New England’s Support for Distributed Generation and the Electricity Grid of the Future

As multiple states stagger under the effects of superstorm Sandy, and many Northeasterners vividly recall Tropical Storms Irene and Lee and the freak October blizzard of 2011, prolonged power outages are among the most challenging repercussions for those in afflicted areas. One type of protection against widespread outages can be offered by a less centralized grid, with distributed generation of electricity providing localized power resources that could ride out a storm more successfully.

Distributed generation (DG) is also a means of expanding smaller clean-energy projects and taking advantage of the modernized and flexible smart grid that experts see as the future for the nation’s transmission system.

Representatives from state government, utilities and innovative technology companies in the New England states gathered in Boston on October 26 to provide an overview of new regulations, policies, and technologies that aim to expand the deployment of DG in the region.

Kicking off the review, Ann Berwick, chair of the Massachusetts Department of Public Utilities (DPU), summarized her agency’s new regulatory directions and discussed the growth of DG following the enactment of the state’s watershed Green Communities Act (GCA) in 2008.  Provisions of the GCA allow DG projects using wind, solar and farm-based biogas technologies to receive close to retail prices for credits obtained through net-metering, in which the owners of clean-energy installations receive credits from their utility suppliers when the amount of power that they generate exceeds their overall usage. The law also removed caps limiting the size of many public DG projects. In addition, the GCA established “virtual net metering,” through which the credits for power fed back into the grid can be shared by all of the individual customers who have invested in a community clean-energy project, even when the power is produced from an off-site facility.

In October 2010, the Commonwealth’s budget bill raised the caps for net-metering facilities and established a queue, or system of assurance, for approved projects, Berwick said.  Having a place in the queue guarantees that the grid will be able to interconnect with the project once it is completed. Thus, a developer can secure financing and undertake all necessary planning, based on the certainty that when it is ready to be built, the project will be able to interconnect, she said.

Berwick presented data collected by the DPU that substantiates the positive impact of these policies on the growth of DG. Installed capacity in the Commonwealth more than quintupled between 2007 and 2011, increasing from only 8,247 kilowatts (kW) to nearly 50,000 kW.

Recent DPU regulations provide further cap increases on clean-energy development.  Rules finalized in connection with the July 2012 Act Relative to Competitively Price Electricity enable larger public and private DG projects to expand to 3 percent of the total load of each of four Massachusetts utilities. Small renewable DG projects will be exempted from caps altogether as of November 1, 2012, said Berwick.

In contrast, previous regulations associated with the October 2010 budget bill set a total cap of three-percent for net-metered DG projects, of which one percent went to private projects and two percent to public ones, she said.

Further orders from the agency have clarified the definitions of public versus private facilities and determined precisely how caps will work for local, state and other governmental entities such as schools.

Taken together, the new rules furnish an enormous amount of room for growth in DG, even after the rapid development of projects through 2011, Berwick said. According to DPU data, anywhere from 66 to 94 percent of capacity remains available for public and private DG projects in the territories of the states’ utilities.

Massachusetts also recognizes that the growth in DG must go hand in hand with a more flexible and resilient grid, Berwick said.

“We have avoided the term ‘smart grid’ because of the many things that it means to different people, and instead issued a Notice of Investigation (NOI) into grid modernization in October 2012,” she said.

A DPU-appointed stakeholder working group will explore “grid-facing” elements that improve the reliability and efficiency of power transmission and distribution along with “customer-facing” elements that provide ratepayers with greater means of controlling their usage and taking advantage of dynamic pricing to lower their costs, according to the NOI.

Connecticut has also established innovative new policies to encourage the development of small, behind-the-meter renewable generation. Last year, lawmakers enacted an omnibus energy reform law that establishes a range of new incentives for clean energy.  A new state green bank will offer low-cost financing to clean energy and energy efficiency projects, and a new credit trading program compels the state’s two investor-owned utilities to enter into long-term contracts to purchase energy from low- and zero-emission sources.

The trading program aims to provide certainty for investors in solar, wind, small hydro and other clean-energy sources while reducing costs for ratepayers. Utilities must purchase, annually, a fixed dollar amount worth of credits generated by low- or zero-emission sources, known as LRECs and ZRECs. In contrast to programs in other Northeastern states where utilities typically must buy a certain number of credits not based on overall dollar amounts, the Connecticut program aims to reduce costs through competition, as owners of renewable and clean-energy installations bid against one another for a portion of the overall monetary pool. The winners of the reverse auction will be able to lock-in fixed ZREC and LREC prices for 15-year terms, and those with the lowest bids will have the best chance of succeeding.

Christie Bradway, Northeast Utilities’ (NU) manager for renewable power contracts, presented information at the Boston forum about the system’s performance through data from Connecticut Light and Power (CL&P), NU’s subsidiary there. CL&P filed a successful LREC and ZREC procurement plan with Connecticut’s Public Utilities Regulatory Authority on October 12 that included 76 contracts for a total of $6 million in contract commitments this year, she said.  If any of these contracts are not properly fulfilled, bidders from a stand-by queue will then move up for additional contracting.

In a breakdown of the REC bidding in this initial auction, CL&P paid an average of $59.91 per REC for LRECS, $149.29 per REC for ZRECs from medium-sized projects, and $101.36 per REC for ZRECs from large-scale projects, Bradway said.  Over the 15-year period of the contracts associated with the auction, the REC purchases will cost CL&P a total of $29.8 million, she said. The program for small-scale zero-emission projects has yet to begin, but the current proposed price is $164.22 per REC, said Bradway.

In contrast to a number of other states with compliance-based markets, Connecticut’s auction process produced the desired result — lower costs per REC because of both the nature of the reverse auction and the capacity to purchase RECs with prices fixed by long-term contracts. For example, the Massachusetts clearing price for SRECs in 2012 ranged from $199 to $225; the Maryland price from $130 to $180; and the Washington, D.C. price from $290 to $300, according to SRECTrade, a San Francisco-based company that hosts SREC auctions.

Connected with these regulatory changes, small companies and start-ups are anxious to become active players in the region’s DG market, said representatives of four technology companies participating in the October 26 forum. The companies are developing innovative technologies, including new types of power storage and DG that can function in isolation from or as part of the grid.

The start-up Ambri is bringing a new liquid metal battery technology up to scale for applications that encompass storage to offset the intermittency of renewable resources and relief for localized grid congestion, said Phil Giudicci, president and CEO of the company. Using a combination of magnesium, antimony and salt, Ambri produces batteries that are simple to manufacture and appear to tolerate unlimited numbers of charge cycles without degrading, he said.

Bloom Energy manufactures solid oxide fuel cells, using ordinary natural gas or biogas to power the cells without burning the feedstock, a process that eliminates emissions and minimizes harmful byproducts, said Charles Fox, the director of East Coast regulatory affairs for the company. The modules, typically deployed in 200kW arrays, can operate directly as a DG resource or supplement generation resources on the grid, either in parallel at times of peak demand or in isolation in the case of power outages, he said.

Harvest Power, now the largest composter of yard waste and food waste in North America, extracts four revenue streams by means of its anaerobic-digestion process – renewable power, soils, fertilizers and mulches, said Wayne Davis, co-founder and vice president of regulatory affairs. Harvest Power sees much potential for expanding its business in Massachusetts, which has set ambitious goals for diverting organic waste as part of its new Solid Waste Master Plan, he said. Connecticut also could also offer great potential, if anaerobic digestion were incorporated into its renewable energy policy, said Davis.

FloDesign Wind Turbine produces shrouded turbines, whose design derives from jet engines, said John Howe, the director of public affairs. Their turbine produces up to three times more output per unit of swept area than open-blade turbines, and can be deployed at a much smaller scale that addresses both local power needs and siting concerns, he said.

The business activity generated by the two states’ innovative regulations demonstrates the possibilities for new clean-energy technologies to grow states’ economies and increase grid resiliency, while simultaneously reducing pollution.

 —By Eleanor Saunders

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