MONTPELIER, Vt. — A new report indicates that Vermont is over-spending and underachieving on its trajectory towards 90 percent renewable energy by 2050, a policy goal laid out in the state’s current renewable energy standard.
The report, published this month by Vermonters for a Clean Environment, also attempts to untangle a complex system of renewable energy credits (RECs) and alternative compliance payments (ACPs) that allow energy producers to claim progress towards renewables without direct investment in new facilities.
Annette Smith, director of VCE, told True North that the whole system is overly complex and the public needs a better understanding if they are to hold policymakers accountable.
MEETING GREEN ENERGY GOALS?: According to a report by Vermonters for a Clean Environment, the state is not meeting its goals to shift away from carbon-based energy.
“It’s intended to provide public information about what our policies are,” she said. “It’s updating but also informing about what the policies are because I think a lot of people don’t know what our policies are.”
The report explains how the selling of RECs leaves ratepayers with what’s called null power, which is “the underlying power remaining when the RECs have been stripped off and sold elsewhere,” according to a definition cited from green-e.org. “Null power is not renewable but is the unspecified and undifferentiated power that has the attributes of the overall system mix or the residual mix where specified power purchases have been removed.”
According to the fuel mix chart in the report, null power is 50 percent natural gas, 27 percent nuclear, 15 percent hydro, 7 percent renewable and 1 percent coal.
On the ACPs, the report cites these as another alternative to direct investment in green energy.
“The purpose of the Fund is to increase the development and deployment in Vermont of cost-effective and environmentally sustainable electric power resources, primarily with respect to renewable energy resources, and the use in Vermont of combined heat and power technologies,” Vermont statute says.
The money is supposed to be collected into the Clean Energy Development Fund (CEDF). According to the report, the CEDF’s Fiscal Year 2018 Annual Program Plan makes no mention of ACPs.
The report highlights the work of Vermont Law School professor Kevin Jones, who notes a downward trend in the value of Vermont RECs compared to RECs from other states. The result is Vermont ratepayers pay more to make up the difference.
The difference is Vermont counts hydropower purchased from New York and Hydro Quebec as renewable, whereas other New England states do not. As result, the value of Vermont RECs has decreased from between 5 and 6 cents kilowatt-hour down to 1 or 2 cents.
According to Jones, when utilities lock in long-term contracts to purchase power and then these REC prices drop, Vermonters suffer.
“The difference of $0.04 is the REC value assumed by GMP [Green Mountain Power] for the life of the contract,” the report states. “GMP, and the PUC [Public Utility Commission] in awarding the Certificate of Public Good [CPG] made no effort to protect ratepayers in the event that energy and REC prices declined, which they have.”
Riley Allen, the Vermont Department of Public Service Commissioner’s deputy commissioner, addressed some points from the report in an email to True North. On Jones’ report on falling REC prices, he acknowledged that Vermont “relies heavily” on hydro systems which contribute to this dilemma.
“That said, Vermont utilities also possess an abundance of RECs or attributes of renewable generation that are highly valued by neighboring states,” Allen wrote. “Historically, Vermont utilities have sold these more valuable attributes or RECs to help keep down costs of utility operations and therefore rates.
“As the value of these RECs have declined, the ability of our utilities to engage in beneficial transactions to keep down their costs, diminishes.”
He said the RECs and ACPs are all part of the formula to reach state goals.
“We expect our electric companies to meet their renewable portfolio obligations for 2017 and therefore do not expect that there will be a need to make any alternative compliance payments for the current period,” he wrote. “But if in the future, they do struggle, the money available from alternative compliance payments would be used to foster the development of other clean energy projects to help our utilities to meet their obligations in the future.”
He reassured that the accounting amounts to tangible green energy progress.
“Those attributes can be exchanged separately from power (the electrons) to help ensure that the accounting is rigorous and minimizes the risk of double counting,” he wrote. “Reliance on RECs is a national standard, now used by all New England states. Nationally, EPA reports that RECs are approved for use in 35 states to help utilities demonstrate compliance with either legislated renewable targets and for meeting other consumer objectives (e.g., green pricing of energy).”
Further comments from Allen assert that his department sees VCE’s work as an asset in the process towards a beneficial and transparent energy policy for Vermont.
In the end, Smith said this report is all about trying to help Vermonters understand this whole energy policy quagmire.
“My sole agenda is to help us come up with an honest energy policy that is doing what Vermonters think it’s doing, and right now that is not what’s happening,” she said. “We have a circuitous policy that is not transparent, that nobody understands, and is raising rates and transferring wealth to people that are benefiting at the expense of the people who are actually using the power.”
Michael Bielawski is a reporter for True North Reports. Send him news tips at bielawski82@yahoo.com and follow him on Twitter @TrueNorthMikeB.
Vermont Electricity Sector CO2:
The results of four CO2 calculation methods are summarized in the below table. I deleted all the URLs, as otherwise it would not be posted.
Method Basis Data Year Metric ton
Method 1 VT consumption, based on electricity drawn from NE grid 2015 1,316,385
Method 2 VT generation, based on ISO-NE allocation of NE grid CO2 2015 581,053
Method 3 VT generation and purchased RE, based on VT-DEC method 2013 810,000
Method 4 VT generation by McNeal/Ryegate, based on EPA calculations 2015 657,733
Method 1 (proposed)
Allocating Grid CO2 Emissions Based on Electricity Drawn From the Grid: ISO-NE monitors the part-load operating condition and fuel of each generator connected to the grid, on a real time basis, which enables ISO-NE to calculate the CO2eq/yr and CO2/kWh for each generator. By summing all generators, the total CO2eq and CO2eq/kWh of the grid is determined, on a real time basis, for each year.
This method ignores generation within a state, because, electromagnetic waves travel at near the speed of light. There is no fictitious, arbitrarily, politically determined “VT mix” or “NH mix”, etc. There is only the NE mix. This method is in accordance with basic physics.
NE has some generation with CO2 emissions, which include gas, coal and oil, and some without CO2 emissions, which include nuclear, wind and solar, etc., and hydro electricity imports from H-Q.
http://www.windtaskforce.org/profiles/blogs/vermont-co2-emission-from-electricity-based-on-consumption
2015 Data
NE grid supply 126,955,000 MWh
NE grid generation 107,916,000 MWh
NE grid CO2 emission intensity 747 lb/MWh or 747/2204.62 = 0.3388 Mt/MWh
NE grid CO2 emissions 30.2 million ton x 2000/2204.62 = 27.397 million Mt
NE grid generation with CO2 emissions 27.397 million Mt/0.3388 Mt/MWh = 80,856,726 MWh
NE grid supply without CO2 emissions 126,955,000 – 80,856,726 = 46,098,274 MWh, 36.31% of NE grid supply
Vermont supply to utilities 6,100,000 MWh
Vermont population 625,000
VT CO2 emission allocation 0.3388 x (1 – 0.3631) x 6,100,000 = 1,316,385 Mt, about 2.11 Mt/capita
Method 2
ISO-NE Allocation of Grid CO2 to Vermont: ISO-NE calculates Vermont’s share of grid CO2 emissions at 210 lb/MWh, based on in-state generation, mostly McNeal and Ryegate.
Vermont = 6,100,000 MWh x 210 lb/MWh = 640,500 US ton/y, per ISO-NE, or 581,053 Mt/y, which is much less than McNeal and Ryegate. See below note and table 5.1 of URL.
http://www.iso-ne.com/static-assets/documents/2016/01/2014_emissions_report.pdf
Method 3
VT-DEC Method: VT-DEC calculates 0.810 MMt for 2013, which is much more than for McNeal and Ryegate. It is not clear how VT-DEC determined that number.
Method 4
CO2 from McNeil (473,100 US ton, per EPA in 2015) and Ryegate (251,925 US ton, per EPA 2015), totals 725,025 US ton, or 657,733 Mt.
Table 5‐1
2014 New England System
Annual Average NOX, SO2, and CO2 Emission Rates (lb/MWh)
State NOx SO2 CO2
Connecticut 0.29 0.11 592
Maine 0.43 0.28 838
Massachusetts 0.54 0.35 932
New Hampshire 0.40 0.29 665
Rhode Island 0.19 0.01 945
Vermont 0.10 0.01 210
New England 0.38 0.22 726
VT-DEC Method of Calculating CO2 is Not Rational: The most rational method is method 1, because ISO-NE calculates the CO2 of the entire NE grid and allocates CO2 to states, based on the quantity of electricity drawn from the grid.
Per VT-DEC: “Emissions from the electricity sector are significantly lower in Vermont than the U.S., mainly due to large utility purchases of hydroelectric power from Hydro-Québec, and other in-state and out-of-state RE generating facilities, as well as the use of a consumption-based GHG accounting methodology in VT as compared to a generation-based methodology for the US.”
VT-DEC uses a historical, arbitrary mix of methods. Part of the mix is purchased in-state RE, and purchased out-of-state RE, and purchased H-Q electricity. Only the part of RE that has retained or retired RECs can be counted.
The historical VT-DEC method is contrived, not based on physical reality, plus it overstates Vermont’s CO2 emissions. See Appendix.
There is NO special VT mix, or special NH mix. There is only an NE mix. ISO-NE has the best data to calculate the NE grid CO2.
No wonder there are so few CO2 reductions. Here is another fiasco
Matt Cota, executive director of the Vermont Fuel Dealers Association testified: “Cold-climate heat pumps are inadequate during the colder days in winter. Many households with heat pumps found they could not adequately heat their houses. They had to turn off the heat pumps, which are very inefficient in cold weather, and turn on their oil and propane stoves or their wood stoves.”
Since about 2010, Efficiency Vermont and VPIRG have been extolling the virtues of cold-climate heat pumps, mostly made in Japan. By end 2017, about 18000 were installed at a turnkey average cost of about $4500. Most houses need two units.
Based on an average life of 15 years, the annual cost is 4500/15 = $300/y (simple payback basis), neglecting any interest or returns on invested funds and subsidies. The Vermont target is to have 200,000 installed by 2050. Vermont has about 330,000 households.
VPIRG, a lobby organization and booster of renewable energy, mostly financed by Vermont RE businesses, estimated the annual savings at $1000 to $1500 per year on a $3000 household heating bill. However, a study of households with heat pumps, performed by the Vermont Department of Services, VT-DPS, revealed the annual average savings are about $200/y.
From the VT-DPS report:
1. Overall dollar savings are impacted by the efficiency of the back‐up fossil fuel system. The higher the efficiency of the back-up system, the smaller the amount of fuel is being displaced by the heat pump.
2. Houses with poor insulation levels and air leaks will not get as much benefit out of a heat pump, as will highly sealed, well- insulated houses.
3. It is unlikely a heat pump by itself would be sufficient to heat a typical house, without use of a traditional heating system as a backup on cold days.
http://publicservice.vermont.gov/sites/dps/files/documents/Energy_Efficiency/Reports/Vermont%20ccHP%20Summary.pdf
For the annual savings to be only $200/y, most of the houses had to have poor insulation and sealing. EV and its approved contractors likely did not properly survey those houses and did not give proper warning to those households. They likely were eager to install as many heat pumps as possible.
It is well known, Vermont has very few highly energy-efficient houses, likely at most 10% of all houses. Only those houses are candidates for heat pumps. There likely would be another 15% of houses that could be upgraded to be highly energy efficient, at a cost of at least $20,000 each, which would make them candidates for heat pumps. The rest of the houses (75%) are “energy hogs”. It would be too expensive to upgrade them. Thus it appears, the above installation targets and the VPRIG estimated annual savings are highly optimistic, i.e. a fantasy based wishful dreaming.
Heat Pump Example in Valley News Article of March 30, 2018: An engineer had installed two cold-climate heat pumps, which underperformed during colder weather. Because it is likely the engineer had an average insulated/sealed house, he had to switch to his existing oil system at about 25 F, because heat pumps become less efficient at lower temperatures and do not deliver enough heat to his house.
Now he has two heating systems: 1) two heat pumps at about $10,000, doing the light duty work, mostly during spring and fall, and 2) an oil system, $10,000, doing the heavy duty work at all other times when it is colder than 25 F.
This explains why energy savings, on average, are only $200/y, as determined by above VT-DPS. But two heating systems have maintenance and replacements costs far in excess of $200/y. All this means, only the most energy-efficient houses are candidates for heat pumps.
Based in the latest Greenhouse Gas Emissions Inventory Update 1990 – 2013, issued July 2017, it appears there has been an increase in CO2eq emissions from 8.378 million metric ton in 1990 to 8.745 MMt in 2013. The numbers for 2014, 2015, 2016, and 2017 likely were about the same as 2013.
NOTE: It is truly amazing Germany, with a hugely more complex economy than Vermont, has up-to-date CO2eq data for 2017, but Vermont only manages to come up with 2013 data in July 2017.
If the CO2eq of wood burning is added, the CO2eq becomes about 10.0 MMt in 1990 and 10.8 MMt in 2013.
If Land Use, Land-Use Change, and Forestry are subtracted, the CO2eq becomes 5.2 MMt in 1990 and 6.350 MMt in 2013.
The CO2eq sequestering of the forests has decreased, because of:
1) Less forest acreage, due to encroachments and development.
2) Increased clearcutting, roads, and other development within forests, which reduces sequestering, CO2eq/acre.
3) About 50% of standing timber being of low quality and suitable only for burning.
Vermont CO2eq Increased Despite Huge RE Investments for 23 years: Vermonters and out-of-state entities have spent at least $5.0 billion trying to reduce CO2eq emissions from 1990 – 2013, about 5.0/23 = $220 million per year, including Efficiency Vermont.
That total includes federal and state grants, various subsidies, reduced tax collections due to rapid depreciation write offs, and investments by private and government entities. The money was spent on insulation and sealing, new heating systems, and renewable energy programs.
However, it appears Vermont’s CO2eq reduction efforts have been unsuccessful so far. For at least a decade, I have been advocating net-zero-energy and energy-surplus housing and other buildings and gas-guzzler taxes to get higher mileage vehicles off the road. Those two sectors contribute about 70% of Vermont’s CO2eq.
Electricity CO2eq was only 9.26% of the 8.745 MMt in 2013, but wind and solar has been receiving most of government attention, because lucrative grants, various generous subsidies and reduced tax collections due to rapid depreciation write-offs were available to politically well-connected, high-income people, if they invested in such projects.
See URL for much more info.
http://www.windtaskforce.org/profiles/blogs/vermont-far-from-meeting-co2eq-reduction-goals
Just because VCE and or Annette Smith doesn’t understand energy policies and the physics of the grid does not mean that nobody understands it. This is just more NIMBY rhetoric to attempt to support VCE’s perspective that no development should spoil pristine VT.
Matt,
You should read my comments, which would provide you with information to further increase your understanding of the grid.
As I have been saying right along, “follow the money”.
When an unrealistic goal is forced on us there can only be one outcome and it will not be good for average Vermonters. Unfortunately Montpelier is trying to build a utopia with their lofty goals, instead of protecting us from outside interests and developers they are collaborating with them and advancing their agendas through cronyism. We will pay more in the name of their crusade while ignoring the advantages of fuels like natural gas and making the best use of the real technologies of today.
It is truly sad that it requires so much manipulation and subsidy to do anything these days. What ever happened to an honest days work to achieve our goals?
Maybe we should strive to improve our work ethic instead of trying so hard to get something for nothing, our problem might be we crave too much instant gratification combined with a lack of understanding governments true purpose.
The assignment of ACPs to the CEDF was the last in a long series of desperate Shumlin efforts to keep somebody else’s money flowing into this renewable-industrial complex piggy bank after Entergy’s extorted contributions disappeared in 2012. It would be good to know how much of GMP’s clean energy fund, created to grease its acquisition of CVPS, found its way into CEDF.
My column on this (Pirates of the Winooski, 4/17/12) concluded “Maybe someday someone will make a modern pirate movie about this misadventure, hopefully after all the parties to it have been (figuratively) keelhauled.”