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Powering Texas: Big, Clean, Market-Driven Changes are Already Underfoot

By: Peter Sopher, policy analyst, clean energy, and Sarah Ryan, clean energy consultant

Over the past century, the electric grid in the United States has experienced only minor changes. There is evidence, however, the power sector is changing. We are moving away from traditional coal generation and toward alternative, cleaner energy sources. And despite our state being primarily known for oil and gas, Texas is no exception.

In fact, Texas’ electricity sector has been trending cleaner over the past decades, driven by deregulation of the electricity market, the development of the massive highway of transmission lines built to carry West Texas wind to cities throughout the state – the Competitive Renewable Energy Zone (CREZ), and technological progress. Basically, once the market was opened up to competition, the more economic options – which also happen to be cleaner – began to gain a foothold. And there’s no stopping this train.

Where we are and where we’re going

To start, the declining use of fossil fuels to power our lives is perhaps the most significant change in Texas. As shown in Figure 1 below, fossil fuels’ (coal and gas’) proportion of the state’s electricity generation mix shrunk from 88 percent in 2002 to 82 percent in 2013.

Meanwhile, renewable energy was taking its place – wind’s share grew from one percent to eight percent.

texas generation mix

Not only is fossil fuels’ slice of the generation mix on the decline, we are using cleaner fossil fuels in place of coal. Natural gas generation has grown substantially more than coal generation in the state since 1990, even before deregulation. During this stretch, coal’s percentage of Texas’ generation mix has steadily declined from about 45 percent to 35 percent, while natural gas’ has remained between 45 percent and 50 percent.

Energy forecasters predict this trend toward cleaner power will intensify. The business as usual (BAU), or “Current Trends,” scenario – the best forecast for what the future could hold under the current economic and policy landscape– from the Electric Reliability Council of Texas (ERCOT), the state’s grid operator, projectswind generation capacity will double the 2013 total by 2017. Even more ambitious, SNL Financial’s wind capacity projection – based on “actual planned/under construction projects” – for 2020 is nearly three times the 2013 total.

Further, Texas has barely begun to scratch the surface of our solar potential. ERCOT’s BAU forecast is for the state’s solar capacity to increase to upwards of 10GW by 2029, making solar power’s share of the state’s generation mix six percent, up from zero percent in 2013. That’s a big jump.

With regard to fossil fuels, ERCOT’s BAU scenario predicts zero additional coal capacity and 8.6 GW of additional natural gas capacity by 2024. Not only will there not be any new coal coming online, SNL Financialforecasts coal generation capacity dropping by 2020, while natural gas capacity increases significantly during that timeframe.

In sum, renewable energy and natural gas are increasingly powering Texas, while the use of coal is on the decline.

Why is this trend toward cleaner power sources occurring?

Lower prices and technological progress for renewables and natural gas – under a deregulated market structure and in parallel with the construction of CREZ transmission lines – have improved the economic context for cleaner fuel sources, making the electric market in Texas ripe for clean energy.

Prior to deregulation, the regulatory framework guaranteed conventional utilities the economic right to recover costs with a reasonable profit. For example, if a utility needed to fix broken equipment, they could then structure their rates in such a way to recoup those costs plus a reasonable rate of return, subject to the approval of the Public Utilities Commission. There was no real incentive to retire inefficient resources. Deregulation, on the other hand, created the opportunity for more retail electricity providers to enter the state and compete with one another, forcing inefficient resources to give way to more cost-efficient options.

And which resources have been winning under this competitive environment? Natural gas and renewables – especially wind – so far. This is largely due to the continued construction of CREZ lines over the past decade, which   will eventually enable 18.5 GW of wind capacity, or over 30 percent of all 2012 onshore wind capacity in the entire United States. This competitive environment has fostered the upspring of five of the world’s 15 largest wind farms right here in Texas.

In addition to CREZ infrastructure, technological progress and related decreases in costs have improved clean power’s ability to compete in Texas. Lazard’s levelized cost of energy (LCOE) – the most commonly used metric for comparing cost competitiveness of fuel sources – for solar and wind power dropped 78 percent and 58 percent, respectively during 2009-2014. To put these cost reductions in perspective, imagine if your cable bill dropped 58 percent with no strings attached: instead of paying $50 per month, you’d be looking at a price tag of $21 per month.

As with renewables, prices for natural gas have also declined – largely due to the breakthrough of fracking– over recent years. Energy Information Administration (EIA) data show natural gas prices were more or less cut in half during 2008-2014.

Notably, since 2009, as wind and gas’ proportion of the Texas generation mix have become more significant, wholesale electricity prices in Texas have plummeted. Cleaner energy and lower electricity bills can go hand in hand.

And this trend toward cleaner, more affordable power should continue in Texas. One reason? Bloomberg New Energy Finance forecasts energy from wind and solar becoming even more competitive with coal and natural gas in future years. In fact, as the generation costs of coal and natural gas continue to rise, those of wind and solar are predicted to keep going down.

LCOE forecast

As prices for renewables decline, Texas stands to benefit more than any other state. According to National Renewable Energy Laboratory, Texas is by far the most resource-rich state in the country for wind and solar energy. Specifically, our state has twice the potential for wind and three times the potential for solar than the second place state for each category.

Even in Texas – a state famous for its oil and gas – our own grid operator, ERCOT, entitled its clean power section of its annual report “Connecting tomorrow’s resources to today’s grid.” Anyone that has been to West Texas has felt the state’s abundance of wind, and the sun shines year-round. That’s excellent news for us because the primary reason for Texas transitioning toward cleaner electricity generation – or “tomorrow’s resources,” in the words of ERCOT – is simple economics.

In anticipation of the Environmental Protection Agency’s Clean Power Plan being finalized, Environmental Defense Fund will be releasing a policy paper demonstrating how Texas is well-positioned to comply with the upcoming rules.

Senate Panel Passes Bill With Alt-Fuel Tax Credit Extensions

by NGT News

In a 23-3 vote Tuesday, the U.S. Senate Finance Committee passed a tax extenders package to revive dozens of tax credits that expired at the end of last year, including key incentives for the alternative fuel industry. The bipartisan legislation now moves to the Senate floor for consideration.

The bill would retroactively extend the various tax credits for two years from Jan. 1, 2015, through Dec. 31, 2016.

Among the bill’s many provisions is an extension of the federal $0.50/gallon alternative fuels excise tax credit, which covers compressed natural gas, liquefied natural gas, propane autogas and other alternative transportation fuels.

The measure would also extend the 30% alternative refueling infrastructure tax credit, which is capped at $30,000. Furthermore, the bill would renew the $1,000 home refueling tax credit.

In a press release, NGVAmerica applauds the Senate panel for approving the package, and the group says that renewing the federal alternative fuel incentives would help boost the natural gas vehicle market.

“NGVAmerica commends the Senate Finance Committee for their leadership to advance natural gas vehicles,” says Matthew Godlewski, president of NGVAmerica, in the statement. “If passed, this legislation is great news for fleets who are looking to clean-burning, low-cost, domestic natural gas to power their transportation needs.”

NGVAmerica notes the legislation also includes an amendment authored by U.S. Sens. Michael Bennet, D-Colo., and Richard Burr, R-N.C., to help put liquefied natural gas (LNG) on equal footing with diesel fuel under the federal highway excise tax.

According to a press release from Bennet, the measure would allow LNG to compete fairly with diesel by taxing LNG based on the natural gas’ energy output, rather than on its volume. NGVAmerica, which calls the measure a “common-sense amendment,” says LNG is currently taxed at a rate 70% higher than that of diesel.

“LNG is becoming a larger part of Colorado’s diverse energy industry, and we have an opportunity to help grow this market and increase the use of natural gas as a transportation fuel,” comments Bennet, in his release. “This bill will help us embrace that momentum and encourage the use of this domestic, cleaner-burning fuel.”

Notably, Bennet and Burr’s LNG provision is similar to an alternative fuel tax parity measure thatrecently passed in the U.S. House of Representatives as part of a larger highway funding bill.

Meanwhile, the biofuels industry has also welcomed the Senate tax extenders package. The legislation would extend several incentives for the sector, including the second-generation biofuel producer tax credit, as well as biodiesel and renewable diesel tax credits.

“I commend the Senate Finance Committee’s leadership for recognizing how important these tax credits are for the continued growth and innovation of the U.S. biofuels industry,” states Bob Dinneen, president and CEO of the Renewable Fuels Association, in a release. “Stability in the marketplace is crucial to encouraging development in second-generation biofuels, like cellulosic ethanol. By extending these incentives, the committee has helped to provide that needed stability.”

Last December, Congress passed H.R.5771, a bill that established a one-year retroactive extension for the alt-fuel and dozens of other expired tax credits through the end of 2014. President Barack Obamasigned the bill into law soon after, but many considered the eleventh-hour legislation too little, too late.

As U.S. Sen. Ron Wyden, D-Ore., explained in a statement Tuesday, “At the stroke of midnight on January 1st, [H.R.5771] expired, the tax incentives again were dead as a doornail, and Americans were back in limbo not knowing what taxes they’d owe in the future.”

Wyden, the Senate Finance Committee’s ranking member and former chairman, continued, “This [new] legislation is going to lock these policies in place for two years, past the next election.

“This two-year bill is the right way to ensure these incentives live up to the hype,” he said. “The budgetary math might look the same regardless of the date, but the economic value of these incentives virtually disappears when Congress waits until the end of the year. The economy would get about as much use out of spending those billions on 8-track tapes and pocket pagers.”

In his opening statement Tuesday, U.S. Senate Finance Committee Chairman Orrin Hatch, R-Utah, also emphasized the need for swift action to pass a new extenders package and again restore important tax breaks.

“I want to note that this year marked the first time in 20 years that a new Congress began with the tax extenders already expired,” said Orin. “In other words, we began this Congress with a built-in disadvantage when it comes to tax policy.

“All of these tax provisions are meant to be incentives – they are meant to encourage and promote certain activities,” he added. “If they are expired, they aren’t doing much good.”

Wyden said, “It’s my hope that once the committee reports this legislation, the Senate will act quickly.”

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U.S. House Passes Highway Bill with Alt-Fuel Tax Parity Provision

On Wednesday, the U.S. House of Representatives passed a highway and transportation funding bill that includes a provision meant to help level the playing field for how certain alternative fuels are taxed in relation to conventional fuels.

H.R.3038, legislation to fund and extend the authorization for the country’s highway and transit programs through the end of 2015, passed the House in a 312-119 vote.

According to U.S. Rep. Todd Young, R-Ind., who sponsored the Alternative Fuel Tax Parity Act with other lawmakers earlier this year, the tax parity provision now included in H.R.3038 would ensure the federal highway excise taxes on liquefied natural gas (LNG) and propane autogas are levied based on the fuels’ energy output, rather than on their volume.

As Young explains, LNG produces 58% of the energy output of diesel, but the two fuels are currently taxed at the same 24.3 cents per gallon rate. Similarly, propane produces 72% of the energy output of gasoline, but those two fuels are taxed at the same 18.3 cents per gallon rate. Young says the tax parity provision recognizes these disparities and sets the energy equivalent rates for LNG (14.1 cents per gallon) and propane (13.2 cents per gallon).

“Dozens of homegrown companies in my Indiana district have developed and adopted alternative fuel technologies,” says Young in a press release. “This provision prevents Washington from picking winners and losers and provides this burgeoning sector of our economy equitable treatment within the federal tax code.”

NGVAmerica has lauded the inclusion of the tax parity provision in the passed House bill.

In a press release, the organization says the legislation would correct a longstanding inequity for LNG, as the alternative fuel is effectively taxed at a rate that is 70% higher than that of diesel.

“We commend the House of Representatives for including this common-sense fix that further strengthens the economic value proposition of natural gas as a transportation fuel,” states NGVAmerica President Matthew Godlewski. “This is great news for current and prospective LNG fleet operators, who will see even greater savings on their fuel costs should this fix become law.”

UPS, whose massive green fleet includes natural gas and autogas vehicles, has also welcomed the tax parity provision.

Young’s press release cites Laura Lane, UPS’ president of global public affairs, as saying, “LNG and propane are both clean, readily available fuels, produced in the United States. Removing this economic disincentive in the tax code will speed the penetration of LNG and propane vehicles into the marketplace, and expand the use of LNG and propane vehicles on America’s roadways.”

NGVAmerica explains that the authorization for federal transportation funding expires at the end of July, which necessitates the passage of an extension by the U.S. Congress. The group says the Senate must still consider H.R.3038 or its own transportation funding legislation, noting that the Senate previously voted to fix the LNG tax inequity as recently as 2014.

To view the original post by NGT News click here.

Hyundai-Kia Developing Wireless EV Charging

By Green Fleet Magazine

The Hyundai-Kia America Technical Center will use a federal grant to develop wireless electric-vehicle charging technology in a partnership with Mojo Mobility, Kia has announced.

The project, which is already underway, received a grant from the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy to develop the charging system.

Kia is tying in the project with its 2015 Soul EV. The two entities will develop, implement and demonstrate a wireless power transfer system on a test fleet of Kia Soul EVs over three phases, at the center in Superior Township, Michigan, and Mojo Mobility in Santa Clara, Calif.

During the first phase, the partnership developed a wireless power transfer system that offers more than 85 percent grid-to-vehicle efficiency and is capable of transferring in excess of 10 kilowatts to the vehicle for fast charging.

The new system will allow misalignment between the energy transmitter on the ground and the energy receiver on the vehicle. In the second phase, the partnership collaborated to integrate a compact system optimized for the Soul EV and demonstrate full operation at 92 percent efficiency.

Real-world performance data will be gathered in the third phase of the project using five Kia Soul EVs and corresponding energy transmission units. This final phase will test the system’s durability, interoperability, safety, and performance.

Kia is also ramping up EV infrastructure in Oregon and Washington state to support the battery-electric vehicle. Kia will begin delivering the Soul EV to 12 dealers in Washington and eight in Oregon. Additionally, Kia is adding 10 new fast-chargers to dealers in the region. All of the dealers will get Level 2 chargers, and 10 will receive a 50-kilowatt Signet FC50K-CC-S DC fast charger.

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Sustainable Transportation Day Draws Together Vehicle, Bioenergy, and Fuel Cells Technologies Offices

by Shannon Brescher Shea, from DOE Update!

In the wide world of transportation, vehicle technologies are only one piece of the puzzle.  That’s why Clean Cities’ parent office, the Vehicle Technologies Office (VTO), is collaborating with the Fuel Cells and Bioenergy Offices to further coordinate our research, development, and deployment activities.  One of our most recent efforts was Sustainable Transportation Day, a showcase of technologies that our offices support, right outside the Department of Energy’s Forrestal building.

The Fuel Cell Technologies Office had two of the stars of the show, with fuel cell vehicles on loan from Toyota and Honda.  DOE hosted the Hyundai Tucson Fuel Cell Electric Vehicle (FCEV), currently available for lease and the Toyota Mirai FCEV, available for both lease and sale in California. Both these vehicles build on the Fuel Cell Technologies Office’s R&D, which has reduced the cost of fuel cells by 50 percent since 2006. The Office also has data from nearly 6 million miles of fuel cell vehicles’ on-road driving and is working with six manufacturers to conduct vehicle and fueling station demonstrations. Learn more about the Fuel Cell Technologies Office’s efforts.

The literally biggest draw was the Freightliner SuperTruck, developed under VTO-supported research. The Freightliner SuperTruck is an innovative, super-efficient Class 8 tractor-trailer developed by Daimler Trucks North America. While the original SuperTruck program goal was to improve freight efficiency by 50%, this truck drastically exceeded this goal with a 115% improvement in freight efficiency over the baseline truck while achieving over 12 mpg in real world driving.

On the other end of the size spectrum was the 3D-printed Shelby Cobra, a replica of the classic sports car.  In only six weeks, Oak Ridge National Laboratory printed the car using the Big Area Additive Manufacturing machine.  In addition to it taking far less time to produce than usual, the 3-D printing process required less than half of the energy a conventional process would.

But the day wasn’t all business.  We also hosted the world’s first algae surfboard and the Green Racing Simulator.  The surfboard, which was supported by the Bioenergy Office, is made of an algal oil-based foam instead of polyurethane from fossil fuels. Developed by researchers at the University of California San Diego in collaboration with the biotech firm Solazyme, it was made with only a half-liter of algal oil. The Green Racing Simulator is part of VTO’s Green Racing partnership, a joint effort between DOE, the Environmental Protection Agency, and SAE International to use motorsport competition to promote, help rapidly develop, and test cleaner fuels and more efficient vehicle technologies. The Simulator allows participants to play a racing game where efficiency is just as important as speed.

Sustainable Transportation Day provided all three offices’ stakeholders and the general public a peek into a few of the technologies that will make our transportation far more environmentally, economically, and socially sustainable in the future.  Check out more photos on the Office of Energy Efficiency and Renewable Energy’s Blog.