Why Is Hydro-Québec So Intent on Overselling Its Hydropower?, Part II

Oct 24, 2014 by  | Bio |  Leave a Comment

CLF has been asking questions about the carbon footprint of large-scale Canadian hydropower since before the Northern Pass project’s inception. I recently raised our concerns in my list of three ugly numbers behind the regional push for more hydropower imports, pointing out that, in the first decade after flooding, greenhouse gas pollution from new hydropower reservoirs can produce 70% as much greenhouse gas pollution as natural gas power plants, according to Hydro-Québec’s own science.

As with our number on new hydropower costs, Hydro-Québec took exception in a press release, asserting that CLF does not understand the science. We obviously disagree. In this post, the second in a series of three, I will break down what Hydro-Québec’s defense of its product gets wrong—on the climate benefits of its hydropower. This will be a deep dive, especially because Hydro-Québec’s press release is so profoundly misleading.

hydro-Québec

Aurora Borealis over Gouin Reservoir, Québec (photo credit: flickr/-AX-)

Why CLF Cares About Hydropower’s Carbon Footprint

Why is this issue important at all? As our region considers massive new infrastructure to import more hydropower, we need to have a full, honest accounting of the real impacts—on both sides of the border. Greenhouse gas pollution and climate change know no international boundaries, and New England is ultimately responsible for the carbon pollution attributable to its power use.

Getting credible estimates of the climate effects of new imports is especially important because virtually every proponent of new hydropower imports touts reduced emissions as a dominant reason to pursue them. Likewise, federal law and some state statutes require accurate assessments of what new imports of hydropower will mean for New England’s greenhouse gas emissions and how we achieve our short-term and long-term climate goals. To the extent new imports are in the region’s future, something CLF could support with the right conditions, we need honest numbers.

Given that hydropower projects do not have smoke stacks, when I say “carbon pollution” or “greenhouse gas emissions” from hydropower, what do I mean? Reservoirs behind new dams inundate vast geographic areas. For example, the Eastmain reservoir in the James Bay region is roughly 600 square kilometers, or more than three Lake Winnipesaukees. Drowned vegetation and biological material decompose over time and release carbon dioxide and methane into the water column and then into the atmosphere. In addition, the flooding destroys northern forested landscapes that can be potent carbon sinks (and are often called “lungs of the planet”), increasing the net greenhouse gas emissions of the reservoir by the amount of any lost capability to sequester carbon.

The key question is how much net greenhouse gas pollution a reservoir produces for its power output over time. To assess the climate effects of new imports of hydropower, pollution from the facilities supplying the power can be compared with the emissions of displaced power here in New England.

It’s also important to understand the effects in the province supplying the power and in neighboring regions, like New York or Ontario. If Canadian hydropower is merely shifted from those markets to ours and the gap is filled by fossil fuel power plants, the imports won’t reduce greenhouse gas emissions overall.

What Hydro-Québec Gets Wrong About Its Own Research

In its press release, Hydro-Québec says that “CLF asserts that hydropower greenhouse gas (GHG) emissions are much higher than they actually are … by cherry-picking data contained in a scientific study on emissions from a recently created reservoir in Québec…. What that study really indicates is that hydropower is one of the lowest-emission generating options per kilowatthour produced.”

Here again, as with hydropower costs, Hydro-Québec misstates CLF’s point. The number I cited does not pretend to describe all hydropower, or even all Hydro-Québec hydropower.

The 70% number clearly and expressly describes the emissions from a new large-scale hydropower facility during the first ten years of operation. It is taken directly from peer-reviewed scientific analysis by Hydro-Québec and academic researchers of data collected at the Eastmain 1 reservoir, a new hydropower facility in northern Québec. My blog post includes the relevant graph, presented in a scientific paper that a Hydro-Québec scientist co-authored, showing a direct comparison of these emissions with natural gas and supporting CLF’s statement that a new large-scale hydropower facility can emit 70% of the greenhouse gases of natural gas power plants in the decade following development.

A 100-year life-cycle analysis shows lower long-term emissions, but in a world where climate change is accelerating and we desperately need to reduce emissions now, the early emissions of Hydro-Quebec’s new facilities—several of which are under construction and slated for development in the coming few years—are vitally important. Moreover, it is these new facilities that Hydro-Québec intends to rely on to support new exports to the United States, likely making their carbon footprint more relevant to New England’s current decisions to increase imports than the footprints of existing reservoirs that are supplying Québec customers.

It is worth noting that the 100-year emissions described in the research are much higher than the numbers that Hydro-Quebec’s press release implies that the study confirms. The paper says that 100-year emissions are 40% of the emissions of natural gas power plants, about ten times more than the factor Hydro-Québec quotes and much higher than solar and wind power, which emit no pollution once installed.

While Hydro-Québec says CLF is “cherry-picking” a data point from its research, it ignores that the data point is a key finding of what is now seminal research, which Hydro-Quebec touts on its website as the first time ever that researchers have measured the emissions of a landscape developed for hydropower both before and after flooding:

Project EM-1 is a world first, since this is the first time that GHG emissions are measured before and after the creation of a hydroelectric reservoir. This will make it possible to precisely identify the impact hydroelectric reservoirs have on greenhouse gases.

Despite its billing, Hydro-Québec’s Eastmain research does not provide a full picture. In particular, there are many important differences between hydropower facilities in Québec, and the differences’ effects on reservoir emissions haven’t been fully researched.

For example, Hydro-Québec’s new dams along the Romaine River, now under construction, are creating somewhat smaller reservoirs than Eastmain (collectively, only one and a half Lake Winnipesaukees), suggesting that they might produce less net pollution. However, the flooded landscape along the Romaine and the flooded landscape at Eastmain are quite different. Hydro-Québec’s research at Eastmain suggests that the flooded landscape wasn’t a carbon sink prior to reservoir construction, whereas the landscape along the Romaine is more heavily forested and could provide much more vegetation that will decompose over time as well as a greater value as a carbon sink, which is now being lost.

And of course, the project’s emissions rate depends on how much power the reservoir produces. A vast reservoir that produces a relatively small number of megawatts of power will likely have a higher emissions rate than a smaller reservoir in the same landscape that produces a higher number of megawatts. That’s why true “run-of-river” hydropower facilities, which are powered by the flows in existing rivers and do not require enormous dams or flooding, are much lower carbon resources than large-scale hydropower.

Hydro-Québec’s Faulty Math

So why is Hydro-Québec so upset with CLF’s characterization of the utility’s own groundbreaking research? The core of Hydro-Québec’s disagreement with CLF is this: the utility likes to cite a greenhouse gas emission rate (pollution per unit of energy generated) that assumes its Eastmain reservoir alone powers two generation stations (meaning that the emission rate equals the reservoir’s emissions divided by the output of both stations). When the utility is in charge of the presentation, it highlights this number, which reflects a steep drop in the emission rate after the newer generation station came online by early 2012. The peer-reviewed version of the research, published in 2012, refuses to make that assumption and leaves out the newer generation station from the reservoir’s power output. Why?

The new station (Eastmain 1-A) was constructed to include flows made possible and channeled to the Eastmain reservoir by Hydro-Québec’s massive project to divert the Rupert River. That means that the net effects of the landscape changes associated with the diversion project are key to understanding the emissions of the Eastmain complex as a whole. A major element of the diversion project was the creation of two diversion bays totaling about 350 square kilometers, or the flooding of about two additional Lake Winnepauskees. While Hydro-Québec’s favored number assumes that this flooding has no net effect on emissions, the peer-reviewed research says the effects are unknown and therefore does not include the power from Eastmain 1-A in its calculation of the Eastmain emission rate.

That leaves us with the table from the peer-reviewed paper itself, which is where CLF got its number. We are also informed by the thorough research summary from Synapse Energy Economics on this topic that CLF released more than two years ago, which shows that new hydropower facilities have significantly higher emissions than have been assumed and advertised.

CLF has attempted to engage Hydro-Québec in a serious dialogue on this issue. While there have been several interactions—like this one on our blog after CLF released the Synapse report—we have yet to see anything that meaningfully addresses CLF’s concerns or corrects its misleading public relations campaign.

The Need for Honest Numbers

If this all seems complicated to you, you’re right. The research on hydropower emissions is not complete, and it is probably fair to assume there is significant variation from reservoir to reservoir. Some likely have a larger carbon footprint than Eastmain and some smaller; some are decades old, with relatively low emissions going forward, and others are newer, with a larger carbon footprint now and in the near term.

For many years, policymakers and large-scale hydropower boosters have assumed this complexity away. Hydropower emissions were either presumed to be zero or were pegged at a level based on extrapolations from simple measurements of greenhouse gas emissions from reservoir surfaces, including reservoirs flooded many decades ago. In many cases, including in Canada’s inventory of greenhouse gas emissions, a single miniscule emissions figure is used to characterize all large-scale hydropower facilities. These assumptions are at work in Hydro-Québec’s press release, including in its comparisons to other power sources and its statements about avoided emissions from its energy sales.

We know now that the old simplifying assumptions can be way off, which is one reason why CLF and others have identified a need to “tag” the energy from individual power facilities in Québec that are used for exports to the United States and define, with at least some reasonable approximation, the energy’s source and its environmental attributes and emissions profile.

The developers of the Northern Pass transmission project and Hydro-Québec are continuing their campaign to gloss over the very real greenhouse gas pollution that hydropower projects create. Despite Hydro-Québec’s own research, they are advertising numbers and slogans that inaccurately minimize reservoir carbon footprints or deny the pollution even exists. Unfortunately, it’s also the case that many New England policymakers and the federal officials reviewing Northern Pass’s permit application appear thoroughly disinterested in getting to the bottom of what Canadian hydropower projects really mean for the climate or in insisting on an accurate accounting from Hydro-Québec. For example, we have not received a single substantive response to our August 2013 request that the states meaningfully assess this issue as part of their regional efforts around hydropower imports.

As with the costs of Canadian hydropower, New England deserves honest information about the emissions of the product that Hydro-Québec wants to sell us. Instead of impugning CLF for raising questions, Hydro-Québec and American transmission developers like Northern Pass that want to bring New England its power should start offering New England the basic respect of fair dealing and real numbers.

Coming next in this series, what Hydro-Québec’s defense of its product gets wrong—on the reliability benefits of new imports for the New England electric grid.

The ISO’s Big Mistake: Not Counting Renewable Energy

Oct 15, 2014 by  | Bio |  Leave a Comment

On October 3, 2014, the New England Power Pool (NEPOOL) voted overwhelmingly not to support the ISO’s forecast of New England electricity load for an upcoming year.  CLF is a member of NEPOOL, and strongly supported the NEPOOL action.  NEPOOL’s action is both very important and very surprising, but the story is complicated and requires a bit of explanation.

What is the ISO?

“ISO” is the acronym for the Independent System Operator-New England.  For background, you can read more about why CLF works with ISO.

In a nutshell, ISO is the entity that is responsible for keeping the lights on in New England.  ISO operates under the Federal Power Act, and is regulated by the Federal Energy Regulatory Commission (FERC).  ISO has an annual budget of around $178 million (raised from electricity tariffs), has hundreds of staff people, and is based in Holyoke, Massachusetts.

As it says on its website, ISO does three things.  First, it runs the entire electricity grid in New England in real time by turning on and off (and ramping up and down) nearly every electricity generator in New England.  Second, it runs the New England wholesale electricity markets; this sets the price(s) for electricity that all ratepayers will pay.  Third, ISO does future planning, so that the electricity grid here in New England will remain reliable for years into the future.

NEPOOL’s action on October 3 relates to the third of these functions – system planning for future reliability.  Specifically, NEPOOL rejected ISO’s estimate of New England electricity load (the total amount of electricity needed) for the year beginning June 1, 2018 (and running until May 31, 2019).  NEPOOL took this action for only one reason:  the ISO’s total, inexcusable failure to take renewable energy distributed generation into account in calculating its load forecast.

In two recent blog posts, I wrote about how ISO is working to integrate renewable energy into New England’s grid, here and here.

What is NEPOOL?

NEPOOL is the official stakeholder group associated with ISO.  By “official,” I mean is that ISO is legally obligated to consult formally with NEPOOL members before taking any major, new action, and NEPOOL members (like CLF) have a legal right to challenge ISO actions before FERC.

What is a “Forward Capacity Auction” – and Why Does It Matter?

Once a year, ISO holds what it calls a “Forward Capacity Auction” (FCA) for a one-year period of time three years in the future.  The purpose of these FCAs is to ensure that there will be adequate supplies of electricity (that is, enough power generators) in the region to meet the expected load.  ISO’s ninth FCA (called, appropriately enough, FCA-9) is going to be held in February 2015.  And, as I said above, in FCA-9, ISO wants to buy enough electricity to meet New England’s expected load for the year starting on June 1, 2018.  The technical term that ISO uses to describe what it wants to buy in these FCAs is “Installed Capacity Requirement” (ICR).  Don’t be frightened by the name or the acronym:  the ICR is the quantity of electricity generation (“capacity”) that is needed (“requirement”) to meet the expected load (electricity usage) during the relevant period.

The results of these Forward Capacity Auctions matter because a lot of money is involved.  Based on the clearing prices of the eight prior FCAs that ISO has conducted, we can expect FCA-9 to cost New England electricity ratepayers anywhere from $800 million to $2.2 billion!

What Happened on October 3 – and Why Does It Matter?

ISO is legally obligated to present its ICR prediction (how much electricity capacity it plans to purchase) to NEPOOL, and ISO did that on October 3.  ISO’s ICR prediction was 34,189 Megawatts (MW).  In other words, in the upcoming February 2015 Forward Capacity Auction, ISO wants to buy 34,189 MW of electricity, which ISO predicts will be enough future generating capacity (from enough individual generators) to meet all of New England’s electricity needs (“load”) for the period June 1, 2018 to May 31, 2019.

That purchase will cost New England ratepayers anywhere from hundred of millions to billions of dollars.

On October 3, NEPOOL resoundingly rejected ISO’s ICR forecast.  NEPOOL did so for one reason and one reason only:  ISO completely failed to take into account renewable energy Distributed Generation (DG) in its ICR forecast.

All the New England states have incentive programs of one type or another to encourage the growth of renewable energy.  As a result there has been phenomenal growth of renewable energy in New England for several years.  ISO has itself worked hard to forecast the anticipated growth of renewable DG over the next decade, and CLF has been an active member of ISO’s DG Forecast Working Group.

Nevertheless, when ISO calculated the ICR (amount of electricity capacity to buy) in the upcoming Forward Capacity Auction, ISO completely ignored its own forecast of how much renewable DG was getting built.  As a direct result of this failure, NEPOOL voted overwhelmingly to reject ISO’s forecast.

ISO’s Big Mistake

ISO’s big mistake was not accounting for renewable DG when it projected how much electricity to buy in the next Forward Capacity Auction.  ISO’s big mistake is important on several levels.

First, and most directly, ISO’s big mistake will cost ratepayers a lot of money.  For every 100 MW of renewable DG that ISO failed to count, New England ratepayers will overpay $200 million in the upcoming February 2015 FCA.  And ISO’s own estimate (which CLF believes is overly conservative) is that there will be hundreds of megawatts of renewable DG in New England during the relevant period (2018-2019).

Environmentalists promote renewable energy, in part, by citing the cost savings that can accrue from having renewables on the electricity grid.  Everyone knows that renewable energy costs money, but there can also be cost savings to ratepayers from having renewable energy on the electricity grid.  However, ratepayers reap those saving if – and only if! –  ISO accounts for that renewable energy in calculating its ICR.

By not accounting for the renewable DG that is actually on the electricity grid, ISO is forcing ratepayers to pay hundreds of millions of dollars for electricity that they don’t actually need.

There is another reason why ISO’s big mistake is important.  CLF is working hard to close down each and every one of the few remaining coal-fired power plants in New England.  When the ISO over-estimates how much electricity is needed in New England, it makes it harder to shut down dirty, old coal-fired power plants – because it makes it seem that those plants are needed to keep the lights on.

The Predictable Backlash

Immediately after the October 3 NEPOOL meeting, CLF wrote to the ISO to protest the ISO’s big mistake.  (The letter has some technical terms and acronyms in it, but now that you have read this blog you’ll be able to understand those terms!)

And CLF was not the only one to protest. The New England States Committee on Electricity (NESCOE) issued a statement also.

As CLF’s letter points out (page 2, paragraph 2) it is only a matter of time until one or more NEPOOL participants brings a legal challenge before FERC of the ISO’s big mistake.  The Federal Power Act – that governs the ISO, FERC, and all U.S. electricity markets – requires that all electricity rates be “just and reasonable.”  Overcharging ratepayers by hundreds of millions of dollars by ignoring the benefits of renewable energy is not just and reasonable.

Summing It Up

First, renewable energy in New England is here to stay.

Second, the reason renewable energy is here to stay is that each New England state has put into place financial and other incentives for renewable energy.

Third, ISO is just wrong to ignore its own forecast of renewable energy development when deciding how much electricity capacity to buy for the future.

Fourth, ISO’s big mistake costs ratepayers hundreds of millions of dollars.

Fifth, ISO’s big mistake makes it harder to close down dirty, polluting coal-fired power plants.

Sixth, the ISO’s big mistake is legally unsupportable if it is challenged before FERC.  And it is just a matter of time until that happens.

Why Is Hydro-Québec So Intent on Overselling Its Hydropower?, Part I

Oct 14, 2014 by  | Bio |  1 Comment »

For years, Hydro-Québec—the provincially-owned Canadian utility and financial sponsor of the Northern Pass transmission project—has oversold the benefits and downplayed the costs of its large-scale hydropower. This campaign to confuse is profoundly frustrating: new imports from the north will likely be a part of our region’s energy future, and we need honesty, clarity, and integrity from our northern neighbors before we expand New England’s reliance on Canadian hydropower.

Hydro-Québec’s latest gambit: an egregiously misleading press release, directly responding to my post and op-eds on three ugly numbers that lead CLF to concerns about imported hydropower’s price, environmental benefits, and winter reliability. In its release, Hydro-Québec accuses CLF of disseminating “erroneous” information, yet can’t identify a single error in our numbers.

In this post, the first in a series of three, I will break down what Hydro-Québec’s defense of its product gets wrong—on the price of its hydropower.

Hydro-Québec

In July, CLF identified 15.2 cents per kilowatt-hour as the cost of electricity from new Hydro-Québec dams in northeastern Québec, including the costs of the dams and the transmission lines to get their power to southern New England. This is much more than the cost of new land-based wind power or of our cheapest resource—energy efficiency. The cost also has an uncomfortable similarity to this winter’s high electric prices, which is far above the annual average cost New England customers pay.

Tellingly, Hydro-Québec has no public price, or even range of prices, for the product it is offering, saying merely that its price will be “competitive.” But Hydro-Québec disagrees with CLF’s estimate:

CLF claims that the generation and delivery of Hydro-Québec hydropower to the New England market will cost New England an additional $800 million each year, and that the cost of Hydro-Québec electricity would be 15.2¢. [emphasis added] However, it is impossible for CLF to estimate any supplier’s cost or bid price because of the complexity and risk of the marketplace and because energy infrastructure is highly site-specific. This is especially true for a supplier like Hydro-Québec which is connected to four North American electricity markets…. Like other suppliers, Hydro-Québec would establish its bid price based on a range of factors in the New England and neighboring energy marketplaces.

Our calculation was quite specific—the costs, published by Hydro-Québec and Northern Pass developer Northeast Utilities themselves in regulatory filings, of generating and delivering power from Hydro-Québec’s new Romaine River facilities to New England, including the costs of transmission lines north of the border and an American transmission project like Northern Pass. The sources of every element of the calculation were provided on the second page of our fact sheet.

Hydro-Québec

Click on the image for CLF’s full fact sheet on the potential costs of new imports from new hydropower projects in Québec

Our numbers were not, as Hydro-Québec claims, CLF’s estimate of the cost of all “Hydro-Québec electricity,” nor was CLF saying that New England “will” pay $800 million of excess costs if we buy more Hydro-Québec hydropower. Indeed, Hydro-Québec now sells its power to New England over existing lines for market prices—mostly in the regional wholesale market with some energy going to Vermont under a long-term contract that tracks the market. That means CLF’s number doesn’t speak to the potentially lower-cost options for importing more or firmer power from existing hydropower facilities over existing power lines, alternatives CLF has highlighted before.

Most importantly, Hydro-Québec did not dispute the details of CLF’s calculations, which present a plausible picture of the high costs of new hydropower facilities and long-distance transmission lines that New England could pay if that combination is what Hydro-Québec is offering.

But what is it that Hydro-Québec is offering, exactly?

While we do not know for sure, we have a pretty good idea. Building new dams and stepping up exports in tandem are fundamental to Hydro-Québec’s most recent strategic plan. At every opportunity, Hydro-Québec and other hydropower boosters like Northern Pass sponsor Northeast Utilities have cited the abundance of future resources as contributing to Hydro-Québec’s capability to export additional power to the northeastern United States. In fact, Northeast Utilities’ claimed environmental benefits for Northern Pass itself are premised on the availability of power from incremental additions to Hydro-Québec’s dam system over the coming years.

With Northern Pass on the table and new dams rising on the Romaine River as part of Hydro-Québec’s strategy to expand its exports, it’s realistic to expect that, if Hydro-Québec incurs the costs of building these facilities, it will want to recover those costs, with a healthy return. And it is unlikely that the utility will try to recover all of these costs from its domestic customers in Québec, who buy most of the power from the utility’s existing hydropower facilities (and its extraordinarily favorable contract with the Churchill Falls project in Newfoundland/Labrador) and pay a much lower rate than New England electric customers. We also know that Northern Pass partner and New Hampshire electric utility PSNH has been trying to negotiate a power purchase agreement with Hydro-Québec, without success, for about five years; Hydro-Québec clearly hasn’t yet offered a price that PSNH would feel comfortable touting as a bargain that would provide meaningful economic benefits to New Hampshire.

CLF is not alone in raising concerns about the cost of Canadian hydropower; Sue Tierney of the Analysis Group made these very same points in an April white paper (written for the trade association for New England-based power plants). From CLF’s perspective, the burden of proof is on Hydro-Québec, its Canadian hydropower competitors like Nalcor, and the American transmission developers that seek to bring hydropower south; outdated studies and generic assurances of “low cost power” or “competitive” prices aren’t enough.

Before New England spends billions buying vast quantities of anything (and building the transmission projects to carry it), we need a much better understanding of what would be sold to us, at what price and on what terms. Until then, CLF’s calculations counsel greater skepticism and scrutiny of the supposed economic benefit of new hydropower imports.

Coming next in this series: why Hydro-Québec’s defense of its greenhouse gas emissions falls flat.

Holyoke’s Coal-Fired Mt. Tom Power Plant Announces Formal Shutdown Date

Sep 24, 2014 by  | Bio |  1 Comment »

Mt. Tom’s owners announced this summer that they would retire the 54-year-old coal plant, and yesterday, GDF Suez filed the official request with the electric system operator to retire this last Massachusetts coal-fired power plant by June 2018. This is great news for the residents who have breathed the pollution from Mt. Tom since it first began operation in 1960. This follows the recent announcement by Somerset’s Brayton Point, the largest coal-fired power plant in New England, that it will retire by June 2017, and the final shutdown of Salem Harbor Station earlier this year.

This request to retire, if approved, will obligate Mt. Tom’s owners to retire the facility permanently, and marks the formal finish for coal in Massachusetts. Conservation Law Foundation has been fighting for decades to reveal the dismal economics of coal and to support an effective transition to sustainable clean energy in New England. This announcement comes only a year after Mt. Tom’s owners were required to install new monitors to measure soot from the facility as the result of a 2011 call by CLF for enforcement of more than 2,500 Clean Air Act violations at the facility.

Holyoke is better prepared than most communities for this retirement because of the work of a local coalition, Action for a Healthy Holyoke, and the statewide Coal Free Massachusetts coalition. These groups, along with CLF, have been working to create a better future for Holyoke for years, and, as a result, the City has been evaluating potential impacts of retirement and potential re-use options for more than two years. Recent legislation will help them further that work with a formal re-use study supported by the Massachusetts Clean Energy Center.

Renewable energy is on the horizon for Holyoke. Earlier this year, based on CLF’s coal pant retirement work in Salem and Somerset, CLF garnered an important commitment from the Executive Office of Energy and Environmental Affairs to direct the Department of Energy Resources (DOER) to offer host communities, like Holyoke, up to $2 million to develop a clean energy strategy, including the construction of a renewable energy project within the community. Thanks to that commitment, Holyoke will have the opportunity to work with DOER to move toward cleaner energy either on the site of the retired plant or elsewhere within the community.

CLF will work to ensure that Mt. Tom’s request to retire permanently is approved in the coming months to create an opportunity for new resources to come on-line, and will continue to work to build a clean and sustainable energy future for New England.

Working with the ISO to Integrate Renewable Energy in New England

Sep 15, 2014 by  | Bio |  2 Comment »

The ISO is the organization that operates the New England-wide electricity grid and runs New England’s wholesale electricity markets.

You can read more about what the ISO is, and why CLF works on ISO committees and working groups.

I have written before about CLF’s work with the ISO. You can read those prior blog posts here, here, and here.

As I have said before, CLF is one of the very few environmental organizations to work with the ISO, and no other environmental organization is as heavily engaged in the ISO as CLF is.

A few days ago, I wrote about one of the major criticisms of renewable energy – that it is too expensive – and how changes that CLF is seeing at the ISO are, even now, making that argument a thing of the past. Today I want to describe another frequently heard criticism of renewable energy, that it is not always available and so it cannot be relied upon like fossil-fuel generation can.

We renewable energy advocates hear that argument a lot. For example, the nationally prominent, anti-renewable-energy Heritage Foundation wrote on May 5, 2010:

Wind, like solar energy, is not a dispatchable power source; that is, it cannot be turned on at will. As a result, increasing dependence on wind adds variability and uncertainty to the power grid that must be offset by quick-ramping power sources like natural gas turbines to maintain a relatively constant flow of electricity.

When the Heritage Foundation discusses an electricity source being “dispatchable,” it means both being turned on and off at will, and being able to increase or decrease its electricity output at will. Here in New England, the ISO, which runs our electricity grid, “dispatches” every electricity generator in the region. The ISO tells those generators when to run and when not to run; and it tells them exactly how much electricity to churn out. This is essential to maintaining the reliability of the electricity grid, because the aggregate supply produced by all the generators in the region has to be exactly equal to the aggregate demand of tens of millions of customers every minute of every hour of every day of the year.

What the Heritage Foundation means to say here is that the wind does not always blow and the sun does not always shine. For these reasons, up until now, renewable energy has not been a dispatchable power source.

But here is the really cool news from the ISO: the ISO is now on an irreversible track to make intermittent renewable energy sources like wind fully dispatchable in the New England power grid. In fact, the ISO expects to have wind fully dispatchable in New England by late 2015 or early 2016!

According to the ISO, there are three requirements, or prerequisites, for making wind (and, eventually, other intermittent renewable energy sources) fully dispatchable.

The first requirement is that the wind farms, wherever they are located, be in constant electronic communication with the ISO’s control room in Holyoke, Massachusetts. The ISO refers to this requirement as “telemetry.” The telemetry between wind farms and the ISO control room is already in place; it exists today.

The second requirement for making renewable energy fully dispatchable is that the ISO needs to have reliable, accurate five-minute-ahead weather forecasts for things like wind speed and sunshine intensity. The ISO has been running trials for months now of five-minute-ahead forecasts; and at a meeting I attended this month, the ISO reported that the five-minute-ahead weather forecasts it has been receiving have been completely reliable and accurate and fully satisfy the requirements of the ISO control room.

The third, and final, requirement for making renewable energy fully dispatchable in New England is the creation of the actual computer algorithms that the ISO control room will use to dispatch renewable generators when the time comes. The ISO plans to issue a so-called “DNE Order” to every dispatchable renewable generator for every five-minute interval of every day. This DNE Order will set an upper limit (i.e., “Do Not Exceed,” hence, DNE) for that generator for that five-minute interval. As long as the generator does not go above its DNE limit, the generator will be considered (by the ISO) to be operating “within dispatch,” and will get paid for its electricity output.

It is this third, and final, part that is still needed to make renewable energy fully dispatchable. And at the ISO meeting I attended this month, the ISO decided to start the actual work on those computer algorithms. These algorithms will take some time to complete; but when they are done, the ISO will treat wind as fully dispatchable in New England.

Many owners of fossil-fuel-fired power plants are very unhappy that the ISO is moving so inexorably toward making renewable energy fully dispatchable. Those fossil generators know, correctly, that having renewable energy fully dispatchable by the ISO will tend to undermine the economic viability of their dirty, old power plants. This is especially true now because the ISO-New England, like other ISOs in other parts of the country, is also rolling out “negative price offers” that will make renewable energy resources even more economically competitive compared to fossil-fuel plants. (I discussed that development in my blog post a few days ago, which you can see, here.)

This is a very exciting time for CLF to be participating in ISO matters, because the ISO is moving on multiple fronts to integrate new renewable energy resources in to New England’s electricity grid.

For years, opponents of renewable energy have claimed that renewable energy, while clean and non-polluting, is too expensive for average ratepayers. But on December 3, 2014, ISO is introducing negative price offers, that will make renewable energy cheaper than ever before and drive down the cost of electricity for all New England ratepayers.

And for years, opponents (like the Heritage Foundation) have argued that renewable energy is not dispatchable. But even now the ISO is taking the final steps to make intermittent renewable energy resources fully dispatchable – and is writing the computer algorithms that the ISO control room will soon use to dispatch wind farms.

These are exciting times in the world of renewable energy development, and CLF is playing an active role in those developments.

The ISO – and How Renewable Energy Can Save Ratepayers Money

Sep 11, 2014 by  | Bio |  5 Comment »

Everyone’s heard someone claim that renewable energy is too expensive. This criticism often overlooks one of the most important benefits of renewable energy – not the environmental benefits (which are also very important!) but the price-suppression benefits. CLF is an active participant in the ISO-NE, and, as such, we get to see some of the ways that renewable energy saves ratepayers money – and we sometimes see this in ways that many members of the public do not.

ISO-NE stands for “Independent System Operator – New England.” The ISO is a nonprofit corporation, licensed by the federal government, that both operates the New England-wide electricity grid and runs New England’s wholesale electricity markets. In other words, the ISO tells every electricity generator in New England (whether powered by coal, gas, oil, nuclear, wind, or solar) when to be on (or off) and how much electricity to put into the grid – and the ISO runs the markets that determine how much you and I will pay for that electricity.

You can read more about what the ISO is, and why CLF works on ISO committees and working groups. And I have written before about CLF’s work with the ISO; you can read those prior blog posts here (discussing distributed generation), here (discussing reducing carbon emissions), and here (discussing energy efficiency). CLF is one of the very few environmental organizations to work with the ISO, and no other environmental organization is as heavily engaged in the ISO as CLF is.

First, let’s look at the price-suppression benefits that renewable energy (like wind and solar) have now in our electricity markets. Then, let’s take a look at how the ISO is planning to change the New England wholesale electricity market in a way that may increase those price-suppression benefits in the future.

How Renewable Energy Suppresses Prices Now

Electricity in New England is priced hourly, with the price each hour set by the most expensive marginal resource for that hour. That is, during every one of the 8,760 hours in a year, the ISO “turns on” the least expense generators first, and turns on the most expensive generators last. (That’s why electricity prices are highest on the hottest afternoons of the summer – because the ISO has turned on those last, most expensive generators when there is the most demand on the system, and those generators are setting the clearing price for the entire system.) The layering of generator bids, for every hour of the year – with the lowest bids on the bottom and the highest bids on the top – creates what the ISO calls the “bid stack.”

Thus, every generator on the system is paid the same clearing price for the same hour of the same day. And that clearing price is set by the last, “marginal” generator at the top of the bid stack, the most expensive generator operating during that hour. Of course, the overall clearing price paid by ratepayers is lowered when more low-cost power is bid in; and the overall clearing price is raised when more high-cost power is bid in.

Most renewable energy projects bid in to the New England electricity wholesale energy market at zero dollars for every day and every hour that it is available. This makes sense when you think about it. Most conventional generators (say, coal, oil, or natural gas) bid a price into the ISO-run energy market that reflects the price of the fuel that they burn. Wind and solar generators have free fuel.

The fact that renewable energy projects bid in to the ISO’s energy markets at zero means that the clearing price for all electricity for all ratepayers in New England gets lowered because of the presence of renewable energy at the bottom of the “bid stack” (in fact, at zero). This lowering of electricity prices paid by ratepayers due to the presence of renewable energy on the grid (and its presence in the ISO’s bid stack) is called the “price-suppression effect” of renewable energy.

And the amount of this benefit can be significant. In a recent report by a leading international consulting firm, Charles River Associates (CRA), on the price-suppression effect of the 468 megawatts of wind power expected from the Cape Wind project, CRA estimated the benefit to ratepayers to be about $185 million annually, or about $4.6 billion over the expected 25-year life of the project. These figures are controversial, and other experts put the dollar value of the price-suppression effect of Cape Wind significantly lower. Nevertheless, the price-suppression effect of renewable energy is real – and the CRA estimate was accepted into evidence in 2010 by the Massachusetts Department of Public Utilities in the D.P.U.’s Docket 10-54, which examined the proposed contract between Cape Wind and National Grid. The CRA report is entitled “Analysis of the Impact of Cape Wind on New England Energy Prices,” and is dated February 8, 2010. (You can see the full text of the CRA report on the organization’s website.)

What the ISO Is Going To Change

These price-suppression benefits exist in the New England energy markets now, with renewable energy resources bidding in to the market at zero dollars per hour.

But on December 3, 2014, the ISO is going to begin allowing renewable energy generators to bid into the energy market at minus-$150 per megawatt hour! (Actually, all generators – even coal, oil, and gas generators – will technically be allowed to bid into the energy market at negative amounts; but in the real world, it is likely that only renewable generators will actually do that.) When renewable generators bid into the energy market at less than zero, those bids will be called “negative price offers.”

Of course, negative price offers have the very real potential of driving the overall clearing price of electricity in New England – the price for electricity paid by every ratepayer – down even further.

What do “negative-price offers” really mean? When a conventional generator (say, a plant that is fired by natural gas) makes a positive price bid into the energy market (say, $100/MWh), that generator is, in effect, saying, “I’ll sell my electricity into the market if the market will pay me $100/MWh for all the electricity I sell.” When a renewable generator (say a wind farm) makes a negative price bid into the energy market (say negative $100/MWh) that generator is, in effect, saying, “I’ll sell my electricity into the market – and I’ll give the market $100/MWh for all of my electricity the market takes.”

Pretty good, huh?

So, how can renewable energy generators stay in business if they are willing to pay the market to take their electricity? It’s simple. Renewable energy projects sell not only electricity, but also the Renewable Energy Credits (RECs) from their projects. But the projects can sell those RECs if, and only if, their electricity is going into the grid. Sometimes, the value of the RECs to the renewable project owner will be worth enough money that the project will be willing to sell its electricity into the grid at a negative price!

The Energy-Pricing Paradigm Is Changing!

Renewable energy has been around for decades. Over the past decade, as the public’s awareness of the climate change emergency has increased, environmentalists have had some success in promoting renewable energy. But for as long as environmentalists have been promoting renewable energy, the overall structure of the argument has been the same: sure renewable energy is clean and reduces carbon emission; but renewable energy is far more expensive than conventional power, and we just can’t afford it.

That paradigm is now changing. It won’t change all at once. But as the ISO introduces the new negative-price offers into the New England wholesale electricity markets, the general public (including government officials and, indeed, all electricity ratepayers) will more and more see the cost-savings from the price-suppression benefits of renewable energy.

And, wholesale electricity markets will see another consequence of renewable energy being recognized as more cost-effective than fossil generation as a result of the new negative-price offers: old, dirty, fossil-fuel generators will start losing market share and then they will start losing money. That’s why at every ISO meeting I have attended over the last two years at which negative-price offers have been discussed, the owners of dirty, old fossil-fuel plants have been noticeably discomfited. Those owners of dirty, old fossil fuel plants know something (correctly) that the general public is about to learn: the old paradigm in which renewable energy could be plausibly criticized as being too expensive is changing.

In the new paradigm, renewable energy will be not only cleaner than conventional electricity, but it will be cheaper, too. In fact, the ISO that runs the California electricity grid already allows negative-price offers from generators down to negative-$150/KWh; and the ISO that runs the New York electricity grid allows negative-price offers from generators down to minus-$1000/MWh.

Although the general public does not know these facts, the owners of fossil-fuel generators sure do! That’s why they are so unhappy that the ISO is introducing negative-price offers into New England – even though we ratepayers will benefit significantly.

Three Ugly Numbers Behind the Governors’ Push for Canadian Hydropower

Jul 10, 2014 by  | Bio |  3 Comment »

 

canadian-hydropower

As the New England Governors and the Eastern Canadian Premiers gather in Bretton Woods for their annual conference next week, it’s likely there will be much discussion of building new transmission lines to enable additional imports of Canadian hydropower into New England. Indeed, financing such transmission lines is the centerpiece of Massachusetts Governor Deval Patrick’s pending energy bill and the supposedly “clean” half of the New England Governors’ massive gas pipeline and hydropower plan.

Earlier this year, after the Governors’ energy plan emerged, I broke down three big questions about increasing hydropower imports through new transmission projects: namely, cost, environmental impact, and reliability. We’re not alone in asking these questions. Just yesterday, the Boston Business Journal’s managing editor argued that the region deserves a fuller, better accounting of the total costs of the Governors’ initiative to customers.

As we outlined in our preliminary briefing on the documents obtained from the states on the origins of the Governors’ plan, it appears that the economic and environmental analysis commissioned by the Governors is flawed and incomplete. In the search for hard data points, we offer three of our own.

$800 million
per year 
above current market prices

That’s the cost, according to CLF’s analysis of Hydro-Québec and Northeast Utilities regulatory filings, to generate the power from Hydro-Québec’s new hydropower facilities on the Romaine River (now under construction) and deliver it to the New England electric market through a transmission project like Northeast Utilities’ proposed Northern Pass project in New Hampshire. On a per kilowatt-hour basis, we estimate the cost at 15.2 cents, which is more than three times the cost of energy efficiency and nearly twice that of recent land-based wind power contracts. You can access the full fact sheet with all assumptions and references here or by clicking on the image above. It appears that New England States Committee on Electricity’s (NESCOE) economic analysis, on which the Governors’ plan rests, inexplicably assumed that the cost would be four times less than the public Romaine/Northern Pass figures used in CLF’s analysis.

70%
the carbon pollution of natural gas power over the next decade

That’s the greenhouse gas emissions that can be expected, according to Hydro-Quebec’s own scientific research, during the first ten years following the construction of a new large-scale hydropower facility, such as the Romaine projects discussed above. This research, which CLF has extensively discussed in past posts, utterly debunks the false assumption, contained in all of the studies of hydropower imports on which the Governors’ plan, Massachusetts’s climate plan, and Northern Pass marketing rely, that imported hydropower has no emissions. If new imports are to come from new dams in Canada and will principally displace natural gas power, the promised emissions reductions through the end of the next decade are overstated by more than threefold.

canadian-hydropower

24
times Hydro-Québec chose to curtail exports 
in one cold month of winter 2014

That’s at least how many times, during cold weather in January 2014, Hydro-Quebec chose to limit its power exports to New England over existing transmission lines, according to an internal NESCOE document that CLF made available in the archive released to the public last month. In other words, at the times of greatest electric system stress and despite very high wholesale market prices, Hydro-Québec chose not to send power to New England, presumably to meet its own domestic needs. This number casts considerable doubt on the reliability benefits of building more transmission lines, which could go unused or underutilized during the cold weather periods when, the Governors say, we need more power to ensure reliability.

canadian-hydropower

These numbers are illustrations of why CLF is pushing so hard, in appeals filed this week, to get documents from NESCOE and the states. It is time for robust public debate and transparent scrutiny of all the data and assumptions leading state officials and grid operator ISO-NE to call for a multi-billion dollar tax on electric customers to finance new gas pipeline and hydropower transmission lines. If they have badly miscalculated, as these ugly numbers suggest, the plan can be shelved in favor of more cost-effective, market-oriented, and environmentally sound energy solutions that the Governors are now ignoring.

Documents Reveal Governors’ Gas and Hydropower Plan Shaped by Industry and Incomplete Analysis

Jun 24, 2014 by  | Bio |  24 Comment »

In January, the New England Governors announced a plan to finance new gas pipelines and electric transmission lines across the region with billions of dollars in funding from residents and businesses. In an effort to bring transparency to the process that led to and continues to inform the Governors’ plan, in March, Conservation Law Foundation filed public records requests, seeking documents from the states and the New England States Committee on Electricity (NESCOE), the agency that is working to implement this massive infrastructure initiative.

Today, we are making available to the public a detailed briefing (PDF) on the documents we have received to date, along with an archive of the 48 documents (zip file, 25MB) cited in the briefing.

In short, the documents we have obtained reveal not only outright hostility to conducting the planning process in the open, but also a troubling willingness on the part of state officials to take enormous risks with our money, our region’s energy progress, and our climate.

  • “Behind Closed Doors.” The states and NESCOE are deliberately working out the details of this plan in secret, consistent with the view of one of NESCOE’s staffers that the plan should be “formulated behind closed doors” because the “court of public opinion can be fickle and recalcitrant.” Despite public statements that NESCOE is open to feedback, the agency and state representatives have repeatedly shielded analysis of the plan from public scrutiny.
  • Conflicts of Private and Public Interest. The Governors’ initiative is premised on extensive influence, behind closed doors, from the very pipeline and utility companies that stand to earn billions if this plan is implemented.
    • The documents show, for example, that Maine Public Utilities Commission Chair Tom Welch, a chief architect of the governors’ plan, argued in its favor using a memorandum from Tony Buxton, an industry lawyer who represents both a gas pipeline company and industrial companies that use gas for non-electric purposes. Now, Welch is overseeing a case that will decide whether the State of Maine will invest in financing a pipeline project proposed by Buxton’s client.
    • Through a series of private meetings and calls with NESCOE and state representatives, the electric and gas utilities who stand to benefit most from the governors’ plan are now helping to define their roles as middlemen. In fact, Northeast Utilities itself drafted the document the states and NESCOE are using to manage conflicts of interest when utilities buy power from their own transmission projects, like NU’s Northern Pass project.
  • Ignoring Smaller, More Affordable Solutions. Despite public statements to the contrary, NESCOE and the states agree in private that they “are not looking for market adjustments as alternatives to our current investment infrastructure path” that could be far less costly – to the public’s wallets and to our climate.
    • During a private meeting in Washington, D.C., regional grid operator ISO-New England’s CEO admitted that the point of the governors’ plan is to “overbuild” gas pipeline. However, as Vermont Governor Shumlin suggested recently, overinvestment risks “huge stranded costs” for customers in decades to come. This effort is not about reliability, as NESCOE would have us believe. It’s about directing public money to large energy companies outside of public oversight.
    • As for the governors’ interest in buying more Canadian hydropower by forcing customers to pay for new international power lines, the documents include recent analysis showing that hydropower doesn’t need long-term contracts or other help and that it wasn’t even available to New England when we wanted it during the coldest days of last winter. However, the states and NESCOE appear to be disregarding these findings entirely.

Ultimately, CLF obtained a mere fraction of the documents we requested. Despite acting on behalf of state governments and receiving $2 million annually in public funding through our electricity bills, NESCOE claims that it is not subject to public records laws and is refusing to provide any documents to CLF. Most of the New England states have not yet provided or are actively withholding their documents about the plan.

CLF is considering legal action to force compliance and bring these documents to light. But it’s clear that NESCOE and the governors’ representatives are not interested in a meaningful, transparent planning process that considers the best interest of electric customers and also complies with the states’ legally mandated climate policies. As the customers whose dollars are at risk, we all should have a chance to fully understand what we will be buying with this proposed plan – through an open process based on sound research and analysis, not backroom dealings with industry insiders.

Read CLF’s detailed briefing on the documents here.

Download the archive of documents referenced in CLF’s detailed briefing here.

The Focus of Renewable Energy Remains Climate Change

May 19, 2014 by  | Bio |  1 Comment »

A few days ago, I posted a blog on CLF’s website about a newly published study that quantifies the economic-development benefits of renewable energy Distributed Generation (DG). You can read that earlier blog post, here.

In my prior blog, I quoted from the executive summary of the DG Study that said: “The study finds that the [DG program] . . . will result in net positive economic output, job gains, criteria pollutant emissions reductions, carbon emissions reductions, and positive state revenues over the period 2014-2038.” And I summed up the the economic conclusions of the study, thus: “[T]he state reaps economic benefits of $30.65 million per annum, or $556 million over the life of the program (discounted to present value!) at per-ratepayer cost that is almost exactly half of the price of one cup of coffee per month!”

Everything I stated in my earlier blog post was true.  Every figure I cited from the Brattle Report was cited correctly and was completely accurate. My blog was both technically accurate and fairly presented.

However, I sometimes worry about us environmentalists touting the economic benefits of renewable energy. The fact of the matter is that we environmentalists support renewable energy because there is a climate change emergency in the world. The world is hurtling toward a human-created disaster because of carbon pollution. And, although we recognize that there are economic benefits from renewable energy, we do not view renewable energy as primarily a job-creation program.

Let me make an analogy. Think of the United States Supreme Court case that affirmed the Civil Rights Act of 1964, Katzenbach v. McClung, 379 U.S. 294 (1964). The case challenging the statute had been brought by Ollie McClung, owner of Ollie’s Barbecue, in Birmingham, Alabama.  Ollie McClung’s argument was the essence of simplicity: this is a free country; the government cannot force me to serve people (blacks) if I choose not to do so.

As everyone today knows, the Supreme Court unanimously upheld the constitutionality of the Civil Rights Act.  But the majority opinion, written by Justice Tom Clark, did so on the basis of the Commerce Clause! This is what Justice Clark’s opinion said:  Ollie’s Barbecue is a family-owned restaurant in Birmingham Alabama, specializing in barbecued meats and homemade pies. It is located 11 blocks from an interstate highway and near a railroad station and a bus station.  In the 12 months preceding the passage of the Act, the restaurant purchased approximately $150,000 of food, of which 46%, or $69,683, was meat procured from outside the state.  Some of Ollie’s customers were long-haul truckers who came off the nearby Interstate for a meal. Thus, this case is really about interstate commerce, because both the meat served and some of the patrons eating it had come from out of state. The Commerce Clause in Article I, Section 8, gives Congress the right to control interstate commerce. Therefore. the landmark Civil Rights Act is constitutional because this case is all about commerce.

To his credit, Justice Goldberg wrote concurring opinions saying that the Civil Rights Act was not mainly about commerce (though surely there were economic implications), but rather about human rights: “The primary purpose of the Civil Rights Act of 1964 . . . is the vindication of human dignity and not mere economics.”

So, too, with renewable energy. We environmentalists believe that renewable energy is not mainly about economics and job creation (though there surely are economic benefits to reap) but rather about climate change. We support renewable energy because the consequences of climate change can be catastrophic for humankind, and we want to leave a safer planet to our children and grandchildren’s generations.

The Commerce Clause may be applicable to civil rights, but, in the end, Justice Goldberg was right:  the civil rights act was really about human dignity, not commerce. And renewable energy does create jobs; but, in the end, renewable energy is not about money but about saving the planet.

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