Offshore Wind Power, Long Ignored in U.S., Wins Foothold in Massachusetts


Developers say the state’s plan includes a series of projects large enough to help spawn a network of local suppliers of everything from components for the turbines to services like maintaining them, and drive down costs. Other states are pushing forward as well. Connecticut will soon name a developer for an offshore wind project of its own, while New York and New Jersey have both announced ambitious plans.

New England is particularly well suited to offshore wind farms. There is not enough land for wind turbines onshore, and the area is not ideal for solar power. At the same time, Massachusetts has been under pressure to find new sources of energy to replace aging conventional and nuclear plants, as well as meet targets for reducing greenhouse gas emissions blamed for climate change.

The state is betting that, by investing in offshore wind decades after Northern Europe first tested the technology, it can avoid some of the growing pains experienced across the Atlantic.

For years, projects there required large government subsidies to be economically viable. Recently, technical advances and plummeting prices have meant that countries like Germany and the Netherlands have been able to award offshore wind projects with zero subsidies. As a bonus, offshore wind farms have supported thousands of jobs in port cities in the region.

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Two of the three bids in Massachusetts came from European developers. The winner was a joint venture of Copenhagen Infrastructure Partners, a Danish renewable energy investment firm, and a subsidiary of Iberdrola, a Spanish utility. The other bids came from a consortium led by the Danish wind giant Orsted, and a company called Deepwater Wind, which is based in Providence, R.I., and mainly owned by D.E. Shaw, an investment firm. Deepwater Wind won the Rhode Island contract.

“We know in light of Northern Europe’s experience with offshore wind that many U.S. ports will benefit from the arrival of the industry here,” Jon Mitchell, the New Bedford mayor, said in an interview.

New Bedford has benefited from a lucrative sector before. In the mid-19th century, its whaling industry made it one of the wealthiest cities in the United States. “Nowhere in all America will you find more patrician-like houses; parks and gardens more opulent, than in New Bedford,” Herman Melville wrote in his epic novel, “Moby-Dick.”

In the hopes of another such boost, the Massachusetts Clean Energy Center, the state agency, has already spent $113 million dredging the harbor and expanding and reinforcing a 29-acre marine commerce terminal. The state is preparing it to load the components of turbines that stretch up to 600 feet high and weigh many tons onto special vessels for installation at sea.

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Trump’s Solar Tariffs Cause a Scramble in the Industry


“I think that any action that brings new investment to the United States is welcome,” said Abigail Ross Hopper, president of the Solar Energy Industries Association. “But the tariffs have slowed down the growth of our industry. The growth has been muted, and that means jobs are not being created.” Her group said the tariffs could cost as many as 23,000 American jobs this year.

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A production operator at the SolarWorld factory in Hillsboro, Ore., in January. SolarWorld filed for bankruptcy twice in the last year because it couldn’t compete against foreign prices. Now it is being acquired.

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Natalie Behring/Reuters

In addition, the 30 percent tariffs are going to make it more expensive for cities across the country to pursue their goal of promoting solar power as a way to curb carbon pollution.

The solar industry expects to continue adding installations, but growth is estimated to be about 11 percent lower than projections before the tariffs.

Those diminished prospects are what prompted SunPower to bulk up its operations by pursuing the purchase of SolarWorld, based in Hillsboro, Ore. “We understand the goal of the American people and the goal of this administration,” said Tom Werner, SunPower’s chief executive. “We decided that we will be a leader, and we will take a bold move and buy an American enterprise.”

The office of the United States trade representative, which is handling the tariffs, is reviewing the requests from SunPower and other companies for exemptions. No time frame for a decision has been set.

To be excluded, the companies must show that they have a unique technology or offering. SunPower, based in San Jose, Calif., said its products served a need unmet by existing American manufacturers, and were made overseas for proximity to its suppliers, largely in Asia, making the solar panels cheaper.

“We’re kind of collateral damage,” Mr. Werner said of the tariffs.

The upheaval extends to the consumers of solar products, not just the makers. “The industry is in a scramble to figure out what all of the impacts are,” said Rob Freeman, chief executive of Tradewind Energy, which is based in Kansas outside Kansas City and develops industrial-scale solar and wind projects. “I think it’s fair to say it could be worse. I think it’s fair to say it’s a significant negative.”

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The effect of the tariffs on the cost of imported solar panels makes it more difficult to compete with other sources of power like wind, or even makes fossil-fuel plants look attractive again, Mr. Freeman said. “It tips it back in favor of other alternatives,” he added.

And then there are the jobs.

SunPower, which is taking over an operation with 280 employees, said it had not determined how many jobs it might add, the company said.

JinkoSolar, a Shanghai company, announced this year that it would start manufacturing in Jacksonville, Fla., and create about 200 jobs. It already has a deal with Florida-based NextEra Energy to supply the parent company of Florida’s largest utility with seven million panels over four years — one of the largest orders to date.

JinkoSolar said it still needed exclusion from the tariffs to bring any significant scale to its American operations. While it will assemble panels in the United States, the solar cells will continue to be produced in Asia and subject to tariffs.

“We would not expand it if we don’t get allowed tariff-free cells,” said Nigel Cockroft, the company’s United States general manager.

Even as those projects bring prospective jobs, the Solar Energy Industries Association pointed to the potential job losses from the suspension or termination of solar projects because of higher costs. It said domestic operations alone could not meet the previous level of demand.

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Solar panels on the roof of SunPower’s facility in Richmond, Calif. The company has done most of its manufacturing overseas.

Credit
Kimberly White/Reuters

“In some ways, this is showing that the tariff is having some kind of effect, but it doesn’t necessarily grow the U.S. manufacturing market,” said MJ Shiao, global lead for renewables and emerging technologies at Wood Mackenzie, a research and consulting firm with United States headquarters in Houston.

“The projects no longer pencil out,” Mr. Shiao said.

Solar energy enjoyed a banner year in 2016, when there was a rush to get projects going before a federal tax credit on solar projects was to expire. In that year, it became the nation’s leading source of new electricity generation.

But after that flurry, solar yielded its No. 1 spot even though Congress extended the 30 percent tax credit through 2019. Now the tariffs have added another bump in the road for solar power.

Before the tariffs, the industry was expected to have the capacity to power 13.7 million homes nationwide by 2022, according to the solar industry group. That estimate has been revised downward by more than 10 percent.

“There might be some places where solar would have won for new generation that now might revert back to wind or natural gas,” Mr. Shiao said. “In some cases nothing is going to fill that void.”

Ms. Hopper of the industry group said she hoped that Congress would repeal the tariffs with a bill now before lawmakers. Representative Jacky Rosen, a Nevada Democrat, introduced the bill out of concern over the loss of jobs in her state. Two South Carolina Republicans, Representatives Mark Sanford and Ralph Norman, backed the legislation, citing not only jobs but also the added cost the tariffs imposed on business. The bipartisan nature of the effort gives the industry hope that it might find support.

Solar power, which now generates almost 2 percent of the nation’s electricity, has become popular among Democrats and Republicans alike, as people consider ways to have more control over their energy use and to reduce pollution as well as create jobs.

“We think that the industry will continue to grow,” Ms. Hopper said. “I think that the outlook is still positive but not quite as positive as it could be.”

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Can a City Ditch the Power Company? Not Without a Fight


Critics of the San Diego plan — backed by an affiliate of the local utility, the San Diego Gas and Electric Company — have started a political-style ad campaign on social media, raising concern that taxpayers could be on the hook for billions of dollars if the program went wrong.

They have made the case that major changes to California’s energy policies gave rise to an energy crisis in 2000 and 2001 that caused rolling blackouts and soaring power bills. And they formed an alliance, the Clean Air Coalition, that includes leaders of organizations funded by the power company, among them a group of African-American pastors.

That’s when the campaign became more than Bishop George McKinney could stand.

Bishop McKinney, pastor of St. Stephen’s Cathedral Church of God in Christ here for the last 55 years, said he believed that those attacking the program, including fellow African-American clergy members, were doing so only because of financial support from the utility company.

“I think that the inner-city residents are being taken advantage of,” the 85-year-old bishop said. “The cost of energy now is escalating in the community. There has to be someone who is willing to speak truth to power.”

The move toward such government-run electricity programs, known as community choice aggregation, has been gathering steam over the last year in Southern California, with Los Angeles County adopting the effort and recruiting dozens of cities to enroll. Similar programs have been operating in Northern California for almost a decade.

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A work crew from the San Diego Gas and Electric Company, which is backing critics of the community choice proposal who say taxpayers could be on the hook for billions of dollars if the plan goes wrong.

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K.C. Alfred/The San Diego Union-Tribune, via Associated Press

Broad success of the community choice movement in California could contribute to a substantial reshaping of the West’s energy market. Managers of the state’s complex power grid would have to factor in the supply agreements struck by these new energy players while ensuring that service remained reliable.

San Diego Gas and Electric, a subsidiary of Sempra Energy, is one of California’s three big shareholder-owned utilities, along with Pacific Gas and Electric and Southern California Edison. Together they serve about 70 percent of California’s electricity customers and have been raising concerns about the impact of government-run utility programs on their businesses.

“We support customers’ right to choose an energy provider that best meets their needs,” said Helen Gao, a spokeswoman for the San Diego utility. “At the same time, we have an obligation to protect customers who remain.”

When local governments adopt community choice programs, they typically require the traditional utilities to maintain the network of power lines and often the billing for all customers. California programs are usually designed so that customers are automatically enrolled in community choice and must opt out to go back with the utility company.

Utilities argue that the required services impose an unfair financial burden on them and ultimately their remaining customers.

California regulators are expected to have a proposal by summer’s end about how much community choice programs should pay the power companies in so-called exit fees to make up for the loss of customers.

If the fees are too high, though, community choice provides no savings to consumers. If the fees are too low, the utility companies might not be able to cover their costs.

San Diego, like dozens of other cities nationwide, proposes to reach 100 percent carbon-free electricity. The city has a target date of 2035.

After reviewing feasibility studies, city leaders determined that one of the few ways they could reach their goal was through a community choice program supported by the development of new solar and wind facilities locally and with neighboring California counties. In addition, any cost to carry out the program would be recouped within five years, they said, citing a Northern California county that covered its $2.7 million in expenses within two years.

“I’m not saying these guys are bad and we’re the white hats,” Beth Vaughan, executive director of the California Community Choice Association, said about the utility companies. “What I’m saying is times are changing. It makes sense to me that the communities want to have a say.”

Mark Pruitt, principal of the Illinois Community Choice Aggregation Network, said savings to ratepayers through the state’s program had diminished over time from as high as 30 percent compared with the utility companies down to 5 percent or less.

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Haney Hong, co-chairman of an alliance that opposes the community choice program, questioned how such efforts met their clean-energy goals.

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John Francis Peters for The New York Times

When community choice programs begin, they have an advantage over utilities: Particularly with the falling prices of solar and wind power, they can often secure wholesale contracts at better terms than the long-term agreements that the incumbents are locked into.

In some cases, however, the utilities now offer lower rates in Illinois than the community choice programs, Mr. Pruitt said. Cities there determine each year whether to use the public program or the utility, based on the better deal. But about 50 to 60 percent of electricity customers in the state remain with the community choice programs.

“It has forced better practice throughout the utility sector in Illinois,” Mr. Pruitt said.

But the critics of San Diego’s community choice proposal said they worried that it could drain the city’s coffers.

“It may double the budget at a time when we don’t have the resources that we need,” said the Rev. Gerald Brown, co-chairman of the Clear the Air Coalition. “We don’t want any new taxes or any new rates at all.”

Mr. Brown runs a nonprofit organization, the United African American Ministerial Action Council, that receives financial support from San Diego Gas and Electric.

He said the support had nothing to do with his criticism of the community choice proposal. He said he was troubled by an estimate that it could cost the city up to $2.8 billion to support the program — a worst-case scenario that the city says it no longer includes in its estimates because it was too far-fetched.

Mr. Brown and members of the Clear the Air Coalition also contend that similar government-run utility programs are not producing new alternative-energy projects as they promise. They noted that the utility produced 45 percent of its electricity from carbon-free sources, and argued that community choice programs achieved their climate-friendly goals through purchases of clean energy credits rather than actual generation.

“We’re talking about possible environmental fraud,” said Haney Hong, another co-chairman of the coalition and the president and chief executive of the San Diego County Taxpayers Association. “I feel like folks might be sold a bill of goods.”

San Diego officials said the city was not including renewable-energy credits in its assumptions in becoming carbon-free. (San Diego Gas and Electric also benefits from renewable-energy credits, but says most reflect power sources created specifically for the utility.)

“It’s just a fear-based campaign,” said Nicole Capretz, executive director of the Climate Action Campaign, a group backing the community choice proposal, which she shaped while she was the city’s chief sustainability officer. “The utility is made whole. That’s what’s baffling.”

Bishop McKinney said he believed that opponents of the plan had made up their minds prematurely, taking a position that would ultimately harm the disadvantaged and minorities.

“I’m going to support the change,” he said, calling it “one possible means of equalizing and bringing justice to the table.”

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It’s the No. 1 Power Source, but Natural Gas Faces Headwinds


The Arizona Corporation Commission, which regulates the state’s investor-owned utilities, recently refused to endorse plans by three power companies that included more natural-gas facilities. Commissioners directed them to make greater use of energy storage and plants that produce zero emissions.

“It’s very erratic what we’re now doing with power,” said Andrew M. Tobin, an Arizona commissioner who led efforts to block new gas plants. “I am so nervous that we will end up building a lot of capital plant that doesn’t stand the test of time.”

Some feel the push to get beyond natural gas may be too much, too soon. Officials at Arizona Public Service, the largest utility in the state, said they needed to include new natural-gas development as part of an overall mix, partly because of the state’s round-the-clock air-conditioning demands.

“Our needs are different than other utilities,” said Greg Bernosky, the utility’s director of state regulation and compliance. “We need resources that can have a long duration when our load is high, well after the sun has set. Natural gas resources provide that flexibility.”

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Wind turbines in the desert near Palm Springs, Calif. A recent report by Lazard, the financial advisory and management firm, found that wind power was the least costly power source.

Credit
Beth Coller for The New York Times

Nationwide, other utility executives, power producers and federal regulators have also argued that a healthy power grid requires consistent power, even when the sun doesn’t shine or the wind ceases to blow. The more solar and wind power that is added to the electric grid, they say, the greater the need for reliable backup sources like natural gas.

“Gas has got to be part of that equation,” Robert F. Powelson, a commissioner on the Federal Energy Regulatory Commission, recently told an energy conference. “The gas system has gotten extremely reliable.”

And he argued that even recent advances in storage did not justify an overreliance on alternative energy, however inexpensive. “Storage is great,” said Mr. Powelson, a nominee of President Trump and a former chairman of the Pennsylvania Public Utility Commission. “But that is not a reliable long-term solution to the energy markets.”

Natural gas isn’t likely to be unseated as the country’s primary source of electricity generation anytime soon. In fact, utility companies plan to add more natural-gas plants than any other source, including all alternative energy sources, like solar, wind and hydropower, combined.

But the calculus is rapidly shifting as the prices of wind and solar power continue to fall. According to the Department of Energy, power generated by natural gas declined 7.7 percent in 2017.

And the latest report by Lazard, the financial advisory and management firm, found that the cost of power from utility-scale solar farms was now on a par with natural-gas generation — and that wind farms were less expensive still.

Lazard calculated the unsubsidized cost of wind power at 3 cents a kilowatt-hour, while natural gas and solar energy were a little more than 4 cents. The typical American household pays 12.5 cents a kilowatt-hour for electricity, according to the United States Energy Information Administration. (The cost beyond generation reflects transmission, taxes, and other utility expenses and profits.)

Moreover, the market equation in the West is driven largely by California, the sixth-largest economy in the world, which has mandated that 50 percent of its power be generated from renewable sources by 2030. With a regional energy market run by the state’s electricity grid overseer, the California Independent System Operator, fossil-fuel plants have had increasing difficulty selling their power into a market with low-cost solar and wind power.

At the same time, state legislatures and regulators are increasingly demanding that utilities rethink how they manage their systems to reduce carbon emissions.

Some power producers have bristled at the mandates, even scaling back their operations in certain markets because, they said, it became too difficult to compete without losing money.

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Power lines carrying electricity from the Bonneville Dam on the Columbia River near The Dalles, Ore. California’s turn to other renewable sources has produced a surplus of hydropower that Portland General Electric is taking advantage of.

Credit
Natalie Behring/Getty Images

NRG Energy, for example, announced this month that it would close three natural-gas plants in California because of the regulatory push for clean energy.

After NRG’s announcement, Calpine, a power company based in Houston, said it would suspend plans to build a natural-gas plant in California.

“We cannot invest a single dollar in California,” Thad Hill, Calpine’s chief executive, said. “I would not call California a true competitive market.”

But a big Oregon utility, Portland General Electric, has embraced clean-energy mandates to ease it off dependence on fossil fuels.

“First off for us, climate change is real and we have to diversify our mix,” Dave Robertson, the company’s vice president for public policy. “We’re driving more and more toward a decarbonized future. We really feel like we’ve got to own that. It’s really where the science is taking us.”

This month, Portland General entered into an agreement to buy surplus hydropower from the Bonneville Power Administration — the surplus arises largely from California’s turn to other renewable sources — helping the utility avoid construction of natural-gas plants to replace a coal facility.

“There are surpluses of energy that are looking for markets,” said Brett Sims, Portland General’s director of strategic planning and resource strategy.

Portland General’s view offered a hopeful message to environmentalists, who pushed for the weaning off coal and now have done much the same with natural gas.

“It feels like déjà vu all over again for the electric sector,” Mike Brune, executive director of the Sierra Club, said. “Utilities began to find that coal was not just a dirty form of energy but a more expensive form of energy, so they began to replace coal. Now, as they’re looking to replace coal, they’re finding gas in the same situation. There’s a broad trend across the energy sector, mostly in the West, where coal and natural gas can’t compete.”

Mr. McCullough, the Portland energy economist and principal at McCullough Research, said that the rapid change had caught many in the industry by surprise and that it could lead to a shorter future for natural gas.

“I think the fact of the matter is we’re seeing a lot of people realizing that there are different ways to go,” Mr. McCullough said.

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