PURA Advancing a Framework for Performance-Based Utility Regulation

Utilities recover the costs of the investments that are needed to provide customers with energy through the bills that customers pay each month. This “cost-of-service” framework is the foundation of traditional utility regulation. In contrast, Performance-Based Regulation (PBR) is an alternative method for regulating utilities that ties utility revenues more directly to their performance, such as efforts to reduce emissions or to support the deployment of distributed energy resources, rather than tying earnings primarily to the costs required to provide service.  

By allowing regulators to better align utility revenues with improved performance, PBR— which includes a broad set of regulatory tools, such as performance metrics and financial penalties or rewards—can help overcome outdated incentives under traditional utility regulation. High allowed returns create incentives for utilities to build expensive infrastructure projects, but PBR can help reorient utilities towards more cost-effective solutions that can save customers money and deliver additional benefits, such as reducing emissions and improving environmental justice outcomes.   

States across the US have experimented with PBR to varying degrees and with varying degrees of success. Recently, Connecticut’s Public Utilities Regulatory Authority (PURA) announced a decision that formally adopts regulatory goals and outcomes for PBR in the state. Over the past year, Acadia Center worked with a range of stakeholders to help develop PBR goals and assess how well existing utility regulatory policies do or do not align with those goals. (Some of Acadia Center’s filings in support of PBR in Connecticut can be found here and here.) 

PURA’s decision formally adopts four overarching goals for PBR in Connecticut and nine priority outcomes within those goals, including greenhouse gas emission reductions, advancing social equity, ensuring affordable service, and advancing reliability and resiliency. PURA’s decision sets the stage for the next phase of the PBR proceeding, which is expected to last through 2024. Phase 2 will consist of three “reopener” proceedings, each covering a specific set of issues in more detail, including the rules that govern how utilities recover their costs; performance metrics and incentives; and a process to develop an Integrated Distribution System Planning proceeding. 

Acadia Center commends PURA for taking this important step. However, although Phase 1 of Connecticut’s PBR proceeding has clarified the goals and outcomes that will inform future analyses and proposals, stakeholders will only know the real outcome of this decision in the spring and fall of 2024, when the three reopener proceedings end—and after PURA decides to what extent policy reforms will be implemented. PURA’s recent decision is a commitment to consider potential changes to many types of regulatory tools, which itself is a major step forward, and Acadia Center looks forward to exploring in more detail how utility regulatory tools should change.  

PURA’s leadership in moving this proceeding forward is noteworthy, and Acadia Center is hopeful that the PBR proceeding results in a robust framework that accelerates the achievement of Connecticut’s climate and clean energy goals and helps to deliver a clean and affordable energy system for all ratepayers.  

Daniel L. Sosland: Arctic Refuge affects people in Connecticut

Acadia Center recently joined more than 240 other organizations in requesting that major insurance companies, including The Hartford and Travelers here in Connecticut, show their solidarity with the Gwich’in Nation, who speak with one voice from Canada to Alaska against oil and gas development in the Arctic National Wildlife Refuge in northeastern Alaska. The coastal plain of the refuge is the birthing and nursing grounds of the Porcupine Caribou Herd and known to the Gwich’in people as Iizhik Gwats’an Gwandaii Goodlit — the Sacred Place Where Life Begins.

The letter asks 10 of the largest insurance companies to commit to the protection of the Arctic Refuge from the harms of fossil fuel development by announcing policies against insuring drilling projects there.

As a Northeast-based organization with deep Connecticut roots, this may seem like a far step from local concerns, but the issues arising around the protection and sanctity of the Arctic Refuge are ones that should register here. Acadia Center works to advance bold, effective, and equitable clean energy solutions for a livable climate and a stronger, more equitable economy in Connecticut and around the region. Connecticut, often a clean energy leader in the region, is working to build a clean energy system that puts people front and center, shifting conversations to promote equitable and economically beneficial solutions.

What happens in the Arctic impacts us all — even in the Northeast. The Arctic is warming four times faster than the rest of the world. If we allow drilling to happen in the refuge, entire coastal villages will continue to erode into the sea, the melting of permafrost will increasingly make infrastructure insecure or impossible, and food sources will disappear. Already, federal dollars are being spent to relocate villages sliding into the sea.

The sea around our coastline is also rising faster than the global average. Hurricanes are increasing in number and intensity – 2020 saw 30 tropical storms, forcing forecasters to dig deep into the Greek alphabet for names, and we are experiencing more heatwaves. With each passing year, the urgency grows to accelerate progress toward clean energy for people across the Northeast. Yet there is hope and progress. Connecticut is joined by most states in the region with aggressive plans to decrease greenhouse gas emissions and increase energy efficiency. Jobs in renewable energy industries such as wind and solar now outnumber jobs in the fossil fuel industry. This is our economic and environmental future. Producing and burning oil from the Arctic Refuge would accelerate climate change not just for Arctic communities, but for the world. And have little to no impact on energy prices.

Recently, Chubb became the first American insurance company to issue a policy stating that they will not underwrite oil and gas projects in the Arctic Refuge. They join 17 insurers and 29 major financial institutions that have restricted support for oil and gas drilling in the Arctic Refuge. This list includes five of Canada’s largest banks along with America’s six largest: Goldman Sachs, JPMorgan Chase, Citigroup, Morgan Stanley, Bank of America, and Wells Fargo. These financial institutions recognize the risks and the reputational consequences they would face should they support the violation of Indigenous Peoples’ human rights and such an important ecosystem.

Acadia Center is proud to have a presence in Connecticut’s vibrant community, and we all want to be proud of our large companies and employers. In solidarity with the Gwich’in Nation, we respectfully urge two of the most important businesses in the state, The Hartford and Travelers, to join colleagues and competitors, and other financial institutions that have taken a stand against financing or insuring oil and gas development in the Arctic National Wildlife Refuge. The human rights of Alaska Indigenous communities, the ecological value of the refuge, and the need to do all we can to avoid the devastating climate impacts are compelling reasons to phase out our addiction to oil and gas. Current and future generations depend on all of us making forward-thinking commitments to human rights and the health of our planet.

Op-ed originally featured in the Hartford Courant. Click here to read it there.

Jumpstarting the Clean Heat Standard Process

Clean Heat Standard Momentum 

In the past few years, discussion about implementing a Clean Heat Standard (CHS) has quickly gained steam around the country. In 2021 Colorado passed legislation requiring the development of Clean Heat Plans. Just this week, the Vermont Senate overrode Governor Phil Scott’s veto of a CHS bill, and the House appears to be poised to do the same. In Massachusetts, a CHS was first seriously considered several years ago as the state developed its clean energy and climate plans for 2025 and 2030. Later, as part of its Final Report, the Massachusetts Commission on Clean Heat endorsed developing a CHS. The Massachusetts Clean Energy and Climate Plan for 2050 later adopted the CHS framework outlined in the Clean Heat Commission’s report. With all this momentum in place, you may be left with one question: what exactly is a Clean Heat Standard? 

What is a Clean Heat Standard? 

As identified by the Regulatory Assistance Project (RAP) in a paper prepared for the Massachusetts CECP, a CHS is a “credit-based performance standard that would be applied to suppliers of heating energy in Massachusetts, notably gas utilities and providers of heating oil and propane, and possibly electricity suppliers.” These parties would then be obligated to provide gradually increasing amounts of low- or zero-emissions fuel to consumers. The concept is similar to a Renewable Portfolio Standard. In Massachusetts, the goal would be to decarbonize the building sector at the speed and scale necessary to support the state in achieving its building sector emissions reduction target of 47% below 1990 emission levels by 2030 and 93% by 2050. 

However, while the basic concepts are simple enough, the actual details of such a program and its implementation are a bit trickier. If properly designed, a CHS could serve as another valuable decarbonization policy tool for cost-effectively electrifying and improving the efficiency of buildings in a state without driving up costs to electric ratepayers. However, if poorly implemented, a CHS could serve to potentially undermine decarbonization goals. One critical area to get right is understanding the actual lifecycle emissions of certain alternative heating fuels, such as biofuels. Vermont’s proposed CHS is extremely friendly to biofuels, but biofuels can produce significant emissions. Another key issue surrounds the future of fossil gas as a heating fuel. Neither the RAP report nor the Massachusetts Clean Heat Commission report for example provide detailed recommendations on how the most complicated (and important) elements of a CHS should be designed. For example, what is the long-term vision to phasing out fossil gas for heating and for the future of the natural gas distribution system? How can a CHS be designed to support achieving that vision? Further, if certain biofuels are deemed eligible within the CHS, what specific methodology should the Commonwealth use to accurately account for lifecycle emissions from these fuels? These are the types of make or break decisions that can cause the policy to sink or swim. Therefore, it is absolutely crucial that states looking to adopt a CHS get the details of its proposal correct. 

Acadia Center and Colleague Input 

In Massachusetts, the Department of Environmental Affairs (DEP) initiated a stakeholder process in April 2023 regarding the development of a CHS for Massachusetts, to little fanfare or attention. This process included a stakeholder discussion document in which DEP requested information on program design input, recommendations for further input, and suggested topics, locations, and formats for stakeholder meetings and hearings. In response, Acadia Center worked with a number of stakeholders, including Conservation Law Foundation, Green Energy Consumers Alliance, Home Energy Efficiency Team, and Pipe Line Awareness for the Northeast to develop a response document on to which over 35 organizations signed. Acadia Center with our colleagues produced a comprehensive 22-page document responding to the DEP’s questions and outlined our vision for a successful CHS for Massachusetts. These top priorities include a CHS that ensures adequate equity protections and an electrification-only compliance program, particularly for gas utilities.  

On equity and energy justice, the document asks DEP to design the program to focus direct and indirect benefits on customers with the highest energy burdens. We also ask DEP to coordinate closely with the Department of Energy Resources and the Department of Public Utilities on complimentary strategies, including rate design, the Alternative Portfolio Standard, and a managed transition off gas. 

Acadia Center and its colleagues further ask DEP to design the CHS in a manner that best supports the most cost-effective long-term emissions reduction pathway. This concept centers around focusing compliance pathways on non-combustion technologies rather than biofuels or hydrogen blending, particularly for gas. The document asks DEP to utilize the 2025/2030 CECP’s High Electrification Scenario as opposed to the Phased Scenario, as the High Electrification Scenario emphasizes higher levels of near-term full-building electrification and a more rapid phase down of gas heating systems, better positioning the state to achieve 2050 climate goals at similar costs.  

On stakeholder input, we urge DEP to balance different tracks of stakeholder processes for different types of stakeholders. We also urge the development of technical sessions on key design topics, such as coordination with the Mass Save energy efficiency programs, hybrid heating system credits, and calculation of credits by technology. 

While many details remain to be worked out, Acadia Center is encouraged by the positive first steps taken by the Commonwealth. We look forward to working with the Administration as these proposals move forward. 

For more information: 

Kyle Murray, kmurray@acadiacenter.org, 617-742-0054 ext. 106 

The Race for a Renewable Future: How the EU and US Are Tackling Clean Energy

States have long filled a climate gap in the United States and served as leaders in establishing clean energy and emissions goals. Over 30 states and the District of Columbia have clean energy standards in place. Clean energy goals set mandates for clean energy, usually called Renewable Portfolio Standards (RPS) or Clean Energy Targets, typically imposed on electricity providers. States differ in what clean energy technologies qualify under their laws. Climate goals, or Greenhouse Gas Reduction Targets, set goals for the overall emissions in a state – including energy, transportation, and other sectors.  

Northeast states were early leaders in this trend. Connecticut, for example, was one of the first states in the country to set a goal of 80% emissions reductions by 2050 in legislation. Acadia Center monitors the northeast and mid-Atlantic region and has found the following:  

By the end of 2020, the U.S. Department of Energy (DOE) reports that 67% of electricity retail sales in the U.S. States fall under legally binding RPSs. 

At the federal level, there is no specific statute setting a national U.S. clean energy standard or climate goal, although legislation passed last year – the Inflation Reduction Act – and nonbinding national targets are designed to produce emission reductions 40-50% below 2005 levels by 2030, in line with aggressive state climate goals. Federal policy is intended to reach commitments in the Paris Climate Accords. 

How do these efforts at the state and federal levels compare to other countries?  

The European Union (EU) and the United States are both taking steps to transition towards cleaner energy sources to reduce greenhouse gas emissions and combat climate change. However, there are some notable differences in their approaches. 

The goal set by the EU would reduce its greenhouse gas emissions by at least 55% by 2030 and achieve net-zero emissions by 2050. To achieve this, the EU has implemented a variety of policies and initiatives to support renewable energy, such as the Renewable Energy Directive, which sets binding targets for renewable energy use, and the European Green Deal, which aims to make the EU’s economy sustainable. The EU also has a carbon pricing system in place, the Emissions Trading System (ETS), which covers energy and industrial sectors and provides a financial incentive for companies to reduce their emissions. 

In March 2023, the European Union agreed to double its renewable energy targets by 2030, a significant increase from its previous target of 32%. The new goal is for 65% of the EU’s electricity to come from renewable sources by 2030, with further targets for energy efficiency and electrification of transport. 

The US federal government has also recently made progress on climate policy. President Biden’s American Jobs Plan includes significant funding for clean energy and infrastructure, and he has pledged to reduce greenhouse gas emissions by 50% by 2030, similar to the EU 2030 goal. The Biden administration has also rejoined the Paris Agreement and has set emissions reduction targets for the US. 

However, there are still significant challenges facing both the EU and the US in their clean energy transitions. In the EU, some member states remain heavily reliant on fossil fuels, and there is resistance to phasing out these industries. In the US, there is political polarization on climate policy, with some states and industries opposing regulations and incentives for clean energy. 

Overall, while there are differences in the approaches taken by the EU and the US, both are making progress in transitioning to cleaner energy sources. The EU’s ambitious targets and policy framework provide a solid foundation for its efforts, while the US has made considerable progress at the state level and is now beginning to pursue more ambitious national policies. By continuing to work towards their goals, both the EU and the US can make significant contributions to global efforts to combat climate change. 

NESEA 2023 Building Energy Boston: Scalable Climate Solutions in Built Environment

Acadia Center recently participated in the Northeast Sustainable Energy Association (NESEA)’s annual BuildingEnergy Boston Conference that occurred on March 28 – 29, 2023. With over 45 presentations from experts across the fields, the NESEA BuildingEnergy Boston conference has again drawn attention to the climate and clean energy implications in the design and construction sector in buildings. Our Environmental Justice & Outreach Manager, Joy Yakie served as a member of the 2023 Content Committee and curated two of the presentations at the conference. She found that the highlight of the conference was summarized by the two keynote addresses on the Net-Zero Building Revolution and Why We Stopped Doing Deep Energy Retrofits. The conference opened more dialogue on how solutions can be scaled up to ensure sustainable practices in the design and construction space.

Dividing her time at the conference, Joy supported two of the presentations she reviewed weeks leading up to the conference. Both presentations, Commitment to Learning: A Case Study of Three Public Schools and Addressing Racism and Subtle Acts of Exclusion in the Workplace, shared broader knowledge on sustainable practices in building public schools and how to handle microaggressions in the design and construction workplace respectively. The Case Study of Three Public Schools was presented by architects from HMFH, a leading design firm in the design and construction space that champions sustainability in their building design and construction. The buildings used for the case study on public schools were situated in Taunton, Westborough, and Dighton MA.

Joy also supported the presentation by the Diversity, Equity, and Inclusion Director, Fatou Nije-Jallow, MHA,  from The New England Center for Children, expounding on subtle acts of exclusion in the workplace and the examples of well-crafted responses that foster inclusivity in the workplace.

Acadia Center is proud to work with our partners and other stakeholders in the building sector. We are a part of the ongoing conversations and will ensure that the success of our work reflects net-zero emissions from this sector in the near decade.

NESEA is planning its Building Energy NYC conference scheduled for October 12, 2023. Visit https://nesea.org/conference/buildingenergy-nyc for more information to participate and support.

For more information:

Joy Yakie, Environmental Justice & Outreach Manager, jyakie@acadiacenter.org, 617-742-0054 x110

RGGI Findings and Recommendations Webinar Summary

Acadia Center hosted a webinar on April 11th, where staff discussed the latest Regional Greenhouse Gas Initiative (RGGI) Report, Findings and Recommendations for the Third RGGI Program Review. You can watch the full webinar and read through the summary below.

The presentation began with our hosts explaining what the Regional Greenhouse Gas Initiative (RGGI) is. The cap-and -invest program launched in 2008 and includes 11 states across the Northeast. It aims to limit emissions by getting power plants to purchase emissions allowances through state auctions. The proceeds then go towards state-directed investments in things like clean energy and renewables. Since its inception, RGGI has generated $6.2 billion in proceeds for investment in these states. The 9 states that consistently participated have seen overwhelming success in shifting away from fossil fuels, growing the economy and lowering consumer costs simultaneously. The third program review is currently underway, which is why Acadia Center’s report is timely and can offer insights into how to improve the program.

This report analyzed the impact of RGGI on Environmental Justice communities who face disproportionate drawbacks from emissions, including health and quality of life impacts. RGGI collects little data tracking how the funds are spent and whether they’re flowing to EJ communities appropriately. Although RGGI has achieved great success in reducing NOx emissions across the region, localized air impacts in disadvantaged communities still exist. Acadia Center created a NOx Pollution Threat Score which ranks the worst offending NOx polluting plants in populated areas.

Acadia Center recommends RGGI address the following in their ongoing program review:

• Set the market cap to reflect aggressive state climate and clean energy goals
• Adjust market mechanisms to better align with decarbonization policies and the social cost of carbon
• Commit to investing 40-50% of proceeds in EJ communities, and involve EJ communities in determining in what programs to invest
• Provide publicly available information to track how funds are being used to ensure this threshold is met
• Decrease NOx emissions at the power plants that create the largest respiratory heath risks
• Increase funding and enforcement of air quality monitoring, particularly in EJ communities
• Lower the threshold capacity for RGGI regulation to 15 MW, bringing in an additional [get number from FAQs] 91% of which are near EJ comunities

The webinar concluded with a Q&A session with the audience, which you can watch in the video above. Thank you to all who participated in the webinar for your interest in RGGI and our latest report.

After Fourteen Years of RGGI, Air Quality’s Up Next

Acadia Center today released a much anticipated sequel to our 2019 report RGGI: Ten Years in Review, taking stock of the impacts of the Regional Greenhouse Gas Initiative (RGGI) as it turns 14 and making recommendations for improvements as the participating states embark on the Third Program Review – happening now!

What is RGGI?

RGGI is a cap-and-invest greenhouse gas reduction program by 12 states in the Northeast and Mid-Atlantic designed to limit the amount of carbon dioxide pollution (CO2) from electricity generating plants in the region. RGGI has been a pioneer of climate policy, generating $6.2 billion in proceeds for participating states over the last 14 years. RGGI is the United States’ first multi-state program designed to reduce climate change-causing pollution from power plants and has provided a wealth of lessons to be incorporated into the next generation of climate policies, including successes to build on and opportunities for improvement. 

Has RGGI provided benefits to participating states?

Yes! The nine states that have consistently participated in RGGI (Connecticut, Delaware, Maine, Massachusetts, Maryland, New Hampshire, New York, Rhode Island, and Vermont) have experienced a more rapid increase in GDP per capita and a more rapid decline in power sector CO2 emissions and retail electricity prices. From 2008 through 2021, Acadia Center found that the RGGI states experienced:

· A nearly 50% reduction in CO2 from power plants: 10% more than the 40 states that have not consistently had a price on greenhouse gas emissions (hereinafter “the rest of the country”)

· An increase in economic growth per capita of 50%: 13% more than the rest of the country

· A 3.2% decline in retail electricity prices compared to a 7.7% increase in the rest of the country

· A 91% decline in electricity generated from coal, and 808% growth in solar and wind

· An 85% reduction in nitrogen oxides (NOx) in RGGI-regulated power plants over the entire region. Criteria emissions, particularly NOx, can have significant detrimental health impacts including damaging the respiratory tract and increasing vulnerability to respiratory infections and asthma.

Are air quality benefits seen equally in all communities?

No. While air quality improved across the region, differences exist in localized impacts of power plants covered by the RGGI program. Acadia Center analysis found that, between 2008 and 2021:

· Over a third of RGGI plants that emit significant levels of NOx emissions are located near high asthma communities (census tracts above 90th percentile in CEQ data for adults with asthma).

· NOx emissions from power plants within 3 miles of an EJSI community (above 90th percentile on at least one of U.S. EPA’s EJScreen socioeconomic indicators) declined by 85%, compared to the rest of the RGGI power plant fleet, where NOx emissions declined by 88%.

· Over two-thirds of RGGI plants do not have an active air quality monitoring site within a 3-mile radius – and over three quarters of these unmonitored plants are near an EPA EJSI or high asthma community.

Acadia Center analysis also found that although only 41% of the census tracts in the region are classified as EPA EJSI Communities, 81% of RGGI power plants are located within 3 miles of EPA EJSI Communities. Similarly, although only 11.5% of all census tracts in the region are considered high asthma communities, 37.5% of all RGGI plants were located within 3 miles of a high asthma community. Although complicated by the fact that the 3-mile radius around each power plant often touches multiple census tracts, this comparison suggests that RGGI plants may be more likely to be located within 3 miles of an EPA EJSI community or high asthma community than a random distribution would create.

What should we do about that?

The Third Program Review in 2023 offers communities, affected groups, and the public a key opportunity to advocate for changes that create a more equitable and direct distribution of investments in environmental justice communities, use the power of regional cooperation to improve air quality and health of communities that surround the power plants covered by RGGI and better align RGGI with state climate and clean energy mandates.

What improvements does Acadia Center recommend?

Acadia Center recommends that during the Third Program Review the RGGI states should:

Align the Cap and Market Mechanisms with State Climate and Clean Energy Goals: Set the RGGI cap level at or below the emissions allowed under state clean energy and GHG reduction laws and adjust market mechanisms to support higher levels of decarbonization.

Ensure Environmental Justice Communities Directly Benefit: Require that no less than 40-50% of RGGI proceeds are invested in EJ communities, ensure meaningful participation in investment decisions by EJ community members, and transparently track and report expenditures and impact.

Use the Power of Regional Cooperation to Improve Health and Air Quality: Accelerate decreases in NOx emissions at the power plants that pose the largest respiratory health risks, and increase funding and enforcement of air quality monitoring, especially in EJ communities.

Lower the 25 MW Threshold Capacity for RGGI Regulation to 15MW: 91% of smaller generating units are within 3 miles of an EPA EJSI or high asthma community. By including all generating units of 15MW or higher, and lower for co-located units, RGGI could have a significant health benefit in these areas.

How do we know which plants should be targeted?

To help identify some of the most problematic power plants in the RGGI region, Acadia Center developed a “NOx pollution threat score”, based on how much NOx the plant emits, how many people live within 3 miles, and whether the plant is near EPA EJSI or high asthma communities. With this tool, we identified a RGGI NOx Threat Ten list of power plants that pose the largest respiratory health risks to EJ and high asthma communities and should be considered as a starting point for targeted emissions reductions.

How can I participate?

RGGI states will be offering public comment and listening opportunities in the coming months. Acadia Center will be offering a webinar on April 11, 2023, at noon (EST) to provide information from our RGGI Report that can be used in commenting to RGGI states in the public processes they will be starting soon. We will be preparing additional materials to help interested parties provide comments to the states.

Wind Energy is Needed for Electrifying our Economy

Recent disputes between offshore wind operators and Massachusetts regulators highlight how our clean energy future is far from guaranteed. The two projects in dispute, Commonwealth Wind and SouthCoast Wind (formerly Mayflower Wind), together with Vineyard Wind Project 1, make up 3.2 gigawatts of offshore wind energy Massachusetts has planned for 2030. These offshore wind projects are essential to decarbonizing our electric grid and meeting the growing demands of key sectors, such as electric vehicles and heating buildings.

Fossil gas utilities, however, are asking regulators to use new wind projects to create green hydrogen as a heating fuel to replace fossil (natural) gas. But the data is clear; using renewable electricity directly – for example in heat pumps or electric cars – will always be more efficient than using that same electricity to produce hydrogen and pipe that hydrogen through the leaky gas distribution system. It’s a matter of physics. If regulators allow gas utilities to use renewable energy to produce green hydrogen to heat Massachusetts buildings, utilities will hijack our offshore wind energy resources and/or other sources of clean electricity, endangering our climate goals.

Buildings generate 27 percent of Massachusetts greenhouse gas emissions, one of the largest sources of emissions in the Commonwealth. In 2020, then-Attorney General Maura Healey urged the Department of Public Utilities  to open a “Future of Gas” investigation to determine how we can rapidly decarbonize our buildings sector. The result of this utility-led process is not surprising, but also not a low-emissions or low-cost solution. Gas utilities assert the need to continue using their pipelines (replacing some and building more) to distribute a blend of green hydrogen and “renewable natural gas” as an alternative to using electric heat pumps to heat our homes and other buildings.

The gas utilities claim that using this blended gas for heating would reduce demand for electricity, compared with switching to electric heat pumps. As they have provided little or no evidence to support this, we investigated two simple questions:

• If gas utilities rely on green hydrogen, made using renewable electricity to convert water into hydrogen with electrolysis, how much renewable electricity would be needed?
• How much renewable electricity would be necessary to provide the same amount of heat to homes and other buildings using heat pumps, as proposed by the Massachusetts Clean Energy and Climate Plan for 2050?

Our finding disqualifies the use of green hydrogen for heat, without even considering the myriad issues of climate impacts, cost, equity, health, and safety that also should disqualify using green hydrogen to heat buildings.

We found that a 20 percent volume blend of green hydrogen (which would only replace 7 percent of the total gas) in the fossil gas distributed in Massachusetts would use 3.4 times as much electricity as heat pumps. While Massachusetts utilities have procured only 3.2 gigawatts of the mandated 5.6 gigawatt offshore wind by 2027, about 3.9 gigawatts would be needed to produce enough green hydrogen for this 20 percent blend. Thus, producing sufficient green hydrogen to satisfy the utilities’ plans to add it to the gas pipelines would deplete limited renewable energy and derail our efforts to decarbonize the electric grid.

Gordon Richardson has worked as an independent consultant, a consultant with Arthur D. Little, and as chief engineer at Houston-based Eastman Whipstock Inc. He is the coauthor of a report on green hydrogen production for Gas Transition Allies.  Ben Butterworth is the director of climate, energy, and equity analysis at the Acadia Center.

To read this article in Commonwealth Magazine, click here.

Correcting the record on decarbonization

A RECENT COMMENTARY,  “Decarbonization road map has some gaping holes” by Arnold J. Wallenstein, argues that Massachusetts must scale back its efforts to decarbonize its energy system. Unfortunately, the piece relies upon incomplete assumptions while making glaring omissions about the viability of clean energy. It glosses over the health, climate, and economic burdens imposed by our current outdated energy system, and it ignores that the transition to clean energy is well underway both regionally and nationally.

The energy system in Massachusetts is heavily dependent on fossil fuels. Nearly 50 percent of our electricity is produced by fossil gas. Over 80 percent of our homes and businesses are heated by fossil fuels. And fossil fuels do not produce a reliable system. Whenever a winter storm or a hot summer day arrives, we all cringe in anticipation of whether the power will stay on. Fossil fuels are expensive, too. Electricity rates just increased by 64% percent  in some areas of the state. Other states, such as New Hampshire, saw increases as high as 112 percent. Volatile energy prices come baked into the cake with fossil fuels, as anyone purchasing heating oil or propane this winter knows from seeing prices double.

Additionally, fossil fuels cause poor indoor air quality, damaging the health of the most vulnerable among us – children and the elderly – particularly those in lower income communities and communities of color. That’s not even counting their contribution to catastrophic climate change. And we’re shipping billions of dollars out of state each year for the privilege of unreliability, volatile prices, health problems, and climate destruction.

The good news is that clean energy technologies are market ready, cost-effective, local, healthier, cheaper to operate, and more reliable. For these reasons, the movement towards a wholesale turnover in power generation and heating and consumption technologies is well underway in our region.

Fortunately, Gov. Maura Healey understands the importance of addressing our existential climate threat – for instance, rising oceans and storm damage are a serious concern for Massachusetts – and seizing the economic opportunities presented by localizing our energy production sector, particularly for moderate- and low- income households. In her inauguration speech, she committed at least 1 percent of the state budget to environmental and energy agencies, and she has now followed through with $534 million in her first budget. She promised to triple the budget for the Massachusetts Clean Energy Center and to create a Green Bank to foster investment in resilient infrastructure. She has talked about an investment in the climate economy similar to the $1 billion investment former governor Deval Patrick once made in the growing biotech industry. Former governor Charlie Baker sought to make a similar investment during his final year in office.

Healey also pledged to double offshore wind and solar targets, quadruple energy storage deployment, and put a million electric vehicles on the road by 2030. Importantly, Massachusetts’ neighbors are, in some cases, making more aggressive commitments, like Rhode Island’s mandate to have 100 percent renewables by 2033, or New Jersey’s brand-new commitment to 100 percent clean electricity by 2035. Wallenstein fails to make reference to these goals – including, most importantly, the governor’s urgency to tackle these issues. Recycling 10-year-old talking points to turn the clock back 10 years is not a vision for the future.

Across the country, renewables accounted for 22 percent of the total electricity generation in 2022 and are projected to rise to 24 percent in 2023. From Q3 2020 through Q2 of 2022, the US added 63.2 gigawatts of new wind and solar power generating capacity against only 10.4 gigawatts for gas (and none for coal). And with the passage of the Inflation Reduction Act, tax incentives are now in place to drastically increase the pace of renewable energy adoption. In fact, it is now less expensive to operate solar and wind electricity generation than most fossil fuels.

This makes sense as wind and/or solar energy are already the cheapest power source for two-thirds of the people in the world, including the US (and New England), where solar is our cheapest power source. All grid-scale clean energy projects enter our power grid via a competitive bidding process, one in which clean energy generators are forced to increase their bid prices to keep fossil fuel operators competitive. There are no “undisclosed” costs. Once clean operators deliver their projects, they will supply electricity for fixed rates.

Wallenstein included numerous false statements about the Massachusetts 2050 Decarbonization Roadmap in his piece. While there are too many falsehoods to dissect each one in detail, one particularly egregious statement in his piece stood out: “Unbelievably, there is no cost analysis to be found in the 2050 Decarbonization Road Map.” In-depth cost analysis is actually one of the central pillars upon which the Roadmap was built. In fact, Section 5.6 of the Energy Pathways to Deep Decarbonization portion of the Roadmap is quite simply titled “Cost.”

The sophisticated modeling that is core to the Roadmap examined the costs of nine different paths, and specifically answers the question: “Under the most likely assumptions, what is the least-cost deployment of energy system technologies that achieves deep decarbonization?” The most cost-effective pathway shows that, by 2050, fossil fuel generation accounts for less than 1 percent of electricity supplied to Massachusetts while over 90 percent of building space and water heating utilize consumer and climate friendly electric heat pumps. Reading the Roadmap closely, for 0.25 percent of the state’s total annual economic output we can take the most cost-effective path to net zero emissions instead of just watching the world burn.

Massachusetts also has among the greatest offshore wind power potential of any state in the nation. According to the National Research Energy Laboratory, Massachusetts can produce 1,050 terawatt hours (TWh) per year of electricity. That far exceeds both Massachusetts’ current consumption of 56 TWh per year and the laboratory’s projection of future needs after widespread electrification of 140 TWh. The business case for embracing our most affordable and most plentiful local resources is fairly obvious.

Wallenstein’s piece also trotted out an old canard about how the sun doesn’t always shine or the wind doesn’t blow as an argument to hold on to our dirty fossil fuel system. However, his piece curiously ignores clean energy options that balance wind and solar, such as the increasing prevalence of battery storage. California increased its battery storage capacity from 0.25 gigawatts to 3.2 gigawatts from 2020 to 2022, and that new storage played a critical role in keeping the state’s power on during this past summer’s extreme heat waves. Massachusetts is seeing storage projects move forward: Eversource has installed a 25 megawatt battery in Provincetown, designed to improve power reliability for the Outer Cape.

Long-duration batteries are just around the corner. Somerville-based Form Energy is opening a factory space in West Virginia that in 2024 will start producing 100-hour, 500 megawatt batteries that rely on iron – the most abundant metal on earth. This doesn’t even touch on other options, like better coordinating our grid with clean energy from neighboring systems. There are clean energy answers for how to improve reliability that don’t require an endless reliance on climate-destroying fossil fuels.

And let’s be clear: our fossil fuel-based system is not exactly reliable. At the end of 2022, New England suffered a two-day cold snap that left hundreds of thousands without power, since dubbed “The Nightmare Before Christmas.” The cause of the outages was predominantly a failure of fossil fuel operators to fire on demand. New England’s own grid operator issues annual winter outage warnings and insists significant investment must be made to improve the reliability of its own system. At the most recent such proclamation, Rebecca Tepper, now Massachusetts’ secretary of energy and environmental affairs, said, “We are overly dependent on natural gas. And the region is at risk any time that we have some kind of disruption on that system.”

Everyone involved agrees we will need to spend money to improve our energy system, particularly the grid that distributes that power. The question is where we are going to spend those citizen dollars. We can spend them on leveraging clean and affordable energy from local sources rather than subsidize expensive, unhealthy and not-too-reliable fossil fuel infrastructure. It seems like an easy choice.

It took decades to build our reliance on fossil fuels and it will take some time to wean off of it. Fully modernizing our system with clean electricity and converting our transportation and building heating/cooling systems to clean energy will not happen overnight. Eventually existing fossil fuel companies will need to find new ways to earn revenue. We invite them to join the momentum heading in that direction. Massachusetts’ most important goal now is to unite towards modernizing its energy system to benefit all the people of the state, not cling on to an increasingly outdated system that no longer can meet the needs of the public.

Joe Curtatone is the president of the Northeast Clean Energy Council, Daniel Sosland is president of Acadia Center, and Larry Chretien is executive director of the Green Energy Consumers Alliance. To read this article in Commonwealth Magazine, click here.

The Nightmare Before Christmas

Have you looked at your electric bill lately? If you live in New England, your rates for this winter are likely to be higher than ever. In the past, Acadia Center has highlighted that this spike in prices is very likely due to our grid’s overreliance on fossil fuels like natural gas. And this week, there’s a report from Sierra Club and Strategen that confirms gas to be the culprit. What’s more, it shows that over the long term, the most effective way to protect customers from price spikes (and the climate and health damaging pollution fossil fuels create) is to transition New England’s generation to clean energy resources.

We have also seen a lot of recent information that pokes holes in the assumption that fossil fuels are more reliable than clean energy in the winter. One such example comes from Christmas Eve, 2022. As you may recall, our region was dealing with an arctic blast (itself an increasingly common phenomenon caused by climate change). Although the grid as a whole fared pretty well (the lights stayed on!), fossil fuel plants appear to have fared alarmingly poorly. And it’s not just New England – PJM, the power grid that runs from North Carolina to Chicago saw fossil fuel-fired plants fail to perform while wind provided three times as much power as planned.

In New England, the electric grid is managed by ISO-New England (ISO-NE), which operates under a mandate to maintain reliable electric service in the six state region. On a ‘normal’ winter day, the real time energy market (which you can follow on the ISO to Go app) shows prices under $100/MWh. On December 24th, though, at the peak hour, the real time energy prices in the ISO-NE energy market spiked to over $2,800/MWh, a shocking sign that things weren’t normal. When a number of generators (who we now know to be fossil fuel-fired) that had committed to run instead no-showed, ISO-NE instituted some of its emergency procedures. Stopping short of asking consumers to voluntarily conserve energy, ISO-NE ordered all of the units that were capable of coming online quickly enough to meet the peak energy demand between 4 and 6 PM, to start running. They did, there was enough energy, and, most importantly, the power stayed on. The plants who “no-showed” have to pay penalties of around $39M, all of which goes to the plants who came to the rescue under ISO-NE’s Pay for Performance rules.

So what happened? And what can we learn from it for future winter storms? ISO-NE released a report on the Christmas Eve event that found that around 2,275 MW of generating capacity (over 1/8 of the peak load that day) that was expected to be available for the peak hour became unavailable for a number of reasons. The data released by ISO-NE so far show that at least 90% of these facilities burned fossil fuels – 33% were dual fuel generators (oil & gas); 29% residual fuel oil; 15% natural gas-only generators; and 13% were distillate fuel oil generators. ISO-NE reports that 65% of these reductions were due to mechanical problems like stuck valves and fuel pump failures – these mechanical issues could be coincidental, but the magnitude raises some questions about whether those facilities are prepared for the cold winter temperatures. Regardless of the reason these facilities weren’t online when needed, it drives a hole in ISO-NE’s conclusion that fossil fuel plants are always more reliable and need to be maintained through the rise of renewable energy.

In the past, ISO-NE’s warnings about potential issues in the winter called for needing more gas. Acadia Center has pointed out the fallacy of this argument – New England’s overreliance on gas for both the majority of our electricity generation and heating of buildings creates a risk of blackouts when there is not enough gas to go around or when international instability spikes prices. The solution to that is not doubling down on gas – it’s diversifying our resource mix, making better use of flexible demand and demand response, and adding more renewable energy, where the fuel is free.

In Acadia Center’s estimation, four reforms could help avoid crises like this in the future:

• Diversify the resources and bulk up demand response programs: As Acadia Center and its partners outlined in our Winter Reliability white paper, residential, commercial and industrial, and energy efficiency programs provide controllable demand that can help keep the grid reliable in real time. A balanced portfolio of complementary renewables like wind and solar can displace fossil fuels, and adding battery storage in stacked form, can allow us to move way from our gas overreliance now, even while we wait for long-duration storage that can outlast a winter storm on one battery.
• Coordinate to build the transmission needed to bring renewables: although the New England states have individually made commitments to decarbonizing their power and entering into procurements of renewables, the lack of a coordinated regional approach to building transmission is keeping these large scale hydro, wind, and offshore wind projects from coming online. Hopefully 2023 will bring more regional coordination (and, dare we wish, help from ISO-NE?) to work with affected communities to build the necessary transmission.
• Make gas plants buy on firm contracts, or at least reflect their capacity rating to show they’re taking the risk of no fuel: in the past, ISO-NE has offered to pay certain generators to enter into firm contracts (which get first priority for the gas), rather than relying on the spot market. But such contracts are expensive, and many generators (particularly dual fuel) opt to only use gas when it’s most affordable. But, as Christmas Eve showed, such business decisions can affect the whole grid. The capacity rating for renewable energy is often lowered to reflect the intermittent nature – the risks of fossil fuels should be reflected, too.
• Reform ISO-NE governance so consumers have more of a say in decisions that impact our air, our economy, and our family budgets: for the Northeast to achieve its climate goals and capture the many benefits of clean energy resources, the rules and priorities that govern the regional electricity system must change. Through analysis, public education, and coalition engagement like with our partners in Fix the Grid, Acadia Center is driving efforts to give consumers a voice within ISO-NE.

Acadia Center is working with our coalition partners to promote these reforms at ISO-NE and NEPOOL (the stakeholder body for ISO-NE) and in public engagement and bringing to consumers information about ISO-NE and how it impacts your life and wallet.