Vermont’s bold Choice for renewable energy and its casualties

by / Thursday, 12 March 2015 / Published in Smartgrid-CI Blog

A new law passed by the Vermont’s house on Tuesday turns Vermont into a pioneer in renewable energy maybe to the expense of energy efficiency. Is it a good choice?

By PATRICK LEVY

Tuesday, Vermont’s house decided on a bold and ambitious target for renewable energy in requiring states utilities to reach a 75% renewable energy goal by 2032, following a 50% goal by 2017. Bill H.40 also known as RESET, was massively passed with a 121-24 vote despite critics from the Republican minority that is concerned about the unknown cost of the switch to consumers and businesses. Issue is that massively switching to renewable energy requires massive investments that can only be justified if the market is big enough to absorb peak production as much as possible and to find ways to compensate for low production when the conditions for producing renewable energy are not made. This is why the house addressed at the same time an existing law called SPEED that was making difficult for local renewable producers to sell power out of state. Coincidentally, Connecticut’s regulator decided on Wednesday not to shut down Vermont utilities’ sale of renewable energy credits to power companies in Connecticut. This is not enough to alleviate concerns about the real cost of this switch to utilities and customers. Questions about the bill have been raised in a report sent to the legislature by state economist Tom Kavet who argues that the estimates [regarding the cost of the program] “are sensitive to relative energy prices, the mix of assumed renewable energy investments, (and) uncertainty regarding actual vs. projected savings per investment.” In other words, the real cost is difficult to assess. Furthermore, Kavet things that: “fiscal gains or losses from secondary impacts are impossible to estimate.” This position is in contradiction with the Department of Public Service claim that “H.40 will deliver energy-bill savings of $275 million, a 15 million metric ton reduction of CO2 emissions, and 1,000 new jobs.” Seen from a different perspective, Vermont long term goal could be to become a renewable energy power house in New England with the potential for developing their business in some neighboring states and create more jobs. An idea that is continuation with some decisions made in the recent past by Vermont’s legislature. One of them required local utilities to meet electricity demand growth between 2005 and 2012 with renewable energy only.

Unfortunately energy efficiency could be a significant casualty of this new law. One of Bill H.40’s provisions is about temporarily freezing a surcharge added to customer bills for the financing of the fifteen year old “Efficiency Vermont” program that has an annual budget of $50M and according to the Democratic chairman of the House Committee on Natural Resources and Energy. Efficiency Vermont’s freeze is justified by budget constraints but it could also be a way to avoid burdening customer bills in front of the perspective of seeing their bill grow because of the use of more expensive renewable energy. Some of the consequences of Bill H.40’s are still unknown. This includes the approach utilities will take to develop renewable energy and how they will coordinate with each other. Too bad efficiency is not considered in that bill at par with renewable. Both are necessary and efficiency is a proven way to cut energy cost and GHG emission for a known cost and return on investment.

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