Enviros say tougher RGGI caps are worth the price tag
While some states may be hesitant to sign on to those goals, the Sierra Club and the Acadia Center say the far higher emissions reductions would be worth the money.
Peter Shattuck, clean energy initiative director for Acadia Center, said while RGGI electricity prices could be $6 higher with the harder goals, emissions reductions would be three times bigger — looking like almost 20 million tons more of carbon per year.
“You can get much more of a reach at lower cost than I think folks would often assume,” Shattuck said.
Skyrocketing Transmission Costs and the Need for Reform
Concern that electricity prices in New England are too high is constant. Yet, a key cause of increasing prices is usually ignored: the high cost of transmission lines built to meet infrequent periods of peak electric demand. Over the last 15 years, charges for this reliability-focused transmission have skyrocketed and continue to climb. Since 2002, consumers have footed the bill for $12 billion in projects in New England, where transmission spending is relatively higher than in the rest of the country and steadily growing. Costs are passed directly on to ratepayers, causing electric prices to increase and raising consumer bills. Acadia Center’s new report, “The Hidden Costs of Energy: Overpaying for an Outdated System,” highlights four basic problems that contribute to increasing transmission costs and offers recommendations for reforming the way we plan and pay for the grid.
Ensuring that the grid is reliable is critical to the region’s economic, energy, and environmental future, but the way electric transmission is planned and financed gives utilities incentives to maximize spending on transmission instead of working in the interest of consumers. The current selection, planning, and financing processes are stacked in favor of transmission lines that can earn utilities upward of 11% guaranteed annual returns. Viable alternatives for meeting reliability – some of which are both cleaner and cheaper – do not offer such high returns, and are not adequately considered. Without significant changes, transmission lines will remain the inevitable outcome of all reliability planning practices, and it will be impossible for New England consumers to have confidence that the billions of dollars we are all paying for new transmission lines are the best choices to clean our air and contribute to a healthier environment.
Some new transmission investments are needed to meet regional policy goals of opening opportunities to access renewable power supplies. Others may be needed for reliability. But it is hard to distinguish the transmission investments that are truly necessary for reliability from the transmission investments that could have been avoided.
Experience has shown that New England can mitigate the high cost of transmission construction by using local energy resources. These local alternatives include geographically targeted energy efficiency and demand response that reduces demand for electricity, as well as roof-top solar, battery storage, and efficient combined heat and power. These technologies have proven themselves capable of reducing grid stress and deferring transmission construction. In Boothbay Harbor, Maine, the Boothbay Smart Grid Pilot spent $2.6 million on energy efficiency, demand response, battery storage, and solar resources instead of building an $18.7 million transmission line. Consolidated Edison is deploying energy efficiency and demand response in its Brooklyn/Queens territory to avoid costly grid upgrades and deliver benefits of greater than $500 million to consumers. Energy efficiency investments were credited with deferring the need to construct $416 million in transmission upgrades in Vermont and New Hampshire. These local energy resources are smaller and quicker to deploy than building a new transmission line and can be customized to the particular reliability need being addressed. Local energy resources represent smart and economic solutions to grid reliability needs.
But even with proven successes of local energy resources, the region keeps building more transmission lines. To understand why, you need only look to the economics and politics of transmission construction that have contributed to the increase in transmission line investment. These drivers are described in greater detail in Acadia Center’s “The Hidden Costs of Energy: Overpaying for an Outdated System.”
Reliability-focused transmission lines being built now represent a 30-plus year wager on the region’s energy needs. And these investments are being made before the region has made the important determination of what transmission enhancements may be needed to integrate the renewable generators that will help meet clean energy policy goals, or what gains can be realized through greater reliance on small distributed generation like rooftop solar. Instead, utilities and grid regulators continue down the path of building expensive transmission lines to meet the region’s current resource mix and reliability needs, with little regard for how those needs might change. Any missed opportunity to meet projected reliability needs while promoting renewable resources is a costly mistake. Overestimates are wasteful and cost the region; they divert capital that could be used to make the grid more resilient with local resources and help promote a diverse and cleaner set of energy resources.
In “The Hidden Costs of Energy: Overpaying for an Outdated System,” Acadia Center offers recommendations to reform the system and thereby prevent the region from facing continued increases in transmission cost, while also furthering regional policy goals like promoting cleaner energy and stronger communities. Check out the full report to read more about the problems with our present transmission policies and Acadia Center’s recommendations for reform.
Utilities seek cut of hydro, wind contracts
Peter Shattuck, Massachusetts director at the Acadia Center, an energy advocacy group, said the utility fee seems high considering National Grid and Eversource might play a role in building the transmission lines that will deliver the power. Eversource, for example, is partnering with Hydro-Quebec on the Northern Pass transmission line down from Canada. National Grid is involved with the Green Line in Vermont.
“The bonus incentives seem excessive given that utilities can get a return of 10 percent or more on the transmission to bring hydro and wind online,” Shattuck said.
Op-Ed: House energy bill must be scaled up
In the next two months, Massachusetts has the opportunity to reorient the energy system away from risky over-reliance on fossil fuels and toward a stable clean energy future. The opportunity is created by two trends upending the electric power sector. First, aging power plants have become increasingly uneconomical, prompting a turnover of almost one-third of the region’s power generation. Second, costs for renewable energy have plummeted, offering the potential to retool with clean energy at competitive, stable prices.
Read full piece here.
Massachusetts Energy Bill Lacks Provisions to Ensure Cost-Effective Clean Energy Transition
BOSTON — Leaders of the Alliance for Clean Energy Solutions, a coalition of business groups, clean energy companies, environmental organizations, health and consumer representatives dedicated to advancing clean energy for Massachusetts, issued the following statements regarding the energy bill (HB 4377) passed this week by the Massachusetts House of Representatives.
“The House of Representatives passed a bill that aims to grow the market for combinations of onshore wind, other class 1 renewables, hydro and the transmission to bring this competitive clean energy to the Commonwealth,” said NECEC Executive Vice President Janet Gail Besser, co-leader of ACES, “But the scale of the bill’s solicitation is insufficient to spur the private sector investment needed to capture the full cost reduction and economic development benefits of renewable energy sources, while the failure to include provisions that enable Class 1 RPS-eligible resources to compete on their own removes the most cost-effective source of renewable energy in today’s market from the equation.”
“The house bill takes steps toward clean energy but lacks the necessary scale and scope needed for a cost-effective clean energy transformation,” said Acadia Center Massachusetts Director Peter Shattuck. “The scale of procurement for offshore wind and other renewable energy sources is smaller than the need to replace retiring generation with clean energy sources and may limit the competitiveness of opportunity for new clean energy combinations.”
Below are amendments that ACES encourages the Senate to include in its version of the bill:
- An amendment that increases the size of the clean energy procurement.
- An amendment that enables Class 1 RPS-eligible resources (including on-shore wind) to compete in large scale clean energy procurement established by the bill, which will lead to greater competition, put downward pressure on prices, and allow a variety of renewable resources to bid.
- An energy storage amendment that would direct the Department of Energy Resources (DOER) to develop a plan to implement an energy storage program in the Commonwealth. Energy storage is viewed as a game-changer. Its flexibility could solve problems related to integrating wind and solar energy and help grid operators manage resources more efficiently.
- An amendment to increase the Massachusetts Renewable Energy Portfolio Standard (RPS), a statutory obligation that requires suppliers to obtain a percentage of the electricity they provide to customers from renewable resources. Since first being introduced, the RPS and similar laws in other New England states (and 29 states across the country) have helped to bring many renewable energy projects online, boosting the regional economy, diversifying our energy mix and mitigating the environmental impacts of electricity use and production. Massachusetts clean energy policy and adopting this amendment would make rising to the climate challenge that much more achievable.
“From where we sit, the complicated world of energy policy is actually very simple: we must continue to invest in clean energy in order to bolster our economy, mature a thriving industry and tackle climate change. We’re encouraged by the important progress made in the House yesterday and hope this issue, which is so vital to the future of our commonwealth, remains front and center in the State House as the end of the legislative session draws near.”
Media Contacts:
Krysia Wazny
Acadia Center
kwazny@acadiacenter.org
Phone: 617-742-0054 x107
Kate Plourd Johnson
NECEC
kjohnson@necec.org
Phone: 617-500-9933
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About ACES:
The Alliance for Clean Energy Solutions (ACES) is a “coalition of coalitions” comprised of business groups, clean energy companies, environmental organizations, labor, health, and consumer advocates dedicated to advancing clean energy for Massachusetts. ACES is committed to ensuring that those charged with shaping Massachusetts’ energy policies have the most rigorous, current data on the benefits and costs of clean energy. Our goal is to ensure that the Commonwealth can attain a cost-effective, reliable and diverse energy supply to power its businesses, communities and households, which will reduce our reliance on fossil fuels, create a stable and prosperous business environment and meet the Commonwealth’s greenhouse gas emissions requirements. For more information: acesma.org
Members Include: Acadia Center, Alliance for Business Leadership, Climate Action Business Association, Clean Water Action, E4theFuture, Energy Storage Association, Environment Massachusetts, Environmental Entrepreneurs, Environmental League of Massachusetts, Health Care Without Harm, Mass Audubon, Mass Energy Consumers Alliance, Northeast Clean Energy Council, Northeast Energy Efficiency Council, RENEW Northeast, Solar Energy Business Association of New England, Union of Concerned Scientists, US Green Building Council Massachusetts Chapter, Vote Solar.
Why Boston was chosen for the next US-China climate summit
A conference of this scale “really cements Massachusetts’ reputation as a clean energy leader,” Peter Shattuck, director of Acadia Center’s Massachusetts’ branch, tells The Boston Globe. “It puts Massachusetts companies on display.”
Major climate summit coming to Boston next year
“A conference of this scale ‘really cements Massachusetts’ reputation as a clean energy leader,’ said Peter Shattuck, director of the Massachusetts office of Acadia Center, a nonprofit research and advocacy organization.
‘It puts the Massachusetts companies on display,’ Shattuck said, pointing to a recent report from the Massachusetts Clean Energy Center showing that the clean energy industry in the state grew by 12 percent in 2015, employing about 100,000 people. ‘It’s not a given that cleantech will set up shop here. They need to seize opportunity for companies investing billions to relocate to a place like Boston.'”
RGGI Carbon Price Sinks to $4.53 at Latest Auction
“The Boston-based Acadia Center said the decline in prices was due to an estimated oversupply of 130 million allowances and continued low carbon emissions. It said emissions reductions have outpaced the RGGI emissions cap, lowering demand and inflating the supply of allowances.
“The RGGI states should seek to improve these market conditions through the current program review by establishing ambitious cap levels through 2030, reforming the cost containment reserve and conducting additional adjustments for banked allowances,” Jordan Stutt, an Acadia policy analyst, told Bloomberg BNA in an e-mail.”
Declining Emissions and Allowance Oversupply Keep RGGI Prices Low
Boston – Low emissions and a growing surplus of allowances kept prices modest in the latest Regional Greenhouse Gas Initiative (RGGI) auction. All 15,089,652 available allowances were sold at a clearing price of $4.53, which is 14% lower than the previous auction and 18% lower than the clearing price from one year ago. The RGGI states raised $68,356,124 dollars from Auction 32, and have now raised $2.52 billion for reinvestment since the program began, the majority of which has been used to fund energy efficiency and other consumer benefit programs. As energy ministers from around the globe gather to discuss means of implementing the Paris Agreement, RGGI provides a successful model for reducing power sector emissions. With forward-looking improvements through the 2016 Program Review, RGGI will help member states makes progress toward achieving their long-term emissions reduction commitments.
The Auction 32 results show a continuation of the decline of RGGI allowance prices that began following the Supreme Court’s stay of the Clean Power Plan in February. In the absence of a ruling on the Clean Power Plan’s merits or an indication from the RGGI states about the program’s future, the Auction 32 clearing price was primarily determined by market fundamentals. Emissions reductions have outpaced the trajectory of the RGGI cap, while surplus allowances purchased from the cost containment reserve have inflated supply. Considering the substantial allowance surplus that exists (130 million allowances through 2015), the modest price of $4.53/ton suggests an expectation of a sustained oversupply of allowances. Whether the RGGI states take further action to address this oversupply going forward will be determined in the coming months through the 2016 RGGI Program Review.
“The RGGI states used the previous program review to address the oversupplied market, and this time should be no different” said Acadia Center President, Daniel Sosland.
“Reducing the cap and adjusting for banked allowances were major improvements, but the market remains oversupplied due to a story that is beginning to sound repetitive” said Jordan Stutt, Policy Analyst with Acadia Center. “Emissions continue to decline more quickly than expected, with emissions reductions occurring at lower costs than projected. Accurately accounting for these trends during the program review will result in a stronger program for the future.”
“Despite this relatively low clearing price, RGGI auctions continue to generate significant revenue for investment in energy efficiency and clean energy programs,” said Peter Shattuck, Director of Acadia Center’s Clean Energy Initiative. “By establishing ambitious cap levels through 2030 the RGGI states will encourage a meaningful price on carbon emissions, supporting auction revenue for local energy improvements.”
Information on the 2016 RGGI Program Review, including meeting materials and stakeholder comments, can be found at: http://www.rggi.org/design/2016-program-review
Additional information on RGGI’s performance to date, and role in EPA’s regulatory process are described in Acadia Center’s July, 2015 report: RGGI: A Model Program for the Power Sector.
RGGI Overview:
The Regional Greenhouse Gas Initiative (RGGI) is the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions. Nine Northeastern and Mid-Atlantic states reduce CO2 emissions by setting an overall limit on emissions “allowances” which permit power plants to dispose of CO2 in the atmosphere. States sell allowances through auctions and invest proceeds in consumer benefit programs: energy efficiency, renewable energy, and other programs.
The official RGGI web site is: www.rggi.org
Contact:
Jordan Stutt, Policy Analyst, Clean Energy Initiative
617-742-0054 x105, jstutt@acadiacenter.org
Peter Shattuck, Director, Clean Energy Initiative
617-742-0054 x103, pshattuck@acadiacenter.org
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Acadia Center is a non-profit, data-driven research and advocacy organization committed to advancing the clean energy future. Acadia Center is at the forefront of efforts to build clean, low-carbon and consumer-friendly economies. Acadia Center provides accurate and reliable information, and offers a real-world and comprehensive approach to problem solving through innovation and collaboration.
CT Losing Ground on Greenhouse Gas Emissions
…The state is legally required to reduce greenhouse gas emissions to 10 percent below 1990 levels by the year 2020. But new analysis by the Acadia Center shows the state’s total greenhouse gas pollution has increased almost 4.5 percent since 2012. Jamie Howland, director of Acadia’s Climate and Energy Analysis Center, says that follows what had been an eight-year trend of overall reductions. “2012 was the lowest year for emissions and so, in 2013 and 2014, emissions are now above that – and I think clearly above the 2020 target as well,” he says…