Securing New Brunswick’s Electrical Energy Future
and Establishing a New Platform of High Quality Employment
Based on a presentation to the New Brunswick Energy Policy Commission by the Woodstock Sustainable Energy Group on February 15, 2011. Updated April 2015 for presentation to the Government’s Innovation Week project.
Introduction
The Woodstock Sustainable Energy Group prepared and delivered a 15 page submission to the Energy Policy Commission in January 2011. This presentation focuses on the core issues of that submission: 1) electricity system planning known as distributed generation, and 2) the financing option for energy efficiency and renewable energy installations known in Canada as Property Assessed Payment for Energy Retrofits (PAPER), and as Property Assessed Clean Energy (PACE) in the United States. To start with, a brief prespective on the coming era of distributed generation.
Electricity Systems as Infrastructure
Electricity systems got started with regulated utilities operating central generators and selling electricity as if it were a commodity.
Modern technology is changing this situation. It is now technically feasible and increasingly affordable to generate electricity on-site almost anywhere. These new technologies are dramatically altering the options for generating electricity and changing the way we think about electrical service.
System designers at the forefront of the industry now point out that electricity is not a commodity in the usual sense.* Electricity is a system condition that exists everywhere simultaneously in a given network. A network can be as small as a house or as large as a regional grid. Electricity can now be generated at any scale and networks of various scales can be linked together providing flexibility, optimum efficiency, and security of service.
With Tesla’s April 30, 2015 announcement of its Powerwall battery system, the problem of renewable energy intermittancy is largely solved. Powerwall storage combined with solar generation is a giant step toward a stablized, distributed generation, smart grid system. A 10kWh solar-plus-battery system costs a little over $7000 US, or can leased for 9 years for $5000.
With this coming transition to distributed generation, the costing of electricity will shift from kilowatts to infrastructure. The cost of electrical service will be more and more embedded in infrastructure, starting at the level of individual buildings and proceeding to the connection in a community wide network with appropriately scaled back-up facilities.
* See Walt Patterson, 2007. Keeping the Lights On: Towards Sustainable Electricity. London, Earthscan, Chatham House.
Like many other innovative technologies that have improved modern life, on-site, renewable electricity generation with lithium battery storage will surge to the forefront of desirable, affordable, and sought after options. The solar-plus-battery transition is being compared to the change in telephone service from landlines to mobile phone technology.
A Thirty Year View
What will the electricity system in New Brunswick look like after several decades of distributed generation and smart grid development? Most residences, farms, and businesses will have their own generation facilities hooked up interactively with the grid. Some may be totally off the grid. On-site and community based back-up generation will consist of several types of renewable energy generating technologies with battery storage providing smoothed out, efficient and reliable electrical service regardless of weather conditions.
The grid will connect on-site renewable energy generators-plus-battery technology, providing load-shifting and well balanced system conditions. Backup generation facilities will be established at the community level. The battery storage systems now introduced by Tesla are scalable to industrial and utility system levels. This multi-level, interactive connection, along with the use of efficiency monitoring and control, describes a fully developed “smart grid.”
A distributed generation system would be environmentally secure, fiscally sustainable, and a positive force for economic and social development in every community province wide.
In particular, we want to emphasize the employment creation factor of a distributed generation system. The scale of business development in energy technology installation, maintenance, and perhaps fabrication would be large enough to provide a new, long term stabilizing platform for employment in New Brunswick. The expansion of this business and employment platform could occur in every region, thus helping to equalize income and living standards across the entire Province.
Most of the jobs created by moving toward a distributed generation system would be accessible to workers with construction and mechanical skills. The specific training needed could be readily provided by the Community College system.
As this sector expands, employment will expand across the Province. The jobs created will not require relocation or the importation of workers from away. They will be community and region based jobs. The history of renewable energy development has established an employment track record; 15 jobs are created for every 1 million dollar investment, 14 jobs are created for every 1 million dollar investment in energy efficiency retrofits. By comparison, a 1 million dollar investment in the hydrocarbon industry yields 2 jobs.
Property Assessed Payment for Energy Retrofits (PAPER)*
The programme known as Property Assessed Payment for Energy Retrofits (PAPER) should be implemented in New Brunswick in order to help launch the province into the renewable energy future and lay the foundation of a smart, green power grid. PAPER programmes are a common sense combination of good public policy and private initiative.
The first step toward a distributed generation and smart grid system is for property owners to make their homes and commercial buildings more energy efficient and to install renewable energy technology that becomes part of the smart grid. Upfront costs are a barrier to many property owners. PAPER programmes effectively remove this barrier.
What is the PAPER programme?
PAPER programmes enable governments to secure the financing needed to fund energy efficiency upgrades and on-site renewable technology by issuing bonds or making other financial arrangements. The property owners who take advantage of the programme repay the financing over a set number of years through an extra “assessment” on their property tax bill.
The financing is secured by the property, and, like taxes, is paid before other claims against the property in the case of foreclosure. There is little or no up-front cost to the property owner. If the property is sold before the end of the repayment period, the new owner inherits both the repayment obligation and the energy efficiency improvements.
Establishing a PAPER programme in NB would require the following steps:
- Government creates legislation to establish PAPER programmes.**
- Municipality designs programmes and selects programme administrator.
- Municipality secures funding through bond or forms agreements with private lenders.
- Municipality markets programme through pre-qualified service providers.
- Property owners develop retrofit and/or renewable energy installation plan and applies for special assessment.
- Work is completed; assessment payments collected on property tax bill.
*A similar programme in the US goes by the name Property Assessed Clean Energy (PACE).
**PAPER programmes are typically set up and administered by municipalities or regional juristictions. With NB’s small population and large unincorporated rural areas, a case could be made for the provincal government to act as the administrative body. A combination of municipal programmes and a provincal programme serving unicorporated areas might work well.
PAPER programmes offer many advantages to property owners such as reduced utility bills, a long repayment period, potentially lower interest rate, tax-deductible interest payments, and an easier application process than applying for a second mortgage or home equity loan.
Repayment schedules can often be arranged that match or fall below energy cost savings. Unlike most other financing options, the repayment obligation transfers when the property is sold, allowing homeowners to invest in improvements that will pay back over a longer time frame than the owner may retain the property.
For government, PAPER programmes provide an opportunity to address carbon emission targets and agreements, combat climate change, support environmentally friendly building improvements, and strengthen local and regional economies. Because the loans are secured by the property, PAPER programmes present virtually no risk to the government’s general fund and financial operations.
With the introduction of PAPER programmes, real energy security and resilience can emerge in each community, laying the foundation for distributed generation and a green grid system. A provincial energy policy that includes PAPER programmes will assist communities to remain resilient and viable even as access to fossil fuels becomes unstable and uncertain, and worldwide climate change begins to disrupt many aspects of the global economy.
PAPER programmes should be part of the province’s energy policy. They should be introduced as a unifying policy element and thoroughly articulated in a new policy document and in promotional material.
The province wide implementation of PAPER programmes could begin a historic transformation of electricity generation, distribution and management in NB. PAPER programmes could help get the province on the road to a truly secure, self-sufficient, renewable energy system, and a new era of employment and income growth.
A Critical Step
We urge that a policy path be established that opens the door for New Brunswickers to the best innovative, renewable energy technologies, even while the old centralised system continues to be utilized in the near term.
We acknowledge there is a tension between the old technology and the new, between the economics of centralised generation and the economics of distributed generation. This tension should not be seen as a conflict. It should be seen as an opportunity to facilitate the transition to an updated, highly innovative, and more efficient electricity infrastructure.
Creating good, long term, community based jobs will be one of the most significant benefits for New Brunswick of building up a robust renewable energy and energy efficiency retrofit industry. The Property Assessed Payment financing programme is a key pathway to this future.
Woodstock Sustainable Energy Group Contact: Sam Arnold
References
Grid Edge conference June 2015
Institute for Building Efficiency showing a series of short articles on PACE programmes.
David Suzuki Foundation’s three major reports on Property Assessed Payments for Energy Retrofit programmes.
Two Rocky Mountain Institute reports on how solar and solar-plus-battery are changing critical relationships in the electricity generation and service environment.
– The Economics of Grid Defection
– The Economics of Load Defection