Economic Impact of a New Hampshire Renewable Portfolio Standard. University of New Hampshire Ross Gittell, Ph.D. Matt Magnusson, MBA 2/21/2007

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1 Economic Impact of a New Hampshire Renewable Portfolio Standard University of New Hampshire Ross Gittell, Ph.D. Matt Magnusson, MBA 2/21/27

2 Overview of Presentation General Renewable Portfolio Standard (RPS) Background Overview of NE RPS Market Proposed NH RPS Legislation NH RPS Economic Impacts Recommendations Summary A NH RPS is expected to be relatively low-cost and have potential long-term broad benefits

3 RPS Background RPS require a specific % of electricity sold to retail customers come from renewable energy resources About half the US states (23) have RPS requirements In NE, NH is the only state not to have passed RPS legislation

4 RPS Background NE is a regional energy market, any qualifying renewable energy (RE) generation can be used to meet NE RPS Renewable Energy Certificates (RECs( RECs) represent 1 kwh (1 MWh) ) of RE generation and accepted by all NE RPS Alternative Compliance Payment (ACP) is a penalty payment paid by the utility or the competitive electric supplier if they are unable to purchase enough RECs to meet their RPS obligation

5 RPS Purpose Reduce dependence on foreign and imported sources of energy Reduce risk and volatility in energy costs Reduce air pollution, including greenhouse gas emissions (Global Warming) Foster new local employment and business development opportunities

6 State RPS CT ME MA RI I (New) I + II (Existing) III (Efficiency ) New or Existing New New New or Existing % 28 5% 3.5% 1.5% 29 6% 4% 21 7% 4% 5% 2.5% 215 7% 4% 8% 22 7% 4% 15% 14% 225 7% 4% 14% VT RPS goal of load growth, mandatory RPS in 213, if goals not reached

7 NE Market Conditions REC prices in the region for new RE near the ACP $45 for CT Class I (CT ACP $55) $54 for MA (MA ACP $57.12) REC prices for existing RE are significantly lower than the ACP (almost having no value) $.15 for ME (ME ACP not defined) $.6 for CT Class II (CT ACP $55) REC Prices as of 1/27. Source: Evolution Markets

8 Proposed NH LSR-H-28 RPS Class I (New) 28 Class II (Solar) Class III (Existing Biomass < 25 MW) Class IV (Existing Hydro <= 5 MW) % 3.5%.5% 29.5% % 4.5% 21.4% 5.5% 211.8% 6.5% % 6.5% 213 4%. 6.5% 214 5%. 6.5% 215 6%. 6.5% %. 6.5% ACP Class I -$56 ($28) Class II -$15 ($28) Class III -$28 ($28) Class IV -$28 ($28)

9 Modeled RPS Costs Current NH Retail Electric Costs-$1.4 billion Modeled RPS Cost Direct cost % Change Retail Rate Change Residential Household Monthly Change 28 $7,14,.5% $.6 $ $3,, 1.8% $.2 $ $23,82, 1. $.11 $.65 Maximum RPS Cost Direct cost % Change Retail Rate Change Residential Household Monthly Change 28 $13,327,.9% $.1 $ $72,721, 4.4% $.51 $ $159,877, 8.% $.95 $5.53

10 NH RE Capacity Change Wind BioMass LFG/BioGa s Solar PV Small Hydro Capacity (MW) 8 Wind BioMass 6 Solar PV LFG/BioGas Small Hydro

11 5% Wind Scenario RPS compliance costs increase from the base case scenario, but overall retail electric rate impact is modest $.33 to $1.54 increase in NH residential household average monthly utility bill Employment and state revenue remain the same as the base case scenario Wind development decreases by 383 MW, but biomass development increases by 125 MW relative to the base case scenario

12 NH Economic Benefits ~$1 million in annual state revenue by 225 Opportunity for NH supplier firms in industries with high (relative to US average) employment concentration For example: Logging, electronic component manufacturing, wiring device manufacturing In 25, existing renewable energy facilities Employed 194 Paid $12.8 million in annual wages

13 NH Job Development Wind Geothermal BioMass LFG/BioGas Solar Thermo Solar PV Small Hydro Direct Employment Multiplier Total Employment ,23 1,94

14 Recommendations Implement a renewable energy development fund financed through a renewable energy Systems Benefit Charge to assist in-state development Add an Energy Efficiency Class to RPS to reduce cost of RPS Consider the effectiveness and cost of the proposed NH class structure Utilize long-term contracting for power and RECs to assist in-state development

15 Conclusion A NH Renewable Portfolio Standard (RPS) can: help diversify NH s and the region's power generating capacity and reduce dependency on imported sources increase the potential for new renewable energy development within the state and also help to support the continued operations of existing renewable energy resources There are costs associated with a RPS, however, the net economic and environmental benefits are expected to be positive for New Hampshire With the regional energy market, a NH RPS does not guarantee instate development of renewable energy facilities. Consideration should be given to complementing RPS with efforts to support renewable energy and related economic development. This could include long-term contracting for renewable energy and dedicated funding for renewable energy development

16 Questions?

17 Proposed NH LSR-H-28 RPS 25, 792, , 5, 16% 2,34,. 44, NH Existing 4, RI Existing CT Existing 3, ME 2, 1, ,97, % 211 Class III & IV Existing 6.5% 21 Class II Solar 7, 29 Class I 225 New GWH Class III & IV Existing 5, 213 4,9 MA 212.4% CT Class I 1, 211 Class II Solar RI New , NH New 29 NH Solar 15, 28 Class I 21 New 2, 28 Class Generation Required (MWh) Thousands MWh Year % of Retail Load