# Presentation: 268960

## Renewable Energy Outlook for the Northeast

**Robert C. Grace**
**Sustainable Energy Advantage, LLC**
**NREL Energy Analysis Forum**
**Golden, CO - August 13, 2001**

## The Northeast Markets

- New England (CT, MA, ME, NH, RI, VT)
- 111,000 GWh/yr
- New York
- 130,000 GWh/yr
- Historically distinct markets
- NEPOOL/ISO-NE
- NYPP/NYISO
- Limited interfaces
- FERC RTO Order merges ISO-NE, NYISO & PJM

## Overview

- Regional generation mix (today)
- Market drivers for renewable energy
- Market outlook
- Supply outlook
- Regional analysis & studies relevant to the prospects for renewables

## Disclaimer

- Any opinions and prognostications presented here are my own.

## Source: 1998 NEPOOL Annual Report

- “Other” is mostly  MSW, Biomass

## Source: Patterns & Trends - New York State Energy Profiles, 1984-1988, NYSERDA, Energy Analysis Program

- Source: *Patterns & Trends - New York State Energy Profiles, 1984-1988, NYSERDA, Energy Analysis Program*

## Slide 7

## Existing Renewable Generation

- Source: RePIS Database, modified w/ AWEA NY project database

## Regional Generation Perspective

- New England
- Supply and demand in rough balance
- Historically diverse but aging supply evolving towards heavy natural gas dependence
- New gas plants: 3500 MW built by end of 2001; 6700 MW under cosntruction, many more planned; within 5 years gas could supply 40-50% of regional generation
- New York
- Major internal transmission constraints between upstate (surplus power) and NY City/Long island (scarce at peak)
- Reliability concerns – emergency CTs, peak LM, distributed generation incl. PVs
- A few NGCC plants being built, many more planned

## Market Drivers for Renewables

- State purchase mandates (CT, MA, MA, NY)
- State incentives
- System benefits charge funds (NY, MA, CT, RI)
- Tax & other incentives (see DSIRE database)
- Consumer-driven green power demand
- Other generation attribute requirements and infrastructure
- Supply mix, emissions markets, wholesale market structure

## Purchase Mandates

- Connecticut RPS (“*maintain & grow”*)
- Class I: solar, wind, new sustainable biomass, LFG & fuel cells
- Class II: licensed hydro, municipal solid waste, other biomass
- Requirement:
- Class I: 0.5% in 2000 1% in 2002 6% in 2009 & beyond
- Class I or II = 5.5% in 20006% in 20057% 2009 & beyond
- Maine RPS (“*partial maintenance*”)
- As licensing condition, 30% of retail sales from 2000 on from fuel cells, tidal, solar, wind, geothermal, hydro, biomass, & MSW (under 100 MW); any size high efficiency fossil cogen

## Purchase Mandates (cont.)

- Massachusetts RPS (“g*row, maintain?”)*
- Solar; wind; ocean thermal, wave, or tidal; fuel cells using renewable fuels; landfill gas; waste-to-energy; *naturally flowing water and hydroelectric*; and *low-emission, advanced biomass*
- Proposed to monitor, not (yet) require maintaining existing
- New (post 1997) requirement:
- 1% of sales in 2003 4% in 2009, +1%/yr thereafter until capped
*w*aste-to-energy and hydro cannot count as for “new” standard
- New York Executive Order 111
- 20% renewable energy for state facilities by 2010
- New Jersey RPS
- Generation in NY explicitly eligible

## New York System Benefits Charges Funds

- NYSERDA EnergySmart Program
- $6-14m/yr until 2006
- Focus: NY-only supply (wind, PV, other), demand, market building
- So far: wind grants(60-70 MW funded),PV grants; wind measurement, mapping & prospecting/pre-development (300-600 MW)
- Coming soon: green power demand incentives, renewable energy credit (REC)registry, education & training, analysis, market assessment, research paper series

## Massachusetts Renewable Energy Trust Fund

- $30 - 20m/yr indefinitely (?)
- Focus:
- New England
- distributed generation, green buildings, green power (supply & demand); business incubator model
- So far: not much spending.  Studies; MSW retrofits; recent fuel cell feasibility & demonstration, green supply pre-development, green demand aggregation RFPs
- Coming soon: PV industry initiatives, demonstrations, bulk renewable supply incentives (?)

## Connecticut Clean Energy Fund

- $15 – 30 m/yr until sunset
- Focus:
- CT and bordering states
- Investment model (may shift towards grants)
- So far: resource assessment & wind mapping studies; funded 2 green retailers, PV manufacturer; biomass facility; wind developer; fuel large cell installation
- Coming soon: financing support, large customer buying group market term risk mitigation, RECs?

## Rhode Island Renewable Energy Collaborative

- $2 - 3 m/yr until 2006
- Focus: grant model; customer-sited generation; bulk renewable power supply and demand; market building
- So far: PV and fuel cell grants; wind pre-development
- Recently issued: supply production incentive RFP, large customer power purchase incentive; PV on schools
- Coming soon: small customer green power purchase incentives; education, consumer aggregation & market building programs

## Consumer-Driven Green Power Demand

- Competitive markets
- Dominant regional characteristic = movement to retail competition in most of region
- Favorable demographics & awareness
- Viable customer choice suppressed by low price-to-compare resulting in minimal green power activity
- Opt-out & opt-in aggregation
- Monopoly markets (VT, municipal light plants)
- diversity purchases in MA MLPS (Princeton, Hull) & VT (WEC, BED?)

## Generation Attribute Requirements & Infrastructure

- Emission performance standards
- MA, CT (NESCAUM Model Rule)
- Source and/or emissions disclosure
- MA, ME, NY in place; CT, RI, NH to come
- Attribute accounting/verification systems
- NE Generation Information System (tradable certificated for all generation – under development for 2002
- NY DPS Disclosure administrator (“tracking”, “conversion transaction”)
- Systems currently distinct – how will RTO order change?

## Other Market Drivers

- Supply mix
- Plant building boom in NE may depress prices, need for renewables
- Additional requirements on aging coal and oil plants
- High and growing exposure to volatile natural gas prices magnify diversity & hedging benefits of renewables
- Emerging markets for emissions credits (?)
- Wholesale market structure
- Movement to locational pricing, transmission constraints may depress commodity energy revenues for renewables that typically located far from load centers
- RTO Order – overall uncertainty in market rules

## Market Outlook: New York

- Status:
- Retail choice phased-in at varying rates;
- Prices to compare differ by DISCo, class; market viability and switching rates (4.5% residential, 23.8% C&I) vary widely by territory
- No retail green ESP activity yet; 1 wholesale RECs marketer
- Outlook: improving
- Pending NYSERDA incentives, new state purchase requirements and new merchant wind should attract ESP and/or REC options soon

## Market Outlook:Massachusetts

- Status:
- Limited switching (5.6% of customers, mostly C&I)
- 1 RECs supplier present, no green ESP offers yet, Federal gov’t green power purchases
- Outlook: unclear but should improve
- RPS rules not yet issued, biomass & import eligibility unresolved, applicability to Standard Offer contested; uncertainty thwarts substantial development needs
- Renewables trust fund has not yet been a factor
- may fund green aggregation shortly
- price to compare on the rise, affirmative utility & DTE actions to increase switching, should attract ESP market options soon

## Market Outlook:Connecticut

- Status:
- Almost no switching to date
- 2 ESPs offering green (Clean Energy Fund supported)
- standard offer slightly below market limits options
- RPS having no effect due to Standard Offer exemption, compliance waiver
- Outlook: stalled but should improve by 2004
- Standard Offer expires after 2003
- Clean Energy Fund exploring options (financing, RECs)

## Market Outlook:Rhode Island

- Status:
- 4.4% switched, almost all C&I, little recent activity
- 1 RECs supplier present (fixed price block), no green ESP offers yet
- Mass market too small for significant action without neighboring states
- Outlook: improving
- prices to compare on the rise
- new incentives should attract ESPs and/or REC options soon

## Market Outlook:Other New England 

**Maine**
- Status:
- Limited switching (<1% res, 22.1% C, 66.7% I) varies widely by utility and class due to varying price to compare
- 1 green ESP offer (suspended)
- Standard offers recently increased for much of state, recent green aggregation activity, should attract green options soon
- RPS standard below existing supply; no resulting activity; RPS under attack
- Outlook: stalled
**NH:** Just opening, too soon to tell
**VT:** no retail choice
- Source of switching rates:Xenergy Retail Energy Foresight June/July 2001

## New Renewables Demand Estimates – New England

- Note: Graph assumes that CT RPS applies to Standard offer, so may overstate for 2003.

- Source: Smith, D.C., K.S. Corey, R.C. Grace & R.H. Wiser, Massachusetts RPS Cost Analysis Report, Dec. 21, 2000

## Generation Outlook

- Heavy future reliance on natural gas, new pipelines from Canada; compete with renewables for cleaning up aging supply mix
- Additional renewables technical potential
- Moderate wind and unexploited hydro potential; substantial biomass fuel availability
- Near-term development activity
- Wind, landfill gas, biomass, PV, hydro activity
- Other: No geothermal; some mention of tidal but little action; wave power discussed to complement off-shore wind; MSW not generally considered renewable; MA & CT policies supports existing facilities

## Wind Outlook

- New York wind boom supported by SBC
- Almost 50 MW beyond of 2001
- > 500 MW in development pipeline, much larger potential; 10 or more developers; projects from 5 – 125 MW
- upstate plateaus & ridges (agricultural), off-shore exploration
- New England
- NIMBY challenges to siting; awaiting market/policy development
- 4 very small projects in place by end 2001 (50 kW – 6 MW)
- Much waiting in early development pipeline
- one has permits; some seeking them now
- Mountain ridges in MA, VT, ME, (NH?): 4-6 developers, +/- 300 MW, projects from 2 MW – 200 MW
- Coastline & islands (MA): 2-3 developers, dozens of MW
- Cape Cod off-shore: largest project +/- 400 MW recently announced

## Biomass Outlook

- Landfill gas will be fully exploited
- Much developed, up to about 100 MW additional potential
- Where collection mandated &/or tax credits secured, often proceeding on economics
- Biomass
- NY: Limited development activity; solid fuel co-firing testing and willow pilot in NY; some anaerobic digestion potential (< 20 MW);
- NE: gasification R&D pilot in VT; activity focused on preservation of existing direct combustion facilities bought out of utility contacts; developers looking at pellet-fuel options for repowering fossil facilities, and customer-sited fluidized bed opportunities

## PV Outlook

- NY
- Ongoing reliability-driven grant programs, investment supported by NYSERDA, SBC grants
- MA
- Several recent installations, many active initiatives
- 1 merchant facility (SunPower Electric)
- Trust Fund committed to support of plan by PV industry cluster (under development)
- RI
- 1 merchant facility (SunPower Electric)
- SBC-funded per-watt incentives and schools programs coupled with new tax credit may generate activity

## Hydro Outlook

- Already heavily exploited outside of off-limits parklands
- Some repowering opportunities for small industrial revolution era dams
- Ultimately ample opportunities for commercial in-stream low-head technologies
- Some experimentation with no-impoundment options (Cape Cod Canal)

## Analyses Relevant to Renewables

- Resource assessment & policy prioritization
- State Energy plans (NY – upcoming; VT)
- SBC Fund studies (RI*, NY, MA*, CT)
- Greenhouse gas action plans (NY, RI*)
- Wind assessment & site identification
- Ex: detailed GIS-based wind mapping of NY and NE including off-shore
- Biomass
- Assessment of how biomass feedstocks and technologies fare in systems benefit charge and RPS eligibility (CONEG/NRBP)

- * = *Sustainable Energy Advantage involved in study*

## Analyses Relevant to Renewables (cont.)

- Reliability issues associated with heavy reliance on natural gas for electric supply (NE done,NY pending)
- Cost & impact analysis of renewables mandates
- MA RPS* (complete); NY EO111 purchase requirements* (ongoing)
- Analysis of RPS impact on NE spot energy prices
- Policy analysis of market rules impacting renewables
- Imports/exports of generation attributes* (ongoing)
- Impact of NYISO rules on intermittent generation*

## Conclusion: Northeast

- Substantial existing renewable generation, moderate additional technical potential, little developed recently
- Becoming heavily natural gas dependent
- Many renewables drivers: strong policy mandates, retail choice creates renewables opportunities
- Transmission constraints separate highest potential from demand
- Policy & market uncertainties stalling renewables development

## Conclusion: Northeast (cont.)

- Uncertainties slowly being resolved, recent efforts to overcome barriers
- Much attention to wind development: potential boom in NY, while NE thwarted (so far) by NIMBY, policy & market uncertainty
- Much ongoing analysis
- Substantial further needs identifies in policy & technical analysis
- Potential for NREL to address and/or partner with regional funders

## Sustainable Energy Advantage, LLC4 Lodge LaneNatick, MA 01760tel. 508.653.6737fax 508.653-6443bgrace@seadvantage.comwww.seadvantage.com