Peter Shumlin: An energy innovation program for Vermont

This commentary is by Vermont Gov. Peter Shumlin.

Pursuing clean energy policies in Vermont isn’t just about doing what is right for our environment and protecting our unrivaled quality of life. A thriving clean energy sector is also integral to our economy, keeping young people in Vermont, and making the state a more affordable place to live. That is why I feel so strongly that we must lead on creating a clean energy economy based on Vermont values. If we do so, we will add to the 15,000 jobs already supported by the clean energy industry, help homeowners save hundreds of millions on energy costs, and do our part to help combat climate change.

It’s clear that the energy world is changing. Gone are the days when the business model of utilities relied on selling customers more and more energy from distant centralized plants, no matter the source. Today, utilities understand that their customers are becoming more conscious about how much energy we use and where it comes from. The goal now is to figure out how we use less energy, and how we increase the use of cleaner energy. That change in attitude provides us an incredible opportunity.

The Energy Innovation Program (EIP) I proposed in my inaugural address will position us to take advantage of this opportunity, helping to create jobs, keep young Vermonters here in the state, save Vermonters money on energy bills, and do what’s right for the environment.

We have an incredible opportunity to make Vermont the clean energy leader and reap the job growth, energy savings, and carbon emissions reduction benefits that will come with it.


The EIP will do this by encouraging utilities to help Vermont homeowners use less energy and save money. Modeled after a program Green Mountain Power has pioneered, the EIP will encourage utilities to help Vermonters retrofit their homes with solar panels, heat pumps, and energy efficient lights and appliances. There will be no upfront costs for these improvements. Instead, Vermonters will pay for them on their energy bills with the savings created by the efficiency work. As the improvements are paid off, Vermonters will see their energy costs and consumption steadily decline.

The EIP will also encourage utilities to generate power locally from clean sources by setting achievable targets for more community scale renewable energy, including customer-sited net metering projects. Under the EIP, utilities will be required to provide customers with 55 percent of their energy from renewable sources in 2017, rising to 75 percent by 2032. The EIP will also set a subset target for distributed renewable energy projects, starting with 1 percent of sales in 2017 and rising to 10 percent by 2032. That target would mean more solar on our roofs, and more community-scale renewable projects. Lastly, the EIP will encourage the adoption of new clean technologies as they arrive on the market, making Vermont a destination for energy research and development.

Through the development of more renewable energy and efficiency projects, the EIP will give a boost to a promising clean energy sector that already supports 15,000 jobs for Vermonters. Just recently, I joined a clean energy technology company out of Middlebury called Faraday that announced it will be adding 20 good-paying jobs after securing nearly $2 million in capital investments. Those are jobs that young Vermonters want, and they’re based right here at home. This is just one of many growing Vermont companies that are making our state a leader in this field. In 2013, for example, Vermont led America with the most solar jobs created per capita. That’s progress we can and will build on with the EIP.

Over its lifetime, the EIP is set to provide over 1,000 new jobs for Vermonters. It will also provide a net benefit for ratepayers and a net savings of over $275 million in reduced energy costs for Vermonters. And it will provide approximately 15 million metric tons of greenhouse gas emissions reduction, equivalent to about a quarter of the amount necessary to be on track for our 2050 state goal.

I am grateful that Rep. Tony Klein and Sen. Chris Bray have introduced legislation that would build on these proposals. They are both joined by cosponsors, and I appreciate the work the House and Senate committees on Natural Resources and Energy have already done in shaping and improving the legislation.

We have an incredible opportunity to make Vermont the clean energy leader and reap the job growth, energy savings, and carbon emissions reduction benefits that will come with it. I look forward to working with the Legislature this session to make that opportunity a reality for our state.

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  • Scott Woodward

    Quick question for the Governor or someone from his staff:

    The “2014 Vermont Clean Energy Industry Report,” from which I believe the 15,000 number comes from, states that these clean energy workers work at “2,684 employment locations throughout the state.” Are these “locations” individual companies, towns/cities? It’s just an interesting number and hard to find meaning in without more explanation, other than just being a big number.

    • Scott Woodward

      As a follow-up, the “2014 Vermont Clean Energy Industry Report” shows that 5,833 of the total 15,000+ jobs are installation jobs (39% of the total). Presuming that we’ll see a slow-down in installations due to saturation (or lack of interest), then what jobs will fuel growth in this sector going forward if it’s not installation jobs?

    • John Greenberg


      I’m not sure what your question is, but the report is here: On page 12, there is a chart with the percentage of firms by numbers of employees. The numbers total to 454 firms. Does that answer your question?

      (The governor’s number is on page 10).

      • Scott Woodward

        Thanks John. I saw the 454 number when I looked at the report earlier. No, that doesn’t answer the question. I’m just curious to what the 2,684 “locations” relates.

  • Don Peterson

    For policy decisions of marijuana the Governor hired an outside party– the Rand Corporation I believe.

    For health care related policy decisions, another complex issue, Jonathan Gruber was consulted.

    It is reasonable to do so, as the state can scarcely employ experts of its own.

    My question is — to whom did the Governor consult in developing his energy policy. To whom did the legislature consult? Hopefully not the two largest entities most likely to profit from the out come?

    • Randy Koch

      Is this Peterson way of suggesting that Shumlin is actually meeting with GazMetro and writing down what they tell him to do?

    • Annette Smith

      According to testimony I heard in a committee, the bill was developed by the Department of Public Service (which works directly for the Governor — their words) and the utilities and developers and renewable energy advocates.

      Mary Powell of GMP was asked directly if she had input into the bill and oh yes, she readily and enthusiastically indicated that GMP was very much a part of creating all these exciting opportunities to hook more Vermonters on electricity.

      The innovative part of it is so you can all get off oil furnaces and use air source heat pumps and also purchase and drive electric cars. Choosing technologies well into the future that make customers dependent on utilities, while at the same time technology is moving towards enabling electricity consumers to get off grid.

      The not so innovative part of it is the trick (some might call it a shell game) of letting Vermont’s utilities use Hydro-Quebec “not-RECs” (they don’t call them RECs because they don’t really have any value since no other New England states will trade in them) to meet Vermont’s renewable energy goals through 2017 so that the utilities can continue to sell the high value wind and solar RECs and keep your rates down.

      And Vermonters can continue to get practically no renewable energy from wind or solar, despite littering our landscape with all that new development that is making a lot of people rich — most of whom don’t have any interest in Vermont except for the green cash cow that our governor and legislature have turned Vermont’s landscape into. What’s good for Goldman Sachs and Gaz-Metro is good for Vermont!

      Using H-Q “environmental attributes” to meet the state’s goals through 2017 will solve the “double counting” problem that is the real reason for this bill.

  • Jim Christiansen

    Yet another of the Governors weekly distraction pieces asking Vermonters to look behind door number two when the house is on fire.

    The emperor is down to his skivvies and it isn’t pretty.

  • Jane Palmer

    It is hard to believe that anyone with this kind of vision and plan would at the same time, be backing a gas pipeline that would be bringing gas extracted in environmentally destructive ways to “clean and green” Vermont.
    No one is saying we should cut off the gas already supplying much of Chittenden and Franklin Counties…but why would it make any sense at all to build an insanely expensive pipeline to import fracked gas and get more residents and industries hooked on that fossil fuel so they can then wean themselves off of that and onto truly green energy?

  • Kim Fried

    More propaganda and marketing, period….SPEED was a mess and is now being gutted. So our Governor goes to the SPEED expert Tony Klein for support and more useless, destructive policy. How do we let this happen to us, it’s just sickening. Tony Klein doesn’t listen to anyone but the Governor and the lobbyists seeking their fortunes in renewables. Carbon reduction isn’t even an issue to these guys. Have you noticed how much we have been hearing from the Governor lately? Personally all I would like to hear from him is an apology for the mess he has caused in our state, period.

  • Chris Weinheimer

    “Under the EIP, utilities will be required to provide customers with 55 percent of their energy from renewable sources in 2017”

    How is it possible to achieve this objective in 2 years?

    • Annette Smith

      By using Hydro-Quebec “environmental attributes” to count as renewable, which was not allowed under SPEED.

      Maybe rather than a shell game it is best called “sleight of hand.” In any case, that’s the plan. The reason for the bill is because the double counting of RECs enabled by the SPEED program has chilled the market for Vermont’s RECs to the point that some utilities are having cash flow problems.

      The goal of part of H.40 is to enable the utilities to continue to sell the high value wind and solar RECs, and the way to do that and still meet Vermont’s renewable energy “goals” (which the utilities and DPS have told Connecticut’s PURA do not exist) is to let them qualify H-Q’s “not-RECs” towards meeting Vermont’s goals.

      Okay, I’ve got to try that one more time. Vermont’s DPS and utilities have told CT that Vermont does not have any renewable energy goals. At the same time, Vermont is planning to eliminate its apparent non-goals and allow non-RECs to meet those non-goals so that Vermont’s utilities can continue to sell real renewable energy credits to other states to meet their real renewable energy goals. Vermonters don’t pay for or get renewable power and instead continue to get cheap grid (brown) power while hosting more and more industrial scale renewables on which out of state investors are making a lot of money. Couldn’t make this stuff up!

      • Chris Weinheimer

        Thanks Annette – I am glad we have that all straightened out!

      • John Greenberg

        “The reason for the bill is because the double counting of RECs enabled by the SPEED program has chilled the market for Vermont’s RECs to the point that some utilities are having cash flow problems. ”

        Could you supply some evidence for that statement please?

        • Annette Smith

          Read the filings in this docket

          The utilities are spending a lot of money on lawyers dealing with Connecticut’s investigation, which is rumored to not be going well. Those rumors come from the utilities and their lobbyists. CT was poised to issue a draft decision in January and abruptly delayed it without explanation. It was common knowledge in Montpelier in January that the utilities expected that CT would rule against Vermont and not allow RECs used to meet Vermont’s SPEED goals to count towards CT’s RPS.

          GMP and BED in particular are pushing the end of SPEED, the use of H-Q non-RECs through 2017, as a must pass bill in the first half of this session. Otherwise GMP customers might see as much as a 6% rate increase while BED customers could see as much as a 20% rate increase. Those numbers have been reported in news stories. BED seems to be the most exposed, which is ironic since it keeps showing up in national news stories as the poster child for the 100% renewable city.

  • Don Peterson

    Reading Annette’s posts very closely I am led to believe:

    Because of our state’s developer biased energy policies, other NE states have debased the value of our environmental products. (ie Renewable Energy Credits)

    Does anyone in the statehouse see that this developer biased attitude will also debase our greater environmental product- our reputation as an unspoiled landscape? Appearantly not– its full steam ahead in the mountains, and don’t let a few heat pumps distract you into thinking otherwise.

    • Annette Smith

      Someone who lives in NYC and owns property in Vermont that is threatened by a large solar array in his backyard said to me recently, “the things I always associated with Vermont were the sense of community and how people value the state’s aesthetics. This experience has made me realize that those things no longer matter.”

      • Richard Ratico

        Details please. What are the relative sizes of the two parcels? How large is the array? How is it mounted? What are the setbacks? Will it be screened by landscaping. Is the solar neighbor a year round resident?

        Would the new yorker prefer to have an offgrid neighbor with an undersized array frequently running their generator, as Annette must? Would they prefer picturesque herd swine rooting upwind?

        • Annette Smith

          NextSun/Renewable Generation LLC is proposing two 500 kW solar arrays north of East Main Street (Route 140) in Poultney. Both filed their 45 day notices, one has applied to the PSB, the other one hasn’t. Half of the project site that is currently in the PSB process is in Poultney Village. Both sites are prime ag soil that have been in active corn cultivation, both sites are in flood hazard area. The site in the PSB process would make a fabulous community garden that could feed much of the village of Poultney, and with Green Mountain College a couple blocks down the road, the opportunity to support the local food economy is enormous. There is no shortage of poor agricultural soil and brownfield sites in Rutland County, there is no excuse using prime agricultural soil in a residential village for industrial scale solar.

          About a dozen homes along Route 140/East Main Street would look out onto 2300 solar panels, some very close to their property line. The developer initially said there was natural screening, but perhaps visited the site and realized that wasn’t true.

          Almost all the homes have little to no screening. Almost all of the homes are occupied by year-round residents of Poultney and almost all of the residents are shocked by this proposal (and even though the second proposal is just down the road, they weren’t notified of it because they are not adjoiners).

          As the neighbors were scrambling to put together their comments to the PSB to meet the very short 21 day time frame (projects up to 500 kW now go through an expedited process) the developer filed more information (and then refused to agree to an extension) indicating he would plant 23 arbor vitae trees 20 feet apart for screening. Not even funny.

          For a little window into what people are subjected to in dealing with these not-small solar proposals in the PSB process, after receiving the supplemental information on Thursday, the neighbors wrote on Friday to the attorney for the developer and to the DPS attorney requesting an extension. No response on Friday. On Sunday the developer’s attorney replied and did not agree to the extension. Neighbors hustled to get their Motion to Intervene, Notice of Appearance, Cover Letter, Service List and Comment Letter to the PSB by 4:30 Monday, which was the deadline.

          After the deadline, the neighbors received an email from the DPS attorney with the DPS request for an extension (filed after close of business). Also after the deadline, the neighbors received a forward of an email requesting an extension by ANR which was filed before the close of business, but the neighbors only received it after they had already worked long hours to submit a 59 page comment letter. They would have loved to get an extension. So they filed an objection to the requests for extension. They got their information in on time, they made the case that the applicant had not met the third prong of the “undue adverse” test of the Quechee analysis that requires that reasonable mitigation must be used, and since the process is supposed to encourage quick decisions, the obvious decision was no.

          Last week the PSB hearing officer granted the DPS and ANR request for extension. The decision was issued on Feb. 4 and everyone received it in the mail on Feb. 5 and that was the date that DPS and ANR had requested for the extension from the original Jan 26 deadline, so by the time everyone knew the extension had been granted, it was already moot.

          Meanwhile the developer’s attorney responded to the neighbors’ Motion to Intervene and recommends denying them, saying they have not identified an individualized interest and that DPS and ANR can represent their interests.

          And DPS, ANR and the developer, without consulting the neighbors who had formed a group and given one point of contact to make it easy for everyone, agreed to extend the time frame for submitting comments until the developer submits more information in response to questions being asked by DPS and/or ANR, about which the neighbors have no information.

          On a personal note, I do not frequently run my generator. With new solar panels in 2008, I have to run the generator a couple times a week for a couple hours during the cloudy months. Add that up, it’s about 8 times a month over 3 months, two hours at a time. The rest of the time, 9 months, the system works well without needing to run the generator. Off-grid is becoming much more accessible and with it the freedom that comes from not being a utility customer.

        • Richard Ratico

          Those prime ag soils are almost certainly routinely sprayed with Roundup, industrial fertilizers and liquid manure, much of which, along with a substantial load of sediment, probably winds up in the Poultney River and has for years, no doubt DWARFING whatever amount has or will ever result from the Lowell wind farm. Farming in Vermont is not what it used to be. Sheep can be grazed beneath the arrays to maintain the pastural effect in a more holistic and healthier fashion.

          That “fabulous community garden” would exist now, if it were such a fine idea. It’s a liberal college town, after all.

          Solar arrays are built on well set pole supports. Flood plain issues are not relevant if engineered for. Perhaps there are sites better suited for solar in Poultney, but your arguments don’t rule out this one, other than the NIMBY factor, that is.

          In spite of the fact that off-grid is more accessible, it still requires a SIGNIFICANT degree of vigilance and responsibility on the part of system owners. I’m fairly certain I know many, many more off-grid folks than you do. I don’t think one of them would hesitate to connect their systems to the grid were it to become economically feasible, simply to eliminate 99% of the generator hassles and to enjoy the additional security the grid provides.

          In fact, over the years, I have connected three off-grid systems to the grid after the utilities finally brought their lines within reach, even though it involved considerable expense. Last fall I evaluated doing it for a fourth client. It proved too expensive and they wound up tripling the size of their array to 6kW and replacing their aging batteries, again at great expense.

          At the moment I have one client who just replaced her generator starting battery but still needs a new charge controller and another who’s inverter is hopefully in the hands of UPS on the rebound from an expensive repair In New Jersey. Both clients are a bit stressed given the weather conditions.

          “…the freedom that comes from not being a utility customer.”
          Reach behind and give yourself a pat on the back Annette. Enjoy that freedom and the pleasures of utility bashing.
          As far as I know you’re in the company of one.

  • Jan van Eck

    What I find puzzling in these discussions is the absence of comment on the decay of inertial stability that results from frequency-inverters used to connect “renewables” to the grid. To get readers up to speed on this technical issue, what happens is that classical generators have considerable energy stored inside their rotating masses; this is known as “inertial energy,” and these numbers are surprisingly large. When one generator drops off, the resulting strain falls on the others in the localized grid that have to pick up the load, and the grid response is to have a frequency drop. The “tolerance” in frequency drop is quite tight; if the drop continues, then those generators will trip off to ensure grid integrity. All that inertial energy compensates to hold the grid together until the remaining generators can be accelerated to take up the load.

    If you have large wind machines, then the inertial energy inside the turbines themselves is not available as rotational inertial stability, as these machines are indirectly connected to the grid, via solid-state frequency converters. Equally, photo-voltaic systems have no rotating inertia. When they drop off, the local grid experiences a rapid increase in load on the remaining generators, which have to strain to take up the load. The result is a frequency decay.

    To respond to this, the system needs additional generating capacity, with rotating momentum in the generators – or, alternatively, the RE components must be wired as off-grid and used only for home intermittent loads. If your PV system only drives your air conditioner, and you do not switch it over to the grid when the sun goes down, then the grid does not suffer. If you are pumping solar or wind into the grid and these devices stop, then that drop-off has to come from somewhere else.

    Due to response times, the only current way to do that is through diesel generators – the giant 8 MW ones with 20 cylinders. And those machines have to be in a constant state of readiness, with the fuel, water jackets, and oil all heated. The large capital costs, and the stand-by preparedness costs, have to be borne from somewhere – and that is from the retail tariff.

    Those PV and wind systems are not an unalloyed blessing. They have serious costs, including the problem of grid frequency instability and removal of rotational inertial energy. And somebody has to pay for it. Do try to keep that in mind.

    • Richard Ratico

      “Wind power produced 33% of Denmark’s total electricity consumption in 2013 and 39% in 2014. In 2012 the Danish government adopted a plan to increase the share of electricity production from wind to 50% by 2020, and to 84% in 2035.”

      If this was ever a problem, it seems to be solved.

      • Glenn Thompson

        Denmark also has one of the highest electric rates in the world. I have no desire to pay $.40/Kwh nor do I have a desire to see a ‘scenic state’ such as Vermont filled with 400′-500′ tall wind turbines!

        Interesting to note. At one point this morning 32% of the power grid was made up with Coal and Oil. NG was at 33%. I assume they are diverting NG to residential, commercial, and Industrial customers due to sub-zero temps? Power produced by wind and solar was nowheres to be found. Find another solution to our future energy needs. Solar and wind is NOT the answer!

        • Richard Ratico

          It’s early days yet in deployment of wind and solar in Vermont. Denmark and Germany show what can be done. Cheap energy is always dirty energy. Beauty is in the eye of the beholder. Your desire to live in a “snow globe” is unrealistic. But then you’re in Arizona for the winter, right?

          It’s interesting that those in the best financial position to pay to pay a little more for their energy are ones least willing to do so.

          THIS is not the answer:

          • Glenn Thompson

            Richard Ratico,

            “It’s early days yet in deployment of wind and solar in Vermont.”

            Where are you going to put it?

            “Your desire to live in a “snow globe” is unrealistic. But then you’re in Arizona for the winter, right?”

            Yes, I live in the Tucson. Az area during the winters. FYI, we have no wind power and no plans to install industrial wind probably due to fact wind power is not suitable in this part of Arizona.

            We have numerous large solar arrays, but they at least attempt to minimize their visibility from sticking out like a sore thumb unlike those located along Route 7 near Ferrisburg, Vt which remind me of a field full of ‘billboards’ every time I drive by them! Most of the Industrial Solar arrays I’ve observed out here are placed in areas that can only be seen from higher elevations and they certainly don’t place them near residential areas! Aren’t many of the planned Solar Farms in Vermont located near housing developments? Just another example of the reckless energy planning by politicians and wind and solar developers back in Vermont.

            FYI, I got a ‘rough estimate’ of putting roof top solar out here! First, I’m limited by having only 1500 sq ft. of living space. I’m further limited by the roof design. My monthly avg electric bill runs around $60/month based on rates 50% less than Vt. electric rates. After tax credits, my break even point for installing solar is 17 years. The question becomes….why would I do it? The answer….I wouldn’t!

            You may find this article of interest. Even out here in the land of sun, Arizona has to deal with the high costs of solar power! At least regulators out here factor in costs when planning future energy requirements!

            “But after a period of explosive growth, the industry that Arizona helped pioneer is slowing as utility regulators grapple with how much of a premium energy customers should pay to implement solar and other renewables.”


        • Not to mention 1/3 of their power is produced from coal, the other 10% imported from Nuclear.

          Then you have the wind mills that use PMG, the bi-product of which is extreamly detrimental to the environment.

          Malaysia’s last rareearth refinery in northern Perak state was closed in 1992 following protests and claims that it was the source of radionuclides that were identified as the cause of birth defects and leukemia among nearby residents. The refinery is one of Asia’s largest radioactive waste cleanup sites.

          • Richard Ratico

            Rare earth minerals are used in many products besides wind turbines. The issue is to assure their procurement in a responsible fashion. China and Malaysia, among others, are not renowned for tight environmental controls.

            The U.S. has a spotty record here as well, but in recent years has improved dramatically.

            Government regulation is a good thing.

        • John Greenberg


          Here we go again. “Denmark also has one of the highest electric rates in the world.” As I’ve repeatedly pointed out to you in the past, your statement, as written, is simply false.

          First, what you really mean is the highest HOUSEHOLD electric rates. When it comes to industrial rates, Denmark is 18th out of 34 countries in the EU. Its industrial rates are ½ of those in Cyprus, and almost 60% lower than Italy’s and about 30% lower than Germany’s.

          Second, even with the modifier, these total price statistics are exceedingly misleading, because many European countries have high tax policies on energy in general and electricity, specifically. Fortunately, the EU keeps statistics which allow one to disaggregate these prices.

          For industrial users, Denmark has the 2nd lowest “energy and supply” prices in Europe. Only Norway’s are lower. Conversely, its network costs are close the highest in Europe, exceeded only by Slovakia and Lithuania, and its non-recoverable taxes and levies are also fairly high, though closer to the middle of the pack.

          For household users, Denmark’s “energy and supply” costs are 10th out of 36. Network costs are again among the highest in Europe and non-recoverable taxes and levies ARE the highest in Europe.

          See, Tables 4 and 7.

          The context of your statement here makes it pretty clear that you want readers to infer that the CAUSE of Denmark’s SUPPPOSEDLY high energy prices is its dependence on renewable energy sources, but actually the facts negate that proposition entirely. Denmark’s energy costs as a percentage of electricity prices are among the lowest in Europe; their network costs are high, and their taxes and levies are exceedingly high.

          Finally, as a supporter of carbon taxes, Denmark’s policies make exceedingly good environmental sense. The Danes are obviously using taxes and levies to dampen electricity demand, especially at the household level where high demand has no offsetting economic benefits, but also at the industrial level. Meanwhile, its dependence on renewable energy sources has NOT raised its energy costs to excessive levels when compared to its European neighbors, meaning that its industrial total costs remain competitive within the EU.

          Contrary to Mr. Thompson, I think Vermont has a good deal to learn from Denmark’s example. We could do a lot worse than to follow its lead in electricity policy.

          • Glenn Thompson

            John Greenberg,

            “Here we go again. “Denmark also has one of the highest electric rates in the world.” As I’ve repeatedly pointed out to you in the past, your statement, as written, is simply false.”

            Yes….here we go again! Your claim is totally false since for whatever reason you are constantly removing the network costs and taxation from the equation! Why wouldn’t ANYTHING related to the cost of a power grid be included in the total costs?

            I can post graphs, charts, and articles all day long that shows countries with high % of Solar and Wind also have the highest electric rates! Did you bother to read my link on the high cost of Solar power in Arizona? Now I’m beginning to understand why the Northeast is willing to follow the European path to expensive renewables. They leave out 1/2 the information and the cost factor is completely ignored or rejected!

            Here is an example of what countries have the highest electric rates in the world. Note who the top two are?


            Now…this article does a good job of explaining why!!!!!

            “But countries with large amounts of renewable generation, such as Denmark and Germany, face the highest energy prices in the rich world. In Britain electricity from wind farms costs twice as much as that from traditional sources; solar power is even more dear. What makes it so costly?”


        • John Greenberg


          Your reply distorts my answer by ignoring what you’d obviously prefer not to hear.

          So to repeat myself, without removing anything from the price, Denmark’s TOTAL industrial price is in the middle of the European pack, not at or near the top. Only its household price is high, but the cost of energy in that price is actually quite low. Since both household electricity and industrial electricity are generated from the same sources, how could this be the case if the generating source were causing the price to rise?

          The remainder of your comment also assumes that one can equate high prices to energy sources, but this completely ignores the remainder of what I pointed out: namely, that Denrmark’s ENERGY costs – which obviously DOES relate to energy sources – is among the LOWEST, while its tax policies – which do not relate to energy source – are among the highest. Put differently, it happens that the same country produces more electricity than many of its peers from wind and solar power; it also happens that the same country has high energy taxes. But there is no clear link between these two facts.

          Indeed, the URL from CleanTecnica that you offer confirms this point. You say “Here is an example of what countries have the highest electric rates in the world. Note who the top two are?” But then you fail to note who the bottom two are: China and India, which are two of the world’s largest producers of energy from wind and solar.

          The fact is, Glenn, you’ve proposed a model which does NOT explain the data. High renewables countries show up both as HIGH priced AND as LOW priced countries, and in the case of Denmark, it shows up as both (or more precisely, high and middle). Hence, the correlation between energy source and price is simply not adequate to explain all the facts.

          The reason for disassociating the costs as I did is not a nefarious scheme to pull the wool over anyone’s eyes, but rather an attempt to understand WHY Denmark’s household energy price is high if its energy costs are low and its industrial price is in the middle of the pack.

          Your theory – based as it is on energy source — doesn’t explain that, as I’ve shown in some detail. Mine does: government policies – in this case, taxes and subsidies – explain these price differentials better than energy sources used to generate power.

          As to your broader proposition, you ignore a host of issues, but many are really the SAME issue in somewhat different guises. Energy costs are NOT the products of free market supply and demand principles as you appear to believe.

          Natural gas generated electricity costs $66/MW (according to your AZ reference) to produce because the US offers the industry a series of tax breaks in gas exploration and production, coupled with historic giveaways of land and other resources which allowed the industry to rise from infancy to maturity at a lower than market price level. The US charges the industry nothing for polluting water and aquifers, for quite possibly causing earthquakes by fracking, and for polluting the atmosphere both with greenhouse gases AND with other pollutants. ALL of those costs are part of the REAL cost of natural gas, — real meaning that SOMEONE will eventually pay them — but none of them is included in the price. All of these factors also pertain in spades to the price of coal-generated electricity, on which AZ is highly dependent.

          Let me underscore that my point here is NOT based on environmental concerns. I would love to assume that everyone reading this – including you – actually cares about the environment and about the health consequences of the decisions they make, but I’m far too much of a realist to believe that, so my argument does not rely AT ALL on these considerations.

          I’m talking about PURELY economic considerations: when someone gets asthma or has a heart attack because of air pollution from burning fossil fuels, there’s an economic cost associated. But it is never linked to the gas company. If fracking causes an earthquake which damages a building which needs to be repaired or replaced, there’s a real economic cost, but again, the gas company is unlikely to pay it, so it is NOT reflected in the price of fracked gas. These are REAL costs of “cheap” energy; someone will pay them. But it won’t be the energy consumer.

          If the energy market properly reflected ALL of the costs of producing and consuming energy, then energy buyers WOULD pay that cost. When they don’t, it means that the market is being distorted, because it no longer reflects all of the cost of the product. Prices in truly free, open markets reflect all of the costs of production; energy prices, only a portion of them.

          There’s more on this latter point in my response to Moshe Braner here:

          A final point. It is cheaper to produce power from an existing plant than to build a new one. VY’s cost of power, for example, was in the five cents range ($50/MW). Power from new nuclear plants is expected to cost more than twice that, and quite possibly more than three times as much. (We won’t know until the plants currently under construction get built; we already know that the estimates have risen steadily). Same power source; VERY different price.

          Solar and wind projects are, by definition, new. There are virtually no solar or wind projects of any scale that are more than a decade old; most are even newer. Worse, especially in the case of solar, the industry is nowhere near mature, which is why prices are plummeting and will continue to do so. Until solar photovoltaic power has fully realized all of the potential savings available from mass production AND installation, its costs will continue to drop.

          • Glenn Thompson

            I’m posting this link again…since apparently it is being ignored!

            “European residential electricity prices have historically exceeded U.S. prices, and the gap has widened in recent years. In 2013, average residential electricity rates in European Union (EU) countries were more than double rates in the United States. Regulatory structures—including taxes and other user fees, investment in renewable energy technologies, and the mix and cost of fuels—all influence electricity prices.”

            John, you state “A final point. It is cheaper to produce power from an existing plant than to build a new one.”

            The article I posted here states!

            “In addition, Germany committed to reducing the number of operating nuclear plants in the country and introduced policy incentives to reduce electricity generation from coal. Replacing these existing facilities and their fuels with new generation sources has also increased their electricity cost.”


            I rest my case! Let others ‘judge’ for themselves which one of us is correct in our opinions, John!

          • John Greenberg


            Your own quote shows the weakness of your theory: “European residential electricity prices have historically exceeded U.S. prices, and the gap has widened in recent years.…”

            If generating electricity from renewables were the primary cause of this difference, why would European prices have exceeded US prices “historically?” Roughly 10 years ago, generation from wind and solar was effectively a non-factor in Europe, just as it was here. So how can a non-factor explain an historic price differential? Hint: it can’t.

            What CAN explain the difference is public policy. Europe has pursued high-price policies for decades. This is true both of electricity prices AND of gasoline and other combustible fuels. Their policies are INTENDED to drive prices up, thereby reducing consumption; it’s not a bug, it’s a feature of their programs. And they’ve been effective on both counts.

            Meanwhile, the US has continued to pursue “cheap” energy policies, allowing substantial portions of the cost of using energy to be excluded from the market price, and this too is true for both electricity and for other combustibles. Additionally, as your EIA link shows, EU countries all impose taxes (some more, some less), while no region of the US does so.

            Indeed, if you look at the non-tax portion of Denmark’s rates, their base rates are actually lower than a variety of regions in the US. Hawaii, Alaska, New England, the Mid-Atlantic and the “Pacific Contiguous” regions all have higher “base rates” than Denmark’s according to the EIA chart. (And the cheapest regions of the US also have the highest dependence on wind power!)

            In short, policy differences go a long way towards explaining both the historical and current difference in prices; energy sources do not.

            It is perfectly reasonable to assert that you disagree with policies intended to raise prices for residential consumers, but there is no factual basis for your argument that using renewable power sources CAUSES high rates, and substantial factual evidence against that proposition (e.g. Danish and German energy costs and industrial prices, China, India, the US Midwest, etc.)

            In terms of the EIA’s analysis, one factor is glaringly absent: namely, the natural gas fracking boom in the US. Wholesale electric rates in the US dropped significantly due to a concomitant drop in natural gas prices during most of the years EIA is examining, whereas in Europe, gas prices are high and increasingly problematic (thanks to their dependence on Russia).

            Nuclear utilities all over the US have been complaining that this boom is forcing them to close reactors which would “otherwise” be economic. But hey, if you choose to live by the market, then you die by the market as well. Some of these utilities are fighting to pursue a socialized risk, privatized gain policy. That’s great for their shareholders, but makes no sense at all for the rest of us.

            The same difference applies to the last proposition. Yes, replacing existing nuclear and coal plants in Germany will have the effect of raising consumer prices (at least temporarily), for the very reasons I pointed out in my preceding comment.

            You can perfectly reasonably assert that because that’s so, replacing these plants is bad policy, but then you can NOT use that same excuse when it comes to building NEW nuclear plants.

            In the end, you appear to believe that all energy policy should be reduced to maintaining the lowest possible rates for consumers. I totally disagree with that opinion, but I have no quarrel with the notion that European policies point in precisely the opposite direction.

            I suggest you give up on your theory and concede the obvious: the data shows where high prices come from, and it’s NOT wind and solar. Then you can make your case for your opinion and the REAL discussion can ensue.

          • Glenn Thompson

            John Greenberg,

            “Your own quote shows the weakness of your theory: “European residential electricity prices have historically exceeded U.S. prices, and the gap has widened in recent years.…”

            It’s not my quote…but one taken from the article. I assume you can read a chart? Note the widening of the gap over the last seven years? The article then mentions….

            “Regulatory structures—including taxes and other user fees, investment in renewable energy technologies, and the mix and cost of fuels—all influence electricity prices.”

            If you don’t believe that solar and wind power has increased the gap between Europe and the US for electricity prices….then you are missing something! I already posted an article that explains it. Perhaps you didn’t read it or just reject it?

            This isn’t the only article and data out there that shows a direct collation between electricity rates and the amount of renewables on a specific electric grid! No doubt in my mind, the more solar and wind power added to a grid….the more expensive electricity will become! I could write a book explaining my reasoning and posting numerous references and articles to prove my point.

            Rate structure is important in planning future energy policies due to how electric rates impact the consumer and the economy! Perhaps I can afford higher energy costs….but I prefer to spend my money on things other than blowing exhaust fumes out a tailpipe, smoke up a chimney , or powering a light bulb. Keep in mind, a large % of Americans don’t have the luxury to pay enormous energy bills. But I gather from your comments… pricing is of little importance?

            Here is an article that shows how high electric rates impacts the poor!

            “Germany’s aggressive and reckless expansion of wind and solar power has come with a hefty price tag for consumers, and the costs often fall disproportionately on the poor. Government advisors are calling for a completely new start.”


            PS. Oh…by the way! Oil and Coal is currently making up 37% of the New England Power Grid. Don’t you wish we had that 620 Mw of VY available to offset 620 Mw currently producing Greenhouse emissions from Oil and Coal?

          • John Greenberg


            Perhaps my use of language was a bit sloppy: by “your own quote,” I meant the quote you chose to select and highlight from the EIA page you linked to.

            I CAN read a chart. Can you? You’ll notice that it begins at zero, even though at that point, there’s ALREADY a difference between US and European rates. That’s because the chart measures the difference in PERCENTAGES starting at that point, not the absolute divergence.

            “I already posted an article that explains it.” I’m not sure what article you’re referring to; you’ve posted many.

            “This isn’t the only article and data out there that shows a direct collation between electricity rates and the amount of renewables on a specific electric grid!” I’ve given you numerous reasons to doubt that correlation, and you’ve failed to address any of them. Specifically, if the amount of renewables explained the rates, then Danish and German industrial rates should also be among the highest in Europe, but they aren’t. Chinese and Indian rates should be among the highest in the world, since they’re in the top 5 for wind and solar generation, but they’re actually among the lowest. The US Midwestern regions should have the highest rates in the US, because they have (with the exception of CA) the highest penetration of wind power, but they are, in fact, the lowest.

            “I could write a book explaining my reasoning and posting numerous references and articles to prove my point.” Or perhaps you could just explain the anomalies that I keep raising here, while we’re waiting for the book.

            “Rate structure is important in planning future energy policies due to how electric rates impact the consumer and the economy!” Of course, it is. That’s precisely the point I’ve been making. In Denmark, the desired impact is to REDUCE consumption by households. In Europe and Japan more broadly, energy pricing has been a vehicle to reduce the amount of energy required to produce a unit of GDP. Unsurprisingly, their economies DO produce GDP units with less energy input than the US does (although, to be fair, the US is slowly improving).

            Nothing I’ve said, here or elsewhere, allows you to infer that I believe that “energy pricing is of little importance.” In various discussions on VT Digger, I’ve made it clear repeatedly that if energy prices rise, their impact on poor households can be offset – either directly (e.g. the carbon tax proposal currently on the table) — or indirectly. Energy pricing is NOT the only policy lawmakers consider each year.

            But as long as you’ve brought up the issue, I’ll make my point more broadly than I have in the past. Our economy has produced significant income inequality, and more importantly sustains a significant level of poverty (however you define it). In discussing new policy initiatives, like carbon taxes, it is therefore reasonable to consider their impact on the poorest among us. (It is ironic, however, that the same people who raise the issue of impact on the poor in THIS context choose to ignore the problem altogether when poverty solutions are on the table, or when they’re proposing spending reductions which will produce even greater inequality and poverty.)

            Given the context of THIS discussion, it is worth noting that Denmark and Germany have FAR lower poverty rates than the US despite their use of renewable resources for making electricity. Why? Because their government policies, in addition to making electricity consumption more expensive, provide a deeper and more significant safety net for low income folks. In fact, Denmark’s poverty rate was the lowest in the OECD @ 6.1% and the US was the highest @ 17.3% in the late 2000s., Figure C. cf also I am NOT suggesting that Denmark’s high residential energy price policy produced its low rate of poverty, but I AM suggesting that taking these two facts together demonstrates that these energy policies do not HAVE to negatively impact lower income earners.

            In sum, it’s clear that high residential energy price policies ARE perfectly compatible with fundamental principles of economic justice and do not need to harm the poorest among us.

            Finally, you and others keep harping on day-to-day ISO-NE statistics as though they were environmentally meaningful. They’re not. What matters is the long-term use of fossil fuels, not what transpires for a few days during a cold snap. If you examine ISO’s annual statistics, you will see that New England’s reliance on coal and oil to generate electricity dropped dramatically between 2000 and 2013:
            See also:, p. 13

    • Annette Smith

      Green Mountain Power had to install a $10 million synchronous condenser to balance the load for the Lowell wind project.