Maine’s ambitious goal of cutting carbon out of its economy by the mid-21st century is facing a harsh reality: The network of wires and substations built to feed power from central generating stations to homes and businesses isn’t up to the job of handling the two-way, intermittent flow of energy from solar and wind farms to electric vehicles, heat pumps and giant storage batteries.
It’s one thing for politicians to enact aggressive laws and policies, such as Maine’s goal to cut carbon emissions by 45 percent by 2030, and 80 percent by 2050. It’s another matter to figure out exactly how to do that on the ground, and how the billions of dollars in costs to upgrade the system are going to be shared among developers, utilities and customers.
An overall strategy was outlined in December in Maine’s Climate Action Plan, but not at the granular level of grid planning.
It’s becoming clear that achieving Maine’s climate goals is going to require a makeover of its electric grid on a scale that hasn’t happened since the 1970s. A process is ramping up to assess what will be needed to make it happen, and who will pay for it.
Responding to concerns from Gov. Janet Mills and the state’s renewable power industry, the Maine Public Utilities Commission has begun a set of inquiries to help answer those detailed questions. One will look specifically at the events surrounding Central Maine Power’s recent problems in connecting the unprecedented wave of solar projects, a response to state policies and financial incentives meant to attract new renewable energy generation. The second will more broadly examine the future design and operation of the electric distribution system. The process is likely to take several months.
But even now, a fundamental dispute is emerging.
Some energy policy experts say it’s futile to use traditional performance incentives to try to coax the state’s two dominant, investor-owned utilities, CMP and Versant Power, to make the changes needed to meet Maine’s climate goals. History has shown that the financial obligations to shareholders are too great for the utilities to sufficiently act in the public interest, they say, unless the utilities are forced to do so.
For example, when utilities failed in the 1980s to develop new renewable-energy generation, Maine passed laws requiring them to buy it from independent power producers.
When utilities chafed at buying that power in the late 1990s, Maine made them sell off their generating assets, creating the restructured electric industry that exists today.
When utilities lagged in the early 2000s in offering energy-efficiency and conservation programs, lawmakers created Efficiency Maine Trust, a quasi-state agency.
“In all these instances, the traditional utility approach didn’t get Maine where it wanted to go,” said Richard Silkman, chief executive of Competitive Energy Services in Portland, which helps negotiate power contracts for big customers.
Silkman, who wrote a book on how to achieve a zero-carbon economy in Maine by 2050, cited those and other examples in a separate but related case underway at the PUC that’s examining how to measure and create performance incentives for utilities. Comments filed in that case reflect some of the broader challenges facing Maine’s current energy policies.
One of those challenges rocketed into public view last month when Maine’s fast-growing solar industry revolted, after CMP unexpectedly said many of its substations would need million-dollar upgrades to connect the new generation.
Facing a public and political uproar, CMP quickly reversed course and said it had found ways to engineer less-costly solutions. Whatever the PUC determines in its investigation, the solar snafu is serving as an early example of how Maine’s electricity grid isn’t ready for the low-carbon future envisioned by state policymakers.
It also will bring into focus the priorities and commitments of two utilities that are part of foreign corporations – Versant, owned by Enmax Corp. of Canada, and CMP, owned by Iberdrola of Spain.
Silkman questioned why CMP’s domestic parent company, Avangrid, can push ahead with building a $1 billion transmission line through Maine to send Canadian hydropower to Massachusetts, but can’t find the resources to connect 100 solar projects in its service area. An obvious answer is that Avangrid is being paid by Massachusetts utilities to build the New England Clean Energy Connect project. It doesn’t make money hooking up solar farms.
“CMP’s primary obligation is to its shareholders at Avangrid,” he said. “Avangrid wants to be the biggest renewables company in the United States, not have the best (distribution) networks.”
Silkman’s analysis oversimplifies the role of utilities, according to David Flanagan, CMP’s executive chairman. As regulated companies, utilities have obligations to shareholders, but also to customers, state government, and power developers. Over the past decade, Flanagan said, Avangrid has invested more in CMP’s electric system than it has taken out in profits.
“I reject the premise that we have to be beaten like dogs to get us to do anything,” he said.
Flanagan also said the NECEC transmission line actually complements the intermittent nature of solar and wind, providing an always-on source of renewable energy for the region. The net benefits of that energy, however, are disputed by power line opponents.
Versant, formerly Emera Maine, is a smaller company, with 160,000 customers spread across more than 10,000 square miles. That’s going make it harder to line up the resources to meet the state’s current electrification goals – especially, the company says, when policy directions keep shifting.
SOLAR FARM FRENZY
For example, net energy billing, which offers a credit for customers buying renewable power and incentives for developers, was being phased out five years ago under Republicans and former Gov. Paul LePage. In 2019, with Mills and Democrats in control, that policy was reversed. New net energy billing programs were enacted that greatly expanded customer eligibility and rewards for developers.
“These kinds of policy shifts put utilities in an untenable position, when grid planning and transitions take years to implement,” Versant said in a recent PUC filing.
As part of the program’s expansion, the PUC is required to evaluate the effectiveness of net energy billing in meeting state climate goals and benefiting ratepayers. In November, it issued a report concluding that the program was indeed successful in promoting solar.
But there was also bad news. The current program will lead to substantial rate hikes for customers, calculated last fall at $161 million a year, it said. That could result in distribution rate increases of 21 percent at CMP and 23 percent at Versant, the PUC estimated, if all the proposed projects became operational.
The agency suggested tweaks to the program, such as capping how much output can qualify and rewarding projects that are located where they can do the most good on the system.
That last point highlights a broader issue for John Flynn, Versant’s president.
“Location matters,” Flynn said.
Before Maine’s utility industry was restructured, companies engaged in what’s known as integrated resource planning. They took a holistic view of where to build power plants or upgrade their networks, based on where demand was greatest from homes and businesses.
That’s not happening during the solar gold rush, Flynn said. Some developers are building far from customers on remote segments of the distribution system that weren’t designed for it.
Maine utilities need to be partners in planning the best places to site renewable generation, Flynn said. They also should help locate the expected wave of battery storage projects that will be needed to help balance the on-off nature of solar and wind.
Outside of the PUC process, a broad collection of environmental activists, utility managers, state officials and industry representative have been meeting to try to develop a consensus on the role of utilities in electrifying the economy. Their recommendations could be available this spring.
But Tony Buxton, an attorney who represents industrial power users, said he’s not optimistic about that process. Buxton, who has been a lobbyist for decades on energy matters, said it’s not realistic to expect individual states to change the behavior of utilities owned by big corporations.
“There is an international market for utility equity, graded by rating agencies, and utilities respond to that,” he said. “We’re not going to change that. We just need to tell them what to do.”
LESSON FROM TEXAS
For better or worse, the solar crisis and process of examining Maine’s electric grid may give a new slug of oxygen to the consumer-owned power movement, which seeks to force CMP and Versant to sell their transmission and distribution assets. Legislation to force the divestiture is pending in Augusta, and the companies say if it passed, they’d fight such an order in court.
A legal tussle that could stretch out for years would distract from the urgency of fighting climate change, Buxton said.
“We cannot afford big mistakes that take up time,” he said.
Another factor that was not part of the equation until a few weeks ago is the fallout from the power grid failure in Texas.
The operation and design of the power grids in Texas and New England are very different. But the Texas experience has all utilities taking a harder look at the resiliency of their transmission and distribution networks, in the face of a changing climate.
To Flanagan, that means pending bills meant to limit transmission lines in Maine are the wrong solution at the wrong time. A big lesson from Texas, he said, is that grid interconnections will be more important than ever as more of Maine runs on electricity.
“Anti-transmission line legislation is exactly contrary to a policy of beneficial electrification,” he said.
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