editor’s note: The views and opinions expressed in the following article are those of the author and do not necessarily reflect the views or opinions of High-Profile Monthly.
The economic, political and environmental questions at this time of energy infrastructure reinvestment in Massachusetts are, will decentralized, solar and other distributed energy resources be built within the Commonwealth creating its own economic engine or will the status quo prevail and fossil fuels will continue to be the fuels of choice?
ISO-NE, the non-profit manager of the grid within New England, established in 2010, a list of “at risk” retirements of coal and oil generation assets by 2020 and that list has been again confirmed in reports this summer. Gordon van Welie, President and CEO of ISO-NE, in his letter to Congress last April, confirmed within five-years the retirement of Salem Harbor (749 MW), Norwalk Harbor (342 MW) and Brayton Point (1,535 MW) all coal and oil plants plus Vermont Yankee Station a (604 MW ) nuclear plant. These facilities represent ten-percent of installed capacity within New England. In August of this year, ISO-NE announced that it has over 8,300 MW in the replacement queue and yet acknowledges that only six of those fifty-seven projects, totaling 85 MW, have a high degree of probability of going into service.
There is a gap, an opportunity for the Commonwealth to give notice to the market that solar, wind and other distributed energy resources will take the place of retiring oil, coal and nuclear generation assets. There is 31,000 MW of total generating capacity servicing total load in New England. If solar and other distributed energy resources are to make significant contributions to the capacity servicing the Commonwealth, that capacity must come from replacing retiring assets. The market would then respond with storage, fast-start balancing and base-load generation to accommodate the increasing levels of intermittent generation.
In evaluating cost, it is important to recognize that testimony at the federal level recognizes that solar and other renewables suppress the future cost of energy because distributed generation reduces wholesale load at peak demand and bids into the market at prices below generators cost who need to purchase fuel. The current cost of solar at $285 per MW at 200 MW per year is approximately $0.00134 per kWh costing the average residential ratepayer $0.67 per month or $8.01 per year. This cost pales in comparison to the electricity rate increases due to capacity constrained natural gas supply.
Rather than continuing to export our energy dollars out of the state, we should be encouraging investment in decentralized, solar and other distributed energy resources within the state, creating what at least one economist projects is a 1.2 economic multiplier within the state. For every dollar spent on investment within the state an additional twenty-cents goes to benefit the larger economy. For example, the current 1,600 MW solar-carveout program at a local payment-in-lieu-of-taxes level of $10,000 per MW equals $16 million per year in tax revenue for municipalities with few services required. What is required to achieve these objectives and what would such a transition look like?
Required legislation would:
1) Remove all caps on net and virtual metering.
2) Raise the renewable portfolio standard limits to require at least 25% installed capacity servicing total load in the commonwealth by 2025, 40% by 2040 and 50% by 2050.
3) Give notice to the market that the commonwealth will encourage the installation of 4,000 MW of solar and 4,000 MW of wind and other distributed energy resource assets by 2020 and 1,000 MW every year thereafter until installed capacity limits are met.
4) Define the role of the investor owned utilities in facilitating rapid expansion of distributed energy resources and provide incentives for the same. Utilities in the future are going to migrate to providing decoupled, non-volumetric “services” in a renewables and storage market.
5) Provide performance based incentives for a fixed program term and price, reducing the cost of capital, all the while designed to be flexible, responding to rising net and virtual metering cost.
6) Establish uniform taxation standards including firm, fixed pricing for payment-in-lieu-of-tax agreements.
7) Benchmark incentives based upon commodity pricing of panels, inverters and municipal tax agreements.
The time is now for the Commonwealth to act and give notice to the markets that solar, wind and other distributed energy resources will take the place of coal and oil retiring assets.
Doug Pope is President of Pope Energy and is a solar developer