RENEW Northeast congratulates the renewable energy companies that today secured leases from the U.S. Bureau of Ocean Energy Management for development of offshore wind generation off southern New England. The three leases are for 390,000 acres of ocean surface that would be shared with boaters, the fishing industry and all those who currently enjoy use of our waters. “Today’s enormous investment of private capital demonstrates how offshore wind can provide energy on the scale needed to address winter energy reliability needs and reduce carbon emissions while creating thousands of high paying jobs,” said Francis Pullaro, Executive Director of RENEW Northeast.
This lease auction builds on recent competitively awarded contacts for 1,400 megawatts of offshore wind energy by Connecticut, Massachusetts and Rhode Island. Those solicitations showed that offshore wind can provide renewable energy at a highly competitive price while meeting the environmental goals of the New England states.
Today’s private investment in offshore wind casts further doubt on the wisdom of Massachusetts continuing to pursue a contract with Hydro-Quebec that will cost its electricity customers $500 million annually for 20 years, instead of investing that money in local wind and solar energy projects that provide direct benefits to our communities. “Despite the high cost of this imported electricity, it would only deliver power from old resources that Quebec is already selling to its other neighbors and that need no further support from Massachusetts ratepayers,” Francis Pullaro noted.
RENEW Northeast is a non-profit association uniting the renewable energy industry and environmental advocates whose mission involves coordinating the ideas and resources of its members with the goal of increasing environmentally sustainable energy generation in the Northeast from the region’s abundant, indigenous renewable resources.
In a protest to the Federal Energy Regulatory Commission, RENEW Northeast explained how ISO New England’s proposal to give a no-bid contract to the Mystic 8 and 9 fossil fuel generation units will provide “undue” preference, advantage and prejudice prohibited by the Federal Power Act to those units at the expense of state policy resources like wind and solar. This discrimination will hinder attainment of state policy requirements and increase consumer costs.
The current Forward Capacity Market (“FCM”) rules subject new state-sponsored capacity resources to a Minimum Offer Price Rule (“MOPR”), which requires these sponsored assets to bid into FCM at an administratively determined price. The ISO believes that state-sponsored resources must be mitigated in the FCM to avoid a significant overbuild of the New England power system. In its fuel security proposal, however, the ISO seeks to treat resources that have been retained for fuel security- not state sponsored resources- as price-takers in the FCA. The ISO asserts that treating fuel security risk units as price-takers “considers the contribution to resource adequacy of these resources when determining Capacity Supply Obligation (“CSO”) awards and setting the FCA clearing price,” and “will prevent the region from procuring more resources than are needed to meet its resource adequacy objectives.” Of course, the same argument is true for state-sponsored resources. In requiring units having fuel security out-of-market agreements but not units having state-sponsored agreements to be price-takers in the FCA, the ISO is taking a position contradictory to its position on state sponsored resources and one biased against the contributions of state-sponsored resources. It is also one that gives “undue” preference and advantage to those retained fossil fuel units.
Should this provision enter the Tariff, it will join another aspect of the FCM design that disadvantages renewables which is the calculation of the CSO of variable renewable resources like wind and solar compared to generation with interruptible fuel like natural gas generation. While wind and solar are variable, the ISO operates an accurate forecasting system that renders a fleet of solar and wind resources dependable. Nevertheless, the CSO of variable resources is reduced to reflect actual wind and solar. By comparison, all the factors that are driving the next round of fuel-security market improvements that the ISO must submit to the Commission by July 1, 2019, which are pipeline capacity limits and outages, disruptions that can accompany oil and LNG deliveries and limitations due to air emission permits, are limited to fossil fuel resources whose CSOs are not adjusted downward despite the limitations of their fuel sources. The ISO’s lead-off memorandum to begin stakeholder discussions to meet the July 1, 2019, deadline states that the ISO will not be making any changes to the FCM, as it finds it is meeting its requirements for capacity, but will focus on energy market changes to address fuel security. Although a CSO is designed to give the ISO a call-option on the energy from a capacity resource, the ISO apparently has no plans to reduce the CSO for resources they believe are causing the fuel security risk.