Connecticut took its first step Monday out into the wild world of contracting clean energy projects.
The state’s energy department is seeking bids from clean energy project developers for long-term contracts as a way for Connecticut to lock in lower prices while growing the region’s supply of clean energy.
Before this change, it was solely up to the state’s electric companies to buy a state-mandated amount of clean power from the region’s energy markets. Now the state is pitching in. The certainty from long-term agreements has lowered renewable energy prices in other states, an outcome that Connecticut officials hope to recreate.
The new approach particularly mirrors one Massachusetts launched in late 2010, when the state directed its electric distribution companies to enter into long-term power agreements for clean energy rather than buying the energy off the oftentimes volatile markets.
The news came Monday afternoon as Malloy and energy Commissioner Dan Esty promoted two energy bills that change the state’s approach to natural gas, renewable energy sources and energy efficiency programs. Malloy already signed the bills but held a ceremonial signing to highlight to the changes they put in place.
Connecticut’s request for proposals is open to Class I energy projects in New England built this year. The state is seeking contracts for about 174 megawatts of clean energy projects, like solar panels, wind turbines, hydropower dams or geothermal systems, which will amount to about 4 percent of the state’s energy use. And the contracts could last up to 20 years.
Connecticut joins a small group of states that have connected clean energy development to long-term contracts, one that includes Massachusetts, Rhode Island, Maine, New York, California, Illinois and Hawaii.
The long-term contracts will be accepted on the basis that they are “in the best interest of ratepayers,” said Katie Dykes, deputy energy commissioner of the state Department of Energy and Environmental Protection.
Though the main factor for the projects will be price, they will also be scored on other qualitative factors, like viability – whether the project can get financing and eventually constructed – and reliability, which might favor Connecticut-based developments that don’t need to travel hundreds of miles through transmission wires to arrive in the state.
The timing of the request for proposal, or RFP, is crucial too, Dykes said. If projects begin construction before the end of the year, they could qualify for a federal energy production tax credit.
Getting the contracted renewable energy from, for example, a solar power developer to a home in Avon will require a number of steps. The state energy department will review and accept bids from developers and pass those accepted bids to the state’s electric distribution companies – Northeast Utilities and United Illuminating. The distribution companies will review the bids and take them to their regulators – the state Public Utilities Regulatory Authority – for final review.
The ceremonially signed bills – one redefining what counts as renewable energy and the other implementing a long list items in the governor’s recent energy plan – passed the state legislature in early June. The governor’s office said they are expected to “lower consumer rates, create jobs, expand energy choices, and better protect the environment and natural resources.”
Not long after the legislative session, Malloy and Esty characterized the bills as major progress for the state’s energy policy. “We woke up. We’re smelling the coffee, and we are changing direction,” Malloy said Monday at the ceremony.
The renewable energy bill – now Public Act 13-303 – gave the energy department the ability to direct the electric distribution companies to enter into the long-term renewable energy contracts.
The bill also lets energy officials count large-scale hydropower toward the state-mandated percentage of the energy that must come from renewable sources if the state cannot procure the energy from other sources. It lays out an approach to winding down the state’s reliance on wood-burning biomass and landfill gas, which together make up most of the state’s renewable energy.
The bill implementing the governor’s energy plan – Public Act 13-298 – split its focus between expanding energy efficiency programs and making regulatory changes to encourage natural gas utilities to expand their pipelines.
Malloy, signing the copies of the bills in front of aids, state officials and reporters, presented a copy of the renewable energy bill to Rep. Lonnie Reed and a copy of the governor’s bill to Sen. Bob Duff, who led the committee that approved the bills.
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