Vermont’s Largest Municipal Utility Goes 100-Percent Renewable
OCT 21, 2014
Vermont may be best known for maple syrup and Ben & Jerry’s ice cream, but now its largest city can boast another accomplishment. The city of Burlington (pop. 42,000) now gets 100 percent of its electricity from renewable sources. The Burlington Electric Department (BED) is the state’s largest municipal utility. Wind, hydro, and biomass provide most of the city’s electricity, plus some fossil-fueled generation that comes via short-term contracts from the greater New England grid, which BED offsets with renewable energy credit purchases. Now, with BED’s recent purchase of a nearby 7.4 megawatt hydroelectric project early last month, Burlington is 100 percent renewable. “This has been a goal of BED for over a decade, so we are excited to finally reach that goal,” Mary Sullivan, communications coordinator for BED, told RMI.
Founded in 1905, one of BED’s core values is to be a leader in sustainability, including producing as much clean, locally-generated power as possible. And in recent years, it has been making strong gains in that area. For example, in 2004, BED was one of only five utilities across the U.S. to answer the World Wildlife Fund PowerSwitch! Challenge to support binding limits on national carbon dioxide emissions.
THE ENERGY-EFFICIENCY UTILITY
Even before moving toward a renewable generation mix, BED placed a strong emphasis on energy efficiency. Impressively, BED customers’ annual electricity consumption in 2013 was less than in 1989, despite 8 percent population growth. Over the last 24 years BED has spent $21.2 million on energy-efficiency efforts; customers paid another $23.5 million in matching expenditures through a small monthly charge. These investments have paid off tremendously, saving BED consumers more than $10.1 million in annual electricity costs, equivalent to a net present value that likely exceeds $100 million. More recently, BED has been pursuing smart meters to help the grid run more efficiently and provide more reliable service.
LEVERAGING RENEWABLE ENERGY CERTIFICATES
One goal of Burlington Electric is to not simply go 100 percent renewable in name, but to also get new renewable energy projects built, according to Ken Nolan, manager of power resources for BED. To do that the utility signs long-term contracts with wind farms, which provide Class I renewable energy certificates (RECs). In order to keep rates low for their customers, BED sells the RECs from that wind power to utilities in areas where their value is high, mostly in Massachusetts, which has a renewable portfolio standard to provide at least 15 percent of its electricity from class I RECs by 2020. BED then buys cheaper Class II RECs from other renewable projects, such as older hydro facilities in Maine.
Such REC trading has admittedly been contentious in Vermont, whose SPEED program for renewable generation permits double counting. In-state utilities can sell RECs to out-of-state buyers while still counting those RECs against in-state targets. In fact, earlier this year Connecticut banned double-counted Vermont RECs. Major REC trader NextEra Energy followed suit in the New England market. And last month, Vermont citizens—supported by the Vermont Law School’s Environmental and Natural Resources Law Clinic—filed a petition for the FTC to look into the matter.
To BED’s credit, it goes above and beyond by replacing RECs it sells with other RECs it buys, avoiding double counting and allowing commissioning of in-state projects. “All of the RECs we buy and sell are from renewable projects,” says Nolan. “And once we buy the cheaper class 2 renewable credits, we retire them.” While retiring RECs is required under most forms of a renewable portfolio standard (RPS), Vermont is the only New England state that lacks an RPS (though one may be coming).
DIRECT OWNERSHIP OF RENEWABLE GENERATION
Purchasing the hydro plant was a great way for BED to create long-term predictability for the city. However, while BED’s purchase of wind power is helping build more wind farms in New England, its purchase of power from the Winooski 1 hydro plant brings up the question of additionality. Additionality means that a project introduces new renewable energy onto the grid beyond what would have happened without the project. The Winooski 1 hydro plant has been producing renewably powered electricity since 1993 and selling it to utilities throughout Vermont. BED purchasing this power means that Burlington can claim to purchase all its electricity from renewables, but has it added more renewable energy to the grid? It really just means that whichever utility was previously buying the power from the hydro plant now has to buy it from somewhere else, but does not necessarily mean that more renewable energy is being put onto the grid.
Yet taken collectively, BED’s investment in wind projects, REC trading, and purchase of the hydro power have helped Burlington quickly reach its climate goals while generating new projects in its state and keeping costs low. “What Burlington has done represents the kinds of opportunities available to creative, early-mover communities,” says RMI electricity principal James Mandel. “Others who are considering a move like this should definitely take note.”
DIFFERENT APPROACHES TO 100 PERCENT
How a community decides to pursue a 100-percent-renewable portfolio in today’s market depends on the community’s goals. Bringing new projects online creates jobs and puts more renewable energy into the grid, yet can take time and effort. REC purchases are a nice approach if a community’s priorities are cost and speed. Purchasing an already existing renewable energy plant allows direct ownership but does not necessarily put more renewables onto the grid. And there is the approach that RMI advocates, investing directly in the community through distributed renewables and efficiency, which can have the most transformative benefit, yet requires real work and commitment.
“Ultimately, as more communities move towards these targets, credit purchases and acquisitions of existing plants will not be sufficient,” says Mandel. “There just isn’t enough supply there today. Communities will need new local projects along with a healthy dose of efficiency to keep costs down.” Yet Burlington has taken a great step to join the small handful of communities that can now claim to be 100-percent renewably powered.
The state of Vermont has a goal to produce 90 percent of its energy from renewable resources by 2050, including electricity, heating, and transportation. The latest developments in Burlington help move the state one step closer to that goal.
Image courtesy of Burlington Electric Department.