Energy

Future of clean energy investment fund uncertain

A conveyor belt at Norwich University's new $6.2 million heating plant carries wood chips up from a giant bin to two massive furnaces whose steam production provides 97 percent of the entire campus' heat and hot water needs. Photo by Andrew Nemethy
Conveyor belts carry wood chips into a heating plant in Vermont. File photo by Andrew Nemethy

A fund meant to spur small-scale renewable energy developments will expire by 2018 unless legislators choose to find another source of revenue, according to a legislative report published this month.

The fund’s fiscal year 2017 budget anticipates around $230,000 in revenue, but that’s primarily from loan principal, interest repayments and federal grants.

Until 2014, the fund took in as much as $7 million a year, primarily from payments Vermont Yankee made in return for storing used nuclear fuel. That source of funding ceased after the nuclear plant was shuttered in December 2014. The fund now has more than $5 million available.

Without a new funding source, the fund will be spent entirely by 2018, the report says.

From the clean energy fund report
From the clean energy fund report

The fund’s board members plan to press the Legislature this year for continued funding, said the board’s co-chair, Sam Swanson. Board members hope to spend the money in upcoming years in support of wood-based heat and electricity, Swanson said. Further investment in biomass projects could accelerate Vermont’s flagging forestry industry, officials said.

“We’re going to be gathering material that would support (legislators) who want to talk about it in a meaningful way,” Swanson said. The fund “did a lot for moving the solar market forward and building a pretty robust solar industry in Vermont. It certainly didn’t do it alone, but we think it played an important role.”

“We’re hoping funds can be deployed in a similar way … to nurture and sustain a vibrant biomass-based industry in Vermont,” Swanson said.

Despite having no identified funding source, the fund’s board members this year crafted their budget around an assumption that it would receive at least $2 million each year.

Board members felt strongly that the fund has accomplished a great deal and should continue operating, so they chose “to plan on the basis of the Legislature eventually providing funding,” Swanson said.

Board members have for years expected funding to run out, Swanson said. They’ve sought recently to identify new funding sources, but that question has remained an open and pressing one for years, he said.

Supporters say the fund represents a good investment. It boasts in recent years of having spurred $5 to $6 of private investment for every $1 the fund invests, according to the last two annual reports.

The fund awarded $1.87 million in 2016 in grants, incentives and contracts, and the clean energy projects this money supports cost a total of $11.79 million, according to the report.

While the fund’s cash position diminishes, its support has increased for wood as a source of electricity and heat.

The fund is most effective when its resources are channeled into a single energy sector or technology, the fund’s five-year 2013 strategic plan found. In 2015, the fund’s managers spent more than $1.5 million on wood-energy projects.

Skeptics sometimes say that burning wood isn’t a “clean” way to produce electricity, said fund manager Andrew Perchlik, but administrators have embraced wood energy because it dovetails with the fund’s goals.

Clean energy is often defined as renewable energy in concert with energy conservation efforts, Perchlik said, and the Legislature has defined wood heat and wood-produced electricity as renewable forms of energy.

Wood-fired stoves have advanced to the point that they’re highly efficient and they produce relatively little pollution, Perchlik said.

Furthermore, investment in wood-fired heating is a good use of the fund’s limited remaining money, because it would have the added benefit of reviving the state’s forestry industry, supporters say.

This year, Vermont’s clean energy fund paid nearly $1 million for projects relating to wood heat, according to the report.

The CEDF awarded $903,054 in 2016 to 16 different entities for what fund administrators call “advanced wood heating.” These awards were split almost evenly between infrastructure for wood pellet delivery (trucks, pellet mills and storage) and installation of wood-fired heating systems.

The $428,976 awarded for wood-heat systems went to schools and affordable housing projects, which contributed an additional $3.7 million to the projects.

Of the $474,068 that went to pellet infrastructure, the largest CEDF award totaled $250,000 for a new pellet mill in Lunenburg that is expected to cost between $4 million and $5 million.

At the same time as the fund ramped up support for wood energy, the fund contributed almost nothing to the development of solar power in the state. Solar incentives from the fund aren’t needed any longer because the solar industry is thriving in Vermont, officials say.

From the clean energy fund report
From the clean energy fund report

In 2014, the Clean Energy Development Fund gave incentives for 1,000 solar projects, and awarded monies to only 20 solar power projects in 2016. Developers nevertheless sought nearly twice as many solar project permits in 2016 as they did in 2014.

With the fund’s aid, Vermont’s solar-power industry grew to the point “where we were confident the market would continue to escalate without our incentives,” Perchlik said.

The fund has sufficient money for 2017 and 2018, and the governor will give further consideration to its budget in his state budget for 2019, said Rebecca Kelley, Gov. Phil Scott’s communications director.

A $1.2 billion power cable that Transmission Developers Inc.-New England has won approval to sink beneath Lake Champlain would pay $5 million to the fund annually, according to the terms of its approval by state agencies. But that money will materialize only if the cable is built.

The cable will “absolutely” be built, TDI co-founder and CEO Don Jessome said through a spokesman. TDI is competing with several other companies for a contract to supply Massachusetts with 1,200 megawatts of clean energy, and bids are due April 1.

The Clean Energy Development Fund boosts local economies and makes the benefits of renewable energy more affordable for Vermonters, said Public Service Commissioner June Tierney. Tierney said she and other members of the Scott administration are “committed to continuing the important work of the clean energy fund.”

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  • Sandy Jensen

    It is my sincere hope that this is, at last, a sincere opportunity to stop GMP subsidies via the no bid contract to VEIC from our electric bills. Why not redirect this money into the CEDF?

    • Douglas Hoffer

      They are not subsidies; they are investments in Vermont businesses and homes. Efficiency Vermont effectively buys power through efficiency at costs much lower than utilities pay to buy kWh.

      “Efficiency Vermont supplied electric efficiency at a levelized cost of approximately 4.4
      cents per kilowatt‐hour (kWh) over the average expected lifetime of the efficiency
      measures installed in 2015.”

      https://www.efficiencyvermont.com/about/results

  • John McClaughry

    CEDF backers have a very obvious source for continued large funding: the carbon tax. H 412, last year’s carbon fax bill, renamed the CEDF to “Vermont Energy independence Fund,” and would have become the repository of as much as $42 million in the tenth year of the carbon tax (after an $8 million annual payment to the weatherization fund, the price of getting the support of community action agencies for the carbon tax bill, which of course wasn’t taken up.) One admitted reason for claiming these carbon tax revenues is to counter the coming phase out of the 30% Federal front end investment credit subsidy.
    The Renewable Industrial Complex is clever and focused. They’ll find some way to stay alive and profit, especially if the public can’t figure out how they’re grabbing the cash.

    • Hanna O\’Connor

      “clever and focused” inasmuch as renewable energy is integral to our future and this so-called “complex” is on the right side of Vermont’s economy. (What cleverly-named complex do we call misinforming, climate-denying thinktanks like the Ethan Allen Institute?). If carbon pricing generates revenue to be invested in clean energy and energy efficiency, and our tax dollars are going towards preparing our economy and infrastructure the future, I am on board. We need to be forward thinking, and that takes investing in our future.

    • John McClaughry

      Addition: I left out the words “solar PV” in front of “Federal front end investment credit subsidy.”

  • Owen Farnsworth

    Is wood chip/pellet generated energy truly “clean energy”?
    What are relative CO2 emissions from: wood chips; natural gas; and oil?
    Is “renewable energy” also “clean energy”?

    • Dan Davis

      Hi, I install OkoFen pellet boilers in Vt and upstate NH. The CO2 from these boilers is one half of the amount from oil and propane. The boilers are over 87% efficient and have emissions that are one tenth of the amount the EPA allows for newer wood stoves. The boilers are feed from a bin, clean out the ash, modulate to meet the heating load and are connected to the internet so they can be checked out on line. They also send out emails if they need to be cleaned or have any other issues. The price of pellets is equivalent to oil at $2.00 per gallon and the heating dollars stay in the local economy supporting the logging industry. It’s a total win-win but is still a little expensive. We have been helped by the CDEF and Northern Forest as well as Efficiency VT in providing money to help with the installation. I might also add that if there is a spill of the pellets all you need to have to clean it up is a dust pan.

    • Chris Kayes

      Owen,

      It seems that you are equating CO2 emissions with NOT clean energy?
      If so I would like to remind you that CO2 is what you expire when you breathe and is required for life on this planet. Any slight warming caused by increased levels of CO2 (unfortunately it’s exponentially negative, not linear) is really, really good as it keeps the planet from slipping into another ice age, like it really, really wants to.

      Remember, cold = bad, warm = good.

      Maybe you are also referring to particulate emissions which may occur when carbon energy sources are pyrolyzed (burned). If that is the case then you should know that all forms of carbon pyrolyzation are safe from particulate emission if the proper technology is used. The cost for this “clean energy”is higher, but not as high as the cost of extracting rare metals and environmental damage caused by wind and solar.

      Properly used, wood chips are a great source of renewable energy in Vermont.

  • Gaye Symington (member of the CEDF board)

    This article is incorrect in saying the fund is being used to support wood-generated electricity. The CEDF is supporting modern wood heat, but NOT electricity. Using wood to generate electricity you essentially throw out three pieces of wood for every four harvested. Its inefficient and at a large scale could compromise the health of Vermont’s forests. Wood heat from pellets or chips can be burned more cleanly and is more likely to be used close to the source, rather than being trucked long distances to a big plant.