New England interview: Stephan Wollenburg, Green Energy Program Director of Energy Consumers Alliance of New England
New England Wind Forum | 1/14/2013 | www.windpoweringamerica.gov
New England Wind Forum | 1/14/2013 | www.windpoweringamerica.gov
The Energy Consumers Alliance of New England (ECANE) started as a non-profit oil-buying cooperative 30 years ago. With its first contract with the Hull I wind turbine in Hull, Massachusetts, a decade ago, ECANE (known as Mass Energy Consumers Alliance in Massachusetts and People’s Power and Light in Rhode Island) began to offer its members an opportunity to support community-scale renewable energy in Massachusetts and Rhode Island through a voluntary “green power” offering.
We asked ECANE’s Green Energy Program Director Stephan Wollenburg to discuss how ECANE members’ long-term commitments help support the development and financing of local wind projects, and the importance and viability of community-scale wind projects in New England.
ECANE is a 30-year-old nonprofit organization with the mission of making energy more affordable and environmentally sustainable. Our approach to this mission is centered around aggregating consumer demand. With respect to wind power, this means that we use the buying power of 7,500 of our members to purchase renewable energy certificates (RECs) from wind turbines and other renewable resources in New England, almost exclusively in Massachusetts and Rhode Island. By purchasing and retiring these RECs as part of our voluntary green power programs, we create additional demand for wind power beyond what utilities are buying to comply with renewable portfolio standard (RPS) requirements.
One of the most commonly cited benefits of renewable energy is the price stability that it offers because there are essentially no marginal costs associated with energy produced once a facility is constructed. Unfortunately, the benefits of this stability are not generally available to the developers of wind projects. The market price of both the “commodity” energy and the RECs produced by a wind facility can fluctuate significantly over time due to a range of factors. Larger projects with more sophisticated investors may have more of a tolerance for revenue uncertainty, and several states have begun to offer long-term contracts that offer greater stability. Rhode Island and Vermont have adopted policies that are similar to feed-in tariffs—long-term contracts at guaranteed, cost-based prices for eligible renewable energy generators. Massachusetts also requires utilities to sign a limited number of long-term contracts. Still, these contracts are scarce relative to the overall market and generally favor larger projects. As a result, a number of community-scale wind projects owned by municipalities, small businesses, institutions, and developers are looking for the stability of a long-term, unit contingent, fixed-price contract for RECs. Mass Energy and People’s Power and Light focus on serving this niche by signing long-term contracts with these community-scale wind projects.
Our members are institutions, businesses, and individuals that have chosen to pay a little more for their electricity to ensure that it’s coming from renewable resources. Most do this right on their National Grid bill, making it easy to participate. Most traditional competitive energy suppliers tend to attract customers purely on the basis of price. This means, however, that when their prices are no longer attractive, they can quickly lose customers. Such volatility in their customer base makes it hard for the typical competitive electricity supplier to justify making long-term commitments to renewable resources. On the other hand, our members participate because they know supporting renewables is the right thing to do, reducing customer turnover. Because of this and because our green power offerings are well-established—demonstrating a stability to our approach—we’re in a better position to sign long-term contracts, without requiring comparable long-term commitments from our members.
The reliable income associated with these REC contracts frequently allows projects to clear the hurdles necessary to attract financing, moving the project across the finish line to construction and commercial operation. It’s an arrangement that benefits everyone. Project owners get the predictable revenue they need to finance their projects, while we are able to offer a stable price for our green power products to our members. Long-term revenue stability means that the project owners may be willing to tolerate a lower projected return on investment, reducing the price of the products we offer our members. It’s not a recipe for anyone to get rich, just a recipe for success.
In addition to their particular need for long-term contracts, the nature of these kinds of projects lends itself to the vision of renewable energy development that we share with our members. In almost every case, the financial benefits of community-scale projects are retained locally, benefiting the communities in which they are sited. This might mean a local business remains viable and adds jobs because of their investment in a wind project. Revenues from a wind turbine’s power might take the pressure off tight budgets for a municipality’s school department. It’s a model that makes sense to us and to our members. We don’t just preach about the value of clean, distributed generation and the importance of keeping energy expenditures in state: We focus our efforts on fostering projects that will have a real, positive impact on their communities.
Working out long-term relationships with these projects also makes the results of our members’ participation more tangible. Instead of offering a mixed-bag of RECs made up of small portions of output from various projects that changes frequently over time, we can point to specific projects our members are supporting. We know the owners by first name, and we’re in it for the long haul. It expands the sense of ownership to our members, who have truly played a crucial role in bringing the projects to fruition.
We believe that our focus on community-scale, community-oriented wind projects is even more important in the face of controversy. Studies show that a positive attitude toward wind power can affect a person’s perception of turbines in their midst. And when a municipality or a school has a stake in a well-sited wind turbine, there is reason for the community to work together and root for its success. Instead of being perceived as an intrusion, these projects become a point of pride for a community.
In our experience, the majority of community-scale wind projects are very popular. Unfortunately, popular projects welcomed by the vast majority of citizens in a community tend to garner less attention than do those that have experienced controversy. This has led to a public dialogue about wind that too often dwells exclusively on its potential impacts. While there are concerns about wind that should be considered, focusing exclusively on potential drawbacks can prevent individuals and communities from weighing the benefits of wind as well. It’s important to consider how wind fits into the larger question of where we want to get our electricity from. Taking this more holistic approach forces one to consider the costs and benefits of wind relative to other resources. As proponents of responsibly sited wind, the onus is on us to ensure that the public doesn’t solely consider the objections of some, but also that the majority of wind projects are, by any measure, highly successful.
Most states in the region have fairly aggressive renewable portfolio standards, with targets that increase every year. In the long-term, we have to consider how we’ll achieve even more ambitious goals, including an 80% reduction in greenhouse gas emissions by 2050 required by the Massachusetts Global Warming Solutions Act. Larger, terrestrial wind farms, in addition to community-scale wind and other renewable technologies, are necessary to provide the amount of clean energy needed to comply with these requirements. The Cape Wind project has received a lot of attention, but even a project of this scale is modest given the region’s needs. Community wind projects can serve as an ambassador for some of these larger wind projects, giving more people the opportunity to experience a wind turbine up close, and demonstrating how benefits can accrue to a community. Over the years, Mass Energy and People’s Power and Light have had thousands of people show up at events held at various wind turbine sites, with speakers addressing the crowds standing right at the base of the towers. It’s always gratifying to hear people’s reactions. One common response comes in the form of a question: “Why don’t we have these in my town?” The projects can also lead to more discussions about clean energy, including how to use less at the municipal level and at home. The energy produced by a large number of these smaller projects really does add up.
The Town of Hull, Massachusetts, may be the best example of this. After being the first in the region to install a turbine in the 660-kilowatt range, the town was so pleased with the project that it installed a second, larger turbine. Malcolm Brown, former commissioner of the Hull Municipal Light Department and a passionate and effective wind advocate, loves to tell the story of a Hull resident who said a second-floor addition to his home was largely inspired by his desire to get a better view of one of the turbines. It’s an anecdote about a successful project backed by the 95% of Hull citizens who voted in favor of Hull’s second wind turbine. And we have seen how many other communities, such as Ipswich, Massachusetts, see one turbine built, only to follow with another.
Ultimately, our work demonstrates the benefits of predictable revenue for the owners of renewable energy projects and the importance of community-scale wind. Long-term, fixed-price contracts mean stable prices for everyone, and in many cases, mean lower costs for renewable energy. Community-scale wind affords an opportunity for a larger number of people to rally around, instead of against, the siting of a wind project in their area. And to reach our goals, we’re going to need renewable energy of all sizes and shapes. Community wind has a lot to offer, and we’re working to bring those benefits to energy consumers.
This information was last updated on 1/14/2013