NStar hit for waving BU off plan for fuel cell
When Boston University began a $300 million campus renovation last year, the university planned to install one of the largest "fuel cell" electric generating units in the nation, a tennis-court sized device that would produce enough power for 4,000 homes but with only a tiny fraction of power-plant pollution.
But NStar Electric warned BU that the university would still have to pay big fees to maintain a connection to the NStar grid. That led BU to quietly shelve the plans -- and fueled contentions by several environmentalists that the big Westwood utility, fearing it could lose high-revenue customers, is trying to strangle what could be a crucial new source of clean, reliable, economic energy for Greater Boston.
The issue affects not only fuel cells, but many other types of small, local sources of electricity including wind turbines, solar panels, small hydroelectric generators and other examples of so-called distributed generation. Harvard University, the Massachusetts Institute of Technology, the Boston public schools, and several other area businesses and organizations are considering distributed generation.
In a rate case now working its way through the Department of Telecommunications and Energy, NStar insists it is only trying to make sure that hundreds of thousands of residential and small-business customers are not forced to bear an unfair cost for customers that want to go "off the grid" but maintain a standby utility connection.
But Seth Kaplan, a senior attorney with the Conservation Law Foundation, a Boston environmental group said, "I would be loath to speculate about their motives, but the effect of what NStar is recommending is very clear: It is to eradicate the market for distributed generation. It's a market we desperately need to develop for economic development, energy efficiency, and environmental protection."
Paul W. Gromer, director of the Solar Energy Business Association of New England, said, "NStar wants to charge customers for electricity that they don't buy from NStar. Every other state and regional policy encourages customers to take less electricity from the electric grid, but NStar's standby rates would penalize customers for taking less electricity from the grid."
Distributed generation, advocates say, can help save all utility customers money by reducing electric demand at peak periods such as winter evenings and hot summer afternoons, when wholesale prices can spike to 20 or 30 times normal levels.
Herb Nock, senior vice president of marketing for FuelCell Energy Inc., a Danbury, Conn., company that was working with BU, said NStar's proposals have had "a very chilling effect" on a half-dozen big projects his firm was pursuing with Boston-area businesses and institutions. FuelCell has sold several installations nationally, including one used at a Coast Guard station in Bourne.
NStar spokesman Michael Durand, however, insisted that the utility remains a strong supporter of "green power" and energy efficiency projects, and is only trying to protect its 1 million customers who will continue to be served by the conventional power grid and big generating stations.
In a rate application made late last year, which will be reviewed over the next four months, NStar proposed that large customers installing off-grid power sources would still have to pay the full cost of a standby NStar connection. "When we have a distribution system in an area, there are costs to maintaining it, whether that system is being used 24-7 or whether it's standing by 24-7. We don't feel that it's fair for customers across the board to absorb these costs for some users to have a standby system," Durand said.
BU had been eyeing a 4-megawatt fuel cell as a key power source for major construction projects now underway, including a $220 million arena and recreational complex between Commonwealth Avenue and the Massachusetts Turnpike extension and an $80 million life-sciences building.
In September, NStar chief executive Thomas J. May sent a letter to then-BU chancellor John R. Silber warning that the project might not make financial sense for BU. A copy of the letter was obtained by the Globe.
"Our understanding of the current thinking is that BU would remain interconnected with the NStar system and would like our system to be built with sufficient capacity to serve the entire BU load during those occasions when the fuel cell is off-line for maintenance or other reasons. Even though these delivery facilities may only be used by BU on a 'stand by' basis, NStar must build and maintain this capacity and keep it available for service at all times," May wrote.
"As a result," May continued, "the fuel cell will not produce any delivery network cost savings. This may have significant implications for BU's financial analysis of the fuel cell option."
BU spokesman Colin Riley said he could not comment on the university's discussions with the utility, but he confirmed that "we're not going to be doing the fuel cell. It wasn't feasible at this time, and the timing wasn't right."
Peter J. Howe can be reached at howe@globe.com.
