A price on carbon is viewed as the most efficient way to achieve clean energy goals
by Timothy McQuiston, Vermont Business Magazine Gordon van Welie’s “foremost challenge” as President and CEO of ISO New England is grid reliability. ISO is “responsible for keeping electricity flowing across the six New England states and ensuring that the region has reliable, competitively priced wholesale electricity today and into the future.”
Last winter offered a challenge for Holyoke, MA-based ISO. A severe cold snap in December and January led to a fear of rolling blackouts. New England disproportionally relies on electricity generated by natural gas. But home heating has dibs on gas. To make up the difference, ISO fired up oil burning plants.
The threat of rolling blackouts turned out to be just a scare, but the cold snap was a costly reminder of the reliance on the limits of natural gas supply. Because of constraints in the pipeline system, New England can’t get enough of it.
ISO-NE CEO Gordon van Welie at the REV conference. VBM photo.
Van Welie, during a keynote address to the REV conference in South Burlington on October 18, told the packed-in audience that New England burned through 2 million barrels of oil in two weeks during that cold period. New England usually goes through about one million barrels in an entire year. Coal is another potential stand-in for natural gas.
Overall, grid reliability is pretty good, according to Van Welie. Van Welie is a native of South Africa and you don’t have to listen hard to hear it.
The transmission lines have gone through a generation of upgrades in recent years, including in Vermont. Energy efficiency is now an official energy resource, as the region is consuming less electricity and renewable energy is making a significant impact.
Overall consumption peaked in 2005 and has fallen since, except for steep drop during the Great Recession followed by a one-time increase as the economy bounced back.
While New England has the highest electric rates in the nation, the region is in the middle of the pack for residential electric bills; Vermont has the fifth lowest residential electric bills of any state in the nation.
Distributed energy, including home solar panels, have benefitted reliability. New Hampshire and Maine, perhaps reflecting their more conservative politics than the rest of the region, have negligible solar production, with Vermont joining the hotbed of solar producing states in southern New England.
Tom Dunn, President & CEO of Vermont Electric Power Company, introduced Van Welie at the REV conference. Van Welie is well respected across the region. The packed house gathered to hear Van Welie’s remarks included not only Dunn among Vermont energy leaders, but also Mary Powell, CEO of Green Mountain Power and Don Rendall, Vermont Gas CEO.
Along with praise for Van Welie and ISO-NE, Dunn mentioned that they “don’t always agree.” Undoubtedly there was a lot of local head nodding.
Dunn told VBM later that VELCO’s issue with ISO-NE mostly was how ISO previously calculated the impact of solar and conservation efforts.
“We felt the energy efficiency estimate was too low,” he said, likewise with solar photovoltaic generation.
Van Welie acknowledged that was indeed the case.
The solar "duck curve." ISO graph.
Van Welie spoke at length about the “duck curve” with solar PV in the region. During the summer months solar PV pushed down baseload electric requirements significantly during the middle part of the day. This was good, he said, as air conditioning got cranked up.
But the challenge was during the late afternoon when it was still hot and people had the AC blasting, just as the solar PV quickly waned. At that point ISO-NE has to ramp up traditional electric generation to meet the late-day requirement, which is itself a challenge.
Nuclear, meanwhile, with only two operating plants in New England gonig forward, still represents a vital baseload component. Millstone in Connecticut is a 2,111 MW plant and Seabrook, NH, is a 1,250 MW plant. Pilgrim in Plymouth, MA, is scheduled to close next year with a nameplate capacity of 677 MW. By comparison, Vermont Yankee was a 605 MW output plant.
So, Van Welie said, the economic health of those plants is important to electric reliability in the region.
Van Welie said during the REV conference that a price on carbon would be the most efficient way to achieve clean energy goals, but that it’s a matter for policy makers to decide. He said ISO will work the states to implement those goals.
“A price on carbon, I think, will go a long ways to supporting the existing nuclear fleet in the region…. If you look at the winter energy profile, the two remaining nuclear units produce a quarter of all the energy in the region.”
The impact of shutting down either one of the nuclear plants would have a profound impact on the region’s energy portfolio and undermine the carbon reduction goals of the states, he said.
“One way out of that problem,” Van Welie said, “is to put a real price on carbon and I think it’s consistent with the broader goals that have been espoused by policy makers to de-carbonize the economy by 2050.”
Even in Vermont there appears only modest interest among political leaders for instituting a carbon tax in any form.
Governor Phil Scott opposes it outright. Democratic leadership in the Legislature supports it, but the rank and file of lawmakers are less interested because of the cost to constituents.
Nuclear plant generators maintain that they should be compensated for their carbon-free environmental attributes. A carbon tax could also support renewables. It would help level the cost structure between sources, in what carbon tax advocates call the “true cost of carbon.”
The nuclear industry wants a carbon tax because nuclear is an expensive energy source that produces relatively little carbon even when assuming mining and transportation.
But nuclear can’t compete in the marketplace against much cheaper natural gas in New England and oil or coal nearly everywhere else.
Entergy didn’t shutter Vermont Yankee in December 2014 because of retribution for former Governor Peter Shumlin’s opposition to the Vernon nuclear plant, but because it was losing money.
The State of New York had to beg and offer a $17.6 billion bailout to keep three upstate, money-losing plants online. Governor Cuomo wants to keep hundreds of jobs and the carbon-free power as “a bridge” to renewables.
Vermont’s carbon emissions are on the rise and have already missed initial goals (25 percent reduction of 1990 levels by 2012) and it seems unlikely future goals can be met (40 percent below by 2030), unless there is an extraordinary change in current conditions.
Vermont carbon emissions peaked in 2004 and then took a deep dive that would have met the 2012 targets if the descent had stayed on course. But it didn’t. Emissions flattened and then in 2013 Vermont carbon emissions actually began to rise.
While no one seems to know exactly why, speculation centers on consumer behavior.
Following the end of the Great Recession two things happened, consumers became more confident and the price of oil came down. Smaller cars have become less popular as the nation has developed a greater taste for SUVs (Ford intends to abandon nearly its entire fleet of smaller vehicles). Home heating also appears to have increased.
The trend line for carbon emissions started going up before Vermont Yankee stopped producing electricity.
Energy usage in New England. ISO graph.
Part of the future solution to the region’s energy needs, Dunn said, will include increasing use of energy storage.
GMP, for instance, is promoting battery storage, both in the home and at large solar facilities.
Dunn noted that old-fashioned energy storage also could be part of an innovative future. For instance, he said, large reservoirs in western Massachusetts kick in as needed, providing significant hydro power during peak events.
Water is pumped up to the reservoirs (“pump storage”) during low energy needs and then lies in wait for when it’s needed. The two facilities built in the 1970s can supply almost 2,000 MW of capacity within 10 minutes.
While that is a short-term solution to a spike in electricity needs, it is also a powerful one that amounts to more than three-times the output of what Vermont Yankee produced.
The Trouble of Long Transmission
Former Governor Peter Shumlin separately had a beef with ISO-NE. Shumlin famously supported ridgeline wind power development across the state. Wind is relatively cost effective, but also poses several practical and political challenges.
Shumlin was frustrated by ISO-NE for not taking all the Vermont wind generation available, thus reducing revenues for the owners, on the one hand, and on the other using what he considered less desirable power sources, like nuclear and fossil fuels.
Shumlin sent a letter in July 2013 to Van Welie regarding GMP’s wind farm in Lowell: “I am writing to express my concern at ISO New England's decision to curtail Kingdom Community Wind's energy production during last week's heat wave. While I understand ISO-NE's reliability mission, I urge you to ensure that it is exercised with clear regard for the clean energy goals of Vermont and the region. As you know, the State of Vermont has implemented policies to increase the production of clean, local, renewable energy projects including wind. ISO-NE's curtailment of renewable resources at a time when it instead asked for generation from our oldest and dirtiest power sources to shoulder the burden during peak energy usage runs counter to these goals.”
Van Welie answered Shumlin that August by saying: “GMP’s decisions regarding the location, design, construction, and interconnection of its KCW project have resulted directly in the need for ISO to curtail the project’s output in order to maintain reliability.”
GMP subsequently installed a $10 million condenser in hopes of alleviating ISO-NE’s reliability fears.
GMP spokesperson Kristin Kelly told VBM that the condenser has “largely resolved the issue.”
While there is still some curtailment from ISO or even from ice on the blades, she said, the KCW’s energy output is meeting its targets and is a cost-effective electric supplier for the state’s largest utility.
Van Welie always leans on reliability of the entire system. Wind, even on a good day, can be intermittent and is being carried on transmission lines a long way from the greatest need in southern New England.
The remote nature of wind – as opposed to solar which is largely local – also creates an issue with VELCO. Transmission lines are expensive to build and maintain. Running a new line into a rural area well off the grid can make the resulting power simply too expensive, Dunn said.
Shumlin also faced wind-farm opposition from local residents and some environmentalists (others, like the Vermont Public Interest Research Group and Middlebury’s Bill McKibben and his 350.org, support big wind).
Wind turbines impact sightlines and creates what opponents describe as unhealthy noise pollution.
New noise-level standards in Vermont adopted last year very likely will make new, large wind developments impossible.
New hydro from Quebec also poses issues in transmission as it travels hundreds of miles.
Dunn, among many, is skeptical of the Massachusetts renewable plan that put out bids last year for more than 1,000 MWs of energy.
After a New Hampshire power line proposal was rejected after permitting problems, a Maine option tapping into Quebec renewables was chosen last March.
While the strength of the Maine line is that it's cheaper than some of the other proposals at $950 million, versus $1.1 billion for National Grid (through Northeast Kingdom from Quebec on its way to New Hampshire) and $1.6 billion for the TDI and Eversource (New Hampshire) plans, it still needs several permits and time appears to be running out.
The TDI plan would run a transmission line 100 miles under Lake Champlain before taking a hard left across existing rights-of-way in Vermont.
Because of the iffy nature of the Maine plan, Dunn isn’t totally counting out TDI eventually getting the Massachusetts RFP, but the TDI powerline or any other massive project won’t be built without a contract in hand, of that he’s sure.
“They would not be built on speculation,” he said.
REV Conference October 2018 at the DoubleTree by Hilton Burlington. VBM photo.
CORRECTION. This story corrects the current nuclear capacity in New England.