NH’s Ten Year State Energy Strategy: Past, Present and Future.

Guest Blog by Kate Epsen,  NH Sustainable Energy Association 

Raise your hand if you know that NH has a 10 Year State Energy Strategy…

If your hand is still on your lap, you are not alone.  In 2013, a bipartisan bill (SB 191) passed the Legislature to create a state energy strategy. The bill set up an Advisory Council, which included Democratic and Republican representatives and senators, as well as a Public Utilities Commissioner, the Director of the Office of Energy and Planning, and the Department of Environmental Services Commissioner.  This Council oversaw the creation of the strategy and approved the final version, produced by the Office of Energy and Planning with the additional support of consultants, and public input.  This was a big effort, but it is always difficult to reach everyone using scant public resources.

So what IS our state’s energy strategy?

In short, our state’s energy strategy is a collection of recommendations, which, if implemented, will yield a future (2025) that offers consumers more energy choices at affordable prices, greater amounts of clean energy powering our homes and businesses, greater private investment leveraged toward energy infrastructure, and more retained dollars in our state’s economy as a percentage of spending.

There are four broad categories prioritized to achieve this outcome, each of which include many recommendations:

1. The electric grid of the future. In order to keep our grid reliable, affordable and able to accommodate the increasing trend toward de-centralizing our power system, NH must modernize both our grid and the utilities that own and operate that grid.
2. Increased investments in cost-effective energy efficiency. In our regional energy system, NH is losing ground to its neighbors on reducing our energy use and thereby reducing our share of costs. NH can saved hundreds of millions of dollars by investing in the cheapest form of energy: efficiency, conservation, and demand reduction.
3. Fuel diversity and choice. The Granite State contains no indigenous fossil fuels, and is therefore subject to outside market forces for these fuels. Also, in a time of growing reliance on natural gas to generate electricity, NH can better invest in state-based renewable fuels to hedge against supply disruptions, volatility, constraints and other issues that arise from such dependencies and imbalances.
4. Increased transportation options. The state’s transportation sector accounts for 35% of our energy use and 46% of our energy expenditures, so reducing these figures through expanded options like mass transit, electric vehicles and infrastructure is critical to our economy and to the well-being of our people.

In addition to a very comprehensive suite of recommendations, the state energy strategy provides excellent baseline energy information and data for NH, as well as offering analyses on technical and economic potentials of what we can realistically achieve.  Summarily, the report is a call to action:

“All of these recommendations will take effort and resources to implement. Some require state agency activity, some require legislation, others require private market activity, and many require a combination. The time for action is now. “

Where are we today?

In the two and a half years since completing the strategy, we did act, and we are making progress.  The state created an Energy Efficiency Resource Standard, which will leverage public-private funding mechanisms to invest in saving greater amounts of energy and saving hundreds of millions of dollars for all NH consumers.  The PUC also held an investigation into Grid Modernization (the final report is here), thanks to HB 401 in 2015.  And this year, there is legislation to improve our state’s Renewable Portfolio Standard to increase our resources that come from in-state sources like biomass and solar energy (SB 129).  We still have a lot of work to do, however, to achieve any of the goals for the transportation sector and to deploy much higher amounts of distributed generation.

While it is a very useful road map, the energy strategy is far from perfect.  There are some clear gaps and shortfalls in it.  For example, the overall strategy contains a qualitative vision for the end of the ten-year period, but lacks quantitative goals or metrics by means of measuring success toward this vision.  Also, it does not comprehensively address a few critical and topical issues, upon which our state will make tough decisions. These issues include energy transmission and generation infrastructure opportunities and challenges, embodied lately in Northern Pass, natural gas pipelines, and wind-siting controversies.

Throughout the creation of this strategy, there was opportunity for the public to participate and provide significant comments and critiques. You can read all the public comments that were submitted here. The comments came from diverse stakeholders who are invested in and passionate about NH’s energy future: feedback and ideas came from utilities, individuals, business leaders, and advocacy groups. For example, our organization, NHSEA and the NH Clean Tech Council, offered detailed comments and suggested that we set a goal around keeping our energy dollars in-state and associated actions that would achieve such wealth retention.

Looking to the future, our new Governor may choose to update or even re-do our state’s energy strategy.  While there is certainly room for improvement, there is much in the existing strategy that is worth preserving, and worth pursuing.  Many of us are still learning about the strategy, implementing its good ideas, and working toward that 2025 vision. Let’s build on what we’ve learned, not start from scratch.  Just as it was the case in 2014, the time for action is now.

And you start easily…just raise your hand.

Kate Epsen is the Executive Director of the New Hampshire Sustainable Energy Association (NHSEA)

Guest Blog  by Gus Fromuth,   FREEDOM ENERGY LOGISTICS

               “ Our 3 Energy Market Disruptors”

My subject topic is on the disruption presently occurring in the Energy market, specifically electric energy here in New England, and why we should be celebrating it. While I will focus on the Eversource/PSNH franchise market, much of what I have to report is applicable throughout the region. I’ll start with a screenshot from the Union Leader of this past December – “High-Priced Power for NH Industry” The New England average is 12.19 cents, while New Hampshire is 12.33 cents.

NH as well as all New England is portrayed in this story as having very costly rates, especially in comparison to other parts of the country. If there were no way around this for the Eversource rate payers it would vastly disincentivize anyone from considering expanding business to NH, if energy were a big cost of doing business.

The 12.33 cents is basically the cost of the commodity coming from Eversource, who, with over 500,000 customers serves upwards of 70% of the NH retail electric market. So, this is where we are today; I’ll return to this topic. First I will cover the upheavals that have brought us here. Disruptions by their very nature are unpredicted and unexpected. In the case of the New England’s energy market, the first move, implemented by elected officials in five of the six states was certainly expected to be a game changer.

The First disruptor to roll out:

Legislation that passed in the late 1990s deregulated the electricity market in New England and required regulated utilities like Eversource to divest generating stations to competitive suppliers. That caused a lot of changes. As you may know, Eversource held on to its power plants, except for the Seabrook Nuclear. This radical makeover of the industry was the most profound since enactment of the industry’s first comprehensive regulation by Congress in 1935. Overnight this lead to the creation of what are called Merchant Power Plants- generation facilities once owned by franchise utilities, now owned by commercial operators, free to price their power at whatever the market will bear.

Also entering the energy market place where a new breed of energy traders, marketers, brokers and vendors; generally referred to as Competitive Energy Providers. For many business and commercial customers, they replaced the utility as the energy provider.

Starting about 15 years ago a competitive market was birthed here in New England. On one hand, you had a newly acquired power plants, freed from the rate of return restrictions imposed by utility regulators. These could seek profit-maximizing returns as they peddled their power throughout New England. on the other hand, jumping at this economic opportunity for electricity marketers. They would compete head to head with utilities and with each other to sell commodity power to the millions of eligible business and household consumers in the region.

The natural tension created by forces that sought to sell power at high prices vs those luring customers with the lowest possible pricing created a market that is more efficient and functions more equitably then the old regulated system. This injection of customer choice, this abundance of buyers and sellers and removal of rigid pricing models is but one compelling feature of this new electricity era.

The second disruptor to hit the market and foul up carefully laid plans:

The cost to make electricity plummeted. The regional power grid operator, ISO NE, reports the wholesale price of electricity has fallen from 6.3 cents in 2014 to 4.1 cents in 2015 (35%) and 2.89 cents in 2016 (29%)

What’s the reason? Look no further than western Pennsylvania and the Marcellus shale geographic region of the state. Abundant natural gas deposits have overwhelmed markets and displaced other fossil feels that once generated far more power. Coal and Oil have largely ceased to play anything other than a seasonal or peaking role in the New England generation fleet.

Other factors suppressing price is the notable absence of growth in demand for electricity. Energy efficiency measures have also taking market share in the sense that investments in new forms of lighting and conservation expenditures are running ahead of expansion in usage. Aside from plummeting prices there is another headline associated with the growing dominance of natural gas as the preferred fuel for generation. And it’s far less polluting then cousins Coal and Oil. The transition away from those fuels, starting in 1999, has brought with it a 26% reduction in power plant emissions of carbon dioxide, a 66% drop in nitrogen oxide and 94% of sulfur dioxide pollution has been eliminated.

The third financial asteroid to hit the Energy market:

This has all been very good news for consumers. But it has been harrowing for generators that don’t fuel with natural gas. Let’s look at the New England supply stack. This graph tells the story of how a power plant is financially dispatched to run. This system runs the cheapest generators all the time. The progressively more expensive plants kick in as powered demand rises and compensation to the generator increases. The thing is, that the new were forms of energy generation are cheaper than the legacy power plants with tomb they are competing. The supply stack shows the emergence of wind and solar on the very front and at the dispatch chain.

While very cheap to operate, they are also irregular and unpredictable performers. Unlike other power plants they do not have on and off switches. Weather permitting, they will put out the same quality electrons as a nuke, Hydro or gas plant. But the economics for wind and solar operators are hugely different than their rivals in the legacy generation business. Armed with capacity income, renewable subsidies and tax allowances, wind and solar can operate profitably even if they are paid zero, or less than zero for their energy. Yes, you heard that correctly. Looking at the supply stack, if the price were to drop below zero, wind and solar resources would very likely continue their electricity production. This creates a price sink into which all the other generators up the price latter are sucked into.

Solar and wind are way behind in terms of the volume of energy they can produce. But renewables, coupled with the economics of the gas effect, have caused the owners of two nuclear plants to terminate operation. This is troubling on a number of fronts. Renewables are a good thing but they aren’t equipped to be our prime-time suppliers of energy. Without storage capacity, the random nature of their energy production can’t maintain the reliability standards every household and business depends on.

In the case of nuclear- it provides clean, abundant energy at very affordable prices. They were a long-term investment and now the most expensive part of the relationship is behind us. The benefits are flowing.

I began this commentary with the headline from three months ago that declared New Hampshire and greater New England to be ground zero for high energy prices. If I were to summarize, the benefit of the disruptions I have described are not naturally flowing through to you, the rate payer. In other words, some proactive steps must be taken by you, the business owner, and you the home owner, to get access to the cheaper energy available in NH and New England. In other words, don’t rely on the headline.

Profound disruptions in the energy economy have created significant material opportunities for you, the energy consumer, to buy an expensive power. You must know where to look for it and we will provide some tips on how to do just that in a future blog.

The Faces of Energy Management

Gus and Bart Fromuth of Freedom Energy Logistics, LLC

The Freedom Team

F 603.625.8448

How do I Incorporate “efficiency” Measures in My Energy Plan? Answer: Start everywhere.  I’m not talking just energy efficiency here, I mean everywhere. I have never seen a business not benefit from becoming more efficient.  In many businesses, getting “more efficient” on energy usage should be last on the list of getting “more efficient”.  My 1998 office building was very efficient in 1998, but today I could do so much more with the changes in available building technologies and pricing.  However, at less than 1% of my annual costs of operating my business, it would not be 1^st on my list of areas where I could move more profit to the bottom line with increased efficiency.  I think that kind of high level view should be taken first by every business. If energy costs are important to your bottom line, then it is important enough to take seriously by improving your energy efficiency.

It has been proven over the past 30-40 years that energy efficiency is one of the, if not the most, cost effective means to lower energy costs.  That is precisely why most every state operates energy efficiency programs inside and outside of their regulated electrical distribution system operators (i.e- your local electric utility company).  These state driven initiatives are a great first step for any company wishing to explore the prospects of some financial assistance or rebates provided for technical assistance and efficiency measures.  Of course you are 100% able to take a much more aggressive approach than these sponsored programs do.  However, it’s worth seeing if you qualify for NH assistance that you are already paying for in your NH electrical energy rates and your NH tax dollars.

The second part of this effort really then depends upon a simple cost v. benefit determination or payback analysis on every element that can be flagged for possible improvement:

• Thermal envelope (air tightness and insulation levels)
• Indoor and outdoor lighting systems ( controls and electrical consumption/lumen of lighting)
• Heating and cooling plant equipment (fuel and electrical efficiency, optimization & controls)
• Process systems (pumps, motors, blowers, dryers, conveyors, compressors, heaters, coolers, refrigeration, controls, etc)
• Fuel options (and fuel switching options for new equipment)
• Electrical self-generation and CHP (technically not “efficiency”, but usually examined as alternatives or complementary elements to energy efficiency measures)

Essentially, most companies would find it beneficial to consume less energy first through the implementation of cost-effective efficiency measures BEFORE adding self-generation so that the new electrical “generator” would be sized closer to the actual need and/or optimum payback point.  That same approach is taken today when people pursue a Zero-Net-Energy project of any kind, using efficiency first to lower the energy use to an optimum (cost benefit) level before adding self-generation to get to a zero or near net zero level.

My only caution would be to not throw some options away too fast if they don’t fit neatly into your company’s financial payback criteria.  I know that is harder to do if you are answering to Wall Street every quarter.  There is most always some low hanging fruit (ex.- lighting) that is easy to grab, but don’t lose sight of the long time period that these improvements provide an annual savings, as well as raising plant value.  Not everything is going to fit into a simple 2 year payback analysis, so maybe a more robust alternative ROI examination is worth another view before setting it on the shelf. Here is a short story from NH’s Worthern Industries about measures they have recently undertaken, for example, under a 5 year payback.

Some helpful Links used:

Gov’t Efficiency Programs:   https://www.epa.gov/statelocalclimate/calculating-energy-savings

NH programs:    https://www.nh.gov/oep/energy/saving-energy/rebates-incentives.htm

NH SAVES:    https://www.nhsaves.com/save-home/save-more/heating-cooling-water-heating-systems/

NHPUC:  http://www.puc.state.nh.us/sustainable%20energy/RenewableEnergyRebates.html