Central Hudson eyes solar power
 
Central Hudson will soon present a plan to the state Public Service Commission that would allow the utility to build and own solar power generating equipment to use in providing electricity throughout the Hudson Valley. Â
The proposal would require a change in PSC energy policy which, since the 1990s, has not allowed utilities to own the means of generating power. And it could provide a key boost to efforts at creating a solar power component to the area economy. Â Â Â Â
I think there is a role for utilities advocating and actually constructing renewable energy,” said Carl E. Meyer, president and CEO of Central Hudson, saying the utilities have the financial ability and industry expertise to smooth the transition of renewable energy into mainstream power generation. “We”™re kind of a natural fit for it, we can do this and do it well and be held accountable for it.”
“In the next few months,” Meyer said, Central Hudson will reveal a detailed plan including what sites might be used as a so-called solar farm and what the cost structure would be. “I think we are going to be the first (utility)Â in the state,” to begin producing renewable energy for sale to its customers. He said that local state lawmakers have been supportive and that the state Public Service Commission “has indicated” they are ready to approve such plans.
 “If they can demonstrate that there is advantage, significant advantage to the consumer,” said PSC spokesman James Denn, the commission would approve a plan that would allow utilities to both produce and market electricity generated by renewable energy.
He said the commission is wary of what he called “vertical market power” a reference to the monopoly New York”™s utilities enjoyed in the roughly 100 years of power production until the state PSC changed the rules governing utilities in the deregulation effort in the 1990s.
Denn cited the deal announced last September with Iberdrola Wind Energy”™s $4.6 billion acquisition of Energy East a power company headquartered in Maine with almost 2 million customers in New York. The PSC decision required Iberdrola to sell off some fossil fuel powered generating capacity the company acquired in the deal, in addition to making some $2 billion in investment in wind energy in New York. Given that as a template, Denn suggested that the PSC would be willing to work with Central Hudson and the state”™s other utilities to fashion an agreement that would allow them to enter into ownership and distribution of renewable power.
“It”™s a balancing act,” Denn said. “A utility could move forward with a renewable energy project if they can demonstrate that the advantages outweigh the concerns about vertical market power.”
“My focus here in the Hudson Valley is on solar photovoltaics as the best opportunity for a renewable energy source in the Hudson Valley,” Meyer said. “We are seeking permission to do this. We have made it very clear we think this is a business opportunity,” Meyer volunteered “for full disclosure” that he is on the board of directors of The Solar Energy Consortium, a nonprofit, public-private partnership seeking to create a solar power manufacturing cluster in the Hudson Valley and state.   Â
 He said that companies that come to the area to investigate setting up facilities for solar power production are “seeking off-take for their product.” By that, he means they are looking for Central Hudson to develop solar farms and install solar modules on roofs to provide a market for their products. “Its very important to them to find a market before they settle here,” Meyer said. “They are looking for an opportunity to jumpstart a market.”Â
He said that a so-called solar farm as envisioned for say, the southwestern section of the country, would not necessarily work in the Hudson Valley, where there is not as much vacant land. He said Central Hudson envisions an approach using, for example, the vast roof tops of a Wal-Mart or some other large structure, as well as “distributed generation” where customers install solar power panels on their homes and businesses for their own power needs and to sell excess power back to the grid.
 Meyer acknowledged that such a system would require a new method of calculating return on investment for the utility. Currently, revenue is tied to the amount of power Central Hudson wheels over its infrastructure, but that model would be problematic in cases of distributed generation where the power is produced on site. He said the state needs to prioritize creating a viable “revenue decoupling mechanism,” to set up an economically viable model for utilities seeking to meet state goals of reduced energy consumption.  Â
Besides economics, there are environmental considerations, he said. The state has set ambitious goals seeking to attain some 25 percent of the state”™s energy from renewable sources by 2025. “I think the time has come, if the state is going to be accomplishing  their goals, that we be allowed to pursue generating renewable energy as an option” Meyer said.
Kevin Cahill, chairman of the state Assembly Energy Committee, said he supports bringing utilities into the business of generating renewable energy, but noted it is a complicated process, with responsibility for energy policy divided between the PSC, the state Legislature and the governor”™s energy commission. Cahill noted that the Long Island Power Authority and Con Ed are also exploring renewable energy projects, perhaps including wind turbine off the shores of Long Island and New York. But he said indications are Central Hudson is a bit ahead in the planning process.  Â
“I am thinking Central Hudson may be a legitimate and reasonable pilot to demonstrate to the other utilities this is a good thing to do,” Cahill said.