The Inflation Reduction Act created two new credit delivery mechanisms—elective pay (or direct pay) and transferability—that are meant to help enable state, local, and Tribal governments; non-profit organizations; Puerto Rico and other U.S. territories; and other entities to take advantage of clean energy tax credits.

Until the Inflation Reduction Act introduced these new credit delivery mechanisms, governments, many types of tax-exempt organizations, and some businesses could not fully benefit from tax credits like those that incentivize clean energy deployment.  

“The Inflation Reduction Act’s new tools to access clean energy tax credits are a catalyst for meeting President Biden’s historic economic and climate goals,” said Secretary of the Treasury Janet L. Yellen. “They are acting as a force multiplier, bringing governments and nonprofits to the table for the first time and enabling companies to realize greater value from incentives to deploy new clean power and manufacture clean energy components. More clean energy projects are being built quickly and affordably, and more communities are benefitting from the growth of the clean energy economy.”

The Inflation Reduction Act allows tax-exempt and governmental entities to receive elective payments for 12 clean energy tax credits, including the major Investment and Production Tax (45 and 48) credits, as well as tax credits for electric vehicles and charging stations. Businesses can also choose elective pay for three of those credits: the credits for Advanced Manufacturing (45X), Carbon Oxide Sequestration (45Q), and Clean Hydrogen (45V). 

The Inflation Reduction Act also allows businesses to transfer all or a portion of any of 11 clean energy credits to a third party in exchange for tax-free immediate funds, so that businesses can take advantage of tax incentives if they do not have sufficient tax liability to fully utilize the credits themselves. Entities without sufficient tax liability were previously unable to realize the full value of credits, leaving only corporations able to take advantage of federal tax incentives. Final rules on transferability will be finalized in the near future.

Treasury’s elective pay final rules are intended to provide certainty for applicable entities to understand the law’s scope and requirements for eligibility. The final rules also lay out the process and timeline to claim and receive an elective payment.

Along with final rules on elective pay, Treasury today also issued a separate Notice of Proposed Rulemaking (NPRM) that is intended to provide further clarity and flexibility for applicable entities that that co-own clean energy projects and would like to utilize elective pay.

Under the IRA, entities treated as partnerships for federal tax purposes are not eligible for elective pay, regardless of whether one or more of its partners is an applicable entity. However, the proposed elective pay regulations clarified, and the final regulations confirm, that there are pathways for an applicable entity to access elective pay for credits it earns through a joint ownership arrangement including validly “electing out” of partnership tax treatment. Treasury and IRS agreed with commenters that existing guidance on making a valid election out of partnership tax treatment for clean energy arrangements was limited, and updates were needed for these arrangements to be more effective.

The section 761(a) NPRM issued provides a broader and more accessible pathway for applicable entities that co-own renewable energy projects to elect out of partnership tax status and therefore access elective pay. To qualify under these proposed rules, co-ownership arrangements must be organized exclusively to produce electricity from their applicable credit property, have one or more applicable entity co-owners that will claim elective pay, and meet certain other requirements.

Specifically, these proposed regulations would:

• Permit renewable energy investments to be made through a noncorporate entity, rather than requiring direct co-ownership of the property or facility by the applicable entity;
• Modify certain joint marketing restrictions to provide that multi-year power purchase agreements would not violate the requirements to elect out of partnership tax treatment.

This article was originally published on Renewable Energy World.

WASHINGTON (AP) — The Environmental Protection Agency said Thursday it is delaying planned rules to curb emissions from existing natural gas plants that release harmful air pollutants and contribute to global warming.

The agency said it is still on track to finalize rules for coal-fired power plants and new gas plants that have not come online, a key step to slow planet-warming pollution from the power sector, the nation’s second-largest contributor to climate change.

But in a turnaround from previous plans, the agency said it will review standards for existing gas plants and expand the rules to include more pollutants. The change came after complaints from environmental justice groups, who said the earlier plan allowed too much toxic air pollution which disproportionately harms low-income neighborhoods near power plants, refineries and other industrial sites.

“As EPA works towards final standards to cut climate pollution from existing coal and new gas-fired power plants later this spring, the agency is taking a new, comprehensive approach to cover the entire fleet of natural gas-fired turbines, as well as cover more pollutants,” EPA Administrator Michael Regan said in a statement.

He called the new plan a “stronger, more durable approach” that will achieve greater emissions reductions than the current proposal. It also will better protect vulnerable frontline communities suffering from toxic air pollution caused by power plants and other industrial sites, Regan said.

Still, the plan was not universally welcomed by environmentalists, who said the new approach will likely push rules for existing gas plants past the November presidential election.

“We are extremely disappointed in EPA’s decision to delay finalizing carbon pollution standards for existing gas plants, which make up a significant portion of carbon emissions in the power sector,” said Frank Sturges, a lawyer for the Clean Air Task Force, an environmental group.

“Greenhouse gas emissions from power plants have gone uncontrolled for far too long, and we have no more time to waste,” he said.

Sen. Sheldon Whitehouse, a Rhode Island Democrat, called EPA’s decision “inexplicable,” adding: “Making a rule that applies only to coal, which is dying out on its own, and to new gas power plants that are not yet built, is not how we are going to reach climate safety.”

But some environmentalists hailed the decision, saying the new plan would ultimately deliver better results.

“We have always known that the fight for a clean power sector wouldn’t be a quick one,” said Charles Harper of Evergreen Action. “EPA’s first order of business should be finalizing strong and necessary limits on climate pollution from new gas and existing coal plants as quickly as possible.”

“We are glad that EPA is committed to finishing the job with a new rule that covers every gas plant operating in the U.S.,” Harper added.

“Tackling dirty coal plants is one of the single most important moves the president and EPA can make to rein in climate pollution,” said Abigail Dillen, president of Earthjustice. “As utilities propose new fossil gas plants, we absolutely have to get ahead of a big new pollution problem.”

EPA issued a proposed rule in May 2023 that called for drastically curbing greenhouse gas emissions from existing coal and gas-fired plants, as well as future gas plants planned by the power industry. No new coal plant has opened in the U.S. in more than a decade, while dozens of coal-fired plants have closed in recent years in the face of competition from cheaper natural gas. The Biden administration has committed to create a carbon pollution-free power sector by 2035.

The EPA proposal could force power plants to capture smokestack emissions using a technology that has long been promised but is not used widely in the United States.

If finalized, the proposed regulation would mark the first time the federal government has restricted carbon dioxide emissions from existing power plants, which generate about 25% of U.S. greenhouse gas pollution, second only to the transportation sector. The rule also would apply to future electric plants and would avoid up to 617 million metric tons of carbon dioxide through 2042, equivalent to annual emissions of 137 million passenger vehicles, the EPA said.

Almost all coal plants — along with large, frequently used gas-fired plants — would have to cut or capture nearly all their carbon dioxide emissions by 2038, the EPA said. Plants that cannot meet the new standards would be forced to shutter.

Much of the EPA plan is expected to be made final this spring and is likely to be challenged by industry groups and Republican-leaning states. They have accused the Democratic administration of overreach on environmental regulations and warn of a pending reliability crisis for the electric grid. The power plant rule is one of at least a half-dozen EPA rules limiting power plant emissions and wastewater treatment.

The National Mining Association warned of “an onslaught” of government regulation “designed to shut down the coal fleet prematurely″ when the EPA proposal was announced last year.

Regan has denied that the power plant rule is aimed at shutting down the coal sector, but acknowledged last year that, “ we will see some coal retirements.”

Coal provided just over 16% of U.S. electricity in 2023, down from about 45% in 2010, according to the U.S. Energy Information Administration. Natural gas provided about 43% of U.S. electricity. The remainder comes from nuclear energy and renewables such as wind, solar and hydropower.

Peggy Shepard, co-founder and executive director of WE ACT for Environmental Justice, a New York-based group, said she was pleased that the concerns of environmental justice communities will be factored into EPA’s rulemaking.

“The power sector is one of the top sources of carbon emissions and pollution,” she said. “With this pause to take a deeper dive into developing the most comprehensive and thoughtful rulemaking for existing gas plants, we have an opportunity to do this work correctly and effectively to protect the human and environmental health of the most overburdened, neglected and vulnerable people across the country.”

The EPA’s revised plan was first reported by Bloomberg News.

Vineyard Wind 1

Vineyard Wind 1, the first large-scale offshore wind project in the United States, is now providing approximately 68 MW to the New England grid. Once fully operational, Vineyard Wind 1 will deliver 806 MW.

In early January, Vineyard Wind delivered approximately 5 MW of power from one turbine to the grid. Following that milestone, the project has provided power from each of the first five turbines intermittently, as it ramped up its initial operations. Currently, the project has installed nine turbines and is in the process of installing the 10th, with preparations underway to transport the 11th turbine to the offshore project site. Additional power will be delivered to the grid sequentially, with each turbine starting production once it completes the commissioning process.

The power from the project interconnects to the New England grid in Barnstable, transmitted by underground cables that connect to a substation further inland on Cape Cod. Once completed, the project will consist of 62 wind turbines.

Empire Wind 1

With the permitting action by BOEM secured, 810 MW Empire Wind 1 is on track to begin construction in its federal lease area off the southern coast of Long Island later this year and could deliver first power to New Yorkers by 2026. In addition, construction to transform the South Brooklyn Marine Terminal into a hub for offshore wind could begin as early as this spring.

Empire Wind has recently received several federal approvals. Last week, it received its Clean Air Act permit from the Environmental Protection Agency. Earlier this week, it received approval from the NOAA National Marine Fisheries Service in accordance with the Marine Mammal Protection Act. Empire Wind 1 is currently bidding into New York’s fourth offshore wind solicitation.

In January, Equinor and BP decided to terminate the Empire Wind 2 project, citing inflation, interest rates, and supply chain disruptions. The Northeastern U.S. offshore project promised a potential generative capacity of 1,260 MW.

The project was already on the chopping block after the New York State Public Service Commission denied petitions filed by a group of developers and a state renewable energy trade association seeking billions of dollars in additional funding from consumers for four proposed offshore wind projects and 86 land-based renewable projects.

In October, developers who filed the petition, including subsidiaries of Orsted, Equinor, and BP, said that they were reviewing the Commission’s decision before reassessing their offshore projects, like Orsted’s 924 MW Sunrise Wind, Equinor/bp’s 816 MW Empire Wind 1, 1,260 MW Empire Wind 2 and 1,230 MW Beacon Wind.

Originally published by Renewable Energy World.

The Clinton plant, which began operation in 1987 and can produce up to 1,080 MW, is currently licensed to operate through April of 2027. The license renewal, if approved, would extend to 2047.

Later this year Constellation is scheduled to file a second license renewal for its two-unit Dresden Clean Energy Center in Morris, Illinois, which would allow Unit 2 to operate until 2049, and Unit 3 to operate until 2051. The move, announced in 2022 along with the plans to extend the life of the Clinton plant, marked a reversal in fortune for both power plants, which were on the road to early retirement due to unfavorable economics less than two years before the announcement.

The continued operation of Clinton has been enabled by state legislation enacted in 2016, and the enactment of the federal nuclear production tax credit in 2022 extended policy support through 2032.

“The Clinton Clean Energy Center is not only the largest carbon-free electricity source in Central Illinois, but it also provides a major boost to the economy,” said Dan Matthews, president of the Clinton School District Board and a member of the DeWitt County Board. “The more than $13 million in annual property taxes supports education and county services, and the large number of employees live here and spend money, which supports local business and creates additional jobs. The plant’s relicensing is an important part of DeWitt County’s economic future.”

The Clinton license renewal application is the latest in a series of investments across the company. In 2023, Constellation announced the acquisition of a 44 percent ownership stake in the South Texas Project nuclear plant, an $800 million uprate project at the Braidwood and Byron clean energy centers in Illinois, and a $350 million uprate of its Criterion Wind Project in Maryland.

Virginia’s House and Senate have approved different versions of legislation that could help advance the deployment of small modular nuclear reactors in the state, despite environmental and ratepayer advocates’ concerns about the costs utility customers could bear for the yet-to-be-used technology.

Legislation from Del. Israel O’Quinn, R-Washington, would allow Appalachian Power Company to recover early development costs for SMRs, including expenses related to “evaluation, design, engineering, environmental analysis and permitting, land option, and early site permitting.” A similar bill from Sen. Dave Marsden, D-Fairfax, would apply to both Appalachian Power and Dominion Energy and allow certain additional costs, such as those related to federal licensing, to be recouped.

“It’s all about getting to the head of the line and putting Virginia first in terms of the supply chain for these when they become reliable and a good source of energy,” Marsden said during a committee hearing.

O’Quinn too said development needs to begin “sooner rather than later so that we can … decide if it’s actually feasible or not.” 

But while both measures gained enough support to clear the chambers ahead of the crossover deadline, not every lawmaker was on board. Sen. Travis Hackworth, R-Tazewell, said Tuesday he couldn’t in “good conscience” vote for Marsden’s because of potential rate increases it could produce. 

Small modular reactors are, as the name implies, scaled-down versions of nuclear reactors that can be manufactured offsite and built at lower cost than conventional nuclear plants. Republican Gov. Glenn Youngkin has been particularly enthusiastic about the technology, including it in his four-year energy plan as a way to provide around-the-clock energy to the grid and pushing for its development in Southwest Virginia.

Currently, about 30% of Virginia’s electricity comes from nuclear power generated at Dominion’s Lake Anna and Surry facilities. Nuclear is also a critical component of the decarbonization plan laid out in the 2020 Virginia Clean Economy Act, which requires the state’s utilities to transition their non-nuclear energy use to renewables by midcentury. 

However, while the VCEA allows the continued operation of Dominion’s nuclear plants, it removed language in Virginia law that stated “planning and development” activities for new nuclear facilities were in the public interest, a term used to favor approvals. Last year, Republican legislators attempted to make nuclear qualify as a renewable source under the law, but Democrats in the Senate rejected the proposal.

Both Appalachian Power and Dominion have expressed interest in using small modular reactors.

In hearings this session on O’Quinn and Marsden’s bills, utility lobbyists have argued the proposals would let the companies conduct important preliminary work.

“We’re only looking for the siting piece of it,” said Larry Jackson, a lobbyist for Appalachian Power, during a committee hearing on O’Quinn’s bill. “The reason we’re doing that is the technologies with small modular reactors aren’t quite mature enough yet. We wanted to go ahead and get this first piece out of the way before the technology has matured.”

Both Jackson and Dominion lobbyist Bernard McNamee, a former member of the Federal Energy Regulatory Commission, said spreading out costs over a longer period of time would also prevent customers from seeing a greater rate increase at the time a potential reactor is built.

“This is a reasonable process in order to smooth out the cost to customers,” said McNamee.

While both O’Quinn and Marsden’s bills would give the State Corporation Commission the ability to review any preliminary SMR costs the utilities ask to recover from customers, there are some differences between them. Marsden’s would let the utilities recover the costs of federal approvals — expenses that can cost millions — and equipment, while O’Quinn’s would not. Marsden’s bill would also limit a utility to developing one SMR site, although more than one reactor could be located there.

The proposals are being supported by groups including the Virginia Manufacturers Association, which has pointed out Virginia companies like Lynchburg’s BWXT are already involved in SMR development. 

“This is a homegrown technology,” said Brett Vassey, president and CEO of the association. “This is entirely a supply chain that we own, including the fuel.”

But some environmental and ratepayer groups have argued any legislation should require the utilities to prove there is a need for an SMR and that it’s a better option than alternative technologies, rather than just requiring the companies to demonstrate to regulators that their spending is “reasonable and prudent”

“When hundreds of millions of ratepayer money is at stake, lawmakers should protect Virginians from footing the bill upfront for projects that may never power their homes,” said Laura Gonzalez Guerrero, energy policy and regulatory manager at Clean Virginia, an organization started by Charlottesville millionaire Michael Bills to counter Dominion’s influence in the General Assembly.

Critics also pointed to the high-profile failure of plans to expand the V.C. Summer conventional nuclear plant in South Carolina, which was never completed but left ratepayers on the hook for $2 billion in costs, and argued the recent abandonment of a $9.3 billion SMR project in Idaho shows the technology remains unproven.

Developing an SMR “is a risk,” said Peter Anderson, director of state energy policy for nonprofit Appalachian Voices. “And we wonder why ratepayers should be the insurance policy for that process.”

Language in both bills would allow state regulators to return the proceeds of any sale of a site acquired by a utility under the law for an SMR to ratepayers. Marsden’s bill would not require a refund if the site was located on an existing nuclear site. 

Discussion on the bills will now continue, as the Senate takes up O’Quinn’s proposal and the House Marsden’s. 

Virginia Mercury is part of States Newsroom, a network of news bureaus supported by grants and a coalition of donors as a 501c(3) public charity. Virginia Mercury maintains editorial independence.

Ohio law enforcement authorities on Monday filed numerous felony charges against two former First Energy executives and a former top utility regulator in what has been called the biggest bribery and money-laundering scandal in Ohio history.

Ohio Attorney General Dave Yost announced scores of felony charges against a former regulator who also has been charged federally, and against two people who haven’t — former top executives for Akron-based FirstEnergy whom the company admitted paid more than $60 million in bribes between 2016 and 2020 in exchange for a $1.3 billion ratepayer bailout.

Charged were Sam Randazzo, former chairman of the Public Utilities Commission. Already facing felony charges in federal court, the state indictment charges him with 22 more, including grand theft, bribery, and money laundering. The indictment accuses him of taking bribes from FirstEnergy from 2010 until just before he became chairman of the commission in 2019.

Also charged were former FirstEnergy CEO Chuck Jones and Vice President Michael Dowling. Between them, they face 22 felony charges similar to those faced by Randazzo.

“This indictment is about more than one piece of legislation,” Yost said Monday. “It is about the hostile capture of a significant portion of Ohio’s state government by deception, betrayal, and dishonesty.”

The state charges that were announced Monday didn’t deal with much of the activity addressed in the federal case. They instead focused on the relationship between Jones, Dowling, and Randazzo between 2010 and early 2019, when they paid him $4.33 million just as he was becoming the state’s top utility regulator.

The House Bill 6 scandal

Back in 2019, former Ohio House Speaker Larry Householder took $61 million in bribes in exchange for legislation to give FirstEnergy a $1 billion bailout, named House Bill 6, all at the expense of the ratepayers.

The scheme was revealed in three main ways — two separate whistleblowers and a phone wiretap.

In March 2023, a jury found Householder and former Ohio Republican Party leader Matt Borges guilty beyond a reasonable doubt for their involvement in the racketeering scheme that left four men guilty and another dead by suicide.

In late June that year, federal judge Timothy Black sentenced Householder to 20 years in prison. Borges got 5 years. The two surviving defendants took plea agreements early on, helping the FBI, and are still awaiting their sentencing. The feds are asking for 0-6 months for them.

Until Monday, only federal indictments had been handed out.

HB 6 mainly benefited FirstEnergy’s struggling nuclear power plants, but those provisions were later repealed. There are aspects of the bill still in place, though.

The Ohio Valley Electric Corporation (OVEC) got a handout from the scheme. It expanded a bailout of the OVEC plants and required Ohioans to pay for two 1950s-era coal plants— one in the Southern area of the state and the other in Indiana. The main beneficiaries of this are American Electric Power Company (AEP), Duke Energy and AES Ohio.

Despite this scandal becoming public years ago, ethics laws in the state have not changed to prevent schemes like this from happening.

There are numerous bipartisan efforts to repeal HB 6 totally and to put forward ethics laws. None are going anywhere, it seems.

Monday’s indictments

AG Yost was joined by Summit County Prosecutor Sherri Bevan Walsh and Sheriff Kandy Fatheree for the announcement Monday.

“The crimes committed by these individuals impacted the pocketbooks of every hard working Ohioan and further shook our faith in the institutions and organizations that we count on to represent us and to provide us with essential services,” Fatheree said. “Today, we take another important step in ensuring that justice is served for these crimes and that those who took advantage of the public’s trust are held accountable.”

FirstEnergy as a company has already admitted in a deferred prosecution agreement to bribing public officials in Ohio, including a $4.3 million bribe to Randazzo. Jones and Dowling allegedly paid this to him.

Randazzo pleaded not guilty to the federal charges against him in December.

The Sustainability Funding Alliance of Ohio and IEU-Ohio Administration Company are also named in the filing. Randazzo controlled each of them, and they were allegedly shell companies created to further his criminal activity.

Reactions

While Monday was probably not the best day for Randazzo, Jones and Dowling, it was a great day for whistleblower Tyler Fehrman.

Fehrman is the Republican operative-turned-FBI informant who is credited with exposing this mass public corruption at the Statehouse — and he is cheering the AG and Summit County for these arrests.

“These guys deserve to have everything taken away from them,” Fehrman said. “They deserve it.”

Borges attempted to bribe Fehrman, and threatened him, to be a part of the scandal — even at one point telling him that if he snitches, Borges would “blow up his house.”

That conversation was actually set up and recorded by the feds. Instead of staying quiet, Fehrman testified, helping the jury to return guilty verdicts in the federal trial.

Fehrman ended up having to change careers and flee the state due to fears of retaliation — and because he was ostracized — but now he gets to watch as the scheme continues to unravel.

“You can hide your actions in the dark for a little bit,” Fehrman said Monday. “But the sun always rises and the truth always comes out. Every time one of these guys gets indicted, especially the people that made it possible for Matt and Larry to have the opportunity to do what they did to me — to see them get in trouble, it’s extremely vindicating.”

He agreed with Yost’s statement that there can be no justice without holding the check-writers and the masterminds accountable.

Case Western Reserve University law professor Mike Benza believes these charges are going to be hard to fight. When asked the best possible scenario for them, other than pleading guilty, he said their best bet could be to argue this is politics as usual.

“It seems that the focus from the defense side is going to be much like the focus from Householder and Borges — this is just how things get done in Columbus,” Benza said. “This is just the normal sausage-making of public policy and it may not be pretty and you may not like it, but this is the reality and it doesn’t equal corruption.”

Clearly, that wasn’t a winning argument in federal court.

Part of the reason why it may have worked so poorly in Black’s federal courtroom is because Householder went against the advice of the vast majority of criminal defense attorneys and decided to testify in his defense.

The now-convicted felon used the bribe money to put himself and his allies into power, demolishing and threatening anyone in his path, as well as paying off credit card debt and renovations to his home in Florida.

Benza believes Randazzo, Jones, and Dowling are facing difficult days ahead.

“Randazzo is probably going to be looking at dying in prison,” Benza responded. “Jones and Dowling are probably in that same boat.”

Ferhman is hoping for more indictments, including high-profile names.

“The clock is ticking for the other people that were involved,” Fehrman said.

He named Gov. Mike DeWine Lt. Gov. Jon Husted as people of interest for him.

DeWine has been complying with a subpoena he received in a civil case connected to the scandal, he said.

FirstEnergy investors are suing for being negatively impacted financially by the scandal. They have subpoenaed documents from DeWine, and they’re scheduling a sworn deposition with Husted.

In a one-on-one interview with the governor, DeWine was asked if he was nervous about the scandal, or, more importantly — if was he worried for Husted. DeWine said no to both.

Randazzo has been named as the mastermind behind HB 6, due to him being one of the creators of it — according to the feds. But DeWine was how he came into power.

DeWine was asked in the same interview if he regretted naming Randazzo the state’s top utility regulator.

“Oh, look, if I knew what I know now, if I knew that — I certainly would not have appointed Sam Randazzo to that position,” DeWine responded.

DeWine said he was the best person for the job, claiming that he wasn’t aware that Randazzo was FirstEnergy’s handpicked man.

“While our office was not privy to the indictment and have not yet reviewed it, the indictment alleges very serious acts,” DeWine’s spokesperson Dan Tierney said Monday afternoon. “Our office has full faith in the criminal justice system to adjudicate these serious allegations in an appropriate manner.”

The Request for Information (RFI) that GSA and DoD published requests input to inform the government’s procurement planning for this effort, specifically from contractors who could offer CFE for federal civilian and defense agencies located in the territory where PJM Interconnection is the regional transmission operator. Through this procurement, GSA and DoD anticipate seeking an average of about 2.7 million megawatt hours (MWh) annually of CFE and associated Energy Attribute Certificates. 

“The federal government is a steady customer prepared to make long-term investments. This procurement will mark a key milestone as we continue to incentivize more production and delivery of clean energy,” said GSA Administrator Robin Carnahan. “We’re using the government’s buying power to spur demand for clean, carbon pollution-free electricity, and we’re partnering with industry to drive toward the triple win of good jobs, lower costs for taxpayers, and a healthier planet for future generations.”

In February 2022, the Biden administration, through the General Services Administration and Department of Defense – itself the single largest consumer of energy in the U.S. – requested information regarding 24/7 CFE procurement. The move followed Biden’s executive order that directed the federal government to use 100% CFE on a net annual basis by 2030, including 50% on a 24/7 basis.

RMI defines 24/7 CFE as involving a buyer’s attempt to procure enough carbon-free energy to match a given facility’s load in every hour.

An RMI study titled “Clean Power by the Hour” determined that costs rose with the level of hourly load matching compared to costs for meeting annual procurement targets, near-term emissions reductions for hourly load matching depended on the regional grid mix, and hourly procurement strategies can create new markets for emerging technologies.

Procuring hour-by-hour clean energy within an energy buyer’s grid can lead to a greater drop in greenhouse gas emissions than 100% clean energy matching. At the same time, it can drive the deployment of clean firm power generation and long-duration energy storage, according to a study by Princeton University’s ZERO Lab.

Originally published in Renewable Energy World.

Phillips has served as a FERC commissioner since November 17, 2021, and as acting chair since January 3, 2023. Phillips succeeded Rich Glick, who lost his bid for a new term after Sen. Joe Manchin (D-WV) expressed concern over Glick’s environmental initiatives and some of the Biden administration’s green commitments.

Phillips most recently served as chairman of the Public Service Commission of the District of Columbia, named to that role in 2018. He served on the commission since 2014. He is a regulatory attorney with nearly 20 years of legal expertise in public and private practice, including a background in public utility regulation, bulk power system reliability, and corporate governance.

Before being appointed to the DCPSC, Phillips was assistant general counsel for the North American Electric Reliability Corporation in Washington, D.C. Before joining NERC, he also worked for two law firms, where he advised clients on energy regulatory compliance and policy matters.

Phillips has also served on the boards of several organizations, including the board of directors for the National Association of Regulatory Utility Commissioners and the Organization of PJM States (OPSI). He also has served as president of the Mid-Atlantic Conference of Regulatory Utility Commissioners, and he has held leadership roles on several advisory councils, including the Electric Power Research Institute Advisory Council.

Originally published in POWERGRID International.

Almost 50 environmental justice groups on Tuesday sent a letter to leaders of the federally-funded Midwestern hydrogen hub, imploring them not to try to loosen requirements for tax incentives for hydrogen produced with clean energy.  

The U.S. Treasury in December published draft rules saying that to receive lucrative 45V tax credits for producing clean hydrogen, the energy used must not be diverted from the grid, but be “additional” energy created specifically to power the electrolysis process used to produce pure hydrogen from water. 

Environmental advocates are largely pleased with Treasury’s draft rules, which also say clean energy must be generated around the same time and near where it is used for hydrogen production, to reap incentives. But organizations are worried that industry groups are lobbying to weaken the draft rules, which are open for public comment through Feb. 26. 

The Midwest Alliance for Clean Hydrogen (MachH2), a coalition of industry and research groups that won up to $1 billion in Department of Energy hydrogen hub funding, has proposed to produce much “pink hydrogen” powered by nuclear energy from Illinois. Critics say this, as well as “green hydrogen” produced with solar and wind, could divert zero-emissions power from other users and hence prolong the lives of fossil-fuel-fired generators that fill the gaps. 

“If MachH2 imperils the achievement of our states’ climate goals, harms the health of our communities, and causes electricity price spikes that disproportionality impact low- and moderate-income households, it will face stiff opposition from our coalition and from communities that will bear the brunt of harmful, and avoidable, pollution,” says the letter from 47 organizations, including We the People of Detroit, Interfaith Power & Light, North Dakota Native Vote, StraightUp Solar, the Sierra Club, Eco-Justice Collaborative and Illinois People’s Action. 

MachH2 declined to comment for this story. 

Three pillars 

The environmental and justice groups praised the draft 45V rules for including “three pillars” the groups see as crucial to making sure “clean hydrogen” is truly clean. Those pillars mean clean hydrogen production tax credits will only be awarded if new clean energy is used to power the projects, and the clean energy can actually be delivered to the site of the electrolysis around the time it is needed. The draft rules say that to be considered “additional,” the energy source must have been built within 36 months before the hydrogen production goes online. 

Accounting known as hourly matching, which can be verified with Environmental Attribute Certificates, ensures that hydrogen production isn’t removing clean energy from the grid that could be used by consumers at times of high demand.

A 2023 study by researchers at Princeton University’s Center for Energy and the Environment modeled the emissions impact that hydrogen production by electrolysis would have in the western U.S., and found that all three “pillars” would be necessary to ensure overall emissions don’t exceed fossil fuel generation. 

The environmental justice organizations’ letter notes that the EPA has supported the Treasury department’s decision that induced emissions on the grid — caused by replacing electricity diverted for hydrogen production — should be counted as indirect emissions of hydrogen.  

“Backsliding on Treasury’s proposed rule… would lead to significant emissions increases from hydrogen production, in violation of 45V’s statutory requirements,” said the organizations’ letter. “It would also directly harm communities that are home to some of our states’ dirtiest power plants, which would run more to replace the zero-carbon energy diverted to hydrogen production.” 

Lauren Piette, a senior associate attorney in the clean energy program for Earthjustice, said, “The important thing now is to make sure Treasury holds the line against pressure to weaken the rules.” 

Treasury asked for comment on possible exemptions to the additionality requirement, including the possibility that existing nuclear and hydroelectric plants could receive the tax credit, or that existing plants could get the tax credit if it helps them avoid retirement. Advocates have called these possible changes in the rules “loopholes.” An analysis by the Rhodium Group found these exemptions would generally increase greenhouse gas emissions, compared to modeling under the rules without exemptions. 

“Treasury needs to reject the loopholes industry is demanding, which would create enormous subsidies for dirty hydrogen, lock in more fossil fuel production and use, and increase dangerous health and climate-harming pollution,” Piette said. “Especially damaging would be any loopholes to the incrementality requirement, which are based on industry’s speculative claims about retirement risk, curtailment, and modeling. Such loopholes would reward the hydrogen industry for siphoning critical zero-carbon energy from the grid, creating a massive power demand that would be filled by our dirtiest power plants – the ones that should be retiring, not ramping up.”

The letter charges that if the three pillars aren’t mandates for receiving tax incentives, the electricity diverted from the grid to hydrogen production will cause consumers’ energy bills to spike. They point to cryptocurrency mining as an example of how this phenomenon has played out. 

“Cryptomining, which is subject to minimal constraints and requirements, has increased utility bills by tens to hundreds of millions of dollars for households and businesses in upstate New York and led to costly grid strains in Texas,” the letter says. 

Industry arguments 

BP’s Whiting oil refinery in Northwest Indiana is a focal point of the proposed Midwest hydrogen hub, as the company plans to ramp up hydrogen production at the site and provide it to regional users. BP asked the Treasury department to allow hydrogen made from existing generation to receive tax credits. 

“We encourage the IRS and Treasury to adopt flexible criteria on ‘additionality’ especially at this nascent stage,” said BP America’s comment to the IRS. “Strict additionality rules requiring electrolytic hydrogen to be powered by new renewable energy is not practical, especially in the early years, and will severely limit development of hydrogen projects.” 

BP and other members also argued against the requirement for hourly matching of renewable energy generation to use in hydrogen production, arguing instead for yearly matching. The draft rules currently allow for yearly matching until 2028, then hourly matching becomes mandatory. 

“Stringent requirements such as hourly zero-emission matching have the potential to devastate the economics of clean hydrogen production,” said BP’s comment. “Moreover, such restrictive requirements are likely not practical or feasible in these early stages. If a green hydrogen production facility can only produce during hours when wind and solar are available, the low utilization rate will dramatically increase the price of the hydrogen produced.” 

Bloom Energy Corporation, which manufactures electrolyzers, also said that adequate technology does not exist to timestamp energy generation and use in order to ensure that clean energy is generated when it is needed for hydrogen production. 

“Since electrolyzers will comprise a very small percentage of the overall EAC-qualifying energy produced for many years to come, there is ample time for those state, regional and voluntary bodies to work through their stakeholder processes and make any changes as needed to adjust those systems so as to avoid unintended outcomes,” said Bloom Energy in its comment, referring to Environmental Attribute Certificates.

The Princeton study noted that hourly matching can add considerable costs to hydrogen production, but said the 45V tax credit would be lucrative enough to compensate for those costs while driving the market development of better hourly matching mechanisms.  

Constellation Energy, owner of Illinois’s nuclear plants, also supported a mandate for hourly matching.  

“Setting an expectation of hourly matched clean energy will provide a market signal for the clean energy investments needed to further drive decarbonization in the power sector,” said the nuclear company’s comment. 

But Constellation is asking for exemptions to additionality, asking the government to decide that hydrogen made with behind-the-meter generation from existing plants qualifies for tax credits. The MachH2 hydrogen hub proposal calls for an electrolyzer on the site of Constellation’s LaSalle nuclear plant in Illinois, which could provide behind-the-meter electricity. But this electricity would still represent clean power that otherwise could have been sent to the grid, critics say. 

Constellation also argued against adding carbon emissions related to the nuclear supply chain when calculating hydrogen’s lifecycle greenhouse gas emissions. 

“Measuring carbon content for nuclear fuel is not typically done by the mining, enrichment, fabrication and transport vendors in the nuclear fuel supply chain, and it would be extremely cumbersome, costly, and labor intensive to impose these requirements on said vendors,” Constellation said.

An EJ platform for hydrogen 

The letter to MachH2 comes as grassroots groups and environmental organizations are increasingly organizing around still murky but well-funded plans for hydrogen to be used in everything from power generation to steelmaking to transportation, including as part of the seven federally-funded hubs. 

On February 1, the national collaborative Just Solutions Collective released an Environmental Justice Platform on hydrogen, demanding strict limits on the type of hydrogen production and use that is incentivized as part of a clean energy shift. 

The organization says hydrogen production from natural gas, and hydrogen produced with power from the grid, should be “ruled out” since “fossil fuel-based hydrogen fails to reduce greenhouse gas emissions,” by many estimates. They also demanded strict safety protocols around new hydrogen development, strident protections for water resources, protections around chemicals added to hydrogen fuels, and transparency in all hydrogen-related projects. 

Just Solutions leaders hope their platform influences policymakers and also helps community groups more effectively weigh in on plans for expanding hydrogen, including as the U.S. Department of Energy invests $7 billion in the seven hydrogen hubs nationwide. 

“The framework is meant to be a resource for climate and environmental justice advocates so they can advance clean energy technology that meaningfully addresses the climate crisis and to stop false solutions from taking root in our communities,” Just Solutions senior fellow and strategist Sylvia Chi said in a January webinar. 

Environmental justice organizations in other parts of the country have also opposed hydrogen hub plans. Last summer Indigenous, environmental justice, and youth groups urged the Biden administration not to fund a hydrogen hub based in Colorado, New Mexico, Utah and Wyoming, and that proposal was not among the seven selected.   

“DOE is saying a lot of the right things, but there is widespread concern that environmental justice is going to be set off to the side and figured out later, after contracts are signed and projects are approved,” said Piette. “We have yet to hear a clear answer on whether communities will be able to say no to a Hub project. DOE needs to give its own guidance teeth and hold Hubs accountable to local communities, especially those already experiencing cumulative burdens of decades of fossil fuel pollution.”

Excess energy

The Institute for Energy and Environmental Research (IEER) produced a report released in January commissioned by the Just Solutions Collective.

The report points to a pilot program in New York state where the Nine Mile nuclear plant is powering hydrogen production. While the nuclear power is zero emissions, it displaces energy from the grid that, when replaced by New York’s natural gas-heavy energy mix, increases overall greenhouse gas emissions. 

IEER argues that the ideal place for zero-emissions-produced hydrogen is in areas like California and Texas where there’s often much more wind or solar power available than the grid can handle. These renewables are regularly curtailed, or kept off the grid, simply going to waste. A possible exemption to the additionality requirement for tax credits that Treasury has floated includes existing generation during times that renewables would be curtailed. 

The IEER report estimates that curtailed renewables at current levels could produce 34,000 tons of hydrogen annually in California, and 150,000 tons in Texas. And the availability of renewables in those and other states is only expected to increase. 

The environmental justice organizations’ letter similarly says that in the Midwest, MachH2 could successfully procure new renewables to power green hydrogen production. 

“The MachH2 hub is one of the best situated in the country, able to take advantage of excellent wind and solar resources in the Midwest,” the letter says. “With the anticipated buildout of new renewable energy in this region, the projects funded by the hub will have no difficulty procuring cost-competitive, new, hourly-matched power from the proposed deliverability zone to claim the 45V tax credit.”

This article first appeared on Energy News Network and is republished here under a Creative Commons license.

The announcement follows the release of initial data from the group which said it found that there were no reported injuries and no harmful levels of toxins detected following fires at battery energy storage systems in Jefferson, Orange, and Suffolk Counties last summer.

15 draft recommendations have been proposed by the working group after completing an examination of the existing FCNYS and other energy storage fire safety standards. They are meant to address preventative and responsive measures as well as best practices. They include proposed requirements related to peer review of project permit application packages, emergency response planning, and local fire department training.

The working group said the recommendations identify ways to further improve the regulatory framework for BESS operation in New York and are intended to apply to lithium-ion BESS exceeding 600 kilowatt-hours (kWh). The recs were developed with a focus on outdoor systems, BESS in dedicated-use buildings, and other grid-scale battery energy storage systems. They will be considered by the New York State Code Council for inclusion in the next edition of the FCNYS an an effort to improve the deployment of safety standards in the state.

The creation of the working group was announced last summer after a fire at an energy storage system in Warwick burned for multiple days in June; the next month, a battery fire at a solar farm in Jefferson County raised concerns of possible air contamination and an energy storage system at an East Hampton substation caught fire.

State agencies began immediate inspections of energy storage sites, and the working group was created with the intent to help prevent fires and ensure emergency responders have the necessary training and information to prepare and deploy resources in the event of a fire.

In 2019, New York state committed to adding 3,000 MW of Energy Storage by 2030, among other energy and climate goals, as part of the Climate Leadership and Community Protection Act.

“The battery energy storage industry is enabling communities across New York to transition to a clean energy future, and it is critical that we have the comprehensive safety standards in place,” Governor Kathy Hochul said. “Adopting the Working Group’s recommendations will ensure New York’s clean energy transition is done safely and responsibly.”

The Working Group includes State agency officials from the New York State Division of Homeland Security and Emergency Services, New York State Office of Fire Prevention and Control, New York State Energy Research and Development Authority (NYSERDA), New York State Department of Environmental Conservation, Department of Public Service and the Department of State, as well as BESS safety industry experts with the objectives of investigating the recent failure events, inspecting current installations and identifying gaps in codes and industry best practices.

Additionally, the working group said it is concluding negotiations with the impacted facilities’ battery manufacturers and utility companies to secure Root Cause Analysis (RCA) reports for the Warwick, East Hampton, and Chaumont fires. Subject matter experts will review and analyze the reports once they are made available.

The Working Group said it has also partnered with subject matter experts to inspect all operational battery systems above 300 kW in New York, which accounts for the majority of commercial battery systems in service across the state. Inspections are currently underway and are expected to be complete by the second quarter of 2024. The goal of these inspections is to revise the current evaluation checklists and best practices available for use by New York State and others prior to energizing battery energy storage systems and to incorporate lessons learned from the battery fires while enhancing emergency response measures.

Originally published in Renewable Energy World.