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Maine Public Utilities Commission

Review of Emerging Technologies

As Eligible Resources Under State’s

Portfolio Requirement

February 10, 2005

 

 

I.            INTRODUCTION

 

            During its 2004 session, the Legislature enacted An Act To Promote Economic Development in the State by Encouraging the Production of Electricity from Renewable and Indigenous Resources, P.L. 2003, ch 665.  Included in the Act is a requirement that the Commission review the fuels and technologies that currently qualify as renewable under the State’s eligible resource portfolio requirement.  Specifically, the legislation states:

 

                                    In light of emerging and changing technologies,

the commission shall also review what qualifies as renewable resources under Title 35-A, section 3210, subsection 2 and may make suggestions for changes to the definition of that term.[1]

 

           

II.             BACKGROUND

 

            In 1997, the Legislature enacted comprehensive legislation to fundamentally restructure the electric utility industry in Maine.  This legislation, referred to as the Electric Restructuring Act, allowed for retail consumers to choose an electricity supplier from a competitive market beginning March 1, 2000, required utilities to divest their generation assets, and prohibited utilities from providing electricity supply service. [2]    Prior to the restructuring of the electric industry, the State, through its Public Utilities Commission, had substantial control and influence over the resources used to supply electricity to Maine’s public. This occurred through the Commission’s oversight of vertically integrated electric utilities that had an obligation to provide service through a least cost mix of generating (as well as demand-side) resources.  The ability of the State to influence the resource mix through the oversight of utility planning and acquisition came to an end with the implementation of the Restructuring Act. 

 

            In a restructured environment, the primary means for a State to influence the generation resource mix serving its citizens is through a resource portfolio requirement (typically referred to as a renewable portfolio standard or RPS).[3] Under an RPS, retail suppliers are required to serve a pre-specified percentage of their customers’ electricity needs through designated categories of resources.

 

            The Maine Legislature included an RPS in the original Restructuring Act.[4]  The current portfolio requirement in Maine[5] mandates that each retail supplier meet at least 30% of its load in the State from “eligible resources.” [6]  Under the statute, an eligible resource is either:

 

 

 

A renewable resource is defined as a generation source that does not exceed 100 MW and relies on any of the following:

 

 

 

 

 

 

 

 

 

An efficient resource is a qualifying cogeneration facility under federal regulations that was constructed prior to 1997 and meets an efficiency standard specified in the statute.  An efficient resource does not have to be a renewable resource and may be fueled by a fossil fuel.

 

III.        RPS POLICY GOALS AND OBJECTIVES

 

            An RPS is a mechanism that ensures that a specified percentage of the State’s electricity requirements are served by certain type of resources.  An RPS is generally viewed as a means to promote the development and use of electric generation resources that are not yet commercially viable or would otherwise not be developed.[7]  As such, the mechanism tends to increase the cost of electricity and thus can be considered a consumer subsidy.  To assess the propriety of including any particular fuel or technology as an eligible renewable resource, the goals justifying the subsidy should be articulated.[8]  There are several public policy goals and objectives that can justify the promotion of renewable resources through an RPS.  The primary goals and objectives include:

 

§        Environmental Benefit:  Renewable resources are generally considered less environmentally harmful than fossil fuels, particular with respect to air emissions.

 

§        Resource Diversity:  Renewable resources provide greater diversity within the region’s energy mix, which tends to reduce over-reliance on dominant fuel sources (natural gas and oil) and may help to stabilize electricity prices.

 

§        Resource Security:  Renewable resources are indigenous to the region and thus reduce reliance on foreign sources of fuel.

 

§        Economic Development:  Renewable resources developed in Maine would have an economic impact in their communities through the creation of jobs and an enhanced tax base.

 

The establishment of the State’s overall public policy goals and objectives provides a general guide for the determination of which resources should be promoted through the State’s RPS.  Maine’s RPS statute contains the following policy statement:

 

In order to ensure an adequate and reliable supply of electricity for Maine residents and to encourage the use of renewable, efficient and indigenous resources, it is the policy of this State to encourage the generation of electricity from renewable and efficient sources and to diversify electricity production on which residents of this State rely in a manner consistent with this section.[9] 

 

Despite a general statement of policy, it is often a difficult task to precisely identify the fuels and technologies that should be defined as eligible for purposes of the portfolio requirement.  The decision to include a fuel or technology should depend on its particular characteristics.  In some cases, the Legislature may want to exclude some resources that are generally considered renewable,[10] while including others that may not generally be thought of as renewable.[11]  Moreover, the actual process used to generate electricity, rather than the underlying fuel, could be the determining factor in determining RPS eligibility.[12]

 

There are several characteristics that can be used to screen a fuel or technology for inclusion in an RPS.  These include:

 

·        Sustainability: Sustainable resources, which can be considered synonymous with renewable resources, are those resources that are inexhaustible or replaceable.  For the most part, sustainable resources are those that do not rely on fossil fuels (i.e. oil, coal, and gas).  Resources can be sustainable without necessarily being “clean” from an environmental perspective or efficient.

 

·        Clean:  Clean resources are those that are considered relatively benign from an environmental perspective.  Fuels that are “clean” are not necessarily sustainable or renewable.  Some emerging technologies use fossil fuels, but employ a process that reduces air emissions or lessens environmental damage.

 

·        Efficient:  Efficient resources are those in which the energy output is relatively high compared to the energy input.  Efficient resources are less wasteful and tend to result in less environmental damage for that reason.

 

The following section discusses the characteristics of various fuels and technologies in light of general public policy goals and objectives as an aid to the Legislature in assessing the propriety of their inclusion in the RPS.[13]  The section highlights issues worthy of consideration by the Legislature, but makes no specific recommendations for changes to the “eligible resources” currently specified in the RPS statute.  The determination of which particular fuels or technologies should receive public support through an RPS is fundamentally a question for the Legislature.  The Commission does recommend, however, that when the Legislature assesses the inclusion of various fuels and technologies in Maine’s RPS, it consider, among other relevant items, the extent to which each can be considered sustainable, clean or efficient.

 

IV.            FUELS AND TECHNOLOGIES

 

This section describes various attributes of electricity generation fuels and technologies and presents considerations and issues that the Legislature may weigh in determining eligibility status for purposes of Maine’s RPS.  As directed by the Legislature, the discussion includes emerging technologies, but also contains some considerations and issues related to established fuels and technologies. 

 

In considering changes to Maine’s list of eligible resources, the Legislature should be aware that an RPS, by its nature, acts to promote grid-scale resources that are relatively close to commercial viability.  Thus, an emerging technology that is in relatively early stages of development or one that is likely to only have on-site applications is unlikely to benefit significantly from an RPS.  The inclusion of such resources as eligible for Maine’s RPS, however, is unlikely to cause harm and could have some promotional advantages.

 

A.            Developmental Organic Matter Technologies

 

                        A wide variety of methods for generating electricity that use some form of organic matter are in the research and development (“R&D”) phase.   These technologies are supported by the U.S. Department of Energy (“DOE”) and are being advanced by the DOE, academic institutions, industry groups, governments, and entrepreneurs.  Most of these technologies are far from economically viable and currently exist in pilot installations or in the laboratory.  Thus, inclusion in an RPS will not provide effective support for many of these emerging technologies for the foreseeable future.  R&D grants would be the more effective means to support technologies that are in early phases of development.  In addition, the majority of these technologies produce liquids or gases that, at the current time, are likely to be more effective in fueling vehicles than in producing electricity.  However, because any of these technologies might in the future approach grid-scale electricity generating viability, it is appropriate to consider how they should be treated under Maine’s RPS.

 

                        R&D-level generation methods may be characterized by three aspects: the initial fuel source, the process for converting the initial fuel to a useful end product, and the process by which the end product generates electricity.  All three are relevant to determining whether the technology is consistent with RPS policy goals and objectives.

 

Initial Fuel Source:   The bulk of the research into “cleaner” organic fuels involves:

 

o       Cellulose plant material (i.e., trees)   

 

o       Feed plant material (i.e., grains)

 

o       Other vegetable products (e.g., oil)

 

o       Animal by-products (e.g., fat and solid waste). 

 

 

Conversion Process:   These technologies are considered new and emerging by virtue of the processes by which the organic matter is converted to a useful fuel product.  Most typically, chemical or thermal reactions convert the composition of the initial fuel into simpler chemical compounds or separate a desired product from other chemicals.  More than one chemical or thermal process may be carried out in sequence.  The following are some examples of these technologies:

 

o       Enzymatic hydrolysis:  Enzymatic hydrolysis uses enzymes, which are biological catalysts, to chemically break down cellulose or grains into simple sugars that are easily converted into a gas.  This method may also pre-treat animal solid waste, creating a product that may be converted to a gas.

 

o       Fermentation:  Fermentation uses micro-organisms to consume biomass or the simple sugars created from enzymatic hydrolysis to produce ethanol that may be used (often with other products) to generate electricity or fuel vehicles.

 

o       Fast Pyrolysis:  Fast pyrolysis thermally decomposes (i.e., burns) cellulose or grain in the absence of air, producing solids (char), liquids (pyrolysis oils), and gases (methane, carbon monoxide, and carbon dioxide).  In turn, many of these products may be further processed to create electricity or fuel for vehicles.

 

o       Gasification:  Gasification is a well-established process that consists of pyrolysis, which creates a solid char, followed by gasification of the char through a chemical process.  The resulting gas is called synthetic gas, or “syngas.”  New uses of gasification, such as the use of syngas for fuel cells, are being considered.

 

o       Controlled degradation by acids:  This dilute-acid hydrolysis method creates levulinic acid from cellulose. 

 

o       Biodiesel production:  The biodiesel process combines a vegetable oil or animal fat and an alcohol with a chemical catalyst to produce biodiesel. 

 

o       Anaerobic Digestion (animal by-products):  Anaerobic digestion uses micro-organisms to decompose animal waste in wastewater treatment plants and agricultural facilities to digester gas, or biogas, which may be burned to produce electricity.

 

        End Products:   Some end products that result from these processes are:

 

o       Ethanol:  The primary use of ethanol as a fuel is to combine it with transportation fuel to form a liquid fuel with fewer emissions.  However, consideration has been given to burning ethanol to generate electricity and to use it to create hydrogen for fuel cells.  

 

o       Biodiesel:  Biodiesel is a liquid, oxygenated fuel made from vegetable oil or animal fats that generally may be used as a replacement for diesel fuel to power vehicles or run small electrical generators.   

 

o       Synthetic gas (syngas):  Synthetic gas is a combustible gas created from gasification of coal or cellulose that may be burned to generate electricity.   A less established use for syngas is as fuel for fuel cells.  Work is underway to use micro-organisms to ferment syngas into ethanol.

 

o       Digester gas (biogas):  Digester gas is derived from decomposing biological waste that contains methane that may be burned to generate electricity.  A less established use for biogas is as fuel for fuel cells.  

 

o       Methane:  Methane is a gas produced by anaerobic digestion that may be burned to generate electricity.  A less established use for methane is as fuel for fuel cells. 

 

o       Pyrolysis oil:  Pyrolysis oil is an oxygenated oil created by fast pyrolysis.  It can be used in gas turbines and diesel generators to produce electricity. 

  

o       Levulinic acid:  Levulinic acid is an intermediate chemical that can be further processed to create industrial chemicals, herbicides, and other products.  Research is being conducted into burning the gas itself to produce electricity.

 

                        Because of the number, complexity and often immature nature of these fuels and technologies, it would be difficult and, in some cases, premature to attempt to identify those that should be explicitly included as an eligible RPS resource.  However, there is likely to be some level of uncertainty in the future over whether particular emerging fuels or technologies qualify as eligible for Maine’s RPS as it is currently written.  Specifically, the question is likely to be what qualifies as “biomass” as that term is used in Maine’s statute.  Some may consider the more “common” interpretation of biomass to be limited to wood and wood waste.  A broader interpretation, however, would include all fuels derived from organic sources (such as fuels from animal fats or waste).[14] 

 

                        Without further direction from the Legislature, the Commission is likely to accept a broader interpretation of biomass as the issue is presented to it in the future.[15]  In the Commission’s view, this approach is consistent with the current statutory language that simply contains the unqualified term “biomass.”  By using this unqualified term, the legislative emphasis appears to be on the sustainable nature of biomass.  As discussed above, a fuel or technology could be sustainable and not necessarily clean or efficient and, as mentioned below, some traditional biomass facilities may not be considered clean or efficient.  Nevertheless, the statute refers only to biomass without any reference to clean technology or efficiency.  A broad view of “biomass” in this context would be similar to approaches taken in other states which have addressed the issue of developmental technologies that make use of organic material by including relatively general terminology in their RPS eligibility requirements, such as “biofuels,” “biogas,” and “organic derived fuels.”  

 

                        Issue:  Whether the term “biomass” in Maine’s RPS should be clarified to include “biofuels, biogas and other fuels derived from organic sources. 

 

            B.            Biomass

 

                        Biomass generation is an established grid-scale source of electricity[16] and, as mentioned above, the term “biomass” is included in Maine’s RPS as an eligible resource.  The term is undefined in Maine statutes.  Many state RPSs include more refined categories of biomass to ensure that the resource is sustainable, clean or efficient.  For example, the Connecticut RPS specifies “sustainable biomass” and the Massachusetts RPS allows only “low emission, advanced biomass power conversion technologies.”  Depending on the state’s RPS policy goals and objectives, the type or categories of biomass can be refined or limited.[17]   Possible categories or restrictions on eligible biomass that can be considered are discussed below.

 

                        Advanced Technologies:  Biomass generation is most commonly considered the burning of wood or wood byproducts (e.g. tree or plant matter) in an incinerator to generate electricity.  However, questions arise as to the inclusion as “biomass” of other organic materials, such as food waste, biogas, biodiesel, wastewater sludge or manure. Many states allow for the eligibility of organic fuels as part of a ”gasification” or “digester” process.  The process generates electricity through the capture of gases in a manner that is thought to be more environmentally benign then other disposal methods. 

 

                        Issue: Whether Maine statute should specify that only the use of biomass in conjunction with a low emission gasification process or other low emission advanced conversion technology is eligible for Maine’s RPS.

 

                        Wood content:  The burning of certain wood or wood byproduct items can be particularly harmful to the environment.  Such items include chemically treated wood or wood contaminated with metals or plastics.[18] 

 

                        Issue:  Whether biomass generation fueled by chemically treated wood, wood contaminated with metals or plastics, or other environmentally harmful fuel should be excluded from RPS eligibility.

 

            CO2  Neutrality:  Biomass generation is generally thought of as a means to address greenhouse gases, even though the use of biomass to generate electricity through conventional means results in relatively large direct emissions of CO2.  Nevertheless, biomass is often considered to be a neutral emitter of CO2   upon the rationale that new growth absorbs CO2 in equal or greater amounts than that emitted during the generation process.  However, CO2 neutrality only occurs if the fuel is replaced by new growth or uses wood waste that would otherwise be left to decay.[19] 

 

                        Issue:  Whether Maine law should require that eligible biomass generation use fuel harvested in a sustainable manner or otherwise require CO2 neutrality.

 

            C.            Fuel Cells

 

                        Fuel cells[20] are currently included in statute as a renewable resource eligible for Maine’s RPS.  Fuel cells are not a new technology, but substantial work has occurred in recent years to develop the technology into a commercially viable energy source.  Fuel cells are not likely to be a grid scale source of electricity in the foreseeable future, but currently have some on-site niche applications.[21]  Fuel cells are generally considered a relatively benign source of electricity in that power is produced through electrochemical means rather than combustion and therefore very low levels of NOx and CO2 are emitted.  Fuel cells require hydrogen for the production of electricity and that hydrogen is generally extracted from natural gas or propane.  Thus, fuel cells that make use of such fossil fuels are arguably not a “renewable resource.”  However, fuel cells can make use of hydrogen extracted from renewable sources, and some states limit RPS eligibility to this type of fuel cell.[22]  Fuel cells that use renewable fuels are much more expensive and much further away from commercial application than more conventional fuel cells that use fossil fuels.

 

                        Issue:  Whether the Maine RPS should specify that only fuel cells that use renewable fuels are an eligible resource.

 

            D.            Microturbines

 

                        Microturbines[23] are an established technology that is not included as eligible for Maine’s RPS.  Like fuel cells, microturbines are not a grid scale source of electricity, but have some on-site applications.  They are generally fueled by natural gas or propane and are, thus, not considered a renewable resource.  However, some view microturbines as an extremely efficient source of energy when application can be made of the waste heat (a process that is generally referred to as cogeneration or combined heat and power).[24]  Maine’s RPS currently includes as an eligible resource “efficient” cogeneration facilities that are “qualifying facilities” under federal law and that were constructed prior to 1997.[25]  A few states include cogeneration in their RPS, but the Commission is unaware of any other state RPS that explicitly includes microturbines.

 

                        Issue:  Whether Maine’s RPS should include microturbines that satisfy a specified efficiency standard as an eligible resource.[26]    

 

            E.            Hydroelectric

 

                        Hydroelectric generation is among the most established forms of electric generating technologies and is thus not an emerging technology.  Hydroelectric generation is sustainable and does not produce harmful air emissions; however, hydroelectric facilities can cause substantial harm to fish and surrounding ecosystems, and some impoundment procedures impact mercury dispersal.  As a result, the propriety of including hydroelectric facilities as eligible for an RPS is a matter of significant debate.[27]  Some states exclude all hydroelectric resources, while others restrict eligibility to smaller facilities.[28]  The size of a particular facility, however, is not determinative (or perhaps even a particularly critical factor) of the extent of environmental damage, although large facilities would have an impact on a greater amount of land. 

 

                        Issue: Whether Maine’s RPS should include only “low impact” hydroelectric generation and, if so, what should be the criteria for determining low impact.

 

            F.            Municipal Solid Waste

 

                        Electric generation fueled by municipal solid waste (“MSW”) in conjunction with recycling is included as eligible for Maine’s RPS.  The inclusion of MSW as eligible for an RPS can be questioned in that facilities burn material that can be environmentally harmful; however, in some cases, the burning of material can be more environmentally benign than alternative MSW disposal methods.  Some states do not include MSW as eligible for their RPS, while others do allow MSW as an eligible fuel. 

 

                        Issue:  Whether MSW should be excluded from Maine’s RPS or only allowed as part of a low emission advanced conversion technology.

 

            G.            Tidal and Wave Power   

 

                        Tidal power is explicitly included as eligible for Maine’s RPS, while wave power and ocean thermal are not explicitly on the list.  All are emerging technologies, do not produce air emissions, and are clearly sustainable.  Tidal, wave and ocean thermal are commonly included as eligible in other state RPSs. 

 

                        Issue: Whether the Maine RPS should explicitly include wave power and ocean thermal, as well as tidal power, as an eligible technology.

 

 

 

 

            H.             Other

 

                        The remaining fuels and technologies listed in Maine’s statute are solar, wind and geothermal.  As discussed in the Commission’s 2003 report on renewable resources, geothermal energy used to produce electricity is applicable in a few western states where volcanic activity exists.[29]  Wind and solar are commonly considered as eligible in other state RPSs.

 

V.            CONCLUSION

 

            An RPS is a means to provide electricity consumer financial support to promote the development and use of designated generation resources.  The determination of which resources are worthy of this public support is essentially a public policy question for the Legislature.  The determination of RPS eligibility is typically based on environmental considerations and tradeoffs, and has become more complicated with the development of a variety of emerging technologies.  Maine’s RPS contains a list of general categories of fuels and technologies that are eligible as “renewable resources.”  The items on the list are consistent with those in many state RPSs.  However, it is also common for state RPSs to further refine their eligibility criteria to balance the environmental aspects of particular fuels and technologies (such as requiring advanced emission technology).  The Legislature could determine that a more refined approach is desirable.  If so, it could consider establishing general standards and designating an appropriate agency (e.g., Department of Environmental Protection) to certify facilities as eligible for Maine’s RPS.[30]  

 

           

 

                 

 

 

                         

 

             

 



[1] This language is included in section 4 of the Act, which directs the Commission to conduct a comprehensive study on a variety of issues related to wind power development in Maine.  The Commission has submitted its report on wind power development to the Legislature.  Because the issues are distinct, the Commission separately presents this review of eligible resources for the State’s portfolio requirement. 

[2] P.L. 1997, ch. 316 (codified at 35-A M.R.S.A. §§3201-3217).  Under the law, affiliated entities of utilities could provide electric supply service to retail customers, subject to certain restrictions. 

[3] In 2003, at the direction of the Legislature, the Commission prepared a report to the Utilities and Energy Committee on the promotion of renewable resources.  Report and Recommendations on the Promotion of Renewable Resources, MPUC (Dec 31, 2003) (“MPUC Renewables Report “).  The report contains extensive discussions of the design, operation and implications of renewable resource portfolio requirements.   

[4] 35-A M.R.S.A. § 3210.

[5] Maine’s RPS has, for the most part, remained unchanged since its original adoption.  The only substantive change was the addition of an efficiency standard for eligible cogeneration resources.  P.L. 1999, ch. 398.

[6] Eligible resources are not required to be located in the State, but their energy must be delivered to the New England or northern Maine grids.

[7] This report does not include an economic analysis of whether particular resources require a subsidy to operate.  The economics of particular resources and their need for a promotional mechanism or subsidy are discussed in MPUC Renewables Report at 31-56.

[8] A detailed discussion of potential policy goals and objectives for mechanisms to promote renewable resources is included in the MPUC Renewables Report at 17-19.

[9] 35-A M.R.S.A. § 3210(1).

[10] For example, many state RPSs exclude larger hydroelectric facilities, which involve a mature, commercially viable technology.

[11] The current RPS in Maine includes fuel cells, which most often use natural gas in the process of producing electricity.

[12] For example, several states include technologies that employ a gasification process.

[13] In its December 2003 report to the Legislature on the promotion of renewable resources, the Commission included an extensive discussion on a variety of generating fuels and technologies, including all those currently eligible under Maine’s RPS.  MPUC Renewables Report at 31-56.

[14] For example, the Oregon Department of Energy defines “biomass” as renewable organic matter such as agricultural crops and residue, wood and wood waste, animal waste, aquatic plants and organic components of municipal and industrial wastes.

[15] The Commission, as part of a rulemaking process, interpreted biomass broadly to include landfill gas.  The Legislature approved the interpretation through the major substantive rule process.  Resolves 2003, ch. 22.

[16] Biomass generation has existed in Maine for a long time.  Several facilities were constructed in the late 1980s and early 1990s as a result of federal and State policies to promote renewable generation.  A list of Maine’s biomass facilities was included in the Commission’s December 2003 report.  MPUC Renewables Report, App. B.

[17] Many of the issues surrounding biomass were discussed in the Commission’s December 2003 report.  MPUC Renewables Report at 32-36.

[18] The definition of biomass for the purpose of the federal production tax credit explicitly excludes pressure-treated, chemically-treated, or painted wood wastes.  Public Law No. 108-357, sec.710 (2004). 

[19] For example, the use of construction debris to fuel a biomass facility would arguably not be CO2 neutral.  

[20] Fuel cells combine hydrogen and oxygen to produce electricity, heat and water.

[21] Fuel cells are generally designed to follow load with switch-off mechanisms that prevent the flow of electricity onto the grid.

[22] The Massachusetts RPS restricts fuel cell eligibility to those using renewable fuels.

[23] A microturbine is a rotary engine, similar to a jet engine, but that uses the power of the combustion exhaust gases to produce electricity (generally in the range of 30kW to 500 kW) rather than thrust.

[24] Although more expensive to install, most applications do make use of the waste heat because the increased efficiencies generally make projects more cost effective.  Microturbines that make use of waste heat have efficiencies in the 70% to 90% range, while those that do not have efficiencies in the range of 20% to 35%.

[25] 35-A M.R.S.A. § 3210(2)(A).

[26] If the Legislature considers “efficient” microturbines as eligible for the State’s RPS, it might also want to consider efficient applications of other fossil fuel generation, such as diesel generators that recapture waste heat. 

[27] Many of the issues surrounding hydroelectric generation were discussed in the Commission’s December 2003 report.  MPUC Renewables Report at 40-44.

[28] For example, the Massachusetts RPS does not include hydroelectric generation, while the Connecticut RPS is restricted to run-of-the-river hydro of 5 MW or less.  As mentioned above, Maine’s RPS limits eligible renewable resources to those that do not exceed 100 MW.  With respect to hydroelectric facilities, the Legislature may want to consider whether the 100 MW restriction is warranted depending on its RPS goals and objectives.  

[29] MPUC Renewables Report at 53-54.

[30] A similar approach is used in Massachusetts where the Division of Energy Resources certifies RPS eligibility.