Monday, November 11, 2019

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New England Clean Energy Connect Project Faces Questions

by Samuel Diamond


Nine hundred fifty million dollars: that’s the official price tag on Central Maine Power’s (CMP’s) proposed transmission line, which would carry up to 1,200 megawatts of electricity from the Hydro-Quebec company in Canada through western Maine and down to Massachusetts.

The project, known as New England Clean Energy Connect (NECEC), received unanimous approval from the Maine Public Utilities Commission (PUC) on April 11, 2019, despite strong opposition from landowners, environmentalists, rival power generators and others in the state.

NECEC still requires permits from the Maine Department of Environmental Protection (DEP), Maine Land Use Planning Commission, and U.S. Army Corps of Engineers (USACE). Plus, there are other obstacles in the way as well.

On April 25, exactly two weeks after the PUC granted CMP a “certificate of public convenience and necessity,” Beth Alafat, acting chief of the U.S. Environmental Protection Agency’s Wetlands Protection Unit, sent a letter to the USACE, which called CMP’s permit application “incomplete” and recommended USACE “issue a revised public notice for the project.” The letter also requested a “detailed alternatives analysis” providing information on other possible locations for NECEC.

Then, on May 9, the Maine State Senate voted 30-4 in favor of requiring an independent study of “total greenhouse gas emissions across all jurisdictions interconnected with electricity generation and distribution systems operated by the Hydro-Quebec company.” The study must be completed by August 15.

Although not insignificant, these latest challenges to NECEC may pale in comparison to those that the project has already overcome. To understand how far NECEC has come, we need to go back over a decade.

Environmental Goals

In 2008, Massachusetts passed the Global Warming Solutions Act, mandating the purchase of 9.4 terawatt hours of zero-carbon electricity per year for as long as 20 years. To help meet this ambitious goal, the Eversource utility proposed the Northern Pass transmission line, which would have brought hydroelectricity from Canada through New Hampshire to Massachusetts. At the same time, Avangrid and its subsidiary CMP proposed the NECEC project.

Eversource won the initial bid. However, Northern Pass was repeatedly challenged and delayed until the New Hampshire Site Evaluation Committee (SEC) finally rejected the project in February 2018 over concerns about its impact on state forests. Eversource has since appealed that decision to the New Hampshire Supreme Court, and a verdict is expected any day now, but in the meantime Massachusetts wasted no time moving onto other plans, namely NECEC.

CMP’s proposed transmission line was estimated to cost $600 million less than the Northern Pass project. In addition, CMP had sweetened the pot for Massachusetts by agreeing to fund $50 million in energy assistance for low-income ratepayers in the state. This includes money for electric heat pump installations and other measures aimed at improving residential energy efficiency.

In March 2018, Massachusetts utilities terminated their contract with Northern Pass on the grounds that the SEC decision would delay the timeframe of the project’s in-service date. Last July, utilities in Massachusetts signed on with the NECEC project, agreeing to purchase 9,554,000 megawatt hours of electricity over a 20-year period. This 9.55-terawatt-hour purchase fulfills the aforementioned Global Warming Solutions Act requirement, as well as an added amount mandated by an amendment Governor Charlie Baker signed in 2016.

The NECEC website says the project will reduce New England’s carbon emissions “by approximately 3.0 – 3.6 million metric tons per year – the equivalent of removing approximately 700,000 passenger vehicles from the road.”

Economic Incentives

The NECEC website also says the project will save Maine consumers “$14 million to $44 million per year in wholesale market benefits.” Additionally, it says, “NECEC will create more than 1,600 jobs during the construction phase” and “increase the state’s Gross Domestic Product by $573 million” while bringing in “an estimated $18 million in increased property tax revenue each year.”

Such economic incentives are one reason that the Maine Energy Marketers Association (MEMA), which represents the state’s heating oil and propane dealers, has chosen not to take a position on the project. “On the one hand, anything that’s done to encourage electrification could pose a challenge for our members,” says MEMA President & CEO Jamie Py. “On the other hand, in Maine, we need as much economic development as we can get.”

That being said, the association staunchly opposes ratepayer-funded heat pump conversions, for which NECEC sets aside $15 million.

Market Realities

Py is quick to point out that most electric heating systems are wholly unprepared for Maine’s harsh cold-climate conditions. At the same time, he predicts NECEC might raise the cost of electricity, “which will further push electric units into the realm of being more expensive than traditional heating sources,” even factoring in CMP’s financial incentives. Still, the association executive can read the writing on the wall.

“The government and younger customers are demanding lower carbon intensity,” Py says. “The liquid fuels industry is able to help fulfill that demand with advanced biofuels and an infrastructure that is already in place. Whether we use Maine-made ethyl levulinate or biodiesel, all of these things are going to come into play.”

The Maine Technology Institute seems to agree, as it recently awarded $750,000 to Bangor-based Biofine Developments Northeast to build a commercial biorefinery that will convert woody biomass to levulinac acid, allowing for production of a renewable heating oil substitute. The National Oilheat Research Alliance has partnered with Maine-based Biofine Technology to research and develop blends of ethyl levulinate, biodiesel, and heating oil, and Mike Cassata of Biofine Technology joined NEFI for related discussions with policymakers during a recent visit to Washington, DC.

“The selling of traditional heating oil is being regulated out of business,” Py says. “At the same time, price is still king. Converting to an all-electric system for whole-home heating could cost the average Maine consumer as much as $25,000, and wouldn’t even necessarily guarantee quality comfort. Additionally, upgrading the grid to support mass deployment of heat pumps and electric vehicles would cost billions. On the other hand, biofuels may, in the not-too-distant future, be able to make our customers 100-percent renewable for just a couple hundred bucks in seal and pump replacements.”

Future Opportunities

NECEC supporters hope to have their project fully approved by the end of 2019 and completed by the end of 2022. “A lot of things might delay it further,” Py says, “but barring something that makes it prohibitively expensive, it looks like the project will go ahead as planned.” Whether that means New England’s future heating and energy needs will be powered by electricity, oil, gas, biofuels, or some combination of all the above, Py remains confident in MEMA members’ ability to answer the call.

“Today, technology is advancing so rapidly that we don’t really know what next big thing is going to be around the bend,” Py says. “That said, our members have been able to embrace change over the past 100 years. Those who look out for what’s coming are able to identify market opportunities.”

One such opportunity might lie with so-called hybrid heating systems, which combine conventional oil- or gas-fired boilers and furnaces with electric heat pumps. During periods of extreme cold, the conventional system provides the primary heat load, with the heat pump offering added support if needed. Then, as the seasons change, the heat pump can take over the heating duties and act as an air conditioner during the summer.

Some manufacturers offer smart controls that allow such hybrid systems to automatically switch back and forth between the conventional heating equipment and the heat pump. These controls have not yet seen widespread deployment in the Northeast states. However, many heating oil and propane dealers do sell and service heat pumps even in cold-climate areas like Maine.

“Ductless heat pumps and space heaters may not be the biggest threat,” Py says. “If anything, hybrid units offer an opportunity as the technology advances. At the end of the day, our members will sell and service whatever customers demand.”


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