Act 45 takes a Step Forward

(From page 46 of the Public Service Board’s Interim Price Order, Docket #7523)


VIII. ORDER
IT IS HEREBY ORDERED, ADJUDGED, AND DECREED by the Public Service Board of the
State of Vermont that:

1. Based on the foregoing discussion, we conclude that the interim price levels that apply
under the standard offer program to qualifying Sustainably Priced Energy Enterprise
Development (SPEED) resources are as follows:

(a) for landfill methane projects, 12 cents/kWh;
(b) for farm methane projects, 16 cents/kWh;
(c) for wind projects (15 kW or less) , 20 cents/kWh;
(d) for wind projects (over 15 kW), 12.5 cents/kWh;
(e) for solar PV projects, 30 cents/kWh;
(f) for hydroelectric projects, 12.5 cents/kWh;
(g) for biomass projects, 12.5 cents/kWh.

2. This Docket shall be closed.

Dated at Montpelier, Vermont, this 15th day of September , 2009.

s/James Volz
s/David C. Coen
s/John D. Burke
PUBLIC SERVICE BOARD OF VERMONT

OFFICE OF THE CLERK
FILED: September 15, 2009
ATTEST: s/Susan M. Hudson
Clerk of the Board

This is the first outcome of Act 45, which establishes a special feed-in tariff for renewable energy. The other rules of the game won’t appear till September 30th,, though we know that there will be a 50 megawatt cap on the program. That means that by its conclusion Vermont will have about 5% of its peak electrical load supplied by renewables.

Just to recap, what Act 45 said was that we will need renewables in the future so we should promote renewables now by making sure that they are as profitable as other methods of electrical generation. This is the energy planning equivalent of putting on your parachute before jumping out of the airplane. If we wait till fossil fuel and nuclear energy are expensive before developing renewables then we’ll have to suffer for a long time while we try to catch up.

The bill set some preliminary prices and required the Public Service Board to evaluate and firmly set prices by September 15th. The prices will be adjusted in January 2010 and every two years after that. The standard is that a renewable energy generator (such as a wind turbine, a set of solar panels, or a farm methane installation) should make as good a return on equity (ROE) as the highest return of any existing generator. That turns out to be a local hydro company in Proctor churning out electrons at 10 or 12 percent ROE, depending on how you figure it.
 
And therein lies the problem. I attended the first meeting held by the PSB to solicit opinions on the subjects of price, eligibility, permitting, and so on. The room was filled mostly with utility lawyers, with a sprinkling of renewable energy people and private citizens. The discussion became arcane almost immediately. I have been on the email list for the process and as a result I have plowed through dozens of documents advocating this or that number for interest rates, capacity factors, and system size cutoffs. Committees are still working on how the 50-megawatt queue will be allocated, the permit process, and transmission and interconnection issues. The utilities would be happy to encourage fewer, larger systems. The renewable energy community and others are interested in a range of sizes. The utilities want to offload as much of the administrative work and cost on the installers as possible, and the installers vice versa.

I have been pleasantly surprised by the civil tone of the whole process, and the general use of facts, logic, and mathematics in the debate.

The prices listed above are an overall victory for the renewable energy industry. Northern Power Systems, a company that manufactures a 100-kilowatt wind turbine in Barre, may find the price point a bit awkward for their product. A 100 kW unit lacks the economies of scale of the 1000 kW units that are now the norm in the commercial wind industry. Residential scale wind and PV have scored a big victory and larger scale PV a reasonable win as well. With PV module prices dropping the feed-in price will lag on the high side of profitability. I don’t know enough about the economics of landfill gas or biomass generation to judge the effect on those technologies, but the price is well above usual market rates. Farm methane projects below the net metering threshold of 125 kW may find it almost as good just to net meter in certain utility areas. I’d call it a win for hydroelectric except that permitting for that technology is nearly impossible under present law.

So, there’s a bright spot in the news. On September 30th we’ll find out what difficulties await aspiring renewable energy installers in terms of permitting and fees. Stay tuned.