructure may be combined with tax-exempt grants and forgivable loans because of a special rule. However, the total amount (stacked amount) of the tax credit plus the tax-exempt grant cannot exceed the cost of a vehicle or charging station.Resources Clean Energy Tax Incentives: Elective Pay Eligible Tax Credits Elective Pay Overview (IRS) Elective Pay and Transferability FAQs (IRS) Elective Pay: State and Local Governments Commercial Clean Vehicle Credit (IRS) Alternative Fuel Vehicle Refueling Property Credit (§ 30C) (IRS) IRA Guidebook Legal Considerations
The information contained in this blog is subject to the proposed and temporary elective pay and transferability regulations. The author of this blog is not a tax professional. You should consult with a tax professional before making decisions regarding the contents of this blog.
The Southern Alliance for Clean Energy’s Electrify the South program leverages research, advocacy, and outreach to accelerate the equitable transition to electric transportation across the Southeast. Visit ElectrifytheSouth.org to learn more and connect with us.
On August 17, ten members of Congress, including Representative Steve Cohen (TN-9) and Senator Edward Markey (MA), sent a letter to the Tennessee Valley Authority (TVA) urging the federal utility to chart a path to 100% clean electricity by 2035. The letter begins, “As the country’s largest public power producer, the Tennessee Valley Authority (TVA) should be leading the nation’s transition to a clean, renewable energy future, not dragging its feet. Yet, TVA continues to rely on fossil fuels that are not only supercharging the climate crisis, but are subjecting TVA customers to electric grid blackouts and energy insecurity. It is long past time for TVA to begin the transition to a renewable and reliable electric grid.”
“As an extension of the federal administration and the nation’s largest public power provider, TVA should be leading the way toward our energy future and the Biden Administration’s carbon-free goals. Instead, TVA is planning to expand fossil fuel infrastructure and make long-term commitments to fossil fuels, which is a direction that’s clearly out of alignment with reaching our nation’s carbon-free goals.
In addition, TVA’s rolling blackouts during December’s winter storm resulted from failed fossil fuel infrastructure, including gas plants. A broader commitment to renewable energy and energy storage would be a wiser long-term solution to meet TVA’s reliability and carbon goals.
TVA’s decision to dig its heels into the high costs of a fossil gas plant and pipeline in Cumberland is yet another indication that the public utility has run afoul of its mission and the administration’s goals, and must have oversight from an independent body.”
— Dr. Stephen A. Smith, SACE Executive Director
The Congressional letter continues, “We write to urge you to phase out fossil fuels and immediately chart a path to 100-percent clean energy by 2035—one that prioritizes safety, affordability, resilience, and justice. We also strongly encourage you to seize opportunities to thoughtfully re-evaluate and further develop TVA’s long-term energy and decarbonization strategies, including through the upcoming Integrated Resource Plan and the Valley Pathways Decarbonization Study.”
TVA just began crafting a new long-term integrated resource plan, or IRP, which is the prime opportunity to correct its current decarbonization trajectory. By SACE’s own analysis, if TVA continues on its current trajectory it will struggle to get to zero carbon by 2050 let alone 2035. This is primarily because, despite significant financial incentives and technological advances, TVA is doubling-down on investments in new fossil fuel infrastructure. TVA’s next public future planning exercise won’t be until 2028/2029. The importance of this IRP on decarbonization of electricity in the Southeast cannot be overstated.
As the Congressional letter points out, TVA’s continued reliance on fossil resources is not only “supercharging the climate crisis,” but is also “subjecting TVA customers to electric grid blackouts and energy insecurity.”
“TVA’s 10 million customers are shouldering the costs of its delayed transition to clean, renewable power. TVA customers experience some of the highest energy burdens in the nation, often spending an astounding 20 to 30 percent of their income on energy… TVA’s reluctance to join the clean energy revolution is not only expensive for its customers, it is further polluting communities that are already burdened with environmental health hazards. In addition to facing high energy burdens, families in the Tennessee Valley region suffer from the effects of TVA’s dirty energy mix, including exposure to the arsenic, chromium, lead, and mercury present in coal ash. In one recent case, TVA proceeded to dump coal ash in a predominantly Black neighborhood in South Memphis despite strong community opposition.”
— U.S. Senators Markey, Whitehouse, Merkley, Warren, and Sanders, and Representatives Cohen, Ocasio-Cortez, Barragán, Espaillat, and McGovern.
Along with the letter’s authors, we at SACE believe that TVA’s continued reliance on fossil fuels “fails on several fronts… undermines President Biden’s executive order to reach carbon-free electricity by 2035… [and] is contrary to global calls to fight climate change. And it disproportionately impacts communities of color and low wealth. TVA can no longer delay action on the climate emergency and growing energy injustice.”
Click here to read the letter in its entirety.
The post Congressional Leaders Urge TVA to Transition to Clean Renewable Energy appeared first on SACE | Southern Alliance for Clean Energy.
At the end of June, the Southern Alliance for Clean Energy hosted our first Clean Energy Generation webinar. We talked about the myriad of actions, big and small, we can all take to help create a comfortable, healthy, and environmentally sustainable world, starting today. We all have a role to play in the Clean Energy Generation, no matter where we come from, how old we are, how much money we make, or what our abilities are.
To create healthier communities where we can all thrive, we must recognize the urgency of the moment and take decisive action together now. It starts with baby steps – asking questions and joining together as neighbors, students, and friends to decide which specific climate-actions could benefit our communities.
SACE member and volunteer Rhudine Steele spoke during our webinar. A resident of Clayton County, Georgia, Rhudine is passionate about shining a light on communities like her own that are affected by climate pollution. Rhudine noticed that many of her fellow residents were unaware of the impacts of climate change on their community, so she sought to make a difference by simply spreading the word.
Ever wonder how you can take action against the climate crisis, but have no idea where to start? Don’t worry, you’re not alone. Sometimes just sharing what you learn can ignite a fire in someone who will take the information and run with it – starting a chain reaction of climate action. Read on to learn about how Rhudine ran with what she learned and is encouraging others to do the same.
How did you first get involved in thinking about climate change and the environment?
When I first got involved, I was attending a farmers’ market at the Jimmy Carter Center here in Atlanta, Georgia, and I saw an organization that had a table up talking about climate and environmental change. I stopped by to get some information, and it got me to think about my own community, which is made up of Black, Indigenous, People of Color and has a lot of children. I also started thinking: I am living in a food desert, as we have a lack of [access to] fresh vegetables and food. I thought about how many residents in my community, whether children or adults, are unaware of what climate change is all about.
I took this information, and I stepped out into the community, where I first started working with the Captain Planet Foundation. I thought that was a great organization to start with because they begin with the school system and work with children on environmental projects that they can take out into their community. Talking to the children, they can be really in tune with climate change and the impact it is having on their future.
Our county, Clayton County, became one of the first counties in Georgia that was awarded electric school buses by [a grant from ] the Environmental Protection Agency (EPA). We have 25 school buses in Clayton County from the EPA so far. They put out grants often, where there is nothing to pay back, so the EPA is willing to help this region. A lot of people in our community don’t know anything about that, so getting out and telling the students and the teachers about that – they were very, very surprised.
Once the buses are delivered by Bluebird in 2024, we want to think about powering them with solar. We first have to get the community on board with electric school buses, and it will take even more effort to turn them on to solar power. So, we go one step at a time to get ideas out to the community. And they are excited, especially the children, about how to learn and get involved. It just takes getting the information out – the first step is to get people conscious of what environmental changes they can make.
What made you interested in getting involved with SACE and our Clean Energy Generation work?
I started looking specifically at the Southeastern United States, where we are very impacted by environmental challenges.
An example is in my community, we are five or six miles south of the airport. A lot of people are unaware that before planes land, they have to drop a certain amount of jet fuel to land safely. Clayton County is in that flight path, so a lot of it is being dumped over our community and into our water, like the Flint River. The Flint River runs through our county and is connected to other rivers in the state like the Chattahoochee River and the South River, which runs all the way to the Gulf Coast of Mexico. So everything is intertwined, all of us in the state are impacted by this pollution in some way.
We have to start here, in the Southeast. We start at the community level, then we take it to the state level, then we take it to the federal level. But the very first step is to take what you learn out into the community and get people conscious of what the environmental changes are happening in your area. That way everyone can begin with doing a little bit at a time.
What advice do you have for people who are concerned about the climate and environment but not sure how to start taking action?
Get out into the community, especially with other organizations. For example, our plan was, since Clayton County was awarded electric school buses, to do an event for the whole community that involved the children, the politicians, the teachers, and the parents. Just passing out flyers is fine, but then you’re wasting paper. Have a community event and get everybody involved. When people see the event, it will stick in their minds because they’re seeing it, versus just reading it.
It always starts from the bottom and moves up. You start with the children, you move it up to the adults, then you move it up to the politicians. One day, those children will become voting-age, and their votes will count toward environmental projects. Without our children, the politicians would not be politicians.
This is one reason I am involved: not only for my future, but also for the children’s future. No planet, no future. So we start in our communities.GET INVOLVED IN THE CLEAN ENERGY GENERATION
Like Rhudine, we can all get started by taking baby steps, whether it’s talking to an organization at your local farmers’ market, stopping to notice environmental changes in your community, or simply sparking up conversation with someone at the grocery store. There’s no wrong way to get involved, and we all have what it takes to make a difference – especially when we join together as one Clean Energy Generation.
The post Rhudine Steele Shows How Community Action Leads to Real Traction appeared first on SACE | Southern Alliance for Clean Energy.
Edited for content and clarity by Chris H. Hadgis
In 1987, Stan Day’s invention of the Grip Shift, or the bike gear twist, “changed the world.” Since then, the company now known as SRAM has grown, adapted, and acquired 14 additional brands along the way.
Soon-to-be former VP of Marketing at SRAM, David Zimberoff (DZ), earned a highly-unique departure gift: he got to select the replacement for his role at SRAM to pursue his dream of designing a low-cost, sustainable, mobility solution for rural communities.
As part of our Industry Expert Interview series, we had the pleasure of speaking with Jenny Kalanges, Vice President of Membership at 1% for the Planet. 1% For the Planet is a global organization whose members contribute at least one percent of their annual revenue to environmental causes to protect the planet. The aim of the certification is to offer accountability, prevent greenwashing, and "certify reputable giving."
The MUSE Creative Awards is an international, industry-wide competition for communications professionals. This spring, among 75K of our talented peers from 108 countries, KSV was honored to receive not one, but four MUSE Gold Awards.
As TikTok, Instagram, and other social media platforms grow and evolve, brands have new ways to engage with consumers.
Yes, the “Instagram/TikTok made me buy it!” trend is real, and it’s certainly not just about ads, which many users have gotten great at ignoring. These days, it’s influencer nudging that often pushes customers to buy. Thanks to the widespread use of these platforms and massive followings, influencers are driving sales. Recent studies show social media users (that is, most people) trust influencer promotions more than celebrity ones. And nearly 50% of social media users say they’ve bought a product after seeing an influencer advertise it.
Climate change, if you haven’t heard, is real1.
As advertisers and brands, it falls on us to do what we can to tell the story of a realistic, more sustainable future. We have a duty to do so responsibly and in a way that not only resonates, but drives people to actually change. And yet, one major hurdle still stands in the way: the continued political polarization of the topic.
Responsible advertising related to climate change must break through this polarization to reach a wide audience, make sustainability a priority for brands, and continue to shift public opinion.
The post How to Stand Out and Increase Sales at Farmers Markets: Proven Sustainable Strategies appeared first on Earthava.
Small businesses are often the cornerstones of local communities, especially the very small mom-and-pop type shops. Not only do these businesses help support the livelihood of those in the community, but they also tend to be more sustainable than larger businesses and corporations. Instead of saying teamwork makes the dream work, we’d like to think […]
The post How to Stand Out and Increase Sales at Farmers Markets: Proven Sustainable Strategies appeared first on Earthava.
Whether you’re hosting your first event or your hundredth, there is always room for improvement. A great way to upgrade your event organization is to focus on sustainability. With attendee travel, waste, and resource use, events have a significant environmental impact. Learn how you can reduce the negative impact of your event by having it […]
The post How Mom-and-Pop Shops are Leading the Charge in Sustainability appeared first on Earthava.
Small businesses are the backbone of the global economy. A recent report published by the World Economic Forum (WEF) found that small businesses create 66% of jobs and support the livelihoods of 2 billion people. Unfortunately, the WEF report also suggests that many small to medium-sized enterprises (SMEs) struggle to adopt sustainable business practices. This […]
The post How Mom-and-Pop Shops are Leading the Charge in Sustainability appeared first on Earthava.
The post How to Bring Your Eco-Friendly Knowledge to Social Media appeared first on Earthava.
While social media may have started as a tool for communication and socializing, it has long since become so much more than that. Today, billions of people use social media across the globe for a range of reasons. One of the most significant benefits that have come out of social media is that it enables […]
The post How to Bring Your Eco-Friendly Knowledge to Social Media appeared first on Earthava.
When you hear about Earth’s oceans in danger, it should spark your attention and make you curious about how to get involved in doing your part to save it. Overfishing, climate change, and pollution are currently troubling the waters. While larger corporations have a significant amount of changes to make, you might not even realize […]
A major voluntary carbon standard invites comments on linking carbon credits with crypto instruments and tokens, highlighting emerging questions around blockchain transactions in voluntary carbon markets.
On August 3, 2022, Verra, a voluntary carbon standard, announced it was opening a public consultation process on its proposed approach to third-party crypto instruments and tokens. The 60-day consultation began on August 3 and will close on October 2, 2022.
Verra is seeking public input on a proposal to permit tokenization of “live,” unretired carbon offsets via a new “immobilization” process. This “immobilization” would essentially lock a Verra account holder’s carbon credit within that account’s registry unless the credit is retired or the crypto instrument or token is “burned” (i.e., destroyed). In recent years, a number of entities have sought to develop crypto instruments or tokens that represent Verra-generated carbon offsets. Verra’s announcement of the public consultation process is the latest in a series of steps it has taken to address these efforts and to provide validity and transparency in the market for tokenized carbon offsets.
Verra’s stated objective in conducting its consultation is keyed to identifying and implementing anti-fraud measures related to the association of Verified Carbon Units (VCUs) with crypto instruments and tokens. While crypto instruments and tokens are not inherently fraudulent, in Verra’s words, their “exotic and technical nature… can create an elevated risk of unscrupulous entities taking advantage of unsuspecting people.” Verra began its public consideration of crypto instruments and tokens in late 2021, when it issued a “Statement on Crypto Market Activities.” In that statement, Verra noted its awareness of crypto market activities that aimed “to represent canceled or retired VCUs” issued by Verra. At the time, Verra did not express a position on the legal nature or environmental integrity of crypto activities.
Verra’s proposed approach to crypto instruments and tokens relies on an important distinction between “retired” and “immobilized” credits. Whereas “retiring” a carbon credit is widely understood to constitute consumption of that credit, “immobilization” would essentially freeze within a Verra account holder’s registry account any VCU associated with a corresponding crypto instrument or token. The VCU would remain “immobilized” until either (1) it is retired, and both the VCU and corresponding crypto instrument or token are burned; or (2) the VCU is “reactivated” by burning the crypto instrument or token without the use of any environment benefit. Consistent with this approach, on May 25, 2022, Verra prohibited the practice of creating instruments or tokens based on retired credits.
In the public consultation process announcement, Verra cited perceived risks of a poorly-designed crypto framework that the “immobilization” framework is intended to address. In particular, Verra cited environmental integrity concerns, risks in connection with know-your-client (KYC) processes, and regulatory and legal “uncertainty” stemming from varying laws concerning crypto instruments and tokens, as well as its concerns about fraud discussed above.
As one of the largest carbon offset standards, Verra’s decisions on tokenization of carbon offsets will impact the nascent carbon offset cryptocurrency market. In its public consultation guidance, Verra has outlined a number of potential risks on which it is requesting input. Interested parties may submit comments to Verra through the end of the public consultation process at 11:59 pm ET on October 2, 2022.
 Verra, Public Consultation: Verra’s Approach to Third-Party Crypto Instruments and Tokens (Aug. 3, 2022), https://verra.org/public-consultation-verras-approach-to-third-party-crypto-instruments-and-tokens/
 Verra, Public Consultation on Third-Party Crypto Instruments and Tokens (Aug. 3, 2022), https://verra.org/wp-content/uploads/2022/08/Verra-Public-Consultation-on-Crypto-Instruments-and-Tokens.pdf (all quotes in this post not otherwise cited are cited to this source). Note, Verra considers crypto instruments and tokens as essentially identical, noting that “these types of instruments [both] exist as entries recorded on a blockchain and represent underlying Verra-issued units.” Thus, for Verra’s purposes, there is no difference between a “crypto instrument” and a “token.”
 Verra, Verra Addresses Crypto Instruments and Tokens (May 25, 2022), https://verra.org/verra-addresses-crypto-instruments-and-tokens/
Public agencies prevailed in 71% of CEQA cases analyzed.
By James L. Arnone, Daniel P. Brunton, Nikki Buffa, Marc T. Campopiano, Peter J. Gutierrez, John C. Heintz, Lauren E. Paull, Aron Potash, Lucas I. Quass, Natalie C. Rogers, Jennifer K. Roy, and Winston P. Stromberg
Latham & Watkins is pleased to present its fifth annual CEQA Case Report. Throughout 2021 Latham lawyers reviewed each of the 51 California Environmental Quality Act (CEQA) appellate cases, whether published or unpublished. Below is a compilation of the information distilled from that annual review and a discussion of the patterns that emerged.
In 2021, the California Courts of Appeal issued 51 opinions that substantially considered CEQA while the US District Court for the Northern District of California issued one opinion. Notably, 2021 saw an increased focus on CEQA wildfire analysis. In cases like Sierra Watch v. County of Placer, the Court of Appeal ruled that the County of Placer failed to adequately analyze wildfire risks by wrongly assuming first responders would provide traffic control in the event of an emergency. And in Newtown Preservation Society v. County of El Dorado, the Court upheld a mitigated negative declaration in the face of public concerns that a bridge reconstruction project would result in significant impacts on resident safety and emergency evacuation in case of a wildfire.
Also notable in 2021 was the rare occurrence of a Court of Appeal partially affirming the denial of an anti-SLAPP motion following a CEQA lawsuit. In Dunning v. Johnson, the Court found that a project developer had established a probability of demonstrating lack of probable cause for the underlying CEQA petition, as well as a probability of demonstrating that the petitioners pursued the CEQA litigation with malice.
Of the 51 appellate CEQA cases in 2021, 15 were published, six were partially published, and 30 were unpublished. A nearly equal number of cases focused on Environmental Impact Reports (19 cases) and Attorneys’ Fees, Justiciability, and Other Procedures (18 cases), which includes issues such as mootness, statutes of limitations, waiver, and res judicata. These two topics were the focus of 71% of all cases in 2021 — which is consistent with 2020, when these two topics were the focus of 70% of all cases. Also in 2021, 10 cases focused on Exemptions and Exceptions, two focused on Mitigated Negative Declarations, two focused on Supplemental Review, and one focused on Certified Regulatory Programs.
Unlike 2018, 2019, and 2020, there was not a single district where the public agency prevailed in all cases. However, the First District had the most favorable record for public agencies, which prevailed in 89% of all cases. As was the case in 2019, in the Fifth District, public agencies did not prevail in a single case.
Overall, public agencies prevailed in 38 of the 52 cases, or 71%, up slightly from 68% in 2020 and consistent with the 71% win rate in 2019. The public agency prevailed in 88% of Attorneys’ Fees, Justiciability, and Other Procedures cases and 79% of Exemptions and Exceptions cases.
The action marks the clearance of another significant hurdle toward BOEM’s offshore wind lease sales in federal waters offshore California, anticipated to occur this fall.
In the first half of 2022, the Bureau of Ocean Energy Management (BOEM) has moved swiftly toward the first offshore wind lease sales in California, currently anticipated to occur in the fall. BOEM has identified a total of five proposed leases across two areas — the Humboldt Wind Energy Area (WEA) and the Morro Bay WEA. In April 2022, BOEM issued a Consistency Determination for the Morro Bay WEA — as required by the National Oceanic and Atmospheric Administration Federal Consistency Regulations — and, just last week, the California Coastal Commission (the Commission) conditionally concurred with this determination.
BOEM is authorized by federal law to issue leases, easements, and rights of way to allow for renewable energy development on the Outer Continental Shelf and, in doing so, is required to coordinate with relevant federal agencies and affected state and local governments to ensure that renewable energy development takes place in a safe and environmentally responsible manner. In its Consistency Determination, BOEM focused on the impacts of lease site characterization activities on coastal resources — not on the types of impacts that future construction and operation of offshore wind projects could have — and concluded that the leasing activities planned for the Morro Bay WEA, such as geophysical, geotechnical, and biological surveys and site assessment activities, are “consistent to the maximum extent practicable” with the California Coastal Management Program.
At its June 2022 meeting on the Morro Bay WEA, the Commission considered whether to concur with BOEM’s Consistency Determination. The Commission Staff Report recommended that the Commission conditionally approve the Consistency Determination, subject to BOEM’s agreement to adopt seven conditions:Conditions 1, 2, and 3 aim to protect marine habitats and sensitive species. Condition 1 requires BOEM to work with Commission staff to ensure that lessees’ survey plans and Site Assessment Plans (SAP) are coordinated, consistent, minimize impacts to coastal resources, and provide the data and information necessary for analysis of future consistency certifications. Condition 1 also requires lessees to comply with marine wildlife protection and monitoring measures, to prepare a site-specific spill prevention and response plan and a critical operations and curtailment plan, and to provide an anchoring plan. Condition 2 requires avoidance of intentional contact with hard substrate, rock outcroppings, seamounts, or deep-sea coral/sponge habitat. Condition 3 requires a vessel speed restriction of no more than 10 knots for survey and transit activities. Condition 4 requires BOEM to ensure safe navigation through the lease areas. Conditions 5 and 6 require engagement with environmental justice communities and federally recognized and non-federally recognized Native American tribes on all elements of the lessees’ project development processes, including a workforce plan, survey plan, SAP, and COPs. Condition 6 also requires lessees to develop communication protocols in the event of an unanticipated discovery of a potential tribal resource. Condition 7 requires lessees to have an independent fisheries liaison that will coordinate with affected commercial and recreational fishing communities and harbor districts to ensure that surveys and site assessment activities avoid conflicts with fisheries. Condition 7 also requires BOEM to work with state agencies, fishermen, and offshore wind developers to develop a statewide strategy for avoidance, minimization, and mitigation of impacts to fishing and fisheries.
At the meeting, BOEM presented an overview of the lease conditions with which lessees will be required to comply, including developing communication plans with tribes, state and federal agencies, and fisheries to ensure that key stakeholders remain informed and engaged during the project development process. Lessees will also be required to make every reasonable effort to enter into project labor agreements for the construction stage of any proposed offshore wind project for the leased area.[i]
On June 8, 2022, the Commission conditionally concurred with BOEM’s Consistency Determination. Notably, public comment during the Commission’s process, including comment from the environmental community, was largely in support of a concurrence or conditional concurrence by the Commission.
The decision regarding the Morro Bay WEA follows a similar decision made with regard to the Humboldt WEA earlier this year. Specifically, in January 2022, BOEM issued a Coastal Consistency Determination for the Humboldt WEA, and in April, the Commission conditionally concurred with this determination. Given the Commission’s power and authority over coastal development, these concurrence decisions mark significant hurdles cleared in the process to reach BOEM’s planned lease auction for the Morro Bay and Humboldt WEAs this fall.
The proposal would auction off almost 375,000 acres of the Outer Continental Shelf offshore California for wind energy development.
On May 31, 2022, the Bureau of Ocean Energy Management (BOEM) published a Proposed Sale Notice (PSN) for a pair of renewable energy lease sales offshore California. The PSN — which is the third offshore wind auction under the Biden-Harris Administration — represents a major inflection point in the complex and sometimes contentious process to bring wind power to the Outer Continental Shelf (OCS) offshore California. The timing of the PSN also dovetails with the California Energy Commission’s May 2022 announcement of the nation’s most ambitious target for offshore wind development: the state is seeking to construct 3 gigawatts of offshore wind capacity by 2030, with the potential for 10 to 15 gigawatts by 2045.
The PSN kicks off a 60-day public comment period ending on August 1, 2022, providing the last opportunity for interested parties to shape the California lease sales. Prospective bidders who are not already qualified to take part in the lease sale must submit their materials during this comment period in order to qualify to participate. The lease sales are expected to be held later this year.
Latham & Watkins has published a Client Alert that discusses four key aspects of the proposed California lease sales that potential bidders will need to consider, including:BOEM’s novel decision to hold simultaneous lease sales for the first time and the potential future restrictions in the lease areas New twists on BOEM’s use of multi-factor bidding in the California sales and how bidders may qualify for BOEM’s proposed bidding credits Proposed revisions to BOEM’s “affiliated entity” disclosure standards BOEM’s proposed lease stipulations for the California lease areas, which will significantly shape how development progresses offshore California
CARB addresses California’s increasingly severe climate impacts.
On May 10, 2022, the California Air Resources Board (CARB) released its Draft 2022 Scoping Plan Update (Draft Scoping Plan) for public review and comment. Assembly Bill 32, the California Global Warming Solutions Act of 2006, requires CARB to develop and update every five years a scoping plan that describes the approach California will take to reduce greenhouse gas (GHG) emissions to achieve the goal of reducing emissions to 1990 levels by 2020. Senate Bill 32 subsequently strengthened the state’s GHG emissions reductions target to at least 40% below 1990 levels by 2030.
Latham & Watkins’ first post in this series discusses CARB’s Proposed Scenario to achieve the state’s GHG targets, which adopts a carbon neutrality target for 2045. The second post discusses how the Cap-and-Trade Program features in the Draft Scoping Plan. The third post discussed how California’s Low Carbon Fuel Standard (LCFS) Program factors into the state’s GHG reduction goals and how the LCFS Program may be amended in the near future. This fourth and final post describes how the Draft Scoping Plan responds to some of California’s most significant climate impacts, like wildfires, drought, and extreme heat.
The Draft Scoping Plan begins by highlighting many of the growing climate change impacts that Californians are already experiencing. For example, the Draft Scoping Plan describes the growing threat that severe wildfire poses in California and notes that of the 20 largest wildfires ever recorded in California, nine of them occurred in 2020 and 2021. Indeed, 2020 was the worst recorded wildfire season in California, burning more than 4.3 million acres, damaging or destroying 11,000 structures, and resulting in US$12 billion dollars of property loss and fire suppression costs. Critically, in 2020, wildfires emitted 12 million metric tons of carbon dioxide (CO2) into the atmosphere, which is almost more than twice the annual GHG emissions of California’s cement production industry.
The Draft Scoping Plan also notes that more than 37 million Californians are affected by drought, and, as of March 2022, 87% of California was in severe drought, and 100% of the state was in at least moderate drought. The Draft Scoping Plan notes that within this ongoing “megadrought,” the past 22 years have represented the southwest United States’ driest period since at least 800 CE. In 2021, the drought’s impacts on California’s agricultural sector resulted in fallowing nearly 400,000 acres of fields, crop revenue losses of US$962 million, and total economic impacts over US$1.7 billion. The drought also has severely impacted wildlife and caused water shortages and restrictions.
Finally, the Draft Scoping Plan acknowledges that extreme heat is a growing concern in California with 2021 being the hottest summer on record and Death Valley recording the world’s highest reliably measured temperature (130°F) in July 2021. The Draft Scoping Plan indicates that daily maximum average temperature is expected to rise 4.4°F–5.8°F by 2050 and 5.6°F–8.8°F by 2100. According to the Draft Scoping Plan, heat is among the deadliest of all climate hazards in California, and heat waves in cities are projected to cause two to three times more heat-related deaths by mid-century.
The Draft Scoping Plan notes that as climate change increases the likelihood of extreme wildfires, drought, heat, and other impacts, carbon stocks in California’s “natural and working lands” will face increased risks and impacts. Accordingly, the Draft Scoping Plan includes a number of strategies in the Proposed Scenario to respond to California’s growing climate impacts, while also helping the state achieve its GHG emissions reduction goals. These include:Treating 2–2.5 million acres of forests, shrublands/chaparral, and grasslands annually with regionally specific management strategies, including prescribed fires, thinning, harvesting, and other management actions. The Draft Scoping Plan anticipates that these activities will restore health and resilience to overstocked forests, prevent carbon losses from severe wildfire, reduce health costs related to wildfire emissions, and improve water quantity and quality. Implementing “climate smart” practices, land easements, and conservation annually for certain crops and increasing organic agriculture to 20% of all cultivated acres by 2045. The Draft Scoping Plan indicates that these measures can increase soil water holding capacity while also reducing pesticide use. In developed areas, increasing urban forestry investments by 20% above current levels and utilizing tree watering that is 30% less sensitive to drought. The Draft Scoping Plan indicates that these measures would increase urban tree canopy and shade cover while reducing heat island effects and supporting water infrastructure. The Draft Scoping Plan also notes that urban greening can also reduce fire risk by providing defensible space.
The Draft Scoping Plan notes that these strategies, along with reduced traffic pollution and other measures, can also provide significant health benefits to Californians. It indicates that reduced heat impacts, increased urban greening, reduced wildfire smoke inhalation, and increased food security can improve physical and mental health for adults and children, reduce a range of chronic illnesses, and promote improvements in life expectancy.
CARB doubles down on LCFS Program and liquid transportation fuels.
On May 10, 2022, the California Air Resources Board (CARB) released its Draft 2022 Scoping Plan Update (Draft Scoping Plan) for public review and comment. Assembly Bill (AB) 32, the California Global Warming Solutions Act of 2006 (AB 32), requires CARB to develop and update every five years a scoping plan that describes the approach California will take to reduce greenhouse gas (GHG) emissions to achieve the goal of reducing emissions to 1990 levels by 2020. Senate Bill (SB) 32 subsequently strengthened the state’s GHG emissions reductions target to at least 40% below 1990 levels by 2030. Our first post in this series discusses CARB’s Proposed Scenario to achieve the state’s GHG targets, which adopts a carbon neutrality target for 2045. Our second post explores how the Cap-and-Trade Program features in the Draft Scoping Plan. In this third post, we examine how California’s Low Carbon Fuel Standard (LCFS) Program factors into the state’s GHG reduction goals and how the LCFS Program may be amended in the near future. The Draft Scoping Plan states that CARB will initiate a rulemaking on the LCFS to ensure it continues to support low-carbon fuels that will displace petroleum fuels.
The California LCFS Program was adopted in 2009 as one of the key measures to reduce GHG emissions in California under AB 32. The program’s original target was to reduce the carbon intensity (CI) of transportation fuel used in California by 2020 at least 10% from a 2010 baseline. CI is a measure of the amount of carbon dioxide equivalent (CO2e) emitted per unit of energy provided by that fuel, taking into account the GHG emissions over the lifecycle of the fuel — including production, transportation to market, and consumption. The LCFS Program sets annual CI standards that decline over time. Transportation fuels sold in California that have a lower CI than the LCFS Program benchmark established by CARB generate LCFS Credits, where one credit represents one metric tonne of CO2e reduced. Transportation fuels sold in California with CIs higher than the benchmark generate deficits. A fuel supplier with deficits must generate or acquire an equivalent number of LCFS Credits on an annual basis, creating demand for low-CI fuels in California.
The LCFS Program was most recently, and most significantly, amended in 2018 in response to the 2017 Scoping Plan, which “made it clear that developing a more ambitious LCFS is a critical part of the state’s efforts to achieve the SB 32 goal.” In alignment with California’s 2030 GHG target, the amendments strengthened and extended the CI benchmarks to a 20% reduction below the 2010 baseline by 2030 and in each year going forward. In addition to strengthening the CI targets, the 2018 amendments made the following major changes to the LCFS Program:Covered Fuels: The amendments expanded the fuel types covered by the LCFS Program to encourage further GHG reductions by including alternative jet fuel, propane, compressed natural gas, and renewable natural gas. Capacity-Based Crediting: These added provisions allow an entity to generate LCFS Credits for the deployment of zero-emission vehicle (ZEV) fueling infrastructure, including hydrogen stations and electric vehicle (EV) fast charging sites. LCFS Credits are generated based on the capacity of the station or charger, minus the quantity of dispensed fuel (which generates LCFS Credits under a CARB-approved fuel pathway). Capacity-based crediting provides a revenue stream for fueling stations while the ZEV population and usage of the station increases. CCS Protocol: The 2018 amendments adopted a protocol to allow crediting of carbon capture and sequestration (CCS) projects. CCS projects must incorporate monitoring, reporting, and verification requirements to demonstrate that the GHG reductions are permanent in order to generate LCFS Credits.
As of 2019, the transportation sector was the largest sector source of GHG emissions in the state, accounting for more than 50% of statewide GHG emissions. The Draft Scoping Plan addresses three ways in which transportation emissions may be reduced: (1) new technology; (2) innovative fuels; and (3) a decrease in vehicle miles traveled. Transportation technology and fuels both implicate the LCFS Program.
In terms of technology, the Draft Scoping Plan emphasizes that vehicles must transition to zero emission technology in order to decarbonize the transportation sector. Executive Order N-79-20 set a goal that 100% of in-state new passenger car and truck sales will be ZEV by 2035, which is reflected in the Draft Scoping Plan. That same Executive Order also sets a goal that 100% of medium-duty and heavy-duty trucks will be ZEV by 2045 where feasible, and by 2035 for drayage trucks. As shown in Figure 4-1, copied below from the Draft Scoping Plan, meeting the state’s goals for decarbonizing the transportation sector will require rapid, near-term increases in the percentage of new vehicle sales that are ZEV.
The Draft Scoping Plan notes that easy access to refueling infrastructure is required to achieve the level of ZEV adoption required to meet the state’s goals. While certain existing public funding mechanisms are available for the deployment of ZEV refueling infrastructure, “[p]rivate investment in reliable, affordable and ubiquitous refueling infrastructure must drive the transition as the business case for ZEVs continues to strengthen.” To that end, the “Strategies for Achieving Success” in the transportation technology category include an effort to align the LCFS Program with the Draft Scoping Plan, and:
Promote private investment in the transition to ZEV technology, undergirded by regulatory certainty, such as infrastructure credits in the Low Carbon Fuel Standard for hydrogen and electricity, and hydrogen station grants from the California Energy Commission’s Clean Transportation Program pursuant to Executive Order B-48-18. (emphasis added)
In terms of transportation fuels, while electricity and hydrogen are currently the primary fuels for ZEVs, the Draft Scoping Plan acknowledges the need for low-carbon liquid fuels during the transition to ZEVs. This acknowledgement is pragmatic because gasoline- and diesel-powered vehicles are on the road today, and those sold before the aforementioned 100% ZEV mandates, will continue to operate as the California fleet turns over. Additionally, the Draft Scoping Plan notes that low-carbon liquid fuels can be used to reduce GHG emissions from sectors that cannot easily transition to ZEVs, such as aviation, locomotives, and marine applications. As shown in Figure 4-2, taken from the Draft Scoping Plan, the projected transportation fuel mixes in 2035 and 2045 indicate a substantial decrease in liquid petroleum fuels with increases in electricity, biofuels, and hydrogen.
The Draft Scoping Plan credits the LCFS Program for fostering a growing alternative fuel market in California, and states that the market signals from the LCFS Program are in part responsible for fuels like renewable diesel, sustainable aviation fuel, renewable gas, and electricity all gaining substantial market shares and displacing gasoline and diesel in vehicles.
The Draft Scoping Plan’s “Strategies for Achieving Success” in the category of transportation fuels includes initiating a public process to evaluate increasing the stringency and scope of the LCFS Program, which could include proposing accelerated CI targets between now and 2030; further declines in post-2030 CI targets (which are currently held constant at the 2030 levels) to align with the Final 2022 Scoping Plan; fully integrating current “opt-in” sectors into the LCFS Program (e.g., aviation fuels); and providing capacity crediting for hydrogen and electricity used for heavy-duty vehicle fueling.
The success of the LCFS Program as a market-driven means to reduce the CI of transportation fuels relies heavily on the value of LCFS Credits. While in May 2021 LCFS Credits were trading for an average price of $190, in the week of May 23-29, 2022, CARB reports an average Credit price of $105.03. Credit prices have been steadily declining over the last two years due to a variety of factors, including new low-carbon fuel production facilities coming online and market expectations about future supplies of LCFS Credits from announced, but not yet built, facilities. It remains to be seen whether low-carbon fuel production facilities and ZEV infrastructure projects can secure project financing, be constructed, and remain profitable when LCFS Credit prices are falling. Given the Draft Scoping Plan’s acknowledgement of the LCFS Program’s role in encouraging and supporting the scaling up of alternative fuels, the upcoming LCFS rulemaking also may evaluate provisions to provide regulatory certainty and maintain LCFS Credit prices at a level that will continue to attract private investment.
 Draft Scoping Plan at 225.
 CARB, Staff Report: Initial Statement of Reasons for the Proposed Amendments to the Low Carbon Fuel Standard Regulation at EX-1 (Mar. 2018), available at: https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2018/lcfs18/isor.pdf?_ga=2.163810422.838982876.1653944403-1700096536.1646153403.
 Draft Scoping Plan at 147.
 Id. at 150-51.
 Id. at 154.
 CARB, Monthly LCFS Credit Transfer Activity Report for May 2021 (June 8, 2021), available at: https://ww2.arb.ca.gov/sites/default/files/classic/fuels/lcfs/credit/May%202021%20-%20Monthly%20Credit%20Transfer%20Activity.pdf.
 CARB, Weekly LCFS Credit Transfer Activity Reports, available at: https://ww2.arb.ca.gov/resources/documents/weekly-lcfs-credit-transfer-activity-reports.
CARB opts to stay the course on Cap-and-Trade Program.
On May 10, 2022, the California Air Resources Board (CARB) released its Draft 2022 Scoping Plan Update for public review and comment. Assembly Bill (AB) 32, the California Global Warming Solutions Act of 2006 (AB 32), required CARB to develop a scoping plan, to be updated at least once every five years, that describes the approach California will take to reduce Greenhouse Gas (GHG) emissions to achieve the goal of reducing emissions to 1990 levels by 2020. In developing the 2022 Draft Scoping Plan Update (Draft Scoping Plan), CARB evaluated four scenarios to identify the most viable path to achieve the state’s 2030 interim GHG reduction and GHG neutrality targets. Our first post on this topic discusses CARB’s ultimate selection of the third scenario, which adopts a carbon neutrality target for 2045 instead of 2035, as the best among the four. In this second post, we discuss how the Cap-and-Trade Program (the Program) features in the Draft Scoping Plan.
AB 32 authorized CARB to adopt a market-based compliance mechanism with “declining annual aggregate emission limits for sources or categories of sources that emit greenhouse gas emissions” through 2020. The market-based compliance mechanism deigned by CARB went into effect in 2012 in the form of the California Cap-and-Trade Program. In 2017, AB 398 authorized the extension of the Program through 2030, instituted certain design changes, and set a new GHG reduction goal of 40 percent by 2030. The AB 398 changes to Cap-and-Trade Program started to phase-in on January 1, 2021. Today, the Program regulates roughly 450 entities responsible for roughly 85% of the state’s GHG emissions. Key elements of the Program include:Declining Cap: Annual cap that declines by 4 percent annually. Covered Entities: The Program regulates manufacturers, electricity importers, suppliers of natural gas, gasoline and other fuels, and CO2 suppliers that emit more than 25,000 metric tonnes of carbon dioxide equivalent (MTCO2e) annually. Use of Offsets: Air Resources Board Offset Credits (ARBOCS) can be used by Covered Entities to satisfy their emission reduction obligations under the Program in place of allowances, up to a limit of 4 percent between 2021 and 2025, and up to 6 percent from 2026 to 2030. Half of all ARBOCs must provide direct environmental benefits to the state of California. Allowances Distribution and Pricing: CARB distributes allowances to the Cap-and-Trade Program market through two primary mechanisms: (1) direct allocation to regulated entities (namely, electrical distribution utilities, natural gas suppliers, and industrial facilities) and (2) sale at auction to all market participants, subject to purchase limits. Allowance floor prices increase by 5 percent plus inflation per year to incentivize onsite emissions reductions for covered entities. Allowance Banking: Registered market participants may bank and hold allowances for use in a later compliance period. Participants are subject to holding limits. Program Linkage: The Cap-and-Trade Regulations permit California to link its Program with that of another jurisdiction to promote cost effectiveness and facilitate greater emissions reductions. The Program has been linked with the Cap-and-Trade System of Québec since 2014. Use of Auction Proceeds: A recent report published by CARB indicated that the sale of state-owned allowances through Cap-and-Trade auctions have generated, after legislative appropriations, a total of $18.3 billion. To date, $10.5 billion funds have been invested into GHG-reducing projects. Per SB 535 and AB 1550, a minimum of 35 percent of California Climate Investments must benefit priority populations, which include disadvantaged communities and low-income communities and households across the state.
The Draft Scoping Plan Update discusses design features of the Program that went into effect in January 2021 which are intended to “help ensure that the program is able to handle periods of high and low demand for allowances while continuing to ensure a steadily increasing price signal for regulated entities to invest in GHG reduction technologies.” These design features include:Doubling the annual cap decline from 2 to 4 percent from 2021 to 2030 Adding a price ceiling at which an unlimited number of additional allowances will be sold to satisfy high demand and contain costs Redesigning the allowance price containment reserve consisting of two tiers, or “speed bumps,” at which allowances designated for such purpose will be sold in order to contain rising price levels and satisfy market demand. Retaining a 100 percent leakage assistance factor for industry Lowering offset usage limits from 8 to 4 percent, and requiring half of all offsets to provide direct environmental benefits to the state of California
The Draft Scoping Plan Update noted the existence of 310 million unused allowances as a result of early achievement of the 2020 emission reduction target. While covered entities would not be required to use the banked allowances should their emissions collectively decline by 14 million metric tonnes (MMT) each and every year, the Draft Scoping Plan Update notes that “it is likely that the existing bank of 310 [MMT] allowances will be needed over the course of this decade and will be exhausted by the end of the decade.” In response to concerns regarding the unused allowances, CARB notes that Environmental Protection Secretary Jared Blumenfeld would be reporting to the Legislature by the end of 2023 on the status of the allowance supply and recommendations on potential Program modifications.
CARB did not propose any new Program design features in the Draft Scoping Plan Update and instead noted its intention to “use the modeling for the Final 2022 Scoping Plan to assess what, if any, changes are warranted to the Cap-and-Trade, or other, programs to ensure we are on track to achieve the 2030 target.” As for the role of the Program beyond the 2030 target, CARB indicated that “carbon pricing in the form of a Cap-and-Trade Program has been part of the portfolio to achieve the state’s GHG reduction targets, and it will remain critical as we work toward carbon neutrality.”
The Final Scoping Plan Update is currently expected to be published by December 2022, and is expected to be followed by a rulemaking process to amend the Cap-and-Trade Program in 2023.
The Draft 2022 Scoping Plan Update takes an all-of-the-above approach to decarbonize California.
On May 10, 2022, the California Air Resources Board (CARB) released its Draft 2022 Scoping Plan Update for public review and comment. Originally, the California Global Warming Solutions Act of 2006 required CARB to develop a scoping plan, to be updated every five years, that describes the approach California will take to reduce Greenhouse Gas (GHG) emissions to achieve the goal of reducing emissions to 1990 levels by 2020.
Subsequently, Senate Bill 32 strengthened the state’s GHG emissions reductions target to at least 40% below 1990 levels by 2030 and former Governor Jerry Brown’s Executive Order B-55-18 established a second statewide goal to achieve carbon neutrality as soon as possible, and no later than 2045. Recognizing the need to achieve GHG emissions reductions more quickly, in July 2021, Governor Gavin Newsom directed CARB to accelerate efforts to achieve the state’s climate stabilization and GHG reduction goals, including to “identify a pathway for achieving carbon neutrality a full decade earlier than the existing target of 2045.” The Draft Scoping Plan Update identifies CARB’s proposed path for how California can reach both its interim goal of reducing GHGs by at least 40% below 1990 levels by 2030, and its ultimate goal of carbon neutrality by 2045 along with pathways that would achieve carbon neutrality by 2035.
In developing the Draft Scoping Plan Update, CARB evaluated four scenarios to identify the most viable path to achieve the state’s 2030 interim GHG reduction and 2035/2045 GHG neutrality targets:Scenario 1: Achieves carbon neutrality by 2035 by almost completely phasing out fossil fuel combustion with a limited role for carbon capture and sequestration (CCS) and engineered carbon removal, and no new dairy digesters or landfill methane capture Scenario 2: Achieves carbon neutrality by 2035 with aggressive deployment of a full suite of technology and energy options, including CCS and other engineered carbon removal Scenario 3: Achieves carbon neutrality by 2045 by deploying a broad portfolio of existing and emerging fossil fuel alternatives and clean technologies Scenario 4: Achieves carbon neutrality by 2045 with a slower deployment of a broad portfolio of existing and emerging fossil fuel alternatives and a higher reliance on CO2 removal technologies
Ultimately, CARB staff chose Scenario 3 (Proposed Scenario) as the one that “best achieves the balance of cost-effectiveness, health benefits, and technological feasibility” in meeting the state’s goals. To reach the 2030 and 2045 goals, the Proposed Scenario envisions an all-of-the-above approach that promotes electrifying everything that can feasibly be electrified while also foreseeing a substantial role for clean fuels like green hydrogen and CCS for those emissions that cannot be easily avoided.
Figure 2-1, copied below from the Draft Scoping Plan Update, shows the GHG emissions reductions associated with the Proposed Scenario compared to the “Reference” or business-as-usual scenario. As shown in Figure 2-1, even in 2045, the Proposed Scenario envisions almost 100 million metric tons of carbon dioxide equivalent (MMTCO2e) that would need to be removed and sequestered to meet the state’s carbon neutrality goal, with CARB noting that “[t]he modeling clearly shows, there is no path to carbon neutrality without carbon removal and sequestration.” Governor Newsom, citing the Draft Scoping Plan Update’s reliance on CCS, included $100 million in new monies for carbon removal projects in his updated budget proposal.
To achieve the necessary GHG emissions reductions, the Proposed Scenario outlines what CARB believes will be necessary across various sectors including transportation, buildings, manufacturing, and electricity. Regarding transportation, the Proposed Scenario envisions the rapid deployment of zero emission vehicles across all vehicle categories. As shown in Figure 4-2, copied below from the Draft Scoping Plan Update, the transportation fuel mix in 2045 under the Proposed Scenario sees a substantial decrease in liquid petroleum fuels with increases in electricity, biofuels, and hydrogen. The Draft Scoping Plan Update predicts the importance of the Low Carbon Fuel Standard (LCFS) in incentivizing private investment to achieve these goals and calls for a public process focused on increasing the stringency and scope of the LCFS.
Under the Proposed Scenario, buildings in the state will almost completely decarbonize by 2045, with the use of fossil natural gas decreasing to a fraction of what is used today. The Proposed Scenario also relies heavily on energy efficiency to achieve reductions in building emissions, as demonstrated by the overall reduction in energy demand from buildings, shown in Figure 4-8 copied below from the Draft Scoping Plan Update.
CARB recognizes the importance of California’s industrial sector to the state’s economy and workforce but also recognizes the difficulty in decarbonizing some industrial activities such as steel forging, glass manufacturing, and industries with calcination processes, such as manufacturing lime and cement that cannot be easily electrified because of the high heat required. For these activities, the Proposed Scenario envisions a fuel switch to hydrogen, biomethane (aka renewable natural gas, or RNG), or other low-carbon fuels, with a specific strategy to “develop infrastructure for CCS and hydrogen production to reduce GHG emissions where cost-effective and technologically feasible non-combustion alternatives are not available.”
CARB calls decarbonizing the electricity sector a “crucial pillar” of the Draft Scoping Plan Update. If California does not decarbonize its electricity sector, the electrification across all other sectors will fail to achieve the necessary GHG reductions to meet the state’s goals. Figure 4-5, copied below from the Draft Scoping Plan Update, shows not only the required transition to renewable resources but also the required growth in overall electricity resources by 2045.
The Draft Scoping Plan Update reflects an ambitious path forward for California that identifies opportunities and roles for many technologies and strategies to reduce GHG emissions. To support CARB’s consideration of the Scoping Plan Update, a Draft Environmental Analysis (EA) pursuant to the California Environmental Quality Act was also prepared. CARB will accept public comments on the Draft Scoping Plan Update and the Draft EA until June 24, 2022, and conduct a public hearing on the Draft Scoping Plan Update on June 23, 2022, which may continue until June 24, 2022.
Latham & Watkins is tracking this process and will release additional blog posts on the Scoping Plan Update’s discussion of the LCFS Program, the state’s Cap-and-Trade Program, and climate adaptation.
 Draft Scoping Plan Update, p. iv.
 Id., p. 65
 Id., p. 168
CCUS and clean hydrogen will play a significant role in the Administration’s efforts to address hard-to-decarbonize industries to promote clean US manufacturing.
On February 15, 2022, the White House announced important actions in furtherance of the Biden Administration’s broader decarbonization goals — this time with an eye toward clean domestic manufacturing. Framing the rollout, the White House released a fact sheet highlighting the Administration’s efforts for a “Cleaner Industrial Sector to Reduce Emissions and Reinvigorate American Manufacturing,” including “Buy Clean,” hydrogen, and carbon capture, utilization, and storage (CCUS) announcements.
These efforts include kicking off multibillion-dollar hydrogen funding opportunities provided by the Infrastructure Investment and Jobs Act (IIJA, also known as the Bipartisan Infrastructure Law) and new draft guidance from the White House Council on Environmental Quality (CEQ) titled Carbon Capture, Utilization, and Sequestration Guidance to assist federal agencies with the regulation and permitting of CCUS projects.
As more companies jockey for position and federal funding on both clean hydrogen and CCUS, the announcements are timed to provide critical guidance on these emerging areas of opportunity.
Clean Industrial Sector Fact Sheet
The new initiatives outlined in the fact sheet aim to support the industrial sector’s clean energy transition via clean hydrogen, federal procurement policies, trade, and CCUS. These new initiatives include:Accelerating Clean Hydrogen. Recognizing that clean hydrogen is especially important for hard-to-decarbonize sectors, the Administration announced three Requests for Information (RFI) related to the Department of Energy’s (DOE) hydrogen initiatives under the IIJA. Specifically, the Administration posted RFIs for US$8 billion in funding for Regional Clean Hydrogen Hubs, US$1 billion in funding for a Clean Hydrogen Electrolysis Program, and US$500 million in funding for Clean Hydrogen Manufacturing and Recycling Initiatives to support equipment manufacturing and strong domestic supply chains. Responses are due March 8, 2022, for the Regional Clean Hydrogen Hubs RFI and March 29, 2022, for the hydrogen electrolysis program and recycling initiatives RFI. Focus on Clean Procurement. Building on President Biden’s December 2021 executive order on federal sustainability, CEQ and the White House Office of Domestic Climate Policy are formally establishing a “Buy Clean Task Force,” which will utilize the federal government’s purchasing power to promote the use of low-carbon construction materials, including cement. Consistent with this measure, the General Services Administration and the U.S. Department of Transportation are announcing new efforts to promote the use of low-carbon materials in construction and transportation projects. The Administration also revealed its plans to expand the “First Movers Coalition,” which was initially launched at COP26, to cover four additional sectors in 2022: aluminum, cement, chemicals, and carbon removal. Using Trade Policy to Reward Clean Manufacturing. In October 2021, the Biden Administration announced that the United States and the European Union are negotiating the world’s first emissions-based sectoral arrangement on steel and aluminum trade. The Administration aims to “restrict access to their markets for dirty steel and limit access to countries that dump steel in both markets, contributing to worldwide over-supply.” Responsibly Advancing CCUS Technologies. As discussed in more detail below, CEQ has issued new CCUS draft guidance to help federal agencies advance CCUS responsibly. In addition to this guidance, U.S. EPA is developing proposed rule revisions to strengthen the Greenhouse Gas Reporting Program to improve transparency on CCUS activities, DOE is offering funding to train a more diverse generation of engineers and scientists for carbon management roles, and the Federal Permitting Improvement Steering Council is working to facilitate collaborative CCUS project reviews. Importantly, the Administration affirmed that the Department of the Interior is working to establish safeguards for geologic sequestration on federally managed lands and is developing new regulations for geologic sequestration in the outer continental shelf, as required under the IIJA. Comments on the new guidance must be submitted by March 18, 2022. Supporting Equitable Innovation Across the Industrial Sector. Finally, the Administration announced several efforts to ensure that the industrial sector’s clean energy transition benefits communities across the country and meets the needs of stakeholders from underrepresented groups. These efforts include a new “Initiative for Interdisciplinary Industrial Decarbonization Research,” led by the White House Office of Science and Technology Policy to bring together social scientists, engineering and physical scientists, community groups, industry, government, and other stakeholders. In addition, DOE’s Advanced Manufacturing Office is working to establish the “Industrial Technology Innovation Advisory Committee” to find viable decarbonization pathways that will equitably benefit the industrial workforce and surrounding communities. DOE has also issued a RFI on Industrial Decarbonization that will provide insights on emerging technologies for industry to demonstrate or adopt, including for clean production of iron and steel, cement, chemicals, and food and beverages. Responses are due February 28, 2022.
CEQ Guidance on CCUS
As noted above, on February 15, 2022, CEQ issued new draft guidance for federal agencies regarding regulation and permitting of CCUS activities. The guidance builds on CEQ’s June 2021 CCUS report. The guidance includes several recommendations regarding agency coordination, evaluation of CCUS impacts, transparency, Tribal consultation, and impacts to overburdened communities. Comments on the new guidance must be submitted by March 18, 2022.Facilitating Federal Decision-Making on CCUS Projects and Carbon Dioxide Pipelines
CEQ proposes that:Agencies consider developing programmatic environmental reviews that can facilitate more efficient and effective environmental reviews of multiple projects Agencies establish inter-agency collaboration processes for CCUS projects, and CEQ will convene agencies to assess opportunities for improvement in carbon dioxide pipeline permitting Agencies with oversight authority for carbon dioxide pipelines update their regulations to address CCUS CEQ states that it will collaborate with agencies to implement relevant provisions in the IIJA and monitor progress on these activities and new regulations in the coming months, including authorizing use of geologic pore space on federal lands CEQ proposes that agencies, like U.S. EPA, include provisions that increase transparency regarding CCUS Public Engagement and Interdisciplinary Research
CEQ proposes that:Agencies facilitate a transparent process and public engagement regarding CCUS projects Agencies prioritize environmental justice best practices for CCUS efforts, in addition to developing robust Tribal consultation and stakeholder engagement plans Agencies with substantial CCUS involvement initiate interdisciplinary research, development, demonstration, and deployment programs Understating Environmental Impacts
CEQ proposes that:Agencies study CCUS-related criteria pollutants and carbon dioxide emissions from project infrastructure Projects on the outer continental shelf consider possible impacts on water column carbonate chemistry Agencies share best practices regarding data collection and CCUS project reporting Carbon Capture and Utilization and Carbon Dioxide Removal
CEQ proposes that:Agencies, like U.S. EPA and DOE, consolidate and publish a repository for life-cycle analysis methodology, results, and information related to carbon capture and utilization and carbon dioxide removal DOE and other agencies evaluate how CCUS standards and certifications can increase federal procurement of CCUS-related technologies
These initiatives and recommendations underscore the Administration’s commitment to a clean energy transition, including in hard-to-decarbonize sectors. Consistent with the IIJA, the Administration’s recent efforts demonstrate that CCUS and clean hydrogen will continue to play a significant role in the Administration’s priorities.
Latham & Watkins will continue to monitor and report on the Biden Administration’s clean energy efforts.
 A summary of the Biden Administration’s executive order, which aims to use the US government’s procurement power to achieve “carbon pollution-free electricity” by 2030 and net zero emissions by 2050, is provided on Latham’s Global Environment, Land and Resources Blog, “President Biden Outlines Comprehensive Plan for Federal Sustainability,” January 11, 2022, available at https://www.globalelr.com/2022/01/biden-outlines-comprehensive-plan-for-federal-sustainability/.
The president’s executive order aims to use the US government’s procurement power to achieve “carbon pollution-free electricity” by 2030 and net zero emissions by 2050.
On December 8, 2021, President Biden issued an Executive Order on Catalyzing Clean Energy Industries and Jobs Through Federal Sustainability (EO), which aims to set the federal government — the largest purchaser in the country with an annual purchasing power of $650 billion — on a path to net zero emissions by 2050. The EO establishes the following policies as part of a whole-of-government strategy.The federal government must use 100% carbon pollution-free electricity on a net annual basis by 2030, including 50% “24/7 carbon pollution-free electricity”: The EO defines “carbon pollution-free electricity” to include “electrical energy produced from resources that generate no carbon emissions,” such as solar, wind, and green hydrogen, as well as energy generated from fossil resources if “there is active capture and storage of carbon dioxide emissions that meets EPA requirements.” This electricity must include “24/7 carbon pollution-free electricity” that matches “actual electricity consumption on an hourly basis” and is “produced within the same regional grid where the energy is consumed.” Thus, “24/7 carbon pollution-free electricity” requires that energy generation matches consumption, such as through storage capacity or sources other than wind or solar. To promote this policy, the EO also requires that federal agencies develop carbon pollution-free electricity generation and energy storage capacity on their real property assets. This directive raises the possibility of a greater opening of government land — in particular military bases — for renewable energy projects. A 65% reduction in scope 1 and 2 greenhouse gas emissions from federal operations by 2030 from 2008 levels: To meet these targets, the EO requires agencies to, among other things, pursue building electrification strategies, procure carbon pollution-free energy, and use performance contracting to reduce emissions. The EO incorporates the definitions of scope 1 and scope 2 greenhouse gas emissions from the Council on Environmental Quality Federal Greenhouse Gas Accounting and Reporting Guidance (Guidance). Scope 1 emissions result primarily from certain “activities  owned or controlled by the reporting agency,” including emissions from the “combustion of fuels in stationary sources,” “mobile combustion sources” such as federal fleet vehicles, fugitive emissions, and process emissions. Scope 2 emissions are “associated with consumption of purchased or acquired electricity, steam, heating, or cooling” and “are a consequence of activities that take place within the organizational boundaries of the reporting agency, but the emission releases physically occur at the facility where the electricity, steam, heating, and/or cooling is generated.” 100% zero emission vehicle acquisitions by 2035, including 100% zero emission light-duty vehicle acquisitions by 2027: Each federal agency must develop and annually update a zero emission fleet strategy to optimize fleet size and composition, deploy zero emission vehicle refueling infrastructure, and maximize acquisition and deployment of zero emission light-, medium-, and heavy-duty vehicles. A net zero emissions building portfolio by 2045, including a 50% emissions reduction by 2032: To reach these targets, the EO directs federal agencies to prioritize improving energy efficiency and eliminating “onsite fossil fuel use” in new construction, renovations, and retrofits. The EO also requires that larger construction and modernization projects — those greater than 25,000 gross square feet — must be designed to be net zero by 2030, but does not provide a definition of “net zero.” Net zero emissions from federal procurement, including a “Buy Clean” policy to promote use of construction materials with lower embodied emissions: The EO requires federal agencies to consider contractor emissions and embodied emissions (e.g., the life-cycle emissions associated with producing materials) and develop procurement strategies to reduce both in products acquired or used in federal projects. Additionally, the Administrator of the General Services Administration must track greenhouse gas emissions, emissions reduction targets, climate risk, and other sustainability-related disclosures by major federal suppliers. This requirement furthers the EO’s general directive that agencies reduce Scope 3 emissions — e.g., those that “are a consequence of the agency’s activities but are released from sources outside its organizational boundary.” The EO also creates a “Buy Clean Task Force” to expand consideration of embodied emissions in federal procurement and federally funded projects. Notably, concrete and steel are identified as materials to consider prioritizing under a “Buy Clean” policy. The specific mention of concrete and steel could represent an attempt to nudge these industries towards developing less carbon-intensive production methods, such as green hydrogen. Climate resilient infrastructure and operations: The EO identifies steps that each federal agency must take to promote climate resiliency, including developing policies to promote climate resilient investment, conducting climate adaptation analysis and climate-informed financial and management decisions, reforming agency policies and funding programs that increase vulnerability to climate risks, and developing tools to assess climate change impacts and support climate adaptation planning and implementation. A climate- and sustainability-focused federal workforce: The EO recognizes the importance of workforce culture in meeting ambitious goals. To that end, the EO directs federal agencies to expand employees’ sustainability and climate education and training and incorporate sustainability into performance plans. The EO also reestablishes the role of a Federal Chief Sustainability Officer to lead the development of policies, programs, and partnerships to achieve the EO’s policies.
Consistent with other recent executive orders from the Biden Administration, the EO places a strong focus on environmental justice as well as a “just transition” toward cleaner energy. The EO also identifies growing domestic industry, creating well-paying union jobs, and improving public health as key policies of the government’s energy transition.
Despite the apparent expansive sweep of the EO, it contains exemptions for (1) certain activities, personnel, and facilities “in the interest of national security,” and (2) vehicles and equipment used in combat support, military operations, or training. The EO also includes a process for agency heads to request exemptions for any other reason.
While the EO establishes targets and goals, many of the implementing details are to be developed by federal agencies:Each federal agency is required to set targets for reducing greenhouse gas emissions, transitioning to 100% carbon pollution-free electricity, shifting to a zero-emission fleet, achieving net zero emissions facilities, and increasing energy and water efficiency. These targets must be incorporated into performance management systems. Within 30 days of the date of the EO — by January 7, 2022 — agencies must designate an “Agency Chief Sustainability Officer.” “Principal agencies” must develop and implement annual “Sustainability Plans” that describe actions and progress toward achieving the EO’s goals. The Director of the Office of Management and Budget, in coordination with the Chair of the Council on Environmental Quality and the National Climate Advisor, must issue a memorandum providing direction to agencies on immediate actions and further requirements to meet the EO’s policies and goals. The Chair of the Council on Environmental Quality, in consultation with the Director of the Office of Management and Budget, must (1) issue building performance standards to support achievement of net zero emissions in the federal building portfolio; (2) consider issuing guidance for agencies to promote sustainable locations of federal facilities; and (3) within 120 days of the date of the EO — by April 7, 2022 — issue implementing guidance for agencies that provides directions, strategies, and recommended actions to meet the EO’s policies and goals.
A number of the EO’s policies dovetail with components of the recent Infrastructure Investment and Jobs Act, including promoting a nationwide transition to electric vehicles, upgrading and increasing resiliency of the country’s power and transportation infrastructure, expanding clean energy generation and storage, and transitioning to a zero emissions future. This overlap further emphasizes the importance of these issues to the Biden Administration and indicates that climate and sustainability will continue to remain a focal point in executive policy.
 The EO defines “principal agencies” as the Departments of State, the Treasury, Defense (including the Army Corps of Engineers), Justice, the Interior, Agriculture, Commerce, Labor, Health and Human Services, Housing and Urban Development, Transportation, Energy, Education, Veterans Affairs, and Homeland Security; the Small Business Administration, the Social Security Administration, the National Aeronautics and Space Administration, the Office of Personnel Management, the General Services Administration, and the National Archives and Records Administration.