News & Press

Clean energy industry salivating for CT’s $1B

Hartford Business Journal

May 21, 2012

CORRECTION: Connecticut Light & Power and United Illuminating will buy renewable energy certificates from the winning bidders, and not the power generated from the installations, as an earlier version of this article incorrectly stated.

Clean energy companies from across the nation are drooling over $1 billion in renewable credits Connecticut will start awarding this summer.

Businesses and developers peddling various technologies will amass for a bidders’ conference May 21 to learn how they can land 15-year contracts to support renewable energy development throughout the state.

“I don’t think that there is anybody in the industry that doesn’t want to be part of the program,” said Michael Trahan, executive director of trade association Solar Connecticut. “They’ve had a year to begin talking up commercial customers, and they are ready.”

More than just another government incentive, clean industry officials see Connecticut’s new renewable energy credit initiative to as a long-term solution to some of the problems created by similar programs in other states. The Connecticut credit amounts remain stable over the life of the contract, allowing developers the certainty they need to secure the capital necessary for renewable projects.

“The signal difference in Connecticut is the long-term contract component,” said Dan Berwick, director of policy and business development for San Diego-based Borrego Solar. “The policymakers in Connecticut are going to end up very happy with the projects they get.”

Launched under the energy policy reform legislation the Connecticut General Assembly passed last July, the renewable energy program is split into two divisions:

• Credits, called ZRECs, for zero-emissions technologies, such as solar and wind;

• And credits, called LRECs, for low-emissions technologies, such as fuel cells and biomass.

Under the ZREC program, electric utilities Connecticut Light & Power and United Illuminating will offer a combined total of $8 million annually under 15-year contracts to zero-emissions installations under one megawatt. CL&P and UI will make these awards each year for the next six years.

Under the LREC program, CL&P and UI will offer a combined total of $4 million annually under 15-year contracts to low-emissions installations under two megawatts. The utilities will make these awards annual for the next five years.

The credits are paid out as cash to the developers to help finance and support the projects. CL&P and UI are not agreeing to buy power from the winning bidders, but are rather buying the renewable energy certificates created over the life of the contracts.

To win the contracts, the bidders are competing over who can offer to sell the power from their installations at the lowest price per kilowatt-hour they generate. CL&P and UI will pick the winners starting with the lowest bid, and then keep awarding contracts to the next lowest bidder until all of that year’s money from the program is spent.

CL&P and UI essentially are trying to buy as much renewable electricity as possible with $8 million annually for ZRECs and $4 million annually for LRECs.

Over the 21-year life of the program, CL&P and UI will have committed $720 million for ZRECs and $300 million for LRECs. Ratepayers will cover the costs through increases in their bills.

This year, what businesses will learn at the bidders’ conference May 21 is they are competing for $120 million worth of ZRECs and $60 million worth of LREC spread over 15 years. The companies have until June 12 to submit bids, and CL&P and UI will notify the winners on July 17.

“People seem to be excited about it,” said Christie Bradway, CL&P manager of renewable power contracts.

Consulting Engineering Services, Inc. of Middletown has been busily trying to land customers for this program since it was first announced last July. The company plans to keep selling right until the June 12 deadline.

“We are kind of hoping a few of our projects will be picked,” said Robert Wassung, CES solar team leader. “We are not in a position to finance them outright without the credit.”

The winning projects must start generating power within one year after their selected delivery date.

CL&P and UI will give a 10 percent local preference to projects using components either researched, developed or manufactured in Connecticut.

CL&P and UI won’t pick certain technologies over others and simply will decide based on the lowest bids. The fuel mix of the awarded ZREC projects could be 100 percent solar, 50/50 solar and wind, or any other possible breakdown.

“It may turn out that certain technologies have natural advantages,” said Ed Crowder, UI spokesman. “We are not going to create an additional advantage for any one technology.”

Connecticut’s fuel cell industry feels confident it can land a significant portion of the LREC contracts, said Joel Rinebold, director of energy initiatives for the Connecticut Center for Advanced Technology. Fuel cells are affordable for the type of power they generate, and the 10 percent local preference is guaranteed as all or part of the fuel cells are made at places such as UTC Power in South Windsor, FuelCell Energy in Danbury or Proton Onsite in Wallingford.

“There is a sense of confidence that the fuel cells will be able to compete for a high degree of energy reliability,” Rinebold said. “They’ve been attracted to this program.”

Rich Shaw, UTC Power general manager of eastern region sales, said the LREC program will expand the deployment of fuel cells throughout the state. As that volume increases, UTC Power can find ways to improve the cost-savings of the technology, which will further increase sales.

“Connecticut is doing well by its in-state manufacturers,” Shaw said. “If we are deploying multiple fuel cells over multiple years, that’s exactly the type of program that Connecticut should be putting forward to where these support programs aren’t necessary anymore.”

While other states offer RECs for solar or other zero-emissions technologies, Connecticut is leading the nation in offers for low-emissions technologies. Coupled with long-term, stable financing for these projects, and the Connecticut program will be a prototype for further support of the industry, Shaw said.

“We are going to see more and more interest in the surrounding states,” Shaw said.

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