December 24, 2017
Massachusetts

Turbines blow hot, cold on financial benefits for local towns

Elaine Thompson, Telegram & Gazette Staff | Dec 23, 2017 | www.telegram.com

Massachusetts and other states are ramping up efforts to better harness wind as a bigger source of renewable, clean energy and the experience here has been generally favorable. Despite the demise of the Cape Wind project, much smaller wind turbine projects have generally proven to be a good investment.

However, in Central Massachusetts, Princeton is an exception. Residents there are not benefiting financially from the electricity generated from their $7 million wind turbine project.

In addition to not being able to use energy from the two 15 megawatt turbines installed on the side of Wachusett Mountain in 2010, ratepayers have to make up the nearly half-million-dollar annual project deficit.

Brian Allen, manager of the Princeton Municipal Light Department, said the failed project is the result of a “business plan that didn’t pan out the way it was supposed to.” He notes he was not manager at the time.

In 2006, when energy was selling at about $90 a megawatt, projections indicated that when the wind turbines went on line four years later, a megawatt of energy would sell for $100 to $115, he said.

But, right after the turbines were commissioned in 2010, the natural gas market took a dive. Instead of getting the projected price, the town receives $30 per megawatt.

Having a business plan that included an agreement with an organization that would buy electricity at a certain rate instead of market rate might have been a better way to go, Mr. Allen said.

The annual cost of the turbines, including paying down the 20-year $7.3 million bond and maintenance, is about $900,000.

“We recover $400,000 in energy we sell and renewable energy credits, which leaves us $500,000 in the hole every year. Since 2010, we’ve had to absorb this,” Mr. Allen said.

The shortfall is shared by the 1,500 residential customers, since the town has virtually has no commercial customers. The current rate is 24.75 cents per kilowatt hour. Without the turbines, it would be 19.75 cents per kw hour.

“In 2016, we would have had to get 28 cents a kw hour to break even. Nobody will pay us that because the market price people can buy energy is so low right now,” he continued.

He said the towns of Sterling and West Boylston buy 25 percent of the output at 8 cents per kw hour. The other 75 percent goes into the market.

The town buys all of its energy from Florida-based NextEra Energy, which owns the largest number of wind turbines in the country; 6,000 mw of solar energy, as well as the lion’s share of the Seabrook Nuclear Power Plant in New Hampshire and the Florida Light and Power Co.

Mr. Allen said the project was too big for the town. It might have been better if the project was smaller, perhaps a smaller turbine, so the energy could all be used in town.

Mr. Allen said, to no avail, he reached out to the Patrick administration through state Sen. Harriette L. Chandler, D-Worcester, to try to get some financial assistance through the Clean Energy Technology Center and other means.

The state, he said, should be obligated to help the town because Princeton constructed the first wind turbines in the commonwealth in 1983. They were replaced by the two installed in 2009.

State officials at that time were excited because they saw this as an opportunity to pave the way for other communities and institutions to pursue wind energy, he said.

“That’s all well and good, but it hasn’t quite worked out the way we wanted it to,” he said. “Doesn’t the state have some obligation to push this along … isn’t there some culpability on the state’s part?”　

Ms. Chandler said she tried to help relieve Princeton of some of its financial burden, including costs associated with the mechanical breakdown of one of the turbines, but was unable to. The senator filed an amendment to the fiscal 2015 state budget that would have authorized the state Clean Energy Technology Center to spend up to $2 million to buy renewable energy credits from the town.

Kevin E. Connor, spokesperson for the senator’s office, said the money would have been “de facto funding to help relieve some of (Princeton’s) debt burden.”

He said current law prohibits the Massachusetts Clean Energy Technology Center from providing grants to municipal plants such as Princeton, so this option to purchase certificates provided a method of financing debt relief for the municipal light plant.

The measure was adopted by the Senate, but did not make it through a House-Senate conference committee. Ms Chandler was not a member of the conference committee.

“Princeton was clearly trying to do the right thing. They thought wind was the answer,” Ms. Chandler, who is acting Senate president, said. “This is an awful lot of money for a small community to lose and it would have a ripple effect on the town’s budget.”

She said in 2010-2011 the state was dealing with very tight budgets because of the recession.

“We thought maybe (the state) would deal with the crisis they (Princeton) were having financially. The answer was no at the time. I have not heard from Princeton since the amendment failed to get out of the conference committee. I think it’s kind of limited what could be done now all this time later,” she said.

She said she was not looking at her effort as a promise that had to be fulfilled by the state.

“I’m sure there are other communities across the state who have tried different technology and it hasn’t worked for one reason or another. I’m not sure if the state has made any obligation to any city or town,” she said.

Positive experiences with turbines

On the other hand, the experiences with wind turbines have been positive for several communities and institutions throughout the state and in Central Massachusetts. Among them are turbines installed at Holy Name Central Catholic Junior/Senior High School in Worcester, Mount Wachusett Community College in Gardner, North Central Correctional Institution in Gardner and the 10-turbine, 15-megawatt project atop Brodie Mountain in the Berkshire town of Hancock, which serves 14 municipal utilities, and eight communities – Ashburnham, Boylston, Holden, Paxton, Shrewsbury, Sterling, Templeton and West Boylston – in Worcester County.

Jeffery Quick, director of the state Division of Resource Management, said the two 1.6 mw turbines owned by the state Department of Correction that went online in 2013, have been very successful. They produce more than enough energy to provide all the electricity at the prison in Gardner, as well as the three DOC facilities in Shirley. Part of the savings, including $60,000 to $80,000 quarterly from the sale of renewable energy credits, helps cover the cost of maintenance and pay down the 20-year $10.3 million bond, he said. DOC has solar throughout the department, but the Gardner and Shirley DOC facilities are the only ones also served by wind turbines, he said.

“The Gardner site is probably one of the best wind sites in the state, until you get out in Western Massachusetts. That’s why it was selected. We did a wind study with a meteorological tower for a year to collect wind speeds,” he said. “It’s been a great learning experience for this office and the facility as well.”

The wind turbine installed at Worcester’s Holy Name Central Catholic High School in 2008 has reduced the school’s electricity bills from $200,000 a year to $40,000 a year. The school also recently agreed to lease a small site near the turbines for $30,000 a year for National Grid to do a battery power storage study on the campus. The large batteries will store power that is not needed to be used when energy is not generated because of a lack of wind.

Holy Name Headmaster Edward Reynolds said in addition to the cost savings and environmental impact, the turbines and batteries are an authentic STEM experience that no other school can offer. After the midterm exams in February, the project will be integrated into the curriculum.

“I think it will raise their awareness of renewable energy and how well it can work. I also think it will have a profound effect on their study of science and math because they will have a real world application in their backyard that’s going to be part of their study. They’re very excited and eager to begin,” Mr. Reynolds said.

Robert E. LaBonte, vice president of finance and administration at MWCC, said he does not know of any other college that has a wind portfolio. The school’s electric bill was about $1 million annually about 15 years ago. In 2003, the school installed a biomass plant that burns wood chips for heating. That took about 40 percent off the school’s electrical load. The school also has a solar array on the roof.

“At the time we built the two turbines, we were down to the use of 5 million kw hours a year, which is pretty much about what the turbines produce,” he said. The school comes out about $100,000 ahead each year after paying for the loan to install the turbines. Over time, the savings will be even more than the debt.

“Financially, there’s not this huge wow factor. But environmentally, it is. We are completely powered by renewable energy. That’s the big story,” he said.

When the 10 turbines owned by the Berkshire Wind Power Cooperative Corp. went online in 2011, it was the largest wind farm in the state. The largest now is the $90 million 19 1.5 mw Hoosac Wind farm in the towns of Florida and Monroe that went online in 2012.

The Berkshire turbines were projected to operate at a capacity factor of about 40 percent and produce more than 52,500 mw hours of electricity annually, which is enough to power about 6,000 homes. The project was also expected to offset the production of nearly 612,000 metric tons of carbon dioxide and the use of 1.7 million barrels of oil.

David Tuohey, spokesperson for the nonprofit Massachusetts Municipal Wholesale Electric Co., which acts as the BWPCC’s agent, said the Berkshire project is “beating the expectations.”

But not everyone is happy with the project.

In 2015, the town of Hancock, where the project is located, threatened to sue the cooperative over its payment in lieu of taxes agreement after receiving a check less than the agreed-upon $156,600 annual payment. The issue was finally resolved, but Hancock Selectman Chairman Sherman Derby said the town should be getting much more. The agreement is based on the assessed value of the turbines and the town’s single tax rate of $2.90 per $1,000 of valuation.

“They (wind farm owners) negotiate for their own benefits,” Mr. Derby said.

He said the owners of a wind farm the size of the local one that’s located in Woodstock, Maine, where he owns a summer home, pays that town $430,000 each year, plus a $20,000 scholarship to a local student.

Mr. Tuohey said each side is looking to get the maximum benefits.

More turbines in the future

More renewable energy resources, including wind farms (on-shore and off-shore) are in the making as a result of legislation Gov. Charlie Baker signed into law in 2016 that requires the state’s three energy distribution companies to solicit proposals for 1,200 megawatts of clean energy, including wind and hydropower; and an additional 1,600 megawatts of offshore wind energy. Each has to acquire at least 400 megawatts of wind energy by June 30, 2020. The goal is to have 2,000 megawatts of off-shore and on-shore wind energy by 2020, up from the current 112 megawatts from 128 projects. The state also plans to increase its solar capacity.

Three companies that have acquired leases on thousands of acres of ocean floor from the federal Bureau of Ocean Energy Management to pursue development of wind energy. Bids were submitted to the state Department of Energy Resources Dec. 20. The leases are among 13 the BOEM has granted for almost 1 million acres of ocean floor running from Massachusetts to North Carolina. A lease is the first step in a long process to get approval for a wind farm.

Matthew A. Beaton, secretary of the state Executive Office of Energy and Environmental Affairs, said the new requirements will make significant strides in further increasing the state’s renewable energy portfolio and improving the cost-savings to rate payers. The three bidders will tell the DOER how much wind energy they will produce and at what price.

Barbara A. Durkin of Northboro, who devoted a decade to studying and opposing the failed Cape Wind project, said the new state legislation to ramp up the number of on-shore and off-shore wind farms is “wishful thinking.” She said the standard design codes have not resolved the issues of failure, including internal and external corrosion of turbines. She prefers renewable energy sources of hydropower, which she says is more benign and cleaner, and nuclear power, which is efficient and clean.

Mr. Beaton said with three companies competing, unlike in the Cape Wind project, will result in the most competitive resources as the state sheds fossil fuels.

The state, he noted, has an aggressive renewable portfolio standard and the most aggressive greenhouse gas targets in the nation under the 2008 Global Warming Solutions Act, which requires the reduction of greenhouse gas emissions 25 percent below the 1990 baseline emissions level by 2020 and at least 80 percent by 2050.

He said there is a 1,200 mw proposal for renewable energy that would be the largest import of renewable energy in New England’s history.

“We’re doing a hell of a lot. And we have a long ways to go,” he said. “Massachusetts has been No. 1 in energy efficiency for seven years in a row.”

National Grid spokesman Robert Kievra said the company believes the solution to New England’s energy challenge is a diversity of fuel sources. It supports renewable projects and policies consistent with the goal of reducing emissions while ensuring reliability and minimizing the cost impact to customers.

He said that in 2017, 22.3 percent of National Grid’s electricity distributed in Massachusetts came from renewable sources.

“In 2018, we are obligated for 26.6 percent. By 2028, our obligation, under current regulations, will be at least 46.5 percent,” he said in an email.

The two key components of the 2016 energy legislation: the clean energy and offshore wind components will provide pathways for Massachusetts to reach the targeted emissions reductions set out in the Global Warming Solutions Act.

“We are active participants in the evaluation of the bids for clean energy procurements and would expect, with the maturation of the offshore wind industry in the United States, that we will meet or exceed the timelines laid out in the legislation to support this industry,” Mr. Kievra said.

Meanwhile, the wind energy industry continues to add jobs. There were more than 4,000 new jobs in the past year. That outpaces overall employment growth in Massachusetts, according to a new report. The Massachusetts Clean Energy Center released its annual survey on Wednesday. It found that the clean energy sector, including wind, solar, energy efficiency and other specialties, has seen an 81 percent increase in employment since 2010. The industry employs 109,226 people in Massachusetts. Clean energy jobs grew at a 4 percent rate in the past year, adding 4,014 jobs since 2016 as statewide employment climbed by just 1.5 percent. Sixty-five percent of the renewable energy workforce has jobs in research, manufacturing, trade or solar deployment, 12 percent work in wind and the remaining 23 percent work in fields such as hydropower and bioenergy.

The report also found that 68 percent of workers in clean energy fields earn more than $50,000 a year, and the industry generates $11.4 billion in economic activity and 2.3 percent of the state’s gross domestic product.

State House News Service contributed to this report.

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