Tuesday, May 5, 2009

Wind in the Rockies is expensive

Government policy can, once decided, be implemented by a combination of laws and financial incentives/disincentives among other means. Thus, for example, when trying to change the ways in which America gets power, the government can limit the amount of coal burned, both by direct fiat, and by making it too expensive (through the cost of permits). The former limit will be established through the caps on the production of GHG, assuming that there is no immediate vast investment in sequestration. There is a fair amount of debate over whether the financial incentive will be through a direct tax or the more indirect route of charging for allocations. Having heard Congressman Waxman’s aide at the EIA meeting, I believe the decision is long over, and that, if anything does come out of this Congress it will be the cap and trade model that will be used.

That having been said, since the nation is growing in numbers, even if per capita use is held constant (as it has sensibly been in California) any reduction in fossil fuel use will need to be replaced with an alternative. At present the most widely touted of these are wind and solar, and the high costs of solar mean that, for many utilities seeking change, wind has been the choice, but even this is, in some cases, proving to be too expensive an option.

Wind farms are becoming more obvious around the country, and their message is strengthened with a steady campaign of adverts. T. Boone Pickens is seen more as a savior than as a salesman. And the Secretary of the Interior currently is pointing out that there is sufficient wind available to replace all the coal-fired power stations in the country. But under all the hype, and after the cranes have come and gone, the change in energy source has to make economic sense. Wind farms will only be established where there is a credible likelihood of their making money for the investors that raise them. The current comments of the Secretary come as hearings get under way around the country.
Salazar said ocean winds along the East Coast can generate 1 million megawatts of power, roughly the equivalent of 3,000 medium-sized coal-fired power plants, or nearly five times the number of coal plants now operating in the United States, according to the Energy Department.

Salazar could not estimate how many windmills might be needed to generate 1 million megawatts of power, saying it would depend on their size and how far from the coast they were located.

Mark Rodgers, a spokesman for Cape Wind, which wants to build a wind farm off Cape Cod, Mass., estimates it would take hundreds of thousands of windmills. The average wind turbine today generates 2 to 5 megawatts per unit, he said.
This is the first of four hearings, and focused on the East Coast. But the potential states most likely to benefit can be judged from the DoI plan to create Regional Energy Permitting Centers.
To expedite production of renewable energy on public lands while protecting land, water, and wildlife, Secretary of the Interior Ken Salazar today pledged to create four Renewable Energy Coordination Offices, one each in California, Nevada, Wyoming, and Arizona, along with smaller renewable energy teams in New Mexico, Idaho, Utah, Colorado and Oregon.
You may note that these are all in the West.

While the numbers quoted are large, and the potential benefits of moving to renewable energy are continually being cited, the underlying realities of getting a good return on the investment, at a lower cost than the alternative, is being kept quiet. Unfortunately, as an article in USA Today notes, even with the best will in the world, those benefits don’t always happen. And, in the case of Durango, CO, the utility is moving back to coal, from wind.
For two years, the city of Durango, Colo., bought electricity for all its government buildings from wind farms. The City Council ended that program this year, reverting to electricity derived from coal-burning plants and saving the cash-strapped city about $45,000.

The Durango plan has its roots back in 2007 when the city made the move to wind energy.
Green power currently constitute(d) about 10% of city power purchases. The extra the city pays for green energy will add about $120,000 a year to its electrical bill officials said. But the extra cost will be offset by an energy audit aimed at cutting power consumption. With the wind power option, electric customers pay $1.25 per block of 100-kilowatt-hours in addition to their regular rate. The extra that consumers pay for their power funds investment by power producers in alternative-energy sources such as hydropower, solar and wind. But electricity from all sources flows on the same line. In 2006, Durango used almost 8.15 million kilowatt-hours of power at a cost of $779,000.

At the time, as you may notice, the city recognized that the renewable energy would cost more, but felt that it could make up the difference with improved efficiency. Which is the same sort of argument that we are now getting from the new Administration.

Although the above cite is recent, the change actually occurred last December.
City Manager Ron LeBlanc recommended the city stop buying power from renewable energy sources when it became necessary to cut the 2009 budget by more than $500,000. The city council approved the budget, including his recommendation, earlier this month.

The La Plata electric association charges 80 cents more per 100 kilowatt hours for electricity from solar and wind power. LeBlanc says that adds $45,000 to the city’s annual electric bill.
La Plata does not generate the power itself, but is passing along a program from Tri-State.
The LPEA Green Power program was initiated in 1998 when Tri-State – from which LPEA purchases its power – responded to requests by its member systems, to include a green power option as part of its available resources to end-use consumers. Because of this program, LPEA customers who request purchase of green power receive it at LPEA’s cost from Tri-State, $1.25 per 100 kilowatt-hour block per month. Purchasing one block of Green Power costs consumers less than $.05 per day. To date, LPEA is among the leading purchasers of Green Power in Tri-State’s 44-member cooperative system, supplying nearly 800,000 kilowatt hours of Green Power generation each month.
Tr-State had lowered their costs to 80 cents in January, 2008. . However the company has also carried out an Integrated Resource Plan (IRP) looking at future energy supply, based on anticipated need. That plan concluded:
Tri-State proposes to develop and own two new 700-megawatt supercritical coal-based units at the existing coal-based, 360-megawatt Holcomb Station in western Kansas. The efficient units would include best available control technology to minimize air emissions and activated carbon injection to minimize mercury emissions. The IRP clearly reinforces the need for the first 700-megawatt baseload resource in 2012, which is when Tri-State first unit at Holcomb Station could be online.

Since the first Holcomb unit cannot be brought on line until 2012, Tri-State is left with a significant deficiency in both capacity and energy during the interim period; and its options are somewhat limited. For modeling purposes in this IRP, it is assumed that Tri-State will install combustion turbines (CTs) as soon as possible and purchase energy from the market. However, there are many other options available to Tri-State.
These are the coal-fired power plants that then-Governor Sibelius vetoed three times, with part of her argument being that more than 80% of the energy they would produce would be exported. Which leaves one wondering where the power will come from for Durango, since I am presuming that the turbines are gas-driven, and thus too expensive.

(Um! Yes I know that Durango said that they are going back to coal, and have so moved, but Tri-State still has their supply problem, or will as soon as the economy picks back up without the new stations they were relying on.)

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