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October 2012

Governor Malloy Unveils Comprehensive Energy Strategy

By: Fred Klein & Lee Hoffman

On October 5, 2012, Connecticut Governor Dannel Malloy unveiled a comprehensive energy strategy designed to enhance energy efficiency opportunities, provide greater access to a variety of fuels for heat and power, lower energy costs and better protect the environment and natural resources.

Key components of the strategy include: making cleaner burning lower-cost natural gas available to more than 250,000 residents and 75 percent of businesses in the next seven years, and expanding efficiency programs to reduce energy use.  The plan will also reexamine the Renewable Portfolio Standards – which call for 20 percent renewable power by 2020 – potentially raising the standard and increasing the mix of renewable options. It moves away from subsidizing favored technologies or companies toward a flexible “finance” model that encourages entrepreneurship and private sector leadership. Combined, the strategy is expected to generate at least 10,000 jobs. At more than 250 pages, the draft energy strategy is indeed comprehensive and will focus on five key areas, which are discussed briefly below.

ENERGY EFFICIENCY STRATEGY

The draft energy strategy seeks to utilize “all cost-effective” energy efficiency in order to:

  • Reach all sectors and all buildings;
  • Improve efficiencies in HVAC, insulation, boilers, and manufacturing processes;
  • Leverage private capital through innovative financing including the Clean Energy Finance and Investment Authority (CEFIA), Connecticut’s first-in-the-nation “Green Bank,” standardized energy efficiency performance contracts, and the state’s new Commercial Property-Assessed Clean Energy (C-PACE) program;
  • Establish building efficiency standards for both new construction and retrofits; and
  • Advance information technology opportunities, including a smart grid and advanced meters.

ELECTRICITY SECTOR STRATEGY

With the goal of providing cheaper, cleaner, and more reliable electricity, the strategy proposes to:

  • Contain grid costs through proper planning, infrastructure investments, and engagement in federal (e.g., FERC) and regional energy (e.g., ISO-NE) decision-making processes;
  • Use economic incentives to promote a portfolio of alternative energy technologies that can compete with existing fossil fuel generation;
  • Induce private sector investment in renewables through CEFIA, Zero and Low Emissions Renewable Energy Credits (ZRECs and LRECs), and other innovative financing; 
  • Study Connecticut’s Renewable Portfolio Standard (currently targeting 20 percent renewable power by 2020) to potentially: (1) raising the target, (2) broadening what counts as “renewable,” and (3) expanding in-state clean power generation; and
  • Promote more “distributed generation” through virtual net metering, submetering and a pilot program of microgrids that would keep critical facilities (e.g., hospitals, prisons, sewage treatment plants, first responders, warming centers, grocery stores, gas stations, pharmacies, banks, and phone charging locations, etc.) “up” when the grid is down. 

INDUSTRY SECTOR STRATEGY

In order to spur economic competitiveness and  growth, the strategy would increase the focus on the manufacturing sector to:

  • Ensure that energy efficiency programs reach all of the state’s manufacturing companies;
  • Provide the industrial sector with support for efficiency investments to include process efficiency programs and combined heat and power projects; and
  • Prioritize factories and other industrial “anchor loads” in the extension of natural gas mains.

TRANSPORTATION SECTOR STRATEGY

According to the strategy document, transportation accounts for 32 percent of the energy consumed in Connecticut and an even higher percentage of the fossil fuels burned. Therefore, a high priority of the energy strategy calls for:

  • Secure funding for transportation infrastructure;  and
  • Investment in a clean fuels/vehicles infrastructure, including electric vehicle charging stations, conversion of fleets to natural gas, Liquefied Natural Gas stations and hydrogen filling stations, and development of second-generation biofuels such as biodiesel from food waste.

NATURAL GAS SECTOR STRATEGY 

Harnessing the availability of cleaner burning domestic shale gas at prices that are significantly lower than oil, the strategy is designed to bring Connecticut up to par with neighboring states by making gas available to as many as 300,000 additional Connecticut end-users, beginning with roughly 217,000 customers who are on gas mains now but not heating with gas. Incentives would include:

  • Financing options to eliminate the upfront burden of conversion to natural gas;
  • Enabling potential gas customers who are near gas mains to have their connections financed by the state’s gas utilities and repaid through the added revenues of the new customers; and
  • Adding roughly 900 miles of gas mains with a particular focus on providing “anchor loads” (e.g., factories, hospitals, schools, or other facilities with significant energy consumption).

The Comprehensive Energy Strategy is designed to launch a dialogue that will be the subject of a series of public hearings and technical meetings over the next several months.  Interested persons and businesses are encouraged to submit comments.  The draft strategy is expected to be finalized by the beginning of the year and programs will be developed to implement the strategy at that time.

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