New England governors push for bulk procurement of renewable energy

At the end of this month, the comment period for a new, coordinated energy procurement plan from the New England States Committee on Electricity (NESCOE) will come to a close. NESCOE is a not-for-profit organization representing the collective interests of the states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. The Governors of each of these states appoint officials to NESCOE to work together to secure coordinated, regional energy procurement at the best price. The plan was released on August 10 and is open for public comment until August 31.

The plan specifically focuses on the coordinated procurement of renewable energy – energy that comes from sources such as wind and solar. This plan is the evolution of work that has been happening across all six states since 2009 in order to achieve greater energy cost efficiency through coordinated procurement.

According to the work plan, “analysis suggests that renewable resources located in and around New England could be developed at a lower “all-in” cost to consumers than the cost of building transmission to move equivalent amounts of renewable power from other parts of the country to New England.”

Work plan authors note explicitly that, “competitive markets have not met the demand to date for renewable resources.” As such, in order to make renewables more economical in the region, NESCOE is examining the use of power purchase agreements and other policies to develop the infrastructure locally and bring costs down. On July 30, the New England Governors Association adopted a resolution directing NESCOE to implement competitive coordinated renewable energy procurement. In the resolution, Governors note that renewable energy goals in the region are some of the most aggressive in the country and that they hope by working together they can more easily facilitate the build out of both renewable energy and renewable energy transmission infrastructures.

Work plan authors note, “several factors influence the New England competitive market’s ability to attract and support additional renewable resources, including: a) fundamental shifts in the natural gas supply have lowered forecasted energy revenues for renewable resources; b) macroeconomic conditions have exacerbated the challenge of financing new renewable resource development; c) diminishing available transfer capacity on the New England transmission system in regions with lowest cost renewable resources have complicated the interconnection incentives; d) changing market rules that may limit renewable resources ability to clear in the current capacity market, and e) the clogged interconnection queue which can impede all generation and resource development.”

The issues addressed in this paragraph track with earlier CivSource reporting on the potentially dire picture for wind power in the US. In addition to the lowered revenue projections as a result of the growth of natural gas, a federal wind energy production tax credit is set to expire this year which has already resulted in significant layoffs at all four major wind turbine manufacturers.

States in the region like New York, have recently announced increases to renewable energy programs. New York is adding over $800 million in solar power generation incentives and this work plan would allow groups of states to move together in how they purchase energy from service providers. The Governors hope that buy buying in bulk, they may be able to translate the Costco principal to renewable energy.

An RFP is likely the next release on the horizon from NESCOE in order to facilitate the procurement.