The New England electricity market may not prove to be as lucrative as green-energy developers in Atlantic Canada think, a Maine-based energy expert says.
Gordon Weil said in a new policy paper that efforts to boost power exports from this region could be limited by falling energy demand south of the border, coupled with the high cost of building new transmission lines.
“I think the prospects are not as good as people hoped they would be,” Weil said in a telephone interview Friday.
The paper, released earlier this week, was produced for the Atlantic Institute for Market Studies.
Weil, a senior fellow with the regional think-tank, said there may be less opportunity to sell power into the United States because conservation programs are expected to slow demand in that market. Lower industrial load due to paper mill closures is also a factor, he added.
While various Crown-owned utilities or energy companies — such as Nalcor in Newfoundland and Labrador, and Halifax-based Emera Inc. — are eying projects to help the northeastern U.S. meet renewable energy targets, Weil said shale gas from Pennsylvania could be a more attractive fuel option. A preference for local generation, coupled with stiff competition from Hydro Quebec, may also work against ventures with higher transmission costs, Weil added.
“If you’re exporting power over multiple systems, it gets non-competitive.”
He said there’s no risk to Nova Scotia ratepayers if Nalcor, Emera’s partner in Muskrat Falls, doesn’t sell as much hydroelectricity into New England market as planned. Electricity customers in this province are paying the cost of building new transmission needed for the $7.6-billion Labrador project, including the $1.5-billion Maritime Link.
In return, Nova Scotia gets a portion of the energy, with a guarantee that more will be available at market prices. Labrador hydro will be used to help the province meet its legislated 40 per cent renewable energy target in 2020.
But the Maine energy expert said ratepayers in Newfoundland and Labrador could face higher costs if Nalcor doesn’t sell as much market-priced energy as planned.
“I think Nalcor is excessively optimistic about what it can get in that market, and even how easy it will be for them to access it.”
Weil, an advocate of more regional energy co-operation, said he still believes the creation of an Atlantic power pool is the best way to ensure there’s a market for Muskrat Falls power.
Under such a system, utilities in the four provinces would still own power plants and a transmission grid. But they would share generation, which would be dispatched throughout the region by a single system operator.
While “baby steps” have been taken to increase co-operation, more work is needed to reduce system costs and operating efficiencies, the AIMS fellow said.
The system could later be expanded to include parts of New England, he added.
“Your best hope with New England may be a formal relationship between the two regions, not just trying to sell into the New England market.”