FAST-TRACK DEVELOPMENT STRATEGIES

Al Picardi and Mark Hodges are consultants with Nexant, Inc. Nancy Tarr is manager of business development with Edison Electric Institute's Alliance of Energy Suppliers.

To bring new powerplants online profitably, developers must navigate an accelerated siting, permitting, and licensing process.

Competition and growing peak power demands have combined to shorten delivery schedules for new powerplants considerably. Development cycles that may have been three years or longer in the past have been cut to as little as one year.

Such accelerated scheduling places a high risk on generation projects and demands extreme efficiency in siting, permitting, and licensing. Unexpected delays or unforeseen permitting difficulties are almost always costly and, at the extreme, can kill a project. For example, stretching the permitting step of the process from several months to a year or more can increase its cost by a factor of several times. Moreover, of course, the delay in bringing the plant online also means additional months of for gone power sales. The combined financial impact can entirely change the economic feasibility of a project.

Developers need to find ways to keep the siting process on course, efficient, and timely. (See the sidebar, "Fast-Track Development Guidelines.") To avoid the potentially fatal pitfalls, they must identify applicable environmental regulations as quickly as possible, determine what will be necessary to comply with them, and balance the projected risks and rewards of proceeding with the project.

The Fatal Flaw Study
Once the proposed plant's general location is decided, most successful developers undertake a fatal flaw study. It serves as an early warning system, enabling the developer to minimize losses on a project that would ultimately prove unattractive or impossible.

The developer typically supplies an environmental consultant with the site information, general plant layout, type of equipment planned, and an operational scenario. Together these factors will determine the types of permits required. The consultant then prepares a site-specific study to identify potentially fatal flaws. The fatal flaws checklist may include the following factors, among others:

• existing air and water quality;
• feasibility of process water intake and discharge plans;
• availability, adequacy, and quality of alternative water supplies;
• impacts on wetlands;
• existence of endangered species and sensitive habitats, including nearby protected areas that could limit use of the site;
• availability of gas pipeline and transmission line rights-of-way;
• existence of local cultural and historic resources that might be affected;
• impact of the project's noise on neighbors and sensitive receptors;
• availability of representative meteorological data;
• impact of air pollutants; and
• topographic issues, such as the impact of plumes on elevated areas.

Analyzing these factors requires, among other things, that various experts inspect the site to identify evidence of contamination or dumping, the existence and extent of any wetlands, sensitive receptors nearby, and how pipeline and transmission line routes might be affected by wetlands, stream crossings, and cultural and historic resources.

Permitting: Go or No Go
Following completion of the study and selection of primary and alternate plant sites, an integrated environmental permitting plan must be developed to answer four basic questions:

Which permits are required at the local, state, and federal levels of jurisdiction?

• Is it feasible to permit the project as planned?
• Can the permits be obtained within the project schedule?
• What will permitting and licensing cost?
  

The fatal flaw study itself includes a permitting overview and a preliminary estimation of whether the necessary permits can be obtained or not. If the answer is "no" or "probably not," the developer may decide to abandon the project or select an alternative site at this point. If, however, it appears that the required permits can be obtained, the project team then needs to analyze the environmental setting and map out the permitting requirements and estimated timeline in detail.

The permitting review should identify all required federal, state, and local permits, including compliance with zoning codes. It should also be noted that local zoning ordinances can be more stringent than state or federal regulations and limit site suitability by restrictions on wetland and floodplain buffers, water usage, noise, access roads and setbacks, and hazardous materials, to name just a few. The maximum and minimum times estimated or required to obtain permits should be considered for the best- (no opposition to the project during public comment) and worst-case scenarios.

The project's size, location, fuel, and potential to emit air pollutants determine whether the project is subject to Clean Air Act Amendment's nonattainment area, prevention of significant deterioration (PSD), or minor source permitting requirements. The developer needs to consider the tradeoffs in siting, capacity, and operating schedule. If the project is located

• in an air quality attainment area and is limited to less than 250 tons per year (TPY) of emissions of any of the criteria pollutants (or 100 TPY in a nonattainment area), the source may qualify for minor source permitting. This greatly reduces the permitting and licensing cycle time, but also reduces either the megawatt (MW) capacity allowed or the operating schedule. Either reduction may be acceptable if the unit is designed for peaking use only.
• in an air quality attainment area but emits more than 250 TPY of a criteria pollutant, it must comply with PSD permitting requirements, which will lengthen the permitting and licensing process significantly. On the other hand, the unit can then typically have a higher MW rating and operate more often.
• in a nonattainment area and emits more than 100 TPY of a criteria pollutant, much stricter emission control measures are required, and the costly purchase of offsetting emissions allowances and control technologies may be necessary.
• near or has predicted impacts on wetlands, local- or federal-level wetlands permits may be required.

The attainment status of the proposed project site will figure heavily into the level of resources required for permitting, as well as the timeline for obtaining the air permit. (See the sidebar, "Fast-Track Emissions Tip.") A "major source" of emissions requires a rigorous permitting effort, while a "minor source" of emissions offers a much more simplified permitting process.

If there are wetlands on or near the site, a developer must determine early on how the general layout of the project will affect them. (See the sidebar, "Fast-Track Wetlands Tip.") Buffer zones are required around wetlands, which must be added to the area of potential impact. This buffer is 25 feet wide according to U.S. Army Corps of Engineers criteria; however, local ordinances can be more stringent and require larger buffer zones. In some areas, the regional Corps of Engineers now administers wetlands permitting, and it typically has more stringent rules for permits. In some localities, county agencies have been given jurisdiction over wetlands. Thus, one must first identify who has wetlands jurisdiction at the proposed site—the list could include multiple state and local agencies with their own sets of wetland regulations and requirements, as well as the Corps of Engineers and other federal entities.

Licensing: Covering All the Bases
In the licensing process, a regulatory body typically integrates the findings of the other relevant authorities and determines whether the requirements for the plant's licensing and operation have been met. In its coordination function, the government organization assures that all environmental impacts are duly considered in a timely manner and that public involvement is in accordance with law. Here are some examples, which are also expanded on in the Alliance of Energy Suppliers' "Power Plant Siting, Permitting, and Licensing Guidebooks."

Arizona. The Arizona Power Plant and Transmission Line Siting Committee was established in order to provide adequate opportunity for individuals, groups interested in environmental conservation or protection, local governments, and other public bodies to participate in timely fashion in the decision to locate a specific major facility at a specific site. Every utility planning to construct a plant, transmission line, or both must first file with the commission an application for a certificate of environmental compatibility in the prescribed format. Public hearings are held by the committee or an appointed attorney.

The committee considers

• existing plans of the state and local governments and private entities for developments at or near the site;
• fish, wildlife, or plant life and forms of life upon which they are dependent, with special consideration to the protection of areas unique due to biological wealth or because they are habitats for rare or endangered species;
• noise emission levels and interference with communication signals;
• the site's public availability for recreational purposes, consistent with safety considerations and regulations;
• existing scenic areas, historic sites, and structures or archaeological sites at or in the vicinity of the project site;
• the total environment of the area;
• the technical practicality of achieving the project's proposed objective, in consideration of the previous experience with equipment and methods available;
• the applicant's estimated cost of the facilities and site and the estimated costs as recommended by the committee, recognizing that any significant increase in costs represents a potential increase in the cost of electricity to the customers or the applicant;
• any additional factors that require consideration under applicable federal and state laws; and
• the availability of groundwater and the impact of its use on the local groundwater management plan.

California. The California Energy Commission has the statutory authority to site and license thermal powerplants rated at 50 MW and larger, as well as related transmission lines, fuel supply lines, and other facilities. The commission's Energy Facility Siting and Environmental Committee has policy oversight responsibility for powerplant siting.

There have been nine projects licensed by the commission since April 1999, and since 1997 projects totaling 6,273 MW have been approved. There are currently 14 projects before the commission totaling 5,966 MW. Eight more projects are expected to be received by the commission in 2001, totaling 4,820 MW. Seven projects were withdrawn in 2000.

The "one stop process" is currently designed to take 12 months. The committee, seeking to ensure that "needed energy facilities are licensed in an expeditious and environmentally acceptable manner," considers "all needs," including reliability, quality of life, costs, health and safety, environmental protection, need, jobs, and equity. The committee is now in the process of adopting regulations that can shorten the powerplant certification process to six months for plants that present "no significant environmental impact."

The key elements of the siting process are

• assurance that only powerplants actually needed are built;
  review by independent staff with technical expertise in public health and safety, environmental sciences, engineering, and reliability;
• simultaneous review and full participation by all state and local agencies, as well as coordination with federal agencies;
• one regulatory permit;
• a decision within a specific time-frame; and
• full opportunity for participation by public and interest groups.

Florida. The Department of Environmental Protection is the lead agency. The Siting Coordination Office, in conjunction with the office of general counsel, has been assigned by the department to perform the administrative and legal tasks of the coordination process. The actual licensing entity is the governor's office.

Certification is an umbrella permit for all affected state, regional, and local agencies, and includes any regulatory activity that would apply under these agencies' regulations for the facility. Certification can also include authorization to use or connect to lands or works of state agencies. It is a life-of-the-facility permit, authorizing the facility's construction, operation, and maintenance.

The state's Power Plant Siting Act provides for certification (licensure) of steam electric or solar powerplants that are 75 MW or larger. The plants can be gas-fired combined-cycle units, nuclear units, or those fueled by more conventional means. Combustion turbines may be permitted in conjunction with a certified facility or as an addition via the modification process but in and of themselves do not trigger the certification process.

Certification may be required for a powerplant's directly associated facilities. Such facilities are those that are necessary for the construction and operation of the plant, such as a natural gas pipeline supplying fuel, rail lines for bringing in coal, roadways, and the transmission lines carrying power to the grid. For linear features, the applicant can propose certification of a corridor, within which a right-of-way will be located. These corridors can be up to a mile in width, whereas the rights-of-way are typically more on the order of 100-200 feet in width, depending on the facility type.

Public Involvement: Fighting the Fears
Managing the public's reaction to a powerplant is often the most important factor in siting.

Here's an example. A cogeneration facility using combustible garbage as fuel was sited on the waterfront of an East coast port city. The local community protested against the facility, and matters were bought to a head when residents picketed the facility, effectively shutting down power generation for days at a time. When public meetings were finally held, one of the major concerns of the community that was brought to light was the fear of an increased rat population due to the fuel waste coming into the port.

The project engineers hired an expert in rodents and their behavior, and he made a presentation at another public meeting. The gist of the presentation was that it was highly unlikely, given the behavior of rodents, that the project would increase the rat population in the local surrounding community. In other words, the community rat problem was based within the community, not aggravated by the plant. This technical presentation was not well received by many at the public meeting, who viewed the conclusion as a slur against the (largely minority) community and the technical expert as a biased hired gun.

The agreement finally reached was an arrangement whereby the cogen plant would provide extermination services on demand to all members of the community on an ongoing basis. Besides the extermination services expense, the facility invested in fencing and razor wire (also not well received by the community) to prevent further shutdowns due to picketing. It also enhanced its security system—doubling the number of round-the-clock guards, among other things.

Lessons learned? Once an emotional opinion is embraced by the local community, it will be difficult if not impossible to sway public opinion with expert testimony. In this case the community remained unconvinced by the presentation, suspicious of the expert, and offended by what he said. A proactive approach to plant siting public relations and education must take place in the earliest stages of the project. Moreover, the public relations program must take into account the community's cultural sensitivities. Remember that your powerplant is their new neighbor.

Here is a lesson from a project that had to be abandoned when it was well along in development. The influx of power stations in the greater Chicago area (where more than 60 power projects currently are in the permitting process) has given rise to public concern, efforts to completely block certain projects, and a mandate from the governor to study the environmental impacts. One project site was located near a general aviation airport. While official notice to the Federal Aviation Administration (FAA) was not required, the project sponsor nevertheless contacted FAA and the Illinois Department of Transportation (IDOT) to discuss any concerns they might have. IDOT expressed concern with potential visible plumes and turbulence. Neither FAA nor IDOT had any experience or data on which to base an opinion on the impact of peaking plant plumes on aircraft safety, so the project sponsor in response undertook an extensive study program.

Unfortunately, the studies took time, and the political opposition was already on the case. The project sponsors met with the airport authority to address its concerns. In good faith, the sponsors provided the authority with an educational briefing, which included background on the peaking plant technology and the characteristics of the exhaust plume of the equipment to be used at the proposed plant. It also presented an overview of the sponsors' ongoing technical studies, which included more extensive modeling of the exhaust plume to characterize turbulence effects, modeling of plume characteristics, and impacts on light aircraft in flight, identification of existing airports with the same type of powerplants in the same or closer proximity, and actual test flights to evaluate plume turbulence affects on light planes.

The sponsor trusted the airport authority to pass on this information to the community. This was a strategic mistake.

The authority chose a selection of impressive but out-of-context numbers for exhaust temperature and stack flow to generate fear about what they insisted were the "unknown impacts" and potential danger. They played up fear by saying, "We just don't know what the effects are," even after they had been supplied with the results of exhaustive studies.

The project sponsor met with the local pilot's association to provide information, but the airport authority got there first, the fears had been planted, and everyone's mind had been made up—against the project.

Lessons learned? Get there first and do the public education yourself. Don't rely on seemingly friendly or receptive private briefings of local authorities and trust the other party to disclose accurate information about your project. That other party may have its own political agenda, which does not include your project!

Plan, Plan, Plan
There is no substitute for a proactive public awareness/education program in the earliest stages of any project. Many of us in the industry forget that we have specialized knowledge of power generation technology, and we tend to forget the fears and misconceptions of the public. It is our own fault if the public has not been educated to appreciate the environmental improvements of new turbine technologies and generation efficiencies of the unregulated power markets. Public relations and education should be a line item in the budget of any power development project.

But that is just one area that can take your project plans off the fast track and greatly increase its costs. (See the related article, "The Unexpected Local Tax Bite." ) Any step in the siting, permitting, and licensing process can do it, and developers must have as much information as possible from the outset to balance a projects risks and rewards.

© 2008 Edison Electric Institute