As Vermont works to “electrifying everything” and our electric load grows, REV is committed to making sure our electricity comes from truly renewable resources. This is why REV is supporting H.320 which would require Vermont utilities get 100% of their power from renewable energy by 2030 while ending the use of unbundled RECs from old, large out of region hydro power.
To ensure that Vermont is truly doing its part to reduce GHG emissions from the electric sector, the bill would also double the requirement for in-state renewable energy generation from 10% to 20% of our load by 2030 and 30% by 2035. Based on the Vermont Department of Public Service’s load forecast, REV estimates Vermont will need another 650 MW of solar (in addition to the roughly 400MW of solar currently we currently have) to meet this in state requirement.
When looking across New England for power to help meet our greenhouse gas reduction goals, Vermont basically has four choices- nuclear, wind (on or offshore) and solar. Currently, there are no proposals for new large scale hydro anywhere in New England.
Based on renewable projects currently in the development queue, REV does not believe that a there will be a sufficient volume of new renewable generation built in the rest of New England for us to rely solely– or even primarily – on out-of-state projects to help us achieve a 100% renewable energy mandate by 2030.
Advanced or Small Modular Reactor (SMR) Nuclear Power
Despite persistent excitement about next generation nuclear power, the market for advanced nuclear plants is struggling. The advanced reactor that is farthest along in the development process in the U.S. is a first of its kind SMR project in Idaho. The projected power cost for the project have already jumped from $58/MWh to $89/MWh, even though it’s still years away from beginning construction. According to Canary media, “The first module at the plant is set to begin commercial operation in December 2029, but nuclear project timelines are inevitably Pollyannaish and wildly off-base.” Currently, there is no proposal to build SMR projects anywhere in New England.
Off Shore Wind
The recent news out of Massachusetts highlight the uncertainty that comes with relying on out of state projects that have not yet been built. In Massachusetts, 800 MW of offshore wind are expected to come online by the end of 2024 as part the state’s mandate to add 5.6 GW of offshore wind capacity. In addition, work on other projects that were anticipated to help the state meet this goal has being halted as developers seek to rebid their PPAs with Massachusetts utilities.
Avangrid has asked that its 1.2GW Commonwealth Wind project be re-bid saying the $72/MWh PPAs are no longer viable because of inflation and other economic disruptions and supply chain problems. According to Commonwealth Wind, “Among other factors, the prolonged war in Ukraine has unsettled markets and increased costs for many products, inflation has been persistent, interest rates have increased in a manner unprecedented in recent times, commodity prices have risen sharply and supply shortages and supply-chain constraints once thought to be temporary remain pervasive.”
Commonwealth also stated, “Also, cost increases for offshore wind equipment, such as turbines, have been “unprecedented.”
Because of the state mandate and slowed development timelines, Massachusetts utilities will be likely be willing to pay a high premium for any available offshore wind power making this power less affordable for Vermont.
On Shore Wind
The largest onshore wind project that is currently moving forward in New England is the 1,000MW King Pine project in Aroostock County Maine. This project is being financed in part by Massachusetts utilities and is scheduled to be connected to the grid by September 2026.
The other large wind projects listed in the ISO-NE interconnection queue are:
- 905MW in Pittsfield, Maine currently scheduled to be connected to the grid in October, 2026
- 126MW Washington, Maine currently scheduled to be connected to the grid in June 2023
- 60MW in Somerset Maine currently scheduled to be connected to the grid October, 2024
- 20MW Oxford, Maine currently scheduled to be connected to the grid September, 2025
Given the regulatory hurdles involved in siting on shore wind, it is likely that several of these projects will not be built. Even if all of these projects are built, their collective power output represents only 5% of New England’s 2022 demand and a small percentage of the renewable energy needed to meet the RPS requirements of New England states.
Because Vermont is unique in New England in allowing RECs from out of region large hydro to count towards its RPS’ renewable energy purchasing requirement (our “Tier 1”), it is not financially practical for a Vermont utility to purchase unbundled solar RECs from out of state. Vermont utilities are able to satisfy their Tier 1 requirement through the purchase of RECs from of Hydro Quebec and NYPPA power costing around $10 each. A Class 1 renewable energy New England REC currently sells for around $35 each. A Vermont utility would be passing an enormous cost along to its ratepayers if it wanted to purchase a solar REC separate from a power purchase.
For commercial projects under 5MW solar developers can generally get a better return on their investment by selling their power in their states. For example, NY, ME, MA and CT all have community solar programs that pay a higher rate than what Vermont’s Standard Offer are being built for.
For commercial projects larger than 5MW, the wholesale New England market prices are high enough that once you add in the value of a Class 1 REC, solar developers are no longer incentivized to contract directly with a Vermont utility but instead to sell the power directly to the wholesale markets and sell the REC separately.