Renewable energy projects confront

Bangor Daily News
March 10, 2008

AP

CONCORD, N.H. — Northern New England is turning to the sun, wind and waste wood for clean, renewable power, but there’s a serious problem: the threat of gridlock on electricity "highways."

A prime example is New Hampshire’s northern Coos County, where there are proposals to build renewable energy plants with roughly 460 megawatts of capacity — two-thirds of the proposed renewable projects in the state — to run over a transmission line that can handle only 100 megawatts.

The bottleneck is in Whitefield, the end of a transmission loop that runs through Berlin and Lost Nation.

Projects are approved on a first-come, first-served basis, and the first in line, Noble Environmental Power, stands ready to claim the entire 100 megawatts in 2009 for a wind park. That will leave the other proposals to wither and die if investors, electricity consumers or the government don’t spend $200 million to upgrade 100 miles of line.

Even if the money were available now, the upgrade could take six years to complete, presenting investors with another hurdle — time.

Last month, backers of a proposed 70-megawatt biomass plant in Groveton announced they had had enough, at least for now. Joshua Levine, project developer for Tamarack Energy, a partner in North Country Renewable Energy’s plant, said the project is on hold despite the $1 million already spent on it.

The plant would burn wood chips, low-grade wood from logging operations and other clean wood readily available in the economically stressed region.

But investors declined to put up more money to hold onto land options, and Levine said Tamarack now is looking south to Connecticut and Massachusetts, where transmission is less a problem.

As third in line in Coos County, Levine’s group would need Noble to drop not just the 100-megawatt wind project, but a second, 146-megawatt wind project.

State and regional regulators acknowledge the hurdles — especially in northern New Hampshire — but don’t have ready solutions. A bill before the New Hampshire Senate would have the state be ready to act if no regional solution is forthcoming.

ISO New England, which manages power for the region, is considering changing rules so more of the costs of transmission upgrades could be shared regionally. But as things stand now, backers of projects generally must pay for upgrades needed to connect them to the system.

"None of this is a real speedy process," acknowledges Michael Harrington, senior regional policy adviser for the state Public Utilities Commission.

Officials in Maine, which leads New England in installed wind power capacity, have studied withdrawing from ISO, partly to speed progress on renewable energy projects.

Critics including the Conservation Law Foundation and New Hampshire’s consumer advocate say that in addition to renewables, ISO should be more aggressive in promoting conservation to reduce the need for additional power.

One reason for surging interest in such projects is a two-pronged effort by states to create economic incentives for renewables.

Some of the incentives are in the Regional Greenhouse Gas Initiative, a compact of the six New England states and four others to reduce greenhouse gases from fossil-fuel power plants.

Others are standards, which vary in each New England state, for how much power utilities must get from renewable sources. The utilities, through their customers, subsidize growth in renewables.

New Hampshire became the last New England state to establish renewable standards for utilities last spring. To reduce the need for foreign oil and expensive natural gas, the state set a goal of getting 25 percent of its electricity from renewable sources by 2025.

New Hampshire utilities began spending millions of dollars this year to subsidize regional producers of renewable power — wind, solar, biomass, hydroelectric. The required proportion of renewable power will increase gradually over time.

Electricity customers already are seeing small increases in their monthly bills to pay for the subsidy, which an economic study predicts will produce a net benefit in the long run.

If there isn’t enough renewable power for sale — which now is the case — utilities will pay into a state fund to foster renewable growth.

The debate over the law brought to light the threat that inadequate transmission capacity could kill projects proposed for the North Country.

At a meeting in Concord in August, top ISO executives Kathleen Carrigan and Stephen Whitley said the crux of the problem is that renewable generators are locating in remote areas, far from major transmission lines, and all new generators must pay to connect to the grid unless they are deemed necessary to improve reliability or efficiency for the region.

But a shovel must be in the ground before that determination can be made for any new project, Carrigan and Whitley said.

Frustrated developers say they can’t get investors without being able to assure them there will be transmission capacity at an affordable price.

Levine’s group estimated upgrade costs at $5 million to $7 million, only to potentially face a bill of $50 million or more for line improvements the project might have to share with others who wouldn’t have to pay. If a transmission upgrade could be assured at a reasonable cost in a reasonable time frame, the project could be revived, he said.

Levine said renewable projects locate in remote areas because people don’t want a 400-foot wind tower or a biomass plant nearby.

"We have a culture in New England that is very accepting to the idea of renewable energy, but not to saying, ‘Yes, I will have one of these plants in my backyard," he said.

Other states are struggling with similar issues. In a recent report, New Hampshire regulators cited Texas as an example. Texas adopted renewable energy standards in 1999 with no special provisions for transmission interconnection. Three years ago, the state followed up by making it easier to build transmission lines to encourage wind parks, the report said.

Carrigan said California is building a transmission line to a remote site in hopes renewable generators will build there.

"We do not do that in New England," she said.

She said potential solutions include having the state’s largest electric utility, Public Service Co. of New Hampshire, do the work and bill its customers over time. Others suggest that renewable developers band together and share costs or that the state sell bonds that would be repaid over time by the new plants.

Levine said developers aren’t looking at northern New Hampshire just to avoid more densely populated areas. He said the North Country also has what it takes to make the power: wood chips from forests and wind from mountain ridges. The plants also would mean jobs in a region economically battered by the loss of pulp and paper mills.

Meanwhile, ISO estimates that New England will need at least 8,000 megawatts of generating capacity more than its current 31,000 by 2025, Whitley said.

State officials estimate that New Hampshire could contribute 1,064 megawatts of new renewable energy by 2025. The estimate assumes that incentives in state law will be effective and that regional demand will grow.

"You could develop over $1 billion worth of projects ... in Coos County," Levine said.

He tries to remain optimistic that will happen, but the transmission hurdle is daunting. Investors need to know the power has a way south.

"We have too much uncertainty, too much risk now," he said.