Merchant power generators are warning three New England states that their novel proposal to procure renewable energy capacity could force existing power plants in the region to retire early and may not survive legal scrutiny.
The New England Power Generators Association last week said the states’ clean energy plan would create a subsidy that could “flood the market” with large-scale Canadian hydroelectric energy and have a “catastrophic” impact on existing northeast US power plants. The association represents companies that own about 25,000MW of generation, about 80pc of the region’s capacity.
Massachusetts, Connecticut and Rhode Island last month asked for proposals to build new renewable energy capacity and transmission lines that could import clean – or non-CO2 emitting – energy, including large-scale hydro plants built after 2003. The states each have their own clean energy goals but issued the proposal jointly so they could back larger, more cost-effective projects.
But the generators said the plan would subsidize otherwise uneconomic transmission projects that would import power from large Canadian hydroelectric plants and force the premature retirement of existing New England generators. The association said the proposal would undermine competitive forces in New England’s power market and force ratepayers to carry the risks of subsidized projects.
Last year generators helped kill an effort by New England states to pay for new pipelines and transmission lines through the regional grid’s electric tariff, in part by highlighting the legal risks of the idea.
The generators last week warned the clean energy proposal raised similar legal risks about whether it would interfere with federal jurisdiction over power markets, and warned the plan could “open the states to potentially lengthy and costly litigation processes.” The generators association instead urged the states to use market-based principles to support their clean energy goals.
New England’s installed generation capacity is starting to wither as old coal and oil-fired plants begin to retire. More than 1.3GW of coal and nuclear capacity retired last year and another 2GW will shut in 2015-18. The regional power grid operator says an additional 6GW of coal and oil-fired capacity could be at risk of retirement by 2020.
Developers have proposed 9.5GW of new resources in New England but historically only a third of proposals gets built. Combined-cycle plants and wind farms account for most of the proposed capacity.
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