CWEB.107/November.30.2004
A Reader Writes: Efficiency, Not ConservationEditor's Note: Don Thompson, from Public Works Engineering at Naval Base Kitsap, Bangor Annex, in Washington state, sent us a recent e-mail: "You need to quit using the word 'conservation;' it implies sacrifice, which is the quickest way to turn people and business off to the goals of energy programs. Instead always use the word 'efficiency,' since it implies more bang for the buck, and is more likely to get people and business excited and onboard with energy programs. People are always in favor of investing in items and programs that will save them money with still having the resources to do their jobs and maintain their standard of living." |
The Northwest's focus on efficiency as a resource was praised by three demand-side doyens at separate energy gatherings in Portland in early November.
A Nov. 4 evening event featured Arthur Rosenfeld, Amory Lovins and Ralph Cavanagh--introduced as the "Founding Fathers of Energy Efficiency." They were among the first to herald energy efficiency as an alternative to new power plant construction in the late 1970s, and all are still highly engaged in the effort to generate negawatts.
They specifically lauded the Northwest Power and Conservation Council's recently released draft Fifth Power Plan, which recommends regional development of 700 average megawatts of cost-effective energy conservation and 500 aMW of demand response from 2005 through 2009.
"To those people who believe that energy efficiency makes people feel good but that real men build power plants, I would say real men build unnecessary power plants," said Rosenfeld, a commissioner at the California Energy Commission who helped pioneer national appliance efficiency standards.
Rosenfeld noted the Northwest still has higher per-capita energy consumption than the national average, while California's use is well below. "But the region is leveling off nicely," he said, while the national average continues to climb.
Lovins outlined technological progress for efficiency and previewed "the next big frontier" of whole systems engineering, while Cavanagh had kind words for the Council plan, and separately discussed an effort to alleviate utility financial disincentives for energy-saving programs.
Praising The Plan
In addition to near-term energy-saving goals in its draft plan, the Council--mandated by the Pacific Northwest Electric Power Planning and Conservation Act of 1980 to prioritize conservation and renewable resources in recommending a direction for the region--also leans heavily on energy efficiency through 2025. It has identified 2,800 aMW of realistically achievable energy savings over the next 20 years at an average cost of 2.4 cents per kilowatt-hour, and most of it under 2 cents/KWh. That's roughly half of the Northwest's projected electric load growth over the period.
Cavanagh, senior attorney and energy program director with the Natural Resources Defense Council, lauded the plan, saying it "shows the way toward viewing energy conservation as a resource." He also praised it for "continuing to treat the old coal versus nuclear debate as irrelevant."
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| From the left, Chris Calwell, Arthur Rosenfeld, Amory Lovins and Ralph Cavanagh. (Courtesy of Ecos Consulting) |
Chris Calwell, co-founder and research director of Ecos Consulting, and host of the Founding Fathers event at Portland State University, called the Council plan "a model we all need to follow. The Northwest has shown it can be done a different way."
At the CEC, Rosenfeld recently helped set energy efficiency targets for California utilities that are higher than goals in the Council's plan. Co-founder of the American Council for an Energy-Efficient Economy and the Center for Building Science at Lawrence Berkeley National Laboratory, he helped develop technologies to make homes and offices more efficient, such as low-emissivity (low-e) windows and electronic ballasts.
Technology Advances, Whole Systems Engineering
Lovins, whose ideas helped form the basis for utility least-cost planning, said such technologies keep getting "bigger, cheaper and faster." For example, Rosenfeld's ballasts have dropped from more than $80 in 1990 to less than $10 in 2003, and low-e window coatings have shed 75 percent of their cost in the last five years. "[Energy-saving] technologies are improving faster than [technologies] on the supply side," he said.
Nevertheless, according to Lovins, "We're still fighting metaphors like 'diminishing returns' when we actually know how to design for expanding returns. Or 'low-hanging fruit' … Come on guys, it's mushing up around the ankles and it's putting out new fruit all the time. It is a very fruitful tree."
He sees the "next big frontier for efficiency" in whole systems engineering, even more than a decade after it first came into view. "Tunneling through the cost barrier" to achieve many benefits from single expenditures is "still barely being exploited." But he cited "astonishing results" with recent advances in heavy industries. Lovins, co-founder of the Rocky Mountain Institute, said there are so many examples he has "hatched a plot" called 10XE (factor 10 engineering) that will present case studies of revolutionary designs across various sectors. The casebook, he said, is meant to "leverage the non-violent overthrow of bad engineering."
Issues for Idaho, BPA
Speaking at a Northwest Energy Coalition board meeting Nov. 5 in Portland, Cavanagh pointed to recent "remarkable developments" in Idaho that show how the region can address the "perfectly perverse" disincentives to utility-sponsored energy efficiency.
Together with Bill Eddie, senior attorney with Advocates for the West, and NWEC policy director Nancy Hirsh, Cavanagh persuaded the Idaho Public Utilities Commission--as part of Idaho Power's recent rate case--to open up proceedings to investigate conservation disincentives. Now ongoing in the form of workshops with utility and industry representatives, the groups are focused on "decoupling" the financial health of utilities from kilowatt-hour sales. Most utilities in the United States recover their fixed costs through power sales, limiting the incentive to save energy.
"We want to give companies the assurance that fixed costs will be recovered regardless of how many kilowatt-hours are sold," Eddie told Con.WEB. "This would certainly make it easier to do what the [Northwest Power and Conservation Council] wants to do."
Cavanagh and his team calculated that five years of aggressive energy savings at Idaho Power would cost shareholders about $45 million under the current structure. "That really cuts into management's Christmas bonuses," he said. His solution? "Small, annual adjustments in rates, simple true-ups" with which regulators already have experience. Several utilities in the region, including PacifiCorp, are exploring true-up mechanisms. Cavanagh said it could apply to all.
He also called for the coalition to engage Bonneville Power Administration in a conversation about a stronger role in developing renewables in the region. "[The debate] is by no means over, although some people may think it is," he said in reference to the coming end of BPA's Regional Dialogue process, in which Bonneville intends to limit its future power supply role to the size of the existing federal Columbia River system.
Tom Karier, one of two Washington state representatives on the Council, said BPA's new role must be tied to continuing strong commitment to renewable energy and conservation. "It's part of the Power Act," he said at the NWEC meeting. "Even though we are recommending the change in BPA's new load requirements for public utilities, we are not changing their goals for renewable energy and energy efficiency."
BPA administrator Steve Wright reaffirmed the federal agency intends to acquire its share of cost-effective conservation equal to the proportion of regional load it serves; that would be approximately 280 aMW over the coming five years, based on the Council's draft regional target.
BPA currently purchases output from 198 MW of wind capacity, but through the Regional Dialogue has announced it intends to move away from renewables acquisitions. However, Bonneville envisions facilitating renewables--for example, by integrating wind into the hydro system--and Wright said he is working on a transmission solution with regional stakeholders and advocates on accessing stranded resources.
"We're hoping to have something in the next six months," he said.--Garrett Hering
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A new Washington gubernatorial mandate sets green building standards for some state facilities and requires an additional 10-percent cut in energy use by certain state agencies.
These are part of an Oct. 20 executive order from Gov. Gary Locke, who framed the dictates as broadly valuable. "State government must continue to ensure that our investments in government facilities and operations provide long-term social, economic and environmental benefit," Locke said in a news release. "These actions will help both the environment and taxpayers."
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| Washington Gov. Gary Locke (Courtesy of Gov. Locke's Web site) |
Specifically, Locke called for new construction and major remodels, larger than 25,000 square feet, to achieve the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) silver benchmark. He ordered a 10-percent reduction in facility energy use by 2009, from a 2003 baseline, which could save an estimated 5 average megawatts. Also included are a 20-percent cut in state government petroleum use in vehicles, a 30-percent reduction in office paper consumption and 100-percent recycling of used office paper, all by 2009.
This order, however, comes with some caveats and limitations.
Locke is Washington's outgoing governor, and his still-unknown successor could rescind the executive order, although state officials interviewed by Con.WEB are confident it will stand into either the Dino Rossi or Christine Gregoire administration as positive practice with broad support.
Meanwhile, the order covers only executive cabinet agencies, which excludes schools and universities and some other state agencies. They are invited but not required to follow the provisions.
And, the order contains no direct allocated funding, nor any penalties associated with falling short.
State officials said agencies can tap some financial resources, such as utility incentives, but they acknowledged initial cost challenges for the green building and energy requirements, despite the longer-range payoffs. One official said the energy-saving mandate will likely be achieved mainly through operational and behavioral measures, not capital projects.
Sustainability, Efficiency Order
Locke's order, titled "Establishing Sustainability and Efficiency Goals for State Operations," follows from his 2002 mandate requiring state agencies to craft sustainability plans.
As the plans came in, and after scrutiny by state officials and an outside sustainability advisory group, "What we discovered was that we could get a lot more value if we focused our energy and set up some more specific goals and targets on areas we thought there was the greatest value," said Locke policy advisor Lynn Helbrecht.
Thus the newest mandate spotlights green building ("obvious payback and really ripe," said Helbrecht), petroleum use (addressing greenhouse gas emissions), paper ("ubiquitous use, unrecognized cost") and energy efficiency ("for obvious reasons").
Renewable energy/green power provisions were considered, but higher costs essentially kept those out, said Tony Usibelli, energy policy division director for Washington Department of Community, Trade and Economic Development.
As for Locke's lame-duck status, Helbrecht noted a successor would have to actively eliminate the order; otherwise it stays in effect. She acknowledged "a little bit of uncertainty how closely a new governor will choose to embrace this," including enforcement.
"I would hope that whoever becomes governor would say this is ... the right thing to do," said Usibelli. "It's a good government practice," he added, saving operational money as the state faces a projected $1 billion shortfall in the next two-year budget, and setting a leadership example.
Green Building Order
The LEED silver mandate in Locke's order applies to all new construction projects and major remodelings larger than 25,000 square feet, for facilities starting pre-design in 2005 and beyond. For those between 5,000 square feet and 25,000 square feet, the Department of General Administration will review such projects for consistency with the LEED silver standard, "wherever appropriate," but LEED certification won't be required.
This green building benchmark, recommended by the Sustainable Washington Advisory Panel, is followed by only a handful of state governments, according to Helbrecht.
Some Washington state agencies, such as the Department of Corrections, are already building to LEED, said Stuart Simpson, energy engineer for GA's Division of Engineering and Architectural Services. So are some community colleges, although they aren't covered in the order.
"Some agencies may look at it as an unfunded mandate," said Simpson. However, he added, "We have shown that you can achieve LEED silver without a lot of extra expense and save in other aspects of the project," such as energy and water savings that reduce building operating costs.
The added initial expense for building to LEED silver ranges roughly from 0 percent to 2 percent, according to Simpson. "It tends to be a little bit more money spent during the design phase ... and there's a little bit more spent in organizing and documenting certain things," such as construction material recycling.
This potential premium will challenge state agency officials, according to Helbrecht.
However, agencies can get utility dollars for energy efficiency and in some cases for green building, Simpson said. Under discussion to ease the funding crunch are potential borrowing between capital and operating budgets, state treasury loans repaid through energy or other operational savings, and legislatively approved incentives.
"It's a matter of getting creative, and the decision-makers going along with those ideas," said Simpson.
He also noted paybacks can be relatively quick with such LEED silver measures as energy and water efficiencies, which can be 30 percent or so greater than in conventional buildings. And in some instances, first costs can be lower. As an example Simpson cited a new veterans' nursing facility with natural cooling, for which some elements added expenses (more building mass, operable windows) but others lessened costs, notably elimination of a chiller system. The absence of a chiller also created ongoing energy savings and reduced maintenance needs.
The state order also is likely to boost the larger market for green building, particularly outside the Puget Sound region, Simpson said. "Even though it may not impact a huge amount of projects, just that [order] happening has created some stir and interest, and people are paying attention."
The ultimate goal is to normalize green building, Helbrecht said. "The idea is just to make this the way we build buildlings, so that's just how it's done."
10-Percent Energy Savings
The energy efficiency component of Locke's order builds on a 2001 governor's directive that also specified a 10-percent cut in agency energy use.
State government has met this initial target, according to a memo prepared by Clint Lougheed, energy program manager for GA's Division of Engineering and Architectural Services. Twenty-six state agencies reported total first-year electricity savings of 11 percent, quantified as 50 million kilowatt-hours (about 5.7 aMW) and $3 million in lower energy bills.
His memo listed such contributing measures as turning off lights and computers, modifying HVAC and hot water settings, installing occupancy sensors, insulation and weather stripping, and scheduling custodial work for daylight hours to save night lighting energy.
Lougheed believes this trend toward operational/behavioral energy savings will continue, given the fiscal constraints in state government. The added 10-percent goal is "very doable ... I think it can be done without a lot of financial pain," he said. "I don't expect it's going to happen through major investments in equipment." It will likely entail energy-saving efforts by facilities departments, such as programming energy management systems, and by occupants, such as shutting down unneeded energy-using devices.
There was talk of "a much more aggressive [energy-saving] option" for Locke's order, with tens of millions of accompanying dollars, Lougheed said. But that likely wouldn't have earned gubernatorial or legislative approval.
"All of us are being encouraged" to pursue energy efficiencies, he said. But, "You're very limited in what you can do without funding, and there is no funding," outside of utility incentives and GA-managed projects in which agencies borrow money and repay it through energy savings. "In that kind of scenario, you're only doing those projects that have a fairly short payback."
He projected the new 10-percent reduction would generate 45 million KWh of annual savings among the 27 state agencies reporting energy use figures to GA and affected by Locke's order.--Mark Ohrenschall
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An optimized electricity system making the best use of its constituent parts appears to be an emerging common goal for the Northwest.
This idealized structure would harmonize such elements as large-scale generation, transmission, demand response, energy efficiency, distributed generation and "smart energy" applications.
Paths toward that end were explored at the "Energizing the Northwest" conference in Portland at the end of September, hosted by Bonneville Power Administration and sponsored by numerous public- and private-sector entities.
Among the main avenues traveled at this gathering were energy efficiency programs and policies, non-wires alternatives to new transmission lines, smart energy and transmission and resource adequacy issues.
While prospects and challenges were posed and a general direction toward optimization agreed upon, the conference revealed no grand solutions or epiphanies.
Conference summarizers Stan Price, executive director of the Northwest Energy Efficiency Council, and Bud Krogh, an attorney presiding over a regional transmission integration effort known as Grid West, both saw opportunities but also considerable nitty-gritty work ahead to reach the best functioning electric system.
Energy Efficiency
BPA administrator Steve Wright, speaking early on the conference's first day, expressed a commitment to resource and transmission adequacy. He wants such efforts to be holistic.
Wright also plugged energy efficiency, noting BPA's total conservation investments of more than $1.75 million and cumulative reported savings of more than 800 average megawatts over the past quarter-century. Looking ahead, Wright said BPA would "continue to treat energy efficiency as a resource and ... will work to ensure the development of all cost-effective energy efficiency in the loads we serve." (See Con.WEB, Oct. 29, 2004, for a story on BPA's post-2006 conservation plans.) He urged regional consideration of how efficiency can serve as an "integral part of the equation as we consider transmission construction alternatives." (See section below on non-wires alternatives.)
Other speakers discussed energy efficiency from policy and program perspectives.
In Oregon, annual energy bills total more than $6 billion statewide, according to Oregon Department of Energy director Mike Grainey. But that figure would be $500 million higher if not for energy-saving initiatives.
He noted the "challenging" conservation goals in the Northwest Power and Conservation Council's draft regional plan--700 average megawatts from 2005 through 2009--and said they would require utility, governmental and Bonneville Power Administration roles, from financial incentives to energy code revisions. He urged BPA to "aggressively pursue" the Council's conservation target, maintain the Conservation and Renewables Discount Program and set transmission policies favorable to renewable resources. "BPA energy policy should be the most important force in the region," particularly for developing new renewables and gaining cost-effective energy savings, he said.
Matching the region's historical energy-saving record over the next 20 years will be difficult, Grainey predicted, since much of the "low-hanging fruit" has been plucked in weatherized homes and simple technologies replaced. But technology advances promise new avenues, he added.
Tony Usibelli, energy policy division director for the Washington Department of Community, Trade and Economic Development, outlined "some really significant opportunities" for energy efficiency in the Evergreen State. He cited the Council's plan, the West Coast Global Warming Initiative from state governors, an updated state energy strategy and utility integrated resource planning that often finds conservation/efficiency as "the most desirable source of electricity."
He also views a "major opportunity" for energy efficiency in utilities connecting with customers to lower electric bills. Efficiency also produces economic development, Usibelli said, saving money for customers and generating jobs.
Although he lamented that Washington state government owns fewer policy tools to support energy efficiency than neighboring Oregon--lacking, for example, income tax credits and public-purposes funding--the Evergreen State can play a role. Specifics include energy codes, a new executive order by outgoing Gov. Gary Locke mandating further energy efficiency in state facilities (see related story) and requirements for schools to consider energy efficiency in new facilities. Washington also could set its own efficiency standards for certain energy-using equipment, mainly in the commercial sector, he said.
"We clearly have a policy imperative ... a clear direction toward energy efficiency as really the resource of the future," concluded Usibelli. Past Northwest conservation achievements should be a source of pride, and with "a bit more commitment and effort we can see some pretty major benefits well into the next 20 years."
Energy efficiency services business director Tim Stout of National Grid USA also shared a long-range view, on the historic advances in energy efficiency. "There really is a revolution under way," he said. "Huge progress has been made ... moving to the large-scale evolution of efficiency." And technological progress brings a continuous cycle of new efficiency opportunities.
Corporations increasingly focus on sustainability, including green building and energy efficiency, offering "tremendous opportunity," he said. Climate change responses and rising energy prices also augur positively for efficiency, he indicated. He shared some examples of success: in specific technologies such as the emergence of light-emitting diode lighting; green buildings such as the planned Bank of America Tower in New York City, which is pursuing Leadership in Energy and Environmental Design (LEED) platinum, the highest possible ranking; the march of progress that often starts with utility ventures and culminates in efficiency standards and codes--"I think that cycle will continue to yield significant benefits;" and national programs such as Energy Star. "Who would have thought 10 years ago we would have an [Environmental Protection Agency]-run program that's been adopted across the country to that extent?" he asked.
From Energy Star's sponsoring agency, Tom Kerr, EPA energy supply and industry branch chief, outlined some of the program's directions as a nationwide platform for energy efficiency.
Energy Star has nearly saturated the specifications market for plug-load products, with 77, although these standards are revised as efficiencies improve, Kerr said. An initiative that benchmarks commercial building energy consumption and offers the Energy Star label to top-quartile performers has shown "significant penetrations in the last five years," though EPA wants more. And, in the policy arena, he said EPA is engaging more with utilities, regulators and other stakeholders that also want to promote efficiency and reduce the environmental impacts of energy.
A couple of programmatic perspectives came from foreign countries, one near, one far.
In British Columbia, BC Hydro is aiming to meet 35 percent of its anticipated load growth through 2014 from conservation, reported Power Smart quality assurance and evaluation group manager Derek Henriques. The provincial utility has already recorded 400 aMW of conservation savings, helping to reduce customer energy bills by more than $1.25 billion.
Henriques described the importance of partnerships and of a range of conservation strategies: utility acquisitions, market transformation, codes and standards, rate structures and government policies.
Henriques listed the biggest barriers to cost-effective energy efficiency as five a's: availability, awareness, accessibility, affordability and acceptability.
In India, efficiency programs can demonstrably benefit the transmission and distribution system, which generally lose between 10 percent and 35 percent of power between generating stations and customers, according to Dilip Limaye, a senior advisor to the International Institute for Energy Conservation who is working on Indian DSM/efficiency programs.
He shared some examples. Bangalore Electricity Supply Co. runs a 900 MW peak deficit in mornings and evenings. By promoting compact fluorescent and T-8 lamp installations in homes and small businesses--basically free to customers, essentially funded by the utility--BESCOM expects to cut peak evening loads by 100 MW. Another 200 MW could be cut from morning peaks through hybrid solar/gas-fired water heating systems. And 10 MW of peak demand reduction could be gained through demand-side management in municipal water pumping, via proper sizing, efficient motors and control systems.
Non-Wires Transmission Alternatives
The notion of an optimized electric system is being tangibly explored in BPA's Non-Wires Solutions program, which is examining alternatives to new transmission lines. These can include demand response, distributed generation, conservation, strategically located supply-side power and pricing strategies, which "individually or in combination delay or eliminate the need for upgrades to the transmission system," reads a September BPA report.
BPA's goal--where "the rubber meets the road," in the words of acting transmission planning vice president Brian Silverstein--is a leveled planning field for new wires and non-wires options.
But first, considerably more information, analysis, demonstrations and discussion are needed.
Non-wires options could provide financial benefits by deferring transmission construction, generating economic development and relieving crowded electron highways, said consultant Tom Foley, co-author of a 2001 report titled "Expansion of BPA Transmission Planning Capabilities: A Report on Non-Transmission Alternatives."
Foley also noted a "long list of institutional barriers" to such alternatives. The recent BPA report identified the top obstacles as utility lost revenues; a tendency to forecast high transmission loads, hastening new construction; opaque transmission planning processes; inaccurate price signals for transmission; uncertain reliability of non-wires alternatives; and the unresolved question of who pays and who benefits.
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BPA has initiated four non-wires pilot projects. One is an Olympic Peninsula program in March in which Bonneville simulated severe weather, offered hourly payments for demand reductions by four participating customers, and bought an average of 22 MW of reduced loads during selected hours, primarily achieved through customers using their own generating resources (see Con.WEB, May 28, 2004). Although final verifications and a further pilot are planned, "I would say, arguably, we have one to two years [transmission] deferral potentially available in the can in a place where we actually have transmission constraints," Silverstein said.
For utilities and their customers, service reliability and low costs are paramount considerations, according to two other panelists at a non-wires conference session.
Puget Sound Energy also serves parts of the Olympic Peninsula, and is looking at non-wires opportunities, said PSE senior vice president for operations Sue McLain. However, she said any such alternatives need widespread participation and a clear resolution of payments and benefits. Equivalent reliability to new lines is essential. She hopes pilot ventures will provide more definitive information on the different non-wires prospects.
A similar emphasis came from Ken Canon, executive director of Industrial Customers of Northwest Utilities. "Price and reliability ... both are critically important" to ICNU members. Although he sees promise in such non-wires alternatives as distributed generation, energy efficiency and direct load controls, Canon told conferees that sustained power outages of days or weeks can cost industrial companies millions of dollars in lost production as well as equipment damage. Alternatives will be most needed when the transmission system is already heavily loaded, such as cold, dark winter mornings. "We can't take a risk that hopefully all these [alternatives] will work," he said. "I'm looking to make sure we look at robust measures with little margin for error."
Smart Energy
The conference also delved into so-called smart energy, with a panel titled "Energy Efficiency New Technologies and Trends." These covered software to help customers manage their energy use, a direct-load control pilot program and advanced information technology applied to the power grid.
Harvey Michaels of Nexus Energy Software said energy bills generally lack actionable information. "It doesn't give customers any handle to manage the costs ... We don't really relate the bills to things customers actually want, use and buy--comfort, lights and hot water." Among its services, Nexus can break down specific costs for such energy services, while offering comparison benchmarks and analyses of energy-saving opportunities.
This type of customer communications can also be expanded to budget billing, utility program advertising and many other services, Michaels said. "We see this as a channel that is extremely valuable in the future," he said. "The marriage of technology with policy creates a wide palette for how we approach the problems we're all trying to solve."
In Ashland, OR, the municipal utility is joining with BPA on an Internet-based direct-load control pilot program, in which BPA will remotely monitor and shift discretionary power use (such as air conditioning) among participating customers to reduce peak demands. A part of Non-Wires Solutions, this venture has attracted more than 130 volunteers, recruited via local news coverage, advertising, electric bill inserts and, most effectively, direct mail, said Ashland electric and telecommunications director Dick Wanderscheid. This two-year program should generate valued information about direct-load control's effects on consumers, the utility and the region, he said.
The GridWise Alliance initiative is working to integrate information technologies into the power grid, said Rob Pratt of Pacific Northwest National Laboratory. This process "will absolutely, profoundly change the way we produce and deliver and consume electricity, and the operation of the power grid, over the next 20 years or so," he said, potentially saving tens of billions of dollars on grid infrastructure costs.
Among Pratt's specific mentions were home appliances that can be turned off in response to power system needs. He called this "a glimpse of the future."
Panel moderator Jeff Morris, director of the Northwest Energy Technology Collaborative, said smart energy could potentially become a multibillion dollar market, but it faces roadblocks in the form of government and utility policies, and access to capital. As an example of the former, he cited differing interconnection standards among Washington utilities, and some local government permitting officials' resistance to fuel cells--"They think it's the Hindenburg," he said.
Resource and Transmission Adequacy
A number of panelists directly and indirectly weren't ready to define resource or transmission adequacy. There appeared to be too many variables. A standard question was, "Are we building enough transmission?" Another was, "What is transmission adequacy?" But the definitions of enough and adequate were unclear.
Rich Cowart of the Regulatory Assistance Project in Vermont said transmission is not a value-neutral investment. "An emphasis on transmission," he said, "lowers the value of energy efficiency and distributed generation." As such, using public funds to build transmission in the sense of its resource bias is questionable.
But utility resource adequacy (defined or not) needs to take wider account of resources. Ken Peterson of PowerEx says he doesn't know what resource adequacy is beyond making "sure you have resources that meet all needs all the time in a diverse interconnection." But he believes that in this diverse interconnection it makes no sense for systems not to take advantage of that situation. And he thinks, moreover, that Grid West over time could well "morph into" the Western Electricity Coordinating Council.
But not yet. Don Furman of PacifiCorp asked the audience how many thought Grid West as constituted would actually come into existence, and only four hands were raised. Asked how many thought some entity addressing problems of the sort Grid West wants to address would result, almost all hands went up. Furman also wanted to make sure that the bottom line of resource and transmission policy development was in the best interests of customers.
Summaries
It fell to Price and Krogh to make a formal conference summary.
Price said a basic question was whether regional energy interests for such as efficiency and transmission are in the same boat, or whether they sit in separate boats in the same body of water. Everyone wants an optimized electric system, but how? He shared the sense that full solutions cannot be accomplished at a conceptual level, but rather must be worked out in real world action.
Krogh also said he thought follow-up action must be taken, and echoed BPA's Wright that planning must be holistic, accommodating the range of resource solutions figuring in non-wires. And, he concluded, "The challenge for the Northwest is to sustain and maintain the interest and enthusiasm" evident in the conference. That, he said, will require strong leadership.--Mark Ohrenschall and Cyrus Noe (Joel Puglisi also contributed to this story)
Geothermal power now has its own federal production tax credit, thanks to recently passed legislation, but this financial boost will likely hasten geothermal development later rather than sooner.
This new tax credit won't directly benefit any Northwest geothermal prospects, because none are planned to start operating by the year-end 2005 PTC eligibility deadline.
However, geothermal industry players interviewed by Con.WEB believe the PTC creates a precedent they hope will lead to a further extension better suited to the lengthy time needed to develop new geothermal plants. It already has spurred some additional interest in generating power from hot underground fluids.
"We love it, of course, but I don't think anybody can build it in time" to take advantage of the new PTC, said Doug Glaspey, chief operating officer of US Geothermal, which is developing the proposed Raft River project in southeastern Idaho. "We're looking at mid-2006 [to start energy production], but we don't think it's going to be a problem to get an extension [of the PTC]. The biggest difficulty was just getting on the list."
This PTC has applied to wind power, albeit inconsistently, over the past dozen years, contributing mightily to wind's emergence as a viable utility-scale renewable energy resource, with nearly 7,000 MW of installed capacity expected nationwide by year's end.
Now, with President Bush's signature on the American Jobs Creation Act of 2004, the tax break of 1.8 cents per kilowatt-hour generated applies to geothermal and solar as well--at least for the next 13 months.
"Now that other renewables are included it ... levels the playing field," said John Lund, director of the Klamath Falls, OR-based Geo-Heat Center. "Geothermal can compete with fossil fuels and not only wind. I think it will be a real stimulus for the industry."
Renewables PTC Expanded
The legislation signed by Bush Oct. 22 "significantly expands the availability of the production tax credit ... for energy produced from renewable resources," said a tax alert bulletin from the law firm Stoel Rives.
Wind, closed-loop biomass and poultry waste resources previously were eligible for the PTC. Now it extends to geothermal and solar at the 1.8 cents/KWh rate, and open-loop biomass, small irrigation power and municipal solid waste projects (including landfill gas) for 0.9 cents/KWh produced. Projects using these newly qualified resources can take the credit for five years, according to Stoel Rives (the wind PTC lasts 10 years).
However, these projects must be running by Dec. 31, 2005. That's a very short deadline for new geothermal projects, according to executive director Ted Clutter of the California-based Geothermal Resources Council.
"For almost any kind of geothermal development it's not going to help us right now," he said.
Geothermal plants can take several years to come to fruition, according to sources. Resource confirmation requires time-consuming drilling and subsequent analysis. And once a go decision is made, plant construction can take a couple of years. "It's more like building a traditional power plant, a gas-fired power plant," with equipment, piping and other complex infrastructure, said Peter Mostow, who heads the Stoel Rives renewable energy practice group.
He thinks the new PTC might lead to production expansions at existing geothermal plants--but that won't affect the Northwest, which has no operating commercial-scale geothermal power projects.
At least two Idaho geothermal proposals are in progress.
US Geothermal has tested the flows at five production wells at Raft River--the site hosted a former federal geothermal demonstration project--and arranged for interim financing for engineering and final design work on the proposed 10-megawatt to 15-MW first phase. US Geothermal also has a potential though disputed power purchase arrangement with Idaho Power under provisions of the federal Public Utility Regulatory Policies Act (PURPA).
"We had an economic go without" the PTC, said Glaspey, adding it would be "nice to have."
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| Geothermal power plant in California's Imperial Valley. (Courtesy of U.S. Department of Energy) |
Another Idaho geothermal development is proposed by Idatherm, which envisions a 100-MW project in Bingham and Bonneville counties, southeast of Idaho Falls. The company has leased land and acquired drilling permits, but has not yet dug into the ground, said exploration manager Carl Austin.
"We're talking to various potential partners and investors, seeking capital to drill the first hole," he told Con.WEB. Past oil and gas exploration in the vicinity has shown the presence of sufficiently hot fluids for geothermal power, but, he said, "Until you drill the first well there's a risk."
Although he expressed disappointment at the slow progress in raising money, Austin said the power market looks increasingly better for geothermal, given rising electricity prices.
And with the PTC, "Any change in the marketability and the price of power obviously makes it easier to talk to potential investors and partners," he said.
Idatherm is examining several other potential geothermal sites in the Gem State. Austin, a longtime geothermal developer, said he is aware of 14 prospective Idaho locations with high-temperature resources, capable of collective capacity in the thousands of megawatts. "Idaho has tremendous potential geothermally," he said.
Oregon also hosts possible geothermal power production locales, notably including Newberry Crater near Bend and the Alvord Desert in southeastern Oregon. "There are other areas in Eastern Oregon that may have some potential," said Clutter, but he knows of no geothermal projects in the Beaver State under active development. "It's all pretty sketchy right now."
PTC Impacts in Time
Despite its apparent lack of immediate impact, the geothermal PTC could profit this renewable resource over time.
Mostow has noticed increasing interest in geothermal projects since the legislation passed, including from financiers. Most of the attention seems focused on California and Nevada, which are by far the nation's leading geothermal states, together producing more than 95 percent of the nearly 1,600 average megawatts generated geothermally in the country in 2000, according to federal figures.
The 1.8 cents/KWh tax credit effectively lowers geothermal energy costs to the range of 4 cents/KWh to 5 cents/KWh, said Lund of the Geo-Heat Center. That makes it "very, very competitive" with wind power and fossil-fueled resources, he said.
However, Mostow said geothermal costs vary depending on the resource and site characteristics. He noted that smaller geothermal ventures with guaranteed PURPA power sales contracts may not need the PTC, although for other developers the credit "could be make or break."
Nevertheless, "If tomorrow there was a 1.8-cent tax credit for geothermal that would last three years, you'd see a lot more projects get going. It's not significantly different from wind in that regard," as wind development cycles have been strongly influenced by the PTC's presence or absence.
Wind has clearly dominated the market for new renewables, through the likes of utility solicitations and state renewables portfolio standards, geothermal players acknowledged.
But they think the expanded PTC will eventually help even the competition, particularly if the tax credit stays in place beyond 2005.
"Here's the big issue," said Clutter. "We get our foot in the door. We've got the credit, and it's a lot easier to get it extended than it is to get instituted. The next step is to show our case, get the lead time within the credit extended, so geothermal can indeed take advantage of it. It's a very, very significant milestone for geothermal, to be on a ... level playing field with other renewables."--Mark Ohrenschall
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What does it take to persuade utility customers to sign up for green power in the Pacific Northwest?
Communicate a strong message about renewable energy's environmental benefits and point out that green power revenues support Northwest generation projects.
Work with other utilities and marketing experts to leverage resources and expand the scale of customer outreach.
Put ads on popular television programs, such as "The West Wing" political drama or Donald Trump's adventures in firing people.
Use bill stuffers, the most reliable way for a utility to get its customers' attention.
And a gourmet coffee giveaway helps, too.
Those were the conclusions of officials from three Western Washington utilities--Puget Sound Energy, Snohomish County PUD and Tacoma Power--that jointly marketed their green power products in a spring and early summer campaign.
Puget Sound Energy reported that its green power sign-ups increased by one-third, to nearly 13,000 customers. Snohomish had a 40-percent increase, from 1,500 to 2,100 customers. At Tacoma, the smallest of the three utilities, green power sign-ups nearly doubled, from 500 to 900, the utility found. Meanwhile, surveys showed awareness of green power also increased.
"The campaign exceeded our expectations," said Mike Richardson, manager of Puget Sound Energy's renewable energy customer program. The utilities cumulatively expected the marketing program to snag 3,000 new customers, he said. Between the three utilities, 4,300 new customers signed on the green power line--43 percent above the target, and 272 percent more than enrolled during the same period in 2003.
"It was a really good opportunity to collaborate with others. There is real value in that," Richardson said.
In addition to the three utilities, other partners in the $339,000 campaign included Belo Marketing Solutions, Bonneville Environmental Foundation and Batdorf & Bronson Coffee Roasters.
Green Power Awareness/Interest among Customers
Belo, part of the parent corporation that owns the KING 5 and KONG 6/16 television stations in Seattle, conceived the campaign based on market research, which "indicated that customer awareness of green power programs was pretty limited, but interest in green power was very high," said Belo marketing consultant Noreen King.
Benchmarking research carried out in October 2003 showed that only 15 percent of survey respondents said they knew what "green power" means.
More than half of the respondents were unsure whether their utility offered a green power option. More than 40 percent said they would sign up if their utility offered green power; nearly 15 percent said they wouldn't, and almost 40 percent were uncertain.
The survey research showed a variety of motives for using green power. Cleaner air was cited by 28 percent and general environmental benefits were mentioned by 16 percent.
Constant outreach is necessary to raise customer awareness of green power, according to the 2003 "Powerful Choices" survey of Northwest green power programs published by Renewable Northwest Project. "Research has shown that the average customer needs to have anywhere from 7-13 exposures to information before deciding to purchase a green power product," the report said, adding that "persistence and patience" are necessary for boosting customer participation.
Collaboration
"Leveraging with the other partners was key," said Bob Nicholas, Snohomish's product development manager. For customers, utilities are the most credible information source on energy issues, but utilities have limited resources for widespread marketing campaigns, Nicholas added. Snohomish residential customers can take part in the PUD's Planet Power program, which offers 150 kilowatt-hour blocks at $3 each. Revenues are used to purchase BEF green tags derived from the Stateline, Condon and Klondike wind farms.
For Tacoma Power, the smallest of the three utilities, the collaboration was especially valuable, said Mark Aalfs, Tacoma's senior conservation specialist. "It would be difficult for one small utility to do this on this scale," he said. Residential customers can join Tacoma's EverGreen Options program for $3, $6 or $10 per month, which buy 200, 400 or 667 KWh, respectively. Proceeds pay for Environmentally Preferred Power, from BEF through Bonneville Power Administration. The portfolio includes four wind projects, one solar installation and one small hydro project.
The 10-week campaign resulted in 22 million "media impressions," a marketing term for the number of opportunities for seeing the campaign information, said Puget spokesman Tim Bader. Puget customers can buy a minimum of 200 KWh of green power for $4 per month. Additional blocks of 100 KWh, priced at $2 each, may be purchased. Proceeds pay for green tags marketed by BEF from Northwest wind, solar and small hydro projects.
Green Power Marketing Campaign
The campaign kicked off April 15 and ran through June 30. It included 30-second commercials broadcast on KING (Channel 5) and KONG (Channels 6 and 16), Nicholas said.
In addition, opt-in e-mails were sent to more than 80,000 people registered on the KING 5 Web site, according to a presentation by BEF vice president Tom Starrs at the ninth annual Green Power Marketing Conference Oct. 4 in Albany, N.Y., where the campaign also earned a Green Power Market Development Award. Media coverage included a story on KING's "Evening Magazine" program. Press releases were sent to 2,600 outlets.
The three utilities also heavily marketed green power with bill stuffers. Puget sent out 2 million during the 10-week drive, Snohomish inserted 294,000 stuffers and Tacoma distributed 170,000.
All three utilities and KING highlighted the campaign on their Web sites. In addition, a campaign Web page--getgreenpower.com--included links to the utilities and to BEF. Starr's presentation estimated that 1,600 viewers clicked onto a campaign link on KING's Web site.
The commercial broadcasts included prime-time placement on the season finales of popular programs, such as "The West Wing" and "The Apprentice," Trump's reality-based show. "We wanted to get as much exposure as we could," Nicholas said.
Olympia-based Batdorf & Bronson contributed two bags of premium coffee and a coffee mug to each of the first 3,000 customers who signed up for green power. Batdorf buys green tags to cover 100 percent of its energy needs, according to BEF.
The getgreenpower.com web site prominently highlighted the coffee offer. "We think, anecdotally, that the lovely gift was a factor" in the surge of green power sign-ups, Aalfs said. "Without the coffee, I'd be surprised if we would have gotten half of what we got."
Messaging focused on the benefits that green power programs deliver: "local, renewable power, wind in Washington and Oregon," Aalfs said. "We tried to keep the message basic and straightforward," he added.
RNP's "Powerful Choices" report noted that green power marketing research "consistently shows that customers place a high value on investment in local renewable projects."
Environmental benefit was a primary component of the messaging, Richardson said. The marketing was designed to persuade participating customers that "they're making a difference," he explained.
"Making a difference" is an essential part of green power marketing, Jane Peters, a Portland-based customer research and energy program specialist, told the seventh annual Green Power Marketing conference in 2002.
The getgreenpower.com web site emphasized the environmental advantages of renewable energy. It listed "Top 5 Reasons to Use Green Power." Four of those reasons described health and environmental benefits, while the fifth mentioned supporting the Northwest's economy.
To measure the campaign's effectiveness, surveys were taken before and after, Richardson said. They showed awareness of green power rose from 15 percent to 22 percent of the surveyed population, he said.
"Anecdotally, people told me, 'I saw that commercial,'" Richardson said.
In addition, Richardson said the bill stuffers made a mark. "We saw a large increase in awareness once the inserts went out," he said.
The rate of program sign-ups nearly tripled during the campaign, according to Starr's presentation.
Survey respondents who remembered hearing about green power cited a variety of sources for their information, Nicholas said. The breakdown included 39 percent who heard about green power from television, 27 percent from bill stuffers, 14 percent from radio, 10 percent from newspapers, 4 percent from the Internet and 1 percent from a magazine.
Aalfs said Tacoma noted a sharp spike in green power sign-ups during the marketing campaign.
A key lesson that came out of the campaign, Nicholas said, is that marketing must take place on a large scale to be effective. "We need government and the private sector working together to bring renewable energy to a better position in this region," he said.
Officials at all three utilities are open to repeating the campaign in 2005.--Jim DiPeso
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A permitting decision is near on a proposed 180-megawatt-capacity Central Washington wind farm that has already generated many conflicting opinions.
The Desert Claim Wind Power Project a few miles north of Ellensburg could be the first wind farm approved in that part of the Northwest. It features good wind resources, convenient access to transmission lines and an interested utility buyer--Puget Sound Energy has short-listed Desert Claim in its pursuit of new resources to acquire.
But Desert Claim also faces stiff local resistance, though developer enXco chose to seek Kittitas County approval and not go through the Washington Energy Facility Site Evaluation Council, as Zilkha Renewable Energy has for its two large proposed Kittitas County wind farms.
In late October, the Kittitas County Planning Commission unanimously recommended disapproval of Desert Claim, finding it locally detrimental in scale, noise and property valuation, incompatible with nearby land uses and not essential for electricity needs. It also cited "overwhelming public testimony in opposition to the project."
Some public disapprovals also appeared at a Nov. 8 hearing before the Kittitas County Board of Commissioners, which will render a final decision on Desert Claim; another hearing to consider the project is scheduled Dec. 7.
Project opponents echoed many of the planning commission's conclusions and offered some other anti-Desert Claim arguments, such as bird and bat deaths. They generally described the location as inappropriate for a wind farm.
But supporters--though outnumbered about 2-to-1 by opponents--also shared thoughts. Their comments focused on Desert Claim as economically beneficial in tax revenues and jobs, a clean energy resource and a productive use of the county's persistent winds. A couple of people suggested a wind farm would be better than expanded housing development in the same vicinity.
Desert Claim
Desert Claim first came into public view in January 2003, when enXco applied for permitting approval from Kittitas County (see Con.WEB, Jan. 30, 2003) for the proposed 180-MW project on about 5,200 acres roughly 8 miles north of Ellensburg.
The proposed site lies on private land on the northern edge of the Kittitas Valley floor, and is predominantly given to agricultural and rural residential uses; Desert Claim would occupy portions of eight non-contiguous properties. It would include up to 120 turbines, each a maximum height of 340 feet; 31 miles of underground power lines; one or two substations; and 27 miles of gravel roads.
Kittitas County's draft environmental impact statement from December 2003 found Desert Claim would cause "significant unavoidable adverse impacts to the visual environment," particularly for nearby residents.
The final EIS, published in August, came to the same conclusion. It also cited "unavoidable" contrasts between the wind farm and other local land uses, although this could be reduced to some extent through setbacks; the EIS suggests a minimum 1,000 feet between turbines and residences. It also recommends turbine clustering and relocations, cosmetic details on turbines and other equipment, minimized lighting and other means to promote "visual integration."
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| Desert Claim's proposed location, with Ellensburg at bottom. (Courtesy of Kittitas County) |
Other prospective impacts identified in the EIS include deaths of birds and bats (but not beyond what other Northwest wind farms cause); temporary habitat loss for game animals; more than 400 acres temporarily or permanently affected (notably including shrub-steppe habitat); five cultural resource sites disturbed in construction (though this could be mitigated); "extremely remote" possibilities of tower collapse and blades detaching from turbines; "low or medium" but not significant noises; shadow flicker from rotating blades; and conflict with airplane traffic to and from nearby Bowers Field (resolvable by moving/removing turbines or changing flight patterns). However, none of these are deemed "unavoidable significant adverse impacts."
The EIS also noted potential economic benefits from Desert Claim: 150 construction jobs and 10 operations jobs; total labor income of $3.8 million during construction; an additional $92 million initially in assessed valuation in the county; and property tax revenues of up to $1.1 million in the first year, later dropping as equipment depreciates. "Anticipated local government revenues associated with the project are likely to be significantly higher than expected service costs," the EIS said.
Kittitas County Considers Desert Claim
Desert Claim needs four specific approvals from Kittitas County: a comprehensive plan amendment, a site rezoning as a wind farm resource district, a development permit and a development agreement.
EnXco selected the county route, instead of EFSEC, because it polled residents and learned most wanted local review and permitting of wind proposals, company project manager David Steeb told the county commissioners Nov. 8.
He also said this polling "overwhelmingly" found citizen support for wind farms, though he also acknowledged land-use issues are not decided strictly on popular opinion.
If they were, based on the Planning Commission's judgment and public testimony at the hearing, Desert Claim would clearly face a tough election.
The planning body concluded Desert Claim would be "detrimental and injurious to the public health, peace or safety or to the character of the surrounding neighborhood," given the huge turbine towers, "close proximity" to homes and increased noise. It also would be "unreasonably detrimental to the economic welfare of the county," with likely harm to property values and property rights of nearby landowners. EnXco failed to prove the wind power is needed--"balanced against the negative impact to ... Kittitas County"--and could not guarantee it would be delivered locally or regionally, planning commissioners concluded. They also cited incompatibility with current land uses and county regulations, and "overwhelming" public opposition in formal testimony.
Desert Claim Comments
Many of these points were echoed and amplified by citizen speakers Nov. 8.
A number of speaking opponents described objections to this particular site, not necessarily to wind energy. "The Wild Horse project being proposed [in eastern Kittitas County] seems it would be the logical first step to wind generation in the county. There appears to be little or no opposition to that area," given its sparse population, said Linda Schantz. "This [Desert Claim] is all about location. It's not about people not wanting farmers to be able to make more money on their land; that's understandable. But it is about location."
Desert Claim would "eliminate this entire part of the valley for residential and rural lifestyle living opportunities," said attorney James Carmody, representing Residents Opposed to Kittitas Turbines.
"This whole program is being sold to you on the basis of economic interest and economic fund generation as a county," Carmody said, but those benefits are transportable. "You can move it and put it some place that would not have the detriments and still achieve, monetarily, for the county what you want."
Other speakers listed worries about Desert Claim's potential harm to birds and bats, property values, noise, views and people's health.
"Such enormous impacts of such an industrial project of the size of Desert Claim cannot in any way in this valley be mitigated," said Gloria Baldi. She advocated energy conservation as a substitute for proposed Kittitas County wind power.
Some speakers criticized wind power as a federally subsidized resource, and enXco as a foreign corporation (it's an affiliate of EdF Energies Nouvelles of France). Dana Lind offered some humor in the form of 10 reasons to approve Desert Claim, with number one, "You can't see the towers from France."
Nevertheless, Desert Claim garnered some support at the hearing.
Spoken points in favor included the economic benefits of more tax revenues and new jobs, without an accompanying huge need for additional local public services. Mention was made of landowner rights to host turbines.
Generating renewable energy and harnessing a natural force also were touted; one speaker said this wind project would be an historic successor to the early homesteading pioneers, making productive use of a local resource.
And, there were suggestions wind farms are preferable to increasing homes north of Ellensburg, and would actually create fewer environmental impacts. "I find it far more offensive to have areas covered with residential development," said Helen Wise. "For farmers and ranchers, turbines make a much better view ... I ask that you consider the benefits to all the citizens of the county, now and in the future."
EnXco's Steeb said no one formally challenged the county's final EIS, and therefore, "You can rely on the analysis and conclusion in the EIS. And the EIS clearly states the project will not cause significant adverse environmental impacts."
He also plugged the potential economic gains, and disputed the Planning Commission's finding about a lack of need for the power, given recent wind power solicitations by utilities such as Puget Sound Energy and PacifiCorp, and resource planning that shows a regional market for renewables.
"I ask that you approve the Desert Claim project, because it came through your process and met all of your criteria," he concluded to the commissioners.--Mark Ohrenschall
The Idaho Public Utilities Commission has endorsed a 20-year agreement in which Idaho Power would buy power from what would be the state's first utility-scale wind farm.
Fossil Gulch Wind Park is a 10.5-megawatt-capacity venture proposed for a 416-acre farmland site near Hagerman, between Twin Falls and Boise. Construction was in progress as of late November; the IPUC order approving the power sale said the scheduled operational date is Jan. 1, 2005.
Under the agreement with the Montana-based firm Fossil Gulch Wind Park, Idaho Power would purchase energy generated by seven 1.5-MW-capacity wind turbines. The investor-owned utility would pay IPUC-established rates under provisions of the federal Public Utility Regulatory Policies Act (PURPA), which mandates that utilities buy energy from qualifying small-scale producers at utility avoided costs.
Fossil Gulch Deal
The agreement calls for using 2004 non-levelized rates with seasonalization factors applied. The annual base rate will escalate from 4.68 cents per kilowatt-hour in 2005, the contract's first year, to 7.31 cents/KWh in 2024, the contract's last year. The rate goes up 20 percent in the high-demand months of July, August, November and December, and drops by 26.5 percent in the low-demand months of March, April and May. The base rate applies to January, February, June, September and October.
"Although the avoided cost rates are likely to change in the near future, we find it reasonable to approve the Agreement's terms based upon the published rates that were in place at the time the Agreement was negotiated in good faith," the IPUC order said. This difference would result in about $1.4 million in reduced revenues for the project over 20 years. Idaho Power payments for Fossil Gulch power will be deemed "prudently incurred expenses for ratemaking purposes," the commission added.
Fossil Gulch is expected to deliver a firm-basis schedule of energy that is seasonally shaped, ranging from a monthly average of 2.4 average megawatts in August, to 4.2 aMW in March. The aggregate power delivered annually would be about 3.3 aMW.
Although the nameplate capacity is slightly above the 10 MW threshold for published avoided cost rates, Fossil Gulch plans to adjust turbine generator controls so total output never exceeds 10 MW in any hour; if it accidentally does, Idaho Power won't pay for the extra electrons.
The contract's energy generation terms are similar to those in QF contracts Idaho Power signed with Tiber Hydro, United Materials, Renewable Energy and J.R. Simplot. These agreements all restrict QF rates to generation up to 10 MW in any given hour. They also reward the QF when generation exceeds 110 percent of the firm-delivery target, and penalize it when generation falls below 90 percent of the target if market prices are higher than the QF price.
The agreement excludes any purchase by Idaho Power of Fossil Gulch's environmental attributes (also known as green tags), which are not eligible for PURPA cost recovery, the commission noted.--Rick Adair and Mark Ohrenschall
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A proposed ocean wave energy demonstration project off the Oregon coast has a promising site, a potential commercially available technology, cost and power production estimates, and interested participants.
But it still lacks a fundamental piece: money. And that absence looms tsunami-large, given the dearth of government funding for ocean energy, and limited prospects for initial private financing of this relatively untested renewable resource.
This planned wave energy demonstration project is led by the Electricity Innovation Institute, an affiliate of the Electric Power Research Institute, with partners in the Northwest and other prospective coastal states.
A preliminary assessment has determined Oregon's project would be located in Douglas County, near Gardiner on the state's central coast. It would cost about $4.6 million to construct, and would generate an estimated 1,000 megawatt-hours annually. Central Lincoln PUD has expressed interest in buying the wave-fueled power.
However, instead of now moving toward design, permitting and pursuit of construction financing as earlier planned (see Con.WEB, July 29, 2004), the project's next phase is to chip away at barriers.
Money is a primary obstacle, according to officials. "No state today has a financial path to be able to fund building this pilot demonstration plant," said E2I project manager Roger Bedard.
Project leaders pin considerable hope on federal dollars; however, those are quite doubtful for ocean wave energy, according to U.S. Department of Energy officials.
Nevertheless, said Bedard, "We're working with the electricity stakeholders in Oregon to find a way to permit and finance and build an offshore waver power plant." The earliest operational date would be late 2006, he estimated, but it could be years later.
Riding Ocean Wave Energy
Offshore wave energy is one of E2I's public-private research and development ventures, with an expressed goal "to initiate momentum towards the development of a sustainable commercial market for this technology in the U.S. and thus provide economic benefits and job creation."
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Among the prospective strengths of wave energy are resource abundance (a technical potential of up to 2,500 average megawatts in the Northwest, according to an early 1990s Northwest Power and Conservation Council estimate), potentially minimal environmental impacts and the aforementioned economic gains.
But only one operating wave energy plant worldwide delivers power to the grid, a recently launched prototype in the United Kingdom developed by Ocean Power Delivery--"all the experience that exists for wave," said Bedard.
The E2I project aims to establish demonstration wave energy plants in the U.S. Toward that end, a first phase has examined potential costs, energy performance, technologies and locations, among other issues.
For Oregon, the preferred place is about two miles off the Douglas County coast--near where the Umpqua River empties into the Pacific--at an ocean depth of 60 meters. The Oregon assessment evaluates using OPD's Pelamis device, although Bedard said it's too early to know whether the demonstration also would apply this technology.
Projected installed capital cost is about $4.6 million, which could drop to $3.5 million through Oregon's business energy tax credit. However, this figure excludes as-yet-unknown expenses for detailed design, permitting, construction financing, operations and maintenance, and testing and evaluation.
The pilot plant would produce about 1,000 MWh each year (about 0.1 aMW), the assessment said. Electrons would be sent to an onshore substation via a power cable that could be partially sited in an existing effluent pipe running from an International Paper mill to the ocean.
Central Lincoln PUD's board of directors has authorized general manager Paul Davies to sign a letter of intent to buy power from the proposed demonstration plant, Davies told Con.WEB. The utility would pay its avoided cost, he said. "The board is very interested in being supportive," given this is a potential resource in the utility's service territory; other assistance could be provided beyond power purchasing, he said.
Bedard said he finds "some really good advantages to this particular Oregon site."
Challenges Ahead
Still, considerable challenges lie ahead.
With the preliminary assessments done, the planned next step is to "work toward addressing barriers present in each state, to get to the point to fund a pilot project," said Omar Siddiqui of Global Energy Partners, another EPRI subsidiary, who is taking over E2I project management. He said state participants have shown much interest in developing demonstration projects.
Both Siddiqui and Bedard believe the best chance for funding lies with DOE. They argue that the federal government has financially supported other emerging renewable energy technologies, and wave energy deserves a similar boost.
"I don't know how this is going to be done without the federal government or some angel" investor, said Bedard. "The states don't have the money themselves. Private investors aren't going to invest in unit number one ... They're not going to make any return on investment on the first wave farm. The government has to subsidize initial deployment."
However, DOE spokeswoman Chris Kielich told Con.WEB the department is not researching or otherwise funding ocean wave energy at this point, and she is unaware of any such future plans.
DOE operated an earlier ocean energy program, said Andy Trenka, a Colorado-based DOE project officer who held a similar position with the agency's ocean energy venture in the 1980s and early 1990s. But it was abandoned after assessment showed "relatively limited" potential for cost-effective ocean energy technologies--way under 1 percent of national energy use, he said. DOE instead focused on more promising renewables such as wind, solar photovoltaics and biomass.
He believes several factors have restrained wave energy in the U.S. One is a lack of potential sites with convenient power grid access. Another is the challenge in economically capturing the energy resource, given huge variations in wave sizes and timing. Maintenance and durability of ocean wave energy devices also are difficult; technologies have to be built to withstand severe weather, which adds to the cost.
Trenka sees a "revived interest" in ocean wave energy by some companies and by the military, but said the industry has no real political power, and thus little hope for federal funding. He called ocean wave energy "a niche market" that will be hard-pressed to reach the stature of wind power.
Participating state groups would need to identify potential funding sources and obtain support and consensus within their states, Siddiqui said. That would "set the stage" for design, permitting and other tasks leading to construction.
In addition to Oregon, Hawaii, Massachusetts and Maine, the venture also includes a smaller Washington wave energy component: environmental review assistance for a 1-megawatt-capacity pilot venture proposed off the Olympic Peninsula coast by AquaEnergy Group. That work is still in process, said Bedard.
In addition to assessing pilot project economics and performance, E2I examined potential commercial-scale wave energy plants. Oregon's first such venture would cost an estimated $229 million and produce 300,000 MWh/year, at a levelized cost of 9.2 cents per kilowatt-hour (all in 2004 dollars). This falls within "the realm of [economic] feasibility," according to a project briefing.
E2I also posited a declining cost curve with substantially more installed wave energy capacity. At 40,000 MW, E2I concluded, ocean wave energy in Oregon and Hawaii would cost 2.9 cents/KWh to 3.6 cents/KWh--cheaper than wind energy, at 3.8 cents/KWh, according to the briefing. "If the government subsidized wave like it subsidized wind over the past 15, 20 years, then today wave energy would be the preferred technology to be used by private investors for independent power generating facilities," said Bedard.--Mark Ohrenschall
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