Transmission Alternatives Could Have ‘Serious Financial Implications’ for Maine Utilities

Sep 1, 2016
Originally published on August 22, 2016 4:54 pm

An epochal transformation in the way energy is made, delivered and used in the U.S. is under way, and in Maine an experiment in what’s called a “non-wires alternative” could disrupt electric utilities’ traditional business models by averting the need to build expensive new transmission infrastructure.

In winter, Boothbay Harbor is practically a ghost town, with about 2,000 residents hunkering down at the tip of a peninsula that fingers out from the mainland. But in warm weather the region booms with tens of thousands of summer residents and vacationers.

A first stop for many is T&D Variety, where you can gas up, enjoy a hot breakfast and, on a hot day like this, cool off inside. But instead of a traditional energy-hogging air conditioning unit, co-owner Deb Frenkel says you can thank the ice machines — or ice bears, as they’re called.

“You have two units with tanks that build ice, and when the ice builds, it cools the water and then you have cool air coming in,” she says.

It’s a pretty simple technology. At night when when electricity demand is low, the shipping crate-size “Ice Bear” compressors out back of the store make two-ton blocks of ice and then, in the day, fans blow air across the ice, which flows into the store - averting or at least reducing the need to blast the air conditioners.

“And I think there’s a lot of success locally, I think a lot of people are pleased with it and I love the concept,” Frenkel says.

There are 31 of these ice batteries cooling businesses around the Boothbay region, and they are just one element of a multitechnology effort to manage and reduce the peninsula’s summertime surge of electricity demand. The communitywide initiative came in response to a proposal by Central Maine Power to cover the very few summertime days when demand peaks with a new, $18 million transmission line.

But a Portland-based company called GridSolar had a different idea.

“It’s far cheaper to provide power where you use it than to make power 100 miles away and build a 100-mile transmission line at millions of dollars a mile to deliver that power,” says Steve Hinchman, a principal at GridSolar.

The company proposed to regulators something that transmission utilities, which monopolize the poles and wires in their territories, have rarely if ever seen — a competitor. GridSolar argued that instead of CMP’s expensive new transmission line, it would take advantage of new electricity system data-streams made possible by CMP’s own “SmartGrid” technology to manage an array of local resources to shave down the Boothbay region’s electricity demand, and at a much lower cost to ratepayers.

The regulators bought it, so the ice-bears went in, solar panels were installed on rooftops at the firehouse, YMCA and other locations, businesses swapped out their incandescent lights with energy-saving compact fluorescent bulbs, and three powerful, truck-size batteries were placed near a CMP substation.

It’s a pilot project, and lessons have been learned. One was that on really hot days, GridSolar needed to serve electricity demand more quickly than initially planned for.

The company landed on a big diesel generator that sits out on a dirt road. It’s not renewable energy, but it can fire up with the flick of a computer switch in Portland, providing enough electricity for 100 homes and shaving just a bit from the region’s peak load when it counts the most.

Enough generation to power 100 homes might not seem a lot when you consider the overall demands on the U.S. grid, but this is the largest such project in New England and a national pioneer. It’s being seen as an example for larger projects not only here but also elsewhere in New England.

“It’s an entirely different way of introducing competition into the market,” says William Pentland, an energy consultant who specializes in “distributed generation,” or comparatively small-scale energy projects such as local solar plants or windmills.

Pentland notes that utilities like Central Maine Power have a big incentive to build new transmission lines: When regulators say a project is needed for grid reliability, the utilities can earn a federally mandated profit of 11 percent, and charge it to all ratepayers.

Projects like GridSolar’s, Pentland says, can provide a new, disruptive option.

“That has serious financial implications for how a utility operates,” he says. “That’s the key. There’s no question that their investment agenda will be affected.”

“It’s disruptive but to the extent that we see it as a threat, that’s not productive,” says John Carroll, CMP’s spokesman.

Carroll cautions that there are a lot of variables to manage in non-transmission alternatives such as GridSolar’s, which will become more complicated as they reach larger scales. That could happen soon, with state regulators now considering GridSolar proposals for the midcoast region and the Portland peninsula.

“What we need to do is say we still have the same obligation to our customers to make sure the system is reliable. We have a shared interest with our customers in meeting their needs for lower-cost service,” Carroll says.

As it turned out, the Boothbay region hasn’t come close to the peak loads that CMP first predicted when it proposed building new transmission, at a lifetime cost tens of millions of dollars. So the GridSolar project wasn’t needed either, and the pilot will end after this summer.

But simply because it was on the regulators’ table — because its backers proposed a different path — that new transmission wasn’t built. The state’s consumer watchdog says that alone has saved consumers more money than any other recent effort to reduce transmission costs in Maine.
