How Low-Cost Can U.S. Offshore Wind Go? New Study Looks at the Power of Scale in Massachusetts

This post is by who is a senior energy analyst with the Union of Concerned Scientists and a director on the RENEW Northeast board.

The effects of a state committing to offshore wind power at scale and over time, it turns out, are pretty impressive. A new study looks at what enticing the offshore wind industry to take root and flourish on this side of the Atlantic might mean, and suggests that Massachusetts can learn—and benefit—plenty from what Europe has already learned and done, to great effect. All it takes is foresight and commitment.

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Speakers Debate Massachusetts Clean Energy Legislation

Speakers at the EUCI US/Canada Cross-Border Power Summit on March 15, 2016, debated New England energy policies including pending legislation in Massachusetts on the procurement of clean energy resources, as reported by RTO Insider, “Market Policies, Emissions Goals on Collision Course in New England.”

Francis Pullaro, executive director of RENEW Northeast, which represents renewable energy developers and environmental organizations, said current market rules skew toward natural gas and disadvantage clean energy resources. Natural gas “resources are going to be built over the next couple years with generous capacity payments” that make financing easier to obtain, he said.

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RENEW Supports ISO New England Rule Changes Benefiting Renewable Energy

On April 15, 2015, ISO New England submitted tariff revisions for the dispatch of certain wind and hydro resources, which are classified as Intermittent Power Resources under the market rules, using Do Not Exceed Dispatch Points. RENEW Northeast submitted comments on May 14 that strongly support the ISO’s proposal to implement a system for the real-time economic dispatch of wind and intermittent hydro resources that are not Settlement Only Generators. RENEW’s comments included nine minor recommendations to address a number of details about how this program will be implemented.

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RENEW Offers Model to Promote Development of New York’s Wind Resources

Following the New York State Energy Research and Development Authority’s (NYSERDA) July 1, 2014, supply-side resources Stakeholder Roundtable discussion, RENEW recommended the state move from a model of central procurement for renewable energy certificates (“RECs”) to the distribution utilities becoming counterparties to renewable generators for long term contracts consisting of energy and RECs both at a fixed price. RENEW offered several examples of how this approach in New England lowered project development costs and yielded the lowest prices for consumers. RENEW also urged New York to work in concert with New England on renewable energy and transmission development, such as is now being conducted between the governors of New England, to further New York’s economic development and New England’s renewable energy goals.

New England Wind Has Potential to Reduce Electricity Costs by $1 Billion Per Year

In March 2013, an interim update from ISO New England calculated the annual wholesale electricity cost to consumers (LSE Energy Expense) with 892 MW of wind on the system, which is very close to what is installed today and estimated to produce about 2510 GWh/year, to be $7.955 billion. If all wind resources active in ISO New England interconnection development queue at the time of the study were also built, which would bring the total wind capacity in New England to 3927 MW and estimated to produce 11565 GWh/year, it would drop total wholesale electricity costs to consumers to $6.881 billion. This represents a $1.074 billion/year savings compared with the amount of wind now on the ISO New England system. That is equivalent to savings of $354,000/year per additional MW of wind installed or $119/MWh of additional wind generation. Wind with its “free fuel” can lower wholesale energy prices. Some transmission system upgrades will be needed to achieve the level of savings and wind deliverability seen in the study but the costs of these upgrades should be considered against the energy cost reductions and reliability benefits created by completing these upgrades. For example, the $5 – $8 billion transmission cost estimate given in the 2010 NEWIS study was for a transmission build out that the NEWIS study found would be sufficient to integrate as much as 7 GW of wind (page 118 of the NEWIS report), meaning much less transmission should be needed to integrate 4 GW of wind.

The final Economic Study Report on page 75 (figure 6-53) and page 69 (Figure 6-22) shows the LSE Energy Expense to be essentially the same as the numbers given above. (The draft report gives the results in figures instead of tables, so the precise values can’t be determined, but appear to be the same as the above numbers.)

These numbers all assume natural gas prices between $4 and $5/MMbtu (lower for summer, higher for winter, (Figure 4-3). These gas prices reflect what was seen in 2011, but gas prices that year were the anomaly. Since 2011, we’ve seen much higher gas prices in the colder months. In December 2013, natural gas prices in New England averaged about $14/MMbtu (ISO New England Chief Operating Office report, January 10, 2014, slide 75). In February 2013, gas prices averaged about $17.50/MMbtu. When gas prices (and marginal electricity prices) go up, the savings from wind should also go up as increasingly expensive energy is displaced as depicted in the attached slide.

RENEW addressed these issues in a 2013 op-ed co-written with the Maine Wind Energy Association.

New England Initiative Can Lead To Integration Of Large Quantities Of Wind Power

The New England states are considering whether to expand large hydropower imports into New England with the New England States Committee on Electricity (NESCOE) anticipating submitting a report on possible options to New England’s governors by the end of the year.

According to NESCOE, land-based and offshore wind resources will be largely responsible for meeting the region’s renewable energy goals and transmission upgrades will be needed to make larger quantities of wind energy deliverable in the years ahead.

Transmission lines to bring large hydropower into New England should be planned to allow wind power to tap into those lines to bring clean energy from remote regions to population centers. This will allow for the most economic use of the lines as wind and hydropower can complement each other to achieve a higher utilization rate on the transmission lines

“Renewable energy like wind and solar can work together with hydropower and, if done in a smart way, that combination can help move the New England States towards a clean energy future,” said Francis Pullaro, Executive Director of Renewable Energy New England, Inc., (RENEW).  Large-scale hydropower may play a role in making long distance transmission upgrades more economic allowing additional wind energy to be brought online. Wind and hydropower can work together to keep consumer electric rates down, reduce pollution, and improve electric reliability by diversifying our energy mix.

RENEW encourages the states to consider that hydropower contracts should reduce emissions beyond what would otherwise happen in a business as usual case.  “To count towards climate change goals, it is essential that any hydropower contract actually reduce emissions and not simply shift emissions around the region.  This could happen if states are simply importing hydroelectricity that would have otherwise served Canadian load or the load of another U.S. state.  States should ensure that their hydro contracts have strong safeguards to measure and verify legitimate, new emissions reductions,” said Pullaro.

RENEW welcomes the opportunity to work with the states to find ways to lower the cost of new transmission, possibly using large-scale hydropower, to support increasing the amount of variable renewable resources like wind energy and/or provide cleaner and more reliable balancing power.

RENEW Members Speak at Connecticut Energy Forum

At the June 12th meeting of the Connecticut Power & Energy Society, several RENEW members participated in a panel discussion on the role of wind power in Connecticut’s energy future. The panelists discussed recent legislation in Connecticut and Massachusetts promoting renewable resource development, the environmental benefits of wind power, siting wind plants in Connecticut, and the future of wind development in New England’s Atlantic waters. Eric Johnson, Director, External Affairs at ISO New England, was the moderator.

From L to R, Francis Pullaro, RENEW; Matt Kearns, First Wind; Clint Plummer, Deepwater Wind, Greg Zupkus, BNE Energy.
From L to R, Francis Pullaro, RENEW; Matt Kearns, First Wind; Clint Plummer, Deepwater Wind, Greg Zupkus, BNE Energy.

Windpower Benefits Rhode Island Environment and Economy

At a program sponsored by the Environment Council of Rhode Island (ECRI), RENEW’s Executive Director, Francis Pullaro, explained how increasing wind energy production in Rhode Island on land and in its ocean waters can benefit the state’s environment and economy. Addressing ECRI members at the event in the rotunda of the Rhode Island State House were Gov. Lincoln Chafee, Chair of the House Environment and Agriculture Committee Rep. Art Handy, ECRI President Tricia Jedele, ECRI Vice-president Mike Roles, and Department of Environmental Management legislative liaison Nicole Pollock.

Mr. Pullaro also spoke to the current interest policymakers in Rhode Island, Connecticut and Maine have in finding an appropriate role for large Canadian hydropower in their energy portfolios. He outlined RENEW’s vision for large Canadian hydropower in New England in which it provides cleaner balancing power for variable resources like wind and solar as opposed to being a substitute for them.

From L to R, Mike Roles, Tricia Jedele, Gov. Lincoln Chafee, Nicole Pollock, Rep. Art Handy, and Francis Pullaro.
From L to R, Mike Roles, Tricia Jedele, Gov. Lincoln Chafee, Nicole Pollock, Rep. Art Handy, and Francis Pullaro.

Support the American Renewable Energy PTC Extension Act of 2011

Help extend the wind industry’s top policy driver, the federal production tax credit (PTC), for four years. Encourage your representative to cosponsor H.R. 3077, The American Renewable Energy Production Tax Credit Extension Act of 2011.

America needs homegrown energy resources to power the nation and with our economy struggling, we’re in dire need of American jobs. Wind energy delivers in both of these areas. The PTC has been instrumental in helping the wind industry to:

• Lower the cost of wind power by more than 90%
• Foster economic development in all 50 states
• Manufacture components for wind turbines at over 400 U.S. manufacturing facilities
• Power the equivalent of 10 million American homes

Facing the threat of the PTC expiring, wind project developers are hesitant to plan future U.S. projects and American manufacturers have seen a marked decrease in orders. Job layoffs have already begun. The wind industry is facing the recurrence of the boom-bust cycle it saw in previous years when the PTC was allowed to expire. In the years following expiration, installations dropped by between 73 and 93 percent, resulting in significant job losses.

The PTC is a tax incentive that helps keep electricity rates low and encourages development of proven clean energy projects. The PTC will expire in 2012 unless Congress takes action. Failure to extend the PTC will lead to thousands of job losses and put the brakes on the vast progress we’ve made as a nation toward making clean, affordable, homegrown wind energy part of the U.S. electricity portfolio.

RENEW Urges Sensible Wind Siting Reform in Massachusetts

Significant barriers to the siting of wind turbines are holding back Massachusetts’ ability to capitalize on economic development opportunities explain the New England Clean Energy Council and RENEW in an opinion piece in the Cape Cod Times. The Massachusetts legislature has before it bills to improve Massachusetts’ wind permitting process to allow the Commonwealth to meet its potential in wind energy.
Read it here.

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