Can we have a discussion about energy policy — about everything from electrification to offshore wind to the ability of the grid to handle all these new sources? One where two sides present their views without interruption?
Yes.
The recent ROI-NJ webinar, “The Energy Transition: An ROI-NJ discussion on flexible energy systems powering the future,” showed how.
Barb Blumenthal (research director, New Jersey Conservation Foundation), Eric DeGesero (president of Edge Consulting; executive vice president of New Jersey Fuel Merchants Association) and Eric Miller (director, New Jersey energy policy, climate and clean energy at the Natural Resources Defense Council) had a great back-and-forth for nearly 90 minutes.
If you missed it, we’ll recap the event in a number of stories. Here’s the first — the dozen-or-so best comments as they played out during the discussion. (The highlights on video are above.)
And, because people don’t talk in complete sentences (or perfect grammar), we’ve edited their remarks for readability. Here goes:
Eric Miller — on recent state hearings regarding energy legislation
“It was a relief for all of us to see that everyone is in agreement that New Jersey needs to think about how it invests in its grid. Whether you’re an environmentalist, a business or clean energy provider, everyone’s in agreement — let’s get together, let’s figure out how to modernize the grid. That bill is not moving forward. And, not right now, but next session, I’m sure it will be the center of discussion.”
Barb Blumenthal — on the state’s Energy Master Plan
“The Energy Master Plan is clearly out of date because the transition is happening much more quickly on many different fronts than was anticipated. The Energy Master Plan, which was developed four years ago, always anticipated that we should redo the analysis that underlies it, particularly the electric grid portion of it, every three to four years. So, we’re overdue for taking a fresh look at all of the options: What’s the mix of resources, what are the low-cost pathways to get us to 100% clean electricity?”
Eric DeGesero — on rising costs involved in the transition to clean energy and who will pay them
“When money isn’t free any longer, you’ve seen some of these projects become a lot less attractive. … The governor led a delegation of Northeast governors a few months ago, asking President (Joe) Biden for more money to help backfill this — I think in anticipation of the Ørsted announcement — and the president didn’t come through. So, you’re looking at the cost really coming home to roost. There’s a bill says that we’re going to appropriate $300 million to protect the ratepayers from this cost. The problem is that $300 million is coming from the taxpayers.
“So, whether you’re wearing your ratepayer hat or your taxpayer hat, there needs to be far more analysis of what this is going to cost before we do it, as opposed to doing it and figuring out the cost as we go along.”
Blumenthal — on the ability to transition to clean energy options
“The question in the Energy Master Plan and the analysis that underlies it, is: If you start swapping out more clean resources and retiring or reducing the amount of fossil fuel generation over time, between now and 2050, what happens to the electric grid? Can it remain reliable? The studies actually simulate the actual process of decarbonizing the electric grid over 30 years, and it fundamentally answers the question: Will the lights stay on? And the answer is yes, with the right mix of resources.
“The second question is, of all the ways of doing that, what does it cost? That analysis, four years ago, found that you could decarbonize and we would be paying less for energy in 2050, as a percentage of GDP, than we do today. So, it’s not expensive, it’s doable, it’s affordable.”
(Please note, these figures relate to cost of energy and do not include the cost of the transition and building out of new energy sources.)
Miller — on diversification of options after recent setbacks in offshore wind
“I don’t think we’re necessarily putting all our eggs in one basket. There are a lot of different types of resources out there. I don’t think anyone’s saying this one resource is the answer, it’s, ‘Let’s go out, figure out what works for New Jersey, figure out what meets our climate clean energy goals, figure out what maximizes economic development and go in that direction.’”
DeGesero — on the current diversification of sources
“As of 7 o’clock this morning, 42% of our electricity in our regional grid was generated by natural gas, 34% by nuclear, 14% by coal, 5% by wind, 4% by hydro and 1% everything else, including solar. So, we talk about all the eggs in one basket; we have it spread out here. And part of that is nuclear. We have three nuclear generators in Salem County; their licenses are up (in 2040). There’s a question of whether or not they will be renewed. Keeping that diversified mix, especially for an important part of our baseload, is something that has not being as much part of this discussion as I think it should be.”
DeGesero — on use of hydrogen in clean energy discussion
“Hydrogen is something that gets talked about, and it rightfully should. But this gets to a threshold question of: Is combustion OK? Can we have fire or is everything electrification? Because, two years ago, when the (Department of Environmental Protection) proposed their electric boiler rule, hydrogen boilers were not allowed to be part of it because they emitted an air contaminant at the source of combustion.
“So, on a going-forward basis, I think it’s important that hydrogen and all other new sources — wind and solar are part of it — are included. There’s a lot of government money behind hydrogen, and it’s going to stay behind it; it’s not going anywhere. I think hydrogen deserves more discussion. There’s an issue about cost and availability, but we have to answer the threshold question: Is combustion OK? And, if it is, then we can look at all these different alternatives, of which hydrogen may be a better answer than electrification alone, certainly for larger industry and maybe for heavy transportation.”
Miller — on how hydrogen fits into the mix
“Hydrogen has a lot of uses in the U.S. economy. Right now, we produce it by cleaving it off natural gas. We at NRDC have a big hydrogen team that is focused on this at the federal level and across the country. There is a need for responsible green hydrogen production. Let’s make clean hydrogen and use it in sectors that are very difficult to electrify: chemical manufacturing, heavy industry, long-haul transportation. So, overall, we’re cautiously optimistic about the role hydrogen will play in filling those use cases.
“To be clear on this, on the flip side, because hydrogen is hard to make, because it is expensive right now — we need to make sure we use it in applications where we don’t have another option. That’s how NRDC is looking at this.
“Where we know hydrogen is probably not a good answer — and we’ve done studies on this in multiple states — is blending it into pipelines and using it to cook an egg. There are much higher and better uses for hydrogen than that. So, while I think we should look at how we can use hydrogen best, we already have a pretty good sense of probably where it’s valuable and where it’s less valuable.”
Blumenthal — on the plurality of other options
“We don’t know which ones are going to be commercially viable, but we need to have pathways that allow for a whole range of options that could be the solution to keeping the lights on if we want to keep phasing out gas generation. The point is, the lights are going to stay on in the same way they do today, gas is going to play a role until there is something else. Down the road, 10-15 years from now, we know there will be some other options — and we’ll see which ones become the most cost competitive, most attractive ones, to replace that last role that gas plants are playing.”
DeGesero — on costs related to exploring new options
“The question is, how do you scale, and what’s the cost? All the talk in the past month or so has been about the generation of Ocean Wind 1 and 2, but there’s going to be a billion dollars in costs to get it on shore. How long is it going to take to make that transition? And are there ways to utilize natural gas at the generation level — whether it be renewable hydrogen, whether it’s green or blue hydrogen, to make sure that the lights stay on and stay on at an affordable rate?”
Miller — on the use of gas in a 100% clean energy scenario
“I think there’s this misconception out there that New Jersey’s 100% clean-electricity-targeted legislation means we’re going around shuttering gas plants. That’s just not the case. Different types of resources have different types of credit attributes. And one of the things that natural gas combustion turbines has, is that you can call them up and say: Turn them on right now.
“In a 100% clean electricity scenario in 2035, the gas plants are still around to serve those reliability purposes. Where we benefit greatly is the baseline level of our bulk usage of energy when the amount of it that’s clean — and doesn’t emit pollution — increases. As new technologies come online, we have resources that look a lot like gas plants, but don’t emit carbon, don’t pollutants. Those come online, those get develop. The important thing to say is, those things look a lot like gas plants — how they operate, the underlying technology and the use of welders, pipefitters, IBEW members to operate those facilities. So, on the ground, it looks fairly similar, that we just upgraded our technology, the same way we upgraded in New Jersey from coal to gas.”
Blumenthal — on willingness to switch generation based on cost savings
“More than 90% of all the resources waiting to connect in PJM are clean resources. In the country, if you look at the interconnection queues, everything that’s waiting to be developed can replace all generation currently in existence. It exceeds the amount — and those are clean resources.
“There are parts of the United States, most of the Plains states and the Midwest, where these clean solar and wind are lower in cost than replacing coal and gas. They are not switching because of state policies or climate change, it is what’s driving it is the market.”
DeGesero — on the market in N.J. pushing clean-energy transition
“The only thing I can do is look at what the market said with PSE&G. When ratepayers paid for something, like upgrading the energy strong post-Sandy, (it was all in). But PSE&G is run by very smart people and are the darlings of Wall Street for a very good reason — they’re a very well-run company. When the investors had to put their money into the offshore wind (they pulled out). That tells me that the market is responsive because of the Inflation Reduction Act, as opposed to the market being the one to drive offshore wind in our market.”
Blumenthal — on costs associated with electrifying commercial buildings
“You certainly aren’t going to pay any more for energy bills if you replace your fossil fuel appliances with electric appliances. And, in much of New Jersey, you’ll see substantial savings. But, if you want to see those savings, how do you pay for the upfront equipment? It is more expensive. That’s where the role of state policy comes in.
“If this is something that we want to support and remove market barriers to make it easier for businesses and for residential households to make this switch, the BPU should have bigger incentives for electric appliances. If we were in New York, Massachusetts or many other states, you would be seeing $10,000 rebates for an appliance. We’re in New Jersey, you get $600 right now for an electric appliance.
That’s going to change. There are new programs coming out from all the utilities a year from now — and the incentives for electric appliances are going to be higher. The state has to step up and pay for energy efficiency. Right now, we’re giving bigger incentives for inefficient gas appliances than with these highly efficient electric appliances.”
DeGesero — on electric appliances being more efficient
“Barbara is 100% correct that a heat pump will operate at three times the level of efficiency, but that coefficient of performance drops precipitously once you get close to 30 (degrees). So, the enormous upfront cost is the huge barrier that we know about. But the operational advantage that electric gets when it’s chilly out, isn’t true when it’s cold.”
Miller — on chilly vs. cold
“I always love the chilly vs. cold conversation in a state like New Jersey. It doesn’t get that cold in New Jersey. And, when it does get cold, it’s not nearly as cold as Massachusetts, Maine and upstate New York, which have very high heat pump penetrations. Up there, that industry has been shifting for years toward electrification, away from traditional fuels. Vermont has a lot of delivered fuels, a lot of kerosene oil and wood-burning stoves. They’re moving forward with electrification. And, so far, it hasn’t been entirely problematic.”
Miller — on when costs to transition pay off (and incentives that help)
“We know, over the lifecycle of these technologies, in 15-20 years, they net out. But we want them to net out faster — it’s always better to get your ROI in one or two or three years than five or 10 years. (These incentives) help close that gap, make those investments more attractive. And that’s really why we see a lot of them on the market. I don’t want to pretend that they only exist because this technology’s never cost-competitive. Any renovation you take on a big building will be expensive. And making it so that renovation lowers CO2 emission, moves to electrification and shrinking that ROI, is what these programs do — and why they’re so valuable.”
DeGesero — on the ability of new technology to handle needs
“In December of 2022, Efficiency Maine, which is seen as kind of the paragon of heat pump promotion in a cold state, put out something that said, ‘Enclosed you’ll find tips to get the most from your heat pump during cold weather months, as well as a handout on how to maximize the use of your heat pump, while also heating with a boiler furnace.
“Eric (Miller) said that it doesn’t get that cold in New Jersey. Last year, on Dec. 23, we were all too busy with revelry and we may have missed the email from our utilities saying, ‘Please turn down your thermostat and unplug your unnecessary lights, i.e., your Christmas lights, because it’s cold out and the grid can’t handle the demand.’”
