Tuesday, January 15, 2019

CONNECTICUT DEPARTMENT OF ENVIRONMENTAL PROTECTION: Gov. Malloy Announces Zero-Carbon Resource Selections

Connecticut Department of Environmental Protection issued the following announcement on Dec. 28.

Governor Dannel P. Malloy and Department of Energy and Environmental Protection (DEEP) Commissioner Robert Klee today announced that, under a recently adopted statute requiring the state to conduct an appraisal of nuclear power-generating facilities and solicit bids for zero-carbon electricity-generating resources, the state has selected two nuclear power bids, along with nine solar project bids – two of which are paired with energy storage – and one offshore wind project.

The solicitations were required under Public Act 17-3 (June Special Session), An Act Concerning Zero Carbon Solicitation and Procurement.

“Make no mistake, we are facing a climate crisis with the future of the planet is at stake,” Governor Malloy said. “Despite President Trump’s refusal to listen to scientists on this matter, the reality is that urgent and significant action is needed to dramatically reduce our dependence on carbon-based energy sources. In addition, we need to increase investments in clean energy like offshore wind, solar, and grid-scale storage. Should we fail to do so, we will fail to prevent the catastrophic outcomes that will result from climate change.”

“The recent United Nations IPCC and Fourth National Climate Assessment Reports make clear that we are running out of time to decarbonize the energy sector,” Commissioner Klee said. “The selection of this diverse portfolio of zero-carbon resources ensures that Connecticut is doing its part to address climate change. We agreed with PURA that the Millstone nuclear facility is at risk of early retirement and created an evaluation framework that let us compare the costs of retaining the resource with the cost of replacing it over time with a variety of renewable resources. We remain committed to keeping this valuable zero-carbon resource, provided that it is affordable, as we work towards long-term replacement through smart investments in offshore wind and solar paired with grid-scale storage. At the same time, we believe ratepayers deserve, and can get, a more competitive price for Millstone’s output.”

The approved selections will secure the at-risk Millstone Power Station, Connecticut’s only nuclear plant, and provide low-cost zero carbon energy from the Seabrook Nuclear Power Plant in New Hampshire. They will also add an additional 100 MW of offshore wind from the Revolution Wind Expansion Project (building upon Connecticut’s prior selection of 200 MW), and create 165 MW of new solar generation located in Connecticut and throughout New England. The selections in this procurement are equivalent to 45 percent of Connecticut’s electric load (11,658,080 MWh).

The Millstone selection follows the findings by DEEP and the Public Utilities Regulatory Authority (PURA) that the 2100 MW Millstone units are at risk of early retirement based on Millstone’s disclosed financial statements and insufficient projected energy market revenues from an increasingly gas-dominated market. The Millstone nuclear facility is an extremely important resource providing efficient, reliable, baseload zero carbon electricity to the region as well as economic benefits to the state. In making its Millstone selection, DEEP directs that Connecticut’s electric distribution companies, Eversource and United Illuminating (UI), negotiate the price downwards to better reflect a reasonable rate of return for the plant’s owner, Dominion Energy. A normal utility rate of return on equity is 9 percent, however DEEP would consider 12 to 15 percent reasonable for a merchant power plant with a long-term contract. (See PURA Docket No. 18-05-04.) Dominion has sought a rate of return that is not in the best interests of ratepayers.

Nuclear power

Millstone submitted 24 different bids for different term lengths and quantities. DEEP selected the 10-year bid for about 50 percent of the entire facility’s output. DEEP selected and treated this option as though it were two separate bids: one for the next several years when they are not considered at risk due to their existing market commitments, and one for the latter years. The selected price for the first three years reflects Dominion’s submitted energy-only price. For the at-risk period of the bid, 2022 to 2029, Eversource and UI are directed to negotiate for a price that reflects the costs and risks Dominion faces. The negotiations are requested to conclude by March 31, 2019.

Though it had the opportunity, as did any existing zero-carbon resource, the Seabrook Station did not state it was at risk of early retirement and therefore did not disclose its operating costs to PURA. It was selected on the basis of its price of 3.3 cents/kWh levelized (3.9 cents/kWh nominal), which beats the market forecast and is projected to save Connecticut ratepayers $18 million per year over its eight-year term. The Seabrook contract begins in 2022 and is for 1.9 million MWh.

Offshore wind

In June, Connecticut made its first selection of offshore wind for 200 MW from Revolution Wind. This expansion announced here builds upon that selection with an additional 100 MW of power at a price lower than the previous procurement. The economic benefits of this incremental selection will result in an additional $7.5 million to enhance the New London Port, $3 million to fund the improvement of marine infrastructure in the Port of New London to support the Port's existing maritime-dependent businesses, $700,000 in various additional economic development, and nearly $2.5 million in education related activities with UConn, Mystic Aquarium and other educational partners.

Solar

The nine selected solar projects include several Connecticut-based projects showcasing improved environmental siting that minimizes ecological impacts and the first selections of grid scale energy storage as part of Connecticut’s energy procurements. The average levelized cost of these nine projects is about 4.9 cents/kWh, which is approaching parity with the market price of energy, and represents continued price reductions compared to our last procurement of grid scale solar, as well as additional savings to ratepayers.

The selected solar projects in Connecticut are:

Montville Energy Center, LLC

Black Hill Point Energy Center, LLC paired with energy storage

Gravel Pit Solar in Connecticut

The remaining selected solar projects include:

Tilton Heights Energy Center, LLC in New Hampshire

Steel Mill Solar, LLC in New Hampshire

Old Mill Solar, LLC in Maine

Keay Brook Energy Center, LLC in Maine

GRE-3-ME-SACO in Maine paired with energy storage

Kennebec PV Partners, LLC in Maine

Over 100 renewable energy projects bid into this RFP, including numerous solar projects, land-based and offshore wind, and existing hydropower. Nearly the entire procurement authority under Public Act 17-3 was utilized in this procurement. Assuming all of the selected projects successfully enter into contracts and are approved by PURA, Connecticut will retain approximately 17 percent of total load for additional renewable procurement authority in future RFPs.

Original source can be found here.

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Connecticut Department of Environmental Protection

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