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"What Electricity Resources Can We Count On to Meet New England's Growing Electricity Demand? Renewable Energy". Alan Nogee Energy Program Director Union of Concerned Scientists www.ucsusa.org Massachusetts Restructuring Roundtable Boston, MA November 19, 2004.

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Alan nogee energy program director union of concerned scientists ucsusa

"What Electricity Resources Can We Count On to Meet New England's Growing Electricity Demand? Renewable Energy"

Alan Nogee

Energy Program Director

Union of Concerned Scientists

www.ucsusa.org

Massachusetts Restructuring Roundtable

Boston, MA

November 19, 2004


Eia gas price forecasts 1997 2003

EIA gas price forecasts1997 - 2003


Eia model and assumptions 2002 gas savings offset electric costs of 20 rps

EIA model and assumptions 2002Gas savings offset electric costs of 20% RPS

8

Change in Consumer Electricity Costs

6

4

Billion 98$

Net Cost

2

0

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

-2

Change in Consumer Gas Costs

Source: EIA, Annual Energy Outlook 2000; RPS: 7.5%, no cap or sunset case

-4


Eia model and assumptions 2004 20 renewables reduce both natural gas electricity bills

EIA model and assumptions 2004: 20% renewables reduce both natural gas & electricity bills

EIA: 1% reduced demand for gas = 1% price reduction

$11 billion NPV

Conservative: other studies have found 1% reduced demand for gas = 3% price reduction (EA/ACEEE)

$15 billion NPV

*Net present value using a 7% real discount rate.

Source: UCS, using EIA NEMS model and assumptions


Alan nogee energy program director union of concerned scientists ucsusa

ME: 30% by 2000

MA: 4% by 2009

CT: 10% by 2010

NJ: 4% by 2012

PA: varies by utility

Renewable Electricity Standards - 2002

  • 12 states

MN: 4.8% by 2012*

WI: 2.2% by 2011

NV: 15% by 2013, solar 5% of total annually

IA: 2% by 1999

NM: 5% by 2013

AZ: 1.1% by 2007, 60% solar

TX: 2.7% by 2009

* MN has a minimum requirement for one utility, Xcel.


Alan nogee energy program director union of concerned scientists ucsusa

ME: 30% by 2000

MA: 4% by 2009

RI: 16% by 2019

CT: 10% by 2010

NY: 24% by 2013

NJ: 6.5% by 2008

PA: varies by utility

MD: 7.5% by 2019

Renewable Electricity Standards – November 18, 2004

  • 18 states – CA, CO, HI, IA, MD, MN, NY, RI, WI outside of restructuring

  • Yellow = new since 2002

  • Orange = higher

MN: 19% by 2015*

WI: 2.2% by 2011

NV: 15% by 2013, solar 5% of total annually

CA: 20% by 2017

CO: 10% by 2015

IA: 2% by 1999

NM: 10% by 2011

AZ: 1.1% by 2007, 60% solar

TX: 2.7% by 2009

HI: 20% by 2020

* MN has a minimum requirement for one utility, Xcel.


Renewable energy expected from state standards and funds 2002

Renewable Energy Expected From State Standards and Funds - 2002


Renewable energy expected from state standards and funds november 18 2004

Renewable Energy Expected From State Standards and Funds – November 18, 2004

23,240 MW new renewables

56.1 MMTCO2E reductions

Other**

CO2 reduction equivalent to

* 2.7 billion more trees

* 8.3 million less cars

California

New York

Colorado

Nevada

AZ & NM

Texas

Minnesota

IA & WI

Maryland

NJ

CT & RI

MA

Maine

**Includes Delaware, Hawaii, Illinois, Montana, Ohio, Oregon, and Pennsylvania.


Renewable standards are the primary driver

Renewable standards are the primary driver

  • “RPS will be the most important driver for new renewables in the U.S. and Canada over the next ten years.” Navigant

  • “State-level renewable electricity standards, along with the federal production tax credit for wind, will be the primary drivers of new renewable energy growth...” Platts

  • “In 2001, 75 percent of the wind power developed in the U.S. was within those states with renewable energy requirements.” LBL National Lab

  • “Renewable portfolio standards or purchase mandates are the most powerful tool that a state can use to promote wind energy.” NREL

  • “Renewable portfolio standards have emerged as an effective and popular tool for promoting renewable energy.” Council on State Governments


New capacity contributing to renewable standards thru 2003

New capacity contributing to renewable standards thru 2003

  • U.S. = 2,335 MW

  • Connecticut = 0 MW

  • Massachusetts = 9 MW

    • Built to meet RPS = 0 MW

Source: U.S. EIA


What s going wrong

What’s going wrong?

  • Siting problems

  • No long-term contracts = no financing = no new renewables


Wind siting

Wind siting

  • Challenges on land and sea

  • Encouraged by Cape Wind review process and draft EIS

  • Still reviewing EIS

  • Visual impact of wind: if 6 miles out to sea is not enough to mitigate, what is?

  • Need leadership at all levels


Long term contracts potential solutions

Long-term contractsPotential solutions

  • Central procurement (NY)

  • State-agency funding backstop (MA, RI, NV)

  • Massachusetts Green Power Partnership

    • Mass. Renewable Energy Trust

    • Contracts and options for renewable energy certificates (RECs)

    • Re-sells certificates for RPS, green marketing

    • Fund needs to escrow money, but recycles

    • 100 MW in round 1 ($36 million)

    • Preparing for round 2 ($15 million)

    • Only partial solution: not enough revenues, time lag using alternative compliance revenues

    • Criticized in Boston Herald for supporting out-of-state facility


Why support facilities in other new england states

Why support facilities in other New England states?

  • RPS and fund both for Mass. Customers

    • Fuel diversity

    • Energy security

    • Price stability

    • Environmental improvement

  • Same economic and environmental benefits to customers generated anywhere in New England grid (or delivered to New England grid)

  • US Commerce Clause prohibits discriminating against out-of-state renewables


Consensus report to the legislature on the proposed renewable energy fund

Consensus Report to the Legislature on the Proposed Renewable Energy Fund

  • We agree that the goal of the Fund should be to increase the AVAILABILITY, AFFORDABILITY AND USE OF RENEWABLE ENERGY BY MASSACHUSETTS CONSUMERS through:·   Markets - Supporting increased demand for renewable energy resources via market development in the Commonwealth; ·   Industry - Supporting the continued survival, development and growth ofrenewable energy projects, enterprises and related institutions in the Commonwealth AND REGION; and·   Knowledge - Supporting the expansion of renewable energy expertise at all levels in the Commonwealth.http://www.raabassociates.org/Articles/Renewable_Fund_Final.doc


Potential solution require distco long term contracts

Potential solution: Require distco long-term contracts

  • CA, NV, NM, IA, MN

  • Provide diversity, price stability for customers

  • Regional energy security, price stability

  • Hedge against carbon reduction costs

  • How many people do not have at least 5-10% of their financial portfolios in investments that are likely to cost them more but protect them from price volatility?


Prudence review

Prudence review

  • Companies required by DTE to comply with RPS at least-cost

  • Allowed to sign long-term contracts

  • How is it prudent to pay $50/MWh in spot market for RECs available for $20-25/MWH in long-term market?

  • Can you convince the public even if you could convince the DTE?

  • Can we avoid this train wreck?


National commission on energy rowe tierney holdren cavanagh joskow sharp et al

National Commission on Energy(Rowe, Tierney, Holdren, Cavanagh, Joskow, Sharp, et. al.)

  • Electric- industry restructuring has derailed….

  • Small customers … have received little direct benefit from retail competition itself. Because the pocketbook advantages have been insubstantial, many consumers find the choices associated with retail competition to be more of an annoyance than an advancement….

  • Retail marketers have lost some billions in capital…

  • At the same time, it is often unclear who is responsible for assembling a diversified mix of short- and long-term resource commitments and other risk management tools, in order to sustain the economical and reliable electricity services that a healthy economy requires.

  • Retail distribution should remain a responsibility of utilities under state and local regulation, along with electric energy resource portfolio management for residential and small business customers (and any larger customers who choose regulated portfolio services).

  • http://www.energycommission.org/ewebeditpro/items/O82F2989.pdf


Alan nogee energy program director union of concerned scientists ucsusa

Source:NRDC


Alan nogee energy program director union of concerned scientists ucsusa

For more information…

Union of Concerned Scientists

2 Brattle Sq.

Cambridge, MA 02238

(617) 547-5552

www.ucsusa.org

Alan Nogee

[email protected]

energy Innovations


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