Cuba and Vermont Perspectives on Energy and Culture, Part 4

| 3/5/2015 9:44:00 AM

This post is a follow-up to three others I have done on Cuba and Vermont, Perspectives on Energy and Culture: Part 1, Part 2 and Part 3 - about my visit to Cuba with a delegation of energy industry professionals, and a Cuban colleague’s visit to Vermont where I developed a similar tour.


After lunch with colleagues, we spoke with the Burlington Electric Department to explore how they are able to claim 100 percent renewable energy generation through wind, solar, and biomass energy production and purchase contracts. An increasing renewable energy portfolio is a goal of many states and utilities in response to customer demand. A renewable energy portfolio standard (RPS) means that the utility is producing and/or buying a certain percentage of energy from renewable sources (imposed or voluntary)to meet their customer’s electrical demand. Investing in renewables is beneficial in many ways across the economy, but there is a fair amount of free-market smoke and mirrors behind the curtains of this concept because the regional electric grid hosts many types of generators fueled by gas, oil, nuclear, and renewable energies. How much of what source is in the mix at any given time involves complex minute-by-minute accounting that makes it impossible to know where the electrons powering your home really come from.

Electricity is bought and sold each day, each hour, based on availability and market cost. As demand increases (during peak use hours or weather extremes), the cost to purchase the commodity, in this case electricity, also increases. Add to this accounting the notion of Renewable Energy Certificates, or RECs (a unit of one megawatt hour of renewably-generated electricity) and things get confusing fast. If a utility owns a renewable energy generator such as a solar, wind, or biomass power plant, the power can be used by the utility that owns that resource, or it can be sold as a REC to other utilities trying to meet their own RPS requirements. Whether to sell, keep, or buy RECs all depends on energy demand and market price. In some cases, a large electrical generator (such as a nuclear power plant) may actually pay into the power market so that they avoid a costly facility shut down and restart if they are underbid by another supplier. In other words, they are paying – not earning – to stay in the power market. You, the end user of this commodity, are insulated from all this fluctuation and your local utility needs a skilled negotiation and accounting team to survive the ups and downs. This is a difficult enough concept for a free-market economist to come to grips with; imagine the perspective of a native from a small island nation where everything needs to be accountable, cost-effective, and transparent in order to exist at all. “Show me the renewable electrons! I want to know what is powering my home!” says the islander. “Impossible!” says the free market power manager. “Ridiculous!” is the reply with the laughter of absurd disbelief.


3/18/2015 5:42:29 PM

I have lived off the grid, and I can tell you that solar energy works, but the best bang for the buck today is with I have lived off the grid, and I can tell you that solar energy works, but the best bang for the buck today is with grid-interactive solar electric (photovoltaic) systems.

3/18/2015 5:41:50 PM

I have lived off the grid, and I can tell you that solar energy works, but the best bang for the buck today is with grid-interactive solar electric (photovoltaic) systems.

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