Renewable energy industry grows as businesses question costs

DISRUPTED BY DISTRIBUTION: As more renewable energy projects are built by businesses and homeowners, such as this solar array at Arnold Abatecola's Johnston home, the financial structure of the electricity delivery system is being undermined. / PBN FILE PHOTO/MICHAEL SALERNO
DISRUPTED BY DISTRIBUTION: As more renewable energy projects are built by businesses and homeowners, such as this solar array at Arnold Abatecola's Johnston home, the financial structure of the electricity delivery system is being undermined. / PBN FILE PHOTO/MICHAEL SALERNO

Editor’s note: In celebration of Providence Business News’ 30th anniversary, staff writers and contributors examined the stories and trends that defined the region’s business scene for the period.
Rhode Island’s nascent and fast-growing renewable energy industry is increasingly becoming the headline in a state heavily reliant on outside generation. But many businesses still question the benefit of renewable energy in a state long burdened with high energy costs.

In Providence Business News’ 30 years the energy sector has gone through major changes. From the 1990s’ deregulation of the electricity market to the more recent push to expand pipeline capacity and renewable energy generation, business leaders have debated how best to approach energy issues.

“Rhode Island isn’t an island, meaning we have to operate in a local economy, a regional economy and a world economy,” Douglas Gablinske, executive director of The Energy Council of Rhode Island, told PBN.

The state through the last three decades has taken measured steps to try to make Rhode Island more competitive when it comes to energy prices, although its location and general lack of pipeline infrastructure have made it difficult.

- Advertisement -

In 1996, the state deregulated its electricity market. Proponents argued it would bring competition and help drive down prices. But they were only half-right, because while competition did arrive, prices continued to increase. And they didn’t go back down until the British utility company National Grid PLC came in and bought out all the competition. The acquisitions began in 2000 when National Grid paid $3.2 billion for New England Electric System, parent of Narragansett Electric.

Within weeks, the utility acquired Eastern Utilities Associates, parent of Blackstone Valley Electric, for $642 million. By 2006, National Grid spent an additional $575 million to buy the gas operations of New England Gas Co., which cemented the dominance the company has today.

In 2014, National Grid served more than 500,000 residential and commercial customers, operating in every municipality except Block Island, which is soon to change.

This year, National Grid is installing a bidirectional transmission line from Block Island to the mainland, which will serve two purposes: to deliver energy to Block Island if necessary during peak loads and to import any excess energy generated from Deepwater Wind LLC’s 30-megawatt offshore wind project, which is slated to become the first of its kind in the United States.

“I think Block Island is important for the U.S. industry because it is the project that will take offshore wind from a theory to a reality,” Deepwater CEO Jeffrey Grybowski told PBN.

The five-turbine offshore wind project, being built three miles southeast of Block Island in state waters, was born in 2008 after then-Gov. Donald L. Carcieri launched a plan to build the nation’s first offshore wind farm. He chose Deepwater, then a startup, to build two projects. First a smaller one off Block Island and a second much larger, 100-turbine project further offshore.

Deepwater hasn’t yet obtained financing for the latter project, which could have as much to do with high development costs as it does the amount of flak the bourgeoning industry has faced since coming into the U.S. market. Projects, including Block Island and another in Massachusetts owned by Cape Wind Associates LLC, have been challenged with lawsuits from special interest groups and environmentalists alike.

Rhode Island business leaders, including the R.I. Manufacturing Association and TEC-RI, have argued the offshore wind industry is too expensive, National Grid must pay Deepwater Wind 24.4 cents per kilowatt hour, which will increase 3.5 percent yearly for 20 years. The utility currently charges 8.9 cents per kilowatt hour for residential ratepayers with its standard offer, and business leaders are worried future expensive renewables will continue to drive up costs.

But proponents of offshore wind counter by saying costs associated with building the industry will fall as technology and infrastructure improves, a trend realized in the solar industry.

The number of solar-energy-related jobs grew to more than 1,400 in Rhode Island in 2015 compared with 300 jobs in 2014. The state is pushing for even more growth, as it just finalized a “Solarize Rhode Island” campaign in 2015, resulting in 250 new solar contracts signed by local residents and businesses.

The growth in renewables, however, could pose a threat to National Grid down the road, as small-scale projects, such as residential solar arrays, or onshore wind projects, could start cropping up and cut into the utility’s revenue and shift costs to nonrenewable energy users.

Regardless, the state has identified the renewable energy economy as a growth area and aims to take advantage of it to reduce the state’s emission output while growing local jobs. •

No posts to display