Publications

Achieving NH’s Renewable Energy Goals: Challenges and Opportunities

Heidi L. Kroll
Published on : 2008-12-05

New Hampshire faces both opportunities and challenges as it looks toward achieving its renewable portfolio goals. The state’s Renewable Portfolio Standards (RPS) law1 requires that 25% of the state’s electricity supply come from renewable resources by 2025. Many opportunities exist for renewable projects seeking to fill this niche. However, challenges abound as well that must be addressed as soon as possible if New Hampshire is to meet its RPS goals.

In 2006, 10.6% of the power generated in New Hampshire came from renewable resources, compared to 12.7% for New England.2 At that time, New Hampshire had 685 megawatt’s of renewable power that generated nearly 2.3 billion kilowatt-hours. Across the region, 3,391 megawatt’s of renewable power generated 16.7 billion kilowatt-hours.

Under the NH RPS law, the state’s renewable power supply must come from both existing and new renewable facilities, namely those that began operation after January 1, 2006. The annual RPS percentage requirements for existing renewables remain relatively flat over time, while the requirements for new renewables ramp up considerably. In 2009, new renewables must supply 0.5% of New Hampshire’s electricity needs, and by 2025, the requirement exceeds 16%.

A variety of new renewable projects are currently engaged in the planning process to locate in New England. As of March 15, 2008, there were 2,465 MW of renewable projects in the Generator Interconnection Queue.3 If all of these projects were to be built, they would produce an estimated 10.1 billion kWh per year. However, history has shown that only about 40% of planned capacity actually gets built, which means that the new renewable projects in the Queue might only result in 986 MW of capacity and 4 billion kWh of generation per year. Even if all of these renewable projects in the Queue were to come on-line, they would barely produce enough power to meet New England’s RPS needs in 2016 and would only generate about two-thirds of the power needed to meet the region’s RPS requirements in 2020, according to ISO’s estimates.4 Although the current economic downturn might reduce these forecasted requirements to some extent, it might also lower the amount of planned capacity that actually gets built below the historical average of around 40%.

So what does New Hampshire’s RPS mean in terms of needed renewable power by 2025? Assuming New Hampshire will consume between 14.1 billion kWh and 15.7 billion kWh in 2025,5 the state will need approximately 3.4 – 3.7 billion kWh from renewables that year. Of that, about 2.3 – 2.6 billion kWh will need to come from new renewable facilities. To put this into perspective, this would require the output from at least 400 new wind turbines, 6 new wood plants, 2,200 MW of new solar (photovoltaic), or 600 MW of new hydro.6 As a practical matter, a mix of new renewable resources will be needed due to differences in their availability, capacity factors, reliability, and proximity to load, and due to goals related to diversification and risk management across all resources. Furthermore, these order-of-magnitude estimates assume continued operation of the existing fleet of power plants, including natural gas, oil, nuclear, coal, and existing renewables, and continued efforts to integrate the use of demand-side resources.

All new renewable projects face a host of challenges, some of which are generic and some of which are technology-specific. One common challenge is the availability and cost of capital. A recent Wall Street Journal article reported on how independent power producers have been hurt by the credit crunch. The article speculated that the financing pool which smaller IPPs have historically enjoyed may never regain its former depth.7 A week later, the Wall Street Journal reported that many of the nation’s power companies, including big utilities, are abandoning plans for new renewable projects.8 For example, the article states that FPL Group Inc., one of the country’s biggest producers of wind power, is cutting capital spending for wind projects by nearly $1 billion next year, reducing the capacity of planned projects by 27%., and Duke Energy Corp. removed $400 million from its 2009 budget that was earmarked for wind power.

Another common challenge relates to siting of new facilities. Concerns often emerge about a project’s potential impacts on the environment, wildlife, natural resources, health, views, noise, and traffic, to name a few. Owners of potential projects must invest significant time and money to address these concerns. If reaching resolutions begins to take too long or cost too much, many projects lose their economic viability and investors are forced to abandon projects.

A third common challenge is transmission. Many of the ideal sites for renewable projects are located in remote areas where the transmission system requires costly upgrades or expansions to accommodate one or more new projects. Cost allocation is a key issue, along with the potential siting issues mentioned above. New Hampshire is all too familiar with the challenges posed by transmission needed for new renewables, as stakeholders continue to work on ways to share the costs of upgrading the transmission system to accommodate new renewable projects in the North Country.

A fourth common challenge has been the availability of affordable equipment needed at renewable energy sites. Up until recently, the growth in demand for renewable energy was reportedly straining industry supply chains, manufacturing capacity, and installation crews. At the same time, prices for key materials such as steel, silicon (used to make photovoltaic cells), and other raw materials used to make renewable generation equipment were increasing. Together, these factors lead to longer lead-times to obtain equipment that had become more expensive. While prices have started dropping more recently, it remains to be seen if new partnerships can be forged to ensure that capital is available to invest in new renewables.

New renewable projects that would like to locate in New Hampshire also face technology-specific challenges. The number of biomass plants, for example, is constrained by the supply of wood that can be economically transported to the plant. Two recently released studies suggest that there may only be enough wood for 1 – 2 new biomass plants in the North Country.9 Wind farms must also locate where the wind is greatest. In New Hampshire this means locating on ridge crests in the White Mountain region and western portions of the state, and possibly in certain areas along the seacoast.10 Wind facilities also face the challenge of being an intermittent resource, dependent on when the wind blows. Similarly, solar (photovoltaic) installations are dependent on when the sun shines and have an even lower capacity factor than wind installations do. The cost of solar technologies also remains a barrier in many applications.

With a goal of 25% by 2025 now in place, New Hampshire must turn its focus to meeting the challenges facing renewable projects. It will take collaboration, cooperation, and unwavering commitment if the state is to fulfill its vision for a cleaner and more diverse electricity supply that is both reliable and affordable for New Hampshire citizens and businesses.


Footnotes.

1. RSA 362-F.

2. State Renewable Electricity Profiles 2006, May 2008, Energy Information Administration.

3. ISO New England’s 2008 Regional System Plan, October 16, 2008, Table 8-7, “New England Renewable Energy Projects in the ISO Queue as of March 15, 2008.”

4. ISO New England’s 2008 Regional System Plan, October 16, 2008.

5. Estimates are based on those from ISO New England’s 2008 Regional System Plan, October 16, 2008. The higher end of the range reflects an average annual load growth of 1.6% used by ISO and the lower end of the range is approximately 10% below the higher end, simply to reflect reduced usage that may result from an economic slowdown, greater energy efficiency, and/or other factors.

6. Assumes each wind turbine would be 2 MW and have an average capacity factor of 33%; each wood plant would be 50 MW and have an average capacity factor of 90%; solar PV would have an average capacity factor of 12%; and hydro would have an average capacity factor of 45%.

7. Wall Street Journal, “Energy Prey Can Find Partners,” November 14, 2008.

8. Wall Street Journal, “Clean Energy Confronts Messy Reality,” November 20, 2008.

9. “Timber Supply Study for the North Country of New Hampshire,” Prepared by Landvest, Inc. for the North Country Council, Inc., November 2008 and “Biomass Fuel Availability, Berlin, NH,” Prepared for Clean Power Development, May 2008.

10. U.S. Department of Energy’s wind map.


Return to Energy/Utilities articles
Return to Resources index