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power grid demand response

Federal regulators on Thursday took steps aimed at both speeding up the buildout of AI data centers and reducing costs.

The Federal Energy Regulatory Commission (FERC) directed regional electric grid operators to reform various processes related to the connection of these and other large sources of power demand to the grid.

“We are charting new territory and setting the standard for how America will responsibly and efficiently integrate large energy loads into the bulk electric grid while protecting consumers,” FERC Chair Laura Swett said Thursday.

Read more in The Hill here.

America’s farm economy is facing significant challenges. Agriculture depends on certainty, predictability, access to capital and policies that reflect the realities producers face every day. That’s why the agriculture provisions in the Working Families Tax Cuts package were so important. Congress recognized what farmers and ranchers have been saying for years: we need more farm in the farm bill. 

We delivered by strengthening key farm programs, modernizing the farm safety net, enhancing risk management tools, investing in research, doubling funding for our trade promotion programs, and expanding access to affordable crop insurance. The Working Families Tax Cut was “Farm Bill 1.0.”

While there is more work to be done, “Farm Bill 1.0” provides meaningful certainty and support to farmers, ranchers and rural communities that will help them remain productive and competitive, as well as resilient, for generations to come.

Read more in Agripulse here.

The biggest ever U.S. clean energy infrastructure project, an $11 billion wind farm and transmission line in New Mexico, is ​fully operational after nearly two decades of permitting and ‌construction, owner Pattern Energy Group said on Thursday.

SunZia is a 3,650-megawatt wind farm and 550-mile (885-km) transmission line that will carry power from central ​New Mexico to south-central Arizona. About two-thirds of the ​electricity will then be sent west to customers in ⁠California.

Read more in Reuters here.

This piece was initially published on R Street’s Low Energy Fridays.

Electricity bills are up, and data centers are getting the blame. But in the data so far, the states with the fastest-growing power use have mostly seen rates rise slower than elsewhere, not faster. Rising demand is supposed to push rates up, not down, but there are good reasons to think rising demand has held electric rates down in some areas. The question worth asking is whether we can count on that to last. 

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Regulated electric rates are essentially one big division problem. Regulators put an electric utility’s annual cost of providing service in the numerator of a fraction and the total expected sales for the year in the denominator, then do the arithmetic. When a data center joins the system, it can boost the denominator quite a bit. Whether rates rise or fall depends on whether total costs grow faster or slower than consumption in the denominator.

In other words, when the costs of serving that additional load are below average, adding a data center can bring down the costs for other customers. Naturally, developers of data centers sought out places to build where they could get low-cost power supplies. The result was that the areas adding the most demand were the ones that saw rates fall. 

Unfortunately, those good times may be coming to an end.

In recent years, data centers could locate in rural areas of North Dakota, New Mexico, and Nebraska and get cheap land and cheap energy. All three states have seen electric rates stay stable or decline over the last six years (once adjusted for inflation) as consumption of electricity shot up. But the spare capacity on the electric grid is getting filled up, meaning newer data centers can no longer be served at below-average costs. 

The cost of the materials used to build the grid, like wires, transformers, and switchgear, is rising fast too. That increases costs for electric consumers even in parts of the country that haven’t seen much data center construction. The arithmetic has not changed: growing demand can still lower rates when new customers use spare capacity. What has changed is the underlying condition. In many places, the spare capacity is gone.

PJM—the regional grid for the mid-Atlantic states stretching as far west as Chicago—shows the other side. Electricity demand is growing there, too, but with spare capacity gone, new supply and grid upgrades must be built to serve it. Now getting one more megawatt of power delivered costs more than the average, not less. Growing demand pushes the numerator up faster than the denominator. Rates have followed. Data centers have contributed to those increases, but they aren’t the whole story. It’s the same division problem that North Dakota, New Mexico, and Nebraska faced, only with the spare capacity already used up.

>>>READ: How Data Centers Can Drive Energy Innovation

But all is not lost for the residential consumers who want to see their electric rates kept under control. Growing demand can still leave rates stable for other customers, but only if the new large commercial and industrial power consumers cover all of their costs. Remember that division problem. If new large customers pay their own way, they add to total sales without adding to costs that land on everyone else.

One increasingly common idea is part of the White House’s ratepayer protection pledge: make large new data centers build their own power plants or buy power from new generators rather than leaning on the existing system. That helps, but it only covers part of the problem. Even a data center that generates all its own power will still rely on the poles, wires, and transformers that keep it connected to the grid, and these have been the costs that are growing fastest. Special utility rates for the largest new industrial consumers can cover all new costs, but only if they’re designed carefully.

Growing demand can still help hold rates down. But only if big customers like data centers, which drive the growth, pay for both the power and the wires they’re using.

Yesterday, the United States and Iran signed an agreement to end the war. The 14-point Memorandum of Understanding (MOU) includes an immediate and permanent end to military operations, the lifting of the U.S. naval blockade, and the reopening of the Strait of Hormuz. It is a preliminary deal, not a final settlement, and sets a maximum 60-day deadline to negotiate a final agreement. 

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This is good news, both as a positive step towards a final end to hostilities and a potential return to normalcy in oil and gas markets. By choking off the strait, the passage for about a fifth of global oil and gas trade, the war produced the largest geopolitical oil supply disruption in history. West Texas Intermediate (WTI) crude, around $60 a barrel before the war, peaked close to $115 in early April. Gasoline followed, with the national average rising from under $3.00 a gallon to a peak of $4.50.

Prices are already softening: WTI is below $75 per barrel for the first time since March, while average gasoline prices are creeping below $4.00 per gallon. This early relief is good, but for a few reasons it will still be some time before prices are close to the prewar level.

First, the MoU is not an official peace deal, and any lingering uncertainty will be reflected in oil prices. Many of the hardest questions have been deferred, including the fate of Iran’s nuclear program. Others remain vague, such as a provision calling for a $300 billion reconstruction fund which leaves open exactly who pays. President Trump has explicitly ruled out U.S. funding and the Gulf states appear hesitant to commit. Most importantly, although the agreement calls for an end to fighting, including by Israel in Lebanon, attacks between Israel and Hezbollah continued even after the deal was announced. These and other uncertainties will be priced in by the market, meaning that there will likely be continuing volatility and higher prices until fears are fully assuaged.

On top of that risk premium, reopening the strait is a logistical undertaking. Iran has laid mines along the shipping routes, and normal traffic cannot resume until they are cleared and safe lanes are verified. The 100-plus tankers idling in the Gulf would normally need 10 to 15 days to sail out, but many may wait until the mines are cleared, which could take six weeks or more

Some vessels are beginning to transit the strait, but outbound traffic is only half the equation. Restoring inbound traffic will take longer, as many large carriers were shifted to safer, higher-paying alternative routes during the war. They won’t return to the Gulf until those voyages are complete and Gulf freight rates have climbed enough to justify it. All told, it could take four or five months for inbound traffic to return to normal.

>>>READ: The Iran War and the Long-Term Risks to Energy Affordability

In the meantime, a large portion of oil and gas production in the Gulf will need to be restarted. Despite the popular image of oil output being controlled by a spigot, oil production is constrained by geology, not just business and policy decisions. Some of the fields idled by the war will be easier to restart than others, depending on their individual characteristics, but returning overall production to pre-war levels could take significant time. Wood Mackenzie analysts project that the shut-in fields could reach 70 percent of capacity within three months and 90 percent within six, with the final million barrels per day taking considerably longer.

Compounding this is war damage. Oil refineries that were shut down as a precaution can restart in a couple of weeks, while refineries that were damaged could be repaired in months. The hardest hit, though, is the Gulfs gas infrastructure. Processing and liquifying natural gas requires highly complex, custom-built units with multi-year lead times. Damage to Qatari LNG capacity could take years to repair. The U.S. is largely insulated from these effects, as gas markets are less integrated and U.S. export terminals are already at a capacity. Internationally, though, high gas prices will persist.

Even after these supply-side effects recover, oil prices will likely stay elevated for a while. Stockpiles are at their lowest levels in decades, and governments that drew down their strategic reserves during the war may move to rebuild them. This misguided move would add increased demand just as supply is straining to recover and could inflate prices for several years.

And even once crude eases, there will be a lag before gasoline follows, because of a phenomenon known as “rockets and feathers.” Pump prices are quick to rise but slow to fall; a decline in the crude oil price takes roughly eight weeks to pass through to gasoline. All told, a substantial period will separate the peace deal from the moment its benefits reach our wallets.

Any movement toward peace is good news. But markets will take time to recover, and energy-affordability concerns will not dissipate overnight. The best policy move now is a firm commitment to turning this fragile framework into a durable peace.

Mitsubishi Electric and VTT Technical Research Centre of Finland have completed core development of a direct ocean capture system, moving the project closer to demonstration in coastal conditions.

The system is designed to remove carbon dioxide through seawater rather than through air or industrial exhaust streams. That makes it part of the growing marine carbon dioxide removal market, where developers are testing whether the ocean’s natural carbon sink role can be used in a controlled and measurable way.

Read more in E+E Leader here.

A Connecticut-based developer of distributed energy resources said it has begun construction on solar power installations at four municipal landfill sites in that state. Verogy, a West Hartford-headquartered group and distributed energy integrator focused on commercial, industrial, and utility-scale projects, on June 16 said each project is participating in Connecticut’s Non-Residential Renewable Energy Solutions (NRES) program.

The NRES program is a model for turning closed landfills into clean energy assets, according to Verogy, which said Connecticut’s NRES program compensates non-residential solar project owners for the clean power their systems deliver to the grid. Under the program, projects sited on capped landfills and brownfields receive a 20% bid price preference in the state’s procurement process, which officials said make landfill sites an attractive development opportunity for municipalities and developers. The Connecticut Dept. of Energy and Environmental Protection, known as DEEP, said 14 projects totaling more than 17 MW of power have been sited on landfills under the NRES program to date.

Read more in Power Magazine here.

A modular approach to data center design and construction could help overcome bottlenecks like labor availability, land constraints and long lead times for power and electrical equipment while boosting performance once operational, an executive with data center solutions provider Flex told Facilities Dive last week. 

Chris Butler, president of Flex’s embedded and critical power business, said the company’s modular approach is gaining traction among data center developers following decades of use in other critical industries, such as wastewater treatment and fossil energy extraction.

Read more in Utility Dive here.

In 1872, America set aside a vast stretch of mountains, rivers, valleys, and geysers in the West and created the world’s first national park, Yellowstone. At the time, the idea was revolutionary. It was only ten years after President Lincoln signed the Homestead Act in an effort to fast-track westward expansion to settle and cultivate the land. Preserving land for public enjoyment and future generations, rather than for development or cultivation, marked an incredible shift in how Americans would think about the nation’s natural resources. 

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In the 154 years since, the world has followed America’s lead, establishing national parks in over 100 countries. The United States now has 63 federally protected national parks, and hundreds of other National Park Service sites including battlefields, trails, seashores, and rivers. Often called “America’s best idea”, all play an incredible role in the preservation of some of the country’s most treasured landscapes. 

Yet, from the beginning, maintaining protected wilderness was a challenge. At the time, Yellowstone advocates believed the park would sustain itself, at no expense to the government. However, without funds to hire park staff or build infrastructure, there was little the unpaid superintendent Nathaniel P. Langford could do to protect the park’s natural assets and wildlife, particularly from poachers. A few years later, Congress authorized appropriations “to protect, preserve, and improve Yellowstone”. By 1916, it had become clear that a dedicated agency could better manage the nation’s growing portfolio of parks, leading to the creation of the National Park Service.

Still, over 150 years later, the National Park Service struggles to keep up with a growing deferred maintenance backlog. Today, the NPS faces a $24 billion deferred maintenance backlog, despite receiving historic investments in the 2020 Great American Outdoors Act. The Legacy Restoration Fund, established in the GAOA to fund deferred maintenance, expired last September. As the 250th anniversary approaches, lawmakers are looking to build on that legacy and reauthorize the fund that nearly three-quarters of Americans support.

>>>READ: To Save the Sequoias, Bring Back Good Fire

Last week, bills in both chambers of Congress that would reauthorize the Legacy Restoration Fund were discussed.

The Great American Outdoors Act 250, introduced by Congressmen Bruce Westerman (R-AK), Ryan Zinke (R-MT), and Jared Huffman(D-CA), would make significant changes to the original Great American Outdoors Act. One important change would codify the Interior Department’s surcharge on foreign visitor fees. Under the bill, entrance fees at national parks would include a $100 surcharge for international visitors on top of the standard admission fee, and annual passes would increase to $250.

This reform brings America in line with much of the world, where charging foreign visitors more to see a country’s most treasured landscapes is a common practice. After all, Americans already pay twice for parks, once in taxes and once at the gate. It only makes sense for foreign visitors to pay their fair share as well. This change, along with allowing donations to advance GAOA projects, also helps to depoliticize our parks and provide adequate funding even during political changes in Washington. 

80 percent of the foreign visitor fees will stay at the park where they were collected and contribute directly towards priority projects. For highly trafficked parks like Yellowstone, which face some of the largest deferred maintenance backlogs, this is a major win. 

While not a permitting-focused bill, it would codify streamlined categorical exclusions from NEPA for deferred maintenance projects funded under the act. Often, these projects are for the benefit and safety of visitors, and lengthy reviews can slow down necessary health and safety upgrades and increase the cost of deferred maintenance.

>>>READ: Walmart Commits Millions Toward Wildlife Conservation 

In a win for sportsmen and women across the country, up to 15 percent of funds go to a sportsmen’s access pilot program to expand hunting and fishing opportunities on public lands. Greater access could increase participation in these activities and generate additional license revenue that provides nearly $1 billion annually to state wildlife agencies and supports conservation efforts across the country.

The Senate’s original America the Beautiful Act would essentially renew the Great American Outdoors Act with some minor changes. However, after a lengthy markup on Wednesday, the amended bill looks more similar to the House’s version. The bill advanced out of committee and heads to the floor for consideration.

When Yellowstone was set aside in 1872, its champions believed it would sustain itself. But then the first superintendent spent five unpaid years watching poachers thin the wildlife populations he had no money to protect. We’ve spent the last century since then trying to figure out how to keep America’s best idea thriving. The Great American Outdoors Act 250 provides an incredible path forward. A surcharge on foreign visitors and expanded matching funds give the parks a revenue source that does not rise and fall with each political fight. As the country turns 250, there is no better tribute to our nation’s treasured lands than making sure they can outlast the politics that have threatened them.

U.S. Energy Secretary Chris Wright says the Palisades nuclear power plant in Van Buren County will help power data centers while bringing down utility rates when it reopens later this year.

Wright discussed the plant during a media availability Monday in Lansing after an event with U.S. Rep. Tom Barrett, R-Charlotte, which he said was largely focused on affordability.

While some environmental groups oppose the Palisades facility reopening, Wright said the United States must grow the capacity of its power grid before decommissioning facilities.

Read more in WKAR News here.

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