Over the years, CSPPA has developed a suite of policy options that would protect Connecticut's small generators and, by extension, the benefits to hydropower workers and communities.
CSPPA takes on policy initiatives that reinforce the value and benefits of small generators. Many of Connecticut's small generators were born in the 1980s when Connecticut DPUC (now PURA) approved a nation-leading decision to provide standard long-term, front-loaded Power Purchase Agreements (PPAs) to renewable generating facilities. Today most of these PPA's have expired leaving the projects to scramble for feasible energy rates. Unfortunately many are trying to live on the low Rate 980 rate which is the ISO spot market wholesale avoided cost, last year averaging only about 2 cents/kWh. Current policies leave these small hydropower facilities behind. Too often, the state's existing small generators are omitted from policies designed to incentivize the adoption of renewables, like portfolio standards and net metering.
MA, VT, NH, RI, & NY all have programs to support small hydro in the energy market because they recognize the greater value these small hydro assets actually provide.
Virtual Net Metering allows small generators to sell power directly to end-users like schools without being physically connected. When Virtual Net Metering is not available, the only way for a generator to sell their power is directly to the utility. The generators must find alternative power purchasers or sell at low wholesale rates.
Virtual Net Metering allows the generator to receive a higher power rate while the end-user pays a lower price and directly supports clean energy.
Virtual Net Metering has been successful in many states including Connecticut. However, CT’s program has been oversubscribed (full) by non-hydro renewables for some time and is set to permanently end in 2022.
Renewable Energy Certificates
Renewable Energy Certificates (REC) are a tradable energy commodity produced by clean energy. For every 1 MW of clean energy generated, one REC is also produced. These RECs can be bought and sold as a commodity. Each state has its own definition of what can and can’t qualify to produce a REC.
Some states, including Connecticut, have enacted regulatory mandates to increase the production of clean energy. These mandates are called the Renewable Portfolio Standard (RPS). RECs are used to satisfy the RPS mandates.
CSPPA has advocated for Connecticut’s RPS to recognize small hydropower as qualifying for RECS. A limited number of small hydropower projects in Connecticut are eligible to produce RECs.
Long Term Contracting
The “default” mechanism for small generators to sell their clean energy is the open market. The open market evaluates supply and demand of the power grid to determine the spot value of energy every 5 minutes. With the value of your commodity changing every 5 minutes, it is very difficult to plan large investments and long-term viability. How does one plan a multi-million dollar investment when you don’t know the value of your product for more than 5 minutes?
During the 1980s there were some regulatory programs available to support small hydropower and many of our existing plants were constructed as a result of these programs. However, these programs are no longer available which puts the projects at risk.
Long-term, predictable power purchase contracting is very important to small hydropower. Hydropower projects are life-long assets. Did you know that most of the hydropower projects built 100+ years ago when the power grid was first developed are still operating? Maintenance, relicensing and the installation of increasingly sophisticated fish passage can be costly and threaten the viability of hydro’s future. Long-term contracting with reliable power rates minimizes risk and allows for continued investment.
With over 4,000 dams in Connecticut, most of which are obsolete, it is in Connecticut's interest to protect privately-held dams by ensuring that their productive use, hydropower, continues to be viable. Privately-held hydropower dams are consistently monitored and maintained under strict federal guidelines.