State officials are working to address a problem involving the physics of electricity, the surge in solar development and a local transmission grid that is seriously strained.
In the Northeast Kingdom, the electric grid is out of balance. Several big local wind and hydro projects, plus power imports from Canada, mean the wires carry much more power than the region can consume.
The imbalance has caused the regional grid operator to reduce the output from the wind generators. It's also led to the de-valuing of local generation and a two-year moratorium on new renewable projects in the Kingdom.
The state now wants to break the impasse with a plan to impose a local surcharge on new solar projects.
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Aegis Renewables, based in Waitsfield, has developed more than 30 solar projects around the state. Back in 2017, Aegis CEO Nils Behn thought he had a perfect site for a new 500-kilowatt array. He wanted to put the panels in an old gravel pit in Eden, out of anybody’s view and in a place where the land couldn’t be used for much else.
“It’s exactly those types of projects the state is looking for, from a minimal impact to the environment and to aesthetics as well,” he said.
But then, bad news: “The project was approved by the utility, and at the 11th hour, that was withdrawn,” Behn recalled.
The Aegis development is one of several renewable energy projects halted by both regulators and utilities because of the Kingdom’s grid constraints.
"The economic harm comes from having a large number of renewable resources all trying to produce at the same time. So to the extent that those resources are receiving less money though the ... markets, it means there's less value to ratepayers." — Ed McNamara, Dept. of Public Service
Ed McNamara is planning director for the Department of Public Service, the agency that represents the public in utility issues. He said the local grid has about 450 megawatts of generation trying to use its wires, compared to about 35 megawatts of local demand.
That means the Kingdom produces or imports about half of the state's 930-megawatt peak energy demand, yet consumes about 4%.
“That’s the only place in Vermont where you actually see this becoming a problem,” McNamara said.
This imbalance causes three big problems, according to McNamara. First, there's the moratorium on new renewable projects. Second, when the grid is overloaded, the grid operator – called ISO New England – pays less to generators with projects in the area like Green Mountain Power or Vermont Electric Cooperative. And third, when the grid is really overloaded, ISO tells those utilities to cut their output from local projects.
“The economic harm comes from having a large number of renewable resources all trying to produce at the same time,” he said. “So to the extent that those resources are receiving less money though the ISO New England markets, it means there’s less value to ratepayers.”
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Craig Kieny, manager of power planning at the Vermont Electric Cooperative in Johnson, said the Kingdom’s grid problems are felt financially statewide, since many utilities have invested in renewable projects in the region.
For example, the congestion has forced a wind project in Sheffield, along with Vermont Electric Co-op's and Green Mountain Power’s Lowell wind turbines, to cut back production.
“So we are financially impacted whenever that occurs, as are any other utility that has resources in that area,” Kieny said.
“Much of the challenges and constraints can be addressed by strategic electrification [and] appropriate upgrades to great-grandpa’s grid that was really designed a long time ago for a system that no longer works." — Olivia Campbell Andersen, Renewable Energy Vermont executive director
So what the solution? Grid upgrades could cost $200 million, which every Vermont ratepayer would have to pay for. Or some new industry could miraculously relocate to the Northeast Kingdom and need a whole lot more electricity.
McNamara has proposed one way to address the cost impacts, although he’d be the first to say it’s not perfect.
“We’re not saying that we’ve got the solution worked out,” he said. “We’re trying to come up with a way of resolving what’s been essentially a two-year roadblock.”
McNamara has suggested a per-kilowatt-hour surcharge on net-metered solar projects in the region. Think of it as an impact fee for solar developers. A developer of a 500 kilowatt project – like the one stalled in Eden – would have to pay $37,300 up front. The money would be turned over to the utilities, and they would get it back to customers to offset the cost customers incur from the grid constraints.
“Because a net-metering resource will have an economic harm, we want to mitigate the economic harm,” McNamara said. “And the easiest way of doing that is to have a mitigation fund, so to speak.”
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Solar developer Nils Behn, who wants to build that project in Eden, said the idea is acceptable, if only to get things moving.
“It’s the least-worst option, quite honestly,” he said.
Behn said utilities like Green Mountain Power are to blame for not making more grid improvements when they added the large wind projects to the grid.
“As developers ... pay for the impact, they'll get built and they'll be even more generation. It doesn't solve any [grid] physics issues.” — Craig Kieny, Vermont Electric Cooperative
Olivia Campbell Andersen is executive director of Renewable Energy Vermont, which represents the solar industry. She said the grid concerns are overstated, and will be mostly resolved as the grid is upgraded.
“Much of the challenges and constraints can be addressed by strategic electrification [and] appropriate upgrades to great-grandpa’s grid that was really designed a long time ago for a system that no longer works,” she said.
The solar industry says utilities should pay for new grid upgrades, although utilities would pass those costs onto customers if that happened.
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State energy planner McNamara acknowledged that his surcharge proposal does not actually address grid improvements.
Craig Kieny of the Vermont Electric Cooperative said the state’s plan could potentially make things worse. He said as developers pay the fee and build more projects, that could lead to more strains on the grid.
“As developers pay the grid adjustor and pay for the impact, they'll get built and they'll be even more generation,” he said. “It doesn't solve any physics issues.”
The state says it wants much more feedback on its solar surcharge plan before anything goes into effect.
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