Developing interconnections to transport the fuel, known as RNG, from supply points to broader pipeline networks remained a popular way for gas utilities to enter the value chain. During second-quarter earnings conference calls, some companies detailed how state regulators were facilitating these projects.
The growing number of RNG production facilities also created opportunities for utility operators to put this experience to use for third parties. As of July 31, 300 RNG facilities across North America were processing organic waste into pipeline-quality gas at farms, landfills and other facilities, according to the RNG Coalition. This was up from 30 facilities in 2011.
“Where there are producers that want to get RNG into the interstate pipeline, they were looking for people that know pipes like we do to be able to put that RNG into the broader system,” Todd Jacobs, senior vice president for growth and strategy at Black Hills Corp., said during an Aug. 3 conference call.
Midwest projects advance
During a July 27 conference call, CMS Energy Corp. President and CEO Garrick Rochow highlighted $11 million in grants awarded to subsidiary Consumers Energy Co. to purchase and install equipment to process raw biogas into RNG at two dairy farms in Michigan. The awards, announced by the Michigan Public Service Commission in June, were part of a $50 million state grant program to develop low-carbon energy infrastructure.
The investments would support the development of RNG production facilities at SwissLane Farms in Kent County and TDI Centennial Farm in Clinton County. Together, the facilities would have a combined annual RNG production capacity of 121.7 billion Btu, enough to heat more than 1,200 homes, according to grant applications. They would remove an estimated 32,482 metric tons of carbon dioxide equivalent emissions from the atmosphere per year, equal to taking 7,218 gasoline vehicles off the road.
In its most recent Michigan gas rate case, Consumers asked to recover costs to build, own and operate an RNG production facility. Public Service Commission staff said the project presented unnecessary financial risk to ratepayers and was not part of Consumers’ core regulated business.
Spire Inc. expected its first RNG interconnection to come online in Eastern Missouri in early 2024, Treasurer Adam Woodard said during an Aug. 2 conference call. The project will inject 1.2 Bcf per year of RNG into Spire Missouri Inc.’s distribution system from a landfill RNG project in north St. Louis, according to the company’s 2022 sustainability report.
The company has focused on RNG interconnection opportunities at landfills and wastewater treatment plants in Missouri, with less emphasis on dairy farms, Spire COO Steven Lindsey said in a separate June 14 conference call.
Signs of regulatory support
Spire was awaiting rules from the Missouri Public Service Commission that will allow gas utilities to operate voluntary RNG programs. In other states, regulatory frameworks supported gas utilities’ RNG endeavors.
Southern California Gas Co. recently issued a new request for proposals to procure RNG, said Trevor Ian Mihalik, CFO at parent company Sempra, during an Aug. 3 conference call. The procurement would support the company’s obligation to source 12.2% of its annual gas demand from core customers as biomethane by 2030. RNG accounted for 5% of SoCalGas deliveries in 2022, Mihalik said.
In June, SoCalGas fulfilled another mandate from state regulators by proposing a $13.4 million investment to extend infrastructure to a facility that would pilot RNG production from agricultural waste.
Also in June, CenterPoint Energy Resources Corp. submitted its first natural gas innovation plan in Minnesota. The plan included proposals to procure RNG from facilities across three counties and seek additional supplies through a request for proposals. The plan was sanctioned under the 2021 Natural Gas Innovation Act, the product of a yearslong campaign by CenterPoint to secure regulatory recovery for RNG procurement.
“We continue to be appreciative of the constructive environment in Minnesota, which allows us the opportunity to invest in projects that assist our customers to achieve their emission reduction targets,” CenterPoint Energy Inc. President and COO Jason Wells said during a July 27 conference call.
NW Natural Renewables marks milestone
The first RNG production facility funded by Northwest Natural Holding Co.’s low-carbon fuels subsidiary started operations in August, the company announced Aug. 3. The Portland, Ore.-based gas utility operator formed NW Natural Renewables Holdings LLC in 2021 to invest in RNG production facilities and sell low-carbon fuels.
The nonregulated subsidiary partnered with EDL Energy to convert a power plant fueled by landfill gas into an RNG production facility at the Carbon Limestone landfill, operated by Republic Services Inc. in the Youngstown, Ohio, area. A second production facility at the site is scheduled to come online in the fall, Northwest Natural said.
The two facilities will produce 1.7 trillion Btu of RNG per year once they fully ramp up in 2024, making the Carbon Limestone RNG project one of the largest of its kind in North America, according to EDL. The facilities will reduce emissions by an amount equal to taking 13,170 passenger vehicles off the road each year, it said.
NW Natural Renewables has the right to obtain and sell a 20-year supply of RNG from the facilities. Pennant Midstream LLC, a subsidiary of UGI Energy Services LLC, will transport the RNG through its gas-gathering system.
Opportunities in nonregulated businesses
UGI Energy Services has facilitated much of parent company UGI Corp.’s $500 million investment into RNG and other decarbonized fuel projects. After announcing a new initiative to control operating expenses in light of ongoing earnings pressure, UGI President and CEO Roger Perreault told analysts Aug. 3 that the company remained committed to its decarbonized fuels strategy. UGI planned to spend $1.25 billion on RNG and other fuels through 2025.
Michigan multi-utility DTE Energy Co. was on track to meet its 2023 full-year guidance, thanks in part to strong RNG pricing and new projects at its DTE Vantage segment, according to CFO David Ruud. The DTE Vantage segment develops RNG production facilities and combined heat and power plants. The nonregulated subsidiary has placed two RNG facilities into service in 2023 and plans to start up two more by year-end, DTE Chairman and CEO Jerry Norcia said during a July 27 conference call.
Black Hills has placed six RNG interconnects into service across its Nebraska and Iowa gas distribution systems and expected to build three more in 2023. The company now has a dedicated team looking at opportunities to leverage that experience and invest in projects beyond its regulated business, Senior Vice President Jacobs said.
“What we’re looking at right now is other opportunities,” Jacobs said. “They may be interconnects, they may be hubs where dairy farms, for example, truck RNG to a centralized location where it is purified and put into the natural gas system.”
The company formed a nonregulated business, Black Hills Energy Renewable Resources, to explore these opportunities, according to its 2022 Sustainability Report 2022, released on July 11.
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