When Vermont policymakers discuss the state’s rising greenhouse gas emissions, the consensus is that the electric sector is doing pretty well.
Vermont requires utilities to supply 75% of their energy renewably by 2032 – one of the highest mandates in the country – and multiple utilities are already 100% renewable.
Nationally, electricity accounts for 28% of greenhouse gas emissions; in Vermont, electricity accounts for just shy of 10%.
But what Vermont utilities actually count toward their renewable requirements does not always align with the actual sources of power for their customers, due to a renewable credit trade scheme that is perfectly legal.
Critics say Vermont’s renewable energy standard encourages utilities to buy cheap renewable energy certificates, or RECs, from out of state that wouldn’t meet renewable requirements elsewhere.
That means companies can tout in-state energy generation projects like wind and solar, sell the renewable “credits” to other states, then purchase cheaper credits from out-of-state projects like hydropower, and still count it toward their renewable targets.
So although Vermont is leading the way on some renewable indicators, the numbers don’t tell the full story – and some think the Green Mountain State should follow what other states have done and adopt a stricter definition of renewables.
Rep. Sarah Copeland-Hanzas, D-Bradford, said the Vermont Climate Solutions Caucus, which she vice chairs, will be pushing this session to update the state’s renewable energy standard to require more in-state generation.
“In our minds, it doesn’t really work to call our electric grid clean green when we’re not generating the new electricity that we need out of in-state generation,” she said.
In 1983, Iowa became the first state to establish a mandate for how much renewable electricity its utilities must buy, with 28 other states, Washington, D.C., and three territories following suit. Vermont was actually the last state thus far to set a mandatory renewable standard in 2015.
Because there’s no way to track “green” electrons once they go onto the grid, regulators came up with RECs to certify renewable energy generation. One REC equals one megawatt hour of renewable electricity produced. Only the utility or company that “retires” a REC, or doesn’t sell it to another utility, can take credit for its environmental benefits.
Renewable energy development started to take off in Vermont in the early 2000s, due in part to changes in southern New England.
Utilities in Connecticut and Massachusetts passed renewable electricity requirements in the late ’90s – the same time those states began to deregulate utilities.
Residents of those states suddenly had the option to switch electricity providers, which made utilities reluctant to enter into long-term contracts with developers when they could be losing untold numbers of customers with little notice, said Ken Nolan, general manager of Vermont Public Power Supply Authority and former chief operations officer at Burlington Electric Department.
“When I was at Burlington, we had a lot of renewable developers come and talk to us,” he said. “And the reason they gave for wanting to do business in Vermont was that we were the only state that a utility could still enter into a 10- or 20-year contract.”
In 2005, Vermont established a program to incentivize renewable energy development in-state. Utilities were encouraged to enter into long-term renewable electricity contracts, with a goal of having 20% of statewide electric sales be renewable by 2017.
Utilities began pursuing substantial renewable energy projects in-state, such as Kingdom Community Wind, Sheffield Wind, and upgrades to the McNeil Generating Station, which is fueled by wood chips.
Maria Fischer, utilities analyst with the state Department of Public Service, said that prior to the state’s renewable energy standard going into effect in 2017, utilities were not required to retire any RECs.
“So to offset costs, they got into the practice of selling those renewable credits outside of the state,” she said.
Patty Richards, general manager of Washington Electric Cooperative, which was one of the first utilities in the state to go 100% renewable, said RECs catalyzed renewable energy development across New England.
“It’s an important revenue stream to make our mix of generators in the region more green,” she said.
Energy developers also started to sell RECs from Vermont out of state.
Critics said utilities and developers were “double-counting” renewables by selling the environmental attributes out of Vermont while still counting the electricity toward the state’s clean energy target – or marketing businesses or homeowners as having “gone green.”
The hydropower question
Vermont’s renewable energy standard went into effect in 2017, but it didn’t significantly change the practice of selling RECs out of state. That’s because unlike the rest of New England, Vermont utilities are allowed to count large-scale hydropower as renewable.
“There’s a bit of a mismatch in terms of what’s considered a premium REC in Vermont versus neighboring states,” said Fischer, of the Department of Public Service.
Vermont’s standard requires 55% of a utility’s electricity sales to come from renewable sources, increasing to 75% in 2032. The standard also includes a carve-out, called “Tier II,” that 10% of sales by that date come from smaller, in-state renewable generation.
In Connecticut, Massachusetts and Rhode Island, hydropower from facilities over 30 MW does not count as renewable. While New England does not have the massive hydropower facilities like those built out West or in the Southeast during the golden era of federal dam building, the region’s utilities do have access to the megadams of Hydro-Quebec.
Hydro-Quebec’s largest dam is the 5,616 MW Robert Bourassa dam on the Grande Riviere.
In 1985, a substation in Highgate, on the Canadian border, came online, feeding 225 MW of electricity onto Vermont’s grid and enabling utilities to enter into long-term purchase contracts with Hydro-Quebec. Vermont utilities also buy hydropower from large dams in New York and along the Connecticut River.
“Our strategy is mainly driven by the difference in rules between the various states,” said Craig Kieny, senior resource planner at Vermont Electric Cooperative. “So we can sell those RECs from Kingdom Community Wind and Sheffield into the Massachusetts market and get more money back than it takes to go get some more hydro RECs back to replace them.”
Utilities contend that REC trading allows them to procure renewable electricity at lower costs for customers, especially with state mandates and utility goals ramping up.
“We make sure we’re 100% renewable by RECs,” said Darren Springer, general manager of BED and former deputy commissioner of the Vermont Department of Public Service. “We’re also 100% renewable by generation, but we do buy and sell (RECs) to benefit our ratepayers.”
In 2018, 35% of BED’s electricity came from McNeil, around 27% came from wind, 21% came from small hydro, 13% came from large hydro and 1.4% came from solar. After REC sales, almost all of BED’s renewability was from large hydro projects.
In 2017, a quarter of the fuel mix for Green Mountain Power, the state’s largest utility, came from large hydro; after REC sales, large hydro accounted for almost half of GMP’s electricity for that year.
“I think it was a big mistake to ever have considered Hydro-Quebec power to be renewable,” said Annette Smith, director of Vermonters for a Clean Environment. “I mean, they’re just about to flood more areas in Canada of indigenous people and are destroying gorgeous habitat for wildlife.”
Smith, a longtime critic of ridgeline wind who powers her home with off-the-grid solar, said she wants to see more community-scale renewables in Vermont.
“These are the types of projects that Vermonters are having some of the biggest issues with and to realize they’re not even meeting our goals?” she said, referring to ridgeline wind. “Are we just the plantation for the larger states?”
Kevin Jones, a professor at Vermont Law School, has long critiqued the practice of selling RECs from in-state renewables to southern New England.
“And that’s allowed essentially all of the large-scale solar, all of the wind in the state, even almost all of the biomass to still be exported out of Vermont,” he said.
Renewable energy developers, meanwhile, have complained that the state’s standard does not do enough to promote new in-state renewables, because they can meet most of their requirements by purchasing out-of-state hydropower.
“Our renewable energy standard is pathetic in that it mostly provides an incentive for utilities to give money for existing generation that’s already been built and operating … for decades,” said James Moore, co-president of solar company SunCommon.
Josh Castonguay, vice president of innovation for GMP, said he disagrees that the ability to count electricity from Hydro-Quebec as renewable has in some way stymied renewable generation in Vermont.
“In-state renewables continue to be an extremely important piece, and they continue to grow – net metering, standard offer, all that stuff is coming in continually,” he said, referring to the state’s different renewable energy incentive structures.
GMP has seen a 1,400% increase in solar in its customer territory since 2010.
Castonguay added that the next phase of GMP’s “energy vision” as it moves toward 100% renewable is a “home, business and community-based energy model,” which will rely on more distributed generation paired with energy storage.
The utility recently completed three solar and battery storage projects, and will be holding onto those RECs, said Castonguay.
Tony Klein, former longtime chair of the House Natural Resources and Energy Committee, said the Legislature was thinking regionally when it set the state’s renewable energy standard.
“We didn’t think it’s egregious, for example, that, ‘oh, you bought credits from a plant that’s in Connecticut?,” said Klein, a Democrat who represented East Montpelier. “That’s renewable energy being generated.”
Ed McNamara, director of regulated utility planning for DPS, said that flipping the state’s Tier I and Tier II to require far more in-state solar would have a “very significant” rate impact.
“If we’re going to be more like Massachusetts or Connecticut that had higher portions of new renewables as opposed to existing,” he said, “that would put rate pressure on Vermont, as well.”
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