The Path to Carbon Balance Driving Vermont Lower on the GHG Chain

1
The Path to Carbon BalanceDriving Vermont Lower
on the GHG Chain

• Michael Dworkin, Professor of Law Director,
• Institute for Energy and the Environment
• Vermont Law School
• Renewable Energy Vermont
• 19 October 2006

2
(No Transcript)
3
Energy policy is our worlds most important
environmental issue. Environmental issues are
the energy sectors most important challenge.
4
Putting Things in Perspective 6.1 Billion
People in the late 1990s world0.6 Billion
averaging 10,000 kWh/household (US level ca.
12,000)2.0 Billion averaging 5,000
kWh/household (Latin/Eastern Eur)2.0 Billion
averaging 1,000 kWh/household (Asia,
Africa)1.5 Billion Without electricityQ
What happens if China and India and Indonesia
try to buy fuel and resources to provide even
half the electricity that we used ten years ago ?
A We will see a doubling in bids for
electricity fuels resources.
5
(No Transcript)
6
What Does This Mean in Practice? Power costs
will be high for a long time Relying on gas
and oil will be a costly bid against the
developing world Shifting to efficiency,
renewables and co-generation will save money over
the next decade. Why not just buy some power
from coal-fired U.S. utilities? Because relying
on coal to be cheap will hit its limits very
soon.
7
(No Transcript)
8
(No Transcript)
9
Carbon reduction is big business
10
Air Pollutants The Willie Sutton Principle
11
U.S. Carbon Emissions
About 1/3 200 million Cars Trucks Most
vehicles made by 7 manufacturers
Less Than 1/3 2 Billion Other Sources

• More Than 1/3
• 3,000
• Power Plants
• 15 from 20 plants
• 50 from 100 plants
• 90 from 300 plants

12
So, How Is America Dealing with This
Prospect?Do we have a national energy
policy?We do .. And it is this -?
13
EIA Predicts More Coal Gas
14
Vermonts Electric Needs

• 1,000 MW peak demand now
• Growing at about 2-3 MW per year since 1992
• 100 MW growth 1984-92
• 550 MW will need to be replaced in 2012 - 2015
  timeframe!!
• Current Sources
• Vermont Yankee - about 30 demand and 36 energy
• Contract Expires 2012
• Hydro Quebec - about 30 demand and 32 energy
• Contract expires from 2012 to 2020, most expiring
  by 2015
• Independent Power Producers - about 10 demand
  and 5 energy (all renewable)
• Contracts expire 2008 to 2020
• Other sources (Market and small utility-owned
  sites- about 30 of demand and 27 of energy

15
and we may not be low-carbon for long
16
A Few Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market
• Net Metered Small Projects

• Major In-State Renewables
• Hydro Quebec
• Connecticut River Dams
• Small Distributed Generation
• Creative Imports
• Blended Balance

17
Can Energy Efficiency Really Help ?

• Between 1999 and 2005 Vermont doubled its
  commitment to strong energy efficiency programs.
  The result?
• Lowering the burden of electric costs for Vermont
  residents and businesses
• In 1999, Vermont and NY had highest electric
  rates of seven north-eastern states by 2005 we
  had the lowest such rates.
• More importantly than rates, the burden went
  down.
• Commercial Industrial electric costs dropped
  from 1.9 of Gross State Product to less than
  1.6.
• Residential electric bills dropped from 3.9 of
  disposable personal income to 3.3.

18
(No Transcript)
19
Lovins US energy/GDP already cut to 1973 soft
path
government
actual total energy consumption
gas
nuclear
renewables
but that just scratches the surface, esp. for oil
electricity
20
(No Transcript)
21
Efficiency and Conservation

• Highly cost-effective but requires upfront
• Excellent climate-change effects
• Keeps jobs and in VT
• Probably can meet all new demand
• Probably cant replace all disappearing supply
  resources.

22
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

23
Vermont Yankee

• VY license extension still unresolved
• Assumes new VY contract acceptable
• Waste storage/disposal issues still unresolved
• Effect of NRC safety rulings still unknown
• Price likely to be full market rate..expensive
• Good climate change effects, compared to others
• Transportation of fuel and waste unresolved
• Some jobs and in VT

24
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

25
Out-of-State Fossil Plants

• Price likely to be high and volatile
• Very poor climate-change and health effects
• Jobs and dollars leave Vermont
• Transmission constraints ?

26
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HydroQuebec
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

27
VT Cogen Plants

• Siting means finding the right spots
• Requires fuel delivery capacity
• Price depends on installation and fuel
• Keeps some jobs and in VT
• Environmental impact must be built in
• Could have high efficiency, if part of right
  sitee.g., Rock Tenn, Ethan Allen

28
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

29
Spot Market Purchases

• High price risk (both core price risk and highly
  volatile hedge costs expensive)
• Climate problems since fossil is on New Englands
  margin 85 of hours.
• Exports jobs and (most large scale supply
  out-of-state)
• Ancillary charges, LICAP, Transmission collection
  for NE, ISO costs all rising

30
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

31
Major In-State Renewable Plants Combination
Wind, Biomass, Wood Solar

• Less exposure to market and fossil volatility
• Availability of sufficient biomass resources
  means sustainable forestry is key issue for Vt,
  NY, NH, Quebec
• Keeps jobs and some in VT (could help stimulate
  in-state renewable businesses)
• Excellent in terms of climate-change effects
• Some already in process (WEC landfill gas,
  possible new wood, wind??)
• Limited in-state hydro site options but retrofit
  potential looks significant
• Siting needs care and sensitivity specific site
  matters
• Not all bio fuels ae equal cullulosic is the key

32
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

33
HQ System Power

• HQs path to expansion is unclear, given internal
  Quebec issues
• Price likely to be high-market
• Good climate-change effects
• Jobs and dollars leave Vermont
• HQ commitment of 1 billion to efficiency may
  free up kWh for our purchase
• HQs wind from Gaspe may not be an option given
  Canadas Kyoto commitments

34
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

35
Connecticut River Dams

• Stable price may be negotiated.
• Environmentally neutral, assuming someone would
  operate them
• Dollars leave Vermont
• Known technology limited cost risk
• Purchase no longer open long term contracts an
  option

36
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Blended Balance

37
Small-Scale Distributed Generation / Micro
Turbines

• Cost may be issue
• Probably wont meet all new demand
• Will siting issues limit deployment??
• Air Permit issues need attention
• Good to excellent climate policy
• Good for jobs and in VT
• On spectrum with net metering
• FERC sub 20 MW interconnect standards out now

38
Net Metered Small Projects

• Trivial in past..significant in future.
• IREC recommends up to 2 MW
• FERC interconnect for up to 10 kw expedited.
• Group net metering?
• Californina heading from tneths of percents to
  true percents.
• All Hands on Deck

39
Major Options Some Pros and Cons

• Efficiency and Conservation
• VT Yankee
• Shift to Fossil Plants
• New Cogen in VT
• Spot Market

• Major In-State Renewables
• HQ
• Connecticut River Dams
• Small Distributed Generation
• Rebuild the Balance

40
Three Key Goals for All of Us

• Build jobs in VT Renewables and Efficiency
  Sectors
• Reliable, efficient, cost-effective electric
  power, considering economic and environmental
  cost (Sec 218c)
• Create our tool die industry for the 21st
  century.
• Build towards having a buyers market, not a
  sellers market for Vermont by 2012

41
(No Transcript)
42
(No Transcript)