Column: Hydro and wind power deliver savings and reduce carbon emissions

There's no dispute that clean electricity is popular in the Bay State. A recent survey commissioned by the Massachusetts Clean Electricity Partnership (MCEP) found that 89 percent of Massachusetts registered voters support the use of additional renewable, clean energy. And 58 percent were comfortable with spending more each month for clean electricity.

Now, an independent economic analysis conducted by Power Advisory LLP shows that clean hydro and wind will pay for itself while lowering wholesale energy costs across Massachusetts and New England. The detailed study provides an unequivocal answer to a small group of critics who question why the Bay State should import clean hydropower and wind power from Canada, New England and Upstate New York.

Economic modeling of the interaction between New England natural gas and electricity markets with and without clean energy imports yielded clear results: Clean electricity imports would exert downward pressure on wholesale energy prices, thus reducing the need for less-efficient power plants.

The results concluded that long-term contracts in the Commonwealth for imported hydropower and Class 1 wind generation would lead to approximately $171 million in net savings in the state's energy marketplace every year for the next 25 years. The analysis demonstrated that savings would effectively pay for new the new energy infrastructure required to generate and transmission lines to deliver clean energy imports into Massachusetts, without any impact on wholesale electricity rates.

How does the math work within the economic modeling? The MCEP, a coalition of regional wind, hydro and transmission companies who support adoption of new clean electricity laws, asked for an assessment of potential clean energy imports in terms of impacts on the electricity and natural gas markets in New England and Massachusetts. The economic modeling examined a “business as usual” approach using current electricity market data and also considered clean energy imports as a future energy supply option.

The Power Advisory computer model determined that Massachusetts would achieve an estimated $600 million of savings each year on wholesale electricity costs and additional savings for customers who use natural gas for heat and cooking. With an overall decrease in demand for gas and lower priced electricity, other New England states would also see benefits in terms of lower gas prices and reduced wholesale electricity prices.

The modeling used conservative assumptions, including proposed gas pipeline expansions in Massachusetts, new natural gas power plants and continued electricity demand growth based on regional forecasts from ISO New England. The analysis assumed the import of 18.9 terawatt-hours of clean hydro and onshore wind power over 25 years, which is outlined in legislation pending before the state Legislature.

The modeling also showed that more clean electricity would reduce wholesale market demand for natural gas in Massachusetts by10 percent. Further, the market would see a 5 percent reduction in wholesale natural gas prices based on reduced demand. This result means significant benefits for business and retail gas customers while allowing natural gas power plants to maintain a strong market share, which is consistent with the results of similar studies.

The detailed economic modeling analysis validates what Massachusetts' environmental and energy leaders have said for more than a decade. Importing hydro and wind power as part of a balanced approach is a prudent way to deliver clean, reliable and affordable electricity to the residents of the Bay State.

Potential energy savings in Massachusetts must be weighed against the cost of new clean energy infrastructure, including new clean generation and new transmission lines to deliver new sources of reliable, affordable clean energy to Massachusetts. Based on an estimated annual $431 million cost for new clean power infrastructure, Massachusetts' wholesale market would net an estimated $171 million per year in savings, or a 2 percent reduction over “business as usual” (no new clean electricity).

Equally important, additional clean hydro and wind would put Massachusetts on a path toward meeting mandatory carbon reduction goals under the state's Global Warming Solutions Act. Assuming the import of 18.9 terawatt-hours of clean electricity, the computer model projected 7.2 million metric tons of greenhouse gas reductions per year within the Commonwealth's energy sector, or 10 percent of total greenhouse gas emissions in the state.

That's equivalent to eliminating the annual emissions from more than 1.5 million automobiles.

Competitive solicitation for clean power is the main driver behind a new energy landscape in Massachusetts. Legislation pending on Beacon Hill would determine the best clean electricity projects based on specific energy goals, pricing and other considerations. This approach would subject every project to rigorous review by the Department of Public Utilities, in consultation with the attorney general, to ensure cost-effective solutions for ratepayers.

The Power Advisory study is another indicator that Massachusetts stands on the cusp of a brighter energy future. Abundant clean, affordable and readily available supplies of North American hydro and wind are poised to help the Commonwealth meet mandatory carbon reduction goals, keep electricity bills stable and contribute to a more resilient power grid for decades to come.

Donald Jessome, CEO of Transmission Developers Inc., and Robin McAdam, vice president with Emera, Inc., are members of the Massachusetts Clean Electricity Partnership.