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Pricing for Energy Must Include Pollution Costs

by: Dylan Lucas - Feb 2021

ISO-NE was set up in 1990 to break up the vertically integrated power producers from the power distributors to offer the cheapest electricity to all customers. It was an important first step to break up corporate monopolies who only wanted you, the consumer, to use more power so you pay them more money.

The capitalist auctions are used to make power plants compete, but do not take into account externalized and socialized costs, which are collected from you via taxes, hidden in your utility bills, and embedded in your paycheck healthcare payments. Economically disadvantaged individuals are disproportionately affected by these externalities, because they don’t have the personal bandwidth or means to tie up polluting power plants in lawsuits, as these individuals are struggling to put food on the table, and keep the lights on.

These old power plants were built quickly, without voiced opposition and were able to bid lower prices than power plants that were to be sited in rich neighborhoods. These now existing fuel-based power plants are being subsidized to stay open despite the damage and externalized costs they are causing. These plants run fewer hours and are MORE expensive per kilowatt hour than fuelless renewables on the open market.

ISO-NE needs to address these externalized costs that their flawed auctions are inflicting on our most vulnerable citizens. They also need to adapt their auctions for the current technology that requires less use of transmission lines due to local smaller power plants.

Homes and businesses now source their power from rooftop solar, and have flexible loads such as hot water heaters, thermostats, electric vehicle chargers, and battery backup systems. OhmConnect and SunRun are two businesses that are replacing power plants today by aggregated resources. Many hands make light work, and this can be seen by the declining energy demand as more citizens in the know become self-sufficient for lower cost.

And with buildings becoming self-sufficient microgrids, using just the sun and batteries and smart energy control, the grid will also need to incorporate mobile microgrids, which could be any mode of electrical transportation. A Tesla can output 300 kilowatts of power at full acceleration or enough to run 6 houses with standard 200A load centers at once. But more realistically a single 100 kWh Tesla battery could run a house for 100 hours.

ISO-NE must incorporate these virtual power plants, made from buildings and vehicles, into their markets. ISO-NE must incorporate pollution pricing into their markets.

About the author:

Dylan Lucas was born and raised in Bow, NH in the shadow of the Merrimack Station and returned there for 3 years after completing his studies in mechanical engineering at Northeastern University in Boston. For those 3 years he worked at ReVision Energy designing solar and battery systems until he moved to Nashua and started working for a Utility Scale solar and energy storage as a development engineer for the company Borrego Solar in Lowell, MA.

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