Energy Economics and Extra: Interview with Tommy Vitolo

Introduction

Tommy Vitolo is a busy man. If you want a sense of how busy see:

http://www.tommyvitolo.com

http://www.synapse-energy.com/our-team/dr-thomas-vitolo

https://www.linkedin.com/in/thomas-vitolo-67a1a826

@tommyvitolo

Since he is so busy, I was very happy that he gave me a good chunk of his time to talk energy, policy, and technology (and bring me along to the Synapse Energy Economics Friday company lunch!). In addition to his work at Synapse, he is a Brookline Town Meeting Member, a Brookline Constable, State Representative Frank Smizik’s campaign treasurer, and a Board Member and Treasurer at Amory Street Energy Ventures, and more. He and his wife, Jenn Tartano, who is Director of Sustainability at Structure Tone have two kids and they sometimes need to juggle schedules when one of them is traveling or when a child is sick. Tommy has no cellphone, no TV, and no car. Maybe that helps him make more time.

At lunch, Tommy told us how James Storrow wanted to preserve parkland, not create a highway, along the Charles River. The book, Make Way for Ducklings, describes ducks crossing from the Charles River to the Boston Common, something that would not be possible today with Storrow Drive. He envisions a future with the Esplanade focused on parkland instead of a highway, possibly reducing Storrow Drive to one lane if motor vehicle travel can be accommodated elsewhere.

Energy Issues in Brookline and at Synapse

Tommy talked about how his work at Synapse and in Brookline are complementary. In Brookline he raised a Warrant Article for a Community Choice Aggregation Plan (CCA) (see also the Plan FAQ), which aims to create:

  • A reliable electricity supplier
  • More renewable energy options
  • Longer-term price stability
  • Consumer protection and transparency

With his knowledge of the energy field, he was able to leverage data indicating that Massachusetts Renewable Energy Credits (RECs) would likely move from the $40-$50 range to about $20, which then raised the question of whether more renewable energy should be purchased or whether lower prices should be offered to residents. A key advantage of the CCA is that it provides customer flexibility as customers can choose other options, which may be more or less green. But, it is an opt out plan. This has key advantages from a behavioral economics perspective because new customers in Brookline will, by default, sign up for and likely keep the plan which includes 25% percent of the energy from renewable sources. Brookline choose that aggressive target with the understanding that Brookline residents generally have enough money, but not enough time to put into addressing such energy initiatives. They arrived at 25% renewable energy because they had estimated the cost increase of that to be about $7 a month. Ed Loechler, from the Brookline Climate Action Committee, had sensed that $7 would be the “sweet spot” — an acceptable customer price increase, based on his experience door knocking in his efforts to get residents to sign up for NSTAR Green. (Tommy described the analysis as based on “more than anecdote but less than data.”)

Most communities undertaking such plans only typically target 5% renewables, with no increase in price; however Brookline wanted to take a bigger step. Support was unanimous with the Brookline Advisory Committee behind it. Brookline worked with the Metropolitan Area Planning Council (MAPC) and Good Energy on the plan, which is currently going through the regulatory process and a review by the Massachusetts Department of Public Utilities (DPU). The CCA should be in place by January, 2017.

To help me better understand the use of renewables and the REC purchasing process, Tommy explained that they have a goal of seeking harmony between 1) Energy — that which is used now and 2) Renewable Energy sources, which will be averaged out over a year at 25% of energy consumption. So, given the variable nature of wind and solar energy production, the exact percentages of energy sources will vary at any given time.

Utilities buy up the RECs and retire them; so they cannot be double counted. RECs that have not been bought can be carried forward to future years. However, to address Massachusetts Renewable Energy Portfolio Standard (RPS) and Alternative Energy Portfolio Standard (APS) regulations, utilities can pay instead the Alternate Compliance Payment (ACP). RECs are traded on the open market and are traded at about $50 now. However, the spot market informs buying and selling, and increased renewable sources will lower that price. For example, if New York wind farms no longer contract just to New York then they could sell that power to New England. In addition, the Danish firm, Dong Energy, may build new wind farms in New England and that would also contribute to reduced prices.

The first Brookline CCA contract will likely be for one year or just a few years to avoid risks with long term market swings. But in 2017/2018, Brookline will look for a long term contract to ensure steady rates and better enable financing. For example, a 15 year bank loan is more likely to be approved if there is the certainty associated with a long term contract. This also helps to grow the market for renewable energy.

Tommy pointed to Mass Energy for their work in buying RECs and selling them to people who want to go green. Mass Energy supported Amory Street Energy Ventures, which put solar panels on the roof of the Jamaica Plain Brewery. Tommy now serves on the board, helping to do yearly reviews, including energy output checks, and renewing the contract.

I questioned Tommy on the costs of small-scale rooftop solar projects versus utility-scale projects. He agreed that they are economies of scale and lower costs with utility-scale ground-mounted project that ideally use low-cost, flat land. But that land is typically not near population centers and may require new transmission lines. Also, he cited the challenge for Hawaii, which has benefited from large-scale solar; but which also wants preserve its land.

He said that there is room for both rooftop and utility-scale solar saying that rooftop solar also brings payback. He said that he and his wife would like to get a new kitchen. But what is the payback on a granite countertop? It is probably zero. But rooftop solar brings brings value to the utility system through 1) energy, 2) reduced capacity needs, 3) reduced line losses, 4) avoided capacity due to line losses, 5) avoided transmission, and potentially 6) distribution costs.

Sun power is $0 so fuel costs are reduced and any variations in solar and wind can be approximated in aggregate. We know roughly when the sun will shine and when the wind will blow. Massachusetts utilities own no generation, relying on market-based generation. Eversource can buy from new wind sources. There is decoupling of utility sales and revenues in Massachusetts and elsewhere; but utility revenues can be ensured by forecasting sales. Most states, unfortunately, still have the model of more sales resulting in more revenues.

I questioned whether our energy needs could really be met by wind and solar, citing David MacKay’s Sustainable Energy — Without the Hot Air. MacKay argues that there are not enough viable solar and wind resources to met our needs. But Tommy disagrees, emphasizing that there is plenty of open land and open water and that transmission lines can be built. Tommy was disappointed that Cape Wind was not built, having faced challenges in the permitting process. He said that even though there are now available design improvements, such as taller towers with bigger blades, and systems with fewer moving parts, that Cape Wind would have helped moved wind generation forward.

We turned to the topic of the utility of the future and Tommy said that the utility of the future will be focused on reliability, given the parameters of generation and usage. Utilities will know device usage and be better able to control loads. For example, electric vehicle (EV) charging could be done at any point at night, or at work; or EV energy could be fed back to the grid if needed. Variable pricing, for which there are several varieties, will be important. Tommy pointed to energy waste in water heaters, which heat water, let the water cool, and then reheat it again. With utility control that process could be optimized. Similarly, more can be done to run dishwashers and other appliances off hours. Companies like Nest and Tesla are moving us in this direction. This flexibility can be implemented without impinging on people’s lives. Low income customers and patients with health machines might not be able to adjust their energy usage; but, considerations can be made for such customers. By contrast, he was frustrated to see on his daily bike ride to work that a big home in the Cottage Farm area had installed a heated driveway.

A lot of improvement will come from rate design and continued development of product and building codes, which have already played an important part in reducing energy usage. Tommy said that air-source heat pumps are an impressive technology that have been an important development in reducing energy usage.

I asked Tommy about current debates regarding Net Energy Metering (NEM) and he said that NEM is okay for low saturation; but eventually some changes may be needed. There are cross-subsidies but those are okay because there are other cross-subsidies such as those to summer homes and to hot tubs. Solar rates could be more or less than retail rates and could be set up for time of use (TOU) pricing, which could be set up in simple or complex ways. I suggested that setting up some east facing or west facing panels could help alleviate some morning and evening loads. But Tommy said that there are only minor gains from that.

I could not let Tommy off the hook without putting in a little jab to Elijah Ercolino, who said that renewables are tough in urban environments, limiting Boston University’s ability to do rooftop solar. But Tommy was sympathetic to Elijah’s position, noting several issues. First off, BU pays less for electricity than residential customers do so the payback is longer. BU has a mission of education and research to support; so renewables are not a priority. By contrast, Harvard made renewables a key focus. Tommy cannot be too critical because if he is BU might come after him, as a BU alumnus, and ask for more money (I can’t afford to have them ask me either). Second, Elijah has a tough job because he is in the kind of role where he is paid to ensure that things don’t go wrong so he can’t afford to take a lot of risks. Also, as Elijah had mentioned, rooftop mechanicals can also complicate rooftop solar. I asked Tommy if the utility of the future might help address these concerns by thinking further out in terms of investments and taking on more management of the process. But Tommy said that the answer is in rate design and subsidies.

Tommy noted that BU procurement people had found increased energy consumption, which they initially attributed increased use of electronics like laptops and phones. But such devices have limited impact. Larger issues, such as big exhaust fans in Life Sciences buildings, are drawing out conditioned air. A similar problem occurs with exhaust fans in big kitchens.

Tommy said that we need to move to an 80% reduction in GHG emissions by 2050 in order to reduce carbon emissions. But he said that will we will make it there. Moving from coal-fired plants to gas-fired plants is a start; such as Salem’s shift to gas because coal could not deliver energy cheaply enough. He sees gas-powered plants as a temporary step and he does not support new natural gas infrastructure that is designed to last 40–50 years. The Massachusetts Senate voted 39–0 against ratepayer fees for new pipelines; however, in conference, the Massachusetts House of Representative approach won out. Yet on August 17th the Massachusetts Supreme Judicial Court rules that electric utility customers could not be made to pay for a natural gas pipeline.

More temporary solutions such as Liquid Natural Gas (LNG) delivered to an existing port in Everett can help to address our needs. Renewables, including Canadian Hydro, EVs, and hydrogen-powered planes will also play a role. There will be some jobs impacts on people in the coal industry, and their community and he believes there should be assistance provided to such workers. However, overall, he sees a positive trend toward new job opportunities.

Tommy would like to see more experimentation and innovation in energy policy. He said that developments in Texas were interesting, with the state helping to cover transmission costs, enabling the state to better leverage wind and solar. But not all solutions can be easily transferred to other states, given unique characteristics. New York REV is one example from which other states might be able cherry pick solutions. He is skeptical about tidal and current-based energy, given the corrosive effect of salt water on moving parts; but he is optimistic about offshore wind providing renewable energy for New England.

RESOURCES:

Tommy Vitolo:

http://www.tommyvitolo.com

http://www.synapse-energy.com/our-team/dr-thomas-vitolo

https://www.linkedin.com/in/thomas-vitolo-67a1a826

@TommyVitolo

http://www.synapse-energy.com/sites/default/files/Direct-Testimony-of-Thomas-Vitolo-2016-3-E-16-051.pdf

Massachusetts Energy Policy

Vitolo, T. 2016. “Senate bill on climate change is the stronger of the two.” Cambridge Chronicle, July 30

“On August 17, 2016, we were thrilled to learn that the Mass. Supreme Judicial Court ruled that taxing electricity ratepayers to finance a natural gas (read — fracked methane) pipeline was illegal according to the 1997 Electric Restructuring Act.”

http://blog.massenergy.org/blog

Brookline:

“Eversource program increases Brookline students’ energy efficiency knowledge”

http://brookline.wickedlocal.com/article/20151126/NEWS/151129514

“COMMUNITY CHOICE AGGREGATION SUBCOMMITTEE of the Selectmen’s Climate Action Committee”

http://www.brooklinema.gov/AgendaCenter/ViewFile/Minutes/04082016-3699

“TOWN OF BROOKLINE DRAFT COMMUNITY CHOICE AGGREGATION PLAN

Frequently Asked Question”

http://www.brooklinema.gov/DocumentCenter/View/9760

“Greening Brookline”

http://www.tommyvitolo.com/issues.php

http://climateactionbrookline.org/

http://brookline.wickedlocal.com/news/20160722/brooklines-effort-to-get-solar-panels-on-town-buildings-edges-forward

Salem Power Plant:

http://marblehead.wickedlocal.com/article/20150723/NEWS/150728152

http://www.salemnews.com/news/local_news/officials-hold-groundbreaking-for-salem-s-b-footprint-power-plant/article_8845f88e-3636-59b4-b36b-ca06116780a9.html

http://www.footprintpower.com/

https://www.massenergy.org/ne-green-start/newsletter/jan-04-mayors-newton-and-salem-make-clean-energy-choice

Other:

Elijah Ercolino on Energy

https://medium.com/@PerryGrossman/building-automation-and-beyond-interview-with-elijah-ercolino-790d6b3d306b#.vlepbqlxx

“Partnering to Bring Solar to JP’s Brewery”

http://www.renewboston.org/partnering-to-bring-solar-to-jps-brewery/