Offshore wind better bet than hydro

Importing hydroelectricity from Canada could raise prices

IN A FEW WEEKS, the Massachusetts Legislature is likely to vote on a sweeping energy bill that will help determine how, from where, and from whom we get a substantial portion of our electricity for the next 10 or 20 years.

Offshore wind is the best choice for Massachusetts.  Here’s why.

The Legislature should focus on two main goals: reduce energy prices during peak periods of energy use – generally the coldest winter nights when New England’s heating and electricity needs put the most demand on natural gas supply – and continue the shift of New England’s energy generation towards renewables, in compliance with the goals set in the 2008 Global Warming Solutions Act.

Electric producers or potential future producers are hard at work trying to convince legislators and voters that their source for electricity is the best for Massachusetts. Some are asking the Legislature to direct utilities to enter into long-term contracts with big hydropower dams in Canada. Others want long-term contracts with large offshore wind farms, including wind farms located off the coast of Massachusetts. Others would like to force ratepayers to help finance the construction of expanded or new natural gas pipelines.

The energy bill can best meet the goals of containing electricity prices and reducing carbon emissions by:

  • Maximizing the potential economic benefits of offshore wind energy by requiring procurements of such energy at levels necessary to create economies of scale and incentivize the cultivation of a regional offshore wind industry;
  • Minimizing the extent to which any energy purchases outside of the existing wholesale market undercuts normal market price formation by using a series of procurements that phase in new capacity; and
  • Minimizing state law incentives for utilities to build new transmission lines or natural gas pipelines simply to profit from transmission fees charged to ratepayers.

These goals are best accomplished through a series of moderately sized offshore wind procurements that, over 10 to 15 years, would add up to sizable energy production from off the south coast of Massachusetts. Such a solution would, when coupled with robust investment in energy efficiency, prevent ratepayers from being hit with large rate increases. The deliberate and steady addition of offshore wind capacity would gradually reduce electric rate price spikes during winter months, reduce our reliance on carbon emitting energy generation, and create a new local industry in Massachusetts.

Let’s review the options.

Today, on average, the cheapest source of electricity in Massachusetts is natural gas.  The problem is we don’t know if that will continue to be the case. The federal government is lifting long-standing prohibitions on American natural gas exports, a restriction that held down domestic natural gas prices.  We know that natural gas damages our environment when it is extracted through fracking. Burning natural gas also contributes to global warming.  Since we already produce most of our electricity by burning natural gas, prudence requires that we incentivize energy policy that hedges against the risks of such heavy reliance.

In addition, many energy policy experts, including those working for the Attorney General, doubt that additional gas pipeline capacity is needed. Some of these experts argue that new pipelines will actually raise costs for ratepayers: once these pipes are built, New England ratepayers pay for that construction regardless of whether they use the gas shipped through the new pipelines. In short, pipeline expansion produces new costs, but it doesn’t really solve New England’s main electricity cost problems.

Similar arguments can be made about importing power from large hydropower dams in Canada. As an initial matter, damming big rivers and flooding forests in the Canadian wilderness is not great for the environment and contributes to global warming.

Then there is the fact that Quebec’s electricity use peaks at the same time as New England’s natural gas use on cold winter nights. This means any long-term contract for hydropower from Canada, according to some industry experts, will likely provide competitive electric rates only in the summer months. That won’t fix our winter price spiking problem. The probable consequence of a long-term, out-of-market contract using hydropower from Quebec is that Massachusetts ratepayers will be forced to pay for the new transmission lines that would be required, but that are likely to sell us power when we need it least.

Some argue that we need hydropower because it provides baseload energy, the kind of energy that is always available. This might seem like a good thing, but it’s not that simple. Adding large amounts of baseload energy might cause some of our local baseload producers to stop operations. And if that energy is priced above the energy sold by existing local producers, average wholesale prices would increase. In that way, importing power from Quebec could raise average wholesale electric rates without increasing overall capacity in the New England market.

Offshore wind is a much better value for Massachusetts. The technology has improved substantially over the last decade and its price is likely to continue to come down. The energy bill could contribute to further price reductions by requiring the procurement of a series of projects, phased in over the course of the next 15 years, using long-term contracts. The power these wind farms would produce would be truly clean, which means Massachusetts would be doing its part to help reduce global warming.

Even better, the price suppression effects of offshore wind are likely to respond to the precise needs of the energy market in Massachusetts because offshore wind volume peaks during those winter periods of peak natural gas use for New England. A slow but steady build-up of offshore wind capacity would minimize the impact out-of-market contracts would have on the existing wholesale baseload energy market. Over time, the price suppression effect on peak energy rates would be substantial. For example, the addition of 2,000 megawatts of offshore wind power could reduce the overall amount spent on energy production in New England by as much as 10 percent, according to a draft study published by ISO New England, the organization responsible for managing and planning the future of New England’s grid. What that means is that offshore wind is the one solution requiring legislative action that can best respond to the energy problem Massachusetts faces.

But the biggest difference between offshore wind as an energy solution and the other policy proposals now under consideration in the Legislature is that the offshore wind industry presents the south coast of Massachusetts with the kind of manufacturing and design job opportunities that we have not seen in generations. If you’ve ever walked around the edge of Fort Taber in New Bedford, you know why Massachusetts is one of the best places in the country to produce offshore wind power. There is a possibility for good, local jobs in an industry whose long-term prospects are directly tied to our nation’s ability to combat climate change.

Meet the Author
As my colleague, Rep. Patricia Haddad from Somerset, who’s been a strong advocate for offshore wind, often says: Massachusetts is always at the end of the pipeline.  We don’t produce any natural gas, oil, or coal and we can’t build large hydropower facilities. The one power source we have more than any place else is wind.  Let’s use it.

Rep. Antonio Cabral is a state representative from New Bedford.