By Willem Post
The Clean Energy Development Fund (CEDF) was established in 2006 to “promote the development and deployment of cost-effective and environmentally sustainable electric power resources.” To provide the CEDF with funds, the state entered into two memoranda of understanding, MOUs, one allowing Entergy to increase its energy production of Vermont Yankee and the other for allowing Entergy to store used Vermont Yankee fuel bundles on its site. As a quid-pro-quo, Entergy agreed to make payments to the CEDF of about $6 million per year. Since 2006, Entergy has paid nearly $30 million to this fund. What have Vermonters received for that $30 million. The short answer is Vermonters really do not know.
The Governor and the Legislature are planning to reorganize Vermont’s economy to have 90 percent of all of Vermont’s energy from renewable sources by 2050. This implies significantly increased energy efficiency of vehicles and of old and new buildings, nearly 100% electric and hybrid vehicles, and rearranging urban areas more compactly to enable, walking, bicycling and electric mass transport, and having distributed RE facilities with energy storage systems all over the state. To achieve the goal will require $30-$50 billion.
Here is an example for a very small part of the goal: If we assume wind, solar and biomass energy generation will be 20%, 10% and 10% of Vermont’s 5,700 GWh/yr electrical energy consumption by 2050 (the TOTAL energy consumption is much greater), the capital cost for 1,140 GWh/yr of wind energy would be about $1 billion (useful service life about 20-25 years), for 570 GWh/yr of solar energy would be about $2.2 billion (useful service life about 25 years), and 570 GWh/yr of biomass energy would be about $0.45 billion (useful service life about 40 years); biomass energy is renewable, but not CO2-free, and wind and solar energy are only partially CO2-free.
Will Vermont’s energy transformation be managed by the CEDF or should there be a Vermont Energy Authority? Currently the CEDF is a part of the Vermont Department of Public service, VT-DPS. A seven-member, state-appointed board acts as an advisory group and is responsible for approving the fund’s annual plan, budget, program design, and strategic plan.
The CEDF has had its controversies. The projects of former CEDF board member and RE developer David Blittersdorf received several million dollars of state subsidies. In April 2011, Vermont State Rep. Oliver Olsen, a supporter of RE who has closely monitored the CEDF, expressed concerns noting that 20 percent of the projects that were awarded tax credits would not be implemented, or would not generate any energy.
CEDF supporters often claim that each dollar of subsidy attracts 3 to 4 dollars of private capital. But for every subsidized job in the RE sector, 3 to 5 jobs are lost in other sectors; the job losses are greater if products are imported. Investors desire subsidies for their RE projects to improve their profitability, but if these subsidies divert capital from already-profitable sectors of the economy, there will be a net loss to the economy. http://theenergycollective.com/willem-post/77343/vermont-leaders-back-away-renewable-energy-goals
Natural gas at $3 to $4 per million Btu is in plentiful supply for the next 75 to 100 years. Energy produced from natural gas is competitive with coal, is much cleaner than coal, and emits about 50 to 65 percent less CO2 per kWh, about on par with RE, and has none of the job losses associated with RE.
The cost of RE energy is about 3 to 5 times annual average grid prices. Entities, such as the VT-DPS, advocating a 90 percent RE future, should explain how public funds can help us get there, and what we have learned over the past five years. At the very least the total capital cost, the annual owning and O&M costs, the impacts on the various costs of living of Vermonters should be clearly spelled out. The recently released VT-DPS Vermont Energy Plan does none of that to anyone’s satisfaction.
A report on the CEDF, prepared in June 2011, was generally positive, but Vermont economist Tom Kavet acknowledges, “…specific estimates of economic metrics such as jobs, income, output, etc., cannot be estimated without the use of a formal economic model.”
So, where should we go from here?
By July 1, 2012, the Vermont Department of Public Service should perform a thorough study of the CEDF and make public any analyses, such as spreadsheets, of how the program has worked. This should include:
– The number of jobs created by this $30 million in expenditures.
– The capacity and energy production from operating records of each project.
– A discussion of the criteria used to fund projects and to monitor the effectiveness of grant recipients’ use of these public funds.
– An analysis of which grant and tax credit programs, going back to 2005, worked best, which can be improved, and which should be abandoned.
In the event VT-DPS does not prepare such a report, or the report is lacking in clear detail, analysis, and recommendations, the Vermont state auditor should undertake this analysis.