energy policy | Resynergy Systems

Strange Days

Posted on March 21, 2016 by Keith Burrows

These are strange days in Massachusetts. A state known for its environmental leadership, we now argue over solar caps and net-metering rates while solar projects are shuttered or put on hold. We debate the merits of forcing electricity ratepayers (you and me) to pay $8 billion to construct natural gas pipelines, while new research from Harvard suggests the U.S. is responsible for a huge spike in global Methane emissions—with fracking the likely culprit. We consider the environmental and economic impacts of importing hydro electricity from Canada, while our own offshore wind resources —labeled the “Saudi Arabia of wind”—remain unutilized.

It appears some state policy proposals are based on economics that ignore or don’t properly weigh social or environmental costs, benefits and limits. There’s a continued focus on near-term concerns, while the long-term consequences of policy action (or inaction) are overlooked or discounted. We need to move beyond the short-term, beyond narrowly focused financial considerations.

There is hope. Many political leaders in the state want energy legislation that will benefit the commonwealth and fight climate change. We see this in the letter signed by 100 State Representatives advocating for a balanced, sensible approach to solar legislation: fair net-metering compensation, subsidy reform via the SREC program and grandfathering of existing systems.

This is good news. Let’s hope more Massachusetts political leaders act on their own beliefs, and not those of the utilities and fossil fuel industry.

Author’s note: This post is based on a letter I wrote for the Massachusetts Sierra Club as chair of the Greater Boston Group.

Running From the Sun in Massachusetts?

Posted on January 26, 2016 by Keith Burrows

We’re at a critical juncture in the development of solar as a source of clean energy for the commonwealth. 2015 saw the introduction of four different solar bills to the Massachusetts legislature, each intended to expand the existing net-metering cap (of approximately 1,000 MW) and/or restructure the method by which distributed solar generators are reimbursed for the energy they send to the grid.

Each of these bills has a different emphasis, ranging from simply expanding the cap and keeping net-metering compensation the same (basically at retail rates—the rates we pay on our utility bills), to expanding the cap while imposing minimum bills and slashing net-metering reimbursement to average wholesale rates (the rates utilities pay for the energy generated by power plants). According to National Grid, moving to wholesale rates would drop net-metering compensation from about 19 cents per kWh to 4 cents, a 79% reduction in compensation.

What’s the problem?

This depends on your perspective—which itself is part of the problem. The one concrete issue that all parties (appear) to agree on is the need to expand the current net-metering cap. The cap has already been reached in National Grid territory and there’s no clear consensus on what to do about it. This is limiting new investment in solar projects, which in turn has a negative impact on jobs, carbon emissions and energy production. Although the issue is extremely complex, there is one dynamic underlying all the consternation: Solar installations in Massachusetts are growing exponentially.

The incentives intended to spur growth of the solar industry have worked—solar capacity in Massachusetts has grown over 89% per year (on average) over the last 5 years. This is alarming utilities, which see this growth as a threat to their stable and profitable business model. The state had 841 MW of installed solar capacity as of May of 2015, growing rapidly from a paltry 41 MW in 2010. If we assume 20% annual growth going forward, the state will reach its goal of 1,600 MW of installed solar capacity by the end of 2018—well ahead of the current 2020 target.

Massachusetts Solar capacity projections assuming 20% annual growth from 2016 to 2020.

Of course if the cap is not lifted, growth will stop completely. That’s unacceptable from a climate perspective—we need just this type of growth in renewable energy generation to have any hope of avoiding catastrophic climate change.

And the real problem isn’t growth, it’s the uncertainty that comes with rapid growth or change. Can the grid handle significant distributed generation? Who will pay for necessary grid enhancements? Will storage allow us to use solar energy more effectively in the future? What will happen to electricity rates for non-solar ratepayers?

These uncertainties point to the need for a better understanding of the value of solar and the costs of using the grid over time. Solar generators do not currently pay distribution charges for grid use, which is an understandable concern for utility companies given the rates of growth we are seeing. A comprehensive and public study should be conducted in order to determine the true value of solar, which is dynamic and will change over time as solar capacity increases.

The uncertainties associated with rapid solar growth have generated a knee-jerk reaction from utilities: kill the growth. Utility companies in Massachusetts see solar as a threat rather than an opportunity (apparently they fear change as much as the rest of us), and have decided that the way to address the threat is to smother its growth. And it’s not just Massachusetts; we’re seeing similar activity to slow or stop solar growth in many different states. This national attack on solar net-metering has been initiated by utility companies and fossil fuel interests that see renewable energy as a threat to their profits and business.

Solar growth is good for the citizens of Massachusetts, the climate, and ultimately the utility companies (although they may not see this yet). Several studies show that solar provides benefits to both the electric grid and society that far exceed the retail net-metering rates received today. However, utility companies will need to be compensated for the grid services they provide to distributed solar generators if this growth continues. And the growth should continue, just not forever. It’s not physically possible or economically practical to maintain these growth rates indefinitely, and eventually the value of adding solar to the grid will decline as solar penetration increases. Fortunately we’re a long way from having to worry about an overabundance of solar on the grid.

Any legislation enacted must expand (or better yet remove) the net-metering cap and continue to compensate and incentivize solar adequately. Let’s hope that solar advocates and the utility companies can come to an agreement that will prevent the collapse of the solar industry in the state. Moving to a wholesale rate without grandfathering existing systems is killing solar in Nevada, where solar companies are leaving the state in droves after a change to wholesale net-metering compensation.

The “Nevada” Scenario: Massachusetts solar capacity projections assuming 5% annual growth from 2016.

We should thank Nevada regulators for showing us what will happen if we drastically reduce net-metering compensation in Massachusetts, and it’s clear we don’t want to follow Nevada’s lead if we hope to meet the greenhouse gas reduction requirements of the Global Warming Solutions Act. We’re at a key decision point for the state: do we want carbon-free solar to become a central component of our future electricity system, or do we want to extend our reliance on the fossil fuels that scientists tell us we must stop consuming?

Author’s note: The graphs in this post were updated on January 29th 2016 to reflect better estimates of 2015 solar installation data and a 20% growth rate.

The False Promise of Natural Gas

Posted on November 10, 2015 by Keith Burrows

I read an interesting opinion piece in Commonwealth by Anthony Buxton and Benjamin Borowski, where the authors outline their arguments for expanding natural gas pipelines here in Massachusetts. On the surface they make a convincing case, but their analysis is one-dimensional. The piece can be summed up in a single sentence: Heating with oil is expensive and harms the environment, so we should expand pipeline capacity and convert more homes to natural gas.

Let’s look at a few of the arguments made in detail.

Oil is more expensive than natural gas

This is a fact — oil is more expensive than natural gas today, but that is a weak argument for building the Kinder Morgan (Northeast Energy Direct) and Spectra pipelines. Changes to fossil fuel prices fluctuate over time based on supply, demand and external factors that impact energy markets. The prices we pay for oil and natural gas are in fact low, as they don’t account for the environmental costs of extracting and burning fossil fuels. In a perfect market, these externalities would be factored into our energy prices (which is what a price on carbon attempts to do).

Will we continue to see low natural gas prices in Massachusetts? In the short-term, the answer appears to be yes. In the long-term, this is far less certain. Analysis from the Energy Information Administration (EIA) projects that the U.S. will be a net exporter of natural gas by 2017. This will almost certainly lead to higher domestic natural gas prices as gas is exported to meet global demand. How much of an impact will we see? Australia has recently seen natural gas prices triple because of increased demand resulting from exports.

We’re harming the environment by heating with oil

This is also true. Unfortunately, there’s virtually no way to heat your home in Massachusetts without some adverse impact to the environment (solar and wind have minimal impact, but are not harmless). Burning oil and natural gas releases carbon dioxide into the atmosphere. Natural gas releases approximately 116 pounds of CO2 per British Thermal Unit (BTU) consumed, while oil releases 161 pounds. Unfortunately, that’s not the end of the story from a climate perspective. The extraction and transmission of natural gas also releases methane (CH₄), a potent Greenhouse gas (GHG). Although methane only remains in the atmosphere for about 12 years, its global warming potential is 28-30 times that of CO2.

The natural gas that would flow through these pipelines would be imported from Appalachia, where gas is extracted via hydraulic fracturing (aka fracking). Not only does fracking cause groundwater contamination and earthquakes, the process itself results in the release of a great deal of methane. Some scientists believe that using fracked natural gas is actually worse for the climate than coal, never mind oil. What we know with certainty is that moving from oil to natural gas for environmental reasons is a false promise. There is no “bridge fuel” and we should not waste our time and resources moving from one fossil fuel to another.

The high cost of oil heat has an adverse impact on low-income families

This is also true, and also tells just part of the story. The high price of anything that is required to meet our basic needs adversely impacts low-income families. The solution to this problem is not subsidizing conversions from oil to gas for low-income families, which will only exacerbate our natural gas capacity issues. What should we do then? Let’s take the money needed to do these conversions and some of the $7 billion required to build the pipelines and invest in weatherization work and deep energy retrofits to the homes of low-income families. When the work is complete, these homes will be more comfortable, more valuable, and will cost very little to heat and cool. Importantly, this effort will also reduce our GHG emissions, which is something that won’t happen by shuffling from oil to natural gas.

Gas demand is already greater than pipeline capacity, therefore we need bigger pipelines

Demand does exceed supply on a handful of days in the winter, but simply expanding natural gas capacity to resolve this issue is a misguided solution. Attorney General Maura Healey’s office is working on an analysis of our regional energy requirements and the need for new gas capacity. This analysis is especially important given the recent forecast from ISO New England that predicts no new growth in total electricity consumption over the next 10 years. Per ISO New England, this incredible forecast is the result of solar installations and energy efficiency efforts.

Renewable energy and energy efficiency are just some of the tools that can be used to address peak demand. Energy storage, time-of-use electricity pricing and demand-response can also help us meet or reduce demand during periods of peak load. Expanding natural gas pipelines is a lazy solution to the capacity issues that we created, and it’s one that ignores resiliency, the local environment, and climate change. We can and must do better.

Bottom Line

Don’t believe the false promise of natural gas. Moving from oil to gas is not going to solve any environmental or economic problems. Instead it will weaken us, as all of our energy eggs will be in one basket (or rather pipeline). What happens if the pipelines or transfer stations that bring gas into the state are rendered inoperable from some type of natural (or unnatural) disaster? What if this happens in the middle of winter? Diversification of the fuels we use to heat our homes and generate electricity provides resiliency.

I’m not a proponent of oil. I work in the energy efficiency industry and believe climate change is one of the most important and challenging issues humans have ever faced. I’m looking at the pipeline issue with the mindset of an environmentalist and systems analyst, and in my opinion we can’t waste our time shifting from one fossil fuel to another. We need to focus on energy efficiency and moving to clean, renewable energy sources.