Dirk Greenhouse to the rescue! use energy wisely – or else
February 22, 2008
Because it’s Friday…. for your viewing pleasure.
Happy weekend, all.
— Maril Hazlett, www.climateandenergy.org
All New Energy Costs More, Except…
February 22, 2008
by Nancy Jackson
On Valentine’s Day, in a distinctly unromantic move, IHS Inc. (NYSE: HIS), announced their new Power Capital Costs Index (PCCI). The index – announced among presentations from Exxon, Peabody, Duke, FERC, and the fabulous Alan Greenspan – is a “proprietary measure of project cost inflation similar in concept to the Consumer Price Index.”
It shows that the cost of new power plant construction in North America increased 27 percent in 12 months and 19 percent on the most recent six months, reaching a level 130 percent higher than in 2000. Ouch.
My first thought on reading this news was that I really wish my dwindling retirement portfolio were heavily invested in copper, nickel, and steel futures five years ago.
The real takeaway, of course, is that new power simply costs more: all of it. The Index includes data on building coal, gas, wind, and nuclear plants.
We need to be clear about this. Coal is not cheap. Massive cost overruns plague plants near and far and carbon prices will make that resource more expensive still. But new wind plants are not cheap either, nor are nuclear or natural gas. Given global demand for resources, all new energy costs more than we are used to paying, period.
What we decide today (and tomorrow, and for decades to come) is which expensive new generation we prefer, and why.
Among our considerations, surely: air pollution profiles, both particulate and greenhouse gas emissions. But also: water concerns (both above and below ground), viewshed issues, wildlife impacts, subsidy requirements, national security risks, and our strong desire for energy security and independence.
In a changing world, there is much to be considered. CEP is confident that Kansas will rise to the challenge, and do so in a careful, methodical manner that engages many stakeholders and perspectives.
Meanwhile, there exists one bright and shining exception to the rule. There is one way to meet load growth that creates no new pollution and costs dramatically less than new generation: energy efficiency, which we need to learn to view as the resource that it is.
What’s that you say? Energy efficiency can’t do much and is also really expensive? Au contraire, my good friends!
A remarkable study conducted for the state of Maryland by ACEEE (American Council for an Energy Efficient Economy), confirms that the Maryland Governor’s goal to achieve a 15 percent reduction in per capita energy use by 2015 “is attainable cost-effectively with the energy efficiency and demand response resources we have in Maryland today.”
In fact, it turned out that energy efficiency could:
- Energy efficiency and demand response are the only resources that can be mobilized immediately, forestalling the prospect of power curtailments in the next few years and keeping the lights on for consumers in the state.
- Every dollar invested in efficiency yields an impressive return of $4 in reduced consumer electricity bills. Energy efficiency policies and programs recommended by ACEEE will cut consumer electricity bills by a net $860 million in 2015 and $2.6 billion in 2025.
- By 2015, residential efficiency programs will reduce an average household’s monthly electricity bill by a net $8. Including the benefits of lower wholesale prices, an average household will save a net $10 on monthly bills in 2015, or a 7% savings compared to forecasted bills. These savings grow substantially by 2025.
- All consumers benefit from energy efficiency. By reducing electricity demand, energy efficiency creates a downward pressure on wholesale electricity prices. By 2015, a typical residential consumer can save about $24 a year on monthly electricity bills from lower wholesale prices.
- Investments in energy efficiency create new, high-quality “green-collar” jobs for the state. These investments will create more than 8,000 net new jobs by 2015 and 12,000 by 2025. “That’s about the same level of employment we would see if Maryland were able to attract 100 small-sized manufacturing plants,” observed Prindle. This would yield more than $450 million in new wages, he said, growing to almost $800 million by 2025.
We have before us, available as soon as we decide to use it, this fantastic resource. Energy efficiency provides economic development, “new” energy at least cost, and no new pollution of any kind. Shouldn’t we maximize this resource while we consider new generation?
— Nancy Jackson, www.climateandenergy.org
news update – vote trading, and more
February 22, 2008
What happens in the time period between floor votes on a bill, and a threatened gubernatorial veto?
Arm twisting, apparently. Even arm breaking. The Topeka Capitol-Journal has reported a very troubling incident that occurred on the statehouse floor yesterday, where Republicans Speaker of the House Melvin Neufeld and Rep. Hayzlett pressured Democrat Rep. Sydney Carlin to change her no vote on Sunflower’s Holcomb plants.
Tip of the iceberg, I’m afraid – at least from what I have been hearing. Carlin just happens to have the guts to go on the record.
I’m sure that a general low level of this sort of behavior goes on all the time. Hey, it’s politics. However, the Holcomb issue seems to have intensified the dynamic to a highly problematic level.
As citizens, this should trouble us all. Should all of the legislation proposed during this session be compromised for one company, Sunflower Electric? This scale of – highjacking – by economic interests is really unthinkable in a democracy.
(I hope!)
More on the big solar project going in Arizona – via Jim Mason of KNRC, I think that’s where I grabbed the cite (USNews&World Report). Another great quotable from this story:
The big issue with solar energy has been the cost. Brandt says the Solana plant is expected to generate electricity at 12 cents to 14 cents per kilowatt-hour, which is about 20 percent more than the cost of the other electricity that APS generates with its mix of nuclear, natural gas, and coal. But Brandt notes that since the price of the fuel is free, it’s a 30-year contract with one big source of risk eliminated. If natural gas prices increase or if coal-fired power is made more expensive because of climate-change legislation, the CSP power could end up being one of the lowest-priced forms of electricity in the utility’s portfolio. “Any business wants to diversify its sources of supply,” Brandt says. “That’s why we feel right now the price is attractive. And you factor in the possibility of natural gas prices rising or any carbon legislation, and I think we’ll look back in five years and think this was an absolute grand-slam home run.”
Renewable energy is going mainstream – and bipartisan. An AP story on how states are struggling to figure out how to incent and finance renewables (during a, um, non-recession) quotes Ohio Democratic Governor Ted Strickland:
“If states like Ohio want to overcome their economic challenges, they’ve got to embrace advanced energy technologies and renewable sources,” Strickland said Thursday. “This idea of clean, green energy is no longer a tie-dyed T-shirt kind of idea. This is mainstream economics.”
And it also quotes Minnesota Republican Governor Tim Pawlenty: “Although there are certainly differences in how each state approaches energy policy, there is consensus that more needs to be done to create a cleaner, more secure and more independent energy future.” Pawlenty himself “has embraced renewable fuels, conservation and a requirement to cut global warming emissions in Minnesota by 80 percent by mid-century. He also supports clean coal technology and coal-burning power plants where carbon is captured and sequestered.”
More on Sunflower’s proposed algae reactors, from the Salina Journal: Duane Schrag has previously reported on research suggesting that in order for Sunflower to sequester 30-40% of the CO2 emissions from the proposed coal-fired Holcomb expansion – as they said they would, during their testimony on the bill – they would need approximately 60,000 acres (provided the technology will work effectively in the KS environment). Today, their spokesman said that they had allotted 500 acres to the algae reactor. This would capture somewhere between 0.5% to 4% of the CO2 emitted. Cost estimates range widely, from $2.50 to $9.30 a square foot.
I’m sorry, I forget the conversions to figure out how many square feet are in an acre – but I think we can safely conclude that the cost is pretty astonishingly expensive. When you add up the skyrocketing costs for power plant construction (for all sorts of power generation, not just coal), plus the cost of the algae reactor – plus the fact that the Department of Justice already considers Sunflower to be a financially troubled borrower – yeeow.
More on hunters. To whom I am highly sympathetic, since I really like wild turkey (the kind you eat). Also from the Arizona Republic – more hunters and anglers are getting involved in climate change issues. Quotable:
“The hunting and angling community is becoming more aware of global climate change and the problems associated with that, especially how it affects fish and wildlife,” said Rod Mondt, who lives in Tucson and works as a conservation-lands coordinator for Trout Unlimited. “They see it more readily because they’re out in the field more.”
By taking on global warming, outdoor enthusiasts join a diverse group of activists, from evangelical Christians to farmers, clamoring for legislative action on climate change.
Finally, for investor folk: T. Boone Pickens is getting into wind power on an even grander scale (EnergyCentral.com) Also, a plug for one of my favorite blogs – Climateer Investing. Whoever writes it posts an insane amount of posts, but they are spot on in identifying trends.
— Maril Hazlett, www.climateandenergy.org
