From any broader perspective, the economic benefits of transitioning to 100% renewable energy are clear and indisputable. When the Department of Public Service hired the consulting firm SEA to model the costs and benefits of updating Vermont’s Renewable Energy Standard (RES), the societal benefits of requiring more renewable energy far outstripped the costs in every single scenario that SEA considered. But when you take a narrow lens – ignoring things like climate and public health – and just look at the cost of buying and delivering energy the short-term math gets a little murkier and some estimates of the transition costs can look pretty scary.
The RES update bill that recently advanced out of the House Environment and Energy Committee, H.289, would get Vermont to 100% renewable energy with close to 40% of our power coming from new renewables by 2035. The specific purchasing requirements and timelines in the bill vary from utility to utility to provide flexibility for Vermont’s smaller utilities but the overall impact would be that Vermont utilities would purchase another 2.4 MILLION MWh of new renewable electricity in 2035 – creating an equivalent climate benefit as taking between 160,000 and 240,000 cars off the road.
What would this mean for the cost of delivering electricity to Vermont ratepayers? Over the next five years, REV’s best estimate – calculated by modifying the SEA model to reflect specific requirements in H.289 – is that it would raise rates less than seven-tenths of a cent per kWh through 2030. That translates to $4.70 a month for a household using 700 kWh of electricity (about the average today). In total, the SEA model calculates it would cost $357 million through 2035.
In contrast, the Department of Public Service has stated that the cost of H.289 could be as much as a billion dollars but has not done any specific analysis or modeling to support that assertion. Instead, the Department assumed that the cost of H.289 would be 2/3 thirds of a SEA modeling scenario with 50% more new renewables than H.289 and a faster ramp rate for the new renewables requirements to estimate $500 million in costs. This estimate is considerably higher than REV found when modifying the SEA model and, in fact, higher than SEA’s modeling of other scenarios that were more ambitious than H.289.
To the inflated $500 million power supply cost estimate, the Department estimated that H.289 might require an additional $500 million in transmission upgrades. But here again, the Department’s estimate does not rely on any specific modeling of H.289. Instead, the Department assumes that it might cost 1/3 of VELCO’s worst scenario for the cost of integrating 1,300 MW of solar. Assuming 1/3 of the costs might sound reasonable at first blush but — for the the purpose of studying worst cast impacts — the VELCO study assumed that solar siting would not be influenced by transmission costs, did not consider innovative “non-wires” solutions, and ignored the overlapping upgrades required for solar and electrification. To be very clear, it is not what VELCO expects to happen. In fact, VELCO has shown that we could get 1,000 MW of solar with no additional transmission cost if solar is optimally sited (something that the Departments assumed when presenting its own “Clean” Energy Standard).
Taken together, there are plenty of reasons to be skeptical of the Department’s $1 billion estimate. See this presentation that REV shared with House Environment and Energy for a more detailed look.
Here is what we can say with confidence, H.289 will have a large societal benefits and the costs will be considerably lower than the Department’s $1 billion estimate.