N.H. biomass plants score PPAs while RPS undergoes revisions

By Anna Austin | January 05, 2012

Five independent biomass power producers (IPPs) in New Hampshire have scored power purchase agreements (PPAs) from the state’s largest electric utility, thanks to support from local and state officials. The PPAs will allow the plants to continue to operate while the state’s renewable portfolio standard (RPS) undergoes some significant changes that will benefit them.

The IPPs were all on the verge of closure last year, as their 20-year PPAs with Public Service New Hampshire were expiring, and PSNH indicated it would not be interested in renewing them. Rather, it would purchase power from a new, 75 MW biomass power plant under development in Berlin, N.H., because the state’s RPS—which categorizes renewable energy under four different classes—require utilitiess to buy less Class III renewable energy credits (RECs), the classification under which the older plants fall, than Class I RECs, which includes new biomass power.

After the IPPs attempted to quash Berlin Biopower’s PPA with PSNH by filing an appeal— which would have forced its cancellation and nearly did—all parties were able to reach an agreement, likely a result of government, legislative members and other state officials working to save the jobs that would be severed by the plants’ closings. The agreement was approved by New Hampshire Public Utilities Commission late December.

Meanwhile, the state’s RPS is being revamped, which will hopefully provide better opportunities to New Hampshire’s IPPs.

 The New Hampshire Timberland Owners Association has championed efforts to get RPS revisions passed by state legislators. “New Hampshire’s RPS was crafted in 2007, and the legislature set it up so that there could be revisions down the road, if needed,” explained NHTOA Program Director Eric Johnson. “These PPAs will provide a bridge until the RPS is revised, in order to get these IPPs more support for their power.”

The temporary PPAs will raise the average ratepayer’s bill by only 55 cents, roughly, according to Johnson.

He said the NHTOA has been working since last spring to try to gain public and state support of RPS revisions. “It’s been good [support],” he said. “The governor has been a strong advocate of it, and New Hampshire Department of Resources & Economic Development has been very involved.”

When the RPS was originally drawn up, there were a few unintended consequences, according to NHTOA Executive Director Jasen Stock. “One of them was that electricity generation from methane was allowed to be included in Class III, which is where old biomass generation is classified. What we learned since then is that there’s a lot of methane in New England and New York, and that’s displaced a lot of the biomass.”

 One of NHTOA's proposed changes for the RPS is taking methane out of Class III, so it doesn’t bump older biomass plants out. “That’s a key provision,” Stock said. “There’s a lot of methane power coming here from out of state, and it’s not leaving much room at the table [for biomass].”

More proposed changes would allow biomass thermal and cogeneration projects to qualify under the RPS, as well as plants that cofire biomass with coal. “Right now, it’s all or nothing to get RECs,” Stock said.

Senate Bill 218, which contains the RPS modifications, has been filed and will be heard this month, according to Stock.  “We expect it to go to the House in February or early March, assuming it’s passed by the Senate,” he said. “It’s had pretty good reception there, but we’re running into some roadblocks in the House. The concerns they have are the perpetual impacts to electricity rates and what that may mean for generating new jobs; there’s a very vocal contingent in the House that view the program as corporate welfare or subsidies and should be eliminated all together. It’s unfortunate that these individuals are concerned about bringing jobs to the state, but fail to recognize our existing biomass industry employs hundreds and hundreds of people and the RPS generates hundreds of millions of dollars in state economic activity.”

So why is the issue so important to the NHTOA?  “It affects all of our members, from landowners that grow timber and need markets for low-grade wood, to loggers and sawmills,” Stock said. “It’s important across the board—we need these low-grade wood markets.”

According to recent forest inventory data, around two-thirds of standing wood in New Hampshire is low grade, he added.