Last Updated: December 18, 2013

Overview

Maine is the least densely populated state east of the Mississippi. It is home to both bustling coastal cities and Northwest Aroostook, a territory with one resident per 100 square miles. A majority of the state's population lives in rural areas. More than five-sixths of Maine is still forested, and forest products are both a major, energy-intensive industry and a major biomass resource supplying wood-derived fuels, such as wood pellets. Maine is the only New England state in which industry is the leading energy-consuming sector; it accounts for one-third of state consumption.

Maine is the easternmost state, rising inland from its jagged Atlantic coastline to include the northern terminus of the Appalachian Trail at Mt. Katahdin. Maine weather varies significantly between the ocean-moderated coast, the southern interior, and the northern interior bordering Quebec and New Brunswick. Recorded temperatures have ranged from 103 degrees Fahrenheit on the coast in summer to minus 50 degrees in the far north in winter. Industrial and transportation consumption, along with heating needs during the northern winter, give Maine the highest per capita energy usage in the region. Maine is also the most energy-intensive economy in New England. The forest products sector has shrunk but remains significant, and health care, tourism, and renewable energy industries are growing.

Petroleum

Maine's energy consumption is dominated by petroleum because of widespread use of fuel oil for home heating during the long, cold winters. More than 7 in 10 Maine households use fuel oil as their primary energy source for home heating, a higher share than in any other state. Maine does not produce or refine petroleum. The state receives more than half of its petroleum products through the Port of Portland on Casco Bay, where terminals are operated by major product suppliers. Portland is a natural deep-water harbor and is ice-free year round. Most of the rest of Maine's refined products are received further north, at Searsport and at Calais on the Canadian border. Heating oil and propane are also shipped through the Port of Portsmouth, New Hampshire, on Maine's southern border, and then barged or trucked inland. Refined products come from domestic refineries or imports. Canada is the dominant import supplier to all ports, followed by Europe.

The Port of Portland also hosts unloading and storage facilities for crude oil shipments, which it sends via dedicated pipelines to refineries in Quebec and Ontario. There have been proposals to reverse the flow in the pipelines and bring crude from Alberta and North Dakota to Portland for shipment to refineries elsewhere, but the idea has encountered environmental opposition and legal challenges. Alberta and North Dakota producers have begun shipping crude oil by rail to Canada's largest refinery, in St. John, New Brunswick. Those rail shipments sometimes cross through Maine.

Maine does not require the use of reformulated motor gasoline, but the state does enforce vapor pressure limits statewide, with lower summer limits along the urbanized coast. The state does not require motor gasoline to be oxygenated, but neighboring New England states do, so most motor gasoline sold in the state is blended with ethanol. Maine's heavy use of fuel oil for home heating makes the state particularly vulnerable to distillate fuel oil shortages and price spikes during the winter months. In January and February 2000, heating oil prices rose sharply when extreme weather increased demand and frozen rivers hindered delivery of new supply. That year, the Northeast Home Heating Oil Reserve was created to cushion against a future supply disruption. In 2011, the U.S. Department of Energy converted the reserve to ultra-low-sulfur diesel (ULSD) to correspond with decisions by several northeastern states to begin requiring ULSD for heating. Maine plans to phase in ULSD use in 2016-2018. The new ULSD Heating Oil Reserves are in Revere, Massachusetts, and Groton, Connecticut.

Home heating and transportation consumption make Maine among the most petroleum-dependent states in the nation, with the highest per capita consumption in New England. The state legislature has set a goal of reducing petroleum usage by one-third by 2030.

Natural gas

Maine's natural gas consumption per capita is about three-fourths of the national average. About one-half of Maine's natural gas is used in electricity generation and more than one-third by industry. Fewer than 1 in 20 Maine households use natural gas as their primary heating fuel, although increasing numbers of residents have been switching from heating oil because of recent price differentials favoring natural gas. Maine produces no natural gas and depends almost entirely on Canadian imports. Natural gas enters Maine via pipelines from New Hampshire and Canada, but the New Hampshire pipeline carries Canadian gas. In recent years, Canadian supplies to New England have been buoyed by major natural gas discoveries off the Nova Scotia coast and the opening of the Canaport liquefied natural gas terminal at St. John, New Brunswick. More than half of the natural gas that Maine receives from Canada is typically shipped to New Hampshire and the Boston, Massachusetts, market.

Coal

Maine's only coal-burning power plant is a 103-megawatt cogeneration plant at the Rumford paper mill, which supplies both the mill operations and the electricity grid. Use of non-coal waste fuels such as tire-derived fuel has been increasing, and owners aim to increase the use of alternate fuels and eventually eliminate coal. No coal is mined in Maine. Coal used there is imported through the Port of Portland.

Electricity

More than two-fifths of Maine's net electricity generation comes from natural gas, and most of the rest is produced by renewable sources, primarily hydroelectric dams and biomass generators using wood products. The state power supply has undergone a substantial shift since the early 1990s, when one-third of net electricity generation came from the Maine Yankee nuclear power station and another one-fifth from petroleum. Maine Yankee was decommissioned in 1997, leaving the state with no nuclear generation, and petroleum-fueled generation has decreased to a tiny percentage of supply. Coal-fired generation has also decreased, and natural gas has made up much of the difference, driven by natural gas' recent low cost compared to both coal and oil. Most new non-renewable electricity generation being planned in Maine, as in all of New England, is fueled by natural gas.

The industrial sector produces nearly one-third of Maine's net electricity generation, the highest proportion of any state. The sector uses primarily natural gas and biomass. Maine has the lowest average electricity rates in New England, largely because of its low industrial sector rates. Per capita residential electricity use in Maine is below the national average. Only about 1 in 20 households use electricity as the primary energy source for home heating, and, with the state's mild summer months, few homes have air conditioning.

Maine restructured its electricity industry as of 2000 and allows retail electric competition. Competitive providers have focused on commercial and industrial customers, and they have only recently entered the residential market. Maine allows net metering for renewables and high-efficiency combined heat and power facilities for generators up to 660 kilowatts. Maine is part of the regional transmission operator, Independent System Operator-New England (ISO-NE), except in the northern part of the state where the power system is connected to the Canadian grid. ISO-NE has promoted demand response programs as one strategy to maintain grid reliability. Maine, with fewer than 1 in 10 New England residents, is a leader in enrolling consumers to commit to power reductions during peaks and emergencies. Maine is a member of the northeastern Regional Greenhouse Gas Initiative to limit carbon emissions from power generation. With its small use of coal and oil for electricity, Maine is among the 10 states with the lowest carbon emissions.

Renewable energy

Hydroelectric dams and biomass from wood products provide almost half of Maine's net electricity generation, the largest share from renewable sources in the eastern United States. Biomass alone accounts for more than one-fifth of generation, the largest share by far of any state, placing Maine among the top U.S. producers of electricity from wood and wood waste-derived fuels, such as wood pellets. The state has the highest generation per capita in the nation of electricity from biomass. Use of wood for home heating has grown in rural Maine as the price of home heating oil has risen.

Hydroelectric turbines produce nearly one-fourth of Maine's net electricity generation, the largest share of any state east of the Mississippi. Water-powered mills were built on Maine's numerous rivers to run its earliest industries, and when electricity became available in the late 1800s, small hydroelectric dams were built all over the state. By the mid-1980s, the state was home to 782 dams. A few have since been removed to restore natural river flows and fish migrations. Recently, Maine hydroelectric dam owners and conservationists have reached agreements to increase turbine generating capacity at some dams while tearing down others.

In 1999, as part of electricity market restructuring, Maine regulators set a Renewable Portfolio Standard (RPS) requiring that at least 30% of retail electricity sales come from renewable sources, although state electricity distributors had already surpassed that goal. Since then, the legislature has added a second, separate RPS that requires new renewable resources to supply increasing shares of electricity sales, topping out at 10% in 2017. New hydroelectric generators must be smaller than 100 megawatts to qualify under the second RPS. The state legislature has debated lifting that limit to allow more hydroelectricity imports from Canada.

Most new renewable generating facilities planned in New England are wind-powered. Maine has significant wind resources along crests of Appalachian ranges in the state's northwest and along its Atlantic coastline. The Maine legislature has set goals of installing 2,000 megawatts of wind capacity in the state by 2015; 3,000 megawatts by 2020, with at least 300 megawatts offshore; and 8,000 megawatts by 2030, with at least 5,000 megawatts offshore. Wind energy has been gaining net electricity generating share in Maine rapidly in recent years, with more than a dozen projects coming on line. The state leads New England in wind generation. The first application for wind turbines in federal waters off Maine was filed in 2011. Also on the Maine coast is the first U.S. tidal power generating facility to produce electricity, a pilot project in Cobscook Bay. Because of concerns about the cost of new technologies, New England governors are exploring regional procurement of renewable resources, primarily wind, to meet state RPS goals more economically.