United States

United States

Money on the table for next four years -- Potential in Northeast boosted by fund and green power option

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Wind companies should soon be able to compete for $105 million set aside for renewables over the next four years in New Jersey. They could well win half of the funding, or about $50 million, says Dave Wooley, who lobbies for the American Wind Energy Association (AWEA) in both New Jersey and New York. The $105 million has been raised through a wires charge -- a "systems benefit charge" -- levied over 2000-2004 as part of the deregulation of the New Jersey electricity market.

Wooley's prediction follows an announcement by key stakeholders in the market of a $423 million compromise plan to boost renewable energy and efficiency over the next four years. The plan, which incorporates funding for projects by customers, was expected to be approved by the New Jersey Board of Public Utilities in late March or early April. It is backed by the Natural Resources Defence Council (NRDC), AWEA, and six New Jersey utilities.

Money will be distributed for R&D and market development. Overall, the plan proposes spending $70 million on renewables this year, $108 million next year, $120 million in 2002 and $125 million in 2003. Of that, the funds available for the customer sited projects -- most likely small wind turbines and fuel cells -- are expected to range from $3 million to $14 million yearly.

The US Northeast is considered one of the greatest areas of potential for wind over the next few years and within the region AWEA is concentrating its efforts on New Jersey and New York. The east coast has not only a huge population concentrated in a relatively small area by American standards, it also has a great deal of air pollution.

"This settlement sets the stage for what promises to be the best energy efficiency and renewables programs in the country," says NRDC's Nathanael Greene. "The settlement is the result of a lot of people working hard together and a lot of give and take." A competing settlement did not contain any utility involvement in distributing the funds.

Funding for renewables in the years following the first four year period has yet to be decided. But the level, for the next five years, is expected to be about the same or even higher, says Wooley. And while the market looks promising, he says: "The big question now is whether the wind industry will go prospecting for sites." He says the state, parts of which are highly developed, has two to three good wind sites that could probably be developed without much controversy.

Green option

As interest in the New Jersey market heats up, it now appears customers will also have the option of buying green electricity. GreenMountain.com, a retailer of electricity from clean sources, had previously said it would not enter the market because of deregulation rules that made it hard for independents to compete (Windpower Monthly, November 1999). But GreenMountain.com now says it will launch some of its products -- several of which contain wind -- in the Garden State.

One of the key reasons for the change of heart is that New Jersey regulators have agreed to accept faxed signatures from customers who want to change energy supplier, says John Holtz, GreenMountain's New Jersey representative. Previously, they were insisting on a "wet signature," which made it far harder for retailers to sign customers up, especially on-line. It also threatened to double the cost of sign-ups -- and reduce those signing up by about one-third. "It's house to house combat," says Holtz. The company is still lobbying for options that would make signing up customers even easier -- acceptance of sign-ups on-line or from phone calls initiated by the customers themselves. Neither is accepted, yet.

Another reason for GreenMountain's decision is the interest already being shown in green power, even though no one is yet selling it in New Jersey. The retailer has been approached by "aggregators" -- groups aggregating electricity customers -- and by individual customers who have seen its advertisements broadcast from next-door Philadelphia, which has the most active green power market in the country.

Interest in environmentally friendly options is also indicated by one intriguing product already on sale in the New Jersey market: Clear Choice. Offered by Virginia-based Power Direct in both New Jersey and Pennsylvania, the product offsets emissions. When a customer buys Clear Choice, Power Direct buys sulphur dioxide and nitrogen dioxide emissions credits. It also plants trees and supports other "carbon sequestration" or carbon reducing options.

Hurdles still there

GreenMountain, which received its state license on February 2, may initially launch its products in only one area of New Jersey, to build up momentum for a state-wide launch. The going, however, could be uphill. Despite the state regulators' decision on signatures, there are still major hurdles. An energy retailer such as GreenMountain must submit a bond with the state and with the local power grid. Utilities also have the right to require a bond based on 60 days of peak customer usage at peak hours -- which for GreenMountain would amount to $4-6 million, says Holtz. Overall, it would cost the retailer some $8 million in security bonds to enter the market

Renewable energy retailing has narrow margins. Thus market rules that discourage competition, such as those in New Jersey, may mean the difference between a profit and loss. Furthernore, although competition opened last August, only 24,000 residential users out of 3.3 million have changed supplier.

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