When one looks at a map of Maine, it is easy to see that we share most of our border with Canada. In practical terms, we are at the end of the American pipeline for energy sources shared with our neighboring states, for Maine is the most easterly state in the union. This fact creates significant energy cost issues for Maine.
Given the push to embrace cleaner energy sources, does it not make sense to explore alternative energy options with our northerly neighbor?
Currently, there is a proposal by the New England Clean Energy Connect project to access Hydro-Quebec’s massive power resources with our electric grid through western Maine. The grand plan is to meet the mandated alternative energy demands of Massachusetts. But Maine stands to gain.
This $950 million project would expand an existing power line right-of-way in western Maine from Wyman Dam in Bingham to a new converter station-transmission hub outside Lewiston. Central Maine Power would secure additional land access in far northwest Maine — already in place — as well as permits from towns along the existing route, mostly completed, to build the connection to Hydro-Quebec’s transmission lines across the border in Quebec. Potentially, 1,700 jobs would be created over the three-year construction period, while power line-sited towns would receive new property tax payments for decades. None of the cost for the new DC power line would be borne by Maine rate payers.
Mainers could see more secure and stable energy pricing, as the New England ISO energy market would be stabilized. Projections estimate that Maine’s combined energy bills could drop up to $40 million a year. Apart from the cost savings, the New England Clean Energy Connect project is necessary. Retiring coal and nuclear energy capacity must be replaced in the next few years, while regulators have stymied natural gas line expansion in New England even as demand soars. The contract with Hydro-Quebec also would block nondispatchable energy supply from the grid. Translation: Wind and solar, both non-instantaneous energy providers, could not connect, eliminating one source of contention for western Maine residents concerned about wind power proliferation beyond the existing Mayfield-Bingham wind farm.
Many affected western Maine towns are overwhelmingly in favor of the proposed CMP project. And why not? They have a history of embracing and understanding the impact of hydropower. In 1929, Walter Wyman pushed to build Wyman dam in Bingham, at the time one of the largest dams in the east. There was opposition; the state even prevented Wyman and CMP from selling his electric power out of state. That law was repealed in the 1950s. Supplying inexpensive electric power up and down the Kennebec River valley, Wyman Dam helped a diverse cross-section of businesses to grow and prosper.
In a perspective on Wyman’s forward-thinking vision moving toward hydropower, the Maine Historical Society’s review of his accomplishments includes the following. “Even in the 21st century, the shadow of this older way of life falls across the state, in towns of fierce attachment to locality, an ambivalence about modernity, and an acute sense of loss, as well as gain, that comes with progress.”
Our energy supplies need to be affordable and continuously scalable. Energy infrastructure tends to be very capital-intensive. Investors, regulators and users need to know it will work for decades so that our energy supply is reliable and sustainable. Before the New England Clean Energy Connect project is realized, opponents to hydropower projects must offer realistic alternatives on the scale necessary to supplement the 85 percent of America’s energy currently based on coal, oil, nuclear and natural gas. Existing wind and solar infrastructure alternatives help our electric energy supply, yet they remain fractional contributors on the scale necessary for everyday life. Dispatchable, on-demand power such as Hydro-Quebec is offering to New England and Maine appears to be the best big solution to Maine’s perennial search for an affordable energy supply.
The cold weather over the last few weeks has resulted in a significant amount of electricity being generated by coal and oil in New England. But, on an annual basis, the amount of oil- and coal-generated electricity will still be about 1% or less of all of the generation in the region. It’s important to keep that fact in perspective, especially as the Commonwealth of Massachusetts’ clean energy solicitation is awarded.
The Boston Globe editorial last week implied that it would be worth the expense to select the winner of the solicitation based on its ability to deliver large-scale hydro sooner than a less expensive project—which would deliver the same energy significantly cheaper but, perhaps, a little later—simply to avoid the small amount of coal and oil we burn when it is exceptionally cold. This makes no sense.
This decision is bigger than the near-term environmental impacts and goals. This is a decision that we, as consumers and environmentalists, will have to live with for 20 years.
History has shown that, no matter how good an energy deal looks when it is signed, circumstances change over 20 years and, in New England, the economics have usually ended up not as good as predicted.
We should at least start with the best deal we can and take the long view on the environmental benefits. Opponents of new gas pipelines point to this longer view in accepting the short-term impacts of constrained gas capacity in the region (which is why we’re burning coal and oil). We need to take that same long-term view in the selection of the deal for clean energy.
Projects of this size require extensive permitting and construction time. No one can be certain of timing. Pick the one that’s lowest cost and capable of being built in a reasonable time horizon. Doing it right is more important than doing it quick.
Clean energy in Massachusetts is finally subject to the laws of economics. That’s good news for both businesses and residents throughout the commonwealth who pay some of the highest electric rates in nation.
The current competitive bidding process being conducted by Massachusetts utilities for large scale hydropower, onshore and offshore wind, and solar will not lower the price of electricity – at least not in the next few years. But ratepayers will at least be assured their money is being spent wisely.
Governor Charlie Baker signed two energy bills in 2016 that swept away the sweetheart deals and overly generous subsidies that characterized the clean-energy business prior to that time. The bills required purchases of clean energy to be competitive and transparent. The results are already evident, even before the contracts are signed.
In April 2017, as part of the first requirement for the utilities to purchase clean energy (primarily large hydropower from Canada and onshore wind) a request for proposals was sent to developers.
Suppliers responded with nearly 50 proposals, far more that the total cumulative amount allowed in the legislation. Some names you might recognize – Hydroquebec, for instance, has been sending power to Massachusetts for decades. But others may not be as familiar – Emera, Nalcor, TDI, Nextera, and Avangrid – some partnering with utilities National Grid and Eversource - all vying to serve Massachusetts consumers.
The clean energy process even attracted a bid from New England-based Deepwater Wind, which submitted a small offshore wind proposal, even though the larger competitive solicitation for offshore wind was not due until this month, separate from the initial clean energy bidding process.
While prices haven’t been disclosed yet (the analysis is based on a complex evaluation of bids and is confidential until a winning bidder is selected following by a public process at the Department of Public Utilities process), the fact that so many developers “sharpened their pencil” is a good start.
Bids under the clean-energy program are scheduled to be awarded around January 25. Bids for the separate offshore wind program will be selected on April 23..
Competition will have a particularly dramatic effect on solar energy.
Although some small solar projects were bid as part of the clean energy proposals, the vast amount of solar installations are currently subsidized through a different program that has been around for several years. It has become not only expensive – $500 million dollars per year, but also overly generous as the cost of solar installations has dropped more than 50 percent due to lower market prices.
Most states went to a competitive framework years ago – and saw significantly lower prices, but Massachusetts program is just starting. Bids for new solar projects were due in December. Those bids will establish a baseline process for solar power for the next several years. Based on the experience of other states, the prices should drop by more than half.
And that’s not all. In both the offshore wind and solar programs, future projects must be lower than the current prices, all but guaranteeing that the state has bent the price curve for these installations.
It’s an ambitious move. And in the aftermath of the Cape Wind debacle, some Massachusetts ratepayers may find it hard to believe that clean energy and offshore wind farms could be competitively priced and developed cost-effectively.
But that is what is happening. And the diversity of projects was no surprise to AIM – early supporters of bringing competition to clean energy.
The debate about whether the commonwealth will pursue clean energy is over. So is the debate about the value of competition to Massachusetts electric customers.
Business group calls on state regulators to focus on ratepayer interests as well as reliability and sustainability
In a letter today the Massachusetts High Technology Council (the “Council”) urged the Massachusetts Department of Energy Resources (the “Department”) to give the highest priority to considerations of cost and economic impacts on electricity ratepayers as the Department considers transmission projects that will deliver renewable energy in support of the Commonwealth’s ambitious carbon reduction goals.
The Council recently joined with Associated Industries of Massachusetts and the Massachusetts Business Roundtable to host a public discussion featuring several suppliers bidding for the Massachusetts “83D” clean energy procurement.
“As regulators deliberate on the best project for Massachusetts’ clean energy future, strong consideration must be given to impacts on our ability to meet the needs of our growing economy,” said Christopher R. Anderson, the Council’s President. “Make no mistake, cost matters. We support the Commonwealth’s efforts to be a national leader in renewable energy, but we must all be mindful of the impact energy costs have on job creation and our reputation as a leader in the innovation economy.”
Regulators should be mindful of the evolution of energy technologies and the growing impacts of energy efficiency, smart grids, smart buildings, demand response, microgrids, batteries, and solar technologies are having on overall energy production and distribution.
Current and historic data, including key metrics tracked in the Massachusetts Technology, Talent and Economic Reporting System (MATTERS), the Council’s 50-state competiveness dashboard, show that energy costs in Massachusetts are consistently among the highest in the nation. For example, the average retail price of electricity Massachusetts is currently the 5th highest in the nation and ratepayers continue to see regular increases in base rates.
Overall, the high cost of doing business in Massachusetts is a competitive disadvantage for the state. In the just-concluded Fall 2017 MATTERS Executive Competitiveness Insight Survey, 77% of respondents cited the high cost of doing business as a top risk facing their business.
Following the 2016 enactment of an expansive clean energy law, Governor Baker and legislators repeatedly and wisely urged that only the most cost-effective projects should be considered in the clean energy RFP process and the affordability of each proposal must be given the highest priority. We call on DOER and all involved in the procurement process to heed that call.
In January 2018, Massachusetts’ first large-scale clean electricity solicitation process will conclude. The Commonwealth’s Department of Energy Resources, in partnership with electric distribution companies, are responsible for awarding long-term power contracts for delivery of up to 1,200 megawatts of clean energy into the state’s electrical grid.
The Massachusetts Clean Energy “83D” solicitation for imported hydropower, onshore wind power, energy storage, solar power and other resources is the result of the landmark An Act Relative to Energy Diversity, which was enacted in 2016.
About the Massachusetts High Technology Council – www.mhtc.org
The Massachusetts High Technology Council is the oldest and only cross-sector association of technology, professional services, and higher education CEOs and senior executives in Massachusetts. As advocates for public policies and programs that create and maintain a healthy and competitive business climate, the Council has lead winning strategies for 40 years.