The early returns for Fairfield County at the dawn of Connecticut”™s $1 billion investment in renewable energy? Six projects ”“ presumably with more on the horizon as companies see the cost benefits.
In the first installment of what is planned as a $1 billion program over more than two decades, Connecticut Light & Power Co. accepted just a half-dozen Fairfield County bids under a new state law that provides financing for projects, considering 26 in all.
Without revealing the identities of bid winners in Fairfield County, CL&P approved photovoltaic installations at two commercial sites in Stamford and one each in Norwalk, Newtown, Brookfield and Bethel.
In addition to solar, CL&P also approved projects involving fuel cells ”“ without specifying whether Danbury-based FuelCell Energy Inc. will be a supplier. CL&P considered but did not award funding to a few projects involving wind turbines and small-scale hydro energy projects.
This summer, Connecticut created two new classes of renewable energy credits to spur generating equipment ”“ a zero-emissions renewable energy credit (ZREC) and a low-emission (LREC) option.
Hartford-based CL&P said it received nearly 300 bids by the deadline in mid-June, ultimately selecting 84 with some bidders subsequently dropping out to produce 76 projects in all. For its part, New Haven-based United Illuminating accepted 21 bids from 72 submitted throughout its service territory, at deadline having yet to specify the locations of those projects.
Both CL&P and United Illuminating agree to enter 15-year contracts to buy power from “behind the meter” at renewable energy sources on customer sites. The process includes a fast-track approval process for clearing municipal approvals to install needed equipment.
According to a Washington, D.C.-based renewable energy finance company called Sol Systems L.L.C., after developers were contacted in July to start the CL&P contract process, it became fairly clear that the winning bids for projects were more speculative in nature and did not have a high probability of execution and completion, with some developers having had to drop out of the program due to their inability to obtain and secure financing for projects early on.
CL&P has acknowledged the insufficiency of some bids, while saying that is to be expected in any new program attracting such a large number of bidders.
Winning bidders will receive one renewable energy credit or REC for each megawatt hour of electricity produced, with a megawatt equal to the energy of anywhere from 700 to 1,000 homes.
When the generation system is operating, each kilowatt hour of electricity that it produces is measured, and when 1,000 kilowatt hours are produced ”“ or one megawatt hour (MWh) ”“ a renewable energy generator gets credit for producing one REC as tracked by the New England Power Pool overseen by ISO New England.
To qualify, projects cannot have been operational before July 2011 and cannot have received funding previously from the Clean Energy Finance Investment Authority or its predecessor the Connecticut Clean Energy Fund, other than low-interest financing.
The payback can be significant.
“Weighted average prices of accepted bids ranged from $60 per MWh for LRECs and $100 to $150 per MWh for ZRECs,” said Andrew Price, senior vice president of Maine-based Competitive Energy Services Inc. “At these prices, consumers in Connecticut should consider participating in the next competitive RFP, due out in April 2013.”
