RENEWABLE ENERGY PROJECT IDEAS
for Supplemental Environmental Project (SEP) Settlements
Introduction
Because of their beneficial impact on the ambient air – and consequently, on the public health – renewable energy projects (REPs) are a promising option for SEP settlement negotiations of many kinds of violations.
This list of project concepts is offered in the spirit of brainstorming and runs the gamut from capitalizing wind installations, to purchasing the environmental attributes of “green” power, to funding selected aspects of wind project development, to underwriting the associated training and marketing required for the development of REPs.
In recognition that (a) green power programs might not exist in many jurisdictions and (b) the penalty amount of many SEPs is insufficient to develop a REP, “green tags” are identified as a viable alternative for some project concepts listed below.1
Some concepts might not be permissible under the SEP rules in some jurisdictions.
Purchase wind-generated or other renewable energy power (or green tags) for violator’s consumption or use.2 The penalty is placed in an escrow account with the power provider or green tag broker, to pay for the power or tags over a specified time. Earnings on the escrow account are invested in additional power or green tags. This approach was taken in Colorado where, pursuant to a SEP negotiated between an industrial violator and the CO Dept. of Public Health and Environment, penalty funds were placed in an escrow account with the local electric utility and earmarked for its wind energy program over a five-year period. In this case, the penalty amount was sufficient to capitalize an additional turbine not already planned by the utility.
Buy down the renewable energy cost “premium” for a project that otherwise would be uneconomical to develop and, therefore, would not occur. This approach can be especially attractive if the “developer” is a community or school or some other kind of governmental or volunteer organization interested in “clean and green” as community service or improvement. Where wind energy is not quite cost-competitive, the premium is generally not exorbitant but is sufficient to create a barrier to project development.
Establish a buy-down fund for REPs. The fund subsidizes initial investment in projects to supplement the energy supplies of local or state agencies. REPs (and/or energy efficiency projects) can be installed at schools, community centers, libraries, and other government buildings. This permits maximum flexibility in siting REPs, which is useful if state regulations require SEPs to be undertaken at or near the site of the environmental violation.
If a generation and transmission provider (G&T) is the violator, invest in a member coop’s mini wind farm. This would allow the coop to acquire needed experience with wind energy. It also would provide the coop’s customers with a measure of clean energy, plus price-hedging and other benefits of greater fuel diversity.
Purchase or buy down green tags for groups that philosophically support “green” but are unlikely to be able to purchase green tags themselves. Examples of such groups might include Low-Income Home Energy Assistance Program (LIHEAP) recipients, senior citizen centers, faith-based organizations, hospitals and nursing homes, schools and colleges, etc. SEP funds can be placed in an escrow account to pay the specified green tags over an agreed-upon time.
Fund development of a high-resolution map of the state’s wind resources. High-resolution maps can be one of the first steps in exploring the opportunity for developing wind energy projects. Though not an expensive activity, the absence of these maps can constitute a barrier to wind development. The estimated $50,000 price tag for a map could be the precursor to developing a wind SEP.
Establish a fund to support the initial assessment costs of wind projects. SEP funds are pooled and used to underwrite feasibility studies, without which projects cannot go forward. Feasibility studies include assessment of environmental impacts, economic benefits, interconnection issues and financing.
Fund a local or statewide anemometer loan program. SEP funds purchase anemometers that are made available for loan. This reduces the cost of the site-assessment phase of wind development projects and arguably contributes to improved project economics. (One option would be to run the program through a university.)
Fund a wind technician assistance center at a university. This could be funded in connection with an anemometer loan program and could be managed by a university, perhaps through the agricultural extension service. By providing needed training, arguably this could boost the development of clean energy and the resulting environmental benefits.
If a utility is the violator, invest in a professional green energy marketing campaign through a third party (such as the Land and Water Fund of the Rockies). This targeted marketing can be used to provide discounted or fully subsidized green tags to disadvantaged groups. SEP funds can be placed in an escrow account with the third party managing the activity, ensuring that the utility does not benefit from this activity. (Because of its focus on marketing rather than project development, this concept might not qualify as an acceptable SEP in some jurisdictions.)
1“Green tags,” or renewable energy credits (RECs), are the environmental attributes of clean energy. They are purchased separate from the actual power. This option is desirable in a number of situations – for example, in jurisdictions in which there is no green power to purchase, or if the violator operates where emissions are capped or across several states. Key benefits of green tags are that they are easy to negotiate and are easily applied to small or large penalty amounts.
2Strictly speaking, electrons from all generating sources flow together over the grid. Electrons generated by the wind are indistinguishable from those generated by coal, natural gas, oil or split atoms. However, if the utility serving the violator generates some of its electricity from “green” sources, arguably the violator and its community receive “green” energy when a green program is supported.