Wind Power Hits Some Nasty Gusts

offshorewindturbines By Peter Galuszka

Wind power has taken some hits with the New Year.

A proposed 145-acre, 20-megawatt project in Clarke County is being scuttled because Dominion Resources has shown little interest in buying its power. In New England, a pioneering offshore wind project, Cape Wind, is on the ropes because of the merger of two utilities and opposition by one of the Koch brothers.

According to the Winchester Star and blogger Iveymain, OCI Power is pulling the plug on its plan to erect 100,000 solar panels – enough to power 20,000 homes –due “due to the lack of long-term solar procurement efforts by Dominion and other VA utilities.”

There is no clear program in Virginia to push solar power. The General Assembly and Gov. Terry McAuliffe have paid lip service to the idea but haven’t done anything to actually fund it. Moreover, Virginia has no mandatory renewable portfolio standard as do other states so efforts for renewable energy are set up to dawdle. Dominion also has been slow, if not downright negative, about buying renewable party from third party sources.

Cape Wind off Cape Cod had been might have been the nation’s first real offshore wind farm. It would run 130 turbines in Nantucket Sound with electric utilities buying the output.

But the project’s price tag of $2.5 billion seemed daunting. One group, National Grid had agreed to buy half the power, but another utility, NStar, wanted to drop its interest in the project when it was being taken over in a $17.5 billion merger with Northeast Utilities.

Cape Wind had drawn opposition from people one might expect, such as conservative activist William Koch, who owns millions of dollars’ worth of seafront vacation real estate, but also from odd sources such as the late TV anchorman Walter Cronkite who likewise owned waterfront land.

Closer to Virginia, there have been auctions of offshore areas from wind farms. Dominion has about $50 million in federal funds to build two, six-megawatt turbines 27 miles off the Virginia shore. Dominion says it wants to develop wind, but the reality is that it wants to take tiny steps to it while dominating the market.

Another factor is the rush to natural gas that has Dominion and other regional utilities pitching billions worth of pipelines. Cheap gas hurts renewables because it takes away the urgency to get them going.

That may change. There is so much gas and oil, in fact, that drilling is slowing quickly. Petroleum prices are way low. This is a normal cycle. When production slows because of low prices, supply will likewise diminish. When that happens, prices will rise and drilling will be robust again.

The problem is really an economic one. As long as natural gas remains in its current cycle, it’s going to be really hard to force a play into wind – at least – without some kind of top-down, government involvement. Dominion, once again, is getting away with playing it just as it wants.

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15 responses to “Wind Power Hits Some Nasty Gusts

  1. sometimes I get mired down in the nuts and bolts and I am motivated when Peter says this: “….because Dominion Resources has shown little interest in buying its power”

    so I sort of wonder:

    1. – does Dominion have to buy power from those who generate it?

    2. – how much would they have to pay for it?

    3. – could they … pay not more per kilowatt than what it costs them to generate it themselves?

    so we sort of get to a point where Dominion could conceivably say – we’ll only pay X for the power and the provider is saying – “but it costs us 2x to generate it”.

    so my question is – should Dominion be required to pay more for power than what it costs them to generate it..

    and an even nastier question – if they are required to pay more for it – and they are guaranteed a profit – would they pass that increased cost on to ratepayers?

    these are things I don’t know. perhaps others do know and can explain more fully.

  2. 1) No, no VA utility is bound to buy supply from any particular supplier and frankly they make their money by building and operating their own power plants. They make no profit selling somebody else’s electrons. Dominion and APCO do belong to the regional PJM system which is how they buy power from other suppliers when they need it, but they are not REQUIRED to buy from anyone or from any source. Other states do have mandates to use X amount of renewable power, but not VA.

    2) It is a market price when Dominion buys off-system power, and PJM is the market that determines the price. Very complicated and very interested process. Beyond my ken.

    3) When utilities do buy excess power from others it often costs more than their own generation, but their own generation is running at 100 percent. The price can spike pretty high at peak demand. It can also get so low that it makes sense for the utility to scale back its own plants and buy off the grid.

    It all gets passed on to the ratepayers one way or the other. In Europe where feed-in tariffs subsidize renewable power supply, to keep the electric bills low, the cost shows up in taxes instead. But the money comes out of somebody’s pockets.

    Peter’s right, natural gas prices are making wind and solar far less attractive. Solar in particular makes more sense in other (sunnier) parts of the US. I for one am very interested in seeing how those offshore wind test turbines do — that technology makes sense, but again — very expensive compared to gas turbines right now.

    • Thank you Steve. seriously. you helped me to know more.

      I had a couple of additional thoughts.

      why is Dominion moving nat gas all the way to Eastern Va when they could burn it in turbines near the current coal-burning plants – using it to supplement base load when needed?

      why is Dominion building a high power transmission line across the James ?

      what power are they plan on moving to from where where instead of current grid supply?

      finally – I note your interest in wind – but apparently not Solar.

      it was my impression – perhaps wrong/uninformed that the cost of SOLAR was dropping fast and has gotten cheap enough to go on rooftops without subsidies and still beat Dominion’s price… not true?

      • 1) I’m no expert on all that they do, but the proposed big natural gas pipeline projects are going to serve the entire southeastern United States, not just power plants and industrial plants in VA. And they tie into plans to export the stuff, I think.

        2) Dominion is building the line across the James because demand is growing in Hampton Roads and it needs another feed from the Surry nuclear plant. Again, the engineering behind it is solid and both the SCC and the Federal Energy Regulatory Commission have to be (or have been, in this case) convinced of the need for the project. Redundancy is a major consideration — everybody wants them to have backup routes.

        To the extent possible, with power lines, you want to keep down the distance between two points and that means – where you can — a straight line. There is something called line loss. There is less juice at the end of the line than at the start, depending on the distance and other factors.

        3) Solar production is dropping in cost. It does make more sense for individual homeowners and business owners to look at solar, but I’m not sure it is to the point where substantial savings are possible. And you always need backup. Dominion and the other utilities are perfectly justified in claiming that providing that backup costs them money and they should be paid for it, even if it is often a standby situation. How much it costs of course is open to debate. Solar just makes more sense to me in the places where you can build a huge array.

        • Steve – thanks

          on the Solar – we have just massive space for large solar arrays. It’s called highway right of way and other lands where it is possible -as well as
          people”s roofs and their siding.. carport roofs, etc..

          the point about Dominion providing “backup”.

          If Dominion can claim that independent producers cannot be paid more than what Dominion pays for lowest-price coal or inter-grid – then how can they turn around and charge more for “backup” going the other way?

          At some point – the price of a backup standby home generator is going to amortize competitively with Dominion rates.. such units right now cost about 5K which sounds like a lot until you spread that to a monthly cost over 10 years.. $50 a month..

          at some point the solar/backup generator cost is going to directly challenge Dominions stranded costs for nukes and older coal plants …

          and what is their strategy for that future?

          if their strategy is to continue to get SCC approval to raise rates to recover their costs – that is going to accelerate the advantages of solar/backup gen – it will drive more people towards that option.

          Perhaps Dominion has something up their sleeve but this part don’t look good for them unless they go to the general assembly and successfully put a tax on solar .. or something.

  3. Virginia is one of only six states that allow unlimited campaign contributions from corporations to candidates. Until that changes Dominion will do whatever the heck it wants.

    Remember: Virginia is for lovers (of corruption)

    • What Dominion has on their side is de-facto agreement from most citizens that the goal if the lowest-priced power regardless of pollution impacts.

      we have no value or monetary system for seeking the lowest polluting power …

      we used to have this attitude about toxics in rivers but we got over that to a certain extent but the bottom line is that the air and water is polluted – because we don’t want to pay – to have less pollution.

      Fairfax sues EPA over Accotink and Dominion – with the Va SCC sues the EPA over coal plants.. and the Chamber of Commerce and Farm Bureau supported by Va legislators – sue the EPA over the Chesapeake Bay cleanup.

      It’s all about the money…for sure

      • It’s all about money. That’s the bottom line. But with wage stagnation, that is not unreasonable. The good news of a lower unemployment rate was accompanied by the bad news that average wages are down. Fairfax County’s average personal income was down by more than 2% from 2012 to 2013. I don’t imagine the rest of the state shows much different results. Does the average Virginian want to pay a higher electric bill each month?

        A “pollution” or “carbon” tax would simply eat further into personal disposable incomes. And Wall Street speculators would find a way to arbitrage it.

        As far as lawsuits are concerned, everyone has a right to a day in court. Bad lawsuits should be quickly tossed by the judge, but meritorious ones can have a positive effect on the public interest.

        • you know – what happens when gasoline gets expensive and tolls implemented?

          people buy more fuel efficient cars and drive smarter – bundling errands and not taking unnecessary trips that cost money.

          why won’t the same thing happen with energy?

          as far as wage stagnation…:

          1. – we dang near had a depression

          2. – Congress did precious little to help including build provide jobs building infrastructure – that they are NOW talking about doing.

          3. – during the recession – companies were forced to cut costs and did so by adopting automation and getting rid of people. Now they don’t need them back.

          lawsuits – the EPA gets sued by both sides. They get sued for not implementing court-ordered regulations to comply with the clean air and water acts – and they get sued for implementing them.

          In the end – the EPA usually wins but not before a whole hell of a lot money has been wasted in an attempt to thwart them.

          If Congress truly thinks the EPA is out of control – they should change the Clean Air and Clean Water acts to pull back.

          the funny thing is that the same people that sue to stop regulations – raise holy hell when their own ox gets gored by someone else polluting..

          farmer who raise oysters and make their living on the water are harmed by those upstream who don’t want to reduce pollution.

          Chicken farmers use antibiotics and hormones to increase profits and supply low-priced food to consumers and in the process put antibiotics and hormones into the rivers which in turn – ultimately threatens humans through the food chain.

          Basically if we dumped into our own backyards what we say is “cheaper” to put into the environment – the shoe would quickly be on the other foot.

          If you had to burn coal in your own yard to produce electricity – you’d gag and be directly threatened by carbon dioxide and mercury – so you essentially have it dumped elsewhere -where it harms others…

          some think pollution is basically about putting it on others instead of yourself and letting them pay the costs instead of you and then you blame others.

  4. It’s true that the collapse of nat gas prices a few years ago makes it harder for wind and solar projects to compete quite as well. I believe the mandatory renewables standards (VA went voluntary approach) were adopted well before the current cheaper U.S. energy scenario was upon us. It’s going to be interesting to see if MD (for example) can continue to pursue self-adopted mandatory renewables targets in the new energy reality (and new governor).

  5. LarryG, you ask, “why won’t the same thing happen with energy?” It will. The price of wind power relative to the price of the cheapest power is what drives people to purchase it. Or not. Unless you REQUIRE the consumer to buy wind power (or require the utility to buy a certain percentage from wind generators, or subsidize the price of wind power enough to make the net price competitive with the alternatives, both of which amount to the same thing as a requirement, in economic terms).

    Let me say this as bluntly as possible: neither wind nor solar is competitive with natural gas in today’s energy market. For two reasons: (1) the cost per kwh of wind and solar “energy” generation over the lifetime of the equipment involved is higher, and (2) neither wind nor solar counts as “capacity” because the energy isn’t available 24/7: that is, in addition to whatever energy may be available from wind/solar from time to time, the purchaser also has to pay somebody for the right to fall back on the grid for backup power.

    The question is not whether you will pay more for wind or solar, but how much more.

    There are lots of people who think we should pay that extra amount, for lots of reasons. They vote, too. That’s where government mandates comes in. But in terms of cost alone, reflecting the cost of the fuel consumed ($0 for the sun and wind) and the cost of the equipment and other property used, all spread over each generator’s useful life and all the energy it produces, natural gas generation wins hands-down.

    It’s true that solar and wind equipment is getting more efficient. We may see the energy cost per kwh, (1) above, dip below fossil-fueled generation costs in our lifetime so that a kwh from solar or wind will sell in the competitive market without any subsidy or mandate. But that still won’t address the cost of grid backup, (2) above. You’re kidding yourself to look only at (1) and ignore (2).

    • pretty much agree with Acbars analysis.. but had a couple of issues

      1. – is natural gas-generated grid power – cheaper than coal and if it is then
      why are we using coal as the benchmark for costs?

      2. – wind/solar are not 24/7 – but wind/solar combined with a nat gas turbine allows the nat gas to dynamically compensate for fluctuations. true? or not?

      if someone can use a nat gas standby generator to fill in for wind/solar why not Dominion with grid power?

      bonus question – whose job is it to upgrade the grid to be able to dynamically load balance between disparate and varying generation sources?

      I much enjoy these discussions.. as each one – I learn a bit more..

      • You seem to be paying attention, so I’ll take another crack at it:
        1) I don’t know what you mean by the “benchmark” but I suspect natural gas is getting to be the benchmark. Nobody is building new coal plants. The goal of the EPA CO2 proposal is to retire a bunch more coal plants, including many with plenty of usable life left.
        2) Yes, you can develop a supply grid for a utility that contains wind and solar and then base load natural gas generation (or nuclear) that can be ramped up if the wind or solar are not producing. But it gets expensive. You don’t want to build a power plant and then let it sit idle. Paying for a natural gas plant or nuclear plant to sit idle costs about the same as paying to run it. As a ratepayer who wants low cost I want base load plants that run to their peak capacity.
        Bonus — I’m sure it starts with plans developed by the utilities. Dominion and APCO have to file detailed plans with the SCC every couple of years to project their expected demand and their proposals to meet those needs, including new plants. Dominion’s most recent plan had an option that included more renewable sources — and higher cost. The ultimate authority rests with the SCC and the Federal Energy Regulatory Commission. They are the ones charged by law to regulate the utilities on questions of reliability and cost. Neither is under any mandate to meet certain renewable energy goals. I know the SCC is not.

        • steve:

          “As a ratepayer who wants low cost I want base load plants that run to their peak capacity.”

          even if it’s in excess to grid demand?

          also – the difference between the minimum grid demand and the maximum grid demand – doesn’t that imply there will be idled plant also?

          would you run more base power than the grid needs just so you don’t have to have dispatch nat gas plants sitting idle at times?

          I always thought one of the big advantages of Nat Gas Turbines is that they could ramp up and down much quicker than coal and nuke base plants.

          you make it sound like that’s not the case and that perhaps even nat gas should be running full-up – 24/7.

          clue me in if I am misinformed.. and I might well be..

  6. A proposal for 25 wind turbines on the lower eastern shore of Maryland is on hold, because the Navy fears they would interfere and confuse their Stealth Radar system, across the Bay at NAS Patuxent River, MD. The state legislature imposed a moratorium on the turbines pending further study, which (outgoing) Governor O’Malley then over-rode, however now the turbines are on hold again.

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