AS MASSACHUSETTS POLICYMAKERS seek to move today’s economy beyond the legacy of fossil fuel combustion, we’re forgetting our heritage. New England was a world-class industrial power in the early 19th century, its success built on the energy from traditional water wheels and innovative water turbines. One of the best ways to bring non-fossil fuel power to New England, our quirky home where the wind doesn’t blow all that much and the sun doesn’t shine all the time, is to once again tap the flow of our rivers and the fall of our waters.
New England has more than 8,000 existing, unpowered dams and our Quebecois neighbors to the north stand ready to sell us excess generation from their existing HydroQuebec turbines. The HydroQuebec power available from existing impoundments is plentiful, more than twice as much as all renewable generation in Massachusetts currently. It is also relatively cheap. What is needed to turn the promise of these resources into the reality of less fossil fuel dependence? First, we need to recognize what our policy goals are. Our transcendent state-level clean energy purpose should be to generate electricity without pumping as much carbon into our atmosphere. The goal is not to favor one renewable energy technology over any other; it is not to create an artificial local market for innovations originated here; and it is not to subsidize research and development. These are worthy goals, but I would not pursue them to sacrifice the opportunity to reduce greenhouse gas emissions now.
Second, we need to remember who our constituent audience is. Energy policy should be targeting the taxpayers and ratepayers of the Commonwealth and not the clean energy companies who seek to deploy their products. As the president of one Massachusetts-based clean energy company and the board chairman of another, I strongly favor the success of these enterprises; I just don’t believe it is the job of our state government to prop them up or push them forward. If there are two approaches to achieving clean energy goals, it seems prudent to adopt the more cost-effective one, passing along the savings to the citizens whose priorities and principles inform policies in the first instance.
Third, we need to realize the urgency of reducing our carbon footprint. In my view, there is a scientific consensus that climate change is occurring and that human activities are contributing to it. In addition, global physics suggests the pace of climate change is accelerating much faster than most desk-top models have projected. Assuming these truths—inconvenient as they are—require our attention, the time to act is now.
Massachusetts currently promotes renewable energy deployment through subsidies for new generation from qualifying resources. These subsidies are created by imposing on investor-owned utilities an ever-increasing obligation to buy renewably-generated energy; at present, that obligation stands at 7 percent of their peak sales, and it is scheduled to rise 1 percentage point a year to 15 percent in 2020 and keep rising thereafter. The subsidies, which take the form of renewable energy credits, provide renewable energy developers a revenue source over and above what the market would otherwise pay for their electricity generation.
Only specified types of renewable energy qualify for these credits. For example, the utilities must purchase a small portion of their renewable energy credits from solar photovoltaic projects in Massachusetts. The rest may come from energy from solar, wind, ocean thermal, wave or tidal, certain fuel cells, landfill methane gas, marine or hydrokinetic, geothermal and, under specified conditions, biomass and small-scale hydro projects scattered across New England.
In the state’s most recent report on the renewable energy credits, Massachusetts appears to be falling short of its goals. To meet those goals, Massachusetts should level the playing field to allow large-scale hydro to qualify for renewable energy credits and to align the specified conditions on small-scale hydro with those already sensibly imposed by existing environmental regulations. The current approach significantly disadvantages our region’s most abundant renewable resource and impedes the Commonwealth’s ability to reach the 15 percent renewables target for 2020. It also renders well-nigh impossible any further progress toward a truly fossil-fuel free future. I fully recognize there are some who will critique my call for a leveling of the playing field. Hydropower doesn’t need the subsidy, they will say, as it is a mature technology. They will note—rightly—that it will flood (pun recognized) the market for renewable energy credits, thus precluding other, more expensive technologies from receiving the resultant subsidy benefit. And, they will point out, hydropower isn’t the environmentally beneficial generation source its proponents (like me) claim it to be. Let’s take these arguments in turn.
While there are lots of innovations being explored, especially for smaller hydro installations, they don’t involve the sort of ground-breaking basic research or earth-shattering development improvements occurring for solar or other technologies. But there are challenges to installing and delivering hydropower for which renewable energy subsidies could prove useful. For large hydropower, there is the challenge of transmitting the power from remote impoundments to urban load centers. As part of a grand bargain, HydroQuebec could be required to use its subsidies to help the proponents of the so-called Northern Pass project running from Quebec to southern New Hampshire avoid the forest and habitat fragmentation that the public and advocates are rightly concerned about. Using the subsidies in this way could not only yield a better result ecologically, it could allow the kilowatt-hours of energy to be delivered sooner, if contentious hearings and prolonged litigation can be avoided or lessened.
For small hydropower, there is the challenge of repairing or rebuilding under-maintained, existing dams (at least those not deemed for ecological reasons appropriate for removal). It is worth noting that a slight majority of existing dams in Massachusetts are publicly owned, and neither the Commonwealth nor most municipalities have the financial resources to deal with deferred maintenance. Renewable energy subsidies could rectify that situation and, in the process, add new power to the grid and address looming liability for the degrading dams.
Second, it is reasonable to assert that allowing lower-cost hydropower to access the market for renewable energy subsidies would likely overpower the ability of wind and solar (and other expensive technologies) to receive subsidies, at least in the near term. It is for this reason that many argue that hydropower, particularly large-scale hydropower, should not be subsidized. Hydro doesn’t need subsidies, they say. It’s cheap enough already. Yet this approach sacrifices the interests of ratepayers to solar and wind developers. Given the highly intermittent wind profile (especially onshore) and the low levels of solar insolation that occur in and near Massachusetts, hydropower will be far more cost-efficient from a ratepayer perspective than wind or solar may ever be. Like Iceland, Switzerland, and other countries with nearly zero-carbon-energy-generation mixes that reflect the resources that happen to be prevalent in their land, air, and waters, Massachusetts should not try to put the square peg of wind and solar into the round hole of its unpredictable cold, wet, and cloudy weather.
Third, new impoundments for hydropower can create their own set of climate change impacts in releases of greenhouse gases from the newly submerged areas. But none of the early and easy opportunities to increase hydropower for Massachusetts requires new impoundments. The contemplated imported energy from Quebec comes from excess, seasonally off-peak generation from existing turbines on existing dams for existing impoundments. (There is a similar opportunity from the Maritime provinces). The contemplated in-state, small-scale hydropower simply repowers long-dormant mill dams. It makes sense to remove some dams for local ecological and related reasons, including restoring fish runs. But it is difficult to claim that higher utilization of existing generation somehow creates incremental climate change impacts.
In sum, I worry that the conventional approach to renewable energy development constitutes the functional equivalent of trying to improve the design of the deckchairs while the Titanic sinks. I would rather focus on plugging the leak in the ship’s hull rather than paying above-market rates for the deckchair designers. Moreover, the intrinsic resource characteristics of Massachusetts and its environs work against the economics of wind and solar, even as their technologies improve. I would rather wait as innovators in Massachusetts and elsewhere improve the cost-effectiveness of these technologies at the expense of ratepayers in other jurisdictions, where the cost burden is not so great as here. Once the technologies become more cost-competitive, subsidies can be adjusted then.
Finally, I start with the presumption that deploying lower-carbon generation technologies sooner is essential for combating climate change and prudent for the economy when these technologies are lower cost than other renewables. When subsidized, the technologies can provide more cost-effective power for ratepayers than certain conventional generation sources.
R.J. Lyman is president of General Compression Inc. and chair of New England Hydropower LL; he previously practiced law as an equity partner at Goodwin Procter LLP for over a decade, before which he served as assistant environmental secretary during the Weld administration. (His opinions are solely his own.)