State Selects Two Large Biomass Projects For Long-Term Contracts

Feb 1st, 2014 | By | Category: Energy

by Brian Dowling, The Hartford Courant

The state energy department has locked in long-term contracts with two of the largest wood-burning biomass plants in New England, a move it says will save ratepayers $15 million and diversify the region’s sources of renewable power.

But instead of buying power from the two plants, the state’s two electric companies are only purchasing renewable energy credits, which are used to subsidize clean sources of energy like solar or wind installations that is required by the state’s energy policy.

For more on this story, visit: State Selects Two Large Biomass Projects For Long-Term Subsidy Contracts – Courant.com.

From the DEEP:

Contracts Announced for Renewable Energy Credits With Three Biomass Facilities for 29.6 MW of Class I Power

Action taken to meet renewable portfolio goals at a $15m savings to ratepayers

Connecticut’s Department of Energy and Environmental Protection (DEEP) has announced that three long-term power contracts have been awarded for Renewable Energy Credits (RECs) from biomass facilities that will meet up to 3.5% of the State’s mandated Class 1 Renewable Portfolio Standard (RPS) requirement – at a very favorable cost to ratepayers.

Contracts for the RECs were signed by the state’s two major electric distribution companies – Connecticut Light & Power and United Illuminating and three facility owners: Public Service New Hampshire (PSNH), the Burlington Electric Department (BED), and Green Mountain Power (GMP):

• Schiller Unit 5 owned by PSNH , signed a 10-year contract for RECs on a 21.5MW portion of its New Hampshire plant with a contract term commencing January 1, 2016

• Joseph C. McNeil Generating Station, owned by BED, which signed a five-year contract that takes effect January 1, 2015 for RECs on 5.4MW of power produced at the 54MW Vermont facility

• Joseph C. McNeil Generating Station, from the portion of the Vermont facility owned by GMP, which signed a 10-year contract starting August 1, 2015 for RECs on 2.7MW of power produced at the 54MW Vermont facility

The REC prices secured through these contracts from these facilities average less than three cents per kilowatt (kWh) over the life of the contracts. Current Class 1 REC prices in the marketplace are near the cap of 5.5 cents/kWh and are expected to remain at that level for many years.

“These contracts accomplish several key clean energy objectives for Connecticut’s electric ratepayers,” said DEEP Deputy Commissioner for Energy Katie Dykes. “They help us stay on track to meet our commitment to support renewable energy while saving ratepayers an estimated $15 million, by locking in lower prices for renewable energy credits over the life of these contracts, during which time we anticipate REC prices will rise in the marketplace. In addition, these contracts help secure a diversified fuel mix in New England for the next several years.”

Comment from Other Officials

State Sen. Bob Duff, co-chairman of the General Assembly’s Energy and Technology Committee said, “The purchase of these RECs is in keeping with requirements set by the legislature to effectively meet Connecticut’s Renewable Portfolio Standard. With the actions we have been taking, our state is on track to meet the goal of obtaining 20% of its electricity from clean, Class 1 Sources by the year 2020, and to do so in a way that is affordable for ratepayers.”

State Rep. Lonnie Reed, also a co-chairman of the Energy Committee said, “”The procurement of these REC’s from biomass facilities is further evidence that we are achieving our goals of acquiring a diversified portfolio of power that is as good for the ratepayers as it is for the environment. Connecticut continues to move forward with an innovative strategy that make our state a national leader in energy policy development.”

Consumer Counsel Elin Swanson Katz also expressed support for the contracts, saying, “Connecticut consumers want cleaner energy at a reasonable cost. These contracts will assist with both of these goals, as we promote a network of reliable renewable resources. The plants will receive a steady income stream to continue operations in New England, while the competitive procurement ensures that customers will pay the lowest prices available.”

Background on Project Selection

The contracts with the biomass facilities were signed as a result of a Request for Proposals (RFP) developed in consultation with the procurement team which included the state’s Procurement Manager, the Office of Consumer and the Office of the Attorney General. The RFP solicited electric power or renewable energy credits produced by biomass, landfill gas, and run-of-river hydropower facilities that met Connecticut’s Class 1 renewable requirements. The RFP was issued under authority of Section 8 of Public Act 13-303, “An Act Concerning Connecticut’s Clean Energy Goals.” That Act restructured Connecticut’s Renewable Portfolio Standard (RPS) and recommitted Connecticut to obtaining 20% of its electric power from clean energy sources by the year 2020.

Under the RFP, DEEP sought proposals for energy and renewable energy credits from both new and existing facilities, located both in-state and throughout the Northeast. The Department received 28 responses that included a variety of different technologies and evaluated them based
on a range of criteria focused heavily on pricing, but also considering reliability and environmental and economic development benefits for the state. DEEP has issued a determination detailing the steps in the process and the criteria used for selection.

“The Department reviewed proposals in this RFP through a rigorous, competitive process that balanced a range of statutorily-mandated factors, from price to economic benefits to Connecticut,” said Dykes. “When we have strong competition like this, Connecticut’s consumers win.”

Next Steps in the Process

The long-term contracts signed by the biomass facilities and the state’s electric distribution companies will be submitted to the Public Utilities Regulatory Authority (PURA) for review and approval. Under provisions of Public Act 13-303, PURA has 60 days to review these contracts from the time they are submitted.

Other Recent Procurement

Under other provisions of Public Act 13-303, Governor Malloy announced in September the selection of two other Class I renewable clean energy projects that have a combined capacity of 270 megawatts (MW) of electricity – which represents about 3.5 percent of the state’s total electricity load.

The two projects – which have entered into long-term power purchase agreements with CL&P and UI – are a solar installation slated to be built on land in Sprague and Lisbon, Conn., and a wind energy farm in Maine. The cost of power from the two projects – will average under eight cents per kilowatt hour (k/Wh), a price close to matching the cost of power generated from conventional fossil fuel plants and some of the lowest costs ever obtained for solar and wind power in the region.

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