Economic Benefits

More competition in Massachusetts would mean more savings for consumers

Wind power can help save money for Massachusetts families and businesses.
More competition in Massachusetts would mean more savings for consumers
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Francis Pullaro is the Executive Director of RENEW Northeast (RENEW)- an association of the renewable energy industry and environmental public interest groups in New York and New England.

A bill before the Massachusetts legislature could further cut carbon emissions by building on reduction goals from previous successful procurements under the Green Communities Act. By tapping into more affordable clean energy, the state’s residents can look forward to cleaner air.

The bill currently before the Massachusetts House of Representatives could make those carbon emission reduction commitments unnecessarily expensive, causing Massachusetts consumers to lose out on billions of dollars in savings.

An important amendment could fix that problem by creating greater competition among electricity sources by allowing all forms of wind power to meet more of Massachusetts’s clean energy needs. In turn, this would lower energy prices for the state’s ratepayers.

The U.S. Department of Energy found that by tapping into more wind energy, Massachusetts’s consumers could see $355 million in electricity bill savings. That’s on top of an additional $4.57 billion in savings resulting from lower natural gas prices.

As written, the House bill would unnecessarily require less competition between hydropower and other clean energy sources, including solar and wind energy. Head-to-head competition between land-based renewables, wind and solar energy, and large hydro is the solution.

In New England, large-scale renewable energy resources are the most cost-competitive, with larger wind farms delivering the lowest prices.

As former DPU Chair Ann Berwick said about wind procurements under the Green Communities Act, “these contracts are an absolute win-win for the Commonwealth and for distribution company customers…They help the Commonwealth meet its renewable energy and greenhouse gas reduction requirements, provide a hedge against volatile natural gas prices, and reduce customers’ bills.”

Savings created by diversifying the state’s energy mix with wind power are largely due to wind’s 66 percent cost decline over the last six years.

66-percent-costs-decline

The low cost of recent large-scale wind projects in New England offers additional value as a hedge against potential rising prices from fossil fueled generation.

Like the way a fixed-rate mortgage protects homeowners from fluctuations in interest rates, adding clean wind energy through fixed-rate utility contracts protects ratepayers from price shocks associated with fossil fuels, helping to keep their energy costs low.

RENEW

Over the long-term, by offering the most cost-competitive contracts and by acting as a hedge against the volatility of other fuels, wind power will deliver the billions of dollars in additional savings that would otherwise be lost.

The chart below shows the recent range of New England PPAs for wind power versus the forecast for market prices over the next 25 years.

RENEW 2

So while legislation should encourage the pairing of wind and large hydropower to facilitate low-cost transmission upgrades— innovative proposals combing wind, hydropower and transmission have already been submitted in the current regional clean energy RFP— true competition should allow both hydropower and wind resources to be submitted without being paired with each other.

Equally as important is requiring the proposed clean energy procurements in this draft legislation to help ensure compliance with Massachusetts’ rising renewable portfolio standard (RPS).

Massachusetts recently found its RPS– designed to tap into more land-based wind and other renewable energy sources to keep costs low for ratepayers while driving private investment into local and state economies– has a three-to-one benefit-to-cost ratio, producing annual net benefits of $217 million.

The state’s successful long-term contracting policies under the Green Communities Act using competition would ensure compliance with RPS requirements at the lowest cost.

Delivering clean air in Massachusetts is important, but state lawmakers must encourage the kind of competition needed to do so at the greatest benefit for the state’s ratepayers.

Economic Benefits

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