Tag Archives: Wind power

Electric Reliability and Energy Mix

 Portfolios with high mixes of coal, nuclear and natural gas have the greatest electric reliability.

The purple line shows the Composite Reliability Index (CRI) of different energy-mix portfolios. Portfolios with high mixes of coal, nuclear and natural gas have the greatest electric reliability. Portfolios with large wind components tend to be more reliable than those with solar.

Electric utilities in the 13-state PJM Interconnection regional transmission territory have a balanced resource mix — coal, nuclear, gas and renewables — that is “well equipped” to support reliable operation of the regional grid, PJM has found in a new report, “PJM’s Evolving Resource Mix and System Reliability.”

But continued evolution of the resource mix — particularly the decommissioning of coal and nuclear plants and increasing reliance upon natural gas and renewables — could create reliability issues in the future.

PJM is in charge of maintaining the integrity of the electric grid within its territory, which includes all of Virginia. The study analyzed a spectrum of “portfolios” with different fuel mixes to see how they would affect a variety of electric reliability attributes such as voltage control, frequency response, and the ability to ramp production up and down as needed.

Of particular relevance to the ongoing energy debate in Virginia, PJM found that portfolios with 20% or greater of solar energy in the fuel mix would be “infeasible” because they would be unable to reliably meet night-time requirements. There don’t appear to be any upper bounds for natural gas, but excessive dependence upon gas could create vulnerabilities under a “polar vortex” scenario of sustained, bitterly cold temperatures.

In Virginia, Dominion Virginia Power has emphasized the importance of fuel source diversity, including coal and nuclear. Dominion’s plans for nuclear, which include extending the longevity of its Surry and North Anna nuclear units by an extra 20 years and possibly building a third nuclear unit at tremendous expense at North Anna, have proven particularly contentious. Solar constitutes a small percentage of Virginia’s fuel mix but is fast growing, and environmentalists are pushing for a much bigger role.

Across the PJM region, notes the study, the fuel mix has become more evenly balanced over time. In 2005, coal and nuclear generated 91% of the energy on the PJM system. But between 2010 and 2016, extensive coal capacity was retired and replaced mainly with gas and renewables. PJM’s installed capacity in 2016 consisted of 33% coal, 33% natural gas, 18% nuclear and 6% renewables and hydro. PJM has said in the past that the transmission grid was flexible enough that it could accommodate up to 30% renewables.

Each fuel source has advantages and disadvantages in helping electric utilities balance electricity supply and demand while sticking to tight parameters for frequency and voltage. Coal and nuclear are less responsive to changes in demand, taking far longer to ramp production up and down. Wind and solar are easy to turn off but, due to the variability of the wind and sun, cannot be turned on at will. Natural gas tends to be the most flexible, and PJM’s most reliable portfolios include large contributions from gas. Electric batteries also would provide considerable flexibility, but PJM does not foresee them being deployed on a large scale within the time-frame of the study.

States the study:

  • Portfolios with the lowest unforced capacity shares of wind and solar tend to have the lowest composite reliability indices. (Note: “unforced capacity” refers to capacity in normal operating conditions as opposed to maximum “nameplate” capacity.)
  • Composite reliability indices generally improve as capacity shares of nuclear, coal and natural gas increase.
  • When coal and nuclear units are retired and replaced, portfolios with the highest composite reliability indices tend to be ones in which natural gas is the predominant replacement resource.

Bacon’s bottom line: PJM makes no judgment about the “best” fuel source mix, and it does not say that the most reliable fuel mixes are necessarily more desirable. If the goal is to increase renewables for reasons of reducing CO2 emissions, it is possible that some fuel mixes are reliable enough to accomplish both reliability and sustainability objectives.

Still, the PJM analysis suggests that high-renewable fuel mixes are “at risk for underperformance” and likely will need “additional technology requirements and/or new market rules” to ensure electric reliability.”

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.

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.

Environmentalists Oppose Apco’s Green Tariff

solar_panelsAppalachian Power Company’s proposal to offer a special green-power tariff (which I covered here) has run into heavy resistance from environmentalists on the grounds that (1) it would be expensive and (2) it would prohibit competition in Apco’s service territory. Jim Pieroban explores the controversy in Southeast Energy News.

The proposed tariff, Apco spokesman John Shepelwich told Pierobon, “responds to consumer and industrial demand/requests for 100% renewable energy generation. The goal … is “to provide customers with easy access to cost-effective renewable energy with low transaction costs and a fixed energy component that provides price certainty and avoids fuel price volatility, without impacting other ratepayers.”

Critics say that Apco is overpricing the renewable energy, which will be supplied mainly by wind farms in Illinois, Indiana and West Virginia. The average cost of wind nationally is about $20.75 per megawatt hour, and Apco likely could purchase it for less than that. But Apco’s tariff would average $72 per megawatt hour because it would include projects brought online between 2001 and 201o when the cost was much higher.

As Pierobon notes, third-party sales of electricity are generating increasing interest in Virginia and throughout the Southeast. The regional chapter of the Solar Energy Industries Association (SEIA) contends that Apco’s proposed tariff would effectively remove solar supplied by third parties as an option for ratepayers. Said Dana Sleeper with the Maryland-DC-Virginia chapter: “Ironically, [approval]  could result in fewer options for customers to purchase renewable energy and support renewable energy development in Virginia.”

Renewable Energy Outlook in Virginia Still Sunny

Sunny days ahead for renewable energy in Virginia.

Despite political developments in Washington, D.C., it looks like sunny days ahead for renewable energy in Virginia.

Progress toward an electric grid powered by renewable energy has been frustratingly slow to many Virginians. There have been two main obstacles to ramping up production of wind and solar power in the Old Dominion: cost and reliability.

Wind still has high hurdles in Virginia. There is a limited number of on-shore locations suitable for wind turbines, usually atop scenic mountain ridges, and projects run into stiff opposition from local residents. Meanwhile, the massive expense and risk associated with jump-starting an East Coast offshore wind industry looks insurmountable.

But solar is a different story. The cost per kilowatt continues to decline, making solar increasingly competitive with natural gas. Meanwhile, entrepreneurs are devising an array of strategies for coping with solar’s biggest drawback: the fact that utilities can’t turn it on and off in response to changes in electricity demand.

With the goal of advancing wind and solar, many states have embraced Renewable Portfolio Standards that mandate targets and timetables. Virginia’s goal of achieving 15% renewable production by 2025 is voluntary, however. Therefore clean power advocates have counted on the Obama administration’s Clean Power Plan to promote clean energy indirectly by compelling power companies to reduce CO2 emissions.

Politically, that approach didn’t work out well. The election of climate-warming skeptic Donald Trump as president and his appointment of Scott Pruitt, a Clean Power Plan foe, as the head of the Environmental Protection Agency, suggests that the Clean Power Plan will be drastically weakened, if not killed outright.

But that doesn’t mean renewables are dead in Virginia. Market forces are shifting dramatically in favor of clean energy. Instead of pushing government-driven mandates, clean power advocates need to back entrepreneurial, market-driven solutions. Here are some examples of energy innovation here in the Old Dominion that make solar an increasingly attractive proposition.

AES Energy Storage. Arlington-based AES Energy Storage is building a global enterprise selling industrial-scale batteries to make the electric grid cleaner and more reliable. The low-hanging fruit is using batteries for “frequency regulation,” fine-tuning the frequency on the electric grid, but AES also is using batteries to offset the intermittent output of solar panels.

Dominion Voltage Inc. Richmond-based Dominion Voltage Inc., a non-regulated subsidiary of Dominion Resources, has developed a Conservation Voltage Reduction product that works in conjunction with smart meters to reduce voltage and conserve energy — up to 4% may be achievable — and provide the flexibility required to integrate solar into local distribution circuits serving homes and businesses. The company claims that it can boost the capacity to accommodate solar on distribution systems from 20% to 80%.

Opower. Arlington-based Opower, purchased earlier this year by software giant Oracle for $532 million, sells data services that track energy-usage trends over tens of millions of homes. More recently, the company has developed services that help utilities engage with electricity consumers — notifying them by text, for instance, if their energy usage is spiking — in order to better manage the electric load.

Tesla Motors. The Department of Motor Vehicles ruling that allows Tesla to set up a retail operation in Richmond represents more than a victory for competition in the automobile retailing sector — it will bring Tesla’s broader strategy to transform the electric grid to Virginia. Batteries in electric vehicles represent a potentially massive source of energy storage that can be turned on and off at will (at least when the cars aren’t driving). Tesla CEO Elon Musk’s grand plan is to EVs with solar panels to make rooftop solar a more economically viable proposition than it is today. Continue reading

Banking on Batteries

AES Energy Storage maintains racks of batteries similar in appearance to a server farm.

Arlington-based AES Energy Storage operates the largest battery-storage enterprise in the world. The company does not manufacture batteries. Rather, its Advancion energy-storage platform integrates batteries with inverters and controllers, and tells the batteries when to recharge and when to sell into the grid. The batteries, as seen above, are stacked in racks not unlike servers in data centers.

AES Energy Storage is building a global enterprise using industrial-scale batteries to make the electric grid cleaner and more reliable. 

Richmond-based Dominion Resources may be the most visible energy company in Virginia — its Dominion Virginia Power subsidiary is the dominant electric utility in the state — but it is not the biggest. That distinction belongs to Arlington-based AES Corp., which operates power plants in 17 countries. Where Dominion generated $11.7 billion in revenue in 2015, AES racked up $15 billion.

While coal dominates its electric-generation portfolio, AES is moving aggressively into renewable energy. In the U.S. alone, AES Distributed Energy operates solar plants in seven states, wind in three, and energy storage in four. The company claims to have “the most comprehensive and accomplished fleet of battery-based energy storage in the world.”

Battery storage is still a niche product in the $388 billion electricity industry, but it is strategically important. Batteries can smooth minute-to-minute fluctuations in electricity frequency, shave peaks in demand, and facilitate the integration of large volumes of variable solar and wind production into the grid. Indeed, it is hard to imagine a green energy future without a big contribution from battery storage.

“We find energy storage to be one of the elements we need to create a clean, unbreakable grid,” Kiran Kumaraswamy, market development director for AES Energy Storage, tells Bacon’s Rebellion.

The grid faces what Kumaraswamy calls a “trilemma” — tradeoffs between cost, reliability and sustainability. Zero-carbon wind and solar energy sources are environmentally sustainable and their costs are plunging. But they have a big drawback: variable electricity output. Fluctuations must be balanced very quickly.

PJM Interconnection, which oversees the 14-state regional electric transmission grid of which Virginia is a part, says it can accommodate up to 30% renewable power by juggling conventional power sources. But variability becomes an issue above that level, as it can be in utilities’ lower-voltage distribution systems not overseen by PJM. Battery storage can offset that variability by supplying electricity instantaneously as needed.

As the world turns to solar and wind, says Kumaraswamy, “the grid will need more flexibility. Energy storage enables you to achieve that flexibility.”

AES, which helped jump-start the battery-storage industry eight years ago, now has 156 megawatts of battery storage installed around the globe and 276 megawatts under construction or late-stage development. Broadly speaking, AES has identified four applications where battery storage can provide economical solutions:

Frequency regulation. The best-developed application for energy storage is known in industry jargon as “frequency regulation.” The U.S. electric grid operates on a frequency of 60 hertz — a standard that generators, power lines, machines, HVAC systems and household appliances all have been designed around. Maintaining frequency requires a perfect balance between electricity being added to and withdrawn from the system. If there’s too much electricity, the frequency rises; if there’s too little, the frequency falls. In either case, system reliability can be impacted.

PJM has devised an elaborate system for regulating frequency. It has set up day-ahead auctions to match the lowest-price supplies of electricity with anticipated demand, and also real-time auctions to refine supply and demand for five-minute increments. As good as PJM’s models are, however, they cannot forecast with exactitude every blip in generation when clouds pass over a solar farm or  an industrial customer throws the switch on a big machine.

Batteries can deliver precise and accurate power to the PJM system for short durations. PJM’s need for regulation resources is a tiny percentage of its total load, which can peak around 100,000 megawatts on a typical day, says Andrew Levitt, PJM’s senior market strategist, but the batteries and other resources supplying regulation are critical for keeping the frequency within a narrow range. PJM sends a signal every two seconds to fine-tune the draw.

As an example of how the battery storage industry is taking shape, consider one of AES’s battery arrays in Laurel Mountain, W.Va. That 32-megawatt facility sells electricity into PJM’s frequency-regulation market. The size of the payment varies in direct proportion to the timeliness and accuracy with which AES can deliver micro-bursts of power. Profitability hinges on how well AES follows the PJM control signals for regulation. Continue reading

Rocky Forge Wind Turbines Not a Threat to Aviation

rocky_forge

Simulated view of Rocky Forge Wind turbines. Source: Apex Clean Energy

The Federal Aviation Administration (FAA) has ruled that 549-foot wind turbines, as tall as the Washington Monument, will not pose a danger to passing aircraft, thus putting Apex Clean Energy one step closer to building Virginia’s first commercial wind farm.

As proposed, the Rocky Forge Wind project would string 25 turbines along a ridge line in Botetourt County, generating enough electricity to power 20,000 homes. Charlottesville-based Apex still must obtain a permit from the Virginia Department of Environmental Quality, which will review the project for impact on wildlife and its habitat. Also, reports the Roanoke Times, the company is still looking for a utility or other customer to purchase the electricity.

Initially, the FAA had ruled against the turbines, declaring that they would pose a threat to aviation. But further evaluation of each individual turbine found that the Rocky Forge Wind project would pose no adverse effects. The closest airport is Ingalls Field in Hot Springs, 17 miles away.

As a condition of approval, the FAA said the turbines should be equipped with white paint and synchronized red lights to make them more visible to aviators. However, making the turbines more visible to pilots will make them more visible also to Botetourt residents who oppose the project on the grounds that the turbines will be an eyesore.

Apex selected the 7,000-acre site because of its remote location. The closest home in the area is more than a mile away.

— JAB

The Market-Driven Path to Renewables

texas_wind_turbines

Texas wind turbines. Photo credit: Wall Street Journal

by James A. Bacon

Texas, one of the most conservative states in the country, is not exactly what you’d call a hotbed of environmental activism. Yet the Lone Star state has added more wind-based generating capacity than any other; wind turbines and other renewables account for 16% of electrical generating capacity — and as much as half of electricity production at night. Now the state is anticipating a surge in solar power, reports the Wall Street Journal.

Moreover, Texas, long associated with the oil & gas industry, has become a pace-setter in renewable energy while moving from an average retail electricity rate higher than the national average to a rate below the national average — 8.6 cents per kilowatt hour compared to 10.4 cents nationally.

Oh, and it did so within the context of a free-market-based electricity system — no  state subsidies. (Federal subsidies still apply.)

“Texas officials didn’t invoke global warming to sell the program,” writes the Journal. “They touted renewable energy as a consumer-choice issue, jobs producer and a way to pump money into rural economies.”

Consumer choice: Residents of Houston can pick from 107 rate plans offering 5% to 100% renewable power. Reliant, a unit of NRG Energy Inc., charges 7.1 cents per kilowatt-hour for an all-renewable plan compared to 5.9 cents for one that’s 5% green.

Jobs: The Texas Workforce Commission estimates that the state now has more than 100,000 people working in renewable energy, which includes manufacturing, construction and ongoing operations. Construction of wind turbines and power lines  created jobs in rural counties and gave landowners new sources of income.

How did this transformation occur? The Journal doesn’t delve into details, but here are the highlights. In 1999 then-Governor George W. Bush signed legislation overhauling the Texas power market. Deregulation broke the grip of monopoly utilities that controlled generation, transmission and retail sales of electricity and introduced competitive auctions for wholesale power. Texas also mandated at least 2,000 megawatts of renewable generating capacity by 2009, not an idea inspired by free market principles, but the mandate wasn’t a major factor. Texas blew past that goal by 2005.

State government also charged electric-system users billions of dollars to build transmission lines to wheel power from windy west Texas where the wind turbines were to urban centers where the demand resided.

The Journal article doesn’t address the issue of service reliability, other than to note that Texas officials are “obsessive” about anticipating changes in the weather that might affect wind-powered production.

Bacon’s bottom line: It would be a mistake to portray the Texas approach as purely market driven. The state did enact mandates (although they apparently were not decisive) and it did dun ratepayers to upgrade transmission lines. But the deregulation of retail allowed Texas greenies to exercise their consumer power by purchasing renewables at a modest premium. And the development of wholesale electricity auctions ensured that new wind and solar producers had someone to sell to.

The big question for Virginians is whether the Texas model can be replicated here, and I’m just not sure of the answer. Some of the necessary elements are in place. For example, Virginia does participate in wholesale electricity markets; we’re part of PJM Interconnection, a cooperative zone of a dozen states in the Midwest and Mid-Atlantic. On the other hand, building transmission lines is exceedingly contentious. It’s one thing to install high-voltage towers in empty Texas ranchland; it’s quite another to build them in a Virginia countryside rich in historical, cultural and environmental resources where landowners value the land not only for its productive capacity but for its viewsheds.

Virginia also experimented with retail deregulation, which was deemed a failure. But it’s been a decade since re-regulation, and times have changed. Thanks to the success of retail deregulation in places like Texas, there are enterprises with proven business models that might make retail competition more meaningful here in Virginia.

Finally, there are important climatic differences between Texas and Virginia. With its vast, windy plains, Texas is superbly suited to on-shore wind. Except along isolated mountain ridges, Virginia is not. While the Old Dominion potentially could tap off-shore wind, the business infrastructure to support it does not exist. As for solar, Texas is an arid state where solar panels get more direct sunlight than in Virginia.

Still, while politically “blue” states from California to New York give extensive thought to what the electric grid of the future will look like, Virginia needs to do so as well. Texas’  market-oriented model might be one that Virginians are more comfortable with.

Fed Official Still Optimistic about Offshore Wind

Wind turbines off the Danish coast.

Wind turbines off the Danish coast.

by James A. Bacon

As the cost of offshore wind energy in Europe continues to decline, Abigail Ross Hopper, director of the federal Bureau of Ocean Energy Management, believes that offshore wind will come to the United States eventually.

Responding to a question by Dave Mayfield with the Virginian-Pilot what prospect she sees for ocean wind energy by 2050, she said:

I think there will be turbines running up and down the coast, the Eat Coast and the West Coast, and I don’t think it will be a big deal. Just like I’m looking out the window right now and there’s power lines along the side of the road that I ordinarily don’t see because I’m used to them.

Recently, the Dutch government auctioned rights for two large wind farms in the North Sea. The winning bid came in at the equivalent of about $95 per megawatt hour generated — $40 per megawatt hour below the previous low set by a Danish project just last year. That’s still higher than the cost of other energy sources, but the trend-line is moving in a positive direction.

The U.S. has a lot of catching up to do, Mayfield notes. Compared to the 500 wind turbines off the coast of tiny Denmark, there are five turbines off the East Coast of the U.S. — off Block Island, R.I.

Bacon’s bottom line: Europe is driving down costs now because national governments used massive subsidies to build a large and competitive wind industry, with all the supporting infrastructure and expertise required to install wind turbines in the open sea. That scale and expertise does not exist in the U.S. yet, and given the fact that offshore energy policy is driven mainly by uncoordinated state initiatives, there is no sign that it will develop any time soon.

If all East Coast states could coordinate their policies, they conceivably could generate a critical mass sufficient to entice European major players to set up shop in the U.S. For whatever reason, no one has undertaken the task of getting all the states working together.

Here in Virginia, Dominion Virginia Power investigated the cost of building two experimental turbines off the Virginia Beach Coast. That project would have tested, among other things, innovations designed to help the turbines stand up to hurricane-force winds, thus laying the groundwork for the large-scale deployment of offshore wind power. But the cost of the two experimental turbines was so high that the power company did not think it could get State Corporation Commission approval to build. Progress has stalled since the feds pulled a $40 million research grant.

Virginia has the most to gain of any U.S. state from building a vital offshore wind energy industry because Hampton Roads, centrally located along the East Coast and home to a large ship repair industry, is the most logical location for companies to operate. But the McAuliffe administration has done little — at least nothing visible — to build the interstate cooperation needed to achieve European-style economies of scale. Perhaps that’s because the McAuliffe team has chosen to focus on solar energy, for which the economics are considerably more favorable and the development lead times are much shorter. Given the string of recent solar project announcement, the administration arguably made the right decision.

Want more Solar and Wind Power? Then You Need More Gas Backup.

transmission_lineby James A. Bacon

Elona Verdolini, Francesca Vona and David Popp are deeply concerned about climate change and the need to deploy more renewable energy sources. “Decoupling economic activities from fossil-fuel use (and hence, from anthropogenic carbon emissions) is the only way to avoid severe and pervasive impacts from climate change while sustaining economic growth,” they write in a paper just published by the National Bureau of Economic Research.

But they also acknowledge a reality typically missing from economic studies of renewable energy. Wind and solar are not “dispatchable,” that is, they do not generate electricity upon demand; they generate electricity when the wind is blowing and the sun is shining. “This translates into high system costs of renewable generation, as it requires holding significant back-up capacity to ensure a balanced energy supply throughout the day. In fact, these challenges will only further increase as the share of energy generation increases to levels never witnessed before.”

Unless cheap electricity storage options become widely available in the immediate future, “the penetration of renewable energy will increase system costs, as a significant amount of capital-intensive and under-utilized back-up capacity will have to be maintained,” write the authors, who hail from Italy, France and the United States respectively.

Delving into data for 26 Organization of Economic Cooperation and Development (OECD) countries between 1990 and 2013, the authors found that an 0.88% increase in renewable energy capacity is associated with a 1% increase in the share of fast-reacting fossil generation capacity.

“To date [fast-reacting fossil] technologies have enabled [Renewable Energy] diffusion by providing renewable and dispatchable back-up capacity to hedge against variability of supply.  Our paper calls attention to the fact that renewables and fast-reacting fossil technologies appear as highly complementary and that they should be jointly installed to meet the goals of cutting emissions and ensuring a stable supply.”

Bacon’s bottom line: This is essentially the argument that the utility industry has been making, although the implications for Virginia of this high-level conclusion drawn from 26 OECD countries, many of which are far farther along in the deployment of renewables than the United States, are not immediately apparent.

PJM Interconnection, the regional transmission organization that supports wholesale electricity markets for Virginia, has estimated that the electric grid can accommodate up to 30% renewables without threatening the integrity of the electric grid. The current level of wind and solar in Virginia is a tiny percentage of that level, and even Virginia’s voluntary Renewable Portfolio Standard for 2025  is only 15%. So, it’s not as if wind and solar are likely to create the reliability issues seen in countries that heavily committed to renewables.

But this is not an issue we can ignore in the Old Dominion. If solar penetration is merely 1% or 2% of Virginia’s electricity, the need for back-up capacity is de minimus; any needed power can be purchased from wholesale markets. But what happens if solar and wind reach 15%? There is a finite amount of electricity that can be purchased from outside Virginia because there is a finite amount of transmission capacity. At what level of solar/wind penetration would Dominion Virginia Power, Appalachian Power and the smaller electric utilities be required to maintain expensive backup capacity? I don’t know of anyone who has even asked that question.

The question goes to the heart of the debate over energy policy in Virginia in the era of the Clean Power Plan, which will accelerate the phase-out of coal-powered electricity production. Environmental groups have pushed not only for more wind and solar, but they oppose the construction of new gas-fired plants, new pipelines to supply them, and new nuclear units. Some even oppose extending the life of existing nuclear units. Again, that’s fine when solar/wind is a negligible component of electricity output, but it creates problems if renewables come to dominate the system. The NBER paper reminds us that we need to understand the tradeoffs better as we make decisions that we’ll live with for decades. Right now, I fear that we lack the information needed to make intelligent choices.