Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

The challenge: To make every day Earth Day.



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  • Weekend Video: Colbert Gets Into Coal Rolling
  • Weekend Video: How Solar Power Plants Store And Use Solar Energy
  • Weekend Video: A Story About People And Wind Energy




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    Anne B. Butterfield of Daily Camera and Huffington Post, is a biweekly contributor to NewEnergyNews

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT)

    November 26, 2013 (Huffington Post via NewEnergyNews)

    Everywhere we turn, environmental news is filled with horrid developments and glimpses of irreversible tipping points.

    Just a handful of examples are breathtaking: Scientists have dared to pinpoint the years at which locations around the world may reach runaway heat, and in the northern hemisphere it's well in sight for our children: 2047. Survivors of Superstorm Sandy are packing up as costs of repair and insurance go out of reach, one threat that climate science has long predicted. Or we could simply talk about the plight of bees and the potential impact on food supplies. Surprising no one who explores the Pacific Ocean, sailor Ivan MacFadyen described long a journey dubbed The Ocean is Broken, in which he saw vast expanses of trash and almost no wildlife save for a whale struggling a with giant tumor on its head, evoking the tons of radioactive water coming daily from Fukushima's lamed nuclear power center. Rampaging fishing methods and ocean acidification are now reported as causing the overpopulation of jellyfish that have jammed the intakes of nuclear plants around the world. Yet the shutting down of nuclear plants is a trifling setback compared with the doom that can result in coming days at Fukushima in the delicate job to extract bent and spent fuel rods from a ruined storage tank, a project dubbed "radioactive pick up sticks."

    With all these horrors to ponder you wouldn't expect to hear that you should also worry about the United States running out of coal. But you would be wrong, says Leslie Glustrom, founder and research director for Clean Energy Action. Her contention is that we've passed the peak in our nation's legendary supply of coal that powers over one-third of our grid capacity. This grim news is faithfully spelled out in three reports, with the complete story told in Warning: Faulty Reporting of US Coal Reserves (pdf). (Disclosure: I serve on CEA's board and have known the author for years.)

    Glustrom's research presents a sea change in how we should understand our energy challenges, or experience grim consequences. It's not only about toxic and heat-trapping emissions anymore; it's also about having enough energy generation to run big cities and regions that now rely on coal. Glustrom worries openly about how commerce will go on in many regions in 2025 if they don't plan their energy futures right.

    2013-11-05-FigureES4_FULL.jpgclick to enlarge

    Scrutinizing data for prices on delivered coal nationwide, Glustrom's new report establishes that coal's price has risen nearly 8 percent annually for eight years, roughly doubling, due mostly to thinner, deeper coal seams plus costlier diesel transport expenses. Higher coal prices in a time of "cheap" natural gas and affordable renewables means coal companies are lamed by low or no profits, as they hold debt levels that dwarf their market value and carry very high interest rates.

    2013-11-05-Table_ES2_FULL.jpgclick to enlarge


    One leading coal company, Patriot, filed for bankruptcy last year; many others are also struggling under bankruptcy watch and not eager to upgrade equipment for the tougher mining ahead. Add to this the bizarre event this fall of a coal lease failing to sell in Wyoming's Powder River Basin, the "Fort Knox" of the nation's coal supply, with some pundits agreeing this portends a tightening of the nation's coal supply, not to mention the array of researchers cited in the report. Indeed, at the mid point of 2013, only 488 millions tons of coal were produced in the U.S.; unless a major catch up happens by year-end, 2013 may be as low in production as 1993.

    Coal may exist in large quantities geologically, but economically, it's getting out of reach, as confirmed by US Geological Survey in studies indicating that less than 20 percent of US coal formations are economically recoverable, as explored in the CEA report. To Glustrom, that number plus others translate to 10 to 20 years more of burning coal in the US. It takes capital, accessible coal with good heat content and favorable market conditions to assure that mining companies will stay in business. She has observed a classic disconnect between camps of professionals in which geologists tend to assume money is "infinite" and financial analysts tend to assume that available coal is "infinite." Both biases are faulty and together they court disaster, and "it is only by combining thoughtful estimates of available coal and available money that our country can come to a realistic estimate of the amount of US coal that can be mined at a profit." This brings us back to her main and rather simple point: "If the companies cannot make a profit by mining coal they won't be mining for long."

    No one is more emphatic than Glustrom herself that she cannot predict the future, but she presents trend lines that are robust and confirmed assertively by the editorial board at West Virginia Gazette:

    Although Clean Energy Action is a "green" nonprofit opposed to fossil fuels, this study contains many hard economic facts. As we've said before, West Virginia's leaders should lower their protests about pollution controls, and instead launch intelligent planning for the profound shift that is occurring in the Mountain State's economy.

    The report "Warning, Faulty Reporting of US Coal Reserves" and its companion reports belong in the hands of energy and climate policy makers, investors, bankers, and rate payer watchdog groups, so that states can plan for, rather than react to, a future with sea change risk factors.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    It bears mentioning that even China is enacting a "peak coal" mentality, with Shanghai declaring that it will completely ban coal burning in 2017 with intent to close down hundreds of coal burning boilers and industrial furnaces, or shifting them to clean energy by 2015. And Citi Research, in "The Unimaginable: Peak Coal in China," took a look at all forms of energy production in China and figured that demand for coal will flatten or peak by 2020 and those "coal exporting countries that have been counting on strong future coal demand could be most at risk." Include US coal producers in that group of exporters.

    Our world is undergoing many sorts of change and upheaval. We in the industrialized world have spent about a century dismissing ocean trash, overfishing, pesticides, nuclear hazard, and oil and coal burning with a shrug of, "Hey it's fine, nature can manage it." Now we're surrounded by impacts of industrial-grade consumption, including depletion of critical resources and tipping points of many kinds. It is not enough to think of only ourselves and plan for strictly our own survival or convenience. The threat to animals everywhere, indeed to whole systems of the living, is the grief-filled backdrop of our times. It's "all hands on deck" at this point of human voyaging, and in our nation's capital, we certainly don't have that. Towns, states and regions need to plan fiercely and follow through. And a fine example is Boulder Colorado's recent victory to keep on track for clean energy by separating from its electric utility that makes 59 percent of its power from coal.

    Clean Energy Action is disseminating "Warning: Faulty Reporting of US Coal Reserves" for free to all manner of relevant professionals who should be concerned about long range trends which now include the supply risks of coal, and is supporting that outreach through a fundraising campaign.

    [Clean Energy Action is fundraising to support the dissemination of this report through December 11. Contribute here.]

    Author's note: Want to support my work? Please "fan" me at Huffpost Denver, here ( Thanks.


    Anne's previous NewEnergyNews columns:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns


    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart



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  • Wednesday, July 23, 2014


    The European offshore wind industry - key trends and statistics 1st half 2014

    July 2014 (European Wind Energy Association)

    Mid-year European offshore wind energy statistics

    In the first six months of 2014, Europe fully grid connected 224 offshore wind turbines in 16 commercial wind farms and one offshore demonstration site with a combined capacity totalling 781 MW. There are 310 wind turbines awaiting grid connection. Once connected, these will add a total capacity of over 1,200 MW. The total capacity of all the wind farms under construction is over 4,900 MW when fully commissioned. <;p> New offshore capacity installations during the first half of 2014 were down 25% compared to the same period the previous year.

    The work carried out in European offshore wind farms during the first six months of 2014 is detailed below:

    • 224 wind turbines were fully grid connected, totalling 781 MW (down 25% compared to the same period last year) in five wind farms: Gwynt y Môr (UK), Northwind (BE), Riffgat (DE), West of Duddon Sands (UK) and the Methil Demo at Energy Park Fife (UK).

    • 233 foundations (35 units fewer than the same period last year) were installed in 13 wind farms: Amrumbank West (DE), Borkum Riffgrund I (DE), Borkum West 2.1 (DE), Butendiek (DE), Dan Tysk (DE), Global Tech 1 (DE), Gwynt y Môr (UK), Humber Gateway (UK), Meerwind Sud/Ost (DE), Nordsee Ost (DE), Northwind (BE), Westermost Rough (UK) and the Methil Demo - Energy Park Fife (UK)

    • 282 turbines (28 units or 10% more than during the same period last year) were erected in eight wind farms: Borkum West 2.1 (DE), Dan Tysk (DE), Global Tech 1 (DE), Gwynt y Môr (UK), Meerwind Sud/Ost (DE), Nordsee Ost (DE), Northwind (BE) and West of Duddon Sands (UK)

    • Preparatory work has begun at the 600 MW Gemini wind farm off the coast of the Netherlands. In total, there were, on 1 July 2014, 2,304 offshore wind turbines with a combined capacity of 7,343 MW fully grid connected in European waters in 73 wind farms across 11 countries, including demonstration sites.

    Summary of offshore work carried out during the first half of 2014

    During the first six months of the year, work was carried out on 16 offshore wind farms and one demonstration site. Foundations and turbines were installed and/or grid connected in 15 of these and in one demonstration site in three countries: Belgium, Germany and the United Kingdom.


    Four commercial wind farms and one demonstration project connected wind turbines to the grid totalling 781 MW. Figure 3 shows the share of connected MW per developer from 1 January to 30 June 2014 taking into account each company’s share in the projects. Power producers account for over 78% of the installed capacity (over 600 MW).

    Wind turbines

    During the first six months of 2014, 223 offshore wind turbines and one offshore demonstration wind turbine were connected to the power grid, or around 25% fewer than during the same period in the previous year. The average size of the wind turbines was 3.5 MW, slightly less than during the first six months of 2013.

    Units made by three turbine manufacturers were connected to the grid during the period: Siemens, MHI Vestas, and Samsung. The former has the largest share of newly connected capacity (633 MW, 81%), followed by MHI Vestas (141 MW, 18 %) and Samsung (7 MW, 1%) which connected its 7 MW demonstration wind turbine to the grid.

    In terms of units, Siemens grid connected 176 turbines (79%), MHI Vestas 47 turbines (21%) and Samsung one turbine.

    Financing highlights in H1 2014 and outlook

    There was considerable financing activity in the offshore wind farm sector in the first half of 2014, with multiple transactions on the equity side and the largest offshore wind financing to close to date: the 600 MW Gemini project in the Netherlands. The Gemini transaction, which closed on 13 May 2014, included both equity and debt funding, with independent power producer Northland Power, a Canadian developer, acquiring 60% of the project, alongside contractors Siemens (20%) and Van Oord (10%), from developer Typhoon Offshore, with initial investor HVC, the Dutch waste-to-energy company, keeping its original 10% stake. The €2.8 billion transaction included a senior debt1 financing of €2.1 billion provided by a consortium of 12 commercial banks and four public funding institutions, as well as a mezzanine2 tranche provide by Danish pension fund PKA alongside Northland Power.

    Commercial funding topped one billion euros, with large individual commitments from banks, showing a healthy appetite from the lending market for the offshore wind sector, including construction risk. This appetite will be further confirmed in the second half of the year with several transactions currently in the market and expected to close in the coming months, including Westermost Rough (UK, 210 MW), MEG1 (DE, 400 MW), Nordsee 1 (DE, 330 MW) and Galloper (UK, 340 MW), plus Cape Wind (370 MW) and Deepwater (30 MW) in the US.

    Several of these transactions are backed by power producers, demonstrating their growing appetite for non-recourse debt in offshore wind. On the equity side, the market has also been dynamic with the following transactions closing (in addition to the equity sale that took place on the closing of Gemini):

    • DONG Energy sold half of its 50% stake in the 630 MW London Array project to Caisse de Dépôt et Placement du Québec (CDPQ) in January3;

    • Wpd sold half of its remaining stake in Butendiek (288 MW, DE) in January to Switzerland’s Elektrizitätswerk der Stadt Zürich (EWZ) reducing its participation in the project to 5%4;

    • DONG Energy sold 50% of Westermost Rough (210 MW, UK) to Marubeni (25%) and to the UK Green Investment Bank (25%) in March5;

    • RWE sold a 10% stake in Gwynt y Môr (576 MW, UK) to the UK Green Investment Bank, in March6. In the UK, Statoil and Statkraft have reached a final investment decision (FID) on their Dudgeon offshore wind farm (402 MW), agreeing to invest €1.9bn in the construction of the project. Dudgeon is the first wind farm reaching FID under the new UK Contract for Difference mechanism7.

    A number of other equity transactions have been reported as being under way as owners of operating projects seek to recycle capital in light of a growing interest from financial investors, in particular infrastructure funds and pension funds for operational offshore wind assets. But as the Gemini and Westermost Rough transactions show, investors are also increasingly looking at projects under construction and most such transactions are likely to happen before the end of the year.

    Overall, while transactions remain complex and take time to close, there is an active market for offshore wind projects and a strong pipeline of new deals. Projects with a well-designed commercial and/or financial structure are able to find funding for construction or refinancing, allowing the sector to benefit from competitive capital costs.


    NEW ENERGY WAS 55% OF 1H 2014 U.S. NEW BUILD Renewables Continue To Dominate New U.S. Generating Capacity

    21 July 2014 (Solar Industry)

    “…[S]olar, wind, biomass, geothermal and hydropower provided 55.7% of newly installed U.S. electrical generating capacity during the first half of the year - 1,965 MW of the 3,529 MW total [according to] U.S. Federal Energy Regulatory Commission figures…[Solar power] accounted for 32.1% of this new capacity with 1,131 MW. Wind provided 19.8% with 699 MW…The single greatest source of added generating capacity was natural gas with 44.1%, representing 1,555 MW. No new coal or nuclear capacity came online in the first half of the year…[R]enewable energy sources now account for 16.28% of all U.S. operating capacity…[with hydropower at 8.57%, wind at 5.26%, biomass at 1.37%, solar at 0.75%, and geothermal at 0.33%]…” click here for more

    EV SALES LEAP June EV Sales For US Near New High As Ford, Tesla And Nissan Stay Strong

    Jay Cole, July 1, 2014 (Inside EVs)

    "After electric vehicle sales flew off the chart in May with over 12,000 cars sold – an all-time record, it was assumed June would be a pullback month…[but June fell] only a hair (160 units) with an estimated 11,893 plug-ins sold in the US…Compared to June of 2013, that was a staggering improvement of43%...For the year to date, an estimated 54,463 Americans have chosen to buy a new EV, which is up 33% from last year…At the current pace, 130,000 new vehicle purchases would be of the plug-in variety for 2014…[W]hile Tesla and Ford were the ‘big name’ movers for June, Nissan continues to be the backbone of the electric vehicle industry in the US as the LEAF set its 16th consecutive record month for year-over-years sales in June with 2,347 cars sold…The only drag on the industry in June continues to be the Chevrolet Volt, as sales were off 34% (1,777 vs 2,698) during the month. Overall for the year, the Chevy is off 13%, the only major production EV to show a loss…” click here for more


    Barbara Vergetis Lundin, July 15, 2014 (Fierce Energy)

    “In 2013, the wave and tidal energy market was valued at $25 million, and Transparency Market Research (TMR) anticipates that will reach $10.1 billion in 2020 -- a Compound Annual Growth Rate (CAGR) of 64.1 percent from 2014 to 2020…When harnessed effectively, ocean could prove to be one of the largest reserves of clean and sustainable energy…Tidal stream power plants are a relatively new technology with ample scope for development, while tidal range power is a mature form of energy generation technology…[Wave energy] is a relatively new concept…with the installed capacity aggregated at just 5.77 MW in 2013…[L]arge-scale commercial array deployments of wave and tidal power plants [and development of the offshore wind energy sector] will be followed by massive cost reductions…TMR expects major developments in wave and tidal stream plants to take place in Europe but estimates South Korea to grow fastest in terms of tidal barrage operations…[T]he wave and tidal energy market is projected to reach 3712 MW by 2020 -- expanding at a CAGR of 34.5 percent from 2014 to 2020…Wave energy development in Asia-Pacific would be concentrated in Australia…[which is expected] to add nearly 25 MW of capacity by the end of 2020…” click here for more

    Tuesday, July 22, 2014


    Cashing in on All of the Above: U.S. Fossil Fuel Production Subsidies under Obama

    July 2014 (Oil Change International)

    Executive Summary

    Each year, the U.S. federal and state governments give away more than $21 billion in subsidies to oil, gas, and coal companies to promote increased fossil fuel production and exploration – expanding oil and gas development and increasing the reserves base at the same time that climate scientists around the world agree that we need to leave at least two-thirds of existing reserves in the ground to avoid catastrophic climate change.

    Thanks in large part to these huge subsidies, U.S. fossil fuel production is booming. Between 2009 and 2013, natural gas production increased by 18 percent and oil production increased by 35 percent. Although President Obama has pledged to tackle climate change and eliminate fossil fuel subsidies, he champions the oil and gas boom as the centerpiece of his Administration’s “All of the Above” energy strategy.

    Since President Obama took office in 2009, federal fossil fuel subsidies have grown in value by 45 percent, from $12.7 billion to a current total of $18.5 billion. This rise is mostly due to increased oil and gas production: the value of tax breaks and other incentives has increased along with greater production and profits, essentially rewarding companies for accelerating climate change.

    It should be noted that President Obama has proposed ending some of the most direct and fastest-growing subsidies to the oil industry in every budget he has sent to Capitol Hill. If Congress had not blocked these proposals, they would have resulted in $6.1 billion less in subsidies in 2013, and the value of federal subsidies would have declined by 2% during the Obama Administration.

    In summary, the findings in this report include:

    f The United States federal and state governments gave away $21.6 billion in production and exploration subsidies to the oil, gas, and coal industries in 2013.

    f At the federal level only, largely due to increased oil and gas, production, fossil fuel production and exploration subsidies have grown in value by 45 percent since President Obama took office in 2009 from $12.7 billion to a current total of $18.5 billion.

    f Repeated attempts by the Administration to reduce subsidies have failed at least in part because of the cozy relationship between Congress and the fossil fuel industry. In 2011-12, oil, gas, and coal companies spent $329 million in campaign finance contributions and lobbying expenditures and received $33 billion in federal subsidies over the same two years – a more than 10,000 percent return on investment.

    f More than $5 billion annually is spent by U.S. taxpayers for federal subsidies that encourage further exploration and development of new fossil fuel resources – resources we know we cannot afford to burn

    f Subsidies promoting fossil fuel production on federal property – related to rules governing royalty payments to the U.S. government for leasing federal oil, gas, and coal-producing land – total nearly $4 billion each year.

    f Fossil fuel company deductions for pollution clean-up costs from their tax payments range from tens of millions to billions of dollars each year. These subsidies incentivize not only increased production, but also increased pollution and poor environmental stewardship by transferring the risk and expense of damages onto taxpayers.

    f Although not included in the production subsidy totals, above, there are a number of additional types of support to the oil, gas, and coal industries that should be noted, including:

    g U.S. federal and state consumption subsidies are on the order of $11 billion a year, but were not included in the total above in order to focus on exploration and production subsidies. Thus the total annual value of all known U.S. state and federal fossil fuel exploration, production, and consumption subsidies is $32.8 billion.

    g U.S. financing of fossil fuel projects overseas increased by 14 percent from $4.1 billion in 2009 to $4.7 billion in 2013, driven by an increase in bilateral oil and gas project lending.

    g Additional costs borne by taxpayers related to the military, climate, local environmental, and health impacts of the fossil fuel industry are credibly estimated between $360 billion and $1 trillion each year – in the United States alone.

    Channeling billions of taxpayer dollars to the oil, gas, and coal industries each year is in direct opposition to the urgent demands of climate change. The U.S. needs to reject its current All of the Above energy strategy that amounts to nothing less than climate denial and live up to its promises to eliminate fossil fuel subsidies and usher in a rapid transition to clean, renewable energy.

    What is a Fossil Fuel Subsidy?

    Broadly speaking, a fossil fuel subsidy is any government action that lowers the cost of production, lowers the cost of consumption, or raises the price received by producers. Types of fossil fuel subsidies include financial contributions or support from the government or private bodies funded by governments, including direct transfers of funds, transfer of risk such as loan guarantees, foregone revenue including through tax breaks, and provision of goods and services aside from general infrastructure.1

    Oil Change International groups fossil fuel subsidies according to three categories:

    1. Exploration: support for expanding fossil fuel reserves, including the discovery of new resources;

    2. Production: support to fossil fuel companies for producing oil, gas, and coal, usually in the form of special tax deductions, low-cost access to government land, and infrastructure support; and

    3. Consumption: support to consumers to lower the cost of fossil fuel use. (U.S. fossil fuel consumption subsidies are listed in Appendix II but are not included in the total subsidy estimates in this analysis).

    Given the increasing urgency of climate change, as well as fiscal concerns around government spending, it is highly inefficient to continue subsidizing fossil fuels. Removing subsidies to the fossil fuel industry is one of the first, and least, goals that public policy should seek to achieve, especially given U.S. failure to pass carbon price legislation and the huge unaccounted for social cost of carbon resulting from increased U.S. fossil fuel production.

    While international pressure for fossil fuel subsidy elimination has been mostly targeted at consumption subsidies, exploration and production subsidies are potentially even more damaging because they encourage the extraction of more and more dirty energy resources that our climate can’t safely absorb.

    For this reason, and because consumption subsidies are often intended to support social goods beyond the corporate health of oil, gas, and coal companies (such as heating for the poor or affordable fuel for farmers) the focus of this report is U.S. fossil fuel exploration and production subsidies…

    Unburnable Carbon and U.S. Fossil Fuel Subsidies…All of the Above = More Subsidies to Fossil Fuels…Fossil Fuel Money to Congress Stymies Subsidy Reform…U.S. Fossil Fuel Production and Exploration Subsidy Highlights…Worst of the Worst: Exploration Subsidies…Giving Away Federal Lands for Cheap: Production Subsidies…Pollution Clean-Up Subsidies…Additional Subsidies to Fossil Fuels…Financing Fossil Fuel Projects Overseas: $4.1 to $6.3 billion annually…Military Expenditure to Secure Oil Supply Overseas: $10.5 to $500 billion annually…Externalities: $350 to $501 billion annually…Consumption Subsidies: $11 billion annually…

    Moving Forward: Honoring International Commitments and Protecting the Climate

    It is time for the U.S. to show leadership and stop rewarding the fossil fuel industry for pushing the world toward climate disaster. In 2013, U.S. greenhouse gas emissions grew by 2 percent, a shameful and dangerous rise as our window to avoid catastrophic climate change is closing fast. As with every other nation on Earth, the ultimate climate goal of the U.S. is to reduce emissions to the extent necessary to limit global average temperature increase to 2°C. U.S. taxpayer support should be devoted to helping the country meet this challenge, not further funding the problem.

    Ending the misguided U.S. All of the Above energy strategy should start by repealing the more than $21 billion dollars of giveaways to oil, gas, and coal companies from the U.S. government – especially those that encourage them to find and extract ever-increasing amounts of climate-damaging fossil fuel resources. Eliminating these subsidies is a vital step toward honoring the U.S. commitment to phase out inefficient fossil fuel subsidies and, even more importantly, to encourage clean, renewable energy sources that are our only chance of keeping climate change in check.

    Appendix I: Complete List of U.S. Federal and State Fossil Fuel Exploration and Production Subsidies…Appendix II: U.S. Federal and State Fossil Fuel Consumption Subsidies…Appendix III: U.S. Export-Import Bank and Overseas Private Investment Corporation Fossil Fuel Projects…


    U.S. DOE FORESEES NEW ENERGY EIA projects modest needs for new electric generation capacity

    July 16, 2014 (U.S. Energy Information Administration)

    “The Annual Energy Outlook 2014 (AEO2014) Reference case projects 351 gigawatts (GW) of new electric generating additions between 2013 and 2040…U.S. electric generating capacity additions averaged 35 GW annually from 2000 through 2005. Almost all of the capacity added during those years was natural gas-fired…From 2006 through 2012, annual average capacity additions dropped to 19 GW, with 42% of the additions representing renewable technologies [primarily wind] and 45% representing natural gas-fired technologies…The high levels of recent capacity additions, combined with relatively low electricity demand, have resulted in surplus capacity relative to required reserve margins for many regions of the country…In the AEO2014 Reference case, natural gas-fired plants account for 73% of capacity additions (255 GW) from 2013 to 2040, compared with 24% for renewables, 3% for nuclear, and 1% for coal Of the 83 GW of renewable capacity additions, 39 GW are solar photovoltaic (PV) systems (60% of which are rooftop installations) and 28 GW are wind (60% of which occur by 2015 to take advantage of production tax credits)…” click here for more

    THE BEST CITIES FOR NEW ENERGY Solar And EV Adoption, Climate Policies, And Green Finance Drive U.S. Clean Tech Leadership Index Growth

    July 2014 (Clean Edge News)

    “…[The Clean Edge 2014 U.S. Clean Tech Leadership Index found that eleven] states now generate more than 10 percent of their electricity from non-hydro renewable energy sources, with two – Iowa and South Dakota – exceeding 25 percent. Solar installations climbed more than 40 percent year-over-year in the U.S., while registrations of all-electric vehicles doubled between the 2013 and 2014 indexes, to approximately 200,000 nationwide…California leads the nation in clean tech for the fifth consecutive year, with Massachusetts and Oregon repeating their #2 and #3 rankings from the 2013 State Index. Vermont and Connecticut moved into the Top 10 this year, while Hawaii and Minnesota dropped out. In the Metro Index, San Francisco and San Jose repeated as #1 and #2, while San Diego jumped four places to #3…Eight of the top 10 metro areas are located in the top four states; the exceptions are Washington D.C. (a city without a state), and Austin…” click here for more

    ENERGY STORAGE TO BE $50BIL MRKT Energy Storage Market Rises to $50 Billion in 2020, amid Dramatic Changes Driven by plug-ins, transportation applications will be worth $21 billion, closing the gap on electronics’ $27 billion market…

    July 15, 2014 (Lux Research)

    “Energy storage, driven largely by electronics and plug-in vehicles, will grow at a compound annual growth rate of 8% to $50 billion in 2020, with dramatic shifts coming from the transportation industry…Transportation applications will outpace electronics growth – attaining an 11% CAGR to become a $21 billion market by the end of the decade…[Electronics] will remain the single largest market valued at $27 billion…With global sales of 59 million, a 53% market share and $6.1 billion in annual revenue, micro-hybrids will, for the first time, overtake the conventional internal combustion engine and emerge the most popular drivetrain by 2020...With modest sales of 440,000 units, electric vehicles still will use $6.3 billion worth of energy storage…The United States will lead EV sales for most of the decade, peaking at 167,000 units in 2019…[China will nearly catch up with 2020 sales of 145,000]…[The smartphone market will grow] at a 12% CAGR to $8.4 billion in 2020. Tablet computers follow with a 6% CAGR to $12 billion…Driven by solar integration, residential represents the biggest opportunity in stationary energy storage applications – leaping from less than $0.1 billion to $1.2 billion in 2020…” click here for more

    Monday, July 21, 2014


    Integrating Solar PV in Utility System Operations

    Mills, et al, October 2013, (Argonne National Laboratory, Berkeley Lab, and the National Renewable Energy Laboratory)

    Executive Summary

    Deployment of solar photovoltaic (PV) power generation is growing rapidly in the United States. Utilities and system operators are increasingly conducting studies of the impact of PV on operations, including assessments of short-term variability and uncertainty. Consideration of the complex issues surrounding sub-hourly variability and forecasting of PV power output has still been somewhat limited because of the difficulty of creating realistic sub-hourly PV datasets and forecast errors for future scenarios with increased PV production. How utility operations should be changed to more economically integrate large amounts of solar PV power is an open question currently being considered by many utilities.

    This study develops a systematic framework for estimating the increase in operating costs due to uncertainty and variability in renewable resources, uses the framework to quantify the integration costs associated with sub-hourly solar power variability and uncertainty, and shows how changes in system operations may affect these costs. Toward this end, we present a statistical method for estimating the required balancing reserves to maintain system reliability along with a model for commitment and dispatch of the portfolio of thermal and renewable resources at different stages of system operations. We estimate the costs of sub-hourly solar variability, short-term forecast errors, and day-ahead (DA) forecast errors as the difference in production costs between a case with “realistic” PV (i.e., sub- hourly solar variability and uncertainty are fully included in the modeling) and a case with “well behaved” PV (i.e., PV is assumed to have no sub-hourly variability and can be perfectly forecasted). In addition, we highlight current practices that allow utilities to compensate for the issues encountered at the sub-hourly time frame with increased levels of PV penetration.

    In this analysis we use the analytical framework to simulate utility operations with increasing deployment of PV in a case study of Arizona Public Service Company (APS), a utility in the southwestern United States. In our analysis, we focus on three processes that are important in understanding the management of PV variability and uncertainty in power system operations. First, we represent the decisions made the day before the operating day through a DA commitment model that relies on imperfect DA forecasts of load and wind as well as PV generation. Second, we represent the decisions made by schedulers in the operating day through hour-ahead (HA) scheduling. Peaking units can be committed or decommitted in the HA schedules and online units can be redispatched using forecasts that are improved relative to DA forecasts, but still imperfect. Finally, we represent decisions within the operating hour by schedulers and transmission system operators as real-time (RT) balancing. We simulate the DA and HA scheduling processes with a detailed unit-commitment (UC) and economic dispatch (ED) optimization model. This model creates a least-cost dispatch and commitment plan for the conventional generating units using forecasts and reserve requirements as inputs. We consider only the generation units and load of the utility in this analysis; we do not consider opportunities to trade power with neighboring utilities. We also do not consider provision of reserves from renewables or from demand-side options.

    We estimate dynamic reserve requirements in order to meet reliability requirements in the RT operations, considering the uncertainty and variability in load, solar PV, and wind resources. Balancing reserve requirements are based on the 2.5th and 97.5th percentile of 1-min deviations from the HA schedule in a previous year. We then simulate RT deployment of balancing reserves using a separate minute-by-minute simulation of deviations from the HA schedules in the operating year. In the simulations we assume that balancing reserves can be fully deployed in 10 min. The minute-by-minute deviations account for HA forecasting errors and the actual variability of the load, wind, and solar generation. Using these minute-by-minute deviations and deployment of balancing reserves, we evaluate the impact of PV on system reliability through the calculation of the standard reliability metric called Control Performance Standard 2 (CPS2). Broadly speaking, the CPS2 score measures the percentage of 10-min periods in which a balancing area is able to balance supply and demand within a specific threshold. Compliance with the North American Electric Reliability Corporation (NERC) reliability standards requires that the CPS2 score must exceed 90% (i.e., the balancing area must maintain adequate balance for 90% of the 10-min periods). The combination of representing DA forecast errors in the DA commitments, using 1-min PV data to simulate RT balancing, and estimates of reliability performance through the CPS2 metric, all factors that are important to operating systems with increasing amounts of PV, makes this study unique in its scope.


    We analyze the impact of distributed and utility-scale PV on the APS system based on projected conventional generation, load, and wind and PV resources in 2027. Two PV deployment levels are considered: low PV is based on the PV that APS includes in its 2012 Integrated Resource Plan (IRP) base case, and high PV is based on the PV penetration that APS includes in the expanded renewables case of the IRP. The low-PV case includes sufficient PV to meet 8.8% of the annual energy, and the high-PV case includes enough PV to meet 17.0% of the annual energy (prior to any curtailment of renewables). Both cases also consider wind penetration of 4.9% of annual energy. Based on existing practices at APS five of the eight coal plants are treated as must-run units that can dispatch between minimum and maximum generation, but they cannot be turned off. Similarly, nuclear units are always operated at full nameplate capacity. We find that the combination of must-run generation, inflexible nuclear operations, and large amounts of solar in the high-PV case leads to severe operational challenges during low-load and high solar periods under the assumption that the utility cannot trade power with neighboring utilities. For a high-PV case to be practical, some solution to these challenges will be necessary. We included a “flexible nuclear” case as one option for introducing flexibility during low-load and high solar periods. The impacts of this level of PV deployment under the assumption of constant nuclear operation in the low-PV and high-PV cases and the alternative flexible nuclear operation in the high-PV case are summarized in Table ES-1.

    The assumption of flexible nuclear operation in the high-PV flexible nuclear case (where all the nuclear units can operate below maximum output and can provide reserves) decreases the integration cost and greatly reduces the need to curtail renewables from almost 18% down to 3.4% of available renewables.

    The addition of PV increases the variability and uncertainty between HA scheduling and RT operations. Additional balancing reserves are added in both the up and down direction to manage this uncertainty and variability. The peak and average requirement for balancing reserves in the up direction without PV, with low PV, and with high PV are summarized in Table ES-1, along with the estimated integration costs for low PV, high PV with constant nuclear operation, and high PV with flexible nuclear operation. The total integration cost is primarily due to the cost of holding resources in reserve during the HA scheduling that can then be deployed in RT to manage remaining uncertainty and variability (balancing reserve cost). The remaining portion of the costs (DA forecast error cost) is from redispatch of online generation, changes in UC within the operating day for peaking units, and imperfect UC decisions for other units based on imperfect forecasts between the DA and HA scheduling.

    On the basis of the RT simulations of minute-by-minute deviations from the HA schedule, we find that the balancing reserves based on the 2.5th to 97.5th percentile of deviations are sufficient to achieve a CPS2 score that exceeds NERC minimum standards of a CPS2 score of 90% (Table ES-1), though none of the cases achieve APS’s current practice of aiming to maintain a 99% CPS2 score. The decrease in the CPS2 score, particularly in the high-PV scenario, indicates there is some degradation of CPS2 performance when balancing reserves requirements are based on the 2.5th to 97.5th percentile of deviations, an issue we address through sensitivity studies.

    We conduct an extensive sensitivity analysis of system cost and reliability, using the high-PV (Flex. Nucl.) scenario as a benchmark, under different assumptions about balancing reserves, system flexibility, fuel prices, and forecasting errors. For these sensitivities we find integration costs vary within the range of $1.0 to $4.4/MWh-PV (Figure ES-1). The majority of the integration cost is due to an increase in the cost of balancing reserves held during HA scheduling, whereas DA forecast errors continue to be a smaller contributor to integration costs. Figure ES-1 shows that changes in fuel prices and forecast assumptions for wind and load do have an effect on integration costs, but the impacts are less pronounced compared to those for the other sensitivities, which are discussed in more detail below.

    In the sensitivities related to balancing reserves, we examine two options for increasing the CPS2 performance with high PV penetration: (1) increase the amount of balancing reserve held in the HA or (2) increase the maximum rate of deployment (change from our initial assumption of full deployment in 10 min to full deployment in 5 min). Either option increases the CPS2 score to more than 95%, but both also increase the integration costs. There is clearly a trade-off between integration costs and the utility’s reliability level (Figure ES-2); the proper balance between the two will depend on the priorities of the utility.

    On the basis of the sensitivities related to flexibility, we find that system flexibility is essential for minimizing integration costs. Flexibility is particularly important in this analysis because we assume that the utility absorbs all generation within its service territory (i.e., we assume that there are no opportunities to trade with neighboring utilities). In addition to the comparison of constant and flexible nuclear operations with high PV mentioned earlier, we show the impact of reduced system flexibility by reducing the capabilities of thermal generators to ramp from one hour to the next and minimizing curtailment of renewable energy. Renewables curtailment can be reduced to less than 1% by artificially introducing a large penalty for renewable curtailment into the UC/ED model. However, minimizing this curtailment changes the dispatch of thermal units and also results in an increase in the integration cost (Figure ES-1). Lower ramp rates of thermal units also increase the integration costs.

    To further highlight the importance of flexibility, we constructed a worst-case scenario in which limits to flexibility (including constant nuclear output, low ramp rates for other thermal generators, and penalties on renewables curtailment) and increased balancing reserve requirements were simultaneously assumed. In this worst case, the integration cost increases to $9.6/MWh and renewables curtailment exceeds 10% of available renewable generation (despite the penalties for renewable curtailment), and it also becomes challenging to meet the balancing reserve requirements with frequent occurrences of reserve shortfalls. This case is unrealistic given the combination of several conservative assumptions regarding system flexibility and the actual ability of the utility to trade with other utilities. However, the results do highlight the importance of finding buyers for excess power during times with high PV production or the need to increase flexibility from existing thermal power plants or other resources…


    U.S. WIND, SOLAR TO GROW THROUGH 2020 Market Snapshot: Wind, solar expected to lead growth in power plant capacity

    Emily Reynolds, July 16, 2014 (SNL)

    “An increasing amount of renewable generation is entering into the energy mix, with solar and wind resources making up a growing share of total generation resources. According to SNL data, natural gas could account for about 33% of all power plant capacity in 2020, up 1 percentage point from 2010, while solar and wind capacity is expected to grow 8 percentage points from 2010 to 2020, with solar accounting for 3% and wind making up 9% of total U.S. capacity by 2020.” click here for more

    NEW GEOTHERMAL RISING 100 GW Of US Geothermal Power Will Push US Past Gas

    Tina Casey, July 18, 2014 (Clean Technica)

    “Natural gas has been having a field day…but it looks like the sleeping giant of US geothermal power is being nudged out of its stupor…[The Energy Department]…is plunking down $31 million to rev up a cutting edge geothermal demo project [called FORGE, for Frontier Observatory for Research in Geothermal Energy,] that could enable the US to tap into an estimated 100 gigawatts of geothermal power…The idea is to tap into areas underground where the rocks are hot, but the heat doesn’t have a natural way up to the surface…[It is] called an Enhanced Geothermal System. Ideally, an ESG would create pathways that enable fluid to circulate efficiently through rock, and return to the surface piping hot…[by drilling] into the target area, and then injecting water at high pressure and/or heat to split the rock…[With a ‘fracture network’ and a production well, returning water should be hot enough to transition to steam at the surface or] to heat another fluid to produce vapor…for running a turbine…[ESG construction would not likely lead to the widespread environmental impacts of the natural gas industry in states with weak regulations because] ESG lends itself to the kind of large scale, centralized installations that could fall under federal jurisdiction.” click here for more

    CHINESE HAVE RIGHTS IN OREGON WIND BUY Court backs Chinese firm in dispute with Obama

    Timothy Cama, July 15, 2014 (The Hill)

    “A federal appeals court…[has ruled that when President Obama used a rarely invoked authority in 2012 to prevent Ralls Corp. from buying the four wind farms in Oregon located on or near a naval training facility because of national security concerns, it] deprived Ralls of its due-process rights under the Fifth Amendment of the Constitution…The judges said Ralls should be allowed to see the evidence the Committee on Foreign Investment in the United States used to block the transaction, and should have the chance to respond to the allegations…The committee was formed in the 1970s to stop foreign transactions that could threaten national security. Its proceedings are highly secretive…The panel recommended that Obama block the Ralls acquisitions, and he agreed. It was the first time since 1990 that the authority had been used.” click here for more

    Saturday, July 19, 2014

    Colbert Gets Into Coal Rolling

    As usual, Colbert turns not-funny to funny. From Comedy Central

    How Solar Power Plants Store And Use Solar Energy

    A clear, accurate explanation of what the solar industry calls “thermal storage” – the storage of the sun’s heat. From New Technology via YouTube

    A Story About People And Wind Energy

    How wind energy can be a solution to a range of challenges, from climate change to local economics. From CSR News via YouTube

    Friday, July 18, 2014


    Eight ways climate change is making the world more dangerous; Disasters including storms, floods and heatwaves have increased fivefold since the 1970s, UN finds

    Suzanne Goldenberg, 14 July 2014, UK Guardian

    “…The world already is nearly five times as dangerous and disaster prone as it was in the 1970s, because of the increasing risks brought by climate change, according to [Atlas Of Mortality And Economic Losses From Weather, Climate And Water Extremes (1970–2012) from] the World Meteorological Organisation…The first decade of the 21st century saw 3,496 natural disasters from floods, storms, droughts and heat waves…nearly five times as many [climate change influenced] disasters as the 743 catastrophes reported during the 1970s…Flooding and storms are also taking a bigger bite out of the economy. But heat waves…[which] didn't even register as a threat in the 1970s…[were, by 2010, one] of the leading causes of deaths in natural disasters, along with storms. In Russia alone, more than 55,000 people died as a result of heat wave in 2010…Disasters were about 5.5 times more expensive by 2010 than they were in the 1970s, and most of that was because of the rising losses due to floods. The cost of disasters rose to $864bn (£505bn) in the last decade…” click here for more


    Solar Funding and M&A 2014 Second Quarter Report

    July 2014 (Mercom Capital Group)

    “Total corporate financing, including VC/PE, debt and public market financing in the solar sector totaled $6.3 billion in Q2 2014…Global VC funding in Q2 2014 totaled $432 million in 21 deals, up from $251 million in 26 deals in Q1…Solar downstream companies accounted for nearly 90 percent of funding, bringing in more than $388 million…Public market financing in Q2 2014 totaled $1.3 billion in ten deals compared to $1.3 billion in 17 deals in Q1 2014…There were 33 large-scale project funding deals in Q2 2014 totaling $3.5 billion, compared to $3.6 billion in 43 deals in the first quarter. Large-scale project announcements worldwide in Q2 2014 totaled 7.6 GW from 150 projects…It was a record quarter for residential and commercial solar funds, with $1.3 billion raised in eight different funds…Solar M&A activity in Q2 2014 came to $400 million in 25 transactions, with most of it in the solar downstream category which had 11 transactions…Announced project acquisitions in Q2 2014 totaled $229 million in 34 transactions…” click here for more


    4.9 GW of new offshore wind capacity under construction in Europe

    14 July 2014 (European Wind Energy Association)

    “16 commercial offshore wind farms are under construction [in Europe] totaling 4.9 GW of power capacity [according to The European offshore wind industry - key trends and statistics 1st half 2014]…224 new offshore wind turbines, totaling 781 megawatts (MW), were fully grid connected in Europe during the first six months of 2014 – 25% less than during the same period in 2013 (1,045 MW)…282 wind turbines have been installed but not connected during this period, making a total of 310 offshore turbines awaiting grid connection. Once connected they will add a further 1,200 MW of offshore wind energy capacity…” click here for more


    KfW provides financing for 200 MW geothermal project in Kenya

    July 15, 2014 (PennEnergy)

    “The German Development Bank (KfW) has agreed to an almost $109 million loan to Kenya to build…[t]he Bogoria-Silali geothermal project, which is expected to have a total production capacity of 200 megawatts…[when] developed by the Geothermal Development Company (GDC)…In addition to the Bogoria-Silali geothermal project, KfW also provided a $45 million loan for the Nairobi Water Distribution Project to improve access to water in Kenya. These projects are part of Kenya's Vision 2030, which aims to enhance economic opportunities and improve [environmental quality]…Geothermal projects in Kenya have attracted investment from other banks like the African Development Bank (AfDB) and the French Development Agency (AFD). Kenya plans to drill 20 wells with the $109 million loan from KfW.” click here for more

    Thursday, July 17, 2014


    Global Warming Is Coming, but Climate Hysteria Doesn’t Help Anyone; The Guardian's dire report of a climate-change catastrophe unfolding in Miami is a case of premature evacuation

    Michael Grunwald, July 14, 2014 (Time)

    “…I’ve described [Miami’s] South Beach as the canary in America’s coal mine for climate change, and the canary has started coughing a bit, but it isn’t dead or even very sick. I’m sorry to spoil the climate porn, but…[while the changes] are harbingers of a potentially catastrophic future, they are not currently catastrophic. They are annoying…[and so is] yellow climate journalism…[L]et’s get real. The Pacific island of Kiribati is drowning; Miami Beach is not yet drowning…We should fight global warming — and the powers that be, including Senator Marco Rubio and Governor Rick Scott, should stop looking away — because it’s a potential disaster for Miami and the rest of this very nice planet. But we shouldn’t pretend it’s a disaster now…I get why the Obama Administration wants to emphasize that global warming is a today issue, not a someday issue. I understand that stories about how climate change is already affecting our cities and our farms and our lives…can make the issue feel more pressing to ordinary Americans. But fortunately, the effects are not yet calamitous; the reason we ought to DO SOMETHING is that they’ll get calamitous if we don’t…” click here for more


    Short-Term Energy Outlook, Renewables and CO2 Emissions; Electricity and Heat Generation from Renewables

    July 8, 2014 (U.S. Energy Information Administration)

    “EIA projects total renewables use for electricity and heat generation will grow by 2.9% in 2014. Conventional hydropower generation is projected to fall by 0.8%, while nonhydropower renewables rise by 4.9%. In 2015, total renewables consumption for electric power and heat generation increases by 4.0%...[W]ind power capacity will increase by 8.6% in 2014 and 13.9% in 2015. Electricity generation from wind is projected to contribute 4.5% of total electricity generation in 2015…EIA expects continued robust growth in solar electricity generation, although the amount of utility-scale generation remains a small share of total U.S. generation at about 0.5% in 2015…EIA expects that utility-scale solar capacity will increase by 88% between the end of 2013 and the end of 2015; about 70% of this new capacity is being built in California. However, customer-sited photovoltaic capacity growth, which the STEO does not forecast, is expected to exceed utility-scale solar growth between 2013 and 2015…” click here for more


    Integrating Solar PV in Utility System Operations

    Mills, Andrew D., et al, March 2014 (Argonne National Lab, Lawrence Berkeley National Lab, National Renewable Energy Lab)

    “…Because solar PV power output is both variable and uncertain, there are concerns about how its inclusion…in significant amounts affects conventional power systems operations…This report proposes a systematic framework for analyzing implications for operating procedures and corresponding increases in operating costs due to uncertainty and variability in renewable resources...[It is] based on the projected generation portfolio of a utility in the southwest (Arizona Public Service)…The costs of sub-hourly solar variability, short-term forecast errors, and day-ahead (DA) forecast errors are estimated…In a lower PV scenario (8.8% of annual demand) we find that the operational challenges are relatively modest…[and] primarily due to an increase in the cost of balancing reserves held during hour-ahead scheduling. In a high-PV scenario (17% of annual demand), however, we find the operational challenges to be more substantial…[C]urtailments of renewable energy reach a very high level (17.8% of the renewable potential) and…satisfying balancing reserve requirements is challenging in a few hours of the year…With increased flexibility the estimated integration costs vary…[up to] $4.4/MWh-PV in the high PV scenario. Increased flexibility also reduces the curtailment of renewables to between 0.9% and 9.1% of the renewable potential, indicating that the increased system flexibility makes it much easier to absorb high solar PV penetration levels…” click here for more


    Disruption Becomes Evolution: Creating the Value-Based Utility

    Barker, et. al., July 2014 (CMG)

    “Innovations in the 20th century drove the fastest and most disruptive transformations in economic history…The important common trend among then, and coming soon to the energy industry, was the movement from centralized capacity controlled by a few to distributed capacity independently controlled by anyone and costing a fraction of the traditional cost…Today, after more than a century of slow evolution and little power system changes, a confluence of factors within the industry now result in electric utilities now facing multiple technological and business disruptions…[including]…Renewable and Distributed Generation…Demand Response…Microgrids…Electric Vehicles…[and] Energy Storage…[K]ey business trends partially or wholly unrelated to technology also have the potential to disrupt the utility industry status quo…[including] Retail Choice…Product Bundling…Municipalization…Nationwide Wholesale Markets…[and] New Business Models…” click here for more

    Wednesday, July 16, 2014


    Report of the Market Simulation Group on Competitive Supply/Demand Balance in the California Allowance Market and the Potential for Market Manipulation

    Severin Borenstein, James Bushnell, Frank A. Wolak, and Matthew Zaragoza-Watkins, July 2014 (Energy Institute at Haas/U.C. Berkeley)

    Executive Summary

    California’s Cap and Trade market in greenhouse gases (GHG) is now in its third calendar year, with the first allowance auction taking place on November 14, 2012 and compliance obligations commencing on January 1, 2013. A key design element of the system is its limited price-collar mechanisms that place soft lower and upper bounds of allowance prices. To date the market prices have held at or near the lower bound “floor” prices established by the allowance auction reserve price. However, the market will be entering important new phases over the next 18 months. The first firm information on covered emissions during the first compliance phase (2013-2014) will emerge in November of 2014. Coming near the end of this compliance phase, the release of this information is the first opportunity for the market to confirm expectations of the supply and demand balance of allowances during the first phase. Starting in 2015, the market will expand to include several new sectors, most significantly transportation fuels and the bulk of natural gas consumption in the state. It is therefore important to anticipate any possible shocks to the market that can arise as it matures and expands over the course of the next two years.

    One central issue is the status of the price-collar mechanisms. While the details of California’s price-collars are described in regulations developed by the California Air Resources Board (ARB), recently approved regulatory changes would alter the exact manner in which the price ceiling – known as the allowance price con tainment reserve (APCR) mechanism – would be applied and the degree to which it could mitigate uncertainty over prices.1 A key question relating to this issue is the extent to which either the auction reserve price or APCR price is likely to be relevant, that is, the probabilities that market prices may be near the price floor or the APCR soft price ceiling.2 A second key question is whether some market participants may be able to strategically change the allowance price, in particular by buying more allowances than they need and withholding them from the market in order to sell a portion later at a higher price.

    In this report, we simulate distributions of possible market outcomes in order r to address these questions. We first develop estimates of the distribution of competitive allowance prices and the probabilities that one of the price containment mechanisms may be binding. A key factor driving these probabilities is the amount by which GHG-producing entities will reduce their emissions. This reduction is likely to be a highly non-linear function of allowance price. Specifically, we find that a large quantity of emissions reductions are mandated by programs auxiliary to the cap and trade mechanism, and will therefore be available at or below the auction reserve price. Other businesses can reduce their need to purchase allowances at a cost that is below or only slightly above the auction reserve price. Relatively little additional emissions abatement is likely to be available as the price climbs, at least before the price rises high enough to trigger additional supply of allowances from the price containment reserve.

    Our key simulation findings are

    1) The steeply rising cost of emissions abatement between the auction reserve price floor and the price containment reserve ceiling, along with relatively inflexible supply of abatement below the price containment reserve, implies a bi-modal distribution of prices with most of the probability mass at either low or high price outcomes.

    2) Under most scenarios, the most likely 2020 market price will be very close to the auction reserve price floor.

    3) However, under all scenarios, there is a smaller but significant risk that the allowance price containment reserve will be exhausted at or before 2020.

    For scenarios in which there is low or medium availability of carbon offsets and relatively little reshuffling of electricity imports, this probability ranges from as 4%-25%.

    4) The probability of reaching, but not exhausting, the APCR by 2020 falls between 8% and 31% under low and medium abatement scenarios. We find there is low risk of exhausting the APCR before the third compliance phase, which begins in 2018.

    5) There are small but significant probabilities that the market could reach the APCR during one of the first two compliance phases. Under our low and medium abatement scenarios, there is a 2%-4% chance of reaching the APCR (assuming no strategic withholding behavior by market participants, which we investigate later) during the first compliance phase. Under our low and medium abatement scenarios, the probability of reaching the APCR (assuming no withholding) during the second compliance phase ranges from 4%-17%.

    6) There is a straightforward mechanism in which firms can withhold allowances from one phase of the market by banking them into compliance accounts for future compliance phases. We study the risks that such strategies could inflate prices during the first and second compliance phases. The largest risk is that one (or more) of a small number of large firms acquires signifi- cantly more allowances than it requires for the first compliance phase, and deposits these extra allowances into compliance accounts for use in later periods. This could result in 10% of available allowances or more being removed from an approximately 330 million metric tons (MMT) market in the first compliance period. Such a strategy, if attempted, would increase the probability of reaching the APCR from 2% (absent withholding) up to about 7% or higher with medium abatement and from 4% to about 13% or higher under a low abatement scenario.3

    This strategy would be most likely to affect the allowance price for the first compliance period during 2015, after the first compliance period ends but before the final surrender of allowances for this period.

    7) During the second compliance phase, a similar strategy could increase the risk of needing to access the APCR from around 15% to as much as 30% or higher.

    We provide several recommendations to reduce the risk of very high allowance prices due to either the competitive supply/demand balance or a withholding strategy. It is important to emphasize that the higher prices are allowed to rise, the more potentially profitable a withholding strategy becomes. Therefore an unambiguous policy that credibly limits the maximum allowance price is important to market stability and a strong deterrent to attempts at market manipulation.

    Our major recommendations are:

    1) Establish policies that reinforce the viability of the allowance price containment reserve. The recently adopted rule changes that make adjustments to the APCR only address transient shortfalls and therefore do not address the threat that there could be a supply/demand mismatch for the entire 8-year program.4

    If there were not enough allowances over the 8-year period to cover the cumulative emissions under the cap, then there would be no policy in place to further restrain prices. It is likely that an ad-hoc government intervention into the market might occur under such a circumstance.

    This would prove to be extremely disruptive to both the market and to the broader policy goals of AB 32.

    We therefore recommend that a policy be established to ensure that the APCR could not be exhausted. The Air Resources Board should stand ready to expand the pool of allowances in order to maintain the market price at or below the highest price step of the APCR. Two alternatives that could achieve this goal are allowing sales of post-2020 compliance period allowances or allowing direct or indirect use of compliance instruments from other GHG markets such as the European Union Emissions Trading System (EU-ETS) or the Regional Greenhouse Gas Initiative (RGGI) under such circumstances.

    2) Allow Conversion of Allowance Vintages.

    Currently, market participants are not allowed to use allowances from later vintages for compliance in earlier phases. For example a vintage 2015 allowance cannot be used for compliance obligations in phase I, which concludes on December 31, 2014, but for which final surrender doesn’t occur until late in 2015. This boundary between phases creates the prospect of transitional shortages in which allowance prices in the expiring phase rise to the APCR while current vintage allowance remain near the price floor.

    As we demonstrate, the potential for withholding increases the probability of such an outcome.

    A second concern with the current design is the potential that allowances could end up inefficiently owned ex post. As firms acquire allowances according to their expectations of needs, shocks to individual firms or even sectors could result in too few allowances from a current phase being available to some sectors while others hold a surplus they are unable to sell, if their surplus is held in compliance accounts rather than holding accounts. Conversion – for a fee – of the vintages of allowances held by market participants would greatly reduce the risk and consequence of both problems.

    Under this proposal firms would be allowed, for instance, to purchase 2015 or later vintage allowances during 2015 and convert them to meet their phase I obligations, for which final allowance surrender would occur in November 2015. To prevent stakeholders from casually undertaking such conversions, a cost in terms of either a conversion fee or the number of allowances sur rendered could be imposed. For example, ARB could require 1.25 vintage 2015 allowances be converted to yield 1.0 2014 vintage allowance, thereby imposing an implicit 25% cost on the conversion. Alternatively, a conver sion fee, for example $2.50 or $5 per allowance, could be applied to each converted allowance. Firms would only avail themselves of this option if the allowance price in the expiring phase rises above the price of the later vintage allowance by an amount greater than the conversion fee. At the same time, this option would bound the extent to which prices in the ex piring phase could rise above later vintage allowance prices. This would greatly reduce the incentive to attempt to raise prices in the expiring phase by withholding allowances from that phase.

    The proposal would also address accidental over-compliance by some par ticipants, as well as strategic withholding, either of which could create an artificial shortage at the end of a compliance period. Firms would be able to purchase future vintages (at a premium) to meet their needs.

    3) Maximize the Timeliness and Quality of Information Available to the Market. Currently the market suffers from opacity in several important areas. First, there is almost no way to observe, even indirectly, the emissions ass ociated with electricity imports and the only source of official information will arrive with up to a nearly two-year lag on the market. Second, current proposals would limit the public availability of information on the allowance holdings of individual firms. We recommend steps be taken to increase the frequency with which key emissions figures, particularly from electricity im ports, be provided to the market. We also recommend that if individual allowance holdings must be held confidential, statistics on the overall con centration of allowance holdings be made available. In this way, market participants would be able to detect attempts by one firm to acquire a sub stantial long position and take measures to defend themselves against any attempts at withholding allowances from the market.


    88% OF NEW U.S. POWER IN MAY WAS NEW ENERGY Renewable Energy Dominates New U.S. Capacity In May

    24 June 2014 (Solar Industry)

    “Renewable energy, including wind, solar, biomass and hydropower, provided 88.2% of new installed U.S. electrical generating capacity for the month of May…[T]wo new ‘units’ of wind power provided 203 MW, five units of solar provided 156 MW, one unit of biomass provided 5 MW, and one unit of hydropower provided 0.2 MW…[T]wo new units of natural gas provided just 49 MW, while no new capacity was provided by coal, oil or nuclear power…For the first five months of 2014, renewable energy sources (i.e., biomass, geothermal, solar, water and wind) accounted for 54.1% of the 3,136 MW of new domestic electrical generation installed. This was made up of solar (907 MW), wind (678 MW), biomass (73 MW), geothermal steam (32 MW) and hydro (8 MW)…[C]oal and nuclear provided no new capacity, while 1,437 MW of natural gas, 1 MW of oil and 1 MW of ‘other’ provided the balance…

    “Renewable energy sources, including hydropower, now account for 16.28% of total installed U.S. operating generating capacity: water - 8.57%, wind - 5.26%, biomass - 1.37%, solar - 0.75%, and geothermal steam - 0.33%. This is more than nuclear (9.24%) and oil (4.03%) combined…” click here for more

    THE FIGHT FOR WIND IN OHIO Wind power backers, opponents gear up for long fight over energy laws; $55M Champaign County wind project may be in jeopardy, but some neighbors want it to stop.

    Matt Sanctis, July 12, 2014 (Dayton Daily News)

    “…Wind energy advocates [say two recently signed laws] put the future of wind energy in Ohio in jeopardy, potentially stalling or killing as many as 10 shovel-ready projects that could mean $2.5 billion in investment in the state, along with as much as $20 million in combined tax payments to local governments and lease payments to property owners…Statewide, both sides said they are gearing up for a protracted fight over how electricity will be developed and delivered in the state in the years ahead…At the heart of the debate are [the] two recently signed laws that will take effect later this year…Senate Bill 310 will freeze Ohio’s renewable energy mandates for two years and create a panel to study whether to change the state’s energy laws. House Bill 483, which could have a bigger effect on wind developers, would significantly increase how far a wind turbine must be from a neighboring property…” click here for more

    U.S. CRITICAL SYSTEMS REGULARLY BREACHED Survey Reveals Majority Of Critical Infrastructure Providers Have Been Breached

    July 11, 2014 (Renew Grid)

    "Nearly 70% of companies that are responsible for the world's power, water and other critical functions have reported at least one security breach that led to the loss of confidential information or disruption of operations in the past 12 months, according to [ Critical Infrastructure: Security Preparedness and Maturity by the Poneman Institute and Unisys Corp.,]...In a survey of 599 security executives at utility, oil and gas, energy, and manufacturing companies, 64% of respondents said they anticipated one or more serious attacks in the coming year. Despite this risk, only 28% ranked security as one of the top five strategic priorities for their organization, while a majority named their top business priority as minimizing downtime…Only one in six respondents described their organization's IT security program or activities as mature. Respondents who reported suffering a data breach within the past year most often attributed these breaches to an internal accident or mistake, and negligent insiders were the most cited threat to company security…[but] only 6% of respondents said they provide cybersecurity training for all employees..." click here for more