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Northeastern States Look to Power Purchase Agreements to Cut Carbon

wind-energyDespite the threats by President-elected Donald Trump to withdraw from carbon cutting policies and treaties, the states are taking the lead to decarbonize. The latest such move is coming out of New England, which is going forward with plans to cut carbon emissions through power purchase agreements, infrastructure improvements and potentially tighter emission caps under its so-called Regional Greenhouse Gas Initiative, reports the RTO Insider.

The move essentially gives developers of renewable projects a guaranteed revenue stream, as they are able to sell their power into wholesale markets to either utilities or to companies. In return, those utilities and companies receive green power at stable rates over a fixed time period. As for the utilities, the move also helps them meet their state-specific renewable portfolio standards.

“While the initial contracts are for a modest 460 MW, Massachusetts is expected to issue another request for proposals for 2,800 MW in the spring,” writes Bill Opalka, who covers the Northeast for the publication. “The state’s Energy Diversity law, enacted last summer, directs its electric distribution utilities to enter contracts for 1,600 MW of offshore wind and 1,200 MW of renewables, likely Canadian hydropower, over the next decade.”

Separately, Connecticut is negotiating power purchase agreements with two electric companies, he says. That includes 25 small clean energy and energy efficiency projects totaling 402 MW.

“New England policymakers hope to reach agreement in 2017 on revised market rules to accommodate state clean energy policies, as three states seek to complete renewable procurements and Massachusetts readies for a new solicitation,” Opalka says.

The Regional Greenhouse Gas Initiative is the effort by the nine Northeastern to cut their carbon levels. The participating members say that the program has been successful and the region has seen dramatically falling carbon levels.

It has done so by, primarily, by requiring renewable portfolio standards and by implementing a cap-and-trade system, which is something that EPA could empower others to do, although it is unlikely in a Trump administration. Such a free-market mechanism limits the amount of relevant releases for utilities and companies. Those companies that can’t meet the standards must buy credits. The aim is to get facilities to implement new pollution control technologies or to switch to low-carbon fuels.

Allowance prices dropped to $3.55 in December, the lowest in three years and about 53% lower than a year ago, reports RTO Insider. Many stakeholders say the states should reduce the cap on emissions by 5% annually from the current 2.5%, the story says.

“Although New England has been a national leader in reducing carbon emissions, it would still need an additional 25% cut from 2015 levels to meet the 2030 targets under the federal Clean Power Plan,” says Opalka. “The CPP would cap emissions from new and existing sources at 29.1 million tons in 2030. In a report by ISO-NE, carbon emissions showed a slight uptick to 40.3 million tons in 2015 compared to 2014, likely caused by the closure of the Vermont Yankee nuclear plant.”

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