Nextera: Fossil Fuel Wolf Dressed in a Renewable Energy Sheep's Clothing
Christmas Eve 2022
Fuel Oil Smoke Fills the Skyline as Wyman Station Powers up in the Face of Brutal Cold
A brutal cold front wreaked havoc with the Christmas Holliday for many Americans. It was just the scenario for which the New England Grid’s governing body - ISO NE— sixteen years ago initiated forward contract purchasing to lock in excess power generation capacity in cases of extreme weather.
Participating plants —known as peaker plants— are otherwise largely mothballed as they are typically the oldest and least efficient, and are powered by some of the most environmentally harmful fossil fuels.
In their Annual Report, Nextera proclaims themselves “the word’s largest generator of renewable energy from the wind and sun, as well as a world leader in battery storage.”
What they do not acknowledge is the over $500 million ISO-NE has paid Nextera in forward contract purchases over the life of the program, simply to have access to its two peaker plants, one in Bellingham, MA the other Yarmouth, ME. Any profit generated from the actual sale of electricity produced is icing on the very sizable cake.
Nor does Nextera admit to the lengths it has been willing to go to keep their cash cow cake, regardless of the injury to the environment. Would Wall Street award a such a premium valuation to a company whose operations are so completely at odds with the Nextera posturing as a renewable powerhouse?
The Battle for the CMP Corridor
While officially titled the New England Clean Energy Connect (NECEC), the project to bring Canadian hydropower to New England has come to be known with the loaded moniker of the CMP corridor. The contract with Hydro-Quebec involves the installation of roughly 150 miles of high power lines to carry 1,200 MW of clean hydro power from Canada to Massachusetts; the bottom 100 miles would run adjacent existing lines, however the first 50 from the Canadian border would cut through pristine Maine forrest.
The Central Maine Power (CMP) company’s parent Avangrid had committed to the almost $1 billion project, all the necessary permits obtained, and construction commenced. But after roughly $450 million invested, the project came to a grinding halt. Citizens action committees gathered enough support to have a referendum included on the November 2021 ballot; roughly 60% of the vote was in opposition and construction ceased.
Mainers rallied around several issues, but they boiled down to two: preserving Maine’s wilderness and CMP’s greed. All in, it was the most expensive referendum in Maine’s history, with some $91 million spent in total by both sides. But fueling the opposition? The roughly $21 million contribution from Nextera.
Mainer’s View of CMP: Range from Distrust to Disdain
The opposition worked diligently at infusing the project with all the enmity CMP raised with residents of the state. What better way than to simply rebrand NECEC as the CMP Corridor. But this move was just the stepping stone of the fabrications and misinformation that Nextera’s money fueled.
Mainer’s largely feel that CMP had been taking advantage of them for years, thus were only too happy to believe any additional nefarious innuendo. So the next message was easy: it was pure CMP greed motivating the project that would only line their pockets further, benefitting Massachusetts at the expense of Maine’s natural beauty.
Enviromentalists jumped on the save one of Maine’s remaining pristine areas, with opposition gaining support from the likes of the Sierra Club and the Natural Resources Council of Maine (NRCM).
The third prong of the death knell: it would steal jobs from Mainers by loss of construction of wind and solar projects.
Hydro is So Much More Than an Alternative Renewable
As the. nation marches towards its carbon reduction goals, perhaps the greatest challenge facing the electricity market is intermittency: how to keep enough power flowing when extreme weather spikes demand or reduces the output of renewables. Energy industry experts widely concur that hydro is the key to solving the intermittency challenges, at least until such time as economically feasible long-duration batteries are developed.
Unlike the unpredictable nature of wind and sun, dams have significant control over water flow. Hydro is the perfect peaker solution. Especially, for example, in Massachusetts, which is in various stages in the process of significantly building out its grid through the addition of a total of over 4,000 MW of offshore wind.
Currently under construction, Vineyard I is rated for up to 800MW. In various stages of the permitting process, Mayflower’s initial phase is slated for 400 MW, targeting building out to 2,400 MW by the end of the decade, followed by Commonwealth Wind at 1,200 MW. Park City Wind off the Connecticut coast is slated to add an additional 800 MW to the ISO-NE.
With this power available to augment their grid, the hydro could easily play the peaker roll.
Peaker Plants: The Dirtiest of the Dirty
Nextera could see the writing on the wall; allowing its competitor to bring this powerful hydro into the New England grid would, certainly by the end of the decade, eradicate a lucrative stream of essentially free cash. The reported $21 million that Nextera put towards the campaign to shut down the CMP corridor is nothing as a one-time cost to save an annual annuity in excess of $30 million.
Its a time worn adage that the wind does not always blow, nor the sun always shine. Lithium ion battery prices have fallen to render battery storage feasible and potentially economically viable at commercial scale, but only for short duration — less than four hour — time periods.
Thus, utilities remain reliant upon power plants that remain dormant except when grids are unduly strained by periods of extreme heat or cold. Known as peaker plants, these are typically the oldest, least efficient and most heavily polluting generation facilities.
The organization that manages the New England grid —ISO NE— can’t ensure adequate power without the peaker plants, totaling roughly 33,000 Megawatts (MW) annually. Thus, they contract forward with the owners of these plants three years in advance. This annual forward capacity auction determines what the plant’s owners will be paid whether of not they produce a single watt of electricity.
Nextera owns two such plants in the ISO-NE: the 311 MW gas and oil powered Bellingham Cogeneration in Bellingham, Massachusetts and the 760 MW fuel oil powered Wyman Station in Yarmouth, Maine.
Again, these forward contracts are paid purely on production capacity, completely separate from any potential electricity generated.
Nextera, the self-described “world’s largest generator of renewable energy from the wind and sun,” collects over $30 Million annually, for the privilege of selling the grid some of the worst environmentally devastating power generation in times of extreme weather.
Not only is this forward contracted money essentially a free annuity, it has an extraordinarily high return. Nextera holds the Yarmouth plant on its books for $30 million; it generates in excess of $20 million annually for its mere existence, whatever it earns actually selling electricity is gravy.
31 Million Barrels of Fuel Oil Burned in Two Days - Equivalent of 69,000 Cars
Wyman Station on Cousin Island off the Coast of Yarmouth, Maine
While Wyman was likely not the only oil burning plant called into service on Christmas Eve, it is has the largest capacity of any plant in Maine. All told, the ISO-NE reported that 31 million gallons of fuel oil were burned over this holiday period.
To help conceptualize how truly both mammoth and mysterious that quantity is, for point of reference, the average car is estimated to use roughly 522 gallons of gas annually. Gasoline has a carbon dioxide coefficient of 8.887 kilograms of CO2 per gallon. Thus, the average car generates 4..6 metric tonnes of CO2 annually.
Distillate Fuel Oil (DFO) which is burned by power plants has a slightly higher coefficient at 10.28 kg of CO2 per gallon. Thus burning 31 Million gallons over to keep the lights and heat on in New England over that holiday period generated over 318,000 metric tons of CO2. Turning on these oil peaker plants for 24 hours is the equivalent of almost 69,000 cars for an entire year!
Still Time to Expose Nextera
There are going to have to be compromises as the world marches towards reduction of greenhouse gas emissions. No one’s first choice would be to look at power poles as opposed to pristine forests. But no one wants to look at the blight on Maine’s spectacular coast that Wyman Station poses either. That Hydro-Quebec could single handedly eliminate the need for the most egregious of these peaker plants needs to be moved center stage in the conversation forward. That Nextera is attempting to hold onto a $30 million annual revenue stream at such extreme cost to the environment needs to be conversation of a much larger stage. Would investors be interested in awarding the company’s stock at a multiple roughly twice its competitors when its commitment to the environment is nothing more than posturing? The smoke seen belching out of Wyman Station Christmas Eve certainly created quite a cloud.