Vermont’s
renewable energy program- ‘Sustainably Priced Energy Development Program’
(SPEED) was enacted by the Vermont legislature in 2005 in pursuant to the long
term energy policy goals of Vermont as provided in 30 VSA §202a. The SPEED
program is created in 30 VSA §8005 with the goal to ‘maximize the benefit to
ratepayers from the sale of tradable renewable energy credits that may be
developed in the future’. The Vermont legislature amended the statute in 2012
that no longer contained required the Vermont utilities to retain the renewable
energy credits[1].
This allowed for the Vermont utilities to sell their renewable energy credits
(REC’s) to out of state utilities. There is where a number of environmentalists
and professionals have cried foul[2].
Critics have
argued to go far as to call the Vermont’s SPEED system a ‘sham’[3].
They point that this system essentially allows for the REC’s to be counted
twice, first when the utilities in Vermont sign contracts with the renewable
energy developers and additionally when they sell those RECs to out of state
utilities. By selling the credits to other states, the ‘green power’ produced
from the renewable companies is effectively counted as ‘brown power’ thus
increasing the carbon footprint of the state. This system also sends wrong
price signal to the other states, which discourages the development of
renewable projects in these states, which is contrary to the whole idea of
establishing programs such as SPEED and RECs.
This program
however has been able to provide significant benefits in Vermont. The SPEED program
has been successful in incentivizing investments in renewable energy. The
revenues from the sale of RECs have been instrumental in providing significant
savings to the ratepayers in Vermont.
The question raised
is if Vermont is gaming the system for its own good. In simple terms it does
not appear to, RECs are essentially an economic good that the Vermont utilities
sell in the free market to the buyer at a fair price. Vermont gets to build
more renewable energy plants while at the same time help fulfill the needs of
other state’s goals to achieve their level of renewable energy standard. This
however is morally and economically unsound, the whole system of RECs works with
the credits being scarce goods, if the units are being traded for more than
once then it automatically multiplies the amounts of RECs produced for nothing.
This will make it look in that there is twice as much as renewable energy
projects than there actually is. This also undermines the need of others states
to develop their own renewable energy projects.
No comments:
Post a Comment