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Renewable Electricity: Potential Economic Effects of Increased Commitments in Massachusetts

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Renewable Electricity: Potential Economic Effects of Increased Commitments in Massachusetts United States International Trade Commission Renewable Electricity: Potential Economic Effects of Increased Commitments in Massachusetts January 2021 Publication Number: 5154 Investigation Number: 332-574 United States International Trade Commission Commissioners Jason E. Kearns, Chair Randolph J. Stayin, Vice Chair David S. Johanson Rhonda K. Schmidtlein Amy A. Karpel Catherine DeFilippo Director, Office of Operations Jonathan Coleman Director, Office of Industries Address all communications to Office of External Relations ([email protected]) United States International Trade Commission Washington, DC 20436 United States International Trade Commission Renewable Electricity: Potential Economic Effects of Increased Commitments in Massachusetts January 2021 Publication Number: 5154 Investigation Number: 332-574 This report was prepared principally by: Project Leader Diana Friedman Deputy Project Leader Tricia Mueller Office of Industries Brian Daigle, Andrew David, Jennifer Powell, Allison Utomi, Heather Wickramarachi Office of Economics David Riker, Samantha Schreiber Office of Analysis and Research Services Conor Hargrove, Maureen Letostak Content Reviewers Martha Lawless, Marinos Tsigas Statistical Reviewers Russell Duncan Editorial Reviewers Peg Hausman, Judy Edelhoff Production Support Byron Barlow, Gwenetta Duvall, Monica Sanders Under the direction of Robert Carr Natural Resources and Energy Division Office of Industries Table of Contents Table of Contents Glossary of Terms ............................................................................................. 11 Abbreviations and Acronyms ............................................................................ 15 Executive Summary .......................................................................................... 17 Chapter 1 Introduction and Background on Electricity Markets ...................... 29 Approach ................................................................................................................................... 30 Organization of the Report ....................................................................................................... 31 Background on Electricity Markets, Generation Types, and Regulation .................................. 32 Organization and Regulation of the Sector ........................................................................... 33 How Prices Are Determined .................................................................................................. 37 Characteristics of Generation Technology ............................................................................ 37 Types of Generation Technology .......................................................................................... 41 Renewable and Clean Energy Goals and Commitments ....................................................... 45 Greenhouse Gas Emissions ................................................................................................... 46 Bibliography .............................................................................................................................. 48 Chapter 2 Overview of Electricity Markets in New England and Massachusetts .................................................................................................. 55 Introduction .............................................................................................................................. 55 Key Findings .............................................................................................................................. 55 Electricity Generation Sources and Rates ................................................................................. 56 New England: Sources of Electricity .................................................................................... 56 Trends in Electricity Rates in New England and Massachusetts ........................................... 64 Greenhouse Gas Emissions ................................................................................................... 67 Regional and State-level Goals and Commitments in Massachusetts and New England ........ 68 Introduction .......................................................................................................................... 68 Massachusetts....................................................................................................................... 70 Other New England State Renewable Portfolio Standard Targets ...................................... 76 Regional Greenhouse Gas Initiative ...................................................................................... 79 Potential Available Resources to Meet the Goals and Commitments of New England and Massachusetts .......................................................................................................................... 81 New England ......................................................................................................................... 81 Neighboring Markets ............................................................................................................ 87 Transmission and Storage Challenges................................................................................... 88 Bibliography .............................................................................................................................. 90 Chapter 3 Quantitative Analysis ...................................................................... 99 Introduction .............................................................................................................................. 99 Key Findings .............................................................................................................................. 99 Model Setup and Background ................................................................................................ 100 United States International Trade Commission | 1 Renewable Electricity: Potential Economic Effects of Increased Commitments in Massachusetts Massachusetts’s Recent Goals and Commitments ............................................................. 100 Modeling the Cost to Consumers ....................................................................................... 103 Modeling Greenhouse Gas Emissions ................................................................................. 104 Data Inputs and Model Parameters........................................................................................ 105 Annual Energy Outlook Projections .................................................................................... 106 Model Data and Estimates .................................................................................................. 107 Modeling Results .................................................................................................................... 108 Estimated Effects on Costs to Massachusetts Consumers ................................................. 111 Estimated Effects on Costs to New England Consumers .................................................... 114 Estimated Effects on Massachusetts’s Greenhouse Gas Emissions ................................... 115 Estimated Role of Imports in Meeting Massachusetts’s Commitments ............................ 116 Summary of Results for Alternative Assumptions .............................................................. 118 Limitations of the Model ........................................................................................................ 119 Bibliography ............................................................................................................................ 121 Chapter 4 Case Studies of the Effects of Imports of Hydroelectricity ............. 125 Key Findings ............................................................................................................................ 125 General Characteristics of Hydroelectricity ............................................................................ 126 The Columbia River Basin ....................................................................................................... 127 The Columbia River Basin’s Electricity Market ................................................................... 129 Renewable and Clean Energy Commitments...................................................................... 133 Economic Impacts ............................................................................................................... 136 Environmental Impacts ....................................................................................................... 139 New York State........................................................................................................................ 141 Minnesota-Manitoba .............................................................................................................. 144 Denmark .................................................................................................................................. 146 Introduction ........................................................................................................................ 146 Denmark’s Electricity Market ............................................................................................. 146 Renewable and Clean Energy Commitments...................................................................... 150 Economic Impacts
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