ISO-New England’s announcement that it would end a rule blocking state-subsidized renewable energy projects from its annual capacity auction should have been a win for renewable energy, but a last-minute decision to delay the change for two years instead has sparked frustration among advocates of green energy.
Advocates of developing more renewable energy resources in New England have long targeted the so-called minimum offer price rule, which favors gas-fired power plants at the expense of state-funded, large-scale renewable energy projects in the regional auction for electric capacity.
Francis Pullaro, executive director of RENEW Northeast, which represents the renewable energy industry in the region, said he was surprised that ISO changed its position to support the delay.
Pullaro said that since May, ISO had shown a willingness to end the rule, and hadn’t raised concerns about reliability that would justify a two-year delay until shortly before the vote.
In a memo to NEPOOL – a stakeholder group that advises the grid operator – ISO-New England Chief Operating Officer Vamsi Chadalavada said ISO supported a slower transition that would reduce risks to the grid. The stakeholders ultimately voted to support the delay, which was submitted to the Federal Energy Regulatory Commission, or FERC, for its approval.
Chadalavada explained that ISO expects old fossil fuel-fired plants to retire and be replaced with new renewables, and if that happens too quickly, there could be a delay between when old plants close and when new resources are built – especially considering the challenges and risks of delays that come with building in New England.
Waiting two years to eliminate the minimum price rule will allow more time for the new renewable projects to come online, Chadalavada said.
But Pullaro questioned the basis for the last-minute switch.
“The memo really has nothing in the way of a quantitative analysis that justifies the delay. Frankly, there’s not much in the way of a detailed qualitative analysis,” Pullaro said. “It’s mainly a lot of hand waving, and it does nothing to justify or explain how [the delay] even addresses any of the concerns ISO expressed in that memo.”
Pullaro and the renewable advocates say eliminating the rule will allow renewable energy resources that are funded by state subsidies – like offshore wind – to earn more of their revenue from competitive markets. That will mean lower prices in those markets, and that states will have to hand out fewer subsidies to support renewable energy projects, according to Pullaro.
None of the five states with aggressive carbon reduction goals in the region, New Hampshire being the exception, opposed the delay – a further frustration for supporters of wind and solar projects.
But Connecticut Department of Energy and Environmental Protection Commissioner Katie Dykes told CT Examiner that the state’s decision not to oppose the delay did not mean they supported it.
Dykes said that Connecticut has advocated and litigated to abolish the rule, but the decision is set against the backdrop of a broken market and a fragile fuel supply in the winter of natural gas.
Dykes said she can’t discount concerns that phasing out the rule too quickly could lead to reliability concerns.
“The market itself is fundamentally broken,” Dykes said. “I can’t just dismiss the ISO raising concerns about possible reliability risks, because I don’t have confidence in their market.”
Asked if she was concerned that keeping the rule in effect for two more years would lead to even more investment in natural gas plants that don’t have a reliable source of fuel, Dykes said, “Those horses are already out of the barn.”