Today’s battles over big energy projects in New England obscure the region’s past history of successfully bringing key visions to reality. But they also call into question whether the wholesale electricity market that has evolved over the past two decades can survive.
In the 1970s, when utilities were in charge of power planning, cooperative investments among private companies put nuclear reactors in every state but Rhode Island.
In the late 1990s, global energy companies were able to route two natural gas pipelines through Maine to bring new supplies of Canadian gas into the region.
In the mid-2000s, the Regional Greenhouse Gas Initiative, known as RGGI, became the first market-based program in the United States to reduce greenhouse gas emissions. Maine and eight other Northeast states participate in an auction that caps and cuts carbon dioxide from power plants, and provides millions of dollars of investments in energy efficiency.
In each era, these ventures were models of cross-border cooperation. Even today, they’re helping to keep lights on, homes warm and businesses running.
But today’s effort to build a new transmission line from Canada is different.
New England Clean Energy Connect would bring hydroelectric power from Canada through Maine to Massachusetts. It, too, is being proposed as a regional solution.
But NECEC isn’t part of any planning process run by ISO-New England, the electric grid operator. It’s happening outside the 20-year-old wholesale competitive electricity market.
It’s not designed to carry the lowest-cost power. Although price negotiations are confidential, the power from NECEC is expected to be at least double today’s 3-4 cents per kilowatt-hour average in the region. Those prices reflect the low cost of natural gas. And while the power line would be built by Central Maine Power and its Spanish-owned parent company, Avangrid, utilities didn’t drive the decision. The transmission line is a policy initiative in Massachusetts, the region’s largest energy user.
It’s true that new Canadian power can help replace older coal, oil and nuclear plants that have shut down or plan to retire, but NECEC is the product of a political mandate: Diversify the commonwealth’s energy supply with new sources of clean, renewable energy, and reduce carbon emissions associated with climate change.
The state’s 2016 law, championed by Gov. Charlie Baker, requires Massachusetts utilities to sign long-term contracts for 1,600 megawatts of offshore wind power and another 1,200 megawatts of hydropower or other renewable resources, such as land-based wind or solar.
That process took a big step forward last month, when the state chose the winners of a competition to build a massive offshore wind farm, called Vineyard Wind. One of the partners is Avangrid Renewables, a subsidiary which is majority-owned by the Spanish electric utility Iberdrola SA.
Policy preferences for offshore wind and Canadian hydro raise a question that foreshadows how Maine and the region may get power for homes and businesses in the 2020s, and what they will pay to do it: If these projects are built, how will they affect existing power plants in the region and the existing wholesale electricity market?
“I think there’s a fundamental conflict between large state solicitations for energy capacity, and the goal of using competitive markets to meet consumer needs,” said Paul Hibbard, a principal at Analysis Group, a global consulting firm with offices in Boston.
Hibbard said there’s growing evidence that when politicians pass laws mandating big slugs of renewable energy, it erodes competition in wholesale electric markets. Combined with today’s low natural gas prices, policies that promote “out-of-market” generation threaten the survival of existing power plants, he said.
That’s an argument being used by power plant owners in Maine, which are opposing the NECEC project before the Maine Public Utilities Commission. They argue, among other things, that these projects are being subsidized by electric customers in southern New England and will threaten their ability to compete, or even survive.
They also question whether the NECEC project will lead to real carbon reductions. That’s because some experts have speculated that fossil-fuel power plants in New York state and Canada would be needed to backfill the hydro generation that would be sold to Massachusetts.
With a global imperative to reduce carbon emissions, it’s natural that policymakers will look at the electricity sector. But Tanya Bodell, executive director of the energy consulting firm Energyzt, points out that cars and trucks are the leading sources of carbon emissions. An expert witness for Maine power plant owners in the PUC case, Bodell agrees that focusing on the electricity sector to cut carbon puts the wholesale market at risk.
Writing in a recent issue of the trade publication Electric Light & Power, Bodell concluded:
“The market was designed to implement the lowest-cost solution, and has done so for twenty years. However, policy initiatives now are looking to achieve other objectives including diversification, decarbonization and integration of renewables. The onslaught is unrelenting. If competitive electricity markets do not evolve to value these other attributes, they will be destroyed.”
Tux Turkel can be contacted at 791-6462 or
tturkel@pressherald.com
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