Connecticut energy plan raises tough questions on comparative resource valuation
Critics say the state's comprehensive energy plan falls short in capturing the full costs and benefits of energy technologies.
Connecticut’s newly updated official energy strategy has been praised for its ambition, but the draft leaves a key question unanswered: Will it meet the state’s climate goals?
The state’s Comprehensive Energy Strategy (CES) is intended to meet the statutory requirement (Section 16a-3d) for a statewide “assessment and plan for all energy needs” in electricity, heating, cooling and transportation. It must also consider the utilities’ Integrated Resources Plans and needs for energy efficiency, renewables and resilience.
The first CES, finalized in 2013, was the platform for later legislation on implementation of the energy plan and on clean energy goals. Both laws were aimed at meeting the state’s 2008 Global Warming Solutions Act (GWSA). The Act requires emissions to be 10% below 1990 levels by 2020 and 80% below 2001 levels by 2050.
The Connecticut Department of Energy and Environmental Protection (DEEP) is required to update the strategy every three years. The July 2017 draft CES calls for moving Connecticut's renewable energy mandate — today at 20% by 2020 — up by one percentage point annually for ten years. That would result in 30% renewables in 2030.
It “represents DEEP’s best thinking for building a new and cleaner energy future,” spokesperson Dennis Schain emailed Utility Dive. He declined further comment because DEEP is still considering “all comments and issues.”
Other stakeholders responded to Utility Dive queries with almost a single voice about one overarching problem of the strategy.
John Humphries, lead organizer with the Connecticut Roundtable on Climate and Jobs and member of the Governor’s Council on Climate Change, said the CES “is a step in the right direction” but “makes no attempt to show it will meet the 2020 emissions reduction target.”
Claire Coleman, climate and energy staff attorney with the Connecticut Fund for the Environment (CFE), agreed on its lack of specificity. It recognizes the need to decarbonize the economy and move towards renewables, "but some of the specific policies aren’t specific enough,” she said.
Acadia Center policy specialist Kerry Schlichting said she could support DEEP strategies that meet the state’s climate goals. “But there is no analysis showing the new mandate will meet GWSA goals,” she said. “DEEP told stakeholders the strategy is more art than science but advocates want to see data supporting its recommendations.”
The lack of specificity in the CES is giving rise to three complicated debates about comparative energy resource values. One is whether the renewable energy goals are aggressive enough, another involves potential successor tariffs to Connecticuts net energy billing (NEB) distributed solar policy, and the third is which utility-scale renewables will best serve the state's future.
The CES sets two goals for the electric power sector, three goals for the building sector, and three goals for the transportation sector.
The first electric power sector goal is to align the state’s renewables mandates and global warming goals with available renewables and zero carbon resources. To achieve that, DEEP would move the RPS to 30% by 2030, phase down biomass and landfill gas, and balance “behind-the-meter programs” and least-cost “grid-scale procurements.”
It would also replace the NEB policy with a successor tariff. And it would “pursue” goals of the state’s pilot community solar, or shared clean energy facility (SCEF), program.
The second goal is supporting reliability and resilience. Achieving that would include following the ISO-NE natural gas generation plan, deploying more community microgrids, and increasing infrastructure hardening. DEEP would also “identify and explore grid modernization initiatives.”
In the buildings sector, DEEP’s two goals are increasing building’s energy savings and performance and productivity. To achieve them, the CES calls for increasing the state’s energy efficiency through a wide range of procurements, policy, and deployments.
The first transportation sector goal is “a strategic pathway to decarbonize the transportation sector.” DEEP would start with an Electric Vehicle Roadmap. It also would advocate for federal vehicle fuel economy standards, for low-emission and zero-emission vehicle (ZEV) and GHG reduction programs, and for more community education on transportation electrification and mass transit.
The CES calls for implementing “a best-in-class transportation system” plan, a “transit-oriented development” plan, and “mixed-use planning.”
DEEP would also leverage “strategic partnerships to improve access to a wider array of transportation options.” The CES targets “technological advances, shared mobility services, and transportation demand partnerships.” DEEP would also take advantage of “regional partnerships and initiatives to advance a clean and efficient transportation network.”
Is the CES aggressive enough?
A May 2017 report from Acadia — “EnergyVision 2030” — found an emissions reduction of 45% by 2030 would be necessary to keep New England states “on the path to meet scientifically directed emission reductions of 80% by 2050.”
To achieve that, “42% of New England’s generation needs to be Class I renewable (i.e. primarily wind and solar) in 2030,” Acadia reported — significantly higher than DEEP's goal.
CFE’s Coleman said DEEP’s “incremental changes” are likely in response to keeping Connecticut’s electricity rates, the highest in the continental U.S., as low as possible.
“A better strategy would first meet state policy goals and begin building a modernized grid and resource mix instead of basing short-sighted decisions on upfront costs,” she argued.
Humphries said Connecticut needs more aggressive, data-based plans for transportation electrification and energy efficiency. He called the draft CES a “steady as she goes” approach.
Coleman added that DEEP’s plan to begin developing an EV roadmap in 2018 won’t work. “We don’t have time for another study and then another set of deliberations.”
Transportation accounts for 43% of Connecticut’s emissions, she said, and lawmakers must act in the 2018 session to meet the goals of a multi-state zero-emission vehicle action plan it signed onto in 2014.
“If we’re just beginning to create the road map in January, our legislature is going to delay acting until it completed," Coleman said.
Coleman endorsed proposals to phase out biomass and landfill gas in favor of non-thermal renewable generation like wind and solar. “But DEEP’s reduction of the mandate’s overall annual growth from 1.5% to 1% “slows the transition to a renewable economy,” she said.
A CFE-sponsored study by Synapse Energy Economics released this mont compares the 1% annual increase to a 2.5% annual increase, Coleman said. “It shows the 2.5% increase leads to more renewables, more jobs, and less emissions.”
Increasing renewables by 2.5% per year would increase customer bills, she acknowledged. But investment in fixed price renewables contracts now would reduce the state’s long-term exposure to fossil fuel price volatility,” Coleman said. “The study shows the 2.5% increase will eventually bring down wholesale electricity prices.”
DEEP’s perspective on the cost of both utility-scale and distributed renewables consistently failed to consider long-term benefits, she added.
Solar successor tariff
In Connecticut distributed solar owners are compensated under the state's net energy billing (NEB) policy, similar to net metering policies common in other states.
The draft CES proposed to cap distributed solar at a quarter of the annual 1% RPS expansion, or 0.25% a year. Humphries said regulators did this because they concluded utility-scale renewables are more cost-effective.
But DEEP cannot make claims about the cost-effectiveness of distributed solar or restructure the NEB tariff “until it does an evidence-based, data-based value of solar or value of distributed energy resources study,” Humphries said.
Distributed solar owners, the CES reported, get the $0.18/kWh retail rate compensation for exported electricity and other incentives that can bring the total cost to “over $0.20/kWh on a levelized basis over the life of the project.”
It also asserts that distributed solar “places integration and administrative costs on the electric grid, including cost shifting to non-participants that results from net energy billing.”
Humphries objected. “If there is a cost shift, it should be addressed, but not because of an assertion unsubstantiated by data.”
Both Acadia’s Schlichting and CFE’s Coleman said DEEP proposed a new compromise during a recent technical session for stakeholders.
“It would consider an increase in the proposed 0.25% cap of distributed solar if it is accompanied by a restructuring of NEB to limit the rate impact,” Schlichting said.
DEEP did not detail the amount of the cap increase, she added. But it said a restructured NEB “should drive down costs for all ratepayers through competition, but also allow purchases to increase if the costs to all ratepayers decline.”
The CES argued “the best way to meet our GWSA goals, control costs, and make pricing more equitable and transparent for behind the meter resources would be to restructure net energy billing and implement renewable energy tariffs.”
This renewable energy tariff (RET) is Connecticut’s first step toward the kind of successor tariff first introduced in Hawaii and now being redesigned by regulators from California to Maine.
For solar sited by customers and under the SCEF program, metering of consumed electricity would be separated from metering for exported electricity. Solar owners would still pay the retail rate for consumed electricity but would earn the value of the RET — yet to be determined — for their exported power.
By including SCEF-sited projects, the CES chose not to “embrace the concept of a statewide shared solar program,” CFE’s Coleman said. She called it a “missed opportunity” to make solar available to Connecticut ratepayers without solar suitable roofs.
Larger solar arrays and wind installations of between 2 MW and 20 MW are significantly more cost-effectively procured on behalf of ratepayers, the CES reported. “The cost of grid-side solar and wind has dramatically declined over the past few years to levelized prices below $0.10/kWh.”
The CES recognized potential benefits from distributed solar over utility-scale renewables. It mentioned a potential deferred need for new system infrastructure, increased resiliency and energy security, local economic development, and reduced siting concerns.
But “to maximize the net benefits to Connecticut’s ratepayers, Connecticut needs to procure clean energy at a low cost,” the CES concluded.
Acadia’s Schlichting said the RET “effectively ends NEB because it changes the relationship between the customer and the grid” and changes the DS value proposition.
“That kind of policy limits how smart homes, storage, EVs, and demand response could be integrated in the future,” Schlichting said. “There are ways to improve the existing policy with new rate designs that compensate for time of use and locational value instead of scrapping it.”
“DEEP has seen a significant reduction in grid-connected clean energy costs through its competitive procurements, as compared to the costs of behind the meter programs,” the CES asserted.
But that is not a full cost-benefit comparison, CFE’s Coleman said. “DEEP should take a more holistic approach that looks at lifecycle costs and long-term benefits.”
Humphries agreed. DEEP “has to get beyond the per-kWh sticker price of electricity and take a broader economic impacts perspective,” he said.
That is especially true of DEEP’s comparison between large-scale hydroelectric power imported from Canada and the offshore wind that could be developed off Connectut's Atlantic coast," Humphries said.
The CES described hydropower as a key resource that could help replace the state’s 2,088 MW Millstone nuclear facility, which could be shuttered as early as 2021, Humphries said. “But it makes a significant error in essentially ignoring offshore wind, because it is both an energy strategy and an economic growth strategy.”
Offshore wind requires less new transmission and offers enormous economic potential for Connecticut ports, coastal communities, supply chain manufacturing, and the local tax base, Humphries said.
CFE’s Coleman pointed out that Connecticut would also “miss out” on early opportunities in offshore wind that Massachusetts, New York, New Jersey, and Rhode Island are already moving ahead on.
Acadia’s Schlichting said it “distorts the conversation” to not evaluate renewables in a way that recognizes all their benefits. “It makes some generation look more expensive and others look less expensive than they are,” she said.
An accurate cost-benefit analysis would show that imported hydro has much higher transmission costs than offshore wind because resources developed off Connecticut’s coast “could take advantage of existing infrastructure,” she added. “It would also show the state’s distributed solar market is not yet mature enough to be concerned with a cost shift but, when it is, distributed generation's many benefits should be considered along with procurement costs.”