Acadia Center’s Community Energy Forums continue with event in the SouthCoast

NB Event pic

Last month, Acadia Center co-hosted the first event in the South Coast Community Energy Series with Leadership SouthCoast, the Marion Institute, South Coast Media Group, and Toxics Action Center. The New Bedford forum, “Building the SouthCoast’s Clean Energy Future,” explored the current energy landscape, energy challenges affecting the SouthCoast, and local clean energy alternatives for the region.

Because of new developments in the way energy is generated, delivered, and used, communities and neighborhoods have exciting opportunities to benefit from clean, efficient, and affordable energy at the local level and move away from increasing their overreliance on fossil fuels. However, reforming our existing and outdated utility model is necessary to enable these transformative community energy projects to flourish. Through forums like this one, residents can learn more about their current energy system, the reforms that are possible, and the ways they can have an influence.

Speakers at the event included: Claire Miller, Lead Community Organizer, Toxics Action Center; Roger Cabral, Organizer with South Coast Neighbors United; Peter Shattuck, Director of the Clean Energy Initiative and Massachusetts Office, Acadia Center; and Janet Milkman, Executive Director, Marion Institute.

The diverse panel examined how energy decisions affect a person’s wallet, health, and community. The speakers presented an overview of the current energy system and how it works; highlights of local efforts to combat proposed pipeline expansions; an explanation of the Attorney General’s Natural Gas Report and of Acadia Center’s EnergyVision — outlining a pathway for creating safer, cleaner, and more affordable energy systems; tips for deciphering a utility bill; and local opportunities, like the SouthCoast Energy Challenge, for reducing energy usage through energy efficiency.

SouthCoast Today, a local media outlet, covered the event with a piece here: Panel Explores SouthCoast Region’s Clean Energy Future.

The New Bedford forum was the first event in the SouthCoast Community Energy Series, which seeks to explore energy issues affecting the SouthCoast and how local residents and communities can maximize the economic, environmental, and public health benefits of clean energy. Two more events are planned for the coming months.

SONY DSCTyler Soleau is Acadia Center’s Energy and Climate Outreach Director working from the Boston office. He focuses on raising awareness, network building and advancing Acadia Center’s clean energy program goals in Massachusetts and the Northeast. Tyler came to Acadia Center from the Massachusetts House of Representatives where he served most immediately as Staff Director and Counsel for the House Committee on Climate Change.

New Legislation Advances Rhode Island’s Commitment to Renewable Energy

On July 7, 2016, Rhode Island Governor Gina Raimondo signed into law several bills that will help advance the deployment of renewable energy resources. These bills are welcome developments that signal the state’s commitment to the growth of renewable energy and a clean energy economy, and lay the groundwork for expanding community energy projects and advancing solar and other distributed energy resources through incentive programs and good rate design. Key provisions in each of the bills are summarized in this post.

  • H-7413A/S-2185A — This bill extends the Renewable Energy Standard (RES) from 2019 to 2035 and ramps up National Grid’s renewable energy obligation from 14.5% to 38.5% over that period. Significantly, by extending the RES, Rhode Island policymakers place the state in a leadership position and reaffirm its long-term commitment to advancing the deployment of renewable resources. The new law also requires the Public Utilities Commission (PUC) to review the adequacy of renewable resources every 5 years beginning in 2019 and allows the PUC to delay all or part of the implementation requirement until it determines that resources are available to meet the legislative requirement.

 

  • H-8354A/S-2450B — This bill makes a number of changes that affect distributed energy resource development in Rhode Island. Distributed energy resources, like rooftop solar photovoltaics, are a new and growing part of our energy system. These local, clean energy resources will help diversify the energy portfolio, create in-state economic opportunities, and reduce pollution and associated health risks.
    • The bill extends the Renewable Energy Fund from 2017 to 2022, providing grants to reduce the up-front cost of renewable energy projects for residents and businesses in Rhode Island.
    • It also expands virtual net metering, which allows multiple customers to share power from a single renewable energy system that is not physically connected to their meter(s). Previously, only public, multi-municipal, and farm projects were allowed to virtual net meter. Under the new law, residential customers and qualified low and moderate income housing developments are eligible for “Community Remote Net Metering.” Output from these community projects are credited at the full retail rate (net of the RES charge) up to the sum of average usage, and excess credits are valued at the standard offer service charge. The Community Remote Net Metering program is currently capped at 30 MW as of December 31, 2018, but the PUC has the authority to extend the program.
    • The bill creates an opportunity to promote small- and medium-scale shared solar facilities and larger (>250 kW) community remote distributed generation systems through the Renewable Energy Growth (REG) program — a performance-based incentive program. The bill allows the Distributed Generation Board to propose to the PUC to allocate annual MW goals under the REG program to community remote distributed generation systems. These projects may also receive a higher incentive rate of up to 15% more than the ceiling price for a comparable non-community project. The bill also allows the utility to propose rules and tariffs for shared solar facilities.
    • It clarifies that third party ownership and third party financing arrangements for eligible net metering systems and community remote net metering projects as well as projects enrolled in the REG program are allowed. This is significant because it allows companies that lease solar systems to operate in the state. In response to the passage of the law, SolarCity said that it anticipated expanding from 20 employees in Rhode Island to somewhere between 75 and 200.
    • Furthermore, renewable energy resources used in residential systems or employed by a manufacturer are exempt from property tax. This means that, for example, a homeowner would not be penalized for installing a solar PV array through higher property taxes resulting from their property’s increased value.

 

  • H-8180/S-2174 — This bill amends the “Rhode Island Regulatory Reform Act” to establish a state-wide solar permitting process. A consistent and streamlined permitting process can help improve the cost effectiveness and timeliness of the interconnection process for renewable resources. In this case, the Office of Regulatory Reform will be advised by a task force comprised of the Commissioner of the Office of Energy Resources, at least five municipal representatives, and a representative from a clean energy regional business association. No later than December 31, 2016, the Office of Regulatory Reform will submit a report with recommendations for a permitting process for small residential and small commercial roof-top solar projects. The Office of Energy Resources is then required to propose legislation to establish the state-wide solar permitting process no later than January 31, 2017.

 

  • H-7890/S-2328 — This bill expands the role of the Governor’s workforce board to include in the state career pathways system, a workforce training program(s) that would fill skill gaps and create employment opportunities in the clean energy sector.

RGGI Experience Suggests CPP Concerns Are Overblown

The EPA’s Clean Power Plan (CPP)¹ is a groundbreaking regulation to combat climate change. Despite popular support for the rule, this first federal action to reduce carbon emissions from existing power plants has been met with considerable pushback in some quarters. The rule’s opponents most frequently cite three talking points, saying the CPP could 1) cause electricity prices to rise, 2) be a job killer, and 3) lead to economic stagnation.

These concerns will sound quite familiar to the states participating in the Regional Greenhouse Gas Initiative (RGGI), which launched in 2009. As the nation’s first market-based program to reduce carbon emissions, RGGI had plenty of detractors who used the same arguments as those currently being directed at the CPP. Now, with seven and a half years of RGGI experience to analyze, we can assess how the program has actually performed. As discussed in more detail in Acadia Center’s upcoming RGGI report, the early fears about RGGI’s impacts on electricity prices, jobs, and the economy should be put to rest. The figures below illustrate some of the key findings from RGGI’s operation to-date.

Electricity prices
By choosing to hold power plant owners responsible for the carbon they emit (rather than allowing them to pollute for free), the RGGI states accepted that it would become more expensive for fossil-fueled power plants to generate electricity. That, in turn, could result in higher electricity prices. But as shown in the table below, average retail electricity prices in the RGGI states actually declined by 3.4% from 2008 (the year before RGGI began) to 2015.2 The emergence of low-cost natural gas undoubtedly played a role in this trend, but so too have RGGI-funded investments in energy efficiency and renewable energy, both of which reduce demand for carbon-intensive electricity generation and reduce prices.

RGGI State Electricity Prices, 2008 and 2015 (Cents/kWh)
first table

Employment
Despite claims that RGGI would cost the region jobs by driving businesses away, the program has actually made a significant contribution to employment in the RGGI states. Independent analysis determined that RGGI was responsible for creating 28,500 job-years through 2014. Some of these jobs are the direct result of clean energy projects funded with RGGI auction revenue, and investments in energy efficiency and renewable energy have enabled clean companies to scale up their operations, creating new, high quality jobs for the local workforce. Additional jobs are created as consumers spend energy bill savings in local economies.

Economic stagnation?
Far from stagnating in comparison to the rest of the country, the economies of the RGGI states have outpaced growth in other states’ economies since the program launched in 2008. Over the same time period, RGGI emissions declined by 37%. The combination of economic growth with declining emissions witnessed in the RGGI states is both groundbreaking and a trend that is likely to spread as additional states adopt market-based climate programs like RGGI. Historically, electricity demand has been linked to economic growth, and electric sector emissions have increased during periods of economic expansion. However, this correlation has been broken in the RGGI region. As shown in the table below, economic growth in the RGGI states has exceeded growth in the rest of the country even as the RGGI states have surpassed their ambitious climate goals. Additionally, macroeconomic analysis of RGGI’s impact through 2014 shows that the program added nearly three billion dollars in net economic benefits for the region.

GDP Growth Rates in RGGI States versus Other Statessecond table

RGGI’s experience has demonstrated that a well-designed, market-based program can achieve environmental goals and drive economic growth. Emissions reductions under RGGI have come at far lower than expected costs, and the clean energy sector and economy as a whole have been boosted by the reinvestment of allowance revenue into energy efficiency and renewable energy programs. RGGI’s experience shows the actual impact of smart climate policy in practice. Before heeding dire predictions of potential impacts of the CPP, it is worth keeping this real-world experience in mind.

Stay tuned for our upcoming RGGI report with the latest on market trends, the RGGI program review, and the CPP.

 

1 The Supreme Court issued a stay on the Clean Power Plan in February, 2016, but as discussed in an earlier blog post, we expect the stay to be lifted and the Clean Power Plan to be enforced.

2 Energy Information Administration (EIA) 826 Dataset, http://www.eia.gov/electricity/data/eia826/

Connecticut Passes Legislation to Promote Electric Vehicles! Will Massachusetts Be Next?

Over the past five years, plug-in electric vehicles (EVs) have gone from a cool concept to a real option for vehicle buyers, with almost 440,000 sold nationally through April 2016. Consumer rebate programs have been a big part of this success, beginning in Massachusetts in June 2014, in Connecticut in May 2015, and in Rhode Island in January 2016. Recently, New York included a provision in their 2016 budget to create a consumer rebate program as well.

However, advances in a number of policy areas are needed to allow electric vehicles to make significant inroads with mainstream consumers and take full advantage of the new advanced EV models that will go on sale in the next year. In October 2015, Acadia Center issued a joint report with Conservation Law Foundation and Sierra Club that laid out “Nine Vital Steps for Success” for governments, auto companies and dealers, and utilities.

Connecticut enacts “An Act Concerning Electric and Fuel Cell Electric Vehicles”
In May 2016, the Connecticut General Assembly passed H.B. No. 5510, “An Act Concerning Electric and Fuel Cell Electric Vehicles.” On June 7th, the bill was signed by Governor Malloy and became Public Act 16-135. This law contains a number of great provisions that will help promote electric vehicles:

• Reporting of electric vehicle sales from the Department of Motor Vehicles in order to track progress towards goals;
• Exemption of EV charging stations from burdensome public utility regulations;
• Electric vehicle time of day rates for residential and commercial customers to promote electric vehicle sales and encourage efficient charging;
• Integration of EV sales into utility distribution planning and analysis of EV batteries as energy storage in the Connecticut Integrated Resources Plan; and
• Requirements for public charging stations to allow fair access to all EV drivers.

Notwithstanding one negative provision—a new fee on certain EV charging stations—the Act contains a range of smart provisions that promote electric vehicles and creates a broader framework for widespread electric vehicle adoption.

Electric Vehicle Bill Set for Action in Massachusetts
Massachusetts has its own electric vehicle bill moving through the legislative process, “An Act Promoting Electric Vehicle Adoption,” now numbered S.2266. This bill, which has already been reported favorably by the Joint Committee on Transportation and is now at the Senate Committee on Ways and Means, would promote electric vehicles and other zero emission vehicles (ZEVs) by:

• Allowing EV and ZEV owners to use high-occupancy vehicle (“HOV”) lanes;
• Providing for municipal enforcement of dedicated “ZEV-only” parking spaces;
• Amending the building code to incorporate measures to install EV charging at a lower cost in the future;
• Requiring fair access to public EV charging stations; and
• Adding EV-specific requirements to the state fleet fuel economy standards and studying the opportunities for electrification of the state fleet and vehicles used by the Regional Transit Authorities.

The original bills containing these proposals (numbered H.3085/S.1824) were supported by 16 businesses and organizations, including the Massachusetts Association of Regional Transit Authorities, in joint testimony to the Transportation Committee. Since then, a provision for a study of transportation revenue issues and options for ZEVs were added to the bill.

What Comes Next in Massachusetts?
The Massachusetts Legislature is in the middle of a big debate on our energy future. The House recently passed an “omnibus” bill to promote hydro, onshore and offshore wind, and the associated transmission and diversify the Commonwealth’s energy portfolio. The Senate and outside advocates are debating how to expand this House bill to truly promote a clean energy future. The Senate should either adopt an amendment to incorporate these electric vehicle provisions in their own bill or take up the electric vehicle bill separately as a complement to this work. This legislation could be passed within the next month, and advocates remain hopeful that Massachusetts will embrace this opportunity to make electric vehicles more accessible and practical for consumers.

 

Skyrocketing Transmission Costs and the Need for Reform

Concern that electricity prices in New England are too high is constant. Yet, a key cause of increasing prices is usually ignored: the high cost of transmission lines built to meet infrequent periods of peak electric demand. Over the last 15 years, charges for this reliability-focused transmission have skyrocketed and continue to climb. Since 2002, consumers have footed the bill for $12 billion in projects in New England, where transmission spending is relatively higher than in the rest of the country and steadily growing. Costs are passed directly on to ratepayers, causing electric prices to increase and raising consumer bills. Acadia Center’s new report, “The Hidden Costs of Energy: Overpaying for an Outdated System,” highlights four basic problems that contribute to increasing transmission costs and offers recommendations for reforming the way we plan and pay for the grid.

Ensuring that the grid is reliable is critical to the region’s economic, energy, and environmental future, but the way electric transmission is planned and financed gives utilities incentives to maximize spending on transmission instead of working in the interest of consumers. The current selection, planning, and financing processes are stacked in favor of transmission lines that can earn utilities upward of 11% guaranteed annual returns. Viable alternatives for meeting reliability – some of which are both cleaner and cheaper – do not offer such high returns, and are not adequately considered. Without significant changes, transmission lines will remain the inevitable outcome of all reliability planning practices, and it will be impossible for New England consumers to have confidence that the billions of dollars we are all paying for new transmission lines are the best choices to clean our air and contribute to a healthier environment.

Some new transmission investments are needed to meet regional policy goals of opening opportunities to access renewable power supplies. Others may be needed for reliability. But it is hard to distinguish the transmission investments that are truly necessary for reliability from the transmission investments that could have been avoided.

Experience has shown that New England can mitigate the high cost of transmission construction by using local energy resources. These local alternatives include geographically targeted energy efficiency and demand response that reduces demand for electricity, as well as roof-top solar, battery storage, and efficient combined heat and power. These technologies have proven themselves capable of reducing grid stress and deferring transmission construction. In Boothbay Harbor, Maine, the Boothbay Smart Grid Pilot spent $2.6 million on energy efficiency, demand response, battery storage, and solar resources instead of building an $18.7 million transmission line. Consolidated Edison is deploying energy efficiency and demand response in its Brooklyn/Queens territory to avoid costly grid upgrades and deliver benefits of greater than $500 million to consumers. Energy efficiency investments were credited with deferring the need to construct $416 million in transmission upgrades in Vermont and New Hampshire. These local energy resources are smaller and quicker to deploy than building a new transmission line and can be customized to the particular reliability need being addressed. Local energy resources represent smart and economic solutions to grid reliability needs.

But even with proven successes of local energy resources, the region keeps building more transmission lines. To understand why, you need only look to the economics and politics of transmission construction that have contributed to the increase in transmission line investment. These drivers are described in greater detail in Acadia Center’s “The Hidden Costs of Energy: Overpaying for an Outdated System.”

Reliability-focused transmission lines being built now represent a 30-plus year wager on the region’s energy needs. And these investments are being made before the region has made the important determination of what transmission enhancements may be needed to integrate the renewable generators that will help meet clean energy policy goals, or what gains can be realized through greater reliance on small distributed generation like rooftop solar. Instead, utilities and grid regulators continue down the path of building expensive transmission lines to meet the region’s current resource mix and reliability needs, with little regard for how those needs might change. Any missed opportunity to meet projected reliability needs while promoting renewable resources is a costly mistake. Overestimates are wasteful and cost the region; they divert capital that could be used to make the grid more resilient with local resources and help promote a diverse and cleaner set of energy resources.

In “The Hidden Costs of Energy: Overpaying for an Outdated System,” Acadia Center offers recommendations to reform the system and thereby prevent the region from facing continued increases in transmission cost, while also furthering regional policy goals like promoting cleaner energy and stronger communities. Check out the full report to read more about the problems with our present transmission policies and Acadia Center’s recommendations for reform.

RGGI modeling should be more expansive – environmental groups and power companies agree

Later this year, Northeast and Mid-Atlantic states will determine the future of the successful, first-in-the-nation climate program for the power sector, the Regional Greenhouse Gas Initiative (RGGI). The most important decision centers on the cap level, the primary indicator of the program’s environmental ambition. Before the RGGI states ultimately decide on a post-2020 cap level, however, they will model the impacts of a range of possible cap scenarios. It is with that range in mind that the Collaborative for RGGI Progress (“the Collaborative”) urged the RGGI states to broaden their proposed scope of modeling when they submitted comments last week.

The Collaborative is a unique coalition that includes two of the region’s largest power generators (Calpine and Exelon), one of the largest utilities (National Grid), and environmental organizations (Acadia Center and Natural Resources Defense Council). By finding common ground among diverse interests, the Collaborative seeks to propel balanced policy that advances RGGI states’ climate leadership.

At a February meeting in Delaware, the RGGI states proposed to model just two scenarios: one that reflects doing the bare minimum to comply with the requirements of the Clean Power Plan (see “Model Run #1” in the figure below), and a second that essentially continues the current RGGI cap trajectory of 2.5% per year through 2030 (see “Model Run #2” in the figure)¹. The Collaborative commends the RGGI states for modeling these two scenarios, but also requests the modeling of two more ambitious scenarios:

  • A 5% annual reduction per year from the 2020 cap level from the electric sector from 2021 to 2030 (the green line in the figure); and
  • A scenario that aligns electric industry emissions reductions with RGGI states’ shared commitment to 80% economy-wide GHG reduction targets by 2050.

The 5% annual reduction scenario would provide the states with more information on options for achieving deep, economy-wide emissions reduction commitments, and there is ample quantitative justification to model this specific scenario. As discussed in more detail in more detailed comments to RGGI, Inc. by NRDC, an annual 5% reduction from 2020-2030 would be on par with the actual emissions reductions that have occurred since RGGI began in 2009. RGGI has also generated billions of dollars in economic benefits since 2009, and modeling of a similar emissions reduction trajectory going forward will enable states to assess the impacts of continuing along a comparable glide path. RGGI modeling should also be used to evaluate the contribution that the program can make to achieve the RGGI states’ ambitious, long-term, economy-wide GHG reduction targets. A recent analysis from Synapse Energy Economics indicates that the most cost-effective pathway to achieving those targets translates to annual RGGI cap reductions of approximately 5% from 2020-2030. While the RGGI modeling will not encompass the building and transportation sectors – as Synapse’s analysis did – it affords an opportunity to evaluate how far the electric sector can go toward achieving multi-sector requirements.

RGGI Emissions & Scenarios for Modeling

This is not the first time that stakeholders have asked the RGGI states to model this 5% cap scenario; in previously submitted comments, environmental advocates, public health groups, clean energy companies and a representative of Fortune 500 businesses have all made compelling cases for the inclusion of this modeling run. However, these comments from the Collaborative represent the first time that RGGI compliance entities and electric utilities have weighed in to support this modeling.

The request is simple, the justification is clear, and the support is abundant. If the RGGI states intend to achieve their long term goals, they need to begin considering the pathways that will actually get them there. Modeling the impacts of a cap that declines by 5% of the 2020 level each year through 2030 is a key step in that process.

 

¹ From 2014 -2020, the cap declines annually by 2.5% of the preceding year’s cap level, while the proposed trajectory from 2020-2030 would be an annual decline of 2.5% from the 2020 level. The proposed 2.5% cap through 2030 would also eliminate the cost containment reserve and prohibit the use of offsets.

Stutt 14Jordan Stutt is a Policy Analyst in Acadia Center’s Boston office. He works on energy, transportation and climate change issues, with an emphasis on research and policy analysis for energy systems and carbon markets. He was an Energy Policy Analyst at Pace Energy and Climate Center, Pace University Law School in White Plains, NY, where he focused on energy efficiency and RGGI.

Shattuck_HeadshotPeter Shattuck is Director of Acadia Center’s Massachusetts office and Clean Energy Initiative. Peter’s work at Acadia Center focuses on cleaning up the energy supply across all sectors of the economy. Driving market-based emissions reductions is at the core of this work, using cap and trade policies such as the Regional Greenhouse Gas Initiative, which Acadia Center has tracked since the program’s early development in the 2000s.

 

Forests and Climate Change – From Offsets to What?

In 1994 Greenpeace released a report called “The Carbon Bomb: Climate Change and the Fate of the Northern Boreal Forests”. The report warned that between 50 and 90 percent of the existing boreal forests were likely to disappear as a result of climate changes that would happen if atmospheric levels of carbon dioxide doubled. Warmer and drier conditions stress trees directly, as well as contributing to conditions that could lead to more frequent fires and pest outbreaks. If boreal forests continued to decline, they could release of up to 225 billion metric tons of extra carbon into the atmosphere, increasing current levels by a third.

The recent wildfires that have burned roughly 874,750 acres in Fort McMurray, Canada are a sign that the carbon bomb may be beginning to explode. An El Nino year contributed to a particularly dry winter, and record temperatures and low humidity this May set the stage for a brutal fire season. While individual occurrences of fires, just as individual occurrences of hurricanes, are impossible to tie to climate change, scientists agree that more frequent and intense fires on average are expected.

According to Natural Resources Canada, the boreal forest, or taiga, covers 3.7 billion acres, or which makes up a third of the world’s forests. It extends through Alaska and Canada in the Western hemisphere, and Scandinavia, Russia and northern Asia. In addition, boreal soils include large areas of permafrost and peatlands, which themselves can be large sources of carbon and methane, an even more potent greenhouse gas, if they breakdown through thawing or burning. Currently, more than 4.9 million acres of forest burn each year in Canada. This is twice the average area burned in the early 1970s.

recommendations-to-rggi-0611082 cropForests play an incredibly important role in climate change internationally and nationally, but policy solutions have proven elusive in the United States. In May of 2008, Acadia Center (then Environment Northeast), Manomet and the Maine Forest Center, released recommendations for how to expand forest offset categories in the Regional Greenhouse Gas Initiative (RGGI). These recommendations outlined how, with rigorous measurement and verification, projects that decreased carbon emissions from logging and land development could be used to meet part of the emissions requirements of the program.

In 2013, the RGGI states released updated program rules which incorporated these new forest categories, harmonizing rules with a similar program in California. To date the low price of auction allowances has meant that no forest projects have been used to comply with RGGI. However, some forest offset projects located in the Northeast have been registered in the California carbon market, which has had much higher prices.

At the federal level, implementation of EPA’s Clean Power Plan, which aims to reduce carbon dioxide emissions from power plants in the US, has been stayed by the Supreme Court. If the program goes forward, it is expected that states that are already implementing emission reduction programs, such as RGGI, will be allowed to use these programs to comply with the federal program. The role of offsets in meeting EPA requirements remains uncertain.

Clearly, protecting the carbon stored in forests is essential to preventing a dangerous climate tipping point. However, the threats to forests from climate change itself, as shown in the fires raging around Fort McMurray, highlight that concerns over the permanence of carbon stored in forest projects were not misplaced.

Additional Reading
The Carbon Bomb: Climate Change and the Fate of the Northern Boreal Forests – by Greenpeace, 1994
Forest Future: The Role Forests Can Play in Addressing Climate and Promoting Sustainable Economies – by ENE (now Acadia Center), 2010
Turning Up the Heat: Global Warming and the Degradation of Canada’s Boreal Forest – by Greenpeace, 2008

Ellen HawesEllen Hawes is the Senior Analyst, Energy Systems and Carbon Markets at Acadia Center. Ellen’s work as senior analyst focuses on energy systems, land use and carbon markets. She also leads Acadia Center’s participation in New Hampshire energy policy work. Ellen received her Master in Forestry from the Yale School of Forestry and Environmental Studies.

 

The Promise of Energy Storage: Making the Grid Operate Like Our Food System

food storage

To understand the transformative potential of energy storage in helping achieve a clean and efficient power grid, it helps to conduct a thought experiment: imagining if our food system worked like our power grid. Instead of warehousing surpluses from our farms and keeping refrigerators and pantries stocked with what we need at home, a massively overbuilt food delivery system would be needed to provide the exact amount of food needed to serve every human being, at every single moment of every day.

Illogical as it seems, that is how our electric grid functions, requiring electricity generation to match fluctuating demand on a minute-by-minute basis, 365 days of the year.  With intermittent renewable energy sources such as wind and solar making up a greater portion of energy supply – essentially serving up local, cheap food at unpredictable times – the lack of storage has become untenable.

Advances in energy storage are needed to make our outdated grid more efficient, support the growth of renewable energy, and reduce consumer costs.  Storage will allow us to preserve excess energy generated during periods of low demand (for example offshore wind produced at night) and use this energy to meet peak demand hours or days later. Drawing on stored energy will avoid the need to switch on the least efficient and most expensive fossil fuel-burning power plants, saving money for all electricity consumers. Energy storage can also reduce the need for more expensive upgrades to utility infrastructure, and improve resiliency by providing electricity in emergency situations. There is even greater promise in “stacking” all of these services – reducing peak power costs, avoiding infrastructure expenditures, providing backup power – and more, as described in a recent RMI paper.

The greatest impediment to achieving the benefits of energy storage has been high up-front costs, but this barrier is falling away.  Costs for established technologies like the lithium-ion batteries in phones and electric vehicles are falling rapidly, and creative approaches have shown the viability of storing energy in compressed air, high-tech spinning tops called flywheels, and myriad new chemistries being cooked up in research labs and universities across the country.

Where it has been allowed to compete with conventional resources, storage is already excelling. In California, regulators determined that it would be cost-effective for utilities to bring 1300MW of storage online (about the size of New England’s largest, and soon-shuttering coal-fired Brayton Point power plant). As covered in UtilityDive, in an initial step toward that target, Southern California Edison (SCE) signed up 264MW diverse energy storage applications in 2013, far exceeding requirements for the first procurement. In a sign of the changing times, this energy storage even beat out natural gas power plants for the portion of the procurement meant to ensure adequate generating capacity.

In Massachusetts steps are being taken to unlock the potential for energy storage.  The Baker Administration’s Energy Storage Initiative is providing $10 million in funding for storage deployments, and analyzing the market and economic development potential for energy storage.  Energy storage will also likely feature in omnibus energy legislation, in the form of S1762, authored by Sen. Ben Downing, or a similar mechanism to enable the Department of Energy Resources to act on the findings of their studies. Opportunities for deploying energy storage in new ways – such as repowering Brayton Point with clean energy – are also helping to build support.

With more and more renewable energy coming online, and more clarity about the consumer and commercial benefits of developing energy storage, Massachusetts appears poised to take the next step in realizing the potential for energy storage.  By cultivating and supporting innovative technologies and applications for energy storage we can make the electric grid more efficient and adaptable, allowing us to have our cake and eat it – whenever we want.

 

Shattuck_Headshot

Peter Shattuck is Director of Acadia Center’s Massachusetts office and Clean Energy Initiative. Peter’s work at Acadia Center focuses on cleaning up the energy supply across all sectors of the economy. Driving market-based emissions reductions is at the core of this work, using cap and trade policies such as the Regional Greenhouse Gas Initiative, which Acadia Center has tracked since the program’s early development in the 2000s.

New York Grid Modernization Reforms Present Utilities with New Earnings Opportunities

New York State is in the midst of radically reforming its utility regulatory landscape— and eventually markets—to accelerate the integration of distributed energy resources (DERs) into the grid. DERs, like solar photovoltaics (PV) and energy efficiency, create opportunities for customers to manage their energy usage, improve power quality and resiliency, and help meet state clean energy and environmental goals. The radical reform all started in 2014 with the Reforming the Energy Vision (REV) initiative, which “aims to reorient both the electric industry and the ratemaking paradigm toward a consumer-centered approach that harnesses technology and markets.”

The Public Service Commission tasked with REV implementation has been considering a number of regulatory options to advance REV goals over the past two years. Earlier this year, the Commission held a technical conference focused on performance incentive tools – Earnings Impact Mechanisms (EIMs) and Market-Based Earnings (MBEs.)

Earnings Impact Mechanisms

Earnings Impact Mechanisms reward or penalize utilities for their performance with regard to certain targets, such as energy efficiency and peak demand reduction. The speakers noted that the mechanisms are one of the most effective and low risk regulatory tools and are crucial to achieving New York’s climate goals, but numerous questions remain about the exact EIM structure.

Clear guidelines and an adequate level of utility incentives are necessary for the EIMs to be effective, but at the same time, the mechanisms are meant only as a transition device to a future utility business model envisioned in REV and must not foster continued dependence.
The regulators should ultimately consider how EIMs fit into an overall utility revenue framework. If a utility hits an EIM performance target, it could earn a lump sum cash award or receive an adjustment to return on equity (ROE) basis points.¹ The former scheme is preferable according to the panel as an EIM tied to ROE is in direct conflict with the state’s strive to eliminate utilities’ incentive to favor capital expenditures. The EIMs must ultimately encourage utilities to utilize customer and third party capital to advance REV goals rather than grow their rate base. To further this objective, the Commission has also proposed a modified claw back mechanism that allows utilities to keep earnings on unspent capital as long as the reduction in capital spending is attributed to a distributed energy resource (DER) solution. In the absence of this provision, any reduction in capital spending would cut into utilities’ profits.

Besides the EIM design, the list of policy goals suitable for EIMs hardly gathered unanimous support from the panel. Joint Utilities argued that only metrics within utility control should have symmetrical as opposed to positive-only earnings impact – for instance, peak demand is subject to factors independent of utility actions, such as weather and economic activity in the service area. Joint Utilities also emphasized the need for revenue certainty and continued access to capital markets that may be jeopardized if utility earnings are at risk.

Market Based Earnings

Market Based Revenues represent an innovative revenue source for the utilities that offer services beyond their basic electric or gas service obligations. The discussion around MBEs focused on the composition and pricing of the utility value-added services. The Commission expects the utilities to earn platform service revenues (PSR) by virtue of serving as a distributed system platform (DSP) provider, an intermediary between consumers and third party DER sellers, as well as additional service-based revenues, such as advertising fees or engineering fees, for services that are available from either the utilities or third parties. The exact make up and structure of MBEs remain uncertain however and are largely explored through ongoing utility demonstration projects.

Panel participants proposed separate pricing approaches for PSRs and competitive MBEs. Considering utility’s monopoly position as a platform provider, using cost-based ratemaking for platform service fees to ensure nondiscriminatory and transparent rates is most appropriate. Conversely, competitive products and services that may be offered either by the utility or a third party should be market value priced upon comprehensive stakeholder input. In addition, consumers who choose to engage and take full advantage of the platform value-added services should bear the extra cost to prevent cost shifting to ratepayers who choose to limit their engagement with the platform.

Going forward Acadia Center will continue to closely monitor these discussions.

 

 

¹ The adjustment to basis points represents a change in the regulator-approved rate of return or profit a utility is allowed to earn on its rate base comprised primarily of its capital investments in long-term assets, such as transmission lines or power generation facilities.

 

 

Irina Rodina works as Staff Counsel for Acadia Center focusing on grid modernization and utility reform in New Irina_RodinaYork State. Irina has extensive experience in environmental and energy policy, including renewable project development and market issues, community energy development, sustainable agriculture, and climate change.

What If We All Drove Electric Vehicles?

EV Signage

Electric Vehicles (EVs) are frequently discussed as an exciting new technology that will be able to dramatically lower transportation emissions in the region, while lowering costs to consumers. As battery costs continue to decline and technology improves, this promise looks closer than ever. The widespread adoption of EVs has another potential game-changing benefit – it could radically change the way we operate our electric system for the better.

The electric grid is built to ensure that the lights stay on during the times when electric usage is at its highest – generally summer afternoons during heat waves in this region. The rest of the time much of the infrastructure is being lightly used. Distributed Energy Resources (DER), sources of energy or energy conservation that are widely dispersed, offer the potential to change the way the grid is used and optimize the current physical infrastructure without needing to build more. Electric vehicles with 2-way connections to the grid could become a significant new DER. They could store energy when the grid is lightly taxed and feed it back onto the grid when it is most needed and could play a key role in offsetting the need to build large centralized power plants and transmission lines.

Acadia Center conducted an analysis to examine the potential impacts that EVs could have on the grid. We looked at the aggregate capabilities of switching every car in the New York / New England region to a Nissan Leaf. The Leaf is an all-electric vehicle, but its battery is relatively small compared to larger cars with greater range, which means this analysis did not look at the upper limits of potential. The Tesla Model S, for example, has a battery that has approximately three times more storage capacity than a Leaf. Switching all 10.5 million passenger cars in the New York and New England to 10.5 million Leafs would result in electric storage capacity of over 250 GWh. This is the equivalent of more than 30% of all electricity consumed in the region on an average day. The Leaf batteries would also have 850 GW of peak capacity, about 12 times more than all of the power plants in the region and 14 times more than the peak demand in the region during the highest-use hour on the hottest summer day of the year. Just tapping into a small portion of this battery capacity could dramatically reduce the need for new infrastructure in the region and could help smooth out the more variable production of renewable sources.

 

Jamie Howland leads Acadia’s JAH1Climate & Energy Analysis Center (CLEAN), and Energy Efficiency and Demand Side Initiative. His work as a policy analyst focuses on data management on energy markets and emissions trends, buildings and land use issues.