Will “Home Grown” Renewables Spur Virginia’s Economy?

Which creates more jobs? Solar and wind…

Walton Shepherd, a staff attorney for the Natural Resources Defense Council (NRDC), has made an economic-development argument for renewable energy sources over natural gas in Virginia’s energy policy. Sandy Hausman with WVTF Public Radio quotes him as follows:

Renewable energy and energy efficiency are basically homegrown resources. If Virginia wants to produce its own power and not send dollars out of state for things like natural gas that we actually have to import, we can tap those resources right here in Virginia and keep those dollars local.

… or gas-fired power plants?

Shepherd says that Virginia should cut carbon emissions by 30%, and the state should reject any request by Dominion Virginia Power to build any new natural gas burning plants. Using similar logic, environmentalists also have argued that construction of the proposed Atlantic Coast Pipeline and Mountain Valley Pipeline, both of which would transport natural gas, is unnecessary and not in the public interest.

Shepherd raises a point worth examining: Do “home grown” energy sources like solar, wind and energy conservation create more taxable, job-creating economic activity than building pipelines and gas-fired power stations? The answer seems intuitively obvious — wind and sunshine are abundant and free here in the Old Dominion, while natural gas imported from outside the state represents a drain on Virginia’s economy.

But the truth of the matter is far from clear. The point of this post is not to settle the matter — I don’t have the data or analytical tools to do that — merely to warn against making simplistic assumptions.

Cost of capital. First, the cost of fuel is only one part of the cost of generating electricity. Two other inputs are manpower and, most important, capital. Shepherd’s argument (as filtered through Public Radio) does not consider the cost of capital. At present, solar panels and wind turbines are more expensive per unit of electricity generated than the turbines, boilers and pollution-control devices it takes to burn natural gas. Higher costs translate into higher electric rates, which come out of the pockets of businesses and rate payers, which diminishes the money they have to spend in the local economy.

Direct job creation. Once installed, solar, wind and gas facilities require employees to maintain and operate them. A billion-dollar gas power station requires only a few dozen employees to operate. A solar farm requires little more than periodic inspections to ensure everything is working properly and landscapers to keep down the grass. (Wind will be a niche player in Virginia, so I don’t give it much consideration here.) I haven’t seen an objective analysis that compares the employment levels (and payroll) of solar farms vs. gas plants. Either way, the numbers are tiny compared to the capital investment expended.

Indirect job creation. Solar farms and gas plants also have indirect, spin-off effects. For instance, corporations dedicated to green energy policies want to buy renewable energy. A case in point is Amazon Web Services, which has committed to run its Northern Virginia data centers on solar. The availability of green energy makes such companies more willing to invest in Virginia, although it is difficult to say how critical the criteria is in their location decisions.

On the other side of the argument, gas backers say that new gas-fired power stations will support construction of the Atlantic Coast Pipeline, which in turn will supply gas to industrial customers along the pipeline route and allow communities to compete for energy-intensive manufacturing prospects for the first time.

Energy efficiency. Greenies such as Shepherd tout the advantages of energy efficiency. Whether weatherizing the houses of the poor or installing state-of-the-art controls for office HVAC systems, investments in energy efficiency can create jobs and build businesses. (My wife used to work for a company that makes a software platform for building automation systems. That Henrico-based firm employs a lot of  highly paid engineers.) Energy conservation programs come in many forms — from upgrading heat pumps to replacing old, energy-hogging refrigerators — and each one offers a different payback. On one extreme, the market-driven building automation business offers demonstrable savings and requires no government support. On the other hand, programs that eke out marginal improvements in appliance efficiency typically require subsidies from taxpayers or rate payers.

Subsidized conservation programs may create local jobs, but if the same sum of money were invested elsewhere, they might create just as many jobs, perhaps more. Americans normally trust the free market to allocate capital the most efficiently. When government policy overrides market dynamics via subsidies, it’s much harder to make the case that job creation will be maximized.

Intangibles. Some costs and benefits of energy sources are intangible. For instance, solar and wind are extremely land intensive, displacing other uses such as agriculture and forestry, both of which support Virginia jobs. Similarly, solar and wind, which are intermittent sources of power, create issues for maintaining the stability of the electric grid. Utilities are getting better at handling these fluctuations, but they typically must spend money upgrading their transmission and distribution systems in order to do so. Does Shepherd take these expenditures into account?

There is an environmental benefit to clean energy sources, and a cleaner environment does have an economic value. But putting a price tag on reducing CO2 emissions, the prime benefit of which is less global warming, is problematic. The benefits of Virginians’ CO2 reductions accrue to the world at large, not to Virginia. While flooding from sea-level rise is a major economic concern for Hampton Roads linked to global warming, the impact of renewable investments made here in Virginia on global temperature, and by extension sea-level rise, would be undetectable. Quantifying economic benefits to the commonwealth is an impossible task.

Stranded investments. The greatest intangible is risk. Gas-fired power plants and pipelines are multibillion-dollar investments with an economic life measured in decades. There is a chance that within a decade continued technology improvements will drive down the cost of solar electricity to the point where it would be the indisputably preferable electricity source. In such a scenario, Virginia rate payers would be stuck with enormous stranded investments in gas infrastructure that was no longer economically justifiable.

Dominion’s economic analysis says that the investment in its Brunswick and Greensville power stations will benefit Virginians to the tune of roughly $1 billion each over their economic lifetimes (the savings at Greenville will be somewhat larger than Brunswick’s), even assuming higher gas prices and lower solar prices in the years ahead. Environmental groups dispute the analysis.

Anybody can make any claim they want and back it up with sophisticated-looking charts and graphs. But any claim, by either side of the debate, depends upon two critical things: (1) how the issue is framed, in other words, which factors are included and excluded, and (2) key assumptions about unknowable things such as the future rate of technological improvement, cost of capital, and cost of energy.

So, to answer the question we started with: Will shifting to “local” energy sources like wind, solar and energy-efficiency stimulate more economic development (usually defined as jobs and tax revenue) than natural gas? The answer is, nobody knows. Indeed, the answer may be unknowable with any certainty. If you adopt a position on either side of the debate, you’ll be making a leap of faith.

There are currently no comments highlighted.

41 responses to “Will “Home Grown” Renewables Spur Virginia’s Economy?

  1. I want to see a LOT more wind/solar but wind/solar are incompatible with base load generation since it cannot modulate in response to wind/solar variation.

    That leaves you with the question of what will you use to generate electricity when wind/solar are not generating – especially at night?

    From my viewpoint -you must have gas plants to generate at those periods when wind/solar are not sufficiently available.

    Note I do no buy Dominions view that wind/solar are not “dependable” and therefore not a “reliable” source. I DO think both of them are perfectly useful fuels as long as you have a way to generate electricity when they are not available.

    You’re never not going to need gas plants – until or unless some form of universal cost-effective storage comes into play.

    Perhaps it’s a contest between how long it will take cost-effective storage to be ready and available for prime-time – widespread use everywhere – and how long a gas plant will last and get paid for – before than happens.

    Some folks think we’re already there.. – but if that is so – you’d think that every island in the world would be rapidly transitioning to wind/solar/storage and away from their 40-50 cent kwh fuel oil and I’ve yet to find a single one that is that way 100% for the entire island.

    Fuel oil, by the way CAN vary in generation – just like gas can and thus mates well with solar and wind… but you still need it when wind/solar are insufficient.

    so it appears we’re not there yet…

    when we get there – I’d agree – at that point those gas plants will become giant paper-weights.

    It would seem the trick is to be able to predict when “storage” will be “ready” and that would seem to be a gamble that Dominion just will not take.

    • Larry,

      We have gone around on this a few times, but you have an important voice and I want to see if we can clear this up. Solar is not incompatible with baseload generation – it is complementary.

      It can give baseload a problem (because it displaces baseload and lowers utility profits) when solar becomes a much higher percentage of the generating fleet as it is in California, but we are nowhere near that in Virginia.

      As we have discussed, the plants we already have are perfectly adequate to provide the generation at night. No need to build new conventional generation. As solar and storage continue to come down in price, they will begin to displace the most expensive baseload generation. If we plan this transition properly we can have high reliability and avoid stranded costs.

      Storage is “ready” today, depending on its use. PJM was an early adopter. Dominion might be waiting for the FERC decisions regarding the value of storage in the wholesale market to get sorted out so they can make the best investment decisions.

      Several islands are making the transition to solar. Kauai, as we have discussed, is a long way towards that goal. But if you have already paid for a diesel generator and can keep the fuel from going bad, it will always be valuable to keep some of the old units for backup.

      It is not necessary for solar to assume 100% of the energy production to make it valuable today. We will have a mix of various types of generation for some time. The important issue is what we are choosing when we build new generation. For the past several years, the majority of generating additions in the US have been renewables. There are good reasons to make that same choice in Virginia.

  2. “when we get there – I’d agree – at that point those gas plants will become giant paper-weights.”

    If/when we get there the cost of fossil fuels will respond to the market and drop to the point where they remain very, very attractive. And the paper weights will still be operating for a long time. Coal and oil won’t be around much longer, but natural gas will be the mainstay for this century.

    • John Wellinghoff disagrees with you .,..
      • Jon Wellinghoff warns that “With declining dispatch of gas-fired units, less natural gas will be needed. … These utilities are taking a risk that these will be stranded assets that ultimately their shareholders will have to pay off.”

      Others say … Solar PV could supply 23% of global power generation in 2040 and 29% by 2050, entirely phasing out coal and leaving gas with a 1% market share.


    • CleanAir&Water has it right about Jon Wellinghoff the former FERC chairman’s opinion.

      I would be interested in hearing what market forces you foresee that would drop the price of natural gas. Most observers agree that it is very unlikely that we will see a repeat of the circumstances that have created this unusually low price for natural gas.

      The glut was caused by the financial bubble. Money fled the mortgage securities market in 2008 and rushed into oil & as exploration because of the worldwide all-time high prices for oil and natural gas. Cheap easy money made developers pay exorbitant prices for leases and drilling services. The unconventional shale wells started to decline in just a few years instead of several decades that was experienced with conventional wells.

      This left drillers deep in debt without the expected profits to pay the loans. They had to keep drilling to create the cash flow to pay the loans, even if the price they received was below their cost of production. Over the past few years over 200 oil & gas developers have gone bankrupt and production has come more in line with demand (adequate takeaway pipelines also helped with this).

      The great “productivity gain” that everybody says will keep gas prices low is a bit of a mirage. It is true that about 20% of the production cost reduction is due to technology improvements such as longer laterals that allow fewer drilling pads to harvest more gas. However, over 40% of the cost reduction was due to drillers negotiating down the drilling services charges from the early highs when everybody had money. The first drilling services contractor went bankrupt in late 2016 (with a billion in debt). Most industry observers see this as a sign that drilling services charges will stay stable or go up from here.

      Most of the rest of the savings (about 35%) is because drillers have concentrated on the sweet spots, the wells that had the highest productivity. These wells are beginning to decline. Oil and gas will still be available but at a higher price because the new wells will be less productive than the ones they replace. More than a thousand new wells are required each year in the Marcellus just to keep production stable.

      Exporting LNG will use up the most productive wells faster, which will lead to more rapid price increases.

      We have always been surprised by events that lower prices, new resource finds, new technology, etc., but it appears that these would only slow the price increase rather than reverse it.

      If you have other information that supports a long-term price decrease, I would be happy to hear about it.

  3. Agree.. unless or until they get significant storage technology… and even then gas will be needed to be the “go to” fuel between base load and peak demand.

    If you think about it – you cannot have more solar than the difference between base-load and peak load. It would do you no good. any solar over and above peak load would go to waste because there is no way to reduce the baseload output to take advantage of the excess solar. The only way to use more solar – cost effectively – would be if you reduce the baseload output – which would be great until the solar reduced and then there would be a shortage between baseload and solar – and that would have to be filled by gas.

    So gas is going to be – a critical “buffer” fuel for the foreseeable future.

    the bad news is that gas is a potent greenhouse gas… when extracted so – depending on one’s view toward the science – it’s not something we want to be burning any more than we would other fossil fuels and probably minimize when we can. The goal is to use as much renewables as we can – when we can – and use gas sparingly when we have to.

  4. Interesting points. However, I would offer another factor for analysis:

    Economic benefit dispersal. I would imagine that Shepherd’s idea includes every locality in Virginia. Whereas, a natural gas fired plant benefits the immediate vicinity of the plant in terms of jobs.

    • That’s a fair point. The tax/jobs benefits of distributed grid are more…. distributed.

      • Jim, you’ve done a nice job summarizing the considerations; but there are people who have tried to quantify them and I will look for some results for you. In any event, Walton Shephard is exactly right to try to get people to pay attention to ‘economic impact’ in its broader context. And it’s true, dollars spent on out of State fossil fuels don’t help the local economy.

        But Shephard failed to mention, the very nature of a “renewable resource” generator is that nothing gets spent on fuel (and as little as possible on other operating costs). This of course helps the developer pay the carrying cost of the higher up-front investment usually associated with such a generator. But it begs the question, how much does Virginia benefit from all that up-front investment? Most solar equipment (including the structure the solar cells sit on) is manufactured elsewhere. Virginians may provide much of the workforce that builds the plant, but then those jobs go elsewhere. There’s a little on-going maintenance, but probably less than a similar-output fossil generator. Perhaps the principal economic benefit is the contribution to the local economy through taxes paid — particularly if the alternative were to build another kind of generator located on the grid in another State.

  5. First ..the costs issue. Here is Lazard’s comparison that I believe I referenced in an earlier post.
    Utility scale solar is cost competitive with combined cycle gas and all solar types have already penetrated the most expensive generator – the “peaking plant”. The total amount of PV generated electricity in the US in 2014 was 15.9 m-kWh. This is only 8% of the peaker market. So, there is plenty of “peaker” market available to solar in the US in addition to some of the “load following” plant market.

    Type Low ($/MWh) High ($/MWh)
    Solar PV-Rooftop Residential 138 222
    Solar PV-Rooftop C&I 88 193
    Solar PV-Community 78 135
    Solar PV-Crystalline Utility Scale 49 61
    Solar PV-Thin Film Utility Scale 46 56
    Solar Thermal Tower with Storage 119 182
    Fuel Cell 106 167
    Microturbine 76 89
    Geothermal 79 117
    Biomass Direct 77 110
    Wind 32 62
    Diesel Reciprocating Engine 212 281
    Natural Gas Reciprocating Engine 68 101
    Gas Peaking 165 217
    IGCC 94 210
    Nuclear 97 136
    Coal 60 143
    Gas Combined Cycle 48 78

    Then there is intensity … some subsidized, some not, but the fact is that we are getting better at efficient use. “Since 2007, U.S. GDP has grown by 12 percent, while energy consumption has fallen by 3.6 percent,” according to the new 2017 Sustainable Energy in America Factbook, compiled by Bloomberg New Energy Finance (BNEF) for the Business Council for Sustainable Energy (BCSE)

    “Consumers devoted less than 4 percent of their total annual household spending to energy in 2016, the smallest share ever recorded by the U.S. government,” according to the report.

    In some regions, the savings are very high, as in Texas, where average retail rates have fallen by 29 percent.” Note that Texas has more than three times more wind capacity than any other state, and solar is expected to grow 400 percent by 2022 now that PACE financing is in place.

    “Avoided energy use was one of the most significant changes. Last year, overall energy consumption fell by 0.2 percent, while GDP grew by 1.6 percent. Energy-efficiency improvements were particularly pronounced in the power sector … Electricity demand is down 1.2 percent from its 2014 peak, while GDP has grown by 4.2 percent,” according to the 2017 BNEF Factbook. Those numbers show the economic viability of new energy.

    For Virginia, … According to a Georgia Tech study on energy in the Southern States … if our system emphasized building retrofits, and added DR and wind and solar. “The average Virginia household could cut its electricity bill in 2030 by $307 (or 12.6%) and could save a total of $2,899 over the next 15 years. Across all of Virginia’s households over the next 15 years, this would represent a cumulative electricity bill savings of $9.9 Billion. “

    Jobs … A year ago The Guardian reported … “the US solar industry grew by 20% for a third year in a row, according to the foundation’s National Solar Job Census 2015. By the end of 2015, it employed nearly 209,000 solar workers, more than those employed in oil and gas extraction…. there were 191,900 mining jobs in the US, down from 203,700 a year ago.”

    And Fortune reported … “While the sheer numbers of solar workers is large, it’s the growth rate that’s more impressive. The solar industry’s employment has grown 123% since 2010. It grew 20.2% just over the past year. Last year, (2015) the solar sector added workers at a rate that was almost 12 times faster than the overall economy, says the report. In fact, 1.2% of all jobs—or 1 in 83 jobs—created in the U.S. last year were solar jobs.”

    Finally … Didn’t your Grandmother ever tell you that “every little bit helps” … especially when we are talking about being part of the global community?

  6. Sorry, CA&W, you can’t make a silk purse out of a sow’s ear, and you can’t make a peaker out of a solar PV plant. Solar is never available when the sun isn’t shining, and often unavailable even when it is (clouds, storms). LarryG has it exactly right, you must have cycling generation to mate with the solar, and you must have a lot of cycling plus baseload to carry the entire load at the peak daily consumption hours in winter — just after dark, when people return home and turn up the heat and cook supper and go out for shopping/entertainment — and for cheap cycling generation today, you need gas-fired. IF we develop the ability to time-shift the generation of bulk electricity through cheap batteries and other cheap forms of short-term storage (and I emphasize “cheap” — which pumped storage is NOT), then maybe we can start using a greater percentage of solar power, but on today’s grid, with today’s storage techniques, the maximum for solar is in the 30%-of-total-generation range. And I don’t see that changing soon enough to be a serious stranded-cost threat to the gas fired generation currently built or planned, during their financial horizons.

  7. You may recall I have written several times about the synergy between offshore wind and solar … they meld to take care of the issue you raise. We have a very fine opportunity for offshore wind if we count the costs against peak use and combine with solar.

    AND there is another way to get solar into the wider range of peak demand and that is to site the panels a bit differently. The total solar electricity the slightly redirected panels produce will be a bit less, but the output better fits the peak demand hours.

    Finally, Virginia is so far away from PJM’s ‘30% solar with no gird issues’ that even discussing that red line seems a bit goofey.

    Yes, we will need gas and we have gas, but a further expanded reliance on gas will leave Virginia even further behind.

  8. Another big issue with a move from large fossil-fuel generation plants to a lot more distributed alternative fuel plants is security. Having done legal work for Exelon a number of years ago, I learned that conventional plant security was pretty strong and likely stronger today.

    What are the security needs for many smaller, distributed sources of electric power? How will they be met? Certainly not game stoppers, but questions that need to be answered before we become dependent on these new power generators.

    • What kind of security do they have at existing smaller generating plants ?

      It’s not like blowing one up spreads nuke contamination.

      they just go offline.. but the fact that they are distributed actually increases overall security – because taking out smaller nodes would have much less impact on the grid…

      • Larry, I don’t know what security measures exist at smaller conventional generation plants, but I presume there is some. My point is merely the Industry needs to address security at solar installations. Their smaller size and distributed locations are, as you suggest, positive factors towards preventing catastrophic failure, but, at the same time, it has to be a lot easier to take out a half dozen solar farms than to disable even a small conventional plant. We need security.

  9. Thank you, Jim. You have identified many of the issues that deserve a good deal of discussion regarding our energy future. I would like to add some information that I hope will benefit the dialogue.

    Cost of Capital:

    You say, “solar panels and wind turbines are more expensive per unit of electricity generated than the turbines, boilers and pollution-control devices it takes to burn natural gas.”

    I don’t think this is the point you intended to make, but let me address it anyway. According to a recent Bloomberg New Energy Finance report (US Gas Insight: Remarkable Renewable Growth Again, 22 February 2017), renewables (solar, wind and hydro) will on a daily average displace 1.5 Bcf/d of gas-fired generation in 2017. The gas-fired generation will be displaced simply because the “expense per unit of electricity” is lower with the renewables than it is for the gas-fired generation. Solar output peaks during the summer peak generating season so renewables will displace even more gas-fired generation (2.5 Bcf/d of gas use) in July. This is not based on any future projections. It reflects the cost advantage of renewables today. However, this cost advantage will only increase because the cost of renewables will continue to decline while gas-fired generation costs increase.

    Since this section is titled Cost of Capital, the point I think you might have been trying to make is that the capital cost per “installed unit of energy” is higher for solar and wind compared to natural gas-fired units. This is true because the capital cost is the primary contributor to the cost of energy from solar and wind since there is no fuel cost. For combined cycle units, fuel costs contribute 1/3 – 1/2 the cost of energy, depending on the efficiency of the unit.

    But this actually favors the renewables. We are in an era of extremely low interest rates. And no administration can afford to tinker with the Fed’s printing press that is inflating stock market values and GDP growth. Corporate profits and increases in personal incomes are not contributing to the rise. The point is any energy technology that is mostly dependent on capital costs will do better in this climate compared to a generating alternative (natural gas) that has a significant portion of its energy costs tied to a commodity that is on an increasing cost curve.

    Direct Job Creation:

    Solar installer is the fastest growing job category in the US, while jobs in the fossil fuel sector are declining. If we do it right solar installations will be a mix of utility-scale and distributed solar facilities. This means that a steady stream of projects will be ongoing throughout the state contributing to long-term jobs, not the brief, boom-bust types of jobs associated with pipelines and power plants.

    The largest single increase in jobs projected in the US over the next several decades is in all of the building trades related to improving the energy efficiency of our buildings. These are also long-term jobs spread throughout our communities.

    Indirect Job Creation:

    “gas backers say that new gas-fired power stations will support construction of the Atlantic Coast Pipeline, which in turn will supply gas to industrial customers along the pipeline route and allow communities to compete for energy-intensive manufacturing prospects for the first time”

    There is a bit of revisionist history going on with this point. In its application to FERC, the ACP claims that 80-90% of the natural gas flowing through the ACP will be used for firing power plants (much of the amount allocated to Local Distribution Companies (LDCs) will also go to power plants). Early in the process, communities in West Virginia asked that some of the ACP gas be used in WVA for industrial and community development. The ACP made it very clear that the ACP was a “wholesale only” pipeline intended exclusively for utilities and LDC’s.

    Statements have softened recently when it was discovered that making vague promises about the possibility of having natural gas available for local industries might improve the acceptance of the pipeline. The stated minimum connection costs make it uneconomic for “industrial customers along the pipeline route” to connect to the ACP and receive service at an affordable rate. This is especially true since the Atlantic Coast Pipeline is not a utility and is not authorized to provide natural gas directly to an industrial or any other type of customer.

    The connection to Virginia Natural Gas/AGL in Chesapeake is the only possibility that might fit this description. However, the only types of industry that I have seen discussed for this region are old 20th-century projects (fertilizer plants, etc,) that are based on an export model that will be highly sensitive to the price of the feedstock (natural gas) and could soon be a casualty of rising natural gas prices.

    This region would be far better served by developing an energy efficiency industry that lowers the cost of occupancy for the many government installations in the area that creates new jobs and improves its desirability to one of its most important customers.

    Energy efficiency:

    “Subsidized conservation programs may create local jobs, but if the same sum of money were invested elsewhere, they might create just as many jobs, perhaps more. Americans normally trust the free market to allocate capital the most efficiently. When government policy overrides market dynamics via subsidies, it’s much harder to make the case that job creation will be maximized.”

    I am very puzzled about this one. The statements make it sound like energy efficiency can only compete economically if it is subsidized. This sounds like more scare tactics from the utility handbook. There is abundant evidence that energy efficiency is by far the lowest cost source of new generation compared to conventional generation, renewables, or whatever. That being said, there is a continuum of energy efficiency projects that have a range of cost-benefit ratios. The type of projects that I have been advocating and that are performed by many Energy Service Companies (ESCOs) provide customers with savings from the first day of operation. Many of the marginal ones are the ones that utilities sometimes promote. Currently, it is not in their interest to lower energy use and therefore, their revenues.

    Subsidies are not required for energy efficiency projects to make sense. Although, since all ratepayers benefit from good energy efficiency projects, there might be some policies (not subsidies) that are considered that make it easier for these projects to take place, such as rapid permitting, easier access to capital for residential projects, greater public awareness of the benefits, etc.

    There is no discussion that building an unnecessary power plant that is put in the rate base is a subsidy. Requiring ratepayers to pay hundreds of millions more per year to transport gas over an unnecessary new pipeline is also a subsidy. If we are going to attach names to various alternatives, we should attach those names to all of the projects to which they apply.


    “Some costs and benefits of energy sources are intangible. For instance, solar and wind are extremely land intensive, displacing other uses such as agriculture and forestry . . .”

    This argument is getting a little old. The organizations (utilities) that most often trot it out, are the primary ones responsible for it being true. I agree that we should be concerned about using agricultural and forest land for energy projects. Wind towers have a relatively small footprint, but access roads and transmission lines can disturb a good deal of land. There is some progress being made in using the land under a solar array for grazing, maintaining some agricultural use and lowering maintenance costs (mowing). But large solar facilities should probably be sited first in brownfield locations such as abandoned power plants or other industrial sites.

    The sweet spot for solar is probably in commercial and industrial locations where some economies of scale can be gained without the need for transmission, with benefits to the grid (reliability, congestion, resiliency, etc.) without the need to disrupt existing land uses.

    “Similarly, solar and wind, which are intermittent sources of power, create issues for maintaining the stability of the electric grid. Utilities are getting better at handling these fluctuations, but they typically must spend money upgrading their transmission and distribution systems in order to do so . . . ”

    This is another old argument that should have been put to rest by the PJM studies and the experience of others. Great Britain recently installed 12 GW of solar with no grid integration costs. PJM says 30+% with no significant issues (we are a fraction of 1% now). We need to create a grid that has a two-way flow of energy and information regardless of the amount of solar we install. But the sooner we create such a grid, the quicker we will receive all of the low-cost benefits that will be available from the declining costs of renewables, storage, and demand side management tools.

    “But putting a price tag on reducing CO2 emissions, the prime benefit of which is less global warming, is problematic. The benefits of Virginians’ CO2 reductions accrue to the world at large, not to Virginia.”

    Too many people missed the science class that talked about the planet being an integrated ecosystem. But we can avoid the arguments. Recent studies show that if we continue on the current path to expand our natural gas infrastructure we will exceed the climate change tipping point by 2040. This would mean no coal, no oil (for transportation and all of its other uses). Natural gas would take us beyond the climate tipping point all by itself (sea level rise of 6-8 feet is predicted in the Hampton Roads area by the end of the century).

    But we can avoid the hostility that climate discussions create. We can choose the greatest job producing options that reduce our energy use and provide clean energy at a cost lower than other options. As a bonus, the climate issues are dealt with without the arguments.

    Stranded investments:

    “There is a chance that within a decade continued technology improvements will drive down the cost of solar electricity to the point where it would be the indisputably preferable electricity source.”

    The skepticism in the comment ignores the years of worldwide evidence of the technological learning curve that is exhibited by the cost reductions in renewables and storage. If an argument can be made about the future reductions in the price of renewables and storage being wrong, the evidence would suggest that we are overestimating the future price of these technologies rather than underestimating it.

    I created a company that sold and serviced personal computers and specialty telecommunications devices. I saw firsthand the speed and rapid disruption of existing businesses that occurred from developments in computer and cell phone technologies. Renewables and storage are experiencing the same technology ramp as the chip-based products, just not as fast (50% cost reductions in 4-5 years rather than every 18 months).

    My business was located in the town where IBM was founded. I can’t tell you how many people told me that personal computers would be a fad and that mainframes would be around forever. Today, IBM has closed all of its operations in that city and tens of thousands of employees have gone elsewhere.

    “Dominion’s economic analysis says that the investment in its Brunswick and Greensville power stations will benefit Virginians to the tune of roughly $1 billion each over their economic lifetimes (the savings at Greenville will be somewhat larger than Brunswick’s), even assuming higher gas prices and lower solar prices in the years ahead. Environmental groups dispute the analysis.”

    Unfortunately, there is no analysis to dispute. Dominion has only made a claim about these billion dollar savings. They have never provided the foundation for such a claim. What costs are they comparing against to show that these natural gas plants will save ratepayers money?

    I am relying on data that exists today, not some unsubstantiated future projection. Bloomberg New Energy Finance has studied the situation in California and has found that renewables are cheaper than conventional sources of generation (and getting cheaper). The cost advantage is such that recently built gas-fired power plants cannot be dispatched often enough to pay for themselves. The evidence suggests that even if we needed to build new generation (we do not since the load is not growing) it should not be gas-fired units since they will soon end up as stranded costs.

    Ontario recently replaced their coal plants with natural gas-fired units. Due to a lack of load growth; conventional generation being undercut by energy efficiency and renewables; high reliance on nuclear (60%) making it difficult to follow load variations; the new gas-fired units are operating just 10% of the time rather than the 60%+ capacity factor that is required for these plants to break even.

    “The answer is, nobody knows. Indeed, the answer may be unknowable with any certainty. If you adopt a position on either side of the debate, you’ll be making a leap of faith.”

    I’m sorry, Jim. You are a good journalist but you wouldn’t make it in the utility industry. Every moment, utility executives are making decisions about an unknown future. Years ago, we adopted cutting-edge techniques about making decisions under uncertain conditions because we knew the decisions we made would be reviewed 15 years later in conditions that we could only estimate.

    We know quite a bit now that can help guide our actions in the future. Here are some things that we know for sure right now:

    Every time we build a new power plant rates go up.

    Demand for electricity is no longer linked to population growth and an increase in economic activity.

    Here are some things we a fairly certain about:

    We have 20 years of history of price declines with new technologies (solar, wind, storage) and substantial worldwide evidence that these price declines will continue.

    Gas prices will increase in the future. Utility experts in Virginia are projecting that prices will go from below the $2 level they have been at for the past few years to $6-$8 in the next 10-15 years.

    The circumstances that led to the low prices the past few years are unlikely to repeat themselves.

    We have a low-risk path available to us that also produces the lowest-cost energy and the most jobs. Here are the outlines:

    Avoid approving any new gas-fired generating units in Virginia. Utility load forecasts that use outdated assumptions are the only indication that “some” future power plants “might” be needed. Each year the excess reserve in PJM increases. There is no risk that we would not have adequate power for Virginia if we did not build a new power plant. There is a great deal of evidence that if the proposed power plants proposed by utilities and independent producers are built, there will be a huge glut of generation that would be available at a bargain basement price.

    If more capacity is required, energy efficiency could provide that capacity more quickly and less expensively than building a new power plant and efficiency would reduce the rates for everyone.

    Avoid building any new pipelines in Virginia. Without new power plants, no new pipelines are needed. Even if new power plants need to be built the available capacity in existing pipelines is much greater than the amount proposed for the new pipelines. New pipelines cost ratepayers hundreds of millions per year more in added costs to transport the gas.

    Allow third-parties to build renewables and storage as customers require. The market will direct which projects make sense.

    Begin work on a new regulatory scheme that allows utilities to prosper by doing what is good for their customers.

    • “But we can avoid the hostility that climate discussions create. We can choose the greatest job producing options that reduce our energy use and provide clean energy at a cost lower than other options. As a bonus, the climate issues are dealt with without the arguments.”

      Yes, let’s find common ground where everyone wins. We need low-cost affordable power, especially from renewable sources simply because the nonrenewable sources are non-renewable.

  10. TomH narrative though long – is worth reading.

    • Agreed! I hope others will read it all, too, and learn from TH’s hard-won experience. Only, there are a limited number of folks – even in Virginia – wth the interest and the patience to wade into electric grid issues, and while we enjoy the arcana even while we lob in-jokes and insults at one another, I fear what BR’s other readers must think has caused us ‘grid groupies’ to take leave of our senses.

  11. What would be interesting would be a graph that shows the static baseload KWH for Virginia..and the total KWH demand – on a per day basis over a month or year.

    The “gap” between the static baseload and total demand (at any given time) would be filled by other intermediate/peaker/solar generation sources either Dominion’s plants or PJM.

    what would reduce the amount of baseload needed to that could be reduced and the slack picked up by these other sources?

    Why would you do that unless the other sources available were cheaper than baseload?

    Obviously if PJM had gobs of solar or other cheap generation – on a reliable basis – Dominion could idle some of the baseload turbines..

    If the “availability” was not 100% to cover gap between baseload and total then Dominion would have to generate some of it’s own from intermediate/peak.

    I suspect that calculation and determination is tricky and not one you’d gamble on since Dominion’s perceived mission is not only electricity but reliable 24/7 electricity.. not gaps.. when generation from other sources fell short and Dominion had no backup to assure 24/7 coverage.

    I think there-in lies Dominion’s circumspect perspective towards solar.

    they already have balls being juggled – and adding solar as a significant percentage probably is viewed as risky… yes.. it’s cheap and available in gobs… sometimes.. and other times – it’s just not there.

    what would change that so that Solar became a competitive and trustworthy choice that carried no more risks than other generation source?

    • LG, you say, “What would be interesting would be a graph that shows the static baseload KWH for Virginia..and the total KWH demand – on a per day basis over a month or year.” Don’t think that exists State by State, at least readily, but there is PLENTY of equivalent data for PJM as a whole (the relevant system operating unit) and for each transmission utility “zone” within PJM (i.e., for Dominion as a whole, etc., the relevant grid planning unit). I will try to find that and post links.

    • Rather than total load …here is an interesting article about how wind is causing a lot of rethinking about loads in Texas and soon it will be even more complicated with the push for solar that is coming now that cash flow positive funds are available!


      • CleanAir&Water – you will not find a bigger supporter of wind and solar than I but I’m also a pragmatist more than a wishful thinker and/or cheerleader and I think the fact that wind/solar “vary” and cannot generate on a consistent basis means that they will always be “harvestable when available” until or unless a cost-effective method of storing it is available.

        Just pretend – we shut down all “dirty” baseload plants with the intent to replace them with wind/solar. How reliable would the grid be ?

        what would you do about the periods when wind/solar simply were not able to generate enough electricity to meet demand?

        Perhaps there may be a time when we actually have so much wind/solar installed that we always have “enough” and any excess is stored but what do we do between now and then when we want to integrate more and more wind/solar into the current grid which has to have some level of baseload to operate – and what do we do about the times when baseload plus wind/solar is not sufficient to meet demand?

        So my optimism about the day when we have a predominantly wind/solar grid is tempered by what we do now to evolve towards that future – and in part because if the climate science is correct – then it needs to be sooner than later.

        what say you about this conundrum?

        • Larry,
          These are good questions. Let’s consider some possible approaches to the issue based on available technologies and conservative assumptions about their cost declines.

          The most intelligent move is to lower demand. It saves the most money with the least investment. Let’s assume we can reduce our demand for electricity by 1.5% a year in Virginia. Other states are doing this now, so it is not an unreasonable assumption. In 15 years, that would reduce our summer peak by 25% to 13,500 MW. Assuming a proportional decrease in each segment, that would require 3375 MW of peakers, 2025 MW of cycling units, and 8100 MW of baseload capacity (I have not included reserve requirements).

          Coal is increasingly non-competitive. I just read an article about a coal unit I worked on years ago. Some time ago the utility owners sold it to merchant generators. Since then the plant has survived two bankruptcies and is still unlikely to be dispatched often enough to pay back its significantly reduced capital costs. Coal plants require many hours to ramp up to full power. They are a very poor fit in a dynamic 21st-century grid, even if they can compete economically, which they cannot. I don’t understand the administration’s approach to coal. They are definitely pushing against the tide on this. Even ignoring all of the relevant environmental issues, the economics just don’t make sense.

          Expect that the Mecklenburg, Clover and Chesterfield coal units will retire in the early- to mid-2020s. The coal and biomass-fired Hybrid Energy Center is scheduled to retire in 2029, but it will probably happen earlier than that depending on any guaranteed contracts for fuel purchases.

          That would leave the 1676 MW coal plant in Mt. Storm WV, the nukes, and the three new combined cycle plants to fulfill the baseload duty 15 years from now. They total 9295 MW, which covers the 8100 MW baseload portion of the peak with nearly a 15% reserve margin.

          Intermediate and Peak Load:

          Assume that 6000 MW of solar can be installed in Virginia with no significant expenditures for grid integration (30% of the existing system capacity). This would require 400 MW of solar to be installed each year for 15 years, a rate that Dominion has already shown is possible.

          This would provide all of the intermediate and peak load requirements 15 years from now with over 11% reserve. No storage would be required for the solar since the existing peakers and cycling units would remain available to cover variations in output. The existing plants would either be fully paid off or still in the rate-base paid for by ratepayers (they would be in any case). Dominion could still earn money from the capacity market for these units, even if they are used very infrequently. The existing units would also be valuable to cover the “shoulder” periods in early morning and evening when the sunlight is very weak or non-existent. The 6-10 PM period is a crucial time during summer and winter peaks which cannot be provided by solar without storage.

          It would make sense to install this amount of solar earlier in the period than evenly spread over it. I just wanted to show how things could work with a proven “go slowly” approach.

          Storage would also be a wise investment for a number of reasons during this period, but again, I wanted to show that it was not necessary for the system to be reliable.


          The Surry Units will be 60 years old in 2032 and 2033. Nuclear units are becoming increasingly non-competitive too. Fortunately, Surry has been one of the lower cost nuclear units to operate. However, the components of a nuclear plant were not designed to last 80 years, especially those that are exposed to high radiation levels such as the reactor vessel and the steam generators. It is likely that in order to safely operate beyond the 60-year time span, significant retrofits would be required for Surry to gain approval to operate for 80 years (twice the normal lifespan of a nuclear plant – which has never been authorized in the U.S.).

          How would we replace these units? The cheapest way would be with renewables plus storage. Let’s make some conservative assumptions. Although several solar units in the southwest sold long-term PPAs for solar output at or below 4 cents/kWh in 2016, we can expect the costs to be higher in Virginia. Assume that the current cost for medium-scale solar in Virginia is 8 cents/kWh, roughly equivalent to the LCOE of a combined cycle plant (6-8 cents/kWh). Let us also assume that the price of solar declines by half only twice in the next 15 years rather than the expected three times in the next 12-15 years. That would give an energy cost from solar 15 years from now of 2 cents/kWh. Battery storage is expected to be about 4 cents/kWh 15 years from now. This would provide a total cost of dispatchable renewable energy of 6 cents/kWh in 15 years. Current costs of solar/battery combinations are 11 cents/kWh in Kauai now.

          By 2032, the Bath County Pumped Storage plant will be completely paid off and the operating cost might be just the 20% efficiency loss plus operating and maintenance expenses. Efficiency losses would raise the energy costs from solar to 2.4 cents/kWh plus the O&M costs, say maybe a total of 3-4 cents/kWh for dispatchable solar with pumped storage (this is an uninformed guess) which would be below the costs from old nukes. Different from what happens today, solar would pump up the plant during the day and release it for baseload use during the night. The 1800 MW of pumped storage is greater than the 1676 MW lost from Surry.

          The point I am trying to make is that this is a far lower cost energy future than any other option that is being discussed today and just as reliable. No new conventional generation, no special technology required. The two-way flow of energy and information would improve as grid improvements are made, but none are necessary to incorporate the renewables. I think wind generation would play a part here too, both from Virginia and places like West Virginia. It would make much more sense than mining coal to put wind generators on the high ridges or on abandoned coal mines to generate revenues to clean up the mess left behind by bankrupt coal mines. West Virginia would be a good wind resource area for PJM without the transmission required to bring in wind energy from the Great Plains.

          Many more long-term jobs would be created with this low-cost energy efficiency and renewables scenario than by the conventional options currently discussed.

          • Assume that 6000 MW of solar can be installed in Virginia with no significant expenditures for grid integration (30% of the existing system capacity).

            Tom, I’m not sure you can make that assumption. While PJM says it can handle up to 30% renewables on the transmission grid, that’s the transmission grid, not the distribution grid. Once you get into percentages approaching 30% solar, much of that solar capacity would be rooftop and other distributed generation which plugs into the distribution network. To accommodate that, Dominion, Apco and the co-ops will have to spend hundreds of millions of dollars, maybe billions, upgrading the grid. Look at what they’re spending in California to get an idea of what it will take.

          • I’m a bit of a skeptic like Bacon…

            but I’m curious about the baseload situation.

            what would you use to generate baseload if not coal?

            what do you use to generate baseload if the Nukes retire?

            remember, baseload is 24/7 – it’s what you need to handle the minimum electricity demand.

            we would/should use energy conservation to reduce that number as much as we can – but you’l still need some source that is available 24/7 to feed the grid.

            then the next question is what will you use to power the grid when the demand is in excess of the baseload – if solar/wind are not adequate?

            here’s the point – you’re not going to replace coal with solar.

            and ..you have to have some quick response backup fuel for when solar and wind are not available.

            Yes we can reduce demand and should – but we still have the fundamental issue..of what provides baseload and what powers the grid when wind/solar can’t?

  12. here’s some basic data :
    Electricity Consumption by State, 2014
    (million kilowatt-hours)


    Residential Commercial Industrial Transportation Total
    residential – 46,444
    commercial 47,752
    industrial 17,7 01
    transportation 202
    total 112,098 million kwh

    that works out to about 300 million kwh per day (I think).

    for the 30K households in Va that works out to about 84 kwh per day.

    that a way too high number for a house but the numbers are fairly split
    between residential and commercial/industrial so if we divided that by 2
    we get 42 which is still a bit high for the average household which I think
    is in the 30 something kwh – which would work out to about 1000 kwh per month.

  13. I took the 2017 load duration curve from Dominion’s 2016 IRP and the summer and winter averages for baseload, intermediate, and peak loads from the typical load illustration that I included earlier and made some rough calculations. I make no claim about the accuracy of these figures, I don’t have enough good data to do it right, but it might give us an approximation to have a conversation about. Here is what I came up with:

    Summer Peak – 18,000 MW total
    Peak portion – 4,500 MW
    Intermediate – 2,700 MW
    Baseload – 10,800 MW

    Winter Peak – 16,000 MW total
    Peak portion – 2,500 MW
    Intermediate – 2,880 MW
    Baseload – 10,720 MW

    Let’s assume the peaks remain the same in 2019. Here is what the composition of the generating fleet might look like then. (Caution – I have no knowledge of Dominion’s auction bid prices for each unit, this is just a guess).

    Baseload Units:
    Surry 1&2 nuclear 1676 MW
    North Anna 1&2 nuclear 1672 MW
    Mt. Storm WV coal 1629 MW
    Chesterfield coal 1267 MW retire in 2022?
    Hybrid Energy Center coal/biomass 610 MW
    Clover coal 439 MW retire in 2022?
    Mecklenburg coal 138 MW retire in 2022?
    Yorktown coal (323)MW not incl. retire in 2017

    Subtotal nuclear and coal 7431 MW

    Greensville NGCC 1600 MW
    Brunswick NGCC 1376 MW
    Warren NGCC 1342 MW 4318 MW of new CC

    Baseload- nuclear, coal, NGCC 11,749 MW 9905 MW after 2022?

    Intermediate load (cycling) units:

    Bear Garden NGCC 590 MW
    Possum Point NGCC 573 MW
    Chesterfield NGCC 397 MW
    Bellemeade NGCC 267 MW
    Gordonsville Energy NGCC 218 MW
    Rosemary NGCC 165 MW

    Subtotal NatGas CC cycling units 2210 MW

    Yorktown Oil 790 MW
    Possum Point Oil 786 MW

    Cycling units – gas & oil 3786 MW

    Peaking Units:

    Bremo GasCT 227 MW
    Ladysmith GasCT 783 MW
    Remington GasCT 608 MW
    Elizabeth River GasCT 348 MW
    Possum Point GasCT 316 MW
    Gravel Neck GasCT 170 MW
    Darbytown GasCT 168 MW

    Subtotal Gas CT peakers 2620 MW

    Gravel Neck OilCT 198 MW
    Darbytown OilCT 168 MW
    Possum Point OilCT 72 MW
    Chesapeake OilCT 51 MW
    Low Moor OilCT 48 MW
    Northern Neck OilCT 47 MW OilCTs 584 MW

    Subtotal Gas & OilCT peakers 3204 MW

    Bath County Pumped Hydro Hydro 1808 MW
    Gaston Hydro 220 MW
    Roanoke Rapids Hydro 95 MW
    Various others Hydro 3 MW Hydro 2126 MW

    Peaking units – Gas, Oil, hydro 5330 MW

    Other Units:
    Pittsylvania Biomass 83 MW
    Altavista Biomass 51 MW
    Polyester Biomass 51 MW
    Southampton Biomass 51 MW Biomass 236 MW

    Whitehouse Solar Solar 20 MW
    Woodland Solar Solar 19 MW
    Scott Solar Solar 17 MW Solar 56 MW

    Mt. Storm CT 11 MW

    Dominion owned generating capacity 19,891 MW
    Power purchase agreements 1,764 MW
    Total utility generation 21,655 MW

    As you can see, there are times of the year that the new combined cycle units would operate partially in a baseload mode and partially as cycling (intermediate load) units. This slightly reduces their profitability but it allows the utility to make money from coal plants that are mostly paid for. As coal plants retire, storage would probably be cheap enough to allow the new combined cycle units to run at full capacity all day long and the excess energy would be stored to displace more expensive peakers at other times of the day.

    The coal plant retirements being considered for 2022 were related to meeting the requirements of the Clean Power Plan. The current plans for those units are uncertain at best. It is more likely that they will remain in service longer.

    It is obvious that solar makes a minuscule contribution to Dominion’s generation and will for some time unless third-parties can install solar without restrictions in Dominion’s service territory. Solar is competitive now on a wholesale basis (and will get cheaper) so there are many opportunities for residential, commercial and industrial customers with enough space and sunlight to obtain electricity much cheaper than their current retail rates.

    There is sufficient generation without more additions to serve the nighttime load and to handle daytime variations in renewable output. Nearly 6000 MW of new solar could be accommodated in Dominion’s system (using PJM’s 30% rule of thumb) without significant expenditures. Ideally, Dominion would identify portions of their territory where additions of distributed solar generation would provide benefits to the grid by reducing transmission and distribution congestion, increasing reliability and resiliency, etc. This is the idea behind developing value-of-solar tariffs. The market would reward solar located in the most beneficial locations.

    This solar would be paid for directly by the customers receiving the benefit, which would lower the cost compared to asking the ratepayers to guarantee the utility a profit for building the unit. Having third-party solar contributing an increasingly larger portion of the demand would lower the portion needed to be served by the utility, thus lowering everyone’s cost.

    Obviously, this new scheme lowers utility revenues so we need a new way for them to benefit financially by providing important services.

  14. Sorry, the formatting did not post with the document.

  15. really good data TomH!!! and analysis!!

    will have to read over a couple of times to fully digest..

    I found this neat map:

    was curious if you were familiar with it… has got at least some of
    the data you referenced

  16. Jim,

    We ran out of reply space. I hope you can find my answer down here.

    “To accommodate that, Dominion, Apco and the co-ops will have to spend hundreds of millions of dollars, maybe billions, upgrading the grid. Look at what they’re spending in California to get an idea of what it will take.”

    There is not enough space to properly answer this question, but the short answer is that I do not mean to imply that we will not have to make improvements in the distribution grid, it’s just that it does not have to be a net cost. The best example is that to follow conventional plans ConEd had to build a $1 billion+ substation in New York to handle changes in demand. By installing energy efficiency, solar, storage and demand response options they provided the same or greater benefit to their customers for about $400,000 (the costs are not all in).

    You would say, “they had to make $400,000 in grid improvements”. I would say “by using a combination of modern technologies they saved ratepayers at least $600,000.”

    Using energy efficiency, solar and storage to reduce distribution and transmission congestion, and to improve reliability and resiliency of segments of the grid will save utilities and their customers money, especially if the utility identifies the areas where the use of these technologies have the greatest benefit to the grid. The grid must be upgraded anyway. If the investments are made where they have the greatest bang for the buck first, everyone wins.

    • The Con Ed example is illustrative of what can be done. What we don’t know is to extent to which that was an unusual instance or one that can be replicated widely enough to achieve the kind of savings you’re talking about. Electricity rates in New York (I don’t know about Con Ed specifically) are about 12 cents per kilowatt hour, roughly 1/3 more than in Virginia. Assuming the cost of conservation initiatives is about the same, that gives Con Ed far more room to play with. Energy conservation measures that make sense in New York might not make sense in Virginia.

      I’m not saying that Virginia should not pursue more energy efficiency initiatives. To the contrary, we should analyze all alternatives, using exactly the methodology you talk about. We just have to have realistic expectations of what is economically feasible in a setting with lower electricity rates.

      • I agree that energy efficiency projects should meet certain economic thresholds. But there are many opportunities in Virginia and elsewhere to make energy efficiency improvements at a cost of 2-3 cents per kilowatt-hour. There is no state in the union where such projects would not make sense. This would be primarily in the commercial and large public building sector. Industries have done a good job of utilizing energy efficiencies in their various processes. Residences in Virginia are not very efficient because of lagging building codes and our mild climate.

        States like California have higher electric rates but lower utility bills than we do because they are much more advanced in building and other efficiencies.

        The 1.5% /year efficiency improvement that I suggested is very achievable in Virginia. We do not lack economic opportunities to apply more efficiency. It is more an old-style mindset (increase supply rather than reduce demand) and lack of awareness about the savings available. Dominion’s opposition against any loss of revenues means that legislative remedies are more difficult here than elsewhere, but greater awareness of the easy savings available plus widely available, qualified Energy Service Companies that would provide “no down payment” contracts would speed up the effort.

        This single area has the highest potential for long-term job creation compared to any other option that is being discussed by the new administration. It would also make Virginia more attractive to families and businesses.

        The ConEd example is not rare. It perhaps has a higher price tag than most. One billion dollar substations are not common in the U.S., but the concept holds true everywhere. Obviously, the best strategy is to pick the low hanging fruit now and let experience and new technology bring the costs down for other projects later.

  17. Larry,

    We ran out of reply space. I hope you can find my answer down here.

    “what would you use to generate baseload if not coal? ”

    I think I answered this. I showed that by using the nukes, the new combined cycle plants and the one modern coal plant in West Virginia, there is enough baseload capacity to meet the baseload requirements 15 years from now (given that we have reduced some of the demand through energy efficiency).

    “what do you use to generate baseload if the Nukes retire?”

    I answered this too. I showed that by using solar plus storage (batteries or pumped storage) that we could provide dispatchable renewable generation at a price lower than the cost of continuing to use the Surry plant. With 6-8 more years of energy efficiency savings (1.5% /yr) we would displace the need for the generation provided by North Anna. Any extra required would be provided by dispatchable renewables at a price lower than the cost of the old nukes. If there was a prolonged period of low solar output we would rely on the intermediate load units or lower cost power purchases to provide the necessary baseload capacity (but at a temporarily higher cost). This gives us the lowest cost system, by using renewables, but we would still have secure capacity during unusual events.

    “remember, baseload is 24/7 – it’s what you need to handle the minimum electricity demand.”

    The amount of baseload capacity that I identified using existing power plants (only one coal plant) is sufficient to meet the minimum 24/7 load requirements (baseload) 15 years from now with a 15% reserve margin.

    “we would/should use energy conservation to reduce that number as much as we can – but you’ll still need some source that is available 24/7 to feed the grid.”

    I identified the specific plants that would be used to do just that, with no new conventional generation stations required after Greensville is in service.

    “then the next question is what will you use to power the grid when the demand is in excess of the baseload – if solar/wind are not adequate?”

    I answered this one too. Whenever electricity demand is in excess of what the baseload units and the renewable sources can provide, the existing intermediate and peaking units would be utilized in the order best suited to the situation. You would still be making money from the capacity market with these units even if they are used infrequently. These units are already paid for, so we should keep them as backup for unusual situations. Those expecting the grid to be 100% supplied by renewables in the next 15 years are being unrealistic and uneconomic. The whole idea is to optimize our responses to provide the lowest-cost, highest reliability grid possible. We will do that through a mixture of conventional and modern sources of supply and demand management.

    “here’s the point – you’re not going to replace coal with solar”

    If you carefully read what I have written, you will see that I never made that claim. Although dispatchable solar would be available at a lower cost than coal after 2025, but there is no need to use it until we need to replace the Surry nuclear units in 2032. It is better to wait and let the price of solar plus batteries decline.

    “and ..you have to have some quick response backup fuel for when solar and wind are not available. ”

    If you carefully examine my figures, you will see that there is 5330 MW of peaking units and 3786 MW of cycling units to cover the 6000 MW of solar that I have proposed. This does not include any battery storage, although batteries are likely to be economically justified within the next 15 years.

    “Yes we can reduce demand and should – but we still have the fundamental issue..of what provides baseload and what powers the grid when wind/solar can’t?”

    See the answer to the questions above.

    I wrote the earlier post to answer the questions that you initially asked, yet you asked the same questions again, so I must have been unclear in my initial response. I hope this post clears things up.

    • I’m not going to go point by point here.

      You cannot use solar alone to power the grid unless and until you have cost-effective storage. Until we see that as a real possibility in a more certain timeframe – it’s almost like talking about cold fusion as a “possible” option.

      I’m not opposed to it at all.. I’m hoping we will have the breakthroughs but my pragmatism is tied to any honest assessment… and we’re not there yet.

      that leaves us with baseload.

      baseload is what you need for 24/7 electricity demand.

      pump-storage is not for that use – and pump-storage requires very specific terrain for upper/lower reservoirs that are not plentiful and the few that are would cost multiple billions of dollars –

      even then – you use pump-storage during the day for peaks which COULD be used to back-up solar – but you also have to ask yourself – what fuel source are you using to pump that water back up to the top – usually at night?

      I just think all the verbiage about this tends to obscure the basic issues to be honest.

      we have to have a fuel source for the times that renewables will not be adequate for coverage – EVEN WITH demand-side conservation. That’s true even in the BEST states for demand-side conservation – including many Islands.

      So the question that has to be answered – with short verbiage – is what will we use for baseload until we see cost-effective storage?

      what is that answer?

      if we cannot distill this down to the essence, I believe this is how the public dialogue gets confused – and remains divided. We have to agree – how we will go forward – not continue to disagree about how not to.. right?

      we should never have gotten to the point where this becomes an political “us against them” type conundrum. Only when the public truly understands the basics – can we hope that they will, in turn, put pressure on the GA and Dominion that is received as more than just a bunch of enviro weenies cheerleading…

      that’s my story – and I’m sticking to it!

      • Larry,

        This has been frustrating for me too. We’ll go around this last time and leave it at that. My frustration comes from you misinterpreting what I have written. I accept responsibility for not being an excellent writer, but as long as we are not speaking about the same point, we will always be two ships passing in the night and have no meeting of the minds.

        For example, you said, “You cannot use solar alone to power the grid unless and until you have cost-effective storage.”

        Never did I suggest that we “use solar alone to power the grid”. My recommendation was to use solar to provide for intermediate and peak load needs during daylight hours whenever it is available (no need for storage). When solar is not available or only partially available the balance would be supplied by the current fleet of intermediate and peak load units.

        “what will we use for baseload until we see cost-effective storage”

        In 2030-2032, the baseload plants would be Surry, North Anna, Mt. Storm (coal), Warren, Brunswick and Greensville combined cycle plants. These units provide more than the projected baseload requirements for this time period, no storage required.

        The issue about storage came in when I proposed an option for Surry when it completes its 60th year of operation in 2032. New nuclear will be far too expensive and I suggested that Surry would require expensive retrofits to make it safe to operate another 20 years, which would make it too expensive as well.

        As one possible option, I suggested that renewables plus storage be used as dispatchable baseload power. In Dominion’s 2016 IRP, their graph of levelized busbar costs (for 2022) showed that a solar/battery combination would be equal in costs to nuclear. The solar/battery combination would be 1/2 to 1/4 of that cost 10 years later.

        The pumped storage came in as a possible replacement or supplement to batteries. I do not know the actual costs associated with pumped storage only its efficiency. But pumped storage is “storage” and can be used any time of day.

        Nowadays, we pump it up at night because we have excess nuclear at night and we need to run the nukes 24/7. So we pump up at night and discharge during the peaks when we get a higher price for the energy to offset the efficiency losses. That makes sense now. But many of the things we do with a 21st-century energy system will be exactly the opposite of what we do today.

        If we have excess solar power in the daytime, we would pump up the reservoir in the daytime and discharge it at night. The low cost of solar (less than 2 cents/kWh) plus the cost of storage would still be cheaper than other types of baseload alternatives. Or we might have even better options by then.

        My intention was to show that we have a fairly simple, straightforward path to a cleaner, lower-cost energy system using existing technology that will produce thousands of more jobs than the options that are proposed today. Thank you for pointing out that I need to find a clearer way of describing that possibility.

        • my apologies…

          I think what I’m looking for is an admission that we have to have baseload for the foreseeable future and that baseload cannot come from solar or wind… but only from nukes, coal or gas.

          Maybe I should ask the reverse… what would you use for electricity if solar is not available – during non-peak periods?

          on the pumped -storage.. yes if we have excess electricity during the day – you COULD use it to pump so at night it could flow as “recycled” solar!! but you need to look at the economics of it as for every 3 units of electricity produced you need 4 to store it first because you lose efficiency when you pump.

          there are precious few additional places in Va and WVA for pump storage and even then you’re talking about multiple billions of dollars for both purchasing the land and building the facilities.

          I’m NOT opposed to doing that especially in the rural mountainous places where coal mining is over.

          I’m ALSO not opposed to building solar AND WIND in the mountains especially in places where the mountain tops have been removed. It may actually provide some level of economic activity to an area that needs it.

          I think you’ll find I’m pretty much sold on the idea of wind and solar.. but I have to have a pragmatic view of what we generate electricity with when solar is non generating and our storage options are not near enough to carry us through the night.

          I still believe the first place where we see major progress will be on the worlds 1000+ islands.. that are ..inhabited and currently use fuel oil to produce electricity. When I see an island go to TRUE 100% wind and solar – I’l issue my mea culpa!

          I used to think replacing coal with gas was “ok”.. now.. I’m convinced that gas may be as bad or worse than coal and that we need to burn as little of it as we can… but that still leaves us with burning it at night until and unless we have some way to used “stored” solar.

          • You have hit on a major issue – the lack of affordable storage for renewables. That is why I was suggesting that we will a have a system with a mixture of conventional generation and renewables for quite some time. It will be at least ten years before solar/storage is cost-competitive for night-time generation in most of the U.S. unless fuel prices go out of sight.

            But the new combined cycle plants won’t be paid off for 40 years (2054-2059). We should use them for as long as they are economic and not too damaging for the climate (about equal to a coal plant). But there is really no good reason to build more of them.

            I was not suggesting that we build any new pumped storage. Batteries will be cheaper soon. But after 2032 we are likely to have less nuclear generation in Virginia and that is what justifies the pumped storage. Dominion owns 1808 MW of the Bath Pumped Storage plant and in the 2030s it might make sense to use it to store solar as the nuclear generation declines, if the economics still work. The big problem is that you are discharging to produce the lowest cost energy of the day (at night) instead of using the pumped storage to provide energy during the most expensive time of day, as is the case now.

            There are other storage options that are being investigated such as compressed air, super-flywheels, super-capacitors and a wide variety of battery chemistries. We might make some breakthroughs with thermal storage too. A greater need for these technologies will spur more innovation.

            There are days that Kaua’i generates 95% of its daytime electricity from solar. They are adding batteries economically to handle the evening peak. But the late night load is still served by diesels and the naphtha-fueled combined cycle unit.

            We have come a long way, but we still have far to go. It’s important that we begin to agree on a direction, though. It will cost us a lot of money if continue to build a 20th-century system with no discussion of better alternatives.

  18. Jim … Efficiency is a matter of seeing that good funding opportunities are available. PropertyAssessedCleanEnergy Loans are one and just need proper state setup.

    “The Energy Alliance Group of Michigan’s CEO, Scott Ringlein, recently described the influence Certified Public Accountants (CPAs) have in the financial decision when proposed efficiency or renewable energy projects have a long payback period or hinder cash flow, the CPA will often recommend passing on, or at the very least, delaying the project.

    “The weak link in energy efficiency goals is the financing component, … known as Property Assessed Clean Energy (PACE) and it is financing earmarked solely for projects that save energy, conserve water and increase the use of renewable energy.

    “Because PACE is relatively new, most CPAs have not even heard of it! They have not had the chance to learn how it is used to increase business profits through a reduction in the money spent on wasted energy.”

    Then there are building codes …

    “If the current, outdated, 2009 code persists, Virginia will continue to fall farther behind because amendments proposed in 2012 review cycle haven’t been adopted and actually were watered down. “Adopting the 2012 code would have represented a 25% improvement for Virginia over 2009,” he said.

    According to a 2015 study published by the Virginia Center for Housing Research at Virginia Tech, EarthCraft certified multifamily projects outperform standard construction in Virginia by 30%. Residents in the studied units realized an average savings $648 per year.”

  19. At one time – there was discussion that solar during the day could extract hydrogen from gas or even water… and then the hydrogen could generate electricity later.

    anyone hear anything more about that or has it gone away?

    • It seems the conversion from electricity to hydrogen and hydrogen back to electricity (with a fuel cell for example) is more expensive and less efficient than electricity to batteries to electricity; especially with the cost of batteries falling so rapidly now.

Leave a Reply