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Wednesday, December 26, 2012

Rhode Island's green energy politics

By TIM FAULKNER/ News staff

Renewable energy isn’t just wind turbines and solar panels. There also is loads of politics, planning, economics and science involved with any green power project. The state Office of Energy Resources (OER), under the guidance of director Marion Gold and Office of Administration director Richard Licht, intends to harmonize these sometime discordant forces.

The Renewable Energy Coordinating Board (RECB) recently addressed several of these issues:

Offshore wind. Leases for the offshore wind farms proposed for 164,750 acres off the Rhode Island and Massachusetts coast is unexpectedly subject to a live bidding process. This bidding makes it easier for developers to surpass local construction jobs, as well as the use of the wind energy. This new multi-factor bidding format allows developers with greater resources to build and assemble the turbines in another state or country. The green electricity might also bypass Rhode Island if a larger pool of developers bid for the power-purchase agreement.  

“It’s not a good situation,” Licht said. He said he met with Senators Sheldon Whitehouse, D-R.I., and Jack Reed, D-R.I., to discuss the unfavorable lease-auction agreement. He also plans to address the issue during a public seminar in Narragansett on Jan. 15.

Less gas. Natural gas supplies 98 percent of Rhode island’s electricity supply. The state goal for renewable energy aims for 16 percent renewable electricity by 2019. “How do we address the fact that we have a lot of natural gas but we know that natural gas is not the be-all and end-all," Gold said. "We don’t want to be 100 percent reliant on natural gas."

A RECB subcommittee is reviewing the existing legislation and setting targets for renewable energy and emissions. A report is expected in March.

“We have to look at this in an integrated way,” Licht said. “Recognizing that we do have the concern for economic development and the cost of energy in the short term, but there are long-term costs to natural gas.”

Renewable Energy Certificates. REC prices have soared during the past year. RECs are purchased by electricity generators in order to meet annual renewable energy production goals. Since December 2011 REC prices have jumped from a range of $15-$30 to $64. Each REC represents 1 megawatt-hour of electricity generated by a renewable energy source.

Nicholas Ucci, a policy analysts for the state Public Utilities Commission (PUC), attributes the increase on the low price of natural gas. Low prices have reduced production of more expensive biomass power, which burn landfill gas, clean wood and agricultural waste. Natural gas, Ucci said, “pushed these other resources off the margin in the energy market.”

Other factors in the price increase include fewer RECs available for purchase from hydro and wind power produced in other states; increased demand from state renewable energy mandates; fewer new renewable power sources due to the economic slowdown; and uncertainty about expiring federal tax credits.

Some at the meeting asked if moratoriums and public opposition to wind energy have also slowed development.

“Everything hinges on Washington,” Ucci said. “If they can get their act together. If they don't pass or extend the production tax credit — it already has a chilling effect on development. I’m really not sure where that industry goes without that, outside of significant state-level subsidies, which the industry is already receiving.“

Higher REC prices have increased funds for the state's Renewable Energy Fund (REF), which funds local green energy projects. Traditional energy producers have bought less-expensive alternative compliance payments instead of RECs. These payments added $4.5 million to the REF in 2012.

Ucci said the PUC has a strong relationships with similar entities in the Northeast. The groups are collaborating on improving their energy buying power, enhancing power transmission and finding suitable locations for new renewable energy projects. Maine, which has paused new wind projects, offers the best locations for new wind turbines.

Climate change. Grover Fugate, director of the state Coastal Resources Management Council (CRMC), reminded the committee that renewable energy is needed to temper the impact of climate change. Recent findings from Hurricane Sandy revealed that offshore storm waves reached 47 feet in height, when waves of a maximum of 30 feet were predicted.

“Climate Change is something that’s going to come in play more and more in this whole arena,” Fugate said. “And I think it’s going to force (development of) a lot more renewable energy.”