Solar as Economic Savior for Wise County?

After Wise County coal mines close, what comes next?

After Wise County coal mines close, what comes next?

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

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

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

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

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

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

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

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

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

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53 responses to “Solar as Economic Savior for Wise County?

  1. What regulatory structure? The regulatory structure today is whatever the utilities want, the General Assembly gives them. I can’t see the utility companies getting behind a bill that would set this precedent unless the cost and risk could be socialized to a vast band of ratepayers outside of the region. That is what is done with the bill setting up a possible pumped storage facility, with the risk potentially spread across the entire Dominion rate base.

    Southwest Virginia was home to my mother’s ancestors from the time of the American revolution until my childhood, close to two centuries. My father’s parents moved there for a job during the Depression and raised my father and his siblings there (actually right across the line in W.Va). Most of my cousins on both sides grew up there. As residents of Roanoke we were the easterners in the family. With the exception of one cousin, they are all gone now. All are scattered from Arizona to Florida to Alabama to Northern Virginia. I understand that the people out there cannot just give up on building an economic future, but other than around Tech and the I-81 corridor the ebb tide is strong. Population will continue to decline. Even if the Trumpian vision of American manufacturing renewal comes to pass, it might not be out there.

  2. Why couldn’t Energix just have a PPA with the corporate customers they want to deal with? I still have not had time to research this, but as I understand it, it is just within APCo and Dominion’s territory that PPAs are prohibited. Or they could reduce the size of their installation to multiple smaller units built on the industrial sites of their customers either as a net-metering setup or behind the meter. This would avoid the use of distribution lines and not usurp an existing land use.

    This is just the beginning of these types of issues in Virginia and we need to address them with an integrated energy policy, not a hodgepodge of miscellaneous decisions. Third-parties are the best developers for renewable projects. There is no reason to add an extra profit on top by putting them in the rate base. Utilities should be able to develop these projects too but through non-regulated subsidiaries that participate on a level playing field with other competitors with no ratepayer subsidies. They should not be allowed to favor their own projects over others to the detriment of ratepayers.

    We must begin immediately to reinvent the role of our utilities to give them a profitable future providing the services we need, such as transmission and distribution services, retail sales and transaction services for modern energy technologies. Cost-of-service payments for existing investments must continue. But there is no need to continue the concept of “build to earn” for new projects. This will cause over-building and stranded costs. Customers and utilities should have freedom of choice about the costs and sources of supply. The utilities should be reimbursed plus a fair rate of return for providing and maintaining the wires and other services that are at the center of a modern energy system.

  3. ODP’s lack of interest in buying solar power should not be pa fatal obstacle, here. You mention the wholesale solution, sell this power to PJM’s wholesale energy market, and there is another: sell this power directly to the customer and pay both PJM and ODP to transmit it from the plant (wherever located, doesn’t have to be in Wise County) to the retail customer (the data center). PJM already has tariffs on file at the FERC to perform this transmission service (if transmission service is even required). ODP probably does not already have a tariff offering distribution-only service to deliver power to customers from third party suppliers (that is, “retail access”), but the same end result can be achieved by a “buy-sell” contract negotiated with the customer and filed with the VSCC, whereby ODP takes delivery of the solar power from PJM at the transmission level and delivers it over its distribution wires to the data center(s). If ODP or its parent, KU, refuse to cooperate, THAT’s when political pressure can and should be applied, through the GA and SCC, to twist arms.

    Yet another solution is to locate Energix’ solar generator on the same Wise County property as the data center(s) and deliver directly on-site. That would require ODP to file a rate at the SCC for “partial requirements” (backup) retail service, for when the sun isn’t shining.

    SH mentions a third possibility, an offsite PPA. This is really just different terminology for the “buy-sell” arrangement I described.

    You describe this as “excess” power. By definition, “excess” power is sold to the wholesale marketplace and ODP MUST deliver it to PJM’s wholesale market if asked to do so at FERC-approved rates. ODP probably buys most if not all of its power from KU and the rest from PJM. Certainly Energix has no right to demand that ODP substitute “excess” power from Energix and, moreover, buy that Energix “excess” at ODP’s rate for its own retail sales to other customers. Also, “excess” implies that Energix has a deal in place with the necessary parties to deliver most of its output to the data center(s) — unless, of course, the solar generation and the data centers are already on the same property so no third-party delivery is needed.

    Now, all the above presumes that there’s a win-win economic and political solution here. Most electric utilities won’t stand in the way of an economic development deal that makes basic sense and brings in jobs and increases land values and also brings a reasonable profit to them. But if what’s really going is a political shakedown to force ODP to offer a retail rate that’s below cost, shifting that burden to other customers, then I’d expect stiff ODU resistance. That’s why we have the SCC, to sift through these complicated facts to tell the difference and make the right decision.

  4. I think this is how California was essentially forced into the utility business. They could not reach an equitable situation other than the utilities insistence on a full monopoly.

    The utilities are not about to “share” .. in this region or so it appears.

    I wonder to what extent that Wise could install solar – and wind if there
    were no “regulatory” obstacles..

    would it be enough to materially and beneficially affect their economy and perhaps to a degree that the entitlement burden to Virginia taxpayers be reduced?

    The utilities will no doubt argue that they lived up to their part of the monopoly agreement and now the rules are being changed – and perhaps to the harm of their investors…

    • I don’t know California in detail, but they are mandating Electric Cars, mandating a high % renewable in power generation mix, and taxing CO2 emissions. The CO2 cap and trade has thus far not had much impact, but is expected to hit gasoline taxes (the CA CO2 tax is a hidden tax sent directly to the fossil fuel companies – using this method, consumers don’t see it directly). Presumably CA has mandated RPS Renewable Portfolio Standard for their power plants.

      The mandates include substantial penalties for lack of compliance, so that’s why auto manufactures, for example, have to set lower prices on electric vehicles so that they can make the sales, to avoid the penalties.

      Let’s face it the progressive argument is to mandate.

  5. As time changes – laws and regulations must adapt.

    We seen to be in favor of changes that allow Uber, AirBnb, and removal of COPN for some situations.

    Despite all the opponents arguments against renewables – the economics are undeniable.. and it may well be time to revisit the original monopolies under which utilities were granted because ultimately – the purpose of the monopoly is to benefit taxpayers and citizens – not investors – and we seem to forget that.. these days. It”s not for the sole benefit of the utilities and there could not be a bigger conflict of interest – in my view than a govt-granted monopoly paying thousands and thousands of dollars to elected who will decide the laws and rules for that monopoly.

    There is a real question here as to how objective anyone who receives thousands of dollars a year from – can be.

  6. It sounds like more corporate welfare to me. If ODP needed the excess power, the two entities should be able to sign a purchase agreement. But if the power company doesn’t need it, purchasing it on a mandatory basis would be an abuse of the regulatory system.

    We can change the laws and abolish monopolies. But along with a monopoly comes a duty to serve all customers in the franchise area. It’s not good economics, policy or business ethics to allow an outsider to cherry-pick customers while leaving ODP to serve the expensive ones.

    One possible solution would be to mimic telecommunications and impose universal service fund obligations on Energix so that it and its customers pay a comparable, proportionate subsidy to serve ODP’s expensive-to-serve customers.

  7. The monopoly status was originally granted to utilities in the early 1900s to avoid the installation of wires by multiple companies, duplicating service and making an unsightly mess of wires running everywhere. There still is a good case to allow for a monopoly provider of transmission and distribution services that is allowed a regulated fair return on their investments.

    Many states have realized that it no longer makes sense to give to give utilities a monopoly on generation resources. The modern energy technologies such as solar, wind, storage and other services are usually offered with the most innovation and lowest-cost by third-party providers.

    With the current “build to earn” incentive, utilities are overestimating demand and are proposing new power plants that are not justified by actual load growth and the ratepayers are assuming nearly all of the risk.

    NY is reinventing the utilities’ role to be Distribution System Platform providers. In this way, the utility is responsible for all of the wires and they recover their cost, plus a profit, for providing the service. Everyone pays their appropriate share for use of the grid. There are no cross-subsidies by other customers if some customers choose to self-generate (residential solar), have a PPA with a third-party, or receive Plain Old Utility Service. The utilities must still provide adequate generation to cover the expected load either from owned units, contracted sources or with purchased power.

    This system is fair to the customers and to the utilities and avoids many of the conflicts and problems that we are seeing today. It also sets the stage for a lower cost energy system and tremendous job creation through third-party enterprises. It also puts utilities back in the utility business instead of as corporate speculators that build projects to keep the stock price up that do not serve the interests of their customers.

  8. Ahhh … the great datacenter fallacy. The fallacy holds that large cloud data centers will buoy the high tech employment in an area. While it takes a lot of people to build a big data center it takes astonishingly few to operate that data center once built.

    Data center size is more difficult to describe than you would think. Square feet is a poor method because is assumes the data center is full and that there are no efficiency differences between data centers. Number of servers is a poor choice since servers vary greatly in power and most cloud data centers have servers of various sizes in order to allow for customer choice (cost / benefit). So, the experienced cloud analysts use power consumption at full utilization. But this makes little sense to those outside cloud.

    I like “standard servers”. First, there is no such thing as a standard server. It is the rough weighted average of all the different servers found in a typical cloud data center. A relatively big cloud data center might contain 50,000 standard servers and use 25MW of power. A data center of that size represents A LOT of computing power. Let’s say Wise County can somehow attract four such large data centers. How much would that add to employment?

    At first, it would add a lot of jobs because you have to build these data centers. But those are temporary jobs. Once built the cloud data center is very efficient from a personnel perspective. The actual statistics for this are closely guarded secrets of the cloud providers but I’ll hazard a high end guess of 50 people per data center to provide the needed 24X7, 365 onsite support. So, Wise County miraculously overcomes the power and network capacity needs for these four big data centers and ends up adding 200 permanent jobs. Meanwhile, thousands and thousands of people are logged into these data centers over the network. And where do these people live? SanFrancisco, Austin, Raleigh, New York City, DC, etc.

    Moral of the story – building data centers does not create large numbers of permanent jobs while building a skilled workforce does.

    • The Roanoke Times says the Mineral Gap Data Center will employ 30 people. That’s even fewer than you conjectured. But 30 steady, well-paying jobs means a hell of a lot more to Wise County than it does to Fairfax County.

      The other factor to consider is the impact on the local tax base. As the Wise County economy hollows out, its tax base is eroding. How much do you think a data center would pay in local property and machine & tool taxes? Half a million a year? A million? Again, that’s a drop in the bucket for Fairfax or Loudoun but it’s a big boost to Wise.

      • If the data center owner has any sense the first they’ll negotiate is a tax break from Wise County so don’t hold your breath on the tax proceeds. 30 jobs in a county of 40,000 people? Farming tilapia in an aqua-culture business would make more sense (assuming the damn pseudo-carp could live through a Virginia winter).

        Why do you think the jobs are well paying? They are manual labor jobs. Security guards, inventory clerks, wiring technicians. The data centers are designed far away and run over the network from operations centers. The software is written elsewhere too.

        Meanwhile, the cost of land may be cheap in Wise County but you still have to get (preferably redundant) high bandwidth network connections to the data centers.

        • That’s interesting about the employees at the data centers. I figured they’d have technology credentials. So, you’ve disabused me of one notion.

          As for Wise County. The Tobacco Commission apparently has made big investments in broadband there. I’m not sure whether the infrastructure is up to snuff, but it’s been enough to attract at least one data center.

  9. I never thought that data centers much less solar installations would be great job generators… but people who own the land and get leasing dollars would add dollars… as well as the taxes on the energy generated and sold.
    If the mountains that have been torn down could have solar and wind installed on what is left – why not?

    what you have is utilities who want to continue to operate plants on coal or gas… and more than is needed than if they had wind/solar and used gas only when wind/solar were not enough.

    It’s not like their existing plants would be “stranded” .. the gas plants would still certainly be needed to operated at the times that wind/solar were not sufficient … the bigger question is why they’d want way MORE gas plants than they’d need than if they did embark on plans to harvest solar at the times it was available and gas did not have to be burned?

    why would you do that?

    there’s obviously some sort of built-in incentives for utilities to do that and the ones that can do it – without “interference” from the States – are doing just that… and in states where they have wrestled control of grid from the utilities – they ARE incorporating more wind/solar.. to the extent that the naysayers are promoting a narrative about how they’ve now got too much solar and not enough fossil fuels..

    … as if they could not build gas-fired turbines to cover the gap.. that once you go the solar route – for some reason – you’re prevented from adding gas plants to balance the load.

    it’s pretty clear the utility industry … recognizes … the “automation” threat solar has to their industry and profits – and just like some folks would outlaw automation for other industry – the electric utilities are trying to do the same thing – with help and support from state legislatures who – receive campaign donations and are “sympathetic”…

    this is a simple thing. The utilities view solar as a threat to their business model and when and where they can – they will keep it from damaging their business model.

    California is not engaging in a “grand experiment” – they are leading .. and states like Virginia are still the hostages of the utilities.

    • “what you have is utilities who want to continue to operate plants on coal or gas… and more than is needed than if they had wind/solar and used gas only when wind/solar were not enough. . . . it’s pretty clear the utility industry … recognizes … the “automation” threat solar has to their industry and profits”

      I don’t think you can make that case based on, e.g., DVP. I feel like I’m yelling into the wind but Dominion is not hostile to solar per se. They don’t like the idea of a bunch of homeowners (or small businesses) getting into on/site generation that can backfeed into their distribution system, and they absolutely loathe “net metering” and its cousin, the PPA, as free-loading on the grid, as discussed here occasionally. But I still maintain, the only reason we haven’t had as much solar development in VA as in NC has been the lack of State tax credits here as big as those in NC. In the highly competitive utility-scale solar business every penny counts, and the land and transmission access in NC is at least as cheap, and you connect to the same PJM grid and the same transmission utility (DVP), so why not locate on the NC side of the State line when that line also marks whether you get that tax credit or not?

      As for Dominion wanting to build gas turbines now, that one’s easy. Dominion knows that for the next few years Natural Gas is going to make the most money in the PJM wholesale energy market except, perhaps, during the daytime hours when solar is available. And that exception for solar, in their book, is ‘perhaps’ only.

      Now I know you and many others are saying, those gas fired units may end up a ‘stranded cost’ millstone around Dominion’s neck — but they don’t believe you. Not because they don’t believe it’s possible that solar is going to achieve deep penetration into eastern energy markets, maybe even approaching that magic 30% level where there’s about all you can use during the daytime and the daytime marginal energy price drops to $0 — but they don’t seem to think it’s likely to happen in the PJM portion of the US within the next 10 years or so (when they will have amortized a good chunk of the cost of those gas plants by running them 24/7) and after that, with 20-30 years of useful life left in them, they still foresee using those gas units as cycling units to back up all that solar at night — plus, by then, nearly all those even older coal and oil-fired units and perhaps even a nuke or two will have been retired on the basis of age even if the CPP doesn’t become effective so there will be plenty of need for the gas units to run at night; they may even feel that more new gas units will be needed. In other words, new gas fired units place Dominion in a position of strength relative to the market as they see it unfolding. Not incidentally they say these gas units will help support the new pipeline; but they will show you, the forecast need for the new cycling generation is there independent of the gas supply. You may disagree with their forecasts (and in fact TomH had some sharply critical things to say about those forecasts in his testimony on Dominion’s IRP at the SCC, last fall), but that’s where they are coming from.

      Having a declining generation employee base? Not a threat to Dominion. They see that occurring in their future anyway, mainly as their remaining coal units are retired. They probably make more money off a highly automated unit selling the same volume of electricity, especially if their retail rates come down more slowly than their O&M costs.

      • Acbar,

        You are a wise and experienced observer of the energy scene and I think you have done a good job of describing how Dominion looks at the future and the role of new gas plants.

        I have two main disputes with their point of view, however. The first, everybody is looking at this in the same way. Nearly every state in our region is planning to do the same thing; overbuild capacity and sell the surplus into the PJM marketplace. By 2022, Pennsylvania plans to add 20 new gas-fired plants, 13,363 MW of new capacity, Ohio 11,695 MW, New Jersey 6,186 MW, Maryland 5,105 MW (this is all from the PJM Queue). By 2030, North Carolina is planning to add 8 more gas-fired units totaling 7,026 MW, not including plants built by independents. In Virginia, Dominion plans to build four new gas-fired plants (5260 MW), APCo 472 MW, and 3838-4238 MW is proposed by independents. This totals 9,500 – 10,000 MW of new gas-fired capacity in Virginia in the next 15 years.

        This leads to my second point, load growth is flat or declining in all developed countries throughout the world. Electricity use is no longer linked to growth in economic activity or population growth. My criticism of utilities comes from my firsthand experience working with them. They are creatures of 100 years of habit. They expect the future to be a predictable variation of the past. And for a long time, they have been right. But early in the 21st-century electricity customers gained something they have been missing: affordable ways of reducing their electricity use and the means to generate their own power at a cost lower than their retail price (customer-sited solar).

        This is a disruptive change for the industry and has broken past trends. Yet Dominion, like so many other utilities, treats this like any other variable and averages it into 30 years of past data to predict future load growth. Rather than projecting the future based on the new trends that have been established in the past 5-10 years, the weight of the past data makes them conclude that the next 15 years will be similar to the 1980s and 90s. I think most people who know nothing about regression analyses and utility forecasts might disagree with that conclusion.

        My recommendation has been to be prudent. Let’s don’t rush off the cliff like everyone else is doing. Most the load growth in Virginia has been from the data centers. We should provide them with the renewable sources they desire and meet any other slight increase in demand by investing in energy efficiency, which saves us all money.

        It is likely that others will overbuild and PJM will be awash in new power plants looking for customers. In cross-examination during the last IRP hearing, Dominion witnesses admitted that purchased power was less expensive than any of the new generation options and they had arbitrarily limited it (in order to identify the need to build a new plant).

        We need to clear our heads of the cobwebs of the past and take a fresh look at our options so that we can make the best choices for Virginia, the ratepayers, and our utilities.

        • TomH, you have shown the strength of your convictions by taking your detailed written advice to where it counts, to the SCC. Anyone interested in reading what he told them about DVP’s IRP can find it here: Go to: http://www.scc.virginia.gov/docketsearch#caseDocs/135867 , then scroll down to, “Virginia Electric and Power Company – Memorandum attaching 1 letter submitted to the Commission for consideration from Mr. Thomas Hadwin.09/27/2016”

    • “If the mountains that have been torn down could have solar and wind installed on what is left – why not?”

      Because there are millions upon millions of square miles in America which are at least as desolate as rural Virginia where the sun shines a whole lot more.

      If you’re going to depend on Mother Nature for sunshine and wind you have to go where the sun shines and the wind blows.

  10. “California is not engaging in a ‘grand experiment’ – they are leading .. and states like Virginia are still the hostages of the utilities.”

    So how come electric rates are so much higher in California than in Virginia? Accepting a single provider of distribution, competing generators of power should drive down prices, which, in turn, should be passed along to consumers.

    I remember several years ago, when Virginia law did allow for competition at the generation plant level. I would periodically receive ads and other solicitations from other generators asking me to sign up and pay more for electricity than I could get it from Dominion. Granted technology and its costs have changed in the interim. But I still wonder whether a competing power source would offer lower per kwh prices than Dominion sells.

    I’d bet the California market is driven more by ideology than economics.

    DJR is spot on with his comments on data centers. Not many jobs, but they would pay some real estate taxes that could help rural Virginia.

    • why? because they are trying to encourage people to use LESS electricity since it DOES pollute… just like the New England states do – and their prices without solar are even higher than California!

      electricity POLLUTES TMT – it causes air quality problems in places with mountains and inversion layers.. and it rains down mercury on waterbodies – contaminating fish… and it creates Ash ponds that have to be cleaned up.

      Aren’t you taking for granted the “pollution subsidy”?

      is that also “ideological” thinking?

      Same deal in Europe – it’s the pollution that is driving the policies to use less and reduce pollution..

      this is how you incentivize demand-size conservation…

      people in Europe don’t use American style water heaters.. they use on-demand water heaters.. more expensive up-front – lower cost in use.

      this is the very same reasoning behind cleaner cars and air quality in urban areas – like NoVa which is a non-attainment area.

      the problem is – we take for granted the lower prices – which are enabled by pollution.. that does damage the environment .. we’re “okay” with that but in the longer run – you end up paying the piper… with having to clean-up coal ash piles.. contamination of ground water from coal ash not cleaned up, air quality issues in the summer that adversely affects the health of kids, the elderly and those with compromised immune systems… These are costs also… that are not borne by the people who are causing this harm – those who use cheap electricity.

    • “I’d bet the California market is driven more by ideology than economics.” Right on!

      • I think you’d be surprised by Californians. California’s Department of Transportation just became the first such agency to propose regulations that would let autonomous cars operate without a human driver or any way for a human passenger to drive the car. Ideology? When driverless cars become prevalent tens of thousands of Californians with decent blue collar jobs will be unemployed. But … by acting quickly California keeps the many, many automotive labs working on autonomous vehicles in state.

      • We like to use California as a cautionary tale, but for some things they can be a good example.

        We point out that electricity rates are higher in California. This is from https://www.electricchoice.com/electricity-prices-by-state/

        Residential Electric rates:
        Virginia 11.54 cents/kWh
        California 17.08 cents/kWh

        Commercial Electric rates:
        Virginia 8.02 cents/kWh
        California 15.23 cents/kWh

        Yet WalletHub says that the average electric utility bill in California is just $96. Only five states have lower average bills. In Virginia, our average electric bill is $141. Thirty-six states have lower average bills than we do, even though we are in a region of moderate temperature extremes. California produces twice the economic output per unit of energy compared to Virginia. Perhaps we could learn some lessons from them as well.

        • TH, the WalletHub numbers sound like the classic result of comparing apples to oranges. Of course CA consumption/ month is lower when you figure the weather effect of having neither extreme heat nor extreme cold for the three largest concentrations of population in CA:. LA, SD, and SF/ Silicon Valley. Northern CA has more extreme weather but way fewer people.

          The flattening of CA’s growth per capita after the mid-Atlantic 70s also coincides with the exaggerated CA reaction to the Oil Embargo etc. (shrinking the growth in total consumption), the beginnings of suppression of demand there by higher prices, and the strong CA population growth after that (enlarging the divisor).

          Now, LarryG did sound like he was making the argument that high electricity prices would be good for the future intrinsically, because that would suppress demand and therefore suppress the environmental impact of fossil fuels. But your chart is historical.

          • CleanAir&Water

            Acbar,
            Should you decide to take a look at the energy ‘potentials’ the Solutions Project lays out … here is the methodology. It is pretty straight forward. Of course it starts with the idea of “how can we replace fossil fuels” in our electric system, but it does use resources defined elsewhere to make a unique case for each state.
            The project also went to Paris with a “Potentials” list for other countries. The basic idea is that if we can actually see a way forward we are much more likely to go there, even if the end point is not exactly as seen in defining ‘potentials’.
            http://thesolutionsproject.org/resource/816/

        • My understanding is that California’s electricity crisis had nothing to do with ideology and everything to do with NIMBYism. Californians didn’t want nasty, dirty electrical generation facilities in state. So they made it neigh on impossible to build them in state. Now, even the California legislature know that California would need electricity. They just figured they’d buy it from out of state generators and have the best of both worlds. Then the out of state generators realized they could sell at whatever price they wanted since they weren’t in California and not regulated by California. At least that’s what I recall.

          • What you are recalling is the deregulation days in the 1990’s. Enron made a bundle in that environment before it fell apart.

            California does not have an undersupply crisis. Many of their new gas-fired generating stations are running at a low capacity factor because they cannot compete economically with energy efficiency and renewables. But over a long period, the California energy scene has not been well managed. Too much political influence by a variety of special interests.

  11. “I’d bet the California market is driven more by ideology than economics. ”
    Info from the Solutions Projects at Stanford ….
    Jacobson, the Stanford professor, provides a state-by-state road map for abandoning fossil fuels and outlines the costs and benefits to each state. For California, he found that transitioning to 100 percent renewable energy would actually lower the cost of electricity, saving the average Californian $161 per year by 2050.
    If the cost savings from reducing climate change and hazardous air pollution — most importantly lower healthcare costs — are also taken into account, California would save an average of $7,395 per person by 2050.

    The Golden State got 27 percent of its electricity from solar, wind and other clean sources in 2016, according to the California Energy Commission.

    http://thesolutionsproject.org/infographic/#ca
    a snapshot of the research

    • CA&W, in Jim’s March 8 post, “Following the Least-Cost Pathway to CO2 Cuts,” he discusses a study which purports to show that “California pays more than necessary to reduce its emissions. The reductions achieved via the state’s wind and solar mandates cost 10 times more than ones achieved through its cap-and-trade program.” Now I have no idea where that study came up with its numbers, and they refused to tell Jim when he asked, so I posted this comment:

      “. . . That leaves a lot of uncertainty about exactly how they came up with that 10x figure. For example, what solar costs are being linked to the emissions reductions from solar? Just the developer’s cost (investment carrying cost + O&M cost)? Just the direct cost to the State: CA tax benefits paid to the developer? Or both costs (to the developer plus CA)? Less credit for the electricity sold? Less credit for sales of renewables RECs? Calculated from sales prices determined how (from what market, wholesale or retail)? What about grid impact costs (i.e., the added cost and emissions from operating, stopping and starting gas-plant fired units in cycling mode to back up solar versus more efficiently in base-load mode)? And how is the comparison cost determined from the cap-and-trade market?”

      In other words, there’s a huge potential for BS statistics here, going whichever way you want them to.

      • Yes, statistics can be chosen with bias and manipulated … but I guess I am just frustrated by VA’s ‘all in fir gas” when other alternatives are not considered or made to look bad by Dominion as they did with solar at the SCC. The choices being made now are very short-sighted and seem unable to be changed even as the markets and business structures all around us are changing and being rethought.
        Here are a set of articles about CA possibilities … buy wind from WY, expand and interconnect grids, and sell solar to AZ whose time zone makes CA solar fit AZ peak.
        http://www.desertsun.com/pages/interactives/california-power-grid-expansion/

  12. well I STILL don’t see where you get electricity from at night – if you are 100% renewables… unless there is a presumption that by 2050 – you can store enough electricity for night from the daytime renewable generation.

    but in California – the Sierra Club is making the same argument about gas power plants as in Virginia – that California wants to build more gas plants and the SC thinks they are building too many -except in California, the state is saying without more plants – they risk rolling blackouts – at night.

    The Sierra Club does not offer any solutions other than for people to stop using electricity…

    Now TMT speculates about “ideology”. In the case of the Sierra Club and it’s attitude towards the need for gas plants to run at night to make up for the loss of solar – at night – that opposition is .. in my view… “ideological”.

    In fact the whole thing is getting portrayed by the anti-renewables crowd as a prime example that renewables will de-stabilize the grid -and it’s working as California is now described at the “left coast” where “loons” out of touch with reality are running the grid… and that’s why they are threatened with rolling blackouts.

    I’m truly sorry the Sierra Club cannot bring themselves to an honest position that deals with the realities. they are as bad as the far right folks and between the two of them – they drive a wedge between what others might pursue towards compromise and move forward on adopting more solar but in a way that nightime “works” when solar is not present.

    • You are exactly right — the ideology of the Greenies got the price for solar generation and solar tax credits set way too high; then, surprise, they got more solar than needed. The ideology of the Sierra Club opposes the logical solution for nightime backup. The ideology of the anti-global-warming crowd opposes anything emitting CO2. The ideology of the native Americans and supporters demands hydro gen or dam releases (wasting the ‘fuel’) to keep water in the rivers even when the generation is unneeded. The ideology of the Trump crowd opposes any non-cost consideration for generation, and opposes some environmental protection costs too. What’s the utility to do? There are ideological views all over the place. Generally, the utility says to the Utilities Commission, whatever you want, you weigh the competing claims, just give us a single answer that’s not a moving target​ so we can plan how to reliably serve our loads and also meet all parameters you set — at least cost.

    • In 2007, Pacific Gas & Electric petitioned the California Public utility Commission (PUC) to build a new gas-fired power plant. Many expressed concern that the Colusa plant would be very expensive long-term for customers if the power wasn’t needed. The plant was approved but has operated at just 47% capacity in its first five years.

      A former PUC Commissioner who argued against building new plants was replaced by a former utility executive by Governor Davis. The former Commissioner has said, “We’ve created an extraordinarily complex system that gives you a carrot at every turn.” He went on to say, “I’m a harsh critic because this is intentionally complex to make money on the ratepayer’s back.”

      Another former PUC Commissioner said, “Put simply, for the foreseeable future, we have more power plants than we need. ”

      Since 2008 alone — when consumption began falling — about 30 new power plants approved by California regulators have started producing electricity. These plants account for the vast majority of the 17% increase in the potential electricity supply in the state during that period.

      Most of the big new plants that regulators approved also operate at below 50% of their generating capacity.

      So that California utilities can foot the bill for these plants, the amount they are allowed by regulators to charge ratepayers has increased to $40 billion annually from $33.5 billion, according to data from the U.S. Energy Information Administration.

      Perhaps, California can serve as a cautionary tale in this case too.

      • A capacity factor of 47% (meaning, it runs and generates 47% of the time) in a market over-saturated with solar isn’t that bad. Although they may have planned the financials based on more, that’s a sustainable number I’d think — especially if the marginal energy price after dark is usually quite high due to the insufficiency of alternatives to solar, so they make a lot of money in those hours, which is what I’m hearing.

        • Not according to Bloomberg New Energy Finance. I don’t know if this specific unit was included in their evaluation, but I suspect it was. I am looking for the original article, but I believe they evaluated the entire California ISO. They found that recently built gas-fired combined cycle plants were not being dispatched frequently enough to reach financial break-even. They felt that California had overbuilt gas-fired capacity that was being undercut by lower-cost energy efficiency and renewables. This would continue as both of these technologies would increase in use in California. Their conclusion was that this should be a warning to utilities elsewhere in the U.S. that are rushing to build more gas-fired capacity that may end up as stranded assets.

          I am trying to raise the alarm about this here in Virginia because if it turns out the gas-plants can run for 40 years at above break-even capacity and the utilities can sell the surplus, the utilities make more money. If they cannot, the ratepayers will still have to pay for them. We are setting up a situation just as we have for the big banks. We encourage them to take greater risks. If they win they keep the profits. If they lose, we pay the bill. Is it any wonder these large corporations are moving rapidly in this direction?

    • Larry,

      We just recently covered this ground. In the next 15 years, we could add 6000 MW of solar to Dominion’s system that would produce lower-cost energy with our current level of reliability. No storage would be required, nor would it be needed to produce baseload power during this time period.

      My hope is that we can shed the emotional baggage of partisan positions and just look at the economics of the option. Then we could also enjoy the thousands of long-term jobs created in the energy sector that will not exist with the present choices.

    • Larry, if you didn’t like Jacobson’s 2050 renewable only energy pic for CA how about these ideas?
      • California Senate leader’s new bill: 100% clean energy
      But experts who have studied the transition from fossil fuels to clean energy say California already has most of the tools it needs to solve those problems. Those tools could include smarter energy management, such as encouraging homes and businesses to shift their electricity use to times of day when solar panels and wind turbines are active. Some of those shifts could be automated. For instance, Aggarwal said California’s 3.5 million commercial and multi-family buildings could install pre-heating and pre-cooling technology, which could be programmed to power up when electricity from solar or wind farms floods the grid. Energy prices that vary throughout the day could encourage those buildings to use electricity when the time is right. “We like to say there are already 3.5 million batteries installed in California,” Aggarwal said.
      Other tools for getting to 100 percent could include new twists on old technologies, like hydropower plants that are operated so as to complement wind and solar generation, and solar plants that use molten salt or other fluids to store energy for use when the sun goes down. (One such facility, the 110-megawatt Crescent Dunes solar tower, is already operating in Nevada.) California could also incentivize the development of more geothermal plants in the Imperial Valley, which are expensive to build but can generate climate-friendly electricity 24 hours a day.

      http://www.desertsun.com/story/tech/science/energy/2017/02/20/california-senate-leaders-new-bill-100-clean-energy/98157028/

  13. just to be clear – California is proposing to build more gas plants –

    here’s the Sierra Clubs view:

    ” California, and at the heart of the dash for gas is the city of Los Angeles.

    Wait, what?

    Yes, Los Angeles’s utility the Department of Water and Power (DWP) is proposing a major commitment to new natural gas power plants that risks locking the utility into fossil fuels for decades to come. ”

    http://www.sierraclub.org/compass/2017/01/yikes-los-angeles-wants-spend-billions-new-polluting-power-plants

    California WANTS to build more gas plants so they CAN provide more reliable electricity – especially at night when renewables are at low ebb.

    But California is getting portrayed as refusing to build the gas plants and that because of that they risk rolling blackouts.

    the truth is 100% the opposite. California WANTS to build the gas plants.

  14. Not all CA, mainly LA and south. LA is both a huge urban bunch of customers AND an owner of gas wells on City property. Gas is cheap around LA. The people in their utilities division (it’s a big part of City government) consider using any other source of fuel to be lunacy! The citizens and the entertainment industry may have other ideas, but that’s LA politics. Now, north, towards that liberal bastion of SF and the wine country and you get different answers towards gas.

  15. Sometimes getting to the truth is harder than it should be.

    The truth is that California has been building many new gas power plants to balance the renewables but there is a substantial presence of “green” folks who insist that gas is not needed just more solar.

    You can find the articles if you look – not just in LA.. like this one:

    ” New natural gas projects spark debate on power”

    ” A new wave of natural gas power plants planned for Southern California has stoked a high-stakes debate about how best to keep the lights on throughout the region.

    While green groups believe renewable energy has received short shrift by utilities proposing these facilities from Carlsbad to Oxnard, operators of the state’s electrical grid have warned that maintaining a stable power supply requires a delicate mix of energy sources — including fossil fuels.

    The biggest showdown of late centers on an envisioned gas-fired facility in seaside Carlsbad, which advocates of renewable energy are trying to block. If a state appellate court agrees to hear their case — its decision could be announced any day now — the granting of judicial review could encourage similar challenges against at least four other projects in Southern California.

    If the court denies the request for review, it would help cement the construction of fossil fuel power plants slated to operate for decades.

    “They’re selling a myth about what we must do to go green and clean that rewards usual suspects with multibillion-dollar projects and a guaranteed profit,” said Bill Powers, a mechanical engineer who serves on the board of Protect Our Communities, a nonprofit fighting a number of proposed gas-fired plants.

    “The state’s energy strategy is a rapid transition to clean energy … and that is completely doable with rooftop solar, with battery power, and it’s completely doable in a cost-effective way without some gas-fired transition,” said Powers, a former consultant for the energy industry.

    Officials with San Diego Gas & Electric, which would buy the power from the Carlsbad plant, disagreed that new natural gas projects should be eliminated. The utility said the fuel is a necessary complement to alternatives such as green power and battery storage — a diversification approach also pursued by the region’s other large utilities.

    “You can’t really say that you need all of this and none of that,” said Stephanie Donovan, senior communications manager for SDG&E. “We need wind and solar and storage, and the flexibility of the quick-start (gas-fired) power plant.”

    anyone who thinks California does not have gas fired plants and is not building new ones – should GOOGLE: ” Status of All Projects – California Energy Commission – State of California”

    and/or take a look here:

    it’s interesting how narratives get started these days – and the narratives though popular in their acceptance are far from the actual reality sometimes.

    California is not so “solarized” that they are in dire risk of rolling blackouts.. the truth is more complex than that and the truth is that a LOT of gas-fired plants are built.

    • Yes. One CA issue we haven’t touched on is transmission. All that gas gen is concentrated in the south, and solar in the middle of the State. There have been moves to build pipelines north to supply new gas plants around SF, or, alternatively, to build new transmission north, but there’s still somewhat of a shortage. You have to be able to balance gen-types and loads regionally, under all load conditions, over a LARGE area, to run an efficient grid.

  16. Accepting that mankind can affect weather, if not climate, the question remains: What are the normal climate conditions for the world? And how do we know this? We seem to be focused on the climate conditions around the turn of the prior century and early 1900s. How do we know that period of time is “normal”? What if it is not? What if the world is normally much colder? Or much warmer?

    It reminds me of my grandparent’s cabin in Minnesota. When I was quite young the lake level was quite high – not much beach. Over time, the lake level dropped considerably – lots of beach. In the last few years of my grandparents’ ownership of the cabin, the lake level rose to levels comparable to when I was quite young. What is the normal level of the lake in question – high? Low? Something in between? If one does not know the normal, isn’t hard to develop sound, sensible and scientific methods to achieve the normal? Isn’t there a risk that one might adopt policies and implement measures that work against achieving the true normal?

    Frankly, I’d like to see more scientific methods used in climate science.

    • Completely agree with you, TMT. I remain a skeptic when it comes to totally eliminating CO2 production, because we can’t get there without undue costs (environmental and other) in so many other ways.

      Our knowledge of long range atmospheric climate modeling is still primitive.

      But the fact of the net warming of the oceans is no longer deniable. And the sea level rise that’s likely to produce, and that was in fact produced prehistorically between the Ice Ages, will flood low inhabited delta areas like Bangladesh and Shanghai producing unthinkable population dislocations. My advice is, look at what we are seeing in changing ocean temperatures — not locally but whole oceanwide changes. The ocean is our largest heat sink and the heat buildup there today is showing and the ice at both poles is melting. There is the future, 10 years out.

      • It’s my understanding that much of the Netherlands is below sea level and is protected by dikes and other infrastructure. It would behoove areas that are similarly situated or prone to flooding to grandfather existing buildings, build new structures on higher ground and build some dikes and levees.

        I see much of what goes on internationally as an attempt to shake down the United States taxpayers. Fire one-half of the employees of international agencies and use the savings to help affected nations start planning and engineering.

    • I don’t even see the fundamental U.S. debate as climate change. I see the debate as trying to paint certain energy choices politically unacceptable for America.

      • I have been trying to avoid the political debates because reason gets lost in the conversation. My suggestion has been to choose the lowest cost resources: energy efficiency and renewables as the choice for new additions to an existing diverse mix of generating units. This lowers the cost of energy for everyone, creates many more jobs than other options, and has no emissions – so you get the climate benefits for free, without the arguments.

        • Tom H – yes, sir. If the average customer can save money, at least in real terms, through energy efficiency and renewable sources of power, you won’t have the political fight. I don’t have to be a climate change warrior in order to support a thoughtful move to more renewables and a lower power bill. And economic growth.

          • caveat – money “saved” does not really translate into increased economic activity… it means less money for what you were paying for – less numbers of workers.. less profits.. then whatever you switched the save money to buy instead – would sure enough produce economic activity -“stuff” you’d buy and jobs created in producing the stuff you buy – … but the money you “saved” no long got spent on what you were originally spending it on.

            In other words – when Dominion produces electricity for less money – it means they need less people to do it.. so those folks lose their jobs.. that’s exactly what Solar does to fossil fuel plants…

            Bacon points this out all the time – i.e. that there are “few” jobs for solar.. and Dominion knows it… too.. 😉

          • Larry (for the comment below),

            I understand what you are saying, but it doesn’t necessarily have to be so. If Dominion was operating in a new role, they might be making more money and not concerned that the price of energy was lower for everyone. The families who have saved on their utility bill could create new jobs when they spend the savings, as you say.

            Solar jobs are not in operations but in construction. With many solar projects in progress all of the time, there will be more long-term jobs created by solar projects than the 40 or so jobs associated with a new combined cycle plant. Energy efficiency will create a huge amount of long-term jobs and also create savings for families and businesses that can be spent to create some more jobs.

            The point I am making is that Dominion would no longer have a stake in keeping the price of electricity high or selling more of it, they would be making their money in a different way.

  17. I think we’re pretty much doomed on global warming if it is real because too many people will not believe it until they see it – and then it will be too late.

    over the last few years – more and more of our institutions – not just science – have lost the trust of people.

    I don’t think there is a solution to the science thing at this point – it’s pretty much what people want to believe.. instead… they just look around until they find the narrative that suits their own beliefs .. like this one:

    ” ‘Ozone hole’ shenanigans were the warm-up act for ‘Global Warming’

    Green Guru James Lovelock: ‘We should have been warned by the CFC/ozone affair because the corruption of science in that was so bad that something like 80% of the measurements being made during that time were either faked, or incompetently done.’

    I don’t think we really know to the Nth degree about Global Warming.. probably never will .. but I’m from the school that if we see something that looks troubling.. we go slow… we take precautions.. until we can convince ourselves that it’s not a problem ….

    and that’s why I favor using solar and wind as much as we can and gas to fill in the gaps when we can’t.

    that also conforms to TOmH’s view – to use the lowest cost fuels when we can… and it conforms to what California is trying to do – … use solar as much as you can.. use other fuels when you can’t and keep the grid reliable.

    • Well it’s hard because even industry will use assumptions about future cost as the key decision factor. It was the low cost projections of coal compared to (totally wrong) high cost projections of natural gas, that kept coal as king even though nat gas was cheaper.

      • well.. CLEARLY – solar IS cheaper than coal OR gas – no question!

        but “industry” AND “skeptics” are basically saying that solar is not a valid choice because it cannot generate 24/7 and be “dispatchable”.

        It’s a false narrative because neither coal nor Nukes are “dispatchable” either unless the plant is up and running already.. it cannot be brought up in minutes.. to respond to demand that outstrips baseload generation.

        So “industry” .. depends on gas to ramp up quickly if demand exceeds current baseload.. but the same “industry” says that using gas to do the same thing – for solar is not the same.

        coal and nukes run 24/7 – but cannot vary easily so gas has always been the “go to” fuel to bring online quick to modulate coal/nuke baseload.

        you can use gas in the same way to modulate wind/solar.

        it’s not rocket science. California is doing that right now –

        any island in the world – more than a 1000 of them that currently uses fuel oil at 40-50 kwh cost would do the same thing – i.e use solar and wind WHEN it is available – and use fuel oil when it’s not. That’s BETTER than running fuel oil 24/7. whatever you can save with wind and solar is better even though you can’t use it at night.. and have to rely on fuel oil.

        It is little different in areas that use coal and nukes for baseload and gas to modulate the peaks. you just use wind/solar instead – when you can – and gas when you can’t. You still save on the times when you can use wind/solar .. and you still rely on gas when you can’t get wind/solar.

        again -this is not rocket science… it’s already being done in places with Utility monopolies are not allowed to refuse to use it.

        California is in the forefront – they will have to confront and deal with the variability issue .. and places like Virginia will still be held hostage to the utility monopoly courtesy of the well-lubricated General Assembly.

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