Category Archives: Environment

The Bizarre Local Politics of Solar Energy

by James A. Bacon

As nice as it would be to generate lots of power from the wind, one can understand why people don’t like wind turbines near them. They disrupt viewsheds. They make loud thrumming noises. They kills birds and bats. What I can’t understand is why people would object to having solar panels nearby. Solar voltaic panels don’t make noise. They lay close to the ground, and can be buffered by trees and shrubs. And they don’t harm wildlife.

More than 130 Chesapeake residents signed a petition calling upon Dominion Virginia Power, which is partnering with North Carolina-based SunEnergy1 to build a 241-acre solar farm, to relocate the facility to Dominion’s former coal plant along the Elizabeth River.

The planning commission recommended approving a conditional use permit for the projects. After postponing a hearing on the facility twice, the Chesapeake City Council is scheduled to air the issue tonight.

The solar farm, which would produce enough electricity for 5,000 homes, would occupy 241 acres. SunEnergy1 CEO Kenny Habul has said he has “bent over backwards” trying to accommodate residents, reports the Virginian-Pilot. He has invited them to help design a vegetative buffer that would surround the farm.

But the petitioners really aren’t concerned about views, judging by their petition. They’re mad at Dominion for operating a coal-fired power plant on the Elizabeth River, disposing fly ash on the site, and fighting a Southern Environmental Law Center (SELC) lawsuit alleging that the ash ponds leached toxic minerals into the river. States the petition:

Rather than allowing Dominion to have its way and continue to abuse even more profitable Chesapeake acreage, let’s hold Dominion accountable for the wasted 257 acre site that is contaminating the Elizabeth River. If Dominion is being required by the federal government to implement solar energy, then Dominion should be forced to clean up the land they have destroyed, which creates a perfect site for the solar panels without additional destruction.

Bacon’s bottom line: Check these petitions on Change.org: Grassroots groups are objecting to solar farms around the world. Most decry the despoiling of rural land. It is true, solar panels are extremely land intensive. That’s why developers tend to locate solar farms in rural areas where land is cheap and localized impacts, such as they are, effect the fewest people possible.

But that’s not the problem with the Chesapeake petitioners. They are angry at Dominion for operating a now-defunct coal plant and coal ash ponds that allegedly polluted the river (Dominion denies that it is, but a judge will decide), and now they’re blocking Dominion from partnering in the construction of the cleanest form of electricity known to man. If they want to hold Dominion accountable for its coal ash, then they should raise money for the SELC. Blocking the solar facility on environmental grounds is cutting off their nose to spite their face.

Burning Waste Coal to Restore the Land

Before and after images of Hurricane Creek gob pile. Image credit: Dominion Virginia Power

Before and after images of Hurricane Creek. Image credit: Dominion

by James A. Bacon

The Virginia City Hybrid Energy Center (VCHEC) is one of the cleanest-burning coal-fired power plants in the country. Its circulating fluidized bed technology meets strict federal standards for air emissions of sulfur dioxide, nitrogen oxide, particulates and mercury. But it also has been instrumental in cleaning river water — by helping reclaim the 500,000-ton, Hurricane Creek gob pile on the Clinch River.

“This is major environmental success story,” said Paul Koonce, chief executive officer for the Dominion Generation business group in a press release issued this morning. “A unique power station is taking a waste product from a century-old coal mine and using it to responsibly make energy for Virginia today.”

The Hurricane Creek gob pile originated from Clinchfield Coal Company mining operations as far back as 1907. As was common practice at the time, Clinchfield separated coal mixed with too much rock and dirt to burn in power stations — gob — and dumped it in large piles. It wasn’t appreciated at the time, but the waste rock leached heavy metals, caused acid drainage and spilled sediment into nearby creeks and streams.

For decades an estimated 200 tons of waste coal from the pile eroded into the Clinch River each year. “This abandoned mine land was the largest pollution contributor to the Clinch River,” said John Warren, director of Virginia’s Department of Mines, Minerals and Energy.

There has been no economically feasible way to remove the gob until construction of the VCHEC, a versatile 600-megawatt power station that can burn coal, biomass and even waste coal. In 2012, the power plant began taking on  waste coal from Hurricane Creek.

Dominion Virginia Power partnered with Gobco LLC, of Abingdon, a company that specializes in environmental reclamation, to identify and reclaim old waste coal sites in Southwest Virginia. As reclamation of Hurricane Creek comes to a close, Gobco is cleaning the site down to the original ground, covering it with topsoil, restoring slopes for proper drainage, and planting grass to hold the soil in place. The final step is to replant thousands of native hardwood tree seedlings.

In the past, environmental groups have been critical of using the fluidized bed process to clean coal wastes on the grounds that burning the coal only concentrated the heavy metals and other pollutants in the coal ash. But Dominion disposes the combustion byproducts in a lined landfill on-site.

“Reclamation of the Hurricane Creek gob pile is an important step toward improving water quality in the nationally important Clinch River watershed,” said Brad Kreps, director of the Clinch Valley Program of the Nature Conservancy, which controls more than 35,000 in the Clinch Valley watershed. “Finding creative solutions to address pollution from abandoned mined lands is a crucial part of the larger effort underway to ensure that the Clinch River can provide clean water.”

Said Walter Crickmer, co-owner of Gobco: “It was not until VCHEC came online that our company really had the opportunity to clean up some of the worst problems. The irony is that a new type of coal-fired power station is crucial to cleaning up the waste of a bygone era in coal mining.”

BARC Launches Virginia’s First Community Solar Project

Solar farm maintained by the Delaware Electrical Cooperative.

Solar farm maintained by the Delaware Electrical Cooperative.

by James A. Bacon

Governor Terry McAuliffe traveled to Lexington yesterday to flip the switch on Virginia’s first community solar project, installed by the tiny BARC Electrical Cooperative.

“BARC’s community solar project is an excellent model for stabilizing and reducing energy costs, while delivering clean solar power to a large segment of households on the grid,” McAuliffe said at the commissioning ceremony. “”I do hope this is a model for the rest of our utilities.”

With a three-acre bank of solar panels generating up to 550 kilowatts, BARC will provide 25% of average monthly consumption to 212 residential and  business customers in a service area encompassing Alleghany, Augusta, Bath, Highland and Rockbridge counties, reports the Roanoke Times. Another 25 customers are on the waiting list for when the project expands.

The electricity generated by the solar farm will replace power that BARC would have purchased from the wholesale electricity market.

BARC, a rural electrical cooperative serving more than 12,500 metered customers, had seen considerable interest among members in rooftop solar but observed that little was happening. Either upfront costs were too high, or there were physical barriers such as shading. But building utility-scale solar changed the equation. BARC had the heft to line up financing, it could acquire a shade-free location to place its solar panels, and it enjoyed economies of scale in installation. The coop also acquired a $500,000 grant from the Appalachian Regional Commission (ARC) and another from the U.S. Department of Agriculture to offset upfront financing costs.

CEO Michael Keyser explained the business model to Southeast Energy News:

We settled on a fixed-rate model because we determined one of the key barriers to solar is the  upfront cost.  It was also vitally important that the project self-sustain its own growth. We need to get the levelized cost of energy low enough so that a portion of every subscription would be set aside in a revolving fund to pay for project expansion. As long as there is a waiting list, like right now, the project will continue to pay for its own growth. It’s tremendous.

[The size of the project] was essentially a balancing act between building a system large enough to serve a meaningful number of members, while keeping the total capital costs manageable so that it was not detrimental to our balance sheet.

The value proposition to customers? Subscribers will pay $5 more per month for that 25% block of electricity consumption. But the charge for that block will remain fixed for 20 years, not subject to rate increases.

Bacon’s bottom line: The project required significant subsidies in the form of federal grants — the ARC grant amounted to more than $2,300 per customer. Without the grants, it is unlikely that solar energy in this case would have been cost competitive with the wholesale electricity market. It’s not clear if the solar farm also benefited from federal tax credits. Nothing I have read so far indicated the existence of an intermediary legal entity that would have utilized the tax credits, however, and BARC is a non-profit coop, so it could not have employed them. If I’m right and BARC did in fact build the facility without the tax credits that most other solar projects require to obtain financing, that is a significant accomplishment.

Also, it is interesting to see that so many customers are willing to pay a $5-per-month premium either to be “green” or to lock in a fixed price for electricity for 20 years. The beauty of the project is that customers subscribe voluntarily. No one is being coerced into paying higher rates for a service they don’t want.

The Market-Driven Path to Renewables

texas_wind_turbines

Texas wind turbines. Photo credit: Wall Street Journal

by James A. Bacon

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Fed Official Still Optimistic about Offshore Wind

Wind turbines off the Danish coast.

Wind turbines off the Danish coast.

by James A. Bacon

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

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

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

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

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

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

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

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

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

Hecate Announces Solar Deal in Cape Charles

Transparency: outlook murky.

Transparency: outlook murky.

by James A. Bacon

Governor Terry McAuliffe has announced yet another utility-scale solar deal, this one a 20-megawatt project in Cape Charles in Northampton County. The “Cherrydale Project” will generate enough energy to power more than 3,000 households throughout the region, states the governor’s press release.

The project was assembled by a newcomer to the Virginia solar scene: Chicago-based Hecate Energy LLC.

“As a Virginia native with family ties to the Eastern Shore region, the 20-megawatt Cherrydale solar development has been an exciting and gratifying project with which to be involved,” said Preston Schultz, Hecate’s director of development. “We are grateful to Northampton County for their support throughout the development of the Cherrydale Project.”

A quick perusal of the Internet revealed that Hecate’s request for a special use permit ran into local opposition from residents who opposed the loss of 150 prime acres of farmland in land zoned for agricultural  use. On the positive side, according to the Cape Charles Mirror, the project is expected to generate $750,000 in real estate taxes over 35 years, while Hecate offered $200,000 in a “community improvement grant” for Northampton County to use as it wished.

The “permit by rule” issued by the Virginia Department of Environmental Quality contains provisions to ensure that the environment is protected at the Cape Charles site.

“In my opinion, the Commonwealth of Virginia Permit by Rule process strikes the right balance between protecting critical local environmental, cultural and historical resources while at the same time providing opportunities for the new clean energy economy to take root and flourish in the Old Dominion,” Schultz said in the press release.

The 185-acre facility will utilize an “innovative tracking system,” noted the press release, that maximizes energy output from the available sunlight. The facility will interconnect with the Old Dominion Electric Cooperative and A&N Electric Cooperative system.

Bacon’s bottom line: After a slow start, utility-scale solar is taking off in Virginia. As usual, however, the governor’s press release doesn’t provide the data that allows us to calculate the cost-per-kilowatt of the up-front capital investment, much less how the levelized cost (cost of construction, financing, operation and fuel over time) compares to other energy alternatives.

We don’t even know who Hecate will sell the electricity to. The fact that the solar plant will interconnect with two Eastern Shore electrical cooperatives does not tell us who will ultimately buy that electricity. Will it be sold into the PJM wholesale market? Has an Amazon Web Services-like buyer contracted to purchase the power? Will ratepayers of the local electrical co-ops purchase the power?

The deal may be great, it may be a dog. We don’t know, and if other solar deals are any indication, the terms and economics of this one will not be released to the public — although, I must be clear, I have not asked Hecate for details.

Speaking generally, not of this deal in particular, the lack of transparency invites suspicion. If the economics of Virginia’s solar deals were beneficial to ratepayers, one might reason, the players involved would be eager to share the news. The fact that the information is not shared suggests that they have something to hide. I hope my suspicions are unfounded. But the deal makers could dispel them easily by making more information available.

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

transmission_lineby James A. Bacon

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

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

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

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

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

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

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

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

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