AUGUST 20, 2010

A recent report by the U.S. Department of Energy’s Idaho National Laboratory found security holes in computer networks controlling the electric grid. Hackers could access the systems and potentially steal data, deny service or otherwise take control. Many of the vulnerabilities are basic problems such as a failure to install software security patches or poor password management.

The report, which did not list any individual companies, locations or software applications by name, catalogs results from 24 assessments of grid-related industrial control systems (ICS) performed from 2003 through 2009. “Well-known unsecure coding practices account for most of the ICS software vulnerabilities,” the report said.

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AUGUST 20, 2010

A new best practices guide for designing and implementing feed-in tariffs (FITs) has been released by the National Renewable Energy Laboratory.

Worldwide, FITs are the most popular mechanism for accelerating renewable energy deployment—more successful than tax incentives or renewable portfolio standards, according to the guide. In the European Union, FIT policies led to the deployment of more than 15,000 mw of solar photovoltaic power and more than 55,000 mw of wind power between 2000 and the end of 2009. More than a dozen U.S. states and municipalities have adopted or are considering adopting FITs.

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AUGUST 20, 2010

A federal task force has released a report outlining obstacles and next steps for making carbon capture and storage (CCS) technology viable in the United States. The group, pulled together from 14 executive departments and agencies led by the U.S. Department of Energy (DOE) and Environmental Protection Agency (EPA), said a lack of comprehensive climate change legislation is the key barrier to widespread use of CCS.

Without a carbon price and appropriate financial incentives for new technologies, there is no stable framework for investment in low-carbon technologies such as CCS,” the report said.

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AUGUST 13, 2010

The long-running FutureGen project began a new chapter last week, as U.S. Department of Energy (DOE) Secretary Steven Chu announced plans for a re-envisioned “FutureGen 2.0.” The carbon capture and storage (CCS) demonstration project, first announced in 2003 but shelved after five years due to escalating costs, has received $1 billion in Recovery Act funding, a new site plan and fresh opposition from key players.

FutureGen 2.0 will retrofit an existing Ameren Corp. coal- and oil-fired power plant in Meredosia, Ill., according to Chu. The resulting 200-mw oxy-combustion plant would burn coal with pure oxygen instead of air, and capture carbon dioxide emissions for transport and storage 150 miles east in Coles County, Ill.

Coles County—specifically Mattoon, Ill.—was selected as the site for the original incarnation of the project, which would have tested CCS technology at a 275-mw, integrated gasification combined-cycle coal plant built from scratch. The revamped FutureGen 2.0 plant would pipe more than 1 million tons of carbon dioxide to Mattoon for storage every year, according to DOE.

But on Wednesday, following a request for feedback from project supporter Sen. Richard Durbin (D-Ill.), Coles County officials rejected its role in the revised project. “A number of communities throughout the state” have expressed interest in playing a role, according to a response from Durbin.

AUGUST 13, 2010

U.S. wind energy projects are using a growing percentage of domestically manufactured parts, according to a U.S. Department of Energy (DOE) wind market report authored by Lawrence Berkley National Laboratory researchers. The study also found that 2009 U.S. wind power additions shattered old records, although a number of factors could slow growth in 2010.

When measured as a fraction of total wind turbine equipment-related costs, domestically manufactured materials increased to roughly 60 percent in 2009, up from 50 percent in 2008. In 2004, General Electric was the lone utility-scale wind turbine manufacturer in the United States. Today, seven of the 10 wind turbine manufacturers with the largest share of the U.S. market have at least one domestic manufacturing facility; two others have plans for future stateside plants.

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AUGUST 6, 2010

New to NRCO | Prairie Power, Inc., a Jacksonville, Ill.-based G&T, recently joined the National Renewables Cooperative Organization (NRCO) as its 25th member cooperative. Carmel, Ind.-based NRCO was formed in 2008 by power supply cooperatives in order to develop and deploy renewable energy resources for members. In joining NRCO, Prairie Power plans to further diversify its power supply portfolio—currently strong in coal-, oil- and natural gas-fired generation. NRCO, a not-for-profit cooperative, receives financial support from its members. Each commits $100,000 with an upfront investment of $25,000. CFC joined the organization as an associate member in July 2009.

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Energy Policy Primer | A group of 19 elected legislators from 17 states has released a guide highlighting future energy challenges and state-level policy options. “Meeting the Energy Challenges of the Future: A Guide for Policymakers” was developed by a task force of the National Conference of State Legislators over the past year. The guide provides an overview of the nation’s electric infrastructure; reviews how policy plays a role in regulating it; explores various energy resources and their costs; and summarizes policy options for addressing a wide range of energy issues. The task force consulted Basin Electric Power Cooperative, Bismarck, N.D., NRECA and others in preparing the report, available online at www.ncsl.org.

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Climate Change in Court | A group of five electric utilities filed a petition with the U.S. Supreme Court this week, asking for a review of an appeals court decision they fear could allow judges to set caps on greenhouse gas emissions. In 2009, the U.S. Court of Appeals for the 2nd Circuit ruled against the group—American Electric Power, Duke Energy, Southern Company, Xcel Energy and the Tennessee Valley Authority—in favor of eight states and New York City, according to Platts. The ruling found the plaintiffs could pursue nuisance claims over alleged harm to human health and property from climate change resulting from power plant emissions.

JULY 23, 2010

A beta website for the U.S. Department of Energy-funded Smart Grid Information Clearinghouse was launched this month. The site—now in a public testing phase—is designed to appeal to a wide audience, including consumers, utilities and regulators, and is managed and run by the Virginia Tech Advanced Research Institute (ARI) in Arlington, Va.

Educating consumers is a top goal of the portal. “We believe that by providing information about electricity usage, pricing and incentives, we can help motivate better consumer purchasing patterns,” said Saifur Rahman, ARI director. “Active consumer participation is very important to achieving a more efficient and reliable operation of the overall grid.”

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JULY 23, 2010

Better service reliability and lower monthly bills led to an increase in the satisfaction level of residential electric utility customers this year, according to J.D. Power & Associates’ annual satisfaction study, released last week. Several electric cooperatives scored strongly in the study and received high satisfaction rankings.

Overall customer satisfaction averaged 630 on a 1,000-point scale in this year’s study, increasing from 618 in 2009. Customer-reported bill amounts decreased by 5 percent from 2009, and power reliability improved, with service interruptions falling by 8 percent.

“Utility companies are continuing to improve when it comes to managing customer expectations around power outages and restoration of service,” said Jeff Conklin, senior director of the Energy and Utility Practice at J.D. Power. “Even though outages can have a negative impact on satisfaction, utility providers who manage these incidents properly—by providing sufficiently detailed information about the outage and restoring power when they say they will—may be able to mitigate declines, or even improve satisfaction.”

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JULY 23, 2010

By John Grant, Senior Consultant, CFC Financial Advisory Services

Distribution plant inflation fell to 2 percent in 2009, a rate more commonly seen before the cost run-up began five years ago. Since 2004, inflation has had a significant impact on cooperatives’ capital plant expenditures.

Leading up to 2004, the annual increase in the cost for distribution plant averaged around 2 percent. Between 2004 and 2008, however, costs rose dramatically—by 6 to 12 percent per year. Had that spike not occurred—and if the cost had instead increased by a steady 2 percent per year over that five-year period—plant costs would be nearly 30 percent less than they are now.

One big reason for the dramatic cost increase has been international economic growth. From 2004 to 2008, the emerging economies in Asia underwent a boom in growth. China and India experienced particularly significant growth: The International Monetary Fund reported 2006 growth rates of 11.1 percent and 9.7 percent, respectively. This level of growth resulted in price increases across the board—not only for raw materials used for power plant construction, but also for finished products like transformers, wire and poles.

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JULY 16, 2010

Smart Spending | Cumulative global investments in smart grid technology will approach $46 billion by 2015, according to a new report from Oyster Bay, N.Y.-based ABI Research. The majority will have been spent on transmission and distribution upgrades, the report estimates, with $41 billion in investments worldwide. Smart meter deployment will account for roughly $4.8 billion through 2015. ABI notes the investments are driven primarily by needed upgrades to an aging transmission and distribution infrastructure, and new demands placed on the system by intermittent renewable sources of energy. More information on the study, “Smart Grid Applications: Smart Meters, Demand Response and Distributed Generation,” is available on ABI’s website.

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CFOs Play It Safe | U.S. corporate finance executives are turning to safe, conservative investment patterns in the wake of the recession, according to the Association for Financial Professionals (AFP). AFP’s 2010 Liquidity Survey found many corporations are expanding cash stockpiles and investing in more conservative vehicles: Organizations are allocating an average 74 percent (up from 56 percent in 2006) of short-term investment balances in bank deposits, money market mutual funds and Treasury securities. Many companies have no immediate plans to start deploying cash in their businesses. AFP notes that although it is uncertain when investment comfort levels will begin to recover, increased cash holdings will make it possible to act quickly when organizations do choose to seize opportunities. Full survey results are available on AFP’s website.

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Ratings Upswing | U.S. credit-rating upgrades may exceed downgrades this quarter, a balance that has not occurred since the second quarter of 2007, according to data compiled by Bloomberg. At the end of last month Standard & Poor’s had lifted ratings of 238 U.S. issuers, while cutting 210. Moody’s Investors Service had upped ratings on 200 borrowers while downgrading 129. Investors look to the ratio for insight into the overall business cycle because credit quality varies with the state of the economy as a whole, according to Bloomberg.