Twenty-first Century Energy Future Solutions

Much angst has been expressed by the Baker Administration, legislators and others about the need to replace so-called “base load” electricity generation as a result of the shutdown of several aging power plants in Massachusetts, most notably the Pilgrim nuclear plant. The concept of base load generation is that there is an underlying need for a significant amount of electricity on a steady basis all the time – 24/7 – and that only certain kinds of generation can fit that need. This is an antiquated view of the electricity market and operations. In fact, if there was a need for these generating units to meet this kind of operating need they wouldn’t be shutting down.  The market price signals would have kept them economic and operating.

A few key points to better understand why this view of the electricity world is misguided. First, over the last several years, NEPOOL and ISO-NE have been developing market rules specifically designed to ensure the availability of supply for what, in the past, was referred to as base load, intermediate load and peaking demand. The Performance Incentive Penalty rules going into effect now specifically address this and the market results of the Forward Capacity Auction reflect the ability of the market to deliver what is needed to meet the demand at all hours.  So to suggest that there is a need for government intervention through long-term utility contracts for Canadian hydro to replace these resources is unfounded.

Next, after over 20 years of the most robust and effective energy efficiency programs in the country, the load profile of the region has been inalterably changed so that the need for so-called “base-load” generation no longer exists. In fact, ISO-NE’s latest forecast has demand falling 3% by 2024. Indeed, coupled with the over 900 MWs of solar on the system today in Massachusetts alone, the load profile of the region has shifted significantly and the need for generation at different times than in the past is coming to light in many ways.  As we move forward with storage, integration of wind and other clean new technologies, the idea of imposing old fashioned “base load” large scale hydro makes no sense. By definition, 24-7 generation entering the market at zero cost (because it is being subsidized by ratepayers) will drive these newer more responsive technologies out of business and cost customers more money.

The other justification for the Canadian hydro push is climate change goals under the Global Warming Solutions Act. But, this can’t be justified either as the emissions reductions already achieved from the electricity sector exceed what was originally contemplated coming from this sector back when the Act was passed. The other key sector from which an equal amount of emissions reductions are to be achieved is transportation.  It’s time to start applying a cost effectiveness test to greenhouse gas reduction strategies. Let’s give the MBTA the money it needs to get cars off the road. A billion dollars invested in the MBTA would not only be more cost effective in reducing emissions that Canadian hydro (which will cost several billion dollars) and build a transportation system for the 21^st century to match the 21^st century energy solutions already underway in the Commonwealth.