Wind and Solar on the East Coast – 5/24/16

Renewable energy is growing in popularity thanks to falling costs and increasing concern over the effects of climate change. As a result, legislators on the East Coast are tackling the issues of how to develop and integrate new sources of power while balancing the interests of constituents, utilities, and developers.

In New York, legislators had an easy pass on what has been a contentious issue in other states after utilities and solar companies worked together to shape net metering policy. The two industries often come into conflict over how owners of rooftop PV panel are compensated for the excess electricity they send back to the grid because of starkly opposing goals: Utilities want to avoid revenue losses from customers installing solar systems and solar companies want the incentive of lower electricity bills to help sell their product. The incompatibility of their interests has led to legislative battles in many states, which makes this show of cooperation all the more surprising.

Under the alternative to the existing net metering policy, utilities would pay less than the retail rate for solar energy, while the solar developers involved would get long-term certainty on compensation. The existing policy would stay in place until 2020 before falling periodically with solar systems guaranteed the payment rate in place at the time of installation for at least 15 years. Certainty with regard to rates is no small benefit since, in December, SolarCity left Nevada after legislators sided with utilities and payments to panel owners were cut.

Meanwhile, the offshore wind industry in the U.S. may see a boom on the Atlantic coast thanks to an energy bill requiring utilities to purchase power from offshore wind farms. The bill is expected to reach the floor of the Massachusetts legislature sometime this year, but there will plenty of debate as to how much power utilities would be forced to buy under the bill. A mandate would be the first of its kind in the U.S. and would give developers the security needed to finance large-scale farms. Of course, the issue of the state’s Republican governor, who has opposed offshore wind in the past, remains.

Offshore boom

Offshore wind energy has boomed in Europe and Asia; however, it has had less success in the U.S. where cheap natural gas and cheap land for traditional wind and solar farms make offshore wind less attractive. Despite falling costs, offshore wind energy remains one of the most expensive sources of electricity. Massachusetts is one of the few places in the U.S. with the right combination of high electricity prices, high ocean wind speeds, and densely packed populations that could make offshore wind viable.

With numerous oil, coal and nuclear power plants to close over the next four years, Massachusetts Governor Charlie Baker (R) has pushed for increased hydro electricity use over wind. The governor previously opposed the Cape Wind project, which is now stalled off of the coast of Cape Cod, as an uneconomical eyesore. The governor’s energy secretary said during a speech in March that any decision would depend on cost projections for Massachusetts offshore wind projects.

A recent study by the University of Delaware, concluded that building costs may decline as much as 55% by 2030, allowing developers to offer rates competitive with market prices if their projects are large enough for economies of scale to take effect. And, for their part, new developers plan to build further away from the coast to ensure the wind farms won’t be visible from land. Still, it’s anyone’s guess how the bill will fare in the end.

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