Growing the Economy with Renewable Energy
Growing the Economy with Renewable Energy
Electricity suppliers in the New England grid generate primarily from fossil fuel and nuclear power resources. However, electricity produced from renewable sources is beginning to take hold in the market. In Massachusetts, utilities are subject to a Renewable Portfolio Standard (RPS) that requires them to supply a certain percentage of their electricity from renewable or alternative sources. Analysis shows that without increases to RPS, or the percentage of renewable energy that utilities are required to produce, growth of the clean energy sector and other economic benefits are at risk.
Increasing the Massachusetts RPS by at least 2 percent will allow the state to fully realize the energy, economic, and environmental benefits that come with the development and build out of these projects. RPS policies, which steer utilities towards renewables, are the foundation of clean energy markets and a proven policy tool to support cost-effective renewable energy development in 29 states and Washington, D.C.
According to a NECEC (the Northeast Clean Energy Council and the NECEC Institute) report, in partnership with Mass Energy Consumers Alliance, increasing the Commonwealth’s annual RPS growth rate would help Massachusetts diversify the region’s energy sources, lower wholesale electricity prices, create new jobs, and reduce greenhouse gas emissions.
According to the report increasing the annual RPS growth rate would:
- Diversify the region’s energy sources – New England currently relies heavily on natural gas to generate electricity. An increased RPS would diversify the region’s energy generation and could save consumers up to $2.1 billion if gas prices increase significantly.
- Create new jobs – An increase in the Massachusetts and Connecticut RPS policies could create as many as 43,000 jobs over a 12-year period across the region, or about 3,500 jobs in each year. According to a recent report on clean energy jobs from the Massachusetts Clean Energy Center (CEC), the Commonwealth’s clean energy economy currently employs nearly 100,000 people at over 6,400 companies, representing nearly $11 billion in investment.
- Lower wholesale prices – Sources such as wind and solar have zero fuel costs, enabling utilities and suppliers to lock in rates through long-term pricing and pass along savings to consumers on their energy bills. This new report found that an increased RPS will decrease wholesale market prices by up to 8.1 percent.
- Help the state meets its requirements to reduce greenhouse gas emissions under the Global Warming Solutions Act (GWSA) – Under the current RPS, the report estimates that emissions levels from the electric sector in New England will decrease by 60 percent of 1990 levels by 2030. Additional renewable sources could further this reduction up to 71 percent by 2030, which would help get the state closer to meeting its goal to reduce greenhouse gas emissions by 80 percent by 2050.
The report also found an imbalance between the Commonwealth’s policies that affect renewable energy demand (like the RPS) and renewable energy supply (like the Energy Diversity Act procurements and the state’s solar program). A remedy to this supply and demand imbalance is necessary to maintain the current renewable energy fleet, to encourage new investment and production in a cost-effective and sustainable manner and to help the Commonwealth fulfill its obligations under the Massachusetts Global Warming Solutions Act, which sets a goal of reducing greenhouse gas emissions by 25 percent by 2020 and by 80 percent by 2050.
Currently, the RPS in Massachusetts increases by 1 percent per year indefinitely, putting the Commonwealth on track to be 25 percent renewable by 2030. In Connecticut, the RPS currently increases by 1.5 percent per year but plateaus in 2020 at 20 percent. The report examines increasing the RPS under four scenarios with varying natural gas prices, and with increased levels of electricity use that would result from greater electric vehicle deployment.
Benefit to Business
Business owners in the Northeast can also benefit from the the positive impact of RPS growth on their businesses:
“Recently we’ve seen other states, including Rhode Island, increase their renewable portfolio standards in an effort to accelerate clean energy development,” notes Eugenia Gibbons, clean energy program director at Mass Energy Consumers Alliance. “Renewables are integral to Massachusetts’ efforts to comply with the Global Warming Solutions Act, but this study demonstrates that in addition to environmental gains, increasing the RPS will yield consumer and economic benefits, too.”
“We believe that strong state policies such as the RPS and long-term contracting have been critical in providing favorable conditions for clean energy businesses to make significant investments in renewable energy projects in New England,” said Jim Walker, Vice President - Solar PV, Ameresco.
“Increasing the RPS will send a strong message to companies like us to invest in new renewable energy projects—and the jobs they bring with them—to help achieve the Commonwealth's important energy and environmental goals. The RPS has been a key driver for the renewable energy industry in Massachusetts, and an increase to the RPS is crucial to the continued growth of our clean energy economy,” said Ilan Gutherz, Director of Policy and Business Development for Borrego Solar.
The discussion on RPS and increasing renewables in the Northeast has cemented the importance of clean energy in Massachusetts. Last year, Massachusetts continued its clean energy and climate leadership with the passage of the bipartisan Energy Diversity Act, which requires Massachusetts investor-owned utilities to conduct procurements for long-term contracts with renewable energy projects.
“Massachusetts continues to be a leader with ambitious goals to drive clean energy growth and reduce greenhouse gas emissions. However, to maintain this position it is important that we implement policies to not only increase the supply of renewable energy in the region, but also the demand for renewable growth,” said Peter Rothstein, NECEC President. “Based on the analysis released today, it is clear that increasing the RPS will better position the Commonwealth to meet its goals of diversifying its energy sources, driving job growth, and maintaining our leadership as a clean energy economic hub.”
The full report can be found at: http://bit.ly/NECECRPS.
NECEC is the premier voice of businesses building a world-class clean energy hub in the Northeast, helping clean energy companies start, scale and succeed with our unique business, innovation and policy leadership. NECEC includes the Northeast Clean Energy Council (a nonprofit business member organization), and NECEC Institute (a nonprofit focused on industry research, innovation, policy development and communications initiatives). NECEC brings together business leaders and key stakeholders to engage in influential policy discussions and business initiatives while building connections that propel the clean energy industry forward.