State’s new 10-year energy strategy focuses on addressing high costs

By: - July 19, 2022 2:35 am

New Hampshire’s state energy strategy sets energy goals for the next ten years. (Courtesy)

With energy costs spiking, the Department of Energy just released its state energy strategy, a document that sets state energy goals for the next 10 years and makes recommendations to policy makers about how to achieve them.

Addressing the high cost of energy is listed as the top priority, with recommendations the state limit government intervention and subsidies and turn to the market to bring costs down.

State law requires the Department to update the strategy every three years. It’s meant to ensure that energy in New Hampshire is safe, reliable, and affordable – and that it comes from a variety of sources, while also protecting the state’s environment and heritage. 

The report drew questions from members of the state’s Energy Efficiency and Sustainable Energy Board during a presentation Friday. Those questions included whether the report adequately values the role of energy efficiency in keeping energy costs low and if it accurately reflects costs associated with climate change.

New Hampshire is already projected to fall behind its neighbors on energy efficiency, renewable energy, and strategic electrification. Some clean energy advocates are concerned that the report’s lack of concrete targets will guarantee that outcome, while relying on the market to deliver the benefits of clean energy will delay economic, health, and environmental benefits.

“The primary goal of this strategy is to pursue cost effective energy policies,” said Josh Elliott, director of the division of policy and programs at the New Hampshire Department of Energy. And the strategy presents the market as the primary driver capable of delivering that goal.

The strategy includes 10 goals for the state:

  • Prioritize cost-effective energy policies. An example of this kind of policy was not included in the strategy.
  • Ensure a reliable and secure energy system 
  • Minimize government barriers to innovation
  • Save energy from cost-effective measures like energy efficiency 
  • Balance cost-effective environmental protection with economic growth
  • Limit government intervention in energy markets
  • Support market-selection of cost-effective energy resources
  • Generate economic benefits without using permanent subsidies
  • Protect New Hampshire from price increases when other states pursue renewable energy 
  • Address issues with siting new infrastructure by restructuring or overhauling the Site Evaluation Committee

An average New Hampshire resident spent $4,078 on energy in 2019, making energy prices in New Hampshire among the highest in the nation, according to the U.S. Energy Information Administration. Elliott said that while data from 2019 isn’t the most recent available, it provides a more accurate picture of energy usage than data from the COVID-19 pandemic.

In August, the cost of electricity will increase by around 50 percent for many New Hampshire residents. High energy costs disproportionately burden the state’s poorest residents as well as minority communities, according to the report. And Elliott noted they impact businesses that are considering expanding or relocating to New Hampshire.

In its report, the Department of Energy blames neighboring states for driving up regional energy costs by purchasing expensive energy. Other causes it identifies include a lack of cheaper resources, uncertainty in markets, inadequate infrastructure, and the state’s geography. “Without a paradigm shift in public policy, New Hampshire is unlikely to see lower energy costs in the short or long term,” it states.

The proposed solutions include using competitive markets to determine where the state’s energy comes from. “Resources should compete in the market, not compete for government policy preferences. Competitive markets should steer those investments, not government sponsorship,” it said.

But clean energy advocates say while clean energy resources are the cheapest new source of energy on the market, state policies are still needed to usher them in. 

Public financial support is needed to deliver economic, health, and environmental benefits as quickly as possible, according to Chris Skoglund, director of the energy transition at Clean Energy New Hampshire. He pointed to a 2022 report from the region’s grid operator, ISO New England, projecting that New Hampshire will lag behind other states in the region when it comes to energy efficiency, renewable energy, and strategic electrification.  

The state’s updated strategy is meant to reflect the shifting energy landscape.

“We’re undergoing a period of massive change in the energy sector,” Elliott said. “We’re moving from centralized to decentralized.”

He attributed this shift to new technologies and the number of intermittent resources like solar and wind coming online.

In the past decade, renewable energy generated in New Hampshire, like wind and solar, has increased. Solar was negligible in 2011; it had grown to 197,000 megawatt hours by 2021. Even with that increase, solar still only made up around 1 percent of New Hampshire’s electric generation in 2021.  

This graphic illustrates how renewable generation in New Hampshire has changed between 2011 and 2021. (Screenshot)

Of the energy generated in New Hampshire in 2021, 56 percent came from nuclear, 25 percent from natural gas, and nearly 6 percent from biomass. Hydropower made up an additional 6.6 percent, while wind was just under 3 percent. 

Hydropower decreased from 1,605,000 megawatt hours in 2011 to 1,167,000 in 2021, which Elliott attributed to seasonal issues. He said hydro generation would likely be low in 2022 due to drought conditions in most of the state.

“In state energy resources like hydro, you sort of glossed over the fact that that’s dropped significantly. It’s dropped based on warming, it’s dropped based on climate impacts,” Rep. Kat McGhee, a Hollis Democrat who serves on the energy efficiency board, told the Department.

“And so I guess the question that I have is, how can you decouple climate effects from the energy policy?” she said.  

While the report recognizes the impacts of climate change, it doesn’t include the cost of climate change in calculations of  cost-effectiveness. Including the cost of carbon, or what Elliott called non-purely financial considerations, would be a policy decision the Legislature could make.

Energy efficiency

Board members also questioned Elliott about the strategy’s stance on energy efficiency, after the Public Utilities Commission rejected a plan to aggressively increase energy efficiency in the state was rejected, and then slashed energy efficiency spending. The Legislature ultimately intervened to restore funding to 2021 levels, with incremental increases in funding that are far short of the initial aggressive plan.

Consumer Advocate Don Kreis noted that the strategy’s treatment of energy efficiency differs from the first iteration of the strategy, released in 2018.

“The last one contains a full-throated endorsement of energy efficiency,” Kreis asked Elliott Friday. “This one says energy efficiency is often the cheapest and cleanest energy resource. My question is: Is the Department aware of any circumstances in which energy efficiency is not the cheapest and cleanest energy resource?”

Elliott responded that the strategy is still a defense of energy efficiency. “It’s still a goal. It’s still important that departments still use it as an important tool in the toolkit.”

Ray Burke, a staff attorney at New Hampshire Legal Assistance, commended the report for acknowledging the high energy burden that falls on low-income households and for recognizing weatherization as common sense and cost-effective way to reduce energy usage in homes and businesses. “But it seems like those two comments are in conflict with the recent PUC orders that are going to mean we’ll be doing less weatherization in the residential programs and in particular, the low-income program,” he told the state.

Elliott said the state will receive $18.2 million in federal funding for the Weatherization Assistance Program, targeted at aiding low-income households. And the state will also disburse federal funding through an electric assistance program.

Beyond those measures, Elliott said, “We have limited levers that we can pull to alleviate that.”

 

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Amanda Gokee
Amanda Gokee

Amanda Gokee is the New Hampshire Bulletin’s energy and environment reporter. She previously reported on these issues at VTDigger. Amanda grew up in Vermont and is a graduate of Harvard University. She received her master’s degree in liberal studies, with a concentration in creative writing, from Dartmouth College. Her work has also appeared in the LA Review of Books and the Valley News.

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