Berkshire Hathaway

Alert #7

Overview

Can Hunter and Huntington avoid full scale SCR

BHE can leverage IoT and remote monitoring with the BHE and Supplier Connect

BHE Revenues were $5.2 billion in third quarter

NV Energy plan to buy Arizona gas-fired power plant is rejected

Renewables

Grande Prairie Wind project (GPW), Kallanish Energy moving forward

Net metering proposal for Utah solar customers is suspended

BHE to buy Alamo 6 solar farm

BHE Renewables is a leading operator of megawatt scale PV: plants

Energy gateway for Rock Mountain Power is approved

NV Energy plan to buy Arizona gas-fired power plant is rejected

Las Vegas will now be powered entirely by renewable energy

Iowa moving toward a mostly renewable energy supply

Vestas obtains new wind turbine order from MidAmerican

Transmission 

MidAmerican Energy Co. has completed construction of a transmission line in northwest Iowa

Overview

Can Hunter and Huntington avoid full scale SCR

In September 2016 PacifiCorp and the State of Utah both filed suits against the Environmental Protection

Agency (EPA). They want to reverse a ruling which requires NO_x reductions at the Hunter and Huntington

plants to levels below what had been originally submitted in the State Plan. The question is whether the new administration will decide to retract the adverse ruling. The new EPA Administrator will be Paul Pruitt who unsuccessfully sued the federal agency several times to block its efforts to address emissions from Oklahoma’s aging coal plants.

At the Hunter and Huntington plants it appears that a combination of novel technologies will result in emission levels close to the mandated .07 lbs/MMBtu. This combination will save nearly $200 million in capital costs.  Since the PacifiCorp solution will be nearly as good as the full scale SCR there would seem to be grounds for settling the law suit with an agreement to install the novel technologies. There are nine hours of recorded webinars discussing the combination of options. These are linked through the McIlvaine 44I Coal Fired Power Plant Decisions website which is free of charge to all BHE employees.

BHE can leverage IoT and remote monitoring with the BHE and Supplier Connect

The BHE Supplier Connect program to which you have access has identified many of the components and gathered data about each of the hundreds of power plants owned by BHE.

The innovations in software, smart instruments and remote monitoring can be leveraged to greatly improve power plant performance.  However the specific knowledge incorporated in the Supplier Connect system is needed to make these improvements possible. 

Let’s take lubrication as an example. McIlvaine has identified much of the rotating equipment at each plant.  This includes turbines, fans, pulverizers, pumps etc. it has gathered information on lubrication problems and solutions at many of the plants. 

McIlvaine has initiated a LinkedIn discussion group Power Plant Lubrication https://www.linkedin.com/groups/12021297 

Richard Winslow is a niche expert on power plant Lubrication. We first learned about Richard’s lubrication expertise in an article he wrote when he was with PacifCorp. There was a pulverizer wear problem at the Naughton plant of PacifiCorp. An advanced filtration technology for the coal pulverizer was determined to be readily available for heavy gear oil that would meet solve the maintenance problems. An off-line kidney loop filtration package using a high-efficiency, high-dirt-holding capacity, synthetic filter media was solved the problem. Richard moved on from PacifiCorp and most recently has been in Alaska with ConocoPhillips. He has agreed to a niche expert role in our LinkedIn discussions and decision system. In addition to his Naughton paper we have also included his paper on minimizing bacterial contamination. His resume’ is included in the intelligence system.

This background information can be combined with remote monitoring of all the rotating equipment in the plants and better decisions made regarding maintenance and operation.  All of this comes together to provide the four knowledge needs: Alerts, Answers, Analysis, and Advancement.

NV Energy plan to buy Arizona gas-fired power plant is rejected

In a split decision, the state Public Utilities Commission last week rejected a plan by NV Energy to buy a natural gas-fired power plant in Arizona for $75 million. Commissioner Paul Thomsen, who wrote the majority decision, noted that Nevada is the second-fastest growing state in the union, but the demand for energy is decreasing. “There will be decreased load in Northern and Southern Nevada,” he said.

The company said 70 percent of the energy from the plant would have been used in Southern Nevada and the rest in Northern Nevada. In his written dissent, Commission Chairman Joseph Reynolds said the purchase would be “a good value” and help meet the state’s future energy needs.

Renewables 

Grande Prairie Wind project (GPW), Kallanish Energy moving forward

GPW is a 400-megawatt (MW) wind farm in Holt County, Nebraska – the largest wind energy project in the state’s history – owned by BHE Renewables, a Berkshire Hathaway Energy subsidiary. The project will increase Nebraska’s wind energy capacity by nearly 50 percent, and represents the first project in the state for BHE, BHE announced in April 2015 the plan to start construction of GPW. The project has a long term power purchase agreement with the Omaha Public Power District.

BHE Revenues were $5.2 billion in third quarter

Berkshire Hathaway manages its energy business through BHE (Berkshire Hathaway Energy). It has an 89.9 percent stake. Berkshire owns utilities, downstream companies, and transmission companies. The company operates utilities through MidAmerican Energy, PacifiCorp, and NV Energy, which was acquired in 2013. The company is expected to see year-over-year growth for BHE in 4Q 2016. In 3Q 2016, BHE posted revenues of $5.2 billion—compared to $5.1 billion during the same quarter last year. The growth was due to higher revenues from MidAmerican and real estate brokerage. It was partially offset by a weak performance from NV Energy and Northern Powergrid.

In 3Q 2016, BHE’s earnings before taxes increased to $1,246 million—compared to $1,153 million during the same quarter last year. The operating earnings rose for MidAmerican, NV Energy, and PacifiCorp due to customer load and higher electric rates. The earnings were partially impacted by lower natural gas revenues.

Berkshire, under BHE, also operates the second-largest residential real estate brokerage company in the U.S. Internationally, BHE operates two regulated electricity distribution businesses in the United Kingdom. The company faces competition from utility operators and alternative managers such as Blackstone Group (BX), KKR (KKR), and other managers that form part of the Utilities Select Sector SPDR ETF (XLU).

Net metering proposal for Utah solar customers is suspended

The Utah Public Service Commission suspended Rocky Mountain Power's net metering proposal at the utility's request in order to "seek mutually acceptable solutions" from other stakeholders, such as solar advocates, media outlets report.

The net metering proposal would have applied the new rates for customers seeking interconnection after December 9 of this year, but since none of the parties could come to an agreement over the deadline, RMP chose to have the decision delayed. Despite the respite, RMP doesn't plan to shelve its push to find a "rate that's fair to Utah solar customers" and non-solar customers, a spokesman told radio outlet KPCW. Proceedings are still scheduled for the utility's net metering program.

Under the proposal, Utah solar customers would have participated in a 3-tier rate design consisting of a demand charge, a $15 fixed customer charge and a $0.03/kWh charge for the amount of energy used.

BHE to buy Alamo 6 solar farm

San Antonio-based solar developer OCI Solar Power is seeking state approval to sell its Alamo 6 solar farm to a subsidiary to BHE. Alamo 6 Solar Holdings is a wholly-owned subsidiary of BHE Solar LLC, which is owned by BHE Renewables LLC, which is in turn owned by Berkshire Hathaway Energy CoA sale price has not been disclosed but OCI Solar Power officials confirmed that the company signed a purchase agreement to sell the West Texas solar farm. Located in Pecos County, Alamo 6 remains under construction but once complete it will supply 110.2 megawatts of electricity to San Antonio's municipally-owned utility company CPS Energy.

BHE Renewables is a leading operator of megawatt scale PV plants

The top 100 owners of megawatt-scale PV plants globally - outside of China - accounted for more than 33 gigawatts of net installed capacity as of Q3 2016, Of the top players, 54 are independent power producers (IPPs), with a total of more than 19.6 gigawatts of net capacity. Financial investors and funds are the second-largest category, with 35 of the top 100 positions and 9.2 gigawatts of capacity. YieldCos and developers collectively represent just 11 of the top 100 owners with total net capacities of 2.8 gigawatts and 1.3 gigawatts, respectively. A new report by GTM Research identifies the top five owners of utility PV assets as: American IPPs BHE Renewables, NextEra Energy Resources and ConEdison Development; German IPP Enerparc; and British investor Octopus Investments. American firms are buoyed by a fast-growth U.S. market featuring large plant and portfolio sizes, while European firms operate in lower-growth environments and tend to manage portfolios of plants built over longer time periods.

Energy gateway for Rocky Mountain Power is approved 

The U.S. Bureau of Land Management announced in the Dec. 16 Federal Register the availability of the Record of Decision for the Energy Gateway South Transmission Project and approved land use plan amendments of the Rawlins, Little Snake, Pony Express, Price and Vernal Resource Management Plans.

The ROD constitutes the BLM’s final decision granting a right of way to PacifiCorp (Rocky Mountain Power, to construct and operate an extra-high voltage alternating-current transmission system. The decisions are effective immediately.

When completed, the project will transmit about 1,500 MW of electricity generated from renewable sources at planned facilities in Wyoming, as well as from existing thermal sources. The project will begin in south central Wyoming near Medicine Bow, at the permitted Aeolus Substation, and traverses from northeast to southwest across northwestern Colorado to the existing Clover Substation near Mona, Utah, a distance of about 416 miles.

The facilities will include: 

• Construction of a single-circuit, alternating current 500-kV overhead transmission line (including associated structures, shield wires, conductors, and insulators) between the Aeolus Substation and Clover Substation
• Construction of two series compensation stations, at points between the Aeolus and Clover substations, to improve the transport capacity and efficiency of the transmission line
• Construction of communication regeneration stations associated with the transmission line (about every 55 miles)
• Rebuilding of two existing 345-kV transmission lines between the Clover and Mona Substations (in the existing rights-of-way)
• Rerouting of the Mona to Huntington 345-kV transmission line through the Clover Substation
• Relocation of an approximate 2-mile portion of an existing line (Bears Ears to Bonanza 345-kV transmission line) to eliminate multiple line crossings in a short distance and avoid the BLM Raven Ridge Area of Critical Environmental Concern

Las Vegas will now be powered entirely by renewable energy  

After a large solar array, Boulder Solar 1, came online on Dec. 12, the city was able to buy enough carbon-free electricity to power its 140 buildings, streetlights and other facilities. The power flows from a mix of solar panels and hydroelectric turbines including the Hoover Dam. The renewables, plus energy efficiency savings, are estimated to save the city roughly $5 million per year. 

The Vegas city council, after threatening to leave the grid entirely in 2015, struck a deal with NV Energy that would help the city get to 100 percent renewable. Casinos—including Wynn Las Vegas, MGM Resorts International and Las Vegas Sands Corp.—are now doing the same by installing acres of solar panels on their roofs.

Vestas obtains new wind turbine order from MidAmerican

MidAmerican Energy Co has awarded another firm contract to Denmark’s Vestas Wind Systems A/S (CPH:VWS) concerning its up-to-2-GW Wind XI power complex in Iowa, this time for 153 MW of turbines. 

Vestas announced today it will deliver 153 MW of its V110-2.0 MW turbines under the latest firm and unconditional order from BHE. The company will manufacture the machines at its Colorado factories and will deliver them next year. 

The order also includes a five-year Active Output Management 5000 (AOM5000) service agreement.

In June, Vestas said it had signed a pact to supply and commission the 1,000 x 2-MW turbines that will make up the whole USD-3.6-billion (€3.45bn) Wind XI complex. Three months later it announced a firm and unconditional order for 214 MW of production tax credit (PTC)-qualifying wind turbines that would be installed at the Wind XI site.

Iowa moving toward a mostly renewable energy supply

Iowa's new energy strategy envisions electric car-charging stations across the state, anaerobic digesters that turn animal waste to energy, and top state and federal researchers finding ways to store wind and solar energy.

Lt. Gov. Kim Reynolds released the broad energy report last week that looks at Iowa's energy needs over the next decade. It provided 45 recommendations ranging from modernizing the state's electric power grid to improving state tax credits for solar energy. Reynolds and Debi Durham, Iowa's economic development leader, said energy is key to economic development and job creation across the state, especially in rural areas.

Iowa gets about 30 percent of its electricity from wind generation and is the leading producer of ethanol and biodiesel. The leading source of electricity in Iowa comes from coal. The report said Iowans have invested $85 million in solar projects in 92 counties since 2012. They received about $11 million in state tax incentives.

One of the complaints about wind energy, is that it can't be stored and tapped when demand is at its highest. With research at Iowa State University and the Ames National Laboratory, a federal energy facility, Iowa is "positioned to become a leader in storage technology research and development," the report said. While touting renewable energy opportunities, the strategy said Iowa needs "a diverse energy portfolio" that includes natural gas and coal. It noted strong opportunities, particularly in hydroelectric energy. 

Iowa ranks 10th nationally for hydroelectric potential, but the state gets less than 2 percent of its electricity from water. MidAmerican Energy and the Iowa Association of Electric Cooperatives said they're studying the report. Chuck Soderberg, the association's executive vice president, said the group wants to "assess the impact that implementing the final objectives might have on Iowa’s rural electric cooperatives and their member-owners."

Transmission 

MidAmerican Energy Co. has completed construction of a transmission line in northwest Iowa

The high-voltage transmission line spans portions of Clay, Humboldt, Kossuth, O’Brien, Palo Alto and Webster counties. “By updating the energy grid, we can better serve our customers,” said Steve Ambrose, project manager, high-voltage transmission, for MidAmerican Energy.

“Over the years the population and energy needs have grown and so have our needs for reliability. Bigger houses, more technology and more appliances have led to increases in energy use. By building new transmission lines, we can meet these demands and provide more reliable service to customers. A smarter energy grid will also carry and deliver more wind energy through Iowa and, ultimately, to our customers,” he said. 

The transmission line runs 120 miles and carries 345 kilovolts of electricity. The transmission line project was part of the Transmission Expansion Plan approved in 2011 by the Midcontinent Independent Transmission System Operator Inc.

In addition to the most recent transmission line project, MidAmerican Energy is working on a 27-mile line through Appanoose, Davis and Wapello counties, and a 33-mile transmission line that will cross through Henry, Knox, Mercer and Rock Island counties. Those projects are scheduled to be completed by mid-2017 or mid-2018.