The cumulative capacity of global offshore wind (OSW) has grown at a dramatic rate in recent years, increasing by 25-40% annually since 2011. Due to increasing industry maturity and the development of a specialized supply chain to support the industry, realization of economies of scale, and other factors, the levelized cost of energy from OSW has decreased significantly, which is an encouraging sign for development of this industry in North America.
This report illustrates how European OSW projects have realized dramatic cost reductions, and how the emerging US OSW industry can benefit from this experience. The European OSW industry started over twenty years ago, and currently has over 12,000 MW in commercial operation, while the US only installed its first 30 MW project late last year. With an installed fleet of 3,589 OSW turbines and larger turbines being offered by OSW turbine manufacturers, European projects are offering prices, before consideration of transmission costs, that are competitive with forecast wholesale market prices, promising a market that is sustainable and not dependent on government policy support.
New York State Energy Research and Development Authority (NYSERDA) issued a Request for Proposals to purchase approximately 1.5 million Tier 1 (Tier 1 is equivalent to Class I as the term is used in New England) Renewable Energy Credits (RECs), about 430 MW at a 40% capacity factor.
RFP Schedule: Key Dates
Read Power Advisory’s full review of the NYSERDA RFP here.
On April 28, 2017 the Massachusetts Electric Distribution Companies (EDCs) jointly submitted a request for approval of the 83C Request for Proposals (RFP) for long-term contracts for 400 to 800 MW of offshore wind energy generation to the Massachusetts Department of Public Utilities (DPU). This draft RFP contains a schedule that calls for the final RFP to be released on June 30, 2017.
It is expected that the three existing Bureau of Ocean Energy Management (BOEM) Massachusetts lease holders, Deepwater Wind, Bay State Wind LLC (DONG Energy and Eversource), and Vineyard Wind (Copenhagen Infrastructure Partners and Avangrid Renewables) will submit bids, with one awarded a long-term contract. Given the additional capacity to be procured under the Massachusetts legislation of 800 to 1,200 MW and nascence of the U.S. offshore wind market, there is a significant opportunity for offshore wind development in the Rhode Island-Massachusetts and Massachusetts Wind Energy Areas (WEAs).
This client note discusses the upcoming MA lease auction, potential WEAs and past BOEM auctions.
Power Advisory would welcome the opportunity to assist clients in assessing offshore wind opportunities in RI-MA and other Atlantic markets, including the implications of such development on transmission and on-shore resources.
Read “Massachusetts Offshore Wind Energy Area Lease Opportunities” here.
Power Advisory client Environmental Defence published its backgrounder on Ontario’s electricity prices on February 2, 2017. The report provides evidence that renewable energy – wind, solar and bioenergy – accounts for a relatively small part of provincial electricity bills.
Power Advisory LLC Q4 Ontario Market Report now available.
Over the past few months, there has been much concern (and justifiably so) over rising electricity costs to Ontario’s customers. In part due to this concern, the Ontario Government suspended the Large Renewable Procurement and just announced cancellation of the last round of procurements under the Feed-in Tariff Program. Clearly, there is now heightened awareness to cut costs within Ontario’s electricity sector.
We believe these cost issues are pushing the Ontario Government to find avenues towards potential resolutions, and one of these avenues is the Independent Electricity System Operator’s (IESO’s) Market Renewal Initiative. This is evident based on the Ministry of Energy’s remarks at the Association of Power Producers of Ontario’s annual banquet on November 15, 2016 and then at the November 28, 2016 Empire Club of Canada luncheon.
While Ontario’s wholesale electricity market should evolve through the Market Renewal Initiative, many Ontario-specific conditions and factors must be taken into account. First, Ontario’s Climate Change Action Plan will serve as a foundation within the forthcoming Ontario Government’s revised Long- Term Energy Plan which will set electricity policy. Therefore, evolution of Ontario’s wholesale electricity market must result in outcomes to meet policy objectives. Second, Ontario’s supply mix is heavily ‘baseloaded’ with a very high concentration of non-emitting resources with high fixed costs and low marginal costs. We believe this supply mix will pose unique challenges to evolve Ontario’s wholesale market design, and therefore somewhat limiting application of some components of the U.S. wholesale market designs. Because of these challenges, any wrong turns in the evolution of Ontario’s wholesale market could actually result in higher costs to Ontario’s electricity ratepayers – so let’s take the time to get it right!
On November 23, the Government of Alberta announced its intention to create a capacity market within Alberta’s wholesale electricity market, and released a detailed Alberta Electricity System Operator recommendation paper titled Alberta’s Wholesale Electricity Market Transition Recommendation that provides background and support for the changes being made.
The Electricity Market Transition Report can be found here.
Power Advisory’s summary and commentary on the Government of Alberta announcements is available below.
The following day, the Government announced it had concluded agreements with the coal-fired generation facility owners to cease operation by 2030. These developments are part of fundamentally defining a different path going forward for Alberta’s electricity sector than the one it has been following for almost the past 20 years.
The Coal-Fired Generation Agreement Announcement can be found here.
Power Advisory’s summary and commentary on the Capacity Market Recommendation report is available below.
The various electric distribution companies and state agencies in Massachusetts, Connecticut and Rhode Island announced the results of the Clean Energy RFP Tuesday, indicating that contracts were being negotiated with six developers for about 460 MW. The results are surprising as Power Advisory’s summary shows.
Please click here for Power Advisory’s summary of the Clean Energy RFP
On October 3, the Government of Canada proposed a pan-Canadian pricing benchmark for carbon pollution. The announcement came as Environment Minster Catherine McKenna met with provincial counterparts to discuss coordination of the Pan-Canadian Framework on Clean Growth and Climate Change, and the Paris climate agreement was officially ratified.
Power Advisory has reviewed the announcement and provided our summary and commentary.
Power Advisory Carbon Pricing Commentary.
On October 4th Travis Lusney, Director at Power Advisory, presented a case study on Ontario retail price impacts to the Canadian Energy Research Institute (CERI) at the CERI 2016 Electricity Conference in Calgary.
This presentation provided a case study on Ontario’s Regulated Price Plan (RPP) and the impact on residential and small business consumers in the provinces. The case study briefly reviewed the history of the RPP and reasoning for the recent price escalations for consumers in the program. A discussion on the benefits and drawbacks of the RPP approach was provided along with current changes under consideration. The presentation also presented dynamic pricing concepts in electricity and examples from other jurisdictions. Power Advisory provided commentary on the overall effectiveness of the RPP and Ontario’s retail price impacts.
For more information, please see the CERI 2016 Electricity Conference website
Today the Alberta Government announced a firm target of 30% renewable energy by 2030. As part of this firm target, the government will support an additional 5,000 MW of renewable generation by 2030 (see here). The 30% target had not previously been identified as a firm target, and prior indications had been that the support for renewables would be 4,200 MW by 2030. As such, this announcement marks a strengthening of renewable targets for Alberta.
The 30% energy target will be achieved mainly through the Renewable Electricity Program (REP) that targets large-scale grid renewables. The Government’s news release states that “the province will solicit enough investment in Alberta’s electricity system to meet the target, while ensuring projects come online in a way that does not impact grid reliability and is cost-effective”. The government expects that $10.5B of investment in Alberta renewables will be supported through this initiative.
A few high-level details were released, re: the REP:
- Projects to be based in Alberta;
- Only new or expanded projects;
- Projects must be 5 MW or greater;
- Projects must meet the Natural Resources Canada definition of renewable sources.
Further details on how the REP will operate will be released later this year and will be based on recommendations provided by the AESO. The Government is now working with AESO on detailed program design and remains on target to release details of the program in the coming months.
Work is also underway to improve Alberta’s rules around smaller-scale electricity generation, including micro-generation. Government is engaging expert stakeholders on ways to make it easier for individual Albertans and communities to create their own renewable energy. These small-scale generation initiatives along with energy efficiency programs are being developed under the auspices of the newly created Energy Efficiency Alberta organization.