Sustainable Transportation Solutions for Maine

Maine’s climate and transportation policymaking is at a critical juncture. Last week, the Governor’s Energy Office convened an expert task force of private, public, and non-profit stakeholders to consider the challenges and opportunities ahead and to develop the Maine Energy Roadmap. The group faced complex and seemingly contradictory goals.

Through one lens, maturing transportation technologies are transforming the marketplace. Most major automakers already offer electric vehicles, dozens of additional long-range, reasonably-priced models are in development, and Volvo will sell only hybrid or electric vehicles starting in 2019.  As options expand, battery ranges increase, and costs fall, Maine consumers will increasingly choose EVs for their lower driving and maintenance costs and lighter environmental impact. Fossil fuels burned for transportation are responsible for 40% of Maine’s greenhouse gas emissions—the largest share of any sector—and Acadia Center’s EnergyVision 2030 project shows that electric vehicle adoption is crucial to reducing climate pollution and meeting Maine’s climate targets. Clearly, we should do everything we can to support consumer access to electric vehicles.

Changes in vehicle technology are revealing that traditional transportation funding is out of step with an evolving marketplace and that new approaches are needed so Maine can enjoy a first class transportation system. Maine’s current funding for transportation infrastructure relies primarily on taxing gasoline. Without significant revision, this mechanism will not support a system in which drivers choose vehicles that do not depend on gasoline or diesel fuels. Proposals to impose fees on EVs and hybrids in an attempt to capture lost gas-tax revenue is not the answer—EVs and hybrids only make up about 1% of all the cars in Maine and have had little impact on overall transportation funding. Imposing fees and taxes that target a new, innovative, lower cost technology will not solve Maine’s transportation revenue needs and only act to burden consumers. Clearly, Maine policy should not stand in the way of consumer choice.

The Governor’s Energy Office doesn’t have to choose between accelerating EV adoption and strengthening infrastructure investments. If it’s willing to think differently, rely on accurate data, and distinguish between fair and equal contributions to transportation funding, the Maine Energy Roadmap could set a course to do both.

Recommendations for the Maine Energy Roadmap

Electric vehicles benefit all Mainers. Electric vehicles are a practical way for consumers to control their transportation expenses. Even with low gas prices, fuel efficiency is one of the top 9 reasons consumers choose a vehicle, and electric vehicles offer the additional benefit of lower maintence costs. Even drivers of convential vehicles benefit from expanded EV adoption, thanks to reduced greenhouse gas emissions, lower conventional pollution, and economic contributions to the state budget—from sales tax on electricity and electric systems benefits charges t0 elevated excise and sales taxes compared to conventional vehicles due to their higher value.

Maine should actively support EV adoption. Ramping up EV adoption will require clear goals and concrete policy actions. Maine should join the cooperative, Multi-State Zero Emissions Vehicle Memo of Understanding, which would commit Maine to putting close to 51,000 zero-emission vehicles on the road by 2025. Consumer incentives toward the purchase of new electric vehicles and EV charging equipment would support this ambitious goal.

Maine should explore consumer-friendly transportation funding mechanisms. Transportation funding mechanisms must evolve to keep pace with a changing marketplace and ensure that all drivers contribute fairly to infrastructure maintenance. The energy sector’s Regional Greenhouse Gas Inititative offers a successful mechanism to create revenue for reinvestment in Maine projects while capping climate pollution emissions. Acadia Center is working with regional partners to adapt this proven, market-based approach to transportation. Additional transportation funding solutions may be implemented as EV technology continues to mature and reaches market maturity.

Meeting Maine’s climate and emissions reduction goals should not undermine our ability to invest in our roads and highways. The Maine Energy Roadmap can facilitate these complex, crucial goals.

New Reports Show Electric Vehicle Market Is Taking Hold

Confidence in electric vehicles (EVs) is growing. Several recent announcements demonstrate that many industries are convinced EVs will play a major role in the future of personal vehicles. Bloomberg New Energy Finance (BNEF) recently forecasted that EVs will make up about 58% of vehicle sales in the U.S. by 2040. This month, Volvo committed to producing exclusively EVs and hybrids by 2019. And even OPEC, the representative body of oil producing nations, has begun to predict a significant impact from EVs—Bloomberg Technology just reported that the oil group quintupled its 2040 EV forecast from last year.

These updated EV predictions are largely driven by rapidly declining battery costs, which in turn drive down the cost of these clean vehicles. BNEF’s forecast shows that battery prices have dropped by 73% since 2010 to about $200/kWh, and they predict this trend will continue. These estimates may even be conservative for some manufacturers, as they are based on average battery prices. Tesla announced in 2016 that they were already below the $200/kWh threshold, and they expect further cost reductions from large-scale production at their Gigafactory. With these battery cost predictions, BNEF forecasted that the cost of manufacturing EVs would match conventional vehicle costs by 2025.

EVs already have lower lifetime costs than conventional vehicles, and consumers are catching on to these benefits. In the U.S., EVs sales in the first six months of 2017 have increased about 35% compared to the same period last year. In the Northeast, which comprises about 25% of the EV market, the annual growth rate of EV sales has been about 40% since 2013. Acadia Center’s EnergyVision 2030 highlights the current fuel cost savings and emissions benefits of EVs in the Northeast region. The lower EV purchase prices predicted from decreasing battery prices will further increase consumer savings.

New EV Sales in the U.S. and the Northeast, 2011-2016¹

But batteries are not the only driver of EV costs. BNEF also highlights the importance of supportive policies in the next six to eight years to maintain the momentum around EVs. Some existing policies are facing uncertainty because of actions by the Trump administration. Without them, market dynamics for EVs could change, resulting in slower cost reductions and delayed adoption. In the wake of Federal uncertainty, states should continue to act in strong support of EVs. Acadia Center’s Charging Up report—coauthored with Sierra Club and Conservation Law Foundation—outlines policies that states in the Northeast can adopt to show they are ready for and supportive of the growing EV market.

¹ Data for the Northeast includes the New England states and New York. Data from the Electric Drive Transportation Association and drivingZEV.

EnergyVision 2030 for Massachusetts

Massachusetts has a strong record addressing climate-changing pollution. In the early 2000s, Massachusetts was a founding partner in the Regional Greenhouse Gas Initiative (RGGI), a multi-state, bipartisan cooperative that has contributed to a 50% drop in power plant emissions.  Passage of the Green Communities Act in 2008 led to nation-leading energy efficiency policies that reduce energy waste and save consumers billions of dollars. Last year, the Baker Administration and Legislature collaborated on landmark legislation to launch the U.S. offshore wind industry, enable further growth of onshore wind and solar power, import Canadian hydroelectricity, and place the Commonwealth at the forefront of the booming energy storage industry.  Most recently, Gov. Baker committed Massachusetts to the United States Climate Alliance, a partnership of 13 states honoring the tenets of the Paris Agreement.

The Commonwealth must follow through on policies and commitments to achieve a 25% reduction in carbon pollution by 2020, which is legally mandated under the Global Warming Solutions Act (GWSA). The GWSA additionally requires an 80% reduction by 2050, which will require the replacement of virtually all fossil fuels with clean, renewable electricity to power and heat buildings, and to ‘fuel’ electric vehicles.

Acadia Center’s recently-released EnergyVision 2030 describes the technology and policy benchmarks that Massachusetts and the broader region will need to achieve over the next 13 years to stay on track for deep emissions reductions. Massachusetts is already making progress toward most of these goals, aided by declining technology costs, changes in consumer preferences, and policy leadership.

Here’s what needs to happen next:

Set Ambitious Renewable Energy Targets

The Renewable Portfolio Standard (RPS) determines the share of renewables in Massachusetts’ (and the region’s) energy mix, and should be doubled from the current 25% requirement by 2030 to 50% or more.  Renewables displace carbon pollution from fossil fuel power plants and stabilize costs, and cleaner electricity provides greater emissions savings from electric vehicles and heat pumps (more below).

Bulk Up on Clean Energy

Large-scale long-term contracts are needed to finance the up-front cost of developing clean energy projects and move energy to demand centers. Massachusetts is implementing separate procurements for 1) land-based renewables and hydroelectricity, and 2) offshore wind. Partnering with neighboring states to implement these procurements will achieve greater economies of scale, and encouragingly, Rhode Island and Connecticut have taken steps to join the solicitation issued by Massachusetts utilities to develop the region’s world-class offshore wind resource. Additionally, Massachusetts should jump-start efforts to build a renewable-ready bulk transmission grid to unlock potential for onshore wind in northern Maine and New York, and to facilitate continued development of offshore wind as more states commit to harvesting the abundant energy resource and capturing a share of the economic development that will follow.

Set Solar Free

Caps on solar net metering (the rate compensation mechanism for solar energy sent back to the grid) are stifling deployment and should be removed. 2016 legislation made changes including reducing solar incentive payments to account for lower technology costs and providing options for the Department of Public Utilities to establish payment mechanisms to support grid maintenance. Acadia Center takes issue with some of these changes, but regardless of policy details, lower incentives and assured payments for grid upkeep mean that net metering caps are no longer justified.

Put a Price on Pollution

Climate pollution imposes significant costs on society, and pricing pollution to reflect these costs will drive changes in market behavior while raising revenue to reinvest in complementary programs and/or rebate to consumers. By charging power plants for pollution permits, the successful RGGI program has helped clean up the air while raising billions of dollars for Massachusetts and other states to reinvest in energy efficiency programs. Building on this success, Massachusetts should continue leading regional partners to set ambitious targets for the program through 2030. Pollution pricing must also be expanded beyond the power sector. This can be achieved through innovative carbon pricing proposals that packed a Statehouse auditorium at a recent hearing. Regional progress on transportation emissions can simultaneously be achieved through the Transportation Climate Initiative, a multi-state collaborative to reduce transportation climate pollution through market-based policy and other means.

Get Off Gasoline

With current sources of electric generation, driving on electricity already reduces pollution, and as the share of renewable generation increases the climate benefits of electric vehicles increase in step. Massachusetts has committed to putting 300,000 EVs on the road by 2025. To achieve this target and accelerate uptake of EVs through 2030, the Commonwealth will need to ensure long term funding for consumer rebates, implement a robust public charging network, and enact discounted “off-peak” electricity rates, which will both reduce strain on the grid and lower fueling costs for EV drivers.

Electrify Heating

Modern, efficient heat pumps—a form of efficient electric heating for residential and commercial buildings—are now capable of heating buildings during the coldest New England winters, providing a substitute for natural gas and oil. Heat pumps are also more efficient than traditional air conditioners, providing year-round savings. Heat pumps are offered within MassSave energy efficiency programs and through state grants, and the benefits of this mature clean technology should be extended to more customers through targeted low-income programs, contractor education, and through inclusion in the Alternative Energy Portfolio Standard. Switching from oil to heat pumps does not require expensive and disruptive construction of natural gas mains, and by drawing ‘fuel’ from an increasingly clean grid, heat pumps produce significant GHG reductions.

Modernize the Grid

Massachusetts needs a modern, flexible grid that can accommodate new consumer-based resources and can rely on clean local technologies over centralized power stations and traditional utility infrastructure. Utility financial incentives set by regulators should be structured to promote innovation, consumer empowerment, and reduction in overall energy system costs. Forward-looking utility proposals for electric vehicle charging infrastructure and energy storage should be encouraged within the context of broader efforts to modernize the grid. Massachusetts’ existing Grid Modernization proceeding has produced inadequate and inconsistent utility proposals. Legislation to promote local energy investment and infrastructure modernization would ensure consistent state-wide planning for a modern grid and level the playing field for clean, local energy resources.

Avoid Unnecessary Pipelines

Putting Massachusetts and the region on the EnergyVision 2030 track would reduce demand for natural gas heating and demand for electricity from natural gas power plants such that no additional pipeline capacity would be needed. By lessening the region’s dangerous overreliance on natural gas, the Commonwealth would reduce pollution and protect consumers from risks of cost overruns, price volatility, and stranded expenditures associated with subsidized natural gas pipelines.

We have the technologies, and we know the policies needed to achieve a sustainable, low-pollution energy system. 2030 will be here before we know it, so let’s get to work.

This post was also published on CommonWealth magazine.

How Can We Replace Traditional Infrastructure with Clean Energy?

In March, Acadia Center released an analysis demonstrating that outdated financial incentives are driving expenditures on expensive and unnecessary utility infrastructure and inhibiting clean energy in the Northeast. The report, Incentives for Change: Why Utilities Continue to Build and How Regulators Can Motivate Them to Modernize, shows that under current rules, utilities can earn more money on infrastructure expenditures like natural gas pipelines and electric transmission lines than on cleaner, local energy resources like energy efficiency, rooftop solar, and highly efficient electric heat pumps. The key takeaway from the analysis is that without changes to the way they are regulated and rewarded, utilities will continue to advocate for infrastructure over local energy resources because their fiduciary duty to shareholders requires it.

Meanwhile, experience throughout the Northeast shows that clean, local energy resources can replace expensive grid infrastructure proposed by utlilities. These local alternatives include energy efficiency and demand response technologies that reduce demand for electricity at specific times, as well as roof-top solar, battery storage, and efficient combined heat and power.

Energy efficiency investments alone have avoided over $400 million in major transmission upgrades in Vermont and New Hampshire.¹ Similarly, the Tiverton/Little Compton pilot project in Rhode Island,² the Brooklyn/Queens Demand Management Project in New York,³ and the Boothbay Smart Grid Reliability Project in Maine⁴ are real world examples of local clean energy resources deferring or avoiding upgrades to the distribution grid. Earlier this year, expert witnesses for the New Jersey Division of Rate Counsel argued that a $75 million, 10-mile transmission line is no longer needed due to increasing adoption of distributed generation.⁵ There are additional examples from California also, where the state’s grid operator (California Independent System Operator, or CAISO) announced in December 2016 that it is putting the Gates-Gregg 230 kV transmission line project on hold, and may cancel the project entirely, due to forecasted increases in the development of solar energy.⁶

These clean energy projects are possible when consumers are given the ability to shape a cleaner, lower cost energy system through their investment decisions and behaviors. To motivate utilities to give consumers these options, utility regulators need to adopt alternative economic structures that balance the need to bring clean energy resources on-line with the need to keep utilities financially healthy.

Acadia Center’s UtilityVision outlines an alternative economic structure to resolve this conflict. UtilityVision recommends that states adopt performance incentives to motivate utilities to advance priorities such as system efficiency, grid enhancements, distributed generation, energy efficiency, and other energy system goals. Regulators can then increase the portion of revenue recovered through those performance incentives while reducing the portion of revenue that is linked to infrastructure projects, helping to shift utility priorities further towards achieving the performance outcomes.

A handful of states are beginning to adopt reforms to focus the utility’s financial incentives on advancing public policy goals for clean energy development. On January 25, 2017, the New York Public Service Commission issued an Order approving a shareholder incentive to reward Con Edison for deploying distributed energy resources (DER) to defer or avoid traditional transmission and distribution projects and deliver net benefits to ratepayers. The PSC approved a shared-savings model that uses a benefit-cost framework to determine the difference between the net present value of DER and the traditional infrastructure solution. The PSC found that this reward structure effectively signals the utility to find the most cost-effective grid solutions for ratepayers and advances additional energy and environmental goals.⁷

The California Public Utilities Commission is taking similar steps to resolve the conflict between bringing more DER online and ensuring they do not harm utilities’ profits. In December 2016, Commissioner Florio issued an Order creating a model to financially incentivize utilities to adopt DER. The Order will incentivize the deployment of cost-effective DER that displaces or defers utility spending on infrastructure by offering the utility a reward equal to 4% of the payment made to the DER customer or vendor.⁸

Whether the New York and California model is the best of many ways to revamp the utility business model to incorporate DER is an open question. One limitation of this model is that it is based on a comparison between DER and the traditional infrastructure projects that would otherwise be built in their place. This model makes it relatively straightforward to compensate the utility based on the cost savings and greater net benefits from the DER solution, but it is not easy to apply to more general deployment of DER. For instance, in Rhode Island,⁹ stakeholders led by the Office of Energy Resources are considering how to reward the utility for proactively and strategically using DER to improve grid conditions and prevent problems before the grid gets to the point of needing infrastructure upgrades. In this case, the NY/CA model can’t be used because there isn’t a traditional infrastructure project to compare to the proposed DER.

States must continue to seek reforms to utility regulations so that clean energy can flourish and both consumers and utilities are treated fairly. Replacing poles, wires, transformers, and substation upgrades with rooftop solar, battery storage, demand response, and energy efficiency can reduce costs and make the grid cleaner—but utilities make a guaranteed rate of return on their million (and billion) dollar grid investments, and any lower cost DER alternatives threaten to undercut those revenues. Until a new system of incentives is created, it will be an uphill battle to achieve states’ goals for a lower cost, cleaner energy grid.

¹Schelgel, Hurley, and Zuckerman, 2014, “Accounting for Big Energy Efficiency in RTO Plans and Forecasts: Keeping the Lights on While Avoiding Major Supply Investment.” http://aceee.org/files/proceedings/2014/data/papers/8-1215.pdf

² Rhode Island Public Utilities Commission Docket No. 4581, “2016 System Reliability Procurement Report”. October 2015. http://www.ripuc.org/eventsactions/docket/4581-NGrid-2016-SRP(10-14-15).pdf

³ New York Public Service Commission Case 14-E-0302, “Petition of Consolidated Edison Company of New York, Inc. for Approval of Brooklyn Queens Demand Management Program.” June 15, 2014.

⁴ Maine Public Utilities Commission Docket No. 2011-238, “Final Report for the Boothbay Sub-Region Smart Grid Reliability Project.” January 19, 2016.

⁵ “Rate Counsel Sees No Need For High Voltage Transmission Line,” NJ Spotlight (Jan 19, 2017) available at: http://www.njspotlight.com/stories/17/01/08/rate-counsel-sees-no-need-for-high-voltage-transmission-line/

⁶ ”Solar Growth Puts Fresno High-Voltage Line on Hold,” Fresno Bee (Dec 20, 2016). Available at: http://www.fresnobee.com/news/local/article122063189.html

⁷ New York Public Service Commission, Case 15-E-0229, Petition of Consolidated Edison Company of New York, Inc. for Implementation of Projects and Programs that Support Reforming the Energy Vision, Order Approving Shareholder Incentives. January 25, 2017. http://documents.dps.ny.gov/public/MatterManagement/CaseMaster.aspx?MatterSeq=47911

⁸ California Public Utilities Commission, Decision 16-12-036, Rulemaking 14-10-003, Order Instituting Rulemaking to Create a Consistent Regulatory Framework for the Guidance, Planning, and Evaluation of Integrated Distributed Energy Resources. December 22, 2016.  http://docs.cpuc.ca.gov/PublishedDocs/Published/G000/M171/K555/171555623.PDF

⁹ More about Rhode Island’s Power Sector Transformation initiative can be found at: http://www.ripuc.org/utilityinfo/electric/PST_home.html

New Era of Natural Gas Exports Raises Concerns for Northeast

President Trump’s “Energy Week” address today is expected to express strong support for U.S. exports of natural gas, currently on the rise. For the Northeast, these exports exacerbate the risks of the region’s already-dangerous overreliance on a fossil fuel that has a history of volatile prices and will not allow the region to reach its commitments to reduce greenhouse gases.

With the arrival two weeks ago in Taiwan of a liquified natural gas (LNG) tanker ship loaded with American natural gas, June has been a month marked with milestones for the nascent export industry in the United States. Preceding this delivery by a few days were the first ever U.S. LNG shipments to Poland and the Netherlands. U.S. Energy Secretary Rick Perry deemed those events significant enough to warrant a statement from his office. These deliveries from a new LNG export facility in Louisiana signify a new era for the natural gas industry in this country, and residents of Northeastern states should be paying attention to these events.

This export plant, the Sabine Pass LNG Terminal, is the first of several such facilities planned to be constructed or converted from import use. When it is fully online, it will be able to liquify nearly 1,300 billion cubic feet (bcf) per year of natural gas. Five other facilities under construction in Hackberry, Louisiana, Freeport, Texas, Corpus Christie, Texas, Elba Island, Georgia, and Lusby, Maryland, will be able to liquify twice that volume. In total, these facilities will be able to liquify and export the equivalent of 15% of current U.S. natural gas consumption. Several additional projects have been approved but are not yet under construction.

Having this large a portion of U.S. natural gas consumption subject to world market prices will likely have an impact on markets at home. Such a rapid surge in demand will likely increase domestic natural gas prices. What does this mean for Northeastern states? They need to carefully scrutinize analyses of any projected benefits from natural gas conversions or new natural gas infrastructure projects in the region. The levels of promised savings may never materialize if rapidly increasing LNG exports drive up natural gas prices. The risk of these projects as proposed is almost always borne by ratepayers—the utilities or other project developers will earn their guaranteed return on investment, paid for eventually by electric or gas ratepayers, but the savings are not guaranteed.

Natural gas already stands as one of the main obstacles to reducing greenhouse gas emissions in the region, and concerns have been raised that subsidized pipelines could facilitate exports from facilities in Eastern Canada that—like Sabine Pass—were first built for imports. Tying domestic prices to volatile international markets layers on more risk.

The region’s policymakers should continue to proceed cautiously before committing their ratepayers to years of payments for large fossil fuel infrastructure projects whose tenuous savings can easily be wiped out by changing market conditions. All proposed projects should be evaluated against the possibility that other available resources can meet the Northeast’s energy needs without growing the region’s overreliance on natural gas. Northeast states need to consider energy efficiency, solar and wind generation, and conversion of fossil fuel heating and transportation systems to electric-powered alternatives. Acadia Center’s EnergyVision 2030 project shows the benefits of embracing energy sources that are indigenous to the Northeast region. With the expansion of U.S. natural gas in world markets, the economic benefits of local clean energy will likely only grow.

One Month In – Advocating for Clean Energy Policies in Connecticut

In this blog post, Acadia Center’s new Policy Advocate in Connecticut, Kerry Schlichting, shares her experience one month into her tenure at the organization.

I recently joined the Hartford team in late May, after eight years in Washington, D.C., working on energy policy issues with a national perspective, and was eager to apply my experience to challenges at both the federal and state level. As a new staff member, my experience over the past month in Connecticut’s exciting and fast-paced environment has shown me the depth and breadth of Acadia Center’s work and how much is possible in the state and regionally. With just over two weeks left in Connecticut’s legislative session, Acadia Center’s Hartford-based team made a final push for policies protecting and promoting the state’s clean energy goals while also fighting a proposal to divert funds from the state’s crucial energy efficiency programs. Meanwhile on the national stage, the decision to leave the Paris Climate Accord was announced, with lasting implications for climate and economy locally, regionally, and globally.

On just my second day, we organized a sign-on letter opposing proposed budget raids of ratepayer funds for energy efficiency and clean energy programs to send to CT officials. Over 70 signees—representing business, community, consumer, low-income, public health, environmental, and clean energy interests—came together against the harmful impacts that would flow from proposed raids on ratepayer-funded energy efficiency programs. The letter opposes two budget proposals, one made by Senate Republicans that would raid ratepayer-funded energy efficiency programs and another made by the Senate and House Democrats that would sweep ratepayer-derived revenues from the Regional Greenhouse Gas Initiative. These programs generate immense economic value for the state, from billions of dollars in electricity and natural gas bill savings to helping low-income families reduce the difficult burden of high energy costs, while also protecting the health and prosperity of our local communities. Budget negotiations are ongoing through the end of this month, and we continue to respond to changing proposals that threaten these important programs.

My second week saw the next major challenge as we learned of the threatened withdrawal of the Trump Administration from the Paris Climate Agreement. By pulling out of the Paris Agreement, the Trump Administration weakens our country’s position as an energy leader. This action also undermines progress being made globally, as well as at the national and state level, to address the growing harms of carbon pollution. The announcement by the White House underscores how much more important state leadership will be in advancing a clean energy future. The day of the White House’s announcement, representing Acadia Center, I spoke at U.S. Senator Richard Blumenthal’s press conference to decry this shortsighted decision that risks our country’s global climate leadership and hurts our economic interests around clean energy.

Yet, this moment also offers states and regions an opportunity to aim high and lead the transition to a clean energy future. During my third week, Acadia Center joined other advocates to thank Governor Malloy for committing Connecticut to the Paris Agreement’s climate pollution goals and to pursue policies that will help achieve those goals, as well as for being a leader in the new U.S Climate Alliance, a bipartisan commitment by governors throughout the country to commit to reducing climate pollution. A recent analysis by Acadia Center, EnergyVision 2030, shows that Northeast states can be on the path to a low-carbon future by the year 2030 if they commit to and embrace clean energy technologies. With further strategic action and expanding adoption of modern, market-ready technologies, Northeast states can reduce climate pollution emissions 45% by 2030: a target needed to put the region on the path to meet scientifically directed emission reductions of 80% by 2050.

With a special legislative session called to address the state budget, Acadia Center’s Connecticut team continues to advance policies that benefit consumers and the environment. To reduce the state’s greenhouse gas emissions as well as to accelerate the growth of our clean energy economy, creating new jobs and state revenue, the state needs policies that support our award-winning energy efficiency programs. Additionally, we need policies that make us competitive with our neighboring states in pursing clean energy resources. This includes strengthening the state’s commitment to renewable energy procurement and encouraging electrification of the transportation sector and increased deployment of electric vehicles.

Both federal and state policies can affect the state’s clean energy economy, and it is from that perspective that I look forward to the many opportunities and challenges that lie ahead. My experiences this past month have made me look forward even more to being part of a team advancing the clean energy future through fact-based, solutions-oriented advocacy and collaboration.

Out with the Old, In with the New: The New York DSIPs and What They Mean for the Modernized Energy Grid

The traditional system we currently use for serving the needs of energy users is quickly going out of style. The energy grid is still relying on a system that was invented almost 100 years ago (hello, the 1930s called and they want their transmission and distribution lines back!). The old classic version of the grid has served an important purpose for getting energy to consumers reliably and safely, but today’s energy fashion is more demanding. While the old grid excelled at sending energy one-way from generators to consumers, the new energy grid needs to be able to accessorize by incorporating distributed energy resources (“DER”) such as solar and wind energy, active load management, and energy efficiency programs. DER will enable the development of a grid that is increasingly resilient, flexible, and adaptable to the needs of all energy consumers. In New York, a process is under way to try to bring these innovative new options online.

A modernized energy grid doesn’t happen overnight. States across the Northeastern U.S. are trying to figure out how to facilitate the transition from a traditional energy grid system to a more modernized grid. The Distributed System Implementation Plan (“DSIP”) process initiated by the New York Public Service Commission (“PSC” or “Commission”) may be one model for helping utilities make a smooth and efficient transition.

The Commission has required all electric service utilities to create and maintain comprehensive Plans detailing the processes by which they will transform the traditional one-way electric grid into a more dynamic and integrated grid that can manage two-way flows, is more resilient, and produces fewer carbon emissions. The DSIPs are a comprehensive source of information for the public and serve to consolidate several important pieces of New York’s Reforming the Energy Vision (“REV”) strategy.  They are also intended to be a source of data and information to assist third-party DER providers with planning and investment. The new energy grid will require joint decision-making and planning between utilities, third-party providers, consumers, regulatory bodies, and other interested parties. This means that transparency and visibility are paramount to achieving a modernized grid.

The DSIP process is novel in that it has required utilities to make their internal decision-making more transparent and begin making joint planning decisions. This type of practice has potential for creating a collaborative environment that produces a constructive transition. The DSIP process has done well in New York to:

• Provide insight into key decision-making processes of utilities, especially regarding the use of DER in addressing system needs
• Provide a baseline for current data-gathering capabilities as well as capabilities regarding load forecasting and accommodating DER
• Create a space for joint decision-making and planning between utilities
• Involve stakeholders on various key issues

While the DSIPs that the utilities produced are important and useful, in many ways they fall short of what was expected of them. Some improvements that should be made to the DSIPs include:

• Valuable data – for example regarding hosting capacity, DER forecasting, and DER impacts on the grid – has not yet been included in the DSIPs and the utilities have not in many cases provided sufficient plans for providing the data
• Many of the plans that have been provided are a good start, but are still not sufficiently detailed or specific enough to be useful for the public and third-parties, for example, almost no timelines for implementation are provided
• There is a general lack of description regarding how various processes, such as forecasting and making decisions about using DER for system needs, will be re-assessed and evolved as technologies and data-gathering capabilities improve
• Stakeholder process has been utility-centric and lacked necessary oversight by the state energy regulatory body to ensure fair and meaningful engagement by all interested parties, including at the scoping stage of the process.

In sum, the DSIP process provides one model for states to facilitate the transition to the modernized energy grid, but they should look for opportunities to build on New York’s model. These first DSIPs were filed in 2016. Updated DSIPs will be filed in June 2018, giving utilities another opportunity to seek and receive the level of detailed data and planning that is needed to inform decision-making by other stakeholders and in other states.

Summaries of Important DSIP Focus Areas

Some of the most relevant aspects of the DSIPs are briefly described and assessed below. For more information about the New York DSIPs, read Acadia Center’s full Summary Analysis or the DSIP documents available in the proceedings.

Forecasting is the process by which utilities make predictions about energy load on the grid. Utilities also use forecasting to predict penetration of different DER technologies on the grid. These predictions have varied implications for what the grid needs to ensure reliable and safe power to all customers. The DSIPs provide a first glimpse into the calculations that utilities use and the impacts that DER are expected to have on forecasting. However, the DSIPs also reveal that utilities need to improve their forecasting processes and especially that they need to continue refining their methods for predicting DER penetration as well as DER impacts on the grid.

Utilities’ plans for accommodating and enabling DER on the energy grid are addressed in the DSIPs. As DER increase, their impacts on the grid increase. Distributed generation (such as wind and solar) for example, will increasingly be able to inject energy into the grid from various locations. The current energy grid can only manage a limited amount of distributed generation since it is currently only configured to manage energy flowing from a select few large generators into the homes and businesses of energy users. To optimize development of DER, third-party developers need to have detailed information about where DER can be accommodated and where DER might be most beneficial. The DSIPs provide important information about when and how this information will be available. They also describe their plans for streamlining the interconnection processes for distributed generators. These efforts will go a long way to reduce barriers for integrating DER with the grid, but the DSIPs also show a lack of preparation and planning for actively encouraging more DER. Increasing DER will be invaluable for enhancing resiliency and flexibility as well as decreasing carbon emissions.

Non-wires alternatives are DER that are procured by utilities to address the needs of the energy grid. Traditionally, utilities simply invest in more traditional infrastructure when the need arises. These types of upgrades are costly for the utility and thus for ratepayers. Alternatively, DER can be more cost-effective and can be used to avoid or postpone traditional infrastructure investments. The DSIPs provide clear analysis of the types of projects that they consider suitable for using non-wires alternatives. The utilities have defined a narrow range of projects that are suitable for these alternatives, and limiting the range of possible projects in this way means that there will be missed opportunities to address a wider range of system needs.

Advanced Metering Infrastructure (“AMI”) is important for advancing grid modernization efforts. It will enable utilities to vastly improve data-gathering capabilities and increase their ability to control energy load on the system. In the past, meters were only needed to measure energy used within a time frame, usually one month. With AMI, meters will be able to report hourly or even near to real-time data about energy use. This information will be invaluable for load forecasting and for better understanding DER impacts on the grid. Utilities will also be able to share data with customers – empowering them to better manage their own energy use. AMI also enables strategies to optimize the grid, like demand response, time-varying rates, and active load management. These strategies are based on increasing energy consumption during off-peak periods and decreasing it during peak hours. The DSIPs show that all utilities are planning to implement AMI over the next several years. However, the utilities are not consistent in how they present their plans for AMI roll-out. Some utilities provide excellent summaries or even include their full plans in the appendix of their DSIP. Other utilities provide almost no summary and simply refer to other proceedings.

Electric Vehicles will be key for achieving New York’s carbon emissions reduction goals. New York has made clear goals for increasing the number of electric vehicles on the road. This will require increased infrastructure, such as charging stations. Utilities are expected to be proactive about planning for and enabling the electric vehicle market. The DSIPs show that utilities are implementing pilot projects, mostly aimed at better understanding how these vehicles are used and charged, which will in turn help utilities better understand their impact on the grid. The utilities have also jointly produced a plan for creating an “EV Readiness Framework” which will guide their actions for preparing for electric vehicles. The DSIPs lack any concrete plans for going beyond pilot projects to implementing any wide-scale infrastructure investments for electric vehicles.

The DSIPs include investment plans that indicate how and where the utilities will spend money in the next several years to begin the transition to a modernized energy grid. Generally, utilities are investing in new systems and capabilities that will enhance data-gathering, load management, and DER integration, which will in turn increase grid reliability and efficiency. Utilities also need to invest in improving customer engagement by providing understandable billing and secure data exchange platforms.

EnergyVision 2030: What the numbers tell us about how to achieve a clean energy system

What impact will current efforts to expand clean energy markets in the Northeast have over time? Where can we do more to advance these markets? What specific increases in clean energy are needed to adequately reduce carbon pollution and meet targets for deep reductions in climate pollution? What does the data show about claims that more natural gas pipeline capacity is needed?

A few years ago, Acadia Center released a framework entitled EnergyVision, which shows that a clean energy future can be achieved in the Northeast by drawing on the benefits of using clean energy to heat our homes, transport us, and generate clean power. Many studies have shown that a clean energy future will improve public health, increase consumer choice, and spur economic growth by keeping consumer energy dollars in the region. States have started to move towards the future put forward in our EnergyVision framework supporting key clean energy technologies like rooftop solar, electric vehicles, and wind, and increasing investments in energy efficiency and upgrades to the grid.

But other voices have tried to slow or even block progress toward a clean energy future. Claims that the region needs more natural gas capacity continue to be made, most recently by the U.S. Chamber of Commerce, and states are not uniformly moving forward in all areas of clean energy development. Efforts to reform the power grid vary from state to state, and the data needed to identify what our energy system could look like in a few years and what contribution clean energy can make has not been gathered.

To fill these important information gaps and help answer these questions, Acadia Center undertook a comprehensive analysis of the Northeast’s energy system. Using a data based approach, we looked at where current state and regional efforts to expand clean energy stand and what emissions reductions and growth in markets for clean energy technologies those efforts will produce. We then examined what expansions in clean energy are needed to attain state goals to reduce climate pollution. The result is EnergyVision 2030, an analysis of the energy system that provides a clear pathway towards a clean energy future that empowers consumers in the Northeast.

EnergyVision 2030 demonstrates that the Northeast region can be on track to a clean energy system using technologies that are available now. In the last several years, clean technologies have advanced rapidly, and they offer states an unprecedented opportunity to transform the way energy is produced and used. For example:

• The nation’s first offshore wind project has recently come online in Rhode Island
• Electric heat pumps that work in the cold climates of the Northeast are now readily available
• There has been a dramatic increase in the number of electric vehicle options on the market
• Efforts to modernize our electric grid are underway in several states
• Onshore wind is now the lowest-cost electric resource in some reports
• Massachusetts and Rhode Island have redefined the levels of energy efficiency that can be consistently achieved.

And the list goes on.

To determine what growth in key clean energy technologies is needed, Acadia Center used a well-respected model¹ to analyze the energy system as it might look in the year 2030 under different conditions. First, EnergyVision 2030 shows what the energy system would look like under current trends, and then if policies were put in place to expand markets for newer technologies more quickly—at rates leading states are already achieving.

With this approach, EnergyVision 2030 finds that the first generation of climate and energy policies has successfully built a foundation for progress. Energy efficiency, renewable portfolio standards, and the Regional Greenhouse Gas Initiative (RGGI) have all contributed to declining emissions since the early 2000s.

To be on track to meet state targets for emissions reductions the region needs to achieve a 45% emissions reduction by 2030.² We used this 45% reduction as a target to develop our “Primary Scenario,” which features individual targets for clean energy technologies that together would reduce emissions 45%. We also modeled what it would take to get to a 50% reduction, in our “Accelerated Scenario.”

Policy changes drive both of these scenarios, which would see lagging states catch up to leaders like Massachusetts in energy efficiency and other areas, expand and extend renewable portfolio standards as New York has recently done, and grow markets for newer clean energy technologies like electric vehicles and cold climate heat pumps. In other words, if all states did what leading states are doing in each area—if they expanded building heat pumps like Maine, electric vehicles and solar like Vermont, energy efficiency like Massachusetts and Rhode Island, and utility reform like New York—the Northeast would achieve its emissions goals.

The table below shows how much selected clean energy technologies will expand by 2030 under current trends and in the Primary and Accelerated Scenarios.

To foster these clean energy markets, states can redouble their efforts and create a second generation of clean energy policies building on their initial success. The following policy recommendations will help make this possible. A more complete list is available at 2030.acadiacenter.org.

Clean Energy:

• Extend and increase rooftop and community solar
• Expand Renewable Portfolio Standards

Electric Vehicles:

• Strengthen market for electric vehicles through consumer incentives and better electric rate design

Lower-Cost Heating:

• Increase the market for heat pumps through incentives and education
• End policies that promote natural gas pipeline expansion

Electric Grid:

• Modernize and optimize the energy grid
• Reform utility incentives and regulation to better align them with state policy goals

EnergyVision 2030 combines detailed data analysis and policy recommendations to provide a tool for policymakers, advocates, and other stakeholders to demonstrate both why state-level policy changes are needed and what we can do to make those changes happen, putting us on the path to a clean energy system. As with the first generation of clean energy policies, results can take significant time to accumulate, so action is needed now to ensure the region is ready to meet 2030 goals. EnergyVision 2030 gives us the targets and tools we need to begin working toward those policy changes today.

EnergyVision 2030 is available as an interactive website and in printable formats at 2030.acadiacenter.org.

¹ Long-range Energy Alternatives Planning (LEAP) system from Stockholm Environment Institute
² 45% emissions reduction from 1990 levels

EnergyVision 2030 FAQ

Frequently Asked Questions about EnergyVision 2030

What is EnergyVision 2030?

EnergyVision 2030 is a data-based analysis of options to expand clean energy resources in New York and the six New England states. It examines where current efforts can lead, how consumer adoption and market penetration rates can grow, and what increases in clean energy efforts are needed to attain emissions goals.

EnergyVision 2030 shows that advances in technologies that are now readily available, from heat pumps to electric cars to solar panels, create the means for states to advance a consumer-friendly energy system by increasing adoption in four key areas—grid modernization, electric generation, buildings, and transportation.

Why did Acadia Center prepare it?

Acadia Center prepared EnergyVision 2030 to provide a pathway for policymakers and others in the Northeast to show how market-ready clean energy technologies can modernize the energy systems, give consumers better options to control energy costs, and advance economic growth, while dramatically reducing climate pollution.

What are the key takeaways from the study?

States can achieve a modern clean energy system using available technologies, achieving a 45% emissions reduction by 2030, if policies are enacted now to foster and expand adoption of clean energy resources.

How does EnergyVision 2030 present the data?

EnergyVision 2030 uses the results from Acadia Center’s modeling to describe how much states should increase each clean energy technologies to shift the energy system. EnergyVision 2030 then offers detailed policy recommendations with policy options that states can use to achieve these results.

How can the information be used?

Information presented in EnergyVision 2030 shows the incremental gains needed in key clean energy areas for the region to achieve reductions in climate pollution and build robust clean energy economies. Advocates, stakeholders, and policymakers can use the information presented in EnergyVision 2030 to focus on where to expand current policies that will have the most impact or oppose policies that will move the region off this path. In many cases, states already have the policy tools they need to increase adoption of these technologies; they must simply improve and accelerate existing mechanisms to achieve the goals set in EnergyVision 2030.

What was the methodology?

EnergyVision 2030 uses the Long-range Energy Alternatives Planning System (LEAP) model from Stockholm Environment Institute to project a detailed forecast of energy consumption in all sectors and an emissions trajectory. Acadia Center incorporated the U.S. Energy Information Administration (EIA) Annual Energy Outlook (AEO) forecast, the ISO New England and New York ISO electric ’s Capacity, Energy, Loads, and Transmission (CELT) forecasts, and other data sources as appropriate. The LEAP model contains an electric dispatch model to simulate the electric system, determine the generation mix and ensure that there are sufficient resources to satisfy peak demand for power in summer and winter.

Why a 45% emissions reduction?

The scientific consensus is that to avoid the worst impacts of global warming, the U.S. needs to reduce emissions by 80% from 1990 levels by 2050. States must reduce emissions 45% by 2030 to be on a trajectory to meet that goal, i.e. if a straight line were drawn from the present emission levels to the required 2050 levels, the region would hit a 45% reduction in 2030.

Why 2030?

Most states in the region have committed to reduce emissions 80% by the year 2050 in some form, and several have goals for emissions reductions in the interim period. Building markets takes time and has cumulative impacts, so acting now is critical. 2030 is closer than it seems but offers states sufficient time to reach the clean energy levels outlined in EnergyVision 2030 if they take action in the next two to three years.

What does EnergyVision 2030 tell us about the economy?

In developing EnergyVision 2030, Acadia Center did not model how increases in clean energy technologies and processes will impact local economies. Numerous studies, including some by Acadia Center, show the economic benefits of shifting from paying for imported fossil fuels to investing in local clean energy improvements like those presented in EnergyVision 2030. These benefits include stronger local economies, local job growth, and significant consumer savings.

Does EnergyVision 2030 address calls for more natural gas as a “bridge fuel”?

EnergyVision 2030 analysis shows that the current and planned pipeline capacity in New England will be sufficient to meet the region’s needs as expanding clean generation and energy efficiency reduce demand. Adding new pipeline capacity to the region would cost ratepayers billions of dollars and would lock the region into higher-emission gas generation for decades.

RGGI Emissions Fell Again in 2016

Declining Emissions Signal Need for Reform
In advance of expected actions by the Trump administration to remove or weaken federal climate protections, the Northeast’s pioneering climate program continues to see reductions in carbon pollution, reflected by today’s three-year low auction clearing price. Member states must now strengthen the Regional Greenhouse Gas Initiative to preserve the program’s effectiveness and signal commitment to continuing bi-partisan climate leadership.

Introduction
CO₂ emissions from power plants have been steadily declining across the nine states of the Regional Greenhouse Gas Initiative (RGGI) for the last decade, and in 2016 fell 8.4 percent below the emissions cap. Since the program began in 2009, the decarbonization of the electric sector has been a major victory for the environment, health and economy of the region. Continued investments in clean energy and complementary climate policies in the participating states will help to achieve greater emissions reductions, but the RGGI states must do more to build on their first-in-the-nation program. Through the current Program Review,¹ the participating states should strengthen RGGI to align the program with the current emissions trends and future climate goals.

Emissions
RGGI CO₂ emissions fell to 79.2 million tons in 2016, a 4.7 percent decrease from 2015, marking the sixth consecutive year of power-sector emissions declines. Since 2008, the year before RGGI began, emissions are down 40.4 percent.

While several factors including growth in renewable energy, efficiency improvements, and fuel-switching have contributed to regional emissions reductions, a large share of these reductions has been attributed to the RGGI program.² By establishing a price on carbon emissions and generating revenue for clean energy investments, RGGI has accelerated the transition to a cleaner electric sector. Increases in energy efficiency and growth in renewable energy output will enable the RGGI states to continue to achieve ambitious emissions reductions.

Figure 1: RGGI Emissions Continue to Fall

Market Dynamics

Auction Results

RGGI’s success has resulted in lower-than-expected emissions, which, in turn, have resulted in lower-than-projected compliance costs. With annual emissions falling below the RGGI cap in each of the program’s first eight years, there is an excess of allowances in circulation, leading to low allowance prices. Following ten consecutive auctions in which the auction clearing price was determined by the price floor—the lowest price at which allowances will be sold at a given auction—the RGGI states decided to reduce the cap by 45 percent. That decision had immediate impacts on the RGGI market, driving increased demand for allowances. Increased RGGI allowance prices proved to be temporary, however, as continued emissions reductions have outpaced the decline of the recently adjusted cap, creating an allowance oversupply. These conditions have resulted in falling allowance prices, with Auction 35 clearing at a three-year low of $3.00, 15 percent below the previous auction and 43 percent below the clearing price from one year ago.

Figure 2: Allowance Oversupply Leads to Low Auction Prices

Allowance Oversupply
RGGI, like nearly all emissions trading programs, has struggled with an oversupplied market. Emissions reductions have been achieved more quickly and cost effectively than projected, creating a large gulf between cap levels and actual emissions, as shown in Figure 1. This has led to a market flooded with low-priced allowances, diminishing the program’s impact and undermining the environmental integrity of the cap. Recognizing these problems, the RGGI states agreed during the previous Program Review to gradually eliminate allowances banked prior to 2014 by adjusting 2014-2020 cap levels downward.³

This innovative strategy has proved effective, but a new surplus of allowances has been accumulated since 2014, and we expect it to increase through 2020 as trends that have contributed to the decline in emissions (growth in renewable energy, efficiency improvements, and fuel-switching) continue to bring emissions down.

In the first three years under the new cap, emissions have fallen below cap levels by 4.7 million tons (2014), 5.6 million tons (2015) and 7.3 million tons (2016).  Over these three years all available allowances have been purchased, creating a surplus of 17.6 million tons. Additional allowances purchased from the Cost Containment Reserve (CCR) have added to the surplus, introducing 15 million additional allowances without corresponding emissions to balance the market. This brings the new surplus to 32.6 million tons, as shown in Figure 3. If emissions follow projections under recent ICF modeling of a post-2020 2.5% cap decline,⁴ the surplus will grow to 52.8 million tons through 2020. If CCR allowances are purchased, that figure could grow by up to 40 million tons.

Figure 3: Allowance Surplus, 2014-2020

Need for Market Reform
The emissions reductions achieved by the RGGI states have been a tremendous success, but program reforms will be necessary to ensure that this success continues. As detailed in Part II of our RGGI Status Report: Achieving Climate Commitments,⁵ the RGGI states should make the following changes to strengthen the program:

• Establish a 2021-2030 cap that declines annually by 5% of the 2020 baseline;
• Commit to an adjustment for banked allowances accumulated from 2014-2020;
• Eliminate the CCR or increase CCR price triggers to ensure that CCR allowances are only purchased during periods of exceptionally high demand;
• Establish an Emissions Containment Reserve⁶ to capitalize on emissions reductions and to protect against future allowance oversupply; and
• Increase the auction reserve price to at least $4/ton to maintain a meaningful price on carbon emissions.

¹For more information on the current RGGI Program Review, see: http://rggi.org/design/2016-program-review

²Why Have Greenhouse Emissions in RGGI States Declined? An Econometric Attribution to Economic, Energy Market, and Policy Factors, Brian Murray and Peter Maniloff, Duke Nicholas Institute, August 2015. Available at: https://nicholasinstitute.duke.edu/environment/publications/why-have-greenhouse-emissions-rggi-states-declined-econometric-attribution-economic

³This adjustment was conducted in two steps; one adjustment to account for allowances banked during the first control period (2009-2011) and a second adjustment for the second control period (2012-2014). For more information, see: https://www.rggi.org/docs/SCPIABA.pdf

⁴IPM modeling conducted by ICF for RGGI, Inc. available here: http://rggi.org/design/2016-program-review/rggi-meetings

⁵RGGI Status Report Part II: Achieving Climate Commitments, Acadia Center, August 2016. Available at: http://acadiacenter.org/wp-content/uploads/2016/08/Acadia-Center_RGGI-Report-2016_Part-II.pdf

⁶The Emissions Containment Reserve (ECR) was first proposed by the RGGI states during the November 21^st, 2016 Stakeholder Webinar: http://rggi.org/docs/ProgramReview/2016/11-21-16/2016_Nov_21_ECR_Presentation.pdf. For more information on how the ECR might function, see: http://www.rff.org/events/event/2017-02/emissions-containment-reserve-rggi-how-might-it-work