Category Archives: Energy

Chesapeake Coal Ash Ruling — Advantage Dominion

Judge John A. Gibney Jr.

My initial reaction to Judge John A. Gibney Jr.’s ruling in Virginia’s first coal ash-related federal court case was to call it a draw. As I blogged yesterday, both the Sierra Club and Dominion Virginia Power found aspects of the judge’s order that supported their positions. But as I sort through the implications for the ongoing debate over coal ash in Virginia, I’m thinking that Dominion was the real winner in the long run.

True enough, the Sierra Club and its attorneys with the Southern Environmental Law Center (SELC) did win one important tactical victory: Gibney found that arsenic-tainted groundwater passing through the coal ash ponds at Dominion’s former Chesapeake Energy Center (CEC), did, in fact, reach the Elizabeth River in violation of the Clean Water Act.

Here’s how Seth Heald, chair of the Sierra Club’s Virginia chapter, framed that finding in a press release:

A federal court has found Dominion responsible for breaking the law and polluting the Elizabeth River. That is important for all Virginians who seek to hold the utility responsible for its mishandling of toxic coal ash. Now we must push Dominion to do the right thing and get this toxic ash out of the groundwater and away from the river, which is highly susceptible to disastrous flooding from sea-level rise and other climate-change effects.

But the judge also found that Dominion had been a “good corporate citizen,” had cooperated with Virginia’s Department of Environmental Quality (DEQ) “every step of the way,” and “should not suffer penalties for doing things that it, and the Commonwealth, thought complied with state and federal law.”

More importantly, Gibney applied what is, in effect, a cost-benefit test to any proposed remedy. While it is true that a tiny volume of leachate reaches the Elizabeth River, arsenic concentrations have been rendered harmless by dilution in the massive volume of river water. No threat to aquatic life and human health has been detectable so far. Unless evidence emerges that arsenic levels are reaching dangerous levels, he saw no justification to spend upwards of $600 million to excavate and remove the coal ash.

Gibney also found Dominion’s remedy of “monitored natural attenuation” — in effect, letting nature run its course — to be inadequate as well. He ordered Dominion to conduct more extensive monitoring of sediment, water and wildlife in and around the Chesapeake cite, and to report the results to the Sierra Club’s counsel and the DEQ. “In the event of a significant change in the amount of arsenic in the water or sediments,” Gibney wrote, “either party may move the Court for further relief.”

But Gibney’s cost-benefit test favors Dominion as the coal-ash controversy unfolds. Riverkeeper groups have opposed Dominion’s requests for solid-waste permits at its Bremo and Possum Point power stations. They argued, as the Sierra Club did in the CEC case, that evidence of contaminated groundwater migrating into nearby water bodies is grounds for removing the coal ash to lined landfills away from the water regardless of expense. But the application of Gibney’s logic to future cases would mean that demonstrating the leakage of small volumes of contamination into surface waters is not sufficient to seek a massively expensive remedy. The leakage must be on a scale to affect aquatic health and human safety.

Over a half century of burning coal at the Chesapeake power plant, Dominion accumulated 3.4 million tons of combustion residue and disposed of it in coal ponds. The ash contained high levels of arsenic — an estimated 150 tons. In 2014, samples of groundwater from ten wells around the ash landfill showed arsenic concentrations higher than 10 micrograms per liter, the groundwater protection standard set by DEQ. At one location, the judge noted, the arsenic concentration reached 1,287 micrograms per liter.

Gibney accepted the Sierra Club’s arguments that groundwater migrates from the coal ash to the surface waters of the Elizabeth River and its tributaries. In so doing, he rejected Dominion’s contentions that the groundwater was unconnected to the surrounding water bodies, and that arsenic traces found in the Elizabeth River originated from other industrial sources. Wrote the judge:

Dominion argues that because sediments move upstream and downstream with the tides, it is impossible to tell where the sediments used for the poor water samples originally came from. Although some tidal action may move sediments around, it defies logic to argue that an enormous amount of arsenic does not contribute to the arsenic in soil and water right next to it, especially given the evidence of groundwater movement from the mound outward.

While the evidence shows that Dominion does discharge some arsenic into nearby surface waters, Gibney reasoned, “it does not show how much.”

The Court cannot determine how much groundwater reaches the surface waters, or how much arsenic goes from the CEC to the surrounding waters. .. What the Court does know, however, is that the discharge poses no threat to health or the environment. All tests of the surface waters surrounding the CEC have been well below the water quality criteria for arsenic….. The CEC is surrounded by an enormous body of water, and even a large arsenic discharge would amount to a drop in the bucket.

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Dominion, SELC Spin Coal Ash Ruling as Victory

Dominion Virginia Power and the Southern Environmental Law Center (SELC) are both declaring victory after a ruling by a federal judge regarding Dominion’s disposal of coal ash at its retired Chesapeake Energy Center.

U.S. District Court Judge John A. Gibney ruled today that the coal ash ponds are contaminating the Elizabeth River with arsenic and that the process of “natural attenuation,” or letting nature take its course, is a “completely ineffective solution,” says a press release issued by the SELC, which represented the plaintiff, the Sierra Club.

“The judge agreed with the Sierra Club’s experts, and rejected the testimony of Dominion experts who said arsenic does not reach the Elizabeth River,” said the statement.

But Dominion found much to celebrate in Gibney’s ruling as well. “The court has confirmed that there has been no threat to health or the environment resulting from the coal ash stored at its former Chesapeake Energy Center,” said a Dominion statement. “The court noted there has been ‘no evidence that shows any injury … has occurred to health or the environment.”

Furthermore, the ruling noted that Dominion had abided by all permits and “should not suffer penalties for doing things that it, and the Commonwealth, thought complied with state and federal law.” Accordingly, the court imposed no penalties on Dominion.

That’s the breaking news. I’ll try to have more tomorrow regarding the implications of the ruling for coal ash controversies at Dominion’s Bremo, Possums Point and Chesterfield power stations.

Fix the Broken Regulatory Process

There must be a better way for federal agencies to review infrastructure mega-projects.

A few days ago, I asked why, after three-and-a-half years, the U.S. Army Corps of Engineers has yet to give a yea or nay on Dominion Virginia Power’s permit request for the Surry-Skiffes Creek transmission line. The issue I’m raising isn’t what the Army Corps decides but how long it takes to reach a decision. Because of the interminable time spent pondering the permit application, citizens and businesses on the Virginia Peninsula will be at risk of blackouts this year and next, if not longer.

Today, the Richmond Times-Dispatch highlights the frustrations expressed by Diane Leopold, CEO of Dominion Transmission (DT), sister company of Dominion Virginia Power and managing partner of the proposed $5 billion Atlantic Coast Pipeline (ACP).

“To make these beneficial investments we need certainty from federal agencies. Not a rubber stamp, but a rational path forward with clear processes, reasonable schedules and reasonable decisions,” said Leopold in testimony to the U.S. Senate Committee on Energy and Natural Resources.

The pipeline requires more than 18 major federal permits and authorizations from the Federal Energy Regulatory Commission, the U.S. Army Corps of Engineers, the National Parks Service, the U.S. Forest Service, the Environmental Protection Agency and the U.S. Fish and Wildlife Service. The most visible hang-up at the moment, as judged by Robert Zullo’s article in the T-D, appears to be with the Forest Service.

Dominion says it will use state-of-the-art technology and best practices that will minimize the risk of landslides and erosion on steep mountain slopes. But environmentalists claim that Dominion is under-estimating the landslide risk, and it appears that the Forest Service shares their concerns. Dominion is convinced that it’s right, and its foes are equally persuaded that they’re right. The debate will never be settled by having one side back down.

Why does this have to be so hard?

Instead of a time-consuming bureaucratic battle, why not just specify the desired erosion-and-sediment-control outcomes and require the pipeline to meet them? A reasonable approach would entail careful monitoring of land crossed by the pipeline to detect landslides and other forms of erosion — a cost that ACP would have to absorb. All monitoring data would be made available to the public so government agencies and environmental groups could inspect them to ensure the pipeline was fulfilling its responsibilities. ACP would be required to pay the full cost of restoring mountain slopes and compensate nearby landowners or water authorities for any damages. Perhaps ACP would be required to maintain insurance or post a bond sufficient to guarantee the damages are covered.

There should be one debate over the standards appropriate to steep mountain slopes, and those standards should apply to everyone who wants to build an interstate pipeline in comparable terrain. The purpose of regulation should not be to prescribe how pipelines do their jobs but to ensure that they achieve the desired outcomes. Finally, the review process should not require months and months of review. It should take no more than a week or two to ascertain that the pipeline applicant has the financial wherewithal to live up to its commitments.

Wouldn’t such an arrangement work better for everyone?

Why So Long to Decide about Surry-Skiffes?

View of a Dominion transmission line crossing the James in Newport News downstream from the proposed Surry-Skiffes project.

View of a Dominion transmission line crossing the James in Newport News downstream from the proposed Surry-Skiffes project. Photo credit: Daily News.

Tick, tock! The April 15 deadline is fast approaching for when Dominion Virginia Power will have to shut down its Yorktown One and Two coal-fired units, leaving the Virginia Peninsula vulnerable to blackouts. That risk will hang over the region, home to a half million people, for a year-and-a-half or more — for however long it takes to gain regulatory approval for a solution and then build a replacement source of electric power,

The question every Virginian should ask: What is going on inside the U.S. Army Corps of Engineers? What is taking so long to make a decision, either yea or nay? Whatever the final outcome, it’s hard to avoid the conclusion that the regulatory process is badly broken.

Dominion has known for several years that it would have to replace the capacity of the Yorktown units. It conducted an alternatives analysis, and then considered running a transmission line down the spine of the Peninsula before scotching the idea because the line would cross too many wetlands, subdivisions and Indian lands. Then the utility settled on building a 500 kV transmission line across the James River near Jamestown. PJM Interconnection, the organization that runs the multi-state electric grid that includes Virginia, has repeatedly confirmed that that the Surry-Skiffes Creek route selected by Dominion is the most cost effective. Dominion obtained State Corporation Commission approval for the project in 2013 and survived a Virginia Supreme Court challenge.  The Environmental Protection Agency has given Dominion two one-year extensions on the operation of the Yorktown power stations.

The final regulatory hurdle was gaining a permit from the Norfolk office of the Army Corps of Engineers, which has to balance the economic justification of the project against environmental and conservation considerations. By August 2013, when Dominion submitted a revised permit request, the proposal had stirred up intense resistance from citizens and conservation groups on the grounds that the Surry-Skiffes line’s high steel towers would ruin views of a historically sacred stretch of river, which has remained largely unspoiled since English settlers landed at Jamestown.

For three-and-a-half years, the Corps has solicited public input, held public hearings, examined alternative solutions, and considered Dominion proposals — $85 million worth — to mitigate the loss of historical and cultural resources. (See the Corp’s regulatory time-line here.) All this time Dominion has been sounding the warning that after April 15 the Peninsula would be at risk of region-wide blackouts.

For roughly 60 days a year, during periods of peak electric load, the electric lines bringing in power from outside the region would be running at close to peak capacity. The system would be only one unplanned outage of a transmission line away from a crisis. National electric reliability standards require Dominion to maintain enough redundancy in the system to withstand two simultaneous contingencies. Rather than risk a cascading blackout like the one that knocked out electric power for 50 million Americans and Canadians in the infamous 2003 blackout, PJM would order Dominion to “shed load” to eliminate the risk. During hot summer months or cold winter months, controlled blackouts could become a frequent event on the Peninsula.

There is no question that the Army Corps has a hard decision to make with Surry-Skiffes — whether to risk economically disruptive blackouts until a new solution can be found or to mar an irreplaceable historical treasure. But the longer it waits, the longer it puts the region at risk. If it gives the OK tomorrow, it would still take Dominion a year and a half to build the transmission line. If the corps declines to issue the permit, the utility will take even longer to devise an alternative, gain the necessary permits and build whatever needs to be built. Either way, the interminable decision-making process has put the Peninsula economy at risk.

The scandal here is not the necessity of obtaining Army Corps approval. The country needs a mechanism to evaluate the merits of giant infrastructure projects against the harm they might pose to communities. The scandal is the length of time it takes to reach that decision. Three-and-a-half years is way too long. The system is broken. It needs to be fixed.

Peninsula Still Needs Surry-Skiffes Project, Says PJM

View from the Surry nuclear power station of where the proposed Surry-Skiffes transmission line would cross the James River.

View from the Surry nuclear power station of where the proposed Surry-Skiffes transmission line would cross the James River.

PJM Interconnection may have lowered its forecasts for peak electricity load on the Virginia Peninsula, but the regional transmission organization still contends that the proposed Surry-Skiffes Creek high-voltage transmission line is still needed to avoid the risk of blackouts.

“It is PJM’s determination that the current Skiffes Creek 500 kV project remains the most effective and efficient solution to address the identified reliability criteria violations,” wrote Steven R. Herling, PJM vice president-planning, to the Norfolk district commander of the U.S. Army Corps of Engineers earlier this month.

Dominion Virginia Power, which must obtain a permit from the Corps before it can commence construction, has encountered stiff opposition to the project. Preservationists say the highly visible power line will disrupt views of the James River little changed since the first English settlers arrived more than 400 years ago.

The project was precipitated by federal clean-air regulations that compels Dominion to shut down two of its aging, coal-fired generators at the Yorktown Power Station. Those units are scheduled to go offline next month, eliminating a major source of electric power on the Peninsula. The region is served by multiple transmission lines that can meet electric power demand under routine conditions. But the Peninsula grid lacks the redundancy to meet federal reliability guidelines designed to prevent another cascading blackout like the one that plunged 55 million in the Northeast and Canada into darkness.

Dominion selected the Surry-Skiffes route after examining numerous alternatives. Foes charged that the utility considered only a narrow range of options. Instead of building a 500 kV line across the James, it could have met reliability standards through a combination of measures: upgrade of existing lines, solar power, energy efficiency, demand-response, greater reliance upon the oil-powered Yorktown 3 unit, and/or building a less obtrusive, lower-voltage line across the James. Arguing that the 500 kV line was overkill, they also argued that Dominion forecasts for electricity demand were unrealistically high.

In October 2016, the National Trust for Historic Preservation, which has named the James River as one of the nation’s 11 most endangered historic places, published an alternatives report prepared by Richard D. Tabors, a consultant and former MIT professor. Using Dominion data and the same simulation model as PJM, Tabors outlined four alternatives.

Summary of four alternative scenarios prepared by Tabors Caramanis Rudkevich.

Tabors recommended upgrading existing 115 kV and 230 kV power lines feeding the Peninsula, getting greater use out of the Yorktown No. 3 oil-based generator, dropping load at selected feeders, and building new transmission lines, preferably along existing rights of way. Each scenario, states the report, “is generally less costly and can be implemented in a shorter period of time.”

Since publication of the Tabors report, PJM has backed off its earlier load forecasts. Reports David Ress with the Daily Press:

The latest PJM forecasts … suggest peak load demand during the summer would grow at an annual rate of 4 percent though 2027, to reach a total of 20,501 megawatts.

That’s 1,755 megawatts less than PJM’s forecast a year ago, nearly an 8 percent decline. Last year, Dominion’s summer peak was 19,539 megawatts.

But in Herling’s letter to the Corps, PJM stuck to its guns on the larger point, that the Surry-Skiffes line presented the optimum solution to the Peninsula’s needs. “PJM staff has reviewed the proposed alternatives and found that none of them resolved the identified reliability criteria violations that are being addressed by the Surry-Skiffes 500 kV project,” wrote Herling.

There are multiple, inter-related reliability violations, said the PJM planner.

Solving for a single violation does not address the panoply of reliability violations that are designed to be addressed through the Skiffes Creek project. For example, the continued operation of the Yorktown 3 generator as proposed by Dr. Tabors would not address thermal overload and voltage violations on the 230 kV and 115 kV bulk electric system that were identified by PJM. In addition, Dr. Tabors’ reliance on the Yorktown 3 generator as a solution ignores the significant environmental operating restrictions and limitations on plant operations associated with that plant.

Subsequent studies have re-confirmed the need for the Surry-Skiffes project even considering PJM’s updated load forecasts, Herling wrote.

Has Rate Freeze Benefited Virginia Customers?

There's no evidence that the electricity rate freeze has hurt Virginians.

Rate freeze —

Are the electric power companies ripping off rate payers under the guise of a rate freeze? Some think so. The electric utility industry came under fire during the 2017 General Assembly session when Sen. Chap Petersen, D-Fairfax, submitted a bill to un-do the freeze in base electric rates enacted in the 2015 session. Although his bill never made it through the General Assembly, Petersen has appealed to Governor Terry McAuliffe to implement it as an amendment.

In an op-ed piece published in the Richmond Times-Dispatch this morning Mark Webb, Dominion’s senior vice president for corporate affairs, argued that the freeze is working as designed and is a good deal for rate payers.

Legislators wanted to protect customers from a potential price hike tied to environmental costs. Since then a Dominion residential customer has paid $1,100 less per year for electricity than those in the Mid-Atlantic.

Were the rates frozen after big increases? Not at all. Dominion residential rates are only about 4 percent higher than they were in 2008. Don’t you wish that was the case with your other household expenses?”

Meanwhile, the reliability of service has improved, Webb writes, and industrial rates have declined 16% over the same period. Virginia’s lower electric rates are significantly lower than Maryland’s and Washington, D.C.’s. Maryland residential customers pay 25% higher rates than Dominion customers, while industrial customers pay 49% more. D.C. residents and industrial customers pay an even bigger premium.

Dominion’s lower rates have been an economic boon for Northern Virginia, Webb says. “No wonder large electric users such as data centers overwhelmingly locate in Virginia instead of D.C. or Maryland.”

(Webb’s op-ed made no mention of the neighboring state of North Carolina, however, where the average electric rate is lower — 10.29 per kilowatt hour in December 2016 compared to 10.72 cents in Virginia.)

Webb then goes one step further, contending that the General Assembly’s re-regulation of electric power energy in 2008 has worked out well for Virginians, too. “Since Virginia’s landmark legislation reregulated utilities a decade ago,” he writes, “electric rates have been remarkably stable and well below the national and regional averages.”

Bacon’s bottom line: I was curious. What are the numbers? How have electricity rates fared compared to national averages (a) since reregulation and (b) since the rate freeze? I checked data compiled by the U.S. Energy Information Administration for “Average Retail Prices for Electricity” for answers.

Between 2008 and 2016, the average residential rate per kilowatt hour for retail customers nationally increased 11.7%, significantly higher than the 4% rate for Dominion customers that Webb cites. So, Dominion has out-performed the national average since reregulation. But rate-freeze critics have not disputed the fact.

A more pertinent question is what has happened to electricity rates since July 2015 when the freeze went into effect. As critics have noted, base rates cover only ongoing operating costs, not the cost of fuel, which is adjusted through fuel adjustment clauses, or the cost of new capital projects, which is incorporated into the rate structure through rate adjustment clauses. In theory, overall rates can climb higher while base rates stay locked in place.

But that has not happened. Between July 2015 and December 2016 (the most recent month available), the average price of electricity in Virginia decreased 8% to 10.72 cents per kilowatt hour. That compares to a 5.9% decline in electric rates nationally between July 2015 and November 2016, according to the Energy Information Administration.

Out-performing the national average since mid-2015 would seem to buttress Dominion’s case, but it still doesn’t end the argument. Former Attorney General Ken Cuccinelli has argued that the rate freeze locks into place hundreds of millions of dollars in excess profits, with the implication that if Virginia electricity rates would be even lower if they hadn’t been frozen. Webb side-stepped that issue in his op-ed piece, and the EIA numbers don’t address it.

Solar as Economic Savior for Wise County?

After Wise County coal mines close, what comes next?

After Wise County coal mines close, what comes next?

When I covered the coalfields beat for the Roanoke Times in early 1980s, Virginia coal companies employed more than 25,000. The number has dwindled to one-tenth that number today. Not only has the number of miners plummeted, but so has employment in the industries that supply them with everything from timbers, rock dust and roof bolts to heavy trucks and continuous mining machines.

Wise County, where Virginia’s coal industry took root more than a century ago, is desperately trying to diversify its economy. In an irony of ironies, it is looking to solar energy. But it has run into a regulatory tangle.

As described by the Roanoke TimesWise County has robust broadband connections, courtesy of the Virginia Tobacco Commission, which it is trying to parlay into technology investment. It has secured one big victory so far, which it hopes to build upon. The Mineral Gap Data Center, under construction at the Lonesome Pine Regional Business and Technology Park, will create 30 jobs. But many energy-hungry data-center companies are demanding renewable power, and Wise County is served by Old Dominion Power, a subsidiary of Kentucky Utilities Company, which derives only one percent of its electricity from renewables.

As it happens, a solar company wants to locate in Wise: Energix Renewable Energies, the largest renewable energy company in Israel. The company has signed a non-binding memorandum of understanding to build a 20-megawatt solar facility in Wise. Here’s the catch: Energix wants to sell excess power back to Old Dominion Power, and Old Dominion Power isn’t interested. “Our generation portfolio is meeting our customers’ needs at this time and we do not currently have the need for additional generation capacity,” the utility says, as quoted by the Times.

Now the Wise County Industrial Development Authority wants Governor Terry McAuliffe to intervene. Although it is too late for the General Assembly to introduce new bills this year, McAuliffe can propose amendments, and Wise County is asking him to propose one that would require Old Dominion to buy solar power from Energix and re-sell it to other companies in the business park. Whether McAuliffe can find a germane bill upon which to attach such an amendment, even if he were inclined to do so, is an open question.

Bacon’s bottom line: I am totally sympathetic to Wise County’s desire to diversity its economy, and building a data center/solar power industry cluster sounds like a plausible idea. Data center jobs would be highly paid by local standards, and both data centers and solar facilities would shore up the local tax base. But giving Wise County what it wants would potentially unravel Virginia’s electric utility regulatory structure. Perhaps the electric utility regulatory structure needs unraveling. But thought needs to be given to what to replaces it, and a ginning up a last-minute gubernatorial amendment is not the venue for contemplating a major overhaul.

In the meantime, there is nothing to stop Energix from selling its surplus electricity into the wholesale electricity market maintained by PJM Interconnection. Of course, the price likely would be lower. But Energix cannot reasonably expect to charge the full retail rate for electricity when it is not responsible for maintaining the electric grid that distributes the electricity.

Alternatively, a data-center company seeking to locate in Wise County could purchase renewable power from outside Wise County. For example, Amazon Web Services isn’t purchasing green energy from Loudoun County solar farms — it’s importing solar energy from the Eastern Shore. Half a loaf would be better than none.

While Wise County has a weak case in the context of the current regulatory structure, it is equally clear that the rigidity of that regulatory structure is not helping economic development there. The more instances we hear like this, the more political pressure will build to revisit Virginia’s utility regulatory framework.

Following the Least-Cost Pathway to CO2 Cuts

The least-cost pathway concept acknowledges that as annual electric-sector emissions of CO2 approach zero tons per person, the cost per ton reduced increases.

The least-cost pathway concept acknowledges that as annual electric-sector emissions of CO2 approach zero tons per person, the cost per ton reduced increases. (Image source: IHS Markit)

Global greenhouse gas emissions have increased steadily as China, India and other countries bring new coal-powered electric plants online, but the United States has bucked the trend. In the U.S. electric power sector, CO2 emissions declined 20% between 2007 and 2015.

One might think that California, which is re-restructuring its electric power system to reduce carbon emissions, played a major role in that accomplishment. But it didn’t. In fact, even as the Golden State boosted wind and solar output from 2 percent to 14 percent of in-state electricity production over that period, CO2 emissions held steady. The reason: The share of natural gas-fired generation grew from 50 percent to 60 percent.

Explains IHS Markit, a purveyor of market intelligence and analysis: “This was needed to back up and fill in for intermittent renewables, replace output from prematurely closing nuclear plants, and offset declining hydroelectric generation.”

The economics of CO2 reduction are complex, and not all CO2 reduction strategies are created equal — either in terms of cost or in terms of emissions reduced. As IHS Markit notes in a Wall Street Journal advertorial today, there are more cost-efficient ways to cut greenhouse gases than mandating renewables. “The reductions achieved via [California’s] wind and solar mandates cost 10 times more than the ones achieved through its cap-and-trade programs.”

The idea that cutting greenhouse gas emissions is a compelling national goal is far from universally accepted. Not everyone embraces the more cataclysmic predictions of temperature rise, not everyone believes that an atmosphere richer in CO2 will lead to universally baleful effects, and not everyone agrees with the proposition that cutting CO2 emissions is the best way to respond to a warming climate. But let’s set those reservations aside for a moment and assume that combating global warming and cutting CO2 emissions is a global imperative, and that we’ve all got to do our bit to turn the tide.

IHS Markit employs a concept it calls “the least-cost pathway” to CO2 reduction, which ranks CO2 reduction strategies for the electric power industry by cost-effectiveness — essentially by dollars-per-ton of CO2 saved.

The lowest-cost approach is replacing coal, which emits a large volume of CO2 per unit of electricity generated, with natural gas, which emits about half the volume. That approach is so cost-effective that it has already occurred on a large scale, driven largely by market forces (and Environmental Protection Agency rules that cracked down on emissions of toxic metals from the combustion of coal).

Thanks to the fracking revolution, which has expanded the supply of natural gas and pushed down the price, U.S. electric utilities have shifted dramatically from coal to gas. That’s the reason U.S. CO2 emissions have declined so dramatically. While this approach has not totally run its course, the rate of gas-for-coal substitution is likely to slow significantly, as only the newest, cleanest, most cost-efficient coal plants remain in operation.

Extending the life of aging nuclear power plants is somewhat more expensive, and building new nuclear facilities is significantly more expensive. On the positive side, nukes have zero carbon emissions and they provide a reliable base-load capacity. IHS Markit sums up the pros and cons: “Nuclear power plant extension is cost-effective early on, and new nuclear plants become cost-effective as the curve moves into deeper reduction.”

Energy efficiency is part of the equation, says IHS Markit. However, “encouraging efficiency investments beyond what consumers would do themselves involves increasing costs.”

As for wind and solar, they, too, are part of the solution. “But not as the primary source of generation. … Wind and solar costs are not reaching grid parity when the need to align power output to when consumers want electricity is taken into account. Battery technologies are improving but are still not a cost-effective way to manage variations in electricity demand.”

The comparative economics get murkier when we look into the future. Will natural gas prices increase, and by how much, as the most productive wells are depleted and exports of Liquified Natural Gas soak up excess supply? Will the cost of solar panels and battery technologies continue to decline as in the past, or will the pace of innovation slow? Will the price of building new nuclear plants remain breathtakingly high, or will some combination of new technologies (mini-nukes, anyone?) and relaxation of excessive safety regulations bring down the cost?

As IHS Markit concedes, there is little consensus. Still, the market-intelligence company provides a useful framework for looking at Virginia’s energy future: We should pursue the least-cost pathway to CO2 emissions.

The devil is in the details, of course. We can haggle endlessly over the cost-effectiveness of any given approach. But the idea makes more sense than pre-supposing that any particular approach — coal, gas, extending old nukes, building new nukes, wind, solar, energy conservation — is the way to go. Different energy sources have their own place in the fuel mix as Virginia’s electric power sector moves up the least-cost pathway.

Tracking California’s Grand Experiment with Solar

California solar farm

California is leading the nation’s transition from fossil fuels and nukes to renewable fuels, mostly solar power. The Golden State’s aggressive investment in solar energy has created such a glut of daytime electricity that solar wholesale prices literally drops to zero and such a shortage during the night that real-time prices surge as high as $1,000 per megawatt hour. Regulators and utilities are learning how to cope with these problems through battery storage, grid modernization and energy conservation.

Hopefully, Virginia utilities and regulators are paying close attention as the Old Dominion defines its own approach to renewable energy. On the one hand, by going slowly, Virginia can learn from California’s mistakes and work-arounds. On the other, Virginia’s cautious approach to solar risks allowing other states crack the code first on how to generate reliable, lower-cost and green power, thus converting the price and quality of electricity from a competitive advantage to a disadvantage.

In 2016 the average cost of electricity in Virginia was 8.88 cents per kilowatt hour, according to the U.S. Energy Information Administration. In California, the cost was 14.88 cents per kilowatt hour, 40% higher.

California is spending billions of dollars in giant test project in which the entire state economy is the subject. The great challenge with solar, as oft alluded to in Bacon’s Rebellion, is coping with intermittent nature of generation. Last month, notes the Wall Street Journal, Sempra Energy flipped the switch on a bank of 400,000 lithium-ion batteries installed by Virginia-based AES Corp. The batteries will smooth out power flows in San Diego’s solar-intensive electric grid. Meanwhile, Tesla, Inc., is supplying batteries to a Los Angeles-area network tied together in a microgrid of 100 office buildings and industrial properties. Reports the Journal:

When [Edison International] needs more electricity on its system, the batteries would be able to deliver 360 megawatt hours of extra power to the buildings and the grid, enough to power 20,000 homes for a day, on short notice. At other times, the batteries would help firms hosting the arrays to cut their utility bills.

Clearly, strategies exist for overcoming the variable and daylight-only production of solar panels. The big question is how much the batteries cost. And that tends to be a ticklish subject. As the WSJ noted regarding the Tesla/Edison International project in Los Angeles, “The companies declined to say how much the project would cost.”

Broadly speaking, battery storage has two different uses. One is fine-tuning the electric grid, a function that exploits the ability of batteries to respond instantaneously to micro-fluctuations in voltage and frequency. The other is storing electric power until it is needed at a different time. In this second use, batteries compete with natural-gas peaker plants, which are essentially jet turbines that sit idle until needed. Unlike conventional power plants that ramp up and down slowly, gas peakers and batteries can respond quickly to changes in demand.

Stored power from lithium-ion batteries can do the work of a natural-gas peaker plant at an average cost of between $284 and $581 a megawatt-hour, according to a December report by Lazard Ltd. In contrast, electricity from a new gas peaker plant costs between $155 and $227 a megawatt-hour, according to Lazard.

(By comparison, the average retail price of electricity in Virginia is about $89 per megawatt hour.)

Clearly, lithium-ion batteries are far too expensive at present to use on a large scale in Virginia as a peaking resource. But solar advocates hold out the hope that battery storage will decline in cost. Is that realistic?

The lithium-ion battery chemistry may be reaching the limits of its potential, reports Fortune magazine in an article published yesterday. “The biggest proof may be in the spate of explosions now plaguing smartphone makers from Samsung to Apple, in part thanks to li-ons’ tendency to grow dendrites, metal strands that can cause short circuits.”

John Goodenough, a co-inventor of the lithium-ion battery, claims to have developed a solid-state battery that replaces lithium with sodium, which, in theory, can hold three times more energy, charge quickly, and never explode. Commercialization of the technology is years away, however, warns Fortune. By way of comparison, Lithium ion batteries took a decade to move from the laboratory to the marketplace.

When it comes to reducing CO2 emissions, Californians seem willing to pay any price. That approach will not sell politically in Virginia. But California is more than a Land of Fruits and Nuts. It has some of the most brilliant scientists, engineers and technologists in the world. If green power can be made economically competitive with fossil fuels and nuclear, California will figure it out. We Virginians should not necessarily emulate its example, but we should be paying attention.

At Last, a Wind Farm Virginia Can Call Its Own

Simulated view of Rocky Forge wind farm.

Simulated view of Rocky Forge wind farm.

It looks like Virginia soon will have its first commercial wind farm. The Department of Environmental Quality (DEQ) has approved plans to build 25 giant turbines on a ridgeline in Botetourt County.

Critical to the approval was an agreement by Charlottesville-based Apex Clean Energy to turn off turbines at its Rocky Forge site during warm, calm nights during the season when bats are most active. Foes of the project had focused on the risk that the 550-foot-tall turbines would pose to bats and birds.

Virginia will join 41 other states that have wind projects. The Rocky Forge project has run a regulatory gamut, winning approvals from Botetourt County and the Federal Aviation Administration as well as DEQ. Apex had to demonstrate that its turbines would not pose a threat to commercial aviation.

Apex CEO Mark Goodwin was up-beat. “Linked with competitive pricing and clear evidence that new clean energy generation attracts major corporate investment, Rocky Forge Wind is set to begin a new chapter in Virginia’s energy future.”

Reports the Roanoke Times:

To evaluate the wind farm’s impact on the environment, DEQ relied in large part on studies conducted for Apex by private firms, in consultation with state and federal agencies.

The data showed minimal harm to birds, noting that eagles and other types of birds most threatened by turbines were not seen in large numbers at the proposed wind farm site, a 7,000-acre parcel of unpopulated woodland on North Mountain that sits about 5 miles northeast of Eagle Rock.

The company will stop its turbines from sunset to sunrise from mid-May to mid-November every year, except when the wind is blowing faster than 15 mph or it is 38 degrees or colder on the mountain ridge. … Apex says it also will avoid cutting trees within 5 miles of the bats’ caves and within 150 feet of summer roosting trees for northern long-eared bats from early spring to fall.

In echoes of criticisms leveled against the Atlantic Coast Pipeline and Mountain Valley Pipeline, critics of the project asserted that DEQ’s streamlined administrative process, enacted in 2010, is too friendly to industry.

During construction, the wind farm is expected to produce about 150 jobs. Once the project is operational, it will be run by about a half-dozen employees on-site.
Apex officials have said earlier that the facility could pump as much as $4.5 million a year into the local economy, adding to the tax base and contributing to local sales and tourism spending.

Bacon’s bottom line: Concerns that wind turbines kill birds and bats has emerged as a big issue with many proposed wind farms in the Appalachian mountains. It will be interesting to see if Apex’s concession to shut down the turbines during periods of peak wildlife activity creates a precedent that eases the approval of other wind projects in Virginia.

Virginia’s on-land wind resources are limited, restricted mainly to mountain ridge lines near existing electric transmission lines. People have convinced themselves that wind turbines, like houses, cabins and condominiums, are an eyesore and hurt their property values. Apex shrewdly located Rocky Forge on an isolated ridge seen by few people, so opposition in Botetourt was limited. Whether the Rocky Forge success can be replicated anywhere else remains to be seen.