Whether you find them beautiful or an eyesore, the thousands of solar panels arrayed by the state’s roadsides and wind turbines lining some mountain ridges represent, to the average Vermonter, a symbol of the state’s efforts to build a cleaner energy future.
But appearances can be deceiving.
In 2016, the state Legislature was given an independent report that revealed Vermont’s electric customers actually buy zero percent of the wind energy and just 0.4 percent of photovoltaic solar energy produced in the state. Moreover, the report found, “the state’s electric sector greenhouse gas emissions had doubled over a historic 10-year period.”
That is a very different picture from the one painted by Vermont utilities and lawmakers touting the state’s green energy progress and promoting Vermont as a renewable energy leader.
“What is extremely troubling to me as a Vermonter whose family roots are deep in this state is that we’ve had a lack of transparency and a big focus on the perception of Vermont being green when it comes to renewables, without that largely being the case in reality,” said Kevin Jones, director of the Institute for Energy and the Environment at Vermont Law School and an author of the report.
Part of the blame lies with Renewable Energy Certificates, or RECs (pronounced “wrecks”).
RECs are an accounting measure, a necessary legal mechanism created to assign a “green” designation to power fed into the grid from net-metered and other grid-tied solar, wind and renewable systems. Once that energy enters the grid, RECs are used to differentiate green power from that generated by other sources, like gas-fired power generators.
Think of it a bit like a potluck salad: everyone brought a head of romaine lettuce and you brought a nearly identical but organic head of romaine lettuce. Once you rip up the leaves and mix them in the bowl, you can’t tell them apart. But it makes a difference if individuals eating the salad need to prove they’ve eaten a certain percentage of their greens from organic sources. So assigning proof of what has been put into the salad mixture, and by whom, is necessary to prevent cheating. RECs clarify the mixture.
In a similar manner, a REC is assigned to each megawatt of renewable energy produced so that utilities, municipalities, states or even companies can keep track of how much renewable energy a given system is feeding into the grid.
Once an assigned REC has been used to authenticate the origin of a given megawatt of power, the REC is “retired” and cannot be used again. But before a REC is retired, it can be sold. Any entity requiring proof it used power from renewable energy sources to fulfill voluntary or legislative renewable energy requirements can buy a REC and retire it as theirs.
The key is that whoever does the selling is giving up the legal right to claim they’ve used power from a renewable source – kiss that organic lettuce goodbye and give someone else credit for bringing it. The reality is that solar panels or wind turbines generating electricity are technically powering whoever bought the RECs – not the site or system owner, who is then left with what is called the “residual mix” of power in the grid (all that other lettuce). Electricity users who are not purchasing renewables or retiring their own RECs are responsible for emissions on the grid.
Jones has been among a select few critics. A new analysis released by Vermonters for a Clean Environment this week expands on Jones’ work, explaining Vermont’s policy missteps, unintended consequences and attempting to shed light on the complexities that have obscured these facts for most people.
“Most Vermonters would be stunned to know that we have actually seen an increase in carbon emissions due to our current energy policies,” Annette Smith, executive director of Vermonters for a Clean Environment, said in a release this week. “From public discourse to date, it appears most Vermonters do not realize we get little renewable energy from our state’s wind and solar developments, while simultaneously costing ratepayers significantly more money.”
That’s how the vast majority of the visible solar and wind projects in Vermont are actually generating renewable energy for other states and meeting the renewable energy standards there – not here. Under the REC method of scorekeeping, Massachusetts, Connecticut and other New England states are using Vermont land and resources to achieve their respective renewable energy goals, instead of pursuing their own projects.
The system leaves a lot of Vermonters mistakenly believing their state has been doggedly developing renewable energy and reducing emissions to meet our own legislative policies.
“But Vermont does not currently have a leading renewable energy standard that commits to paying the full price of being green,” said Jones.
Vermont’s policies are the only ones in New England that allow utilities to use more broadly defined RECs from much older sources and large-scale hydro power (such as Hydro-Quebec), which means demand for those RECs is low and thus inexpensive compared to the wind and solar RECs that Massachusetts and Connecticut buy to count toward their own obligations. Vermont utilities can sell high and buy low and still get away with fulfilling their renewable energy requirements.
The irony is that Apple, Google and even Walmart are doing renewable energy in a more transparent and honest manner, the report points out.
“In regards to renewable energy leadership, corporate America is often the gold standard,” said Jones. “Whereas utilities like Burlington Electric Department, through REC arbitrage, selling valuable local solar, biomass and wind RECs out of state, play a renewables shell game for the appearance that they are 100 percent renewable.”
Vermont’s Public Utility Commission, in an attempt to address concerns about out-of-state REC sales, altered net-metering rules last year to encourage net-metered customers to give their RECs to their utility by penalizing them a portion of the rate the utility pays them for excess energy created by their system.
“Unfortunately, under the new net metering rules, the PUC did not differentiate between people trying to reduce their own and their community’s carbon footprint, and by extension Vermont’s, and the developers stripping the RECs and selling them out of state,” said Jones. “Local carbon reduction is the goal, but with the current punitive REC penalty, most of the net-metering RECs are going to the utility which, ultimately, allows the utility to continue selling RECs from their standard offer and utility projects out of state.
“I’m hopeful that they will fix these rules, since the PUC has set up a framework that provides a huge financial incentive to the solar industry to deceive the customer when they transfer the customer’s RECs to the utility. The customer is not truly going solar if the RECs are turned over to the utility, but many customers do not understand that,” he said.
Green Mountain Power spokesperson Kristin Carlson addressed this in 2015 after a petition was filed with the Federal Trade Commission alleging that GMP’s marketing was deceptive in regards to this practice, stating: “GMP is proud of its leadership accelerating the adoption of renewables, while keeping costs low for Vermonters by selling RECs, and helping Vermont become a national leader in clean energy. We remain committed to open and clear communications with Vermonters about our energy portfolio and the importance of selling RECs to encourage more local renewable generation while keeping costs low.” GMP stated that the sale of RECs at that time represented about $30 million in value to customers via lower rates.
The PUC penalties could discourage projects like the successful 150 kW Boardman Hill Solar Farm in West Rutland – a case study for bringing together community members hoping to reduce their carbon footprints by keeping the RECs associated with the project, financing the project in-state and providing its members with savings on their energy bills. If this project were being put together today, a 6-cent penalty would be deducted per kilowatt generated because the residents involved want to keep and retire the RECs to truly “go green,” rather than give them over to their utility.
The PUC public comment period on REC adjustments to rates closes this Thursday, March 15.
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