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

An Ode to Docket 4600

As told through a series of haiku:

I drove to Warwick

In a blue electric car

The chargers were full

 

Those in the know, know

Rhode Island utilities

Governed in Warwick

 

Fifty-four miles left

Should be plenty to get home

I am risk averse

 

Endure long meeting

With many energy geeks

Time-based rates for cars

 

Leafs swap spots at lunch

Brain can’t take much more rate talk

Level 2 charging

 

Start up in silence

I pause a moment, and breathe

Rate case up ahead

 

Can New England Steal California’s Storage Thunder?

Clean energy rivals New England and California are racing toward a new prize: leadership on energy storage. Both coasts have been leaders on energy efficiency, renewables deployment, and electric vehicles (EVs), and storage is the logical next step to improve system efficiency and back up intermittent wind and solar as they are increasingly adopted.

The benefits of storage are clear and increasingly well-recognized. Storage deployed at scale will serve the same purpose as warehouses and refrigerators in our food system by rationalizing an energy grid that is massively overbuilt to match supply and demand every second of every day. This logic is backed up by analysis from the Massachusetts’ Department of Energy Resources (DOER) showing that the top 10% of peak demand hours drive 40% of energy costs, and storing energy to meet these peaks would provide $3 billion in energy system benefits each year. According to a recent study from UC Berkeley, storage can also produce significant public health benefits by avoiding reliance on dirty ‘peaking’ power plants that are often located in marginalized urban areas.

Massachusetts Leadership
In the race for energy storage in the Northeast, Massachusetts is taking an early lead. Under energy diversity legislation passed this summer, DOER can act to meet the storage target it recommended—600MW by 2025—which proportionately would be far larger than California’s mandate. The legislation also cleared an important practical hurdle by authorizing utilities to own storage, and, so long as third-party owners are protected to ensure competition, political support for energy storage should remain strong.

An overall mandate would build on efforts already underway in the Commonwealth. DOER is offering $10 million for demonstration projects through the Energy Storage Initiative. The Massachusetts Clean Energy Center has invested $9 million in storage-related initiatives and is serving as a match-maker for storage developers and potential customers. Under the new solar incentive mechanism being developed, bonus incentives for storage are being considered in the range of two to seven ¢/kWh, based on storage duration (kWh) and power (kW) relative to solar capacity. Within energy efficiency plans that invest $700 million per year, utilities are piloting demand management programs integrating thermal and battery storage, and attention to demand resources is likely to increase as peak demand flatlines, overall consumption declines, and the focus on improving system efficiency at all levels grows.

New Tool in the Energy Toolbox
Across the Northeast energy storage is gaining favor as an alternative to more expensive and often difficult-to-site transmission and distribution (T&D) system upgrades. In Boothbay Harbor, Maine, cheap energy available at night is stored in ice that is then used to cool buildings on hot summer afternoons. In conjunction with targeted efficiency, solar, and demand response, storage is being deployed instead of an $18 million transmission upgrade.  At a larger scale, in New York ConEd is investing $200 million in storage, targeted energy efficiency, distributed generation and demand-response in lieu of a $1.2 billion substation upgrade. The potential for eye-popping T&D savings (in addition to other energy system benefits) contributed to a proposed rule from the Federal Energy Regulatory Commission that would require all Regional Transmission Operators to remove barriers impeding storage from providing energy, capacity, and ancillary services.  This clear directive will help drive the grid operator ISO-NE to take necessary steps to enable storage, including compensating storage for rapid response capabilities, opening markets to smaller storage facilities, and allowing storage to provide multiple services simultaneously. Large scale energy storage could additionally help replace retiring nuclear and coal capacity in Southeast Massachusetts/Rhode Island (potentially pairing directly with offshore wind in a coal-to-clean energy conversion at the soon-closing Brayton Point plant) and address expected load growth in the greater Boston area.

Complementing top-down reform, several states are pursuing grid modernization processes in order to capitalize on declining costs and technology advances for energy storage and other distributed energy resources.  New York’s Reforming the Energy Vision has received the most attention, but REV does not stand alone.  Massachusetts utilities filed Grid Modernization plans including energy storage projects and pilots in August of 2015, and while the plans need improvement to ensure unified progress toward truly modern grids, the process has begun.  Meanwhile, Rhode Island is pursuing a truly bottom-up approach by using distributed resources to meet energy system needs, and grid modernization proceedings were recently initiated in New Hampshire.

Resiliency and Preparedness
Because of its resiliency and preparedness, storage is increasingly recognized for its security advantages. The vulnerability of the grid to cyber-attacks was made clear in Ukraine, and physical attacks on critical grid infrastructure have recently increased.  Weather-related outages will also increase with climate change-fueled extreme weather. As we grow ever more dependent on electrical devices, the importance of grid security expands accordingly.

Storage alone can provide backup power, and pairing storage distributed generation offers steady supply when the grid is down.  In recognition of these benefits, Massachusetts put $40 million into the Community Energy Resiliency Program to support solar plus storage projects at schools that double as emergency shelters, hospitals, and other critical facilities.  Following storms that caused major power outages, Connecticut established a microgrid grant and loan program that is currently deploying $30 million in funding.

And the Winner Is…
California receives the most attention for energy storage, and with real progress toward a bold procurement mandate the attention is deserved.  However, unique conditions in the Northeast—aggressive renewable energy targets, relatively high energy prices, and difficulty siting traditional infrastructure—make the region ripe for storage.

At this stage the race for energy storage leadership is just getting started, and the ultimate winners will be customers and the climate, as storage deployment ramps up, costs decline, and our entire energy system becomes more efficient and cleaner.

 

This blog post also appeared as a guest post on UtilityDive.com. See it here.

New York Proposes New Rates for Distributed Energy

This blog was co-authored with Miles Farmer, Clean Energy Attorney at Natural Resources Defense Council.

The New York Department of Public Service has proposed to change the way distributed energy resources (like community solar and small wind projects) are rewarded for the benefits that they provide to the electricity system. The Department released a landmark report in its “Value of Distributed Energy Resources” proceeding, recommending a methodology by which these resources can receive credits that align more closely with their true value to the electricity system. Acadia Center and NRDC have been involved in the collaborative process around the report’s creation, and here we examine what these proposed reforms hope to accomplish, give initial feedback, and look toward next steps.

This report marks the latest step in the state’s ambitious Reforming the Energy Vision (“REV”) initiative. REV aims to create a more consumer-centric, efficient, resilient, and cleaner energy system. The Department’s report focuses on reforming an electricity rate structure known as “net energy metering,” where credit for clean energy generation is set equal to the retail rate. Reforms to net energy metering have been a controversial topic across the country for the last several years. Some states have proposed successful new approaches. California, for example, is phasing in time-of-use rates for most customers that recognize when electricity generation is most valuable.

From the outset, New York’s Value of Distributed Energy Resources proceeding has sought to better align credits for community solar and other distributed generation resources with their value to the system. New York’s current net energy metering policies are simple, easy for customers to understand, and have proved to be effective incentives for investments in clean energy, so revising methods for net metering presents risks. A new ‘value-based’ crediting system is more complex by its very nature. But if done correctly, aligning credits more closely with benefits created by distributed generation has the potential to incent more efficient investments in the electric system. Acadia Center discusses value-based crediting here.

The staff report is a good start to a long-term iterative process. Throughout this process, Acadia Center and NRDC will be closely analyzing the report and offering recommendations for improvement. On first review, Acadia Center and NRDC find that the report recommends many approaches to important issues that are worthy of support:

• It protects existing projects from unexpected changes and allows mass market development of small rooftop projects to continue under traditional net energy metering, providing continuity.
• It provides credit to projects for their environmental value, with a floor at the social cost of carbon, pursuant to the New York Public Service Commission’s previous Benefit-Cost Framework Order.
• It provides for a ‘market transition credit’ that incorporates some values that cannot be accurately calculated at this time, recognizing limits in current techniques to estimate the value of benefits provided by distributed energy resources.
• It adopts monetary crediting, where each kilowatt hour generated is translated into a monetary amount based on the value it provides. This approach is more flexible and allows for smarter pricing than traditional volumetric crediting (which tracks only the amount of electricity generated and cannot accommodate details like the time at which the electricity was generated).

When creating a “value-based” crediting system like the Department’s proposal, the most difficult task is to develop a method for calculating the value of each of the benefits that distributed energy resources can provide. These benefits include energy, capacity (the availability of the system to provide electricity at times of peak demand), transmission and distribution value (because distributed energy resources like rooftop solar reduce the need for infrastructure to send electricity to customers), environmental and public health value, and other values that are more difficult to quantify. In practice, there are many ways to define and calculate the value of each of these components. However, the precise methods chosen have significant consequences for what investments will be made and how resources will be operated. Certain methods offer different tradeoffs. For example, using dynamic credit values may allow a resource to respond in real time to system needs, but they set less predictable values that might prevent investors from putting capital into beneficial resources.

The staff report effectively balances these goals in a manner that should facilitate continued growth of the solar industry in New York. It provides a good framework for further refinement, and we look forward to working with the Department and other parties to evaluate it further and carry out additional improvements.

The report also reflects the inclusive approach taken by the New York Department of Public Service. The Department facilitated a collaborative process to allow utilities, solar developers, customer representatives, environmental groups, and others to work together and provide input on a variety of issues including how the values of these different components should be calculated. Department staff has listened carefully to the concerns of all parties, including a range of detailed suggestions by Acadia Center and NRDC.

New York’s approach to valuing distributed energy resources is new and innovative, and regulators in states across the country will be examining it closely. We look forward to continuing to work collaboratively on these important issues as New York refines its proposal and builds upon it in future years.

Finding New Frontiers: Clean Energy on Aquidneck Island

This summer, an Acadia Center blog post highlighted the clean energy moment happening in Connecticut. Policymakers in that state are currently deciding what its energy future will look like for years to come, and stakeholders must take notice—but Connecticut isn’t the only state having a clean energy moment. In fact, you might say the whole region, country, even world is having a clean energy moment. At Acadia Center, we strive to capture a vision that will help more communities, of whatever size, embrace these moments, and recently in Rhode Island we found ourselves in a room with more than one hundred locals excited by that vision.

At Acadia Center’s latest forum, community members came together from Aquidneck Island’s three towns to celebrate achievements, explore possibilities, and identify specific opportunities for using clean energy locally. The audience heard from two state representatives, Lauren Carson and Deborah Ruggiero, and two state commissioners, Marion Gold of the Public Utilities Commission and Carol Grant of the Office of Energy Resources. Attendees had the opportunity to engage with these four women as well as with panelists from National Grid, People’s Power & Light, the City of West Warwick, and the Rhode Island Infrastructure Bank. Acadia Center’s Rhode Island Director, Abigail Anthony, also presented the basic principles of EnergyVision, with particular emphasis on Community|EnergyVision.

The event was called “Solar and Beyond” and it highlighted the community’s solar potential by featuring sponsors from solar companies, who were available to answer questions before and after the panels (a big thank you to  Newport Solar, RGS, and Direct Energy Solar). Other topics that drew interest included Block Island’s new offshore wind farm, transportation’s role in the clean energy future, energy efficiency, and the possibility of going 100% renewable.

Acadia Center was privileged to have two excellent partners in this venture, the Aquidneck Island Planning Commission (AIPC) and Emerald Cities Collaborative. We are excited to continue working with these organizations to harness the momentum built at the forum and support effective policies to make the community’s vision a reality. Working with AIPC and Emerald Cities, Acadia Center is developing a forward-looking policy agenda to remove barriers to community energy and build a coalition of support from municipal leaders on Aquidneck Island. Acadia Center is promoting several key actions that Aquidneck Island leaders can take to advance community energy, including:

• Expand the use of local energy resources to avoid the construction of infrastructure projects and reduce costs. In December, the state’s Energy Efficiency & Resource Management Council will propose reforms to utility planning that are designed to proactively deploy energy efficiency and distributed energy resources, like solar, in “highly-utilized” areas of the electric grid to ensure energy reliability for all.
• Adopt Property Assessed Clean Energy (PACE) programs to provide long-term clean energy financing for businesses and residents. Aquidneck Island towns should authorize Commercial PACE, which offers financing for clean energy projects on commercial, industrial, agricultural, non-profit, and multifamily properties. Municipal leaders should also advocate for strong consumer protection elements in the roll-out of Residential PACE in Rhode Island.
• Expand access to community solar. Rhode Island laws passed in 2016 create more opportunities for residential and qualified low- and moderate-income housing developments to benefit from solar projects. However, the Community Remote Net Metering program is currently capped at 30 MW. Aquidneck Island leaders can support advocacy efforts to remove this cap and promote community solar projects.

 

Over the coming months, Acadia Center will work with AIPC and Emerald Cities to build a strong coalition of support for these policies and others. Together we hope to lay a foundation for community energy in Rhode Island that will reduce greenhouse gas emissions and better serve consumers. By seizing this clean energy moment, Aquidneck Island will secure an energy future that is reliable, cost effective, and community driven.

In a rapidly changing world, what do we mean by RGGI leadership?

Never before has the urgency of climate action been so apparent, demonstrated by record high temperatures and unprecedented drought. Yet, as the impacts of climate change become more painfully obvious, jurisdictions from small towns to the world’s largest countries are working towards solutions. Since the Regional Greenhouse Gas Initiative (RGGI) began in the Northeast, the Governors of the participating states have led by embracing, implementing, and improving a first-in-the-nation carbon reduction program. It is now up to a new group of Governors to determine whether RGGI remains a model for ambitious action on climate.

What does RGGI leadership mean?

Looking out for our climate, our health, our economy
Thanks to RGGI’s track record, the participating states can lead on climate without setting back their economies. As detailed in our recent report, since RGGI began CO2 emissions have fallen sharply (faster than the rest of the country), electricity prices have decreased (while the rest of the country has seen an increase), and the economy has grown (outpacing the rest of the country).

Change in Economic Growth, Emissions and Electricity Prices, 2008 to 2015

By setting ambitious cap levels for the future, the RGGI states can continue to achieve the best outcomes for our climate, our health, and our economy. Specifically, the RGGI states should establish post-2020 cap levels designed to meet existing climate targets, which cluster around 40% reductions by 2030. Analysis from Synapse Energy Economics has shown that implementing a RGGI cap with a 5% annual decline from 2020 through 2030 would be the lowest-cost pathway to achieving climate requirements. According to that study, such a cap would also yield over $25 billion in total savings for the region while creating 58,000 new jobs each year in the participating states.

A forward-going 5% annual reduction would be more gradual than what the RGGI states have achieved to date, but it would still put us on a path to achieving our science-based goals. And as we cope with the fact that global CO₂ concentrations have now eclipsed 400 parts per million, it’s become more important than ever that our leaders address scientific imperatives on climate change with comparably ambitious policy.

The forefront of climate policy
When a bi-partisan group of Governors of the RGGI states first came together to place a limit on CO₂ emissions, they staked their claim as national leaders on climate. In the absence of federal climate policy, they were the first states to act on reducing CO₂ emissions from the power sector. When they decided to auction allowances rather than give them away for free—as was common practice under previous emissions trading programs—they directed billions of dollars to consumers instead of polluters. This decision is largely responsible for RGGI’s success as a program that reduces harmful emissions and serves as an engine of local and regional economic growth.

While the leadership role of the RGGI states to-date is indisputable, the bar for climate leadership has been raised. Since the RGGI program began, the region, the country, and the world have taken great strides to address carbon emissions. In recent months the U.S. and China, the planet’s largest emitters of CO₂, have ratified the Paris Climate Agreement. In the last week, India and the European Union have followed suit, bringing the tally of signatories beyond the threshold of 55 countries and 55% of global GHG emissions necessary to make the agreement binding. Also this week, Canada—America’s largest trading partner—announced nationwide carbon pricing. Provinces can implement their own cap-and-trade programs (as Quebec, Ontario, and Manitoba have done), their own carbon tax (like British Columbia), or they can accept the federal carbon tax, beginning at $10/ton in 2018 and rising to $50/ton by 2022.

The RGGI states are no longer going it alone on climate, but they can still be leaders. Committing to a strong future for the program will provide a valuable guidepost as the rest of the country prepares to comply with the Clean Power Plan, and as the rest of the world considers how to reduce emissions without sacrificing growth. Momentum is building, support is growing, and the market is transforming – will the RGGI states continue to lead the way?

Reforming Electricity Pricing Can Promote Electric Vehicles and Help Optimize the Electric Grid

Electric vehicles (EVs) provide multiple environmental and consumer benefits. Because they emit about 60% less greenhouse gas (GHG) than conventional vehicles, EVs are an important element in reaching state GHG reduction requirements. Plus, EVs have lower operating costs than conventional vehicles—even with today’s low gasoline prices; for example, in Connecticut an EV only costs about five cents per mile to operate compared to eight cents for a conventional vehicle. That’s a savings of over 80 cents per gallon-equivalent. Given that the largest source of GHGs in the Northeast is the transportation sector, states should be pushing for accelerated adoption of these vehicles.

Recognizing this opportunity, many states in the Northeast have already committed to increasing the number of zero emission vehicles, primarily EVs, on the road by signing on to the California Clean Car Standards and the Multi-State Zero Emission Vehicle Memorandum of Understanding (ZEV MOU). These agreements have set an ambitious goal of increasing the vehicle fleet in those states to about 13% EVs by 2025.

Though this goal alone is commendable, concerns must be addressed about the amount of electricity that will be needed to charge these additional EVs. If EVs are plugged in during periods of high demand, they can strain the electricity system, triggering costs associated with increased distribution or transmission investment, greater capacity needs, and higher marginal energy prices. If EVs are charged at off-peak times, however, the impact on the electricity system is minimal and can even have benefits.

To encourage off-peak charging, several states have started to adopt electricity rate structures for EV owners that reflect the higher cost of providing electricity during peak periods and the lower cost during off-peak periods. These “time-of-day” rates typically divide the day into two or three different periods, during which electricity costs are different. “On-peak” periods encompass most of the afternoon and evening and have the highest rates; “off peak” periods comprise the rest of the day and weekends and feature lower rates; and sometimes “super off-peak” periods are offered with extra low rates from midnight to early morning when there is minimal demand on the system.

Because lower charging costs translate to lower costs per mile traveled, EV owners have a monetary incentive to charge during off-peak hours. This per-mile savings also makes owning an EV more attractive and can provide the extra push some consumers need to purchase an EV.

Pilot programs adopted by Maryland and New York have demonstrated that time-of-day rate structures are effective at shifting customer behavior. The chart below shows the electricity use of EV owners in Maryland before and after they adopted the time-of-day rate structure or “tariff.”¹ Pre-EV tariff, the customers’ peak energy use was at about 6:00 pm (red line), indicating EV charging likely occurred when commuters returned from work and plugged in their vehicles.  This peak also corresponds with peak system demand. Following the EV-tariff adoption, the peak use for the pilot participants shifted to 10 pm (green line), indicating that customers had altered their behavior to take advantage of the lower rates.

A poll of the Maryland customers who adopted the EV tariff found that over 90% of participants were either “extremely satisfied” or “satisfied” with their new electricity plan, and the majority of customers saved money on their house electricity bill. With the positive result of this pilot and others, Maryland and other states, including California and New York, are now offering full-scale (non-pilot) time-of-day rates for EV owners.

Given their demonstrated success, both satisfying customers and shifting behavior, time-of-day rates should be considered by states as one of the key mechanisms for meeting ZEV commitments and GHG emissions reduction targets. This single reform offers multiple, important benefits: it incentivizes owning an EV, it reduces the contribution of EVs to peak load, and it helps capture the significant environmental benefits of EVs—not just GHG emissions reductions, but also local air pollution reductions that help improve public health.

The Public Utilities Regulatory Authority (PURA) of Connecticut is currently considering whether to move forward with time-of-day rates for EV customers.² As one of the 8 states committed to the ZEV MOU, Connecticut, through PURA, should make the smart choice to implement this proven reform as soon as possible. As Connecticut is likely not on track to meet its mandatory 2020 GHG emissions cap,³ and because transportation emissions comprise 40% of the state’s total GHG emissions, Connecticut will absolutely need the help of time-of-day rates. Acadia Center is participating in PURA’s current docket to ensure that it considers the environmental and consumer benefits of both EV adoption and time-of-day rates.

¹ BGE Electric Vehicle Rate Pilot Program Report, February 2016

² PURA Docket No. 16-07-21. Acadia Center has been granted status as an intervenor. Final decision scheduled for February 2017.

³ Acadia Center, “Updated Greenhouse Gas Emissions Inventory for Connecticut,” June 13, 2016. Emissions overall have increased 7.5% from 2012 to 2015 and we anticipate them increasing even more in 2016.

Connecticut’s Clean Energy Moment

Connecticut is having a clean energy moment — one that could launch a new wave of progress if the right policy decisions are made. This opportunity comes as somewhat of a coincidence. Two key planning processes, the Governor’s Council on Climate Change and the state’s 2016 Comprehensive Energy Strategy, will likely intersect this year, with each issuing important policy findings in the coming months. These findings will guide the state’s actions on fundamental climate and energy issues for many years — with lasting consequences for Connecticut’s economy, public health, and environment.

Connecticut’s clean energy moment may also have legal significance. The state’s first mandatory greenhouse gas (GHG) emissions cap is just a little over three years away. Established by Connecticut’s Global Warming Solutions Act, this cap requires a 10% reduction from the 1990 emissions level by 2020¹ — a modest goal, but crucial to setting Connecticut’s emissions trajectory on a declining path to meet the much more important long-term GHG emissions cap in 2050, an 80% reduction from the 2001 emissions level.² With so much at stake, Connecticut’s policymakers need to have the latest GHG emissions data and analyses to make well-informed decisions.

Toward that end, Acadia Center released an updated GHG emissions inventory for Connecticut this past June. Constructed with the best available data from public sources, this report gives a comprehensive look at emissions from 1990 through 2015 and also analyzes emissions trends in more recent years.³ The results are below.

Connecticut GHG Emissions Inventory, 1990-2015

These results show a clear and concerning trend:  GHG emissions have increased since a 2012 low and do not appear to be on track to meet the mandatory 2020 emissions cap. The recent uptick in emissions can be attributed to many factors outside Connecticut’s control, such as fuel prices, the economy, and weather, among others. The report explores those external factors in more detail.

However, even with these external factors, policymaking matters. Connecticut retains a significant degree of control over how much electricity it consumes, and thus how much carbon it emits. For example, New England states with more aggressive energy efficiency and solar policies than Connecticut will reap greater reductions in electricity consumption over the next six years, as shown below.

ISO New England Forecast – Change in Electric Consumption from 2016

This chart shows that Connecticut’s energy policies have not kept pace with those in Massachusetts, Rhode Island, or Vermont. And this reality has climate ramifications. Connecticut will be taking on an increasing share of the region’s GHG emissions from electricity consumption, which then negatively impacts its carbon profile.

While it is too soon to predict with certainty whether Connecticut will meet its mandatory 2020 GHG emissions cap, implementing additional short-term mitigation measures will increase the likelihood of doing so. The most promising opportunities for short-term reductions are likely in energy efficiency, distributed solar PV, and electric vehicles.  The state has existing programs for each of these options,⁴ which could be expanded quickly to significantly reduce GHG emissions before 2020. Pending clean energy procurements now before Connecticut officials could also play a major role in bringing down the state’s carbon profile in the short to medium term.⁵

Acadia Center looks forward to working with Connecticut and other stakeholders to ensure that the 2016 Comprehensive Energy Strategy and the Governor’s Council on Climate Change offer pragmatic policy recommendations that can launch a strong and effective mitigation effort. Connecticut needs to take full advantage of this clean energy moment to align its energy decisions with its climate goals.

¹ Public Act 08-98, An Act Concerning Connecticut Global Warming Solutions, §2(a)(1) (“The state shall reduce the level of emissions of greenhouse gas…[n]ot later than January 1, 2020, to a level at least ten percent below the level emitted in 1990”).

² See id., §2(a)(2) (“The state shall reduce the level of emissions of greenhouse gas…[n]ot later than January 1, 2050, to a level at least eighty per cent below the level emitted in 2001”).

³ Acadia Center has published multiple GHG emissions inventories for Connecticut beginning in 2003.  The most recent used a traditional inventory approach through 2014.  The current analysis described here is an update using a hybrid approach and 2015 data.

⁴ Connecticut offers high-performing statewide energy efficiency services through its Conservation and Load Management programs. Connecticut encourages the deployment of distributed solar PV through a residential incentive program offered by the Green Bank and through the Zero-Emission Renewable Energy Credit (ZREC) program administered by the electric distribution utilities. The CT Department of Energy and Environmental Protection oversees the CT Hydrogen and Electric Automobile Purchase Rebate (CHEAPR), which offers rebates for the purchase or lease of various low-carbon vehicles.

⁵ See the clean energy procurements enabled by Public Act 15-107, An Act Concerning Affordable and Reliable Energy, §1(c) (authorizing RFP for grid-scale clean energy resources) and §1(b) (authorizing RFP for energy efficiency and/or small-scale clean energy resources).

 

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Bill Dornbos is the Director of the Connecticut Office and Senior Attorney for Acadia Center. Bill focuses on advancing policy and regulatory solutions that seek to transform the energy system and move Connecticut towards a climate-safe, sustainable future.

Four Things You Didn’t Know about Energy Efficiency in Connecticut… And One You Might Have Guessed

1. Nutmeggers have saved more than 1.5 billion kilowatt hours (kWh) in energy over the last five years¹

That’s equivalent to fully powering 169,000 houses in Connecticut for an entire year.² For reference, Bridgeport, the largest city in Connecticut, has approximately 51,000 occupied housing units³ so with the energy saved over the last five years, we would have more than enough to power three cities the same size as Bridgeport for an entire year.

This number doesn’t even include the additional lifetime savings that we know will be realized in the future thanks to these investments in energy efficiency now. If you include those savings, Connecticut residents and businesses will save more than 18.3 billion kWh.⁴ That’s equivalent to:

• 2,058,030 houses powered for one year (1.5 times all of the occupied homes in Connecticut), or
• Millstone’s annual generation (Millstone is Connecticut’s largest power plant),⁵ or
• Combined annual generation of the next 15 largest power plants in Connecticut⁶

What do these savings mean in real terms? They mean lower overall energy demand and lower overall energy costs for everybody. Lower demand also means that the power grid can better handle times of peak use, such as the heights of summer and the depths of winter.

These energy savings translate to carbon dioxide emissions reductions of 13.5 million tons over the lifetime of these investments.⁷ That’s more than the amount of carbon sequestered by planting 300,000,000 trees and letting them grow for 10 years.⁸

2. Connecticut’s residents and businesses have achieved more than $3.8 billion in lifetime savings on their energy bills

Energy efficiency investments over the last five years will save Connecticut consumers approximately $3,818,900,000⁹ over the life of those investments. This is money that consumers don’t have to spend on their energy bills.

Most money that is spent on energy goes to large, out-of-state energy corporations, such as merchant generators that rely on natural gas to fuel their power plants. Money that isn’t spent on energy can instead be spent on goods and services right here in Connecticut. This local spending grows our economy and spurs job creation. The money saved by Connecticut’s 2015 investment in energy efficiency will end up generating approximately 9,258 new jobs, for example.¹⁰

3. Connecticut’s energy efficiency programs have served 242,222 homes over the last five years¹¹

This number includes rebates for efficient HVAC systems, as well as 162,270 homes that were weatherized from 2011 to 2015. In 2015 alone, Connecticut’s Home Energy Solutions (HES) and Home Energy Solutions-Income Eligible (HES-IE) Programs served 55,166 homes.¹² That’s more than the total number of housing units in Connecticut’s second largest city — New Haven.¹³

These programs provide energy auditing services that help residents assess how best to improve the energy efficiency of their homes. These statewide programs will even install many of these important improvements on the spot. They also offer price reductions for purchasing energy efficient appliances and products for the home.

4. Connecticut has converted enough energy efficient light bulbs to fill 300 average-sized swimming pools

A recent report sponsored by Connecticut’s Energy Efficiency Board shows that LED and CFL bulbs have saturated 45% of the residential market in the state.¹⁴ This means that approximately 45% of household lighting in Connecticut uses these high-efficiency bulbs.

Using more efficient bulbs can significantly reduce energy consumption — and they’re more convenient because they last longer. LEDs in particular last 30 to 50 times longer than incandescent bulbs and use up to 85% less energy.

5. Connecticut has more work to do!

All of these impressive achievements are important, but there is more work to do.

Saturation of LEDs in Connecticut is only at 10%. LEDs out-perform CFLs in many ways: they are more energy efficient, they last longer, and people are happier with them. Connecticut’s energy efficiency programs need to continue to incentivize consumers to switch to LEDs to encourage even greater energy savings.

If the HES and HES-IE programs continue at their current pace, it will take almost 15 years to reach even half of the occupied houses in Connecticut. Expanded funding is vital in order to keep these crucial residential programs going strong.

Use of these valuable programs could also be improved. When a resident uses HES to assess and improve their home, HES usually recommends additional work to be done to improve the home’s energy efficiency. More of this additional work, such as adding attic, wall, or basement insulation, needs to be done in order to make Connecticut’s homes more efficient.

It is also worth noting that Massachusetts and Rhode Island are outperforming Connecticut in energy efficiency. The most recent energy efficiency savings rates in Massachusetts and Rhode Island are 3.04% and 2.9% per year, respectively, while Connecticut is at 1.53% — strong nationally, but regionally only half of its leading neighbors. This means that Connecticut’s energy efficiency programs could be eliminating double the energy waste that they currently do. Imagine twice the energy saved, twice the carbon pollution avoided, and twice the cash saved on energy bills!

 

¹ Calculation from adding up annual savings reported in the Energy Efficiency Fund’s Annual Legislative Reports from 2011 to 2015.
² Based on average of 8,892 kWh annually required per household.
³ Bridgeport has 51,255 occupied housing units according to the 2010 U.S. Census.
⁴ Calculation from adding up lifetime savings reported in the Energy Efficiency Fund’s Annual Legislative Reports from 2011 to 2015.
⁵ Based on Millstone’s gross generation for 2014.  Data from: https://www.eia.gov/electricity/data/eia923/.
⁶ Based on gross generation of Connecticut’s power plants in 2014. Data from: https://www.eia.gov/electricity/data/eia923/.
⁷ From Energy Efficiency Fund’s Annual Legislative Reports from 2011 to 2015.
⁸ Based on 23.2 lbs of carbon per tree. Estimate given by EPA GHG Equivalencies Calculator: https://www.epa.gov/energy/ghg-equivalencies-calculator-calculations-and-references.
⁹ From Energy Efficiency Fund’s Annual Legislative Reports from 2011 to 2015.
¹⁰ From Energy Efficiency Fund’s Annual Legislative Report for 2015.
¹¹ Data from HES/HES-IE Performance numbers reported in CT Statewide Energy Efficiency Dashboard for 2011-2015.
¹² Same as above.
¹³ According to the 2010 U.S. Census, New Haven has 54,967 housing units (48,877 occupied housing units).
¹⁴ LED Lighting Study Report (Jan 2016): http://www.energizect.com/sites/default/files/R154%20-%20CT%20LED%20Lighting%20Study_Final%20Report_1.28.16.pdf.

Interconnection Reform: Good for the Grid and the Climate

New York State is currently working to dramatically ramp up the deployment of solar and other distributed generation (DG) technologies in an effort to improve the resiliency and reliability of its electric system as well as to help combat climate change. In these efforts, interconnection reform plays a key role.

Interconnection refers to a state-established procedure that new distributed generation units must follow to connect in parallel with the utility’s distribution system. The interconnection process involves numerous steps and may take several months depending on the technical specifications of the project and the point of interconnection. Projects awaiting interconnection are put into an interconnection queue in the order of application.

In New York, the interconnection queue has been growing steadily, with 4,007 MW of projects in queue as of June 2016, a 38% increase from April 2016. Spurred primarily by a growing interest in community distributed generation (CDG), this unprecedented surge in project applications highlights the importance of proactive queue management to support the proliferation of DG throughout the state.

Interconnection procedure in New York State is governed by statewide rules known as the Standard Interconnection Requirements (SIR). SIR provide a general framework for interconnection application processing, including fees, timelines, and technical criteria.

For many years, SIR incentivized developers to file an application and reserve a place in the queue even if they had no intention of moving forward with their project; and further, SIR provided no process for removing the project from the queue without a customer’s permission. Thus, hundreds of these abandoned projects continue to clog the interconnection queue today.

On April 29, 2016, an update to SIR for systems between 50 kW to 5 MW went into effect, addressing some of the interconnection challenges raised by those involved in recent SIR proceedings. This update:

• Provided for a pre-application report that allows a developer to obtain information about a circuit, including capacity, peak load, and aggregate existing and queued DG, without having to submit a complete application and being placed in queue;
• Established project timelines to ensure that abandoned projects are removed from the queue after 30 days;
• Created a uniform set of technical screens to be used by all utilities for project review and called for uniform technical standards used by utilities to evaluate project feasibility.

However, the new rules are applicable only to project applications submitted after the effective date, and so have done little to resolve the existing queue backlog. Further updates to SIR are expected to address this backlog.

These best practices for queue management are currently being considered by the recently created Interconnection Policy Working Group (IPWG), comprised of utility company, state, and industry representatives. In its most recent straw proposal, the IPWG is seeking to require all pre-April 29th applicants to take action by certain dates to remain in the queue or face removal. For instance, the applicants would be required to provide a landowner consent form within 10 days of a Public Service Commission Order to demonstrate site control and prevent site shopping by the developer.

In addition to addressing the backlog, the IPWG is working to reform interconnection by addressing cost sharing for required substation or distribution-level upgrades. These upgrades can often amount to hundreds of thousands of dollars and make a project cost-prohibitive for a single developer. Under the current rules, the first developer to proceed with a project on a given circuit/substation bears the full cost of upgrades. Any subsequent projects take advantage of those upgrades and forgo the expense. Cost-sharing mechanisms could ensure that every developer benefiting from an upgrade pays their fair share.

Together these reforms could significantly facilitate DG interconnection in New York, resulting in a more reliable, resilient, and efficient system that advances the state’s environmental and climate goals.