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Longer Renewable Energy Contracts Could Deliver Savings To Mass. Consumers

In this Feb. 24, 2006, file photo, a wind turbine stands, generating power next to Hull High School in the shadow of Boston. (Stephan Savoia/AP File)

In this Feb. 24, 2006, file photo, a wind turbine stands, generating power next to Hull High School in the shadow of Boston. (Stephan Savoia/AP File)

BOSTON — Massachusetts is leading the New England states in securing energy produced from resources such as the wind and the sun, as it tries to meet legislative mandates for renewable energy. But the commonwealth is also part of a coalition of states considering massive bids for renewables that could reshape the New England energy market.

This week, Massachusetts utilities opened up initial bids from wind power generators for contracts that would last as long as 15 or 20 years. The contracts are for some 4 percent of the state’s total electricity load.

The state is trying to save consumers some money, according to Rick Sullivan, Secretary of Energy and Environmental Affairs.

“We believe that with the long-term contracts renewable energy can in fact be price competitive.”
– Rick Sullivan, state Secretary of Energy and Environmental Affairs

“We believe that with the long-term contracts renewable energy can in fact be price competitive,” he said. “There is some pent-up supply, if you will, that should bring in lower prices, which is good for the consumers as well — the ratepayers.”

Sullivan’s agency actually accelerated the timeline for getting the new energy bids in, with final approval expected by fall. That’s because a significant federal tax credit for wind projects ends this year.

A big contract for Massachusetts electricity would help companies such as Boston-based First Wind or Spain’s Iberdrola secure those credits before they go away. Collectively, the credits could reduce costs for Massachusetts consumers by hundreds of millions of dollars, industry players say.

And, just as importantly, long-term contracts would help companies get construction loans.

“They reduce the cost of borrowing for the renewable energy developers, and those savings are passed along to ratepayers,” said Conservation Law Foundation analyst Sue Reid. She was part of a group that lobbied the state to go with long-term contracts. “There’s no question that when you go long, it delivers benefits to ratepayers and developers alike,” she said.

Reid and other stakeholders say Massachusetts is ahead of the game — and a pile-on may be underway. A bill pending in the Connecticut legislature would get that state into the mix in time for the federal tax credits. And now there’s an effort to band all the New England states together for a joint procurement of renewable energy, creating a big market-mover that could bring even more stability to the sector.

“The challenge has been that to get the best projects — those that have the best economies of scale — there’s nobody big enough to buy them,” said Bob Grace, president of Sustainable Energy Advantage, an industry and government consultancy firm in Framingham. ”So patching together demands across the region is a way of being able to tap projects with scale economies.”

It would take hundreds of new wind turbines — mostly in northern New England — to meet the Massachusetts contracts. Connecticut’s would require hundreds more.

Add in a multistate effort down the line and you start to see big change in the wind, said Eric Thumma, policy director for Iberdrola Renewables.

“This would clearly be by far the most exciting prospect that you would see in the Northeast,” Thumma said. “So in relative terms I think it would be safe to say that would be a real renaissance here.”

It is relative. As Thumma noted, the Northeast’s wind industry is dwarfed by the Midwest’s giant wind farms.

And there are costs, of course. In addition to the federal tax credit, states, including Massachusetts, give subsidies to wind and other renewable energy developers to help meet environmental goals. In 2012, state regulators estimate those subsidies added about $25 to a typical residential electricity bill. And the hit is bigger for energy-intensive industries.

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  • http://www.facebook.com/people/Maine-Wind-Concerns/100001000837654 Maine Wind Concerns

    “It would take hundreds of new wind turbines — mostly in northern New England — to meet the Massachusetts contracts. Connecticut’s would require hundreds more.”

    No thank you, from Maine!

    Build the God forsaken wind complexes in your own mountains, MA & CT. We in ME don’t need them or want them. We certainly would like to see you clean up your generating fleet because that would clean up our air here, but windmills cannot replace or even displace your base load coal plants. Windmills are merely expensive and destructive duplication. We have biomass plants up here sitting idle. You can start by allowing biomass to qualify for Class I RECs. And while you’re thinking straight, do the same for 100 MW hydro, which is also in long supply. Biomass and hydro are useful, affordable, and sustainable in grid applications. And they are low impact/high benefit, capable of performing base load, peak load, and load following functions. Wind is none of the above. Enough with the fads; this is important public policy. Stick to what works, and what we have.

    • http://www.facebook.com/futo.buddy Futo Buddy

      whats the source of the biomass up there? i dont want any more windmills here unless they build them out on nantucket or marthas vinyard

  • NHWindhater

    Mass and CT export their pollution! Northern New England doesn’t want any more wind turbines that blight the landscape, increase costs and are just uneconomical. Why can’t MA and CT have their own wind turbine projects? I know why because their residents wouldn’t tolerate them! If MA and CT are going to lead the way in renewables, it is time that they deal with the issues that they are forcing on the rest of New England, put their own turbines up.

    • http://www.facebook.com/futo.buddy Futo Buddy

      no more turbines here those things are hidious

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