Study: More reliance on electricity can create local jobs, save money

Electric vehicles recharge on Main Street in Burlington last year. Photo by Glenn Russell/VTDigger

Going all-electric at home could lead to big annual savings for Vermonters, a new study finds. And, in the wake of the pandemic-driven economic downturn, it estimates this transition would create more than 20,000 jobs in the state, while decreasing carbon emissions.

But policy changes are needed to get there. Despite current incentives offered by the state and utility companies, the price tag is not yet within reach of all Vermonters, and the state lacks a clear policy and regulatory framework for lowering emissions and costs from thermal and transportation.

The report from Rewiring America finds that 100{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} electrification of households in Vermont would lead to $973 million in savings per year. That’s $3,603 per household. The model forecasts new jobs in manufacturing, installation and finance, and savings for households — and when people save more money, that money is often spent at a restaurant or on home improvements, for example.

“What gets in the way of that happening today is there are some policy things that need to be created or changed to make it just easier and cheaper for people to buy the clean, electric versions of the products they already own,” said Alex Lasky, a co-founder of Rewiring America.

The organization published a national report in October, followed by state-specific reports. Its analysis for Vermont is drawn from state-specific data. The scope of savings is in step with a report published earlier this year by Energy Action Alliance. 

While the Energy Action report projects $800 million in savings over 15 years, the Rewiring America Report jumps ahead to a hypothetical year when all households use only electricity to meet their energy needs.

Both reports confirm that Vermonters stand to save money while cutting emissions. 

Lasky pointed to the often higher upfront cost of converting conventional systems — furnaces, air conditioning and the like — to electric alternatives. He said states and the federal government should make low-cost financing available to help people make the switch.

Lasky also says current building codes unnecessarily drive up the cost of home solar systems, treating them as custom home remodeling projects. Towns could revisit permit and inspection policies to lower those costs.

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Cutting out these “soft costs” in solar installation would cut the price of solar from its current price of $3 a watt to just $1. Some of this work can happen through city and town governments, but Lasky says the state needs “to provide instruction and motivation to help their communities.”    

Jared Duval, executive director of the Energy Action Network, says the Rewiring America report is in keeping with a conservative estimate of around $800 million in net consumer savings for Vermonters.

The Energy Action report looks at savings over 15 years, whereas Rewiring America envisions an ideal scenario, where prices for electric technologies drop significantly as they’re produced in greater quantities, and the cost of installing solar decreases from $3 to $1 per watt by reducing costs associated with permitting and inspections. Finally, it assumes that low-cost financing will be available to make upgrades affordable.

While 100{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} of fossil fuels are imported to Vermont, electric alternatives “can be locally provided and keep much more of our dollars local,” Duval says. Now, 75{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} of money spent on fossil fuels leaves the state — $1.5 billion per year. Things like installing heat pumps and maintaining electric lines will always have to be done locally.

And there is demand for these installation services, according to Darren Springer at Burlington Electric. “I’ve heard it from neighbors, from friends, from heat pump installers who are booking well into the winter,” Springer said. “These are local jobs, installation jobs. They’re not going to be outsourced.”

When Green Mountain Power doubled its rebate on heat pumps this summer from $400 to $800, it drew a huge response from their customers. 

“Local installers were booked solid doing this work over the summer,” said Kristin Kelly of Green Mountain Power; before the incentive doubled, “they had been slow.”

‘The elephants in the room’

Consumer savings are possible, in part, because electric prices have been lower and more stable than fossil fuels, even at a time when fossil fuel prices are very low. Gasoline has dipped from $4 a gallon to less than $2 in some places. 

But “when we talk about competing with fossil fuels on the (electric vehicle) side, we still have a competitive advantage,” Springer said.

Duval says going electric isn’t as expensive as many people think. 

“One of the biggest myths out there is that electric vehicles are not attainable for a lot of folks,” he said. According to Duval, the Nissan Leap is currently the most popular EV in Vermont, and it can be leased for $129 per month, which is competitive with the leasing cost for a gas-fueled sedan. 

Consumer Reports, in a study issued in September, said analysis of real-world maintenance and repair costs from thousands of its members shows that owners of battery electric vehicles and plug-in hybrid electric vehicles pay half as much as owners of vehicles with internal combustion engines to repair and maintain their vehicles.

And, with the competitive cost of electricity, they can cost less to charge than it would be to fill at the pump.

The Energy Action Network tracks trends, and some of them point to an increasingly electrified future. Heat pumps, for example, have been growing exponentially in the past five years, from 1,300 in 2015 to 19,000 at the end of 2019. The number of electric cars in the state is around 4,000 out of 600,000 total vehicles.

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According to TJ Poor at the Department of Public Service, Vermont is outpacing other states in the region in the number of heat pumps installed per person. He said the state forecasts that, in 10 years, 30{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} of Vermonters will have heat pumps.   

While the early adoption of this technology has been encouraging, “those are nowhere near the numbers we’re going to have to get to to meet our emission reductions,” Duval said. Energy Action has a goal of a 90{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} reduction by 2050. Still, he said, “it’s a good start.”

Compared to the rest of the nation, Vermont is in a good position for electrification, since its electricity is relatively clean — 92{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} is free of carbon; 62{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} is renewable, with much of that coming from hydro; 30{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} comes from nuclear energy; the remaining 8{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} is from ISO New England that still includes some natural gas.

“Whenever someone leaves the fossil fuel piece of equipment for an electric option, we get a greater emissions reduction for that change because we have the lowest emitting electricity in the country,” Duval said.

Vermont has drastically decreased emissions that come from electricity, from 800,000 tons of carbon dioxide in 2016 to 200,000 in 2018, a 75{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} decrease in two years.

“That is great news on its own, and it sets a foundation for us to deal with the elephants in the room,” Duval said. In Vermont, these elephants are transportation and heating, the biggest sources of both pollution and energy cost.

To take them on, Duval says the state needs a clear policy coupled with a regulatory framework to drive down the cost of fossil fuel alternatives. Public awareness is important, too, so that when it’s time to replace an old heating system or vehicle, consumers know that electric vehicles and heat pumps can save them money and reduce emissions.

“The biggest opportunity we have to reduce our carbon pollution and to reduce energy costs over time are by electrifying how we get around and how we heat our buildings,” said Duval.

The hydropower question

But while utilities and the state tout a clean energy portfolio, some renewable energy advocates say that Vermont’s clean energy equation is wrong because it doesn’t include carbon emissions that come from imported electricity. And Vermont consumes four times as much energy as it produces, according to the Energy Information Administration. 

Carillon Hydro-electric Dam, Pointe Fortune, Quebec. Photo by Mac Armstrong.
The Carillon Hydro-electric Dam at Pointe Fortune, Quebec, part of the Hydro-Quebec system. File photo by Mac Armstrong.

A lot of imported electricity comes from hydroelectric power, which can have a negative impact on the environment. Brad Hager, a professor of earth sciences at MIT, testified to the Army Corps of Engineers in December 2019 about the detrimental impact of energy produced by Hydro-Quebec. 

According to Hager’s testimony, six of Hydro-Quebec’s reservoirs were in the top 25{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} of greenhouse gas-emitting hydro plants around the world. “Their emissions range from about that of a modern natural gas power plant to over twice that of coal power plants,” said Hager. “They are definitively NOT the source of green power they are made out to be,” and he said Hydro-Quebec’s power is “among the dirtiest hydro power in the world.”

Vermont is the only state in New England that considers hydropower to be a renewable source of energy, something that renewable energy lawyer Kimberly Hayden says the state should change.

Canadian hydropower has had detrimental impacts on the Inuit and Innu First Nations people, including the harmful presence of mercury in food sources and waterways. The Innu Nation has sued Hydro-Quebec for $4 billion in damages for “unlawfully extracting electricity from their lands since the 1970s and selling it to the U.S.,” according to the Megadam Resistance Project.

Savings hinge on low electric rates

For electric options to be cheaper than conventional heating or transportation, rates have to stay low. For instance, heat pumps aren’t necessarily a cheaper option, depending on where in Vermont a consumer lives and what they’re paying for electricity.

Most heating in Vermont is currently fuel oil, which is “dirt cheap” right now, “and so installing a heat pump is sort of marginal whether you’re going to save money or it’s going to cost more if you install the pump,” said Ed McNamara of the Department of Public Service.

In Washington Electric’s district, where “rates are over 20 cents or so, a heat pump doesn’t make sense. If all other utilities are starting to creep up toward higher electric rates, it’s going to be harder to get people to switch over to the heat pumps,” McNamara said.

The Public Utilities Commission recently decided to lower incentives to homeowners and businesses that go solar, and McNamara said part of that decision was to focus on incentives for transportation and heating, the source of most Vermont emissions.

But Springer at Burlington Electric said increased use of electricity doesn’t have to lead to higher rates. 

“If we do this and do this well, it has a benefit in terms of electric rates,” Springer said. Using more electricity will require investments in the grid, but it can reduce rate pressure, he said — when more electricity flows through the system, the cost per unit that the consumer pays is lower. The cost of the system is the same; it’s just spread out among more people.

Doing this well means not overloading the electric system at peak-use times because that can drive rates up. Green Mountain Power recently worked with a battery company called Fermata to create a technological work-around for peak hours — the first electric vehicle battery that does bi-directional charging. When the grid reaches peak usage, typically between 3 and 7 p.m., the batteries can provide more power to the grid.

“By using stored energy during peaks, it’s like taking 18,000 homes off the grid at once,” said Kelly of Green Mountain Power. “That reduces energy cost at peak times, which can be the most expensive for customers.”

In 2020, used stored energy from batteries has reduced costs by $3 million. “It shows what’s possible and what’s coming,” Kelly said.

The Renewable Energy Standard

According to Poor, the state is looking to electrification as a cost saver for transportation, and to meet emissions goals by building Vermont’s clean electric portfolio. Three utilities in Vermont use 100{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} renewable energy — Washington Electric, Swanton Electric and Burlington Electric.

All utilities were required have at least 55{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} of sales from renewable sources starting in 2017, with the percentage to scale up to as high as 75{c25493dcd731343503a084f08c3848bd69f9f2f05db01633325a3fd40d9cc7a1} over time, based on legislation called the Renewable Energy Standard. That is the regulatory framework that has allowed Vermont to have such a clean electricity grid.

The Renewable Energy Standard also requires utilities to reduce fossil fuel emissions from customers. “The best way for utilities to do that, at least cost to their customers, is through electrification,” Poor said. A lot of incentives that utilities offer are structured through renewable energy standards.   

Currently the state offers a $4,000 rebate for electric vehicles. Meanwhile, the state is using approximately $3 million from the Volkswagen lawsuit to build public charging infrastructure.

These programs are meant to address the two main barriers to electric transportation that the state has identified. Incentives are meant to help lower the upfront cost of investing in an EV, while charging stations are intended to decrease “range anxiety,” or the fear that an EV will run out of charge too far from home or another nearby charger.

There are currently a few hundred charging stations in the state, and the state has helped finance an organization called Drive Electric Vermont that works specifically in this area and helps raise public awareness.

Last year Act 151 passed, which allocates some funding for dealer incentives as well as more education. “One of the barriers is that some of the small dealerships can’t afford to send two sales people out to a week training to learn about electric vehicles,” said Poor.

Some manufacturers, like Nissan, require the franchise to pay for their own charger, which some dealerships can’t afford. Others don’t carry electric vehicles at all.

“If you’re going to a dealership and salesperson wants to make a sale and there’s no EV to try, you’re not going to buy an EV,” Poor said.  

Energy experts across the state agree that the electrical grid in Vermont can handle increased use.

“We have the energy to provide,” said Darren Springer of Burlington Electric. Springer worked on the bill that became the Renewable Energy Standard before he joined Burlington Electric, legislation he calls a model for other states.

And earlier in 2020, the utility worked to put two electric buses in Burlington’s fleet. Now, it’s hoping to add two more, as a part of its net zero plan to become carbon-neutral by 2030.   

The utility also offers special rates for customers who want to charge an electric vehicle at home, equal to about 60 cents per gallon. And it’s looking at creating a special rate for heat pumps, as well to help make it a more affordable option in Burlington, where low natural gas prices mean a customer who switches to electric might break even. In some cases, natural gas might be cheaper.  

“Something we are missing, not just in Vermont, is having some sort of a carbon price that recognizes that fossil fuels produce greenhouse gas emissions and have a societal externality associated with them,” said Springer. Doing that, he said, “would provide an extra boost for electrification programs.”

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