October 11, 2012

CL&P awards $6M to 76 renewable projects

Contributed photo
Contributed photo
Rooftop solar panels at IKEA's New Haven store installed in September. The state's two utilities picked 87 solar projects similar to this one for special funding in the first year of the state's $1 billion ZREC/LREC program.

Berlin electric utility Connecticut Light & Power awarded $6 million annually over 15 years to 76 solar and fuel cell projects in Connecticut, in the first year of the state's 21-year, $1 billion program to proliferate clean energy installations.

The selection of only two types of renewable technologies in the first year creates a problem in the basic concept behind the $1 billion project, which called for a range of technologies to be selected. CL&P received 296 bids in total, and all were either solar or fuel cell proposals except for three hydro projects and two wind projects.

The program did encounter some early bumps in the road during the process, as many initial winning bidders dropped out due to either administrative requirements or unrealistic bids that couldn't secure financing. In the end, CL&P picked the lowest cost projects of the remaining bidders, as the law establishing the program requires.

"As for the process, we think it went smoothly, especially given the number of projects that had to be evaluated," said Caroline Pretyman, spokeswoman for Northeast Utilities, which owns CL&P.

CL&P and New Haven electric utility United Illuminating are administering Connecticut's Zero Emissions and Low Emissions Renewable Energy Credit program – better known as ZREC/LREC. The two utilities have been narrowing down about 400 applicants since June, trying to pick the most realistic projects with the money available this first year.

For ZREC technologies such as solar, wind, and hydro, the utilities will enter into $8 million worth of 15-year contracts annually for six years. For LRECs, such as fuel cells and biomass, the utilities will enter into $4 million worth of 15-year contracts annually for five years. CL&P is awarding 80 percent of the money, while UI awards 20 percent through ratepayer funds.

The program gives credits to the various awardees depending on how much power they produce. The CL&P awardees will produce 25 megawatts.

UI filed their list of awardees in September, picking 19 solar projects for ZREC funding and 2 fuel cell projects for LREC funding. Combined with the CL&P awardees filed with the Public Utilities Regulatory Authority on Wednesday, 87 solar projects will receive ZREC funding and 10 fuel cell projects will receive LREC funding. No other renewable technologies were selected.

The flaw in the desired diversity approach to the technologies lies in the selection process, where CL&P and UI are instructed by the law to select the lowest cost projects. Solar and fuel cells had a natural advantage in the program because they are the cheapest of the renewable technologies in their respective categories, enabling them to underbid the other technologies.

Dan Esty, commissioner of the Department of Energy & Environmental Protection, said policymakers may revisit the program to see if any changes can be made toward the desired outcome.

However, the portfolio approach conflicts with another basic concept behind the program: contracting with the most projects with the money available. Under this desire, the utilities simply pick the lowest bidders, which may all be solar and fuel cells.

Among CL&P's awardees filed Wednesday, 21 large-scale solar projects will receive $101 per credit, 47 medium-scale solar projects will receive $149 per credit, and eight fuel cell projects will receive $60 per credit. Similar programs for solar technology in Massachusetts and Maryland pay about $200 per credit.

The identities of the recipients remained confidential in the PURA filing, although they may be made public during the regulatory process.

After PURA approves UI's procurement plan, the utility plans to launch a separate ZREC program for small projects of 100 kilowatts or less to be awarded on a first-come, first-served basis. The price of those credits is anticipated at $149.

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