[ exact phrase in "" • ~10 sec • results by date ]

[ Google-powered • results by relevance ]


Go to multi-category search »

LOCATION/TYPE

News Home
Archive
RSS

Subscribe to RSS feed

Add NWW headlines to your site (click here)

Sign up for daily updates

Keep Wind Watch online and independent!

Donate $10

Donate $5

Selected Documents

All Documents

Research Links

Alerts

Press Releases

FAQs

Publications & Products

Photos & Graphics

Videos

Allied Groups

Vineyard Wind, backed by Baker, plays power politics  

Credit:  Bruce Mohl | CommonWealth Magazine | Feb 7, 2019 | commonwealthmagazine.org ~~

A sharp-elbowed game of power politics surfaced publicly on Thursday as it became clear that Vineyard Wind, backed by Gov. Charlie Baker, had sought and failed to participate more fully in an electricity auction that would have made the wind farm’s backers a lot of money while also driving down the price of electricity in New England.

The political gamesmanship arose in connection with an auction run by the regional power grid operator ISO-New England, which was seeking commitments from power generators to provide electricity three years from now – in 2022-2023. Normally such auctions receive little attention, but this one was unusual because Vineyard Wind, which hasn’t even begun construction of its 800 megawatt wind farm yet, sought to participate.

Vineyard Wind’s participation raises a host of thorny regulatory issues for the overseers of the region’s wholesale electricity market. That market consists of two major sub-markets. One is a day-ahead energy market, which sets “clearing prices” for electricity delivered to the power grid the next day. The other is a forward capacity market, which sets prices for what are basically options to purchase electricity three years out. The goal is to make sure the region has enough power to keep the lights on.

Historically, the region’s electricity markets have done a good job of providing New England with electricity and insulating ratepayers from cost overruns associated with energy projects. But the markets have not done a good job at spurring renewable energy development, which typically requires major up-front expenditures. So states, eager to meet legally mandated greenhouse gas emission targets, have started contracting on their own for renewable energy outside of the competitive wholesale market, essentially setting up a separate, subsidized marketplace.
Vineyard Wind is at the vanguard of that effort. The company, which is owned jointly by Copenhagen Infrastructure Partners and Avangrid Renewables, won a Massachusetts contract last year to build a massive wind farm off the coast of Martha’s Vineyard. The low, fixed-price, 20-year contract offered by Vineyard Wind turned a lot of heads, particularly Baker’s, who has repeatedly lauded the deal as a game-changer for the offshore wind industry.

Presumably most, if not all, of the costs associated with the Vineyard Wind project were covered through the Massachusetts contract, which is paid for by Bay State electric ratepayers. But it’s also possible Vineyard Wind bid low in the Massachusetts competition on the assumption it would break into the forward capacity market and recoup a chunk of its costs there.

The challenge for regulators is how to broker a marketplace that can accommodate state-subsidized energy resources alongside resources that are not subsidized.

The wind farm first sought to enter the forward capacity market like any other power generator, but the grid operator said in a press release Thursday that Vineyard Wind “didn’t clear in the primary auction,” meaning its cost of operation was too high.

Vineyard Wind’s only other options were to participate in the auction under a special exemption granted to renewable energy generators or to buy out the forward capacity contract of an existing generator pulling out of the market. The latter approach has become ISO-New England’s preferred option for dealing with state-subsidized resources, but the grid operator has allowed the special exemption for renewable energy generators to remain in place for a few more years before it is phased out.

“It does make for kind of a confusing structure. The state contracts have led to this and we’re trying to make it work,” said Ann George, the vice president for external affairs and corporate communications at ISO-New England.

Taking advantage of the renewable energy exemption ran into a roadblock when it was discovered that only renewable energy generators based in New England qualified; since Vineyard Wind would be located in federal waters off the coast, it didn’t qualify.

With preparations already well along for this year’s auction, ISO-New England sought and won approval to have Vineyard Wind take advantage of the renewable energy option next year. But Vineyard Wind wanted in on the auction this year, so the company appealed to the Federal Energy Regulatory Commission on December 17 for a waiver to participate in the auction, which took place Monday.
The waiver request focused on technical issues, but sources familiar with the situation say Vineyard Wind wanted to participate because doing so would earn the company a lot more money in the auction and because participation of the wind farm (which could bid in at zero because most of its costs are covered by Massachusetts ratepayers) would suppress prices overall and save consumers money.

Baker wrote a letter to FERC commissioners on February 1 urging them to approve a waiver for Vineyard Wind. ISO-New England said in its own filing that it wasn’t opposed to FERC granting the waiver.

FERC, however, took no action on Vineyard Wind’s request, which observers said was strange. “It is unusual,” acknowledged George.

Vineyard Wind responded to FERC’s inaction by filing an emergency motion with the agency at 1:30 a.m. the morning of the auction seeking to delay the auction or have it done a second time at a later date.

That bid went nowhere, and the auction went off as planned on Monday. The clearing price was $3.80 per kilowatt month, which translates into a total cost of $1.6 billion, according to George. As part of the auction, Vineyard Wind took advantage of the other option available to it – assuming an obligation of 54 megawatts from an existing, unidentified generator planning to retire in 2022-2023.

If Vineyard Wind had been allowed to participate in the renewable energy exemption, it could have sought reimbursement for a much greater amount of its power output – somewhere between 140 megawatts and 274 megawatts depending on the success of other generators seeking the exemption

Vineyard Wind issued a statement on Thursday lamenting the lack of FERC action. “The preliminary results released yesterday clearly show that with full participation of Vineyard Wind, the auction would have tripled the amount of new renewable resources awarded in the auction while simultaneously lowering prices for consumers,” the statement said.

Just how much could electricity prices have been lowered? In a brief opposing Vineyard Wind’s last-minute bid for a stay of the auction, the New England Power Generators Association estimated a 145-megawatt involvement could have cut payments to other electricity suppliers by more than $270 million.

Dan Dolan, president of the power generators association, said the Vineyard Wind proposal was not the only publicly subsidized project participating in the auction. Two gas-fired power plants in Everett, which had planned to go out of business in 2022-2023, participated in the auction and will continue to run with subsidies from ratepayers across the region. ISO-New England says the power plants are needed to maintain fuel security during extended cold spells during winter months.

Dolan has said in the past that the deregulated electricity market in New England is rapidly becoming regulated again, with state and regional officials picking which power plants get built or operate and which ones don’t. He worries that the top-down approach will end up costing ratepayers more in the long run.

“All we want is free, open, and fair competition,” he said.

Source:  Bruce Mohl | CommonWealth Magazine | Feb 7, 2019 | commonwealthmagazine.org

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

The copyright of this article resides with the author or publisher indicated. As part of its noncommercial effort to present the environmental, social, scientific, and economic issues of large-scale wind power development to a global audience seeking such information, National Wind Watch endeavors to observe “fair use” as provided for in section 107 of U.S. Copyright Law and similar “fair dealing” provisions of the copyright laws of other nations. Send requests to excerpt, general inquiries, and comments to query/wind-watch.org.

Wind Watch relies entirely
on User Funding
Donate $5 PayPal Donate

Share:


News Watch Home

Get the Facts Follow Wind Watch on Twitter

Wind Watch on Facebook

Share

CONTACT DONATE PRIVACY ABOUT SEARCH
© National Wind Watch, Inc.
Use of copyrighted material adheres to Fair Use.
"Wind Watch" is a registered trademark.
Share

 Follow: