CWEB.095/November.26.2003
| CORRECTION A story in the March 27, 2003 issue of Con.WEB misstated the estimated energy savings of a voltage control system installed by PCS UtiliData at an Inland Power & Light substation. PCS UtiliData estimates the savings at 1.9 million kilowatt-hours annually from voltage reduction on the distribution system. Con.WEB regrets the error. |
The Pacific Northwest has a bountiful energy conservation history, and ahead lies an even more promising future--at least potentially.
Regional energy savings since 1980 total more than 2,600 average megawatts, from Bonneville Power Administration/utility programs, state energy codes and federal efficiency standards. That makes conservation the fourth-largest electricity source in the Northwest--behind hydropower, coal and natural gas--and responsible for about 10 percent of regional power needs.
And looking ahead, the region could cost-effectively save nearly 3,500 aMW by 2025.
This regional summary, and supporting details, were shared by conservation resources manager Tom Eckman of the Northwest Power and Conservation Council at a Nov. 5 Web/audio conference sponsored by Con.WEB.
"The good news is we haven't found it all and developed it all," Eckman told the "Northwest Energy Conservation Accomplishments and Opportunities" conference.
Most of the cost-effective negawatts available regionwide through 2025 lie untapped in the residential sector--more than 1,800 aMW, Eckman said. Lighting and space conditioning are the two most abundant sources of prospective household energy savings. The commercial sector could contribute 1,000 aMW to 1,300 aMW, mainly in lighting and HVAC efficiencies. Potential industrial (350 aMW) and irrigiation (100 aMW) efficiencies comprise the rest.
These numbers are still being vetted by the Council for its upcoming regional plan, due out in 2004. Once that is set, said Eckman, "We'll encourage, jawbone and hope for the best in terms of implementation" of a conservation action plan.
History Lesson
Eckman began his conference presentation with a history lesson, dating to the 1980 passage of the Pacific Northwest Electric Power Planning and Conservation Act. It remains "the longest-running integrated resource plan going forward in the country," he said.
The Council's first regional plan, adopted in 1983, advocated energy conservation through BPA/utilities, state and local building codes, and federal standards for appliances and new manufactured homes. Energy-saving goals by 2002 were 4,790 aMW under the high load forecast and 660 aMW under the low load forecast.
How has the region fared? Roughly in the middle of those two targets.
Despite the funding roller coaster of the past two decades, accumulated BPA/utility conservation savings track a fairly steady rise, to about 1,500 aMW--with more to follow in 2002 and 2003, Eckman noted.
State and local energy codes have contributed more than 735 aMW of accomplished savings; most of these negawatts have accrued since the mid-1990s, coinciding with a regional economic boom. "We were lucky enough to get the codes in place before that happened," Eckman said. About 600 aMW came from commercial energy codes in Oregon and Washington.
Federal efficiency standards--notably for water heaters, clothes washers, manufactured homes, refrigerators and dishwashers--have added more than 375 aMW to regional conservation, also primarily since the mid-1990s.
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| (Courtesy of Northwest Power and Conservation Council) |
Eckman put the overall total of some 2,600 aMW in perspective.
Conservation met about one-fourth of regional load growth from 1980 to 2002; it now accounts for about 10 percent of regional electricity services; as of 2000 conservation was the third-largest regional energy resource, behind only hydropower (63.4 percent) and coal (13.2 percent), although natural gas has probably passed it since; and it represents three times the annual firm energy output of Bonneville Dam--as well as enough to supply the entire state of Idaho, Eckman told the Idaho Energy Conference Nov. 7.
This accumulated conservation saved the region $1.6 billion in retail energy expenses in 2002, he told Idahoans. "It was a good, good deal. It was a really good deal."
On the cost side, Eckman earlier this year told Con.WEB energy savings from codes and standards came "at very little cost to utilities," and the BPA/utility savings averaged about 2 cents per kilowatt-hour. "This is really cheap stuff for utilities to get ... It's probably comparable in cost to some of the hydro projects, for what's embedded in rates."
Looking Ahead
Still, much conservation remains to be gained around the Northwest.
Cost-effective regional conservation potential through 2025 lies in the range of 3,000 aMW to 3,500 aMW, Eckman reported.
The Council uses a total resource cost perspective, and gauges cost-effectiveness by comparing the timing of energy savings--daily, seasonally and yearly--to wholesale market power purchases. This method increases the value, for example, of summer afternoon energy efficiencies, Eckman noted, and differs from the prior standard of pitting conservation against generating resources.
With this approach, the Council's latest analysis finds about 1,800 aMW of cost-effective conservation available in Northwest households.
Lighting is considered the biggest residential conservation opportunity, at about 660 aMW of potential. Reaching that number would mean energy-efficient lamps in virtually all residential screw-in lighting applications.
Residential heating and cooling represents a 575 aMW conservation opportunity, led by heat pump conversions (160 aMW), heat pump upgrades (150 aMW), duct sealing (125 aMW) and weatherization measures (80 aMW).
Prospective water heating efficiences tally 335 aMW, two-thirds from heat pump water heaters.
Residential appliance conservation potential amounts to slightly more than 300 aMW, almost entirely from clothes washers (290 aMW). Eckman described a "significant difference" between the most efficient current washer (modified energy factor of 2.2) and the Energy Star standard (1.4 MEF as of 2004) and 2007 federal requirement (1.26 MEF). Refrigerators, meanwhile, now typically use about one-third as much energy as they did in 1977, and present "much less opportunity" for further savings, he said.
These residential figures exclude 580 aMW in projected regional savings by 2025 from upgraded federal efficiency standards, and another 170 aMW from existing market transformation activities.
In the commercial sector, the Council's preliminary findings show somewhere between 1,000 aMW and 1,300 aMW of cost-effective energy-saving potential.
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| (Courtesy of Northwest Power and Conservation Council) |
Lighting measures in both new and existing buildings total more than 450 aMW. Eckman cited ongoing opportunities in fluorescent, incandescent and high-intensity discharge lighting, daylighting and controls, and improved standard practices, such as specifying and installing the latest T-8 lamps and ballasts.
Commercial HVAC efficiencies are listed at about 350 aMW, through improved equipment as well as commissioning, controls and integrated design of new buildings. Building envelope and refrigeration efficiencies represent another 100-plus aMW of potential conservation, according to the Council.
Another promising commercial area encompasses what Eckman called non-building resources. Packaged refrigeration, networked personal computer management, sewage and water treatment, and light-emitting diode traffic signals could deliver 340 aMW of savings.
Industrial conservation potential is difficult to gauge, Eckman said--illustrating with a slide of actor Peter Falk as Columbo, saying, "Well, ma'am ... That's a really tricky question."
Said Eckman: "We really don't have a good fix on what the industrial sector will look like in five, 10 years." Council officials are talking with industrial representatives to assess the impacts of globalization, higher regional electricity rates and other factors. Northwest industrial growth is likely to come in facilities with lower electricity intensity, Eckman said. For now, the Council offers a "placeholder" estimate of 350 aMW of industrial conservation prospects by 2025.
Irrigated agriculture is projected at 100 aMW of potential savings, the great majority in Idaho and Washington. This sector is already becoming more energy-efficient, Eckman said, fueled by conversions to low-pressure center-pivot watering systems. But opportunities still exist for "a significant amount of acreage" in the region. Pump, nozzle and gasket replacements also can improve irrigation energy efficiency.
Now What?
The prospective efficiencies will be subject to a "portfolio screening mechanism" as the Council weighs energy resources for the upcoming regional plan. "This chart shows what's cost-effective based on average market prices over the next 20 years," Eckman said. "It doesn't tell us the appropriate amount to be built over the next 20 years," an assessment that will take into account various risks and rewards of different resource options. A draft plan is tentatively due in late spring, Eckman said, with Council adoption anticipated after a public review process.
A conference attendee asked Eckman how the region could be inspired to achieve its conservation potential. "After 20 years of trying to do this, I'm hunbled by the task," he said. "We've had good days and bad days in the conservation history of the Northwest. They have come and gone, mostly on the perception of policy-makers that we're in a world of hurt" for resource supplies or prices. "If we're not in a world of hurt, it's really hard to get investments made."
He offered some hope that the energy crisis taught decision-makers the value of consistently pursuing conservation.--Mark Ohrenschall
The Northwest Energy Efficiency Alliance has made "substantive contributions to transforming regional markets for energy efficiency equipment and practices" since its inception, an independent evaluation has concluded.
"Retrospective Assessment of the Northwest Energy Efficiency Alliance" found that the benefits of the regional market transformation collaborative outweigh its costs, and that "the reasons for establishing the Alliance are still valid and provide strong rationale for continuation." The Alliance's current funding expires in 2004.
However, the report by two Colorado-based consulting firms also offered a substantially lower estimate of energy savings attributable to Alliance programs--from 134 average megawatts, as the Alliance had reported, to 98 aMW. This difference owes almost entirely to a reduction in Alliance-claimed savings from its Energy Star Residential Lighting program.
The report also slightly raised the estimated levelized cost of energy savings from Alliance programs, from 0.7 cents per kilowatt-hour, as the Alliance had documented, to 0.99 cents/KWh. "While this is an increase ... it is still well below the avoided cost of power in the region," wrote Daniel Violette and Michael Ozog of Summit Blue Consulting and Kevin Cooney of Stratus Consulting.
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They recommended some changes in Alliance cost-effectiveness and program impact processes.
Interviewing stakeholders, the consultants found a "widely held belief that the Alliance is responsible for higher levels of market transformation than would have occurred had the Alliance not existed." Stakeholders thought the Alliance had made "a significant impact" on several regional markets. They also gave generally positive reviews of the Alliance as an organization. (Editor's note: Full disclosure: This reporter was one of the interviewed stakeholders, and Con.WEB receives funding support from the Alliance.)
Overall Findings
This review--originally recommended by Bonneville Power Administration and also called for by contracts with Alliance utility funders--was commissioned by the Alliance "for the primary purpose of determining whether the Alliance has transformed enough markets over the first six years to justify the costs of the Alliance." The collaborative's board authorized up to $150,000 for this work.
The report was designed to serve as "an objective evaluation" for stakeholders considering further Alliance funding. Other areas of investigation included Alliance savings claims, market transformation program impacts compared with other influences (such as electricity rate increases and technology improvements), and the appropriateness of market transformation as an approach.
Summit Blue and Stratus pored through existing materials produced for the Alliance, such as market assessments, market progress evaluations, computer modeling and planning documents. Interviews with Alliance staff, contractors and other market players also were conducted.
"The results of the project are timely, considering that the funding cycle for the Alliance stakeholders requires renewal before the end of 2004," wrote Violette, Ozog and Cooney.
They concluded the Alliance deserves an extended existence.
"The benefit-cost analyses conducted with the Team's revised numbers show that the benefits of the Alliance has exceeded its costs. Overall, it is the study team's opinion that the reasons for establishing theAlliance are still valid and provide strong rationale for continuation: Energy markets invariably cut across utility and jurisdictional boundaries, it makes most sense to pursue these [market transformation] efforts regionally; and, [t]his regional approach by [the] Alliance is an asset and can gain increased leverage by continuing its relationship building efforts with partners."
Based on its research, the consultants determined the Alliance "has been successful at transforming, or contributing to the transformation of markets." They specifically mentioned residential windows, clothes washers and compact fluorescent lamps (see below). "The magnitude of the impact of the Alliance on these markets was a subject that not all market actors in the region agreed upon, but there was a more general agreement that permanent changes had taken place in these markets and were at least partially the result of Alliance activities."
Energy Savings, Cost-Effectiveness Revisions
Despite the positive overall findings, the consulting team significantly lowered the Alliance's reported overall program energy savings, and slightly increased the total per-kilowatt-hour costs.
The Alliance's 2002 Market Activities Report said the collaborative's efforts had saved 134 aMW since 1997.
But after looking at the Alliance numbers, developing alternative scenarios and analyzing cost-effectiveness, the consulting team came up with 98 aMW of total savings attributable to the Alliance.
This difference is almost exclusively in CFLs, and largely from a change in assumed savings per lamp: the Alliance figure is 66 KWh annually, but the study team likewise examined displaced wattages along with various usage, price and sales factors and reported 39 KWh per year. The overall lighting savings dropped from an Alliance-reported 70.4 aMW through 2002 to 30.3 aMW, reflecting a "low influence scenario" in which the Alliance gets credit for about 2 million of the 8.3 million regionwide CFL sales/distribution in the boom year of 2001. The Alliance had claimed savings from 4.2 million lamps--or all those not purchased with a coupon or given away by utilities.
The assessment noted "two divergent opinions" among interviewees about the Alliance's role in the 2001 CFL market, basically falling on either side of the 4.2 million lamp level.
In any case, the consultants found, "The Alliance has contributed to increased awareness of CFL technology and Energy Star brand in the Northwest over the past several years, and thus was a key contributing factor to the overall increase in sales in the region in 2001-02."
This change in estimated lighting savings influenced the consulting team's estimated overall cost-effectiveness of Alliance programs, raising it from the Alliance's 0.7 cents/KWh levelized to 0.99 cents/KWh. However, the authors wrote, this revised figure is "still well below the avoided cost of power in the region."
Specific Programs
In addition to the Energy Star Residential Lighting initiative, the consulting team closely examined three other Alliance programs deemed representative of the overall portfolio:
MagnaDrive energy savings were found to be as reported by the Alliance (1.1 aMW), but the consulting team found "relatively high" total resource levelized costs of 7.4 cents/KWh, compared to 3.8 cents/KWh estimated by the Alliance. The team also reported differences of opinion on the Alliance supporting a specific technology such as this: "Some regional sources expressed concern that this does not promote the development of a robust market for a product or service. Others felt that these types of programs are an excellent use of regional resources, because individual utilities and organizations would not have the resources to independently test and promote new technologies."
Lessons
The report also included findings about different types of Alliance programs:
For "upstream" ventures, the consultants found the Alliance had done well in supporting energy codes and contributing to higher market shares and more consumer awareness of energy-efficient products. They also concluded it's too early to judge the merits of the Alliance's umbrella program approach to commercial and residential markets.
Training programs have made headway in market awareness of energy-efficient practices and improving the region's educational infrastructure for energy efficiency, the consultants reported.
Entrepreneurial ventures have "successfully tested and demonstrated" some technologies, but have generated "limited market acceptance," the assessment found.
The assessment also described the Alliance as an "effective organization," with a culture focused on "adaptive management and continuous learning."
Stakeholders rated the Alliance highly as an organization, with strengths in planning and communications, and a staff "well respected by the majority of stakeholders interviewed."
The consulting group offered some specific recommendations, including improvements in Alliance processes for determining cost-effectiveness and program impacts.--Mark Ohrenschall
More Information:
Puget Sound Energy has unveiled an expanded energy conservation plan for 2004 and 2005.
Washington's largest utility aims to save nearly 40 average megawatts of electricity and more than 5 million therms of natural gas over the coming two years, through a variety of proposed energy-saving initiatives filed Oct. 31 with the Washington Utilities and Transportation Commission. Puget plans to spend $52.8 million on electric programs and $9.1 million on natural gas initiatives.
This two-year conservation program stems from Puget's integrated resource planning.
The investor-owned utility's April least-cost plan included a 15 aMW annual energy-saving goal over 10 years, but after assessing conservation potential and analyzing overall resource options Puget bumped up its 2004-2013 conservation target to 203 aMW. Puget plans to add fossil-fueled (natural gas and coal) power to meet most of its new resource needs by 2013, along with some renewables.
Puget's conservation appraisal found that energy-efficient lighting accounted for more than half of the potentially achievable electric savings.
"Given the fact that the least-cost plan provided guidance that shows and demonstrates it would be more cost-effective to acquire more of some of these resources in lighting early in the first 10 years rather than later, we did decide it would probably be prudent to take the accelerated approach," said Cal Shirley, Puget's energy efficiency services director.
This strategy drew praise from the Northwest Energy Coalition, whose director, Sara Patton, "enthusiastically commends Puget Sound Energy's pursuit of energy efficiency. The utility really understands that saved energy is the cheapest and cleanest energy," she said in a Puget news release.
This plan reflects an increasing conservation emphasis at Puget, which since 1978 has saved more energy than any other Northwest utility (outside of Bonneville Power Administration), but which had greatly diminished its efforts in the late 1990s. A rate-case settlement in mid-2002 committed Puget to seek at least 15 aMW of annual programmatic conservation through 2003, plus 2.1 million therms of gas savings--both of which Puget has reached in the past 12 months.
Conservation and Puget's Resource Needs
The Bellevue-based IOU predicts an anticipated need for nearly 500 aMW of new electric resources by 2004, rising to more than 1,500 aMW by 2013. New peak capacity needs are forecast at about 1,000 MW by next year, increasing to more than 2,500 MW by 2013, according to its updated least-cost plan. Puget faces the expiration by 2010 of power supply contracts totaling 314 aMW of energy and 755 MW of capacity,
"Unlike a lot of other utility planning situations, our situation is that we have resources that are expiring and dropping out of our portfolio," said Puget resource planning manager Charlie Black. Consequently, "We have a more immediate and larger need for resources now."
Puget officials, along with least-cost planning and conservation advisory groups, mulled whether the conservation numbers could be raised "to try and help meet more of that immediate need for resources," Black said.
The 39.2 aMW and 5 million-plus therm goals for 2004-2005 derived from, and slightly exceed, the August update to Puget's least-cost plan. That revision incorporates a study of systemwide conservation potential and an integrated evaluation of supply- and demand-side resources.
In judging future conservation, Puget distinguished between technical potential (described as "all conservation measures are installed regardless of cost or market barriers") and achievable potential (defined as "that portion of the potential that is likely to be available over the planning horizon under prevailing market barriers and administrative constraints that hamper delivery or implementation of energy-efficiency measures").
Conducted for Puget by KEMA-XENERGY and Quantec, this analysis found a total technical conservation potential of 1,016 aMW over 20 years--one-third of the utility's estimated baseline load in 2023--and an achievable potential of 328.3 aMW, or 10.8 percent of projected load.
Shirley said he found it "a bit of a surprise" that residential sector potential outpaced commercial/industrial sector prospects.
Achievable residential savings over 20 years came to 176 aMW, primarily from appliances (42.1 percent) and lighting (32.1 percent). Water heating (16.2 percent) and HVAC (9.7 percent) comprised the rest.
Commercial sector achievable savings amounted to 143.1 aMW by 2023, nearly three-quarters in lighting (73.8 percent) and the rest in HVAC (23.1 percent), appliances (2.6 percent) and water heating (0.4 percent). Industrial sector prospects were rated at 9.2 aMW total.
For natural gas, the assessment found a 20-year achievable conservation potential of 10.7 million decatherms, of which about 75 percent lies in the residential sector; the biggest household opportunities are seen in space heating (56.7 percent) and water heating (39.3 percent).
"We built a curve for the different types of conservation resources that showed at increasing costs how much increasing quantity we could get out of the potential," Black explained. (For example, of the 328 aMW of achievable potential by 2023, Puget identified 153.7 aMW at 3 cents per kilowatt-hour or less, and another 99.4 aMW at ranges of 3 cents/KWh to 6 cents/KWh.) "Then we did the integrated modeling of the overall portfolio, including supply alternatives, to pick the best combination of supply and conservation resources that is least cost." This process also takes into account "dynamic interactions among different types of resources," he said.
Puget ended up with a strategy to pursue 203 aMW of electric energy efficiencies through 2013, and 273 aMW through 2023.
In addition, Puget wants to serve 10 percent of customer loads with renewables by 2013. Toward that end, the utility recently issued a request for proposals for wind power, seeking about 150 MW capacity; responses are due Jan. 9.
Most of its new resources, though, would come from natural gas and coal-fired power: the least-cost plan update shows Puget's strategy to add more than 1,200 MW of gas and coal resources by 2013. Puget in late October announced its purchase of a 49.8-percent share of a 249-MW-capacity natural gas-fired power plant near Tacoma, and in late November the utility filed with the WUTC a draft all-source request for proposals for up to 355 aMW of electric supplies.
Proposed Conservation Programs
Puget's conservation program package--which is scheduled for WUTC consideration Dec. 10--envisions a variety of offerings.
By far the single biggest initiative for projected savings and spending is commercial/industrial retrofits. Puget anticipates 16.4 aMW of electric savings and 1.4 million therms of gas savings in this category, on planned spending of $21.6 million on the electric side and $2.5 million for gas.
The commercial/industrial retrofit program covers HVAC and refrigeration, controls, process efficiency improvements, lighting, building thermal measures, water heating and commissioning. Puget would pay up to 70 percent of incremental costs for measures with simple paybacks of one year or more (commissioning is capped at 50 percent of cost).
Also in the commercial/industrial sector, Puget plans to fund electric energy efficiencies in new construction and retrofits. Eligible new construction items include HVAC measures, controls, process efficiency improvements, lighting and building envelope upgrades that exceed energy code requirements by 10 percent or more. Puget would pay up to 70 percent of incremental costs for individual measures. Financial incentives also would be available for entire buildings that beat code mandates by at least 10 percent.
Puget also would offer rebates for certain prescriptive commercial/industrial efficiency measures, as well as incentives of up to 50 percent of installed cost for energy-saving applications considered quite different from other qualifying measures, yet cost-effective and easily found in the marketplace. Small businesses could get funding for qualifying light sources and fixtures. A resource conservation manager program would continue to be offered.
Numerous informational and analysis services are part of Puget's commercial/industrial package as well.
Residential offerings include rebates for Energy Star-qualifying lamps and fixtures, and assorted informational/analysis services, plus pilot programs for mobile home duct-sealing and electric-to-gas heating system conversions in specific areas with distribution system constraints.
Puget also wants to debut pilot ventures for premium service HVAC maintenance in the commercial sector, and in the residential arena for multifamily lighting retrofits, refrigerator decommissioning, heat pump maintenance, multifamily fuel choice for space and water heating, and Energy Star new construction.
Puget anticipates pilot programs would save 8.3 aMW and 1.2 million therms over the two years.
The IOU also is earmarking $3.7 million in 2004 and 2005 for its Northwest Energy Efficiency Alliance participation.
In natural gas, Puget now gets most of its efficiencies through commercial and industrial programs, Shirley said. The utility doesn't plan a major programmatic flip-flop based on the conservation assessment that found the highest gas-savings potential in residential, but it plans to "add some weight and some effort exploring more energy efficiency opportunities" in households.
Puget is proposing programs with funding for efficient residential gas water heaters and furnaces, manufactured housing and a pilot program for commercial/industrial boiler tuneups. Many other planned gas initiatives closely resemble Puget's proposed electricity saving programs.
This two-year package includes financial penalties for Puget if the IOU fails to meet its savings targets, a provision agreed to in the 2002 rate case settlement. Potential penalties range from $250,000 to $750,000; any such collections would fund other conservation programs. Puget's filing excludes from penalty calculations some programs over which the utility has no direct control (including the Alliance and self-directed initiatives for large power users) as well as many pilot ventures.
This conservation package would not immediately affect electric or natural gas rates, although separate filings for the Electricity Conservation Service Rider and Gas Conservation Service Tracker are planned for March, according to Puget's filing.--Mark Ohrenschall
More Information:
A Portland General Electric study of remote residential load controls found 100-percent acceptance for water heating control, but the buy-in dropped to less than 80 percent for space heating.
This study, conducted the first two months of 2003, could lead to a demand-response program focused on water heating, which could help PGE offset the need for new peaking power and broaden utility response when loads stress available resources.
The investor-owned utility is awaiting results from its request for supply-side power proposals, which will help determine cost-effectiveness for capacity savings from potential demand-response programs, according to PGE distributed resources director Joe Barra. "We continue to like water heating conceptually as a program," he told Con.WEB. "We know we have to reduce the cost to make it viable."
Meanwhile, PGE also is working on a real-time pricing experiment, and PacifiCorp will bring results of its direct load-control assessments forward next year.
Studying Remote Load Controls
The PGE remote load control study had several objectives, according to a summary presented Oct. 30 to the Oregon Public Utility Commission. It sought to measure peak-load impacts and customer acceptance, while evaluating potential program cost-effectiveness and the influence of incentives.
Participating customers--81 for water heating, 77 for space heating--received a $5 monthly incentive, minus 50 cents for each override on a Web-based interface.
The study targeted times when utility loads were likely to be high. Water heaters were controlled weekday mornings from 6 a.m. to 8 a.m., and space heating loads were controlled during weekday afternoons and evenings from 4 p.m. to 6 p.m. and 6 p.m. to 8 p.m.
None of the participating customers overrode remote control of water heating. PGE also reported an average demand reduction of 0.65 to 0.69 kilowatts per node, out of 2-plus KW average morning use. "Few participants noticed reductions in water temperature," the summary said.
In space heating, 21 percent of participants used the override function, according to PGE. Average demand reduction was 0.48 KW to 0.73 KW per node, out of an approximate 2 KW average peak use. PGE reported a "[m]ixed level of customer acceptance" for space heating curtailments, and a less-than-expected demand reduction.
Study results suggest that full-implementation benefits of a water heating program would exceed about 90 percent of its costs and approach the break-even point. But the benefit/cost ratio would fall to between 50 percent and 66 percent for a space heating initiative, although PGE time-of-use product manager Laura Rooke told Con.WEB the ratio could improve if space heating control technology were less costly.
Barra described the water heating study results as positive in terms of customer acceptance, but only marginally cost-effective. Supply-side capacity values should be known by early 2004, and with those, he said, "I expect to see additional pressure to reduce costs on a water heating program to get a cost-benefit ratio that makes sense."
"PGE has really been out front on these sorts of programs," said OPUC staffer Lisa Schwartz. "They asked a year ago, on their own, if they could try pilot programs for direct load control and real-time pricing."
In July, OPUC ordered the two investor-owned utilities to assess demand-response potential and barriers by the end of this year, and to use these assessments to develop demand-response programs that are presently cost-effective or build capacity in the future.
"We're seeing some good preliminary results," Schwartz said. "Customer interest has been demonstrated, and PGE has learned a lot if they decide to try another pilot program."
She noted that high participation in the water heater results mirrors the experience of Milton-Freewater Light and Power, which started direct load control efforts in 1985 that have been "wildly successful." The northeastern Oregon utility turns off residential space heating, water heating and air conditioning loads of voluntarily participating customers during peak periods typically lasting three hours; these customers receive rate discounts of up to 6 percent year-round, electric superintendent Mike Charlo told a conference in spring 2001. This program saves the utility $100,000 annually on purchased power, equal to 3 percent of its revenues, he said.
Schwartz sees a benefit aside from building capacity, even if the outcome isn't quite break-even or better. "If the cost-benefit ratio is really darn close to one, they might want to adopt the program anyway because it would diversify their options," she said.
PGE also is conducting a two-part real-time pricing experiment with six larger customers with a minimum load of 1 megawatt. PGE expects to report on these results in April 2005.
PacifiCorp is not conducting demand-response studies in Oregon, but is focusing its demand-control efforts in Utah, where much of its major load growth is taking place, Schwartz said.--Rick Adair and Mark Ohrenschall
The greenness of American Honda's Northwest Regional Facility near Portland is quickly and visibly apparent to visitors.
A sign in the parking lot near the main entry reads "Carpool Parking Only"--and covers six spaces. Elsewhere in the parking lot is a compressed natural gas refueling station for pool cars, and an electric vehicle charging station. In the lobby, the flooring is maple wood from a certified sustainably managed forest; the decorative glass behind the reception desk is 35-percent recycled; and an armchair's interior framework consists of 100-percent recycled wheatboard and its fabric is 100-percent recycled, recyclable and biodegradable.
And that's before the official tour even begins.
Located on the south side of the Columbia River, just east of Portland city limits in Gresham, Honda's plant is the nation's first mixed-use industrial facility to earn gold-level certification through the Leadership in Energy and Environmental Design (LEED) standards from the U.S. Green Building Council. Although not a manufacturing plant, the 212,888-square-foot Northwest Regional Facility features a parts warehouse, an automotive training center and offices supporting sales and customer service.
The green elements are extensive and eclectic. Honda earned 39 of 69 potential LEED points, with particular successes in indoor environmental quality and water efficiency, and good showings in energy and atmosphere, materials and resources, and innovation and design process.
Energy efficiencies abound, in HVAC, lighting and building envelope measures. The facility is 48 percent more energy-efficient than similar conventional buildings, according to Honda officials. Recycled materials are commonplace. A rainwater collection system substantially cuts water consumption.
Although the Northwest Regional Facility cost more than a similar conventional building, going green was the right direction for Honda, Barbara van Gaasbeek, Honda's national administrator for green building programs, told Con.WEB via e-mail.
"The Gresham facility was built in keeping with Honda's corporate philosophy," she said. "Our products are environmental leaders, our factories worldwide are ISO 14001-certified and it made sense to extend the sustainable thinking to our buildings ... Honda's management wanted to demonstrate that it was possible to build an industrial facility to the LEED gold standard, while supporting normal business activities."
Honda Goes Green
Honda's Northwest Regional Facility, which serves eight Western states, was completed in September 2001 and occupied a month later, Honda facility services administrator John Woelfle told an April tour organized by a Society of Women Engineers group.
"Although the decision to go green came after the initial design phase, this did not alter the schedule, and the building opened on time," said van Gaasbeek. "All involved in the project went through a steep learning curve, in order to familiarize themselves with the LEED requirements," including research into materials.
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| The entrance to American Honda’s Northwest Regional Facility in Gresham, OR (Photo by Mark Ohrenschall) |
Initially, Woelfle said, the company thought about LEED platinum certification--which only three U.S. facilities have achieved to date, according to USGBC. But he said cost considerations led Honda to target LEED gold, which it earned by gaining 39 of a possible 69 points (platinum requires 52 or more points). It was just the fourth LEED gold project nationwide, he said, and the first for a multiuse industrial complex.
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| Honda’s LEED gold plaque
(Photo by Mark Ohrenschall) |
Although the plant cost more than a conventional facility, van Gaasbeek indicated that operating cost reductions will help pay back some of this premium. Energy, water and other such expenses are being monitored, but exact savings aren't yet known.
Offices
Woelfle took the April tour group into the cubicled office area, walking on recycled-fiber carpet. Conference room tabletops consist of crushed sunflower seeds in a resin base, while the wall coverings served an earlier function as phone books.
HVAC and lighting systems use energy sparingly.
In the office area, outside air is distributed through ground vents at a low velocity--200 cubic feet per minute--and then exhausted through ceiling vents. The air is then drawn up via chimneys and expelled through large turbines on the warehouse roof. This functions as a passive HVAC system. Automated dampers control air-pressure levels. The facility earned 13 of a possible 15 LEED points for indoor environmental quality. A high-efficiency boiler provides heating, adjustable for each of 22 zones.
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| The office area at Honda’s Northwest Regional Facility sports recycled-fiber carpet as well as extensive daylighting. (Photo by Mark Ohrenschall) |
As long as indoor temperature lies within a predetermined range, Woelfle said, heating and cooling functions aren't used.
The office area sports numerous opaque skylights and abundant daylighting. Interior light shelves maximize daylight by projecting light inside, and also help reduce glare, as do bottom windows with tinted glass. Sensors assess daylight levels and dim T-5 fluorescent lamps accordingly; on this partly cloudy late spring afternoon, electric lighting levels were 30 percent to 40 percent of full, saving huge amounts of energy. "Everybody here loves [the lighting]," said Woelfle. Compact fluorescent lamps shine down in corridors.
Warehouse
A very large space--about 167,000 square feet with a mezzanine level, and nearly four stories tall-- the warehouse stores about 40,000 car parts' numbers in narrow aisles.
The most notable green aspect of the warehouse is an absence of mechanical heating and cooling.
Roof insulation is rated a snug R-19; ventilators on the roof provide natural cooling when needed. Honda has five 320-British thermal unit heaters available for the warehouse, but they only operate to prevent freezing pipes when interior temperatures dip below 40 degrees--which has not yet happened. Woelfle said he has recorded warehouse temperatures as low as 56 degrees and as high as 74 degrees; most commonly the temperature ranges between 63 degrees and 70 degrees. On hot summer days, warehouse doors are opened in the morning to pull in cool air.
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| The warehouse at Honda’s Northwest Regional Facility has no mechanical heating or cooling, and has sensors to supply the best combination of daylighting and electric lighting. (Photo by Mark Ohrenschall) |
"It works really, really well," Woelfle said.
For lighting, the warehouse has 120 skylights and metal halide high-bay lamps, with sensors responding to light and motion to supply the optimum combination of electric lighting and daylighting. "Most lights never kick into 100 percent, except in the darkest winter," Woelfle said.
Other green features in the warehouse include 90-percent recycled-content structural steel, an eco-friendly floor sealant, and concrete tilt-up walls with a minimum of 30-percent fly ash content (fly ash is a by-product of coal-fired power plants).
Training Center
A 26,000-square-foot automotive training center at the Honda facility does use mechanical heating and cooling, but resourcefully.
The high-efficiency boiler (rated at 1 million Btu per hour) and an 80-ton chiller provide heating and cooling to the training center and office areas. Both the heating and cooling systems are undersized at times during the year, Woelfle said; this requires some creative controls programming adjustments to keep the facility comfortable.
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| Honda facility services administrator John Woelfle talks to a tour group in April about the automotive training center at the company’s Northwest Regional Facility. (Photo by Mark Ohrenschall) |
A heat recovery coil gathers heat from vehicle exhaust and ambient air, recirculating it into the training center, Woelfle said. It does double duty as a cooling recovery coil in summer, he added.
Rainwater Collection/Landscaping
The Honda facility uses water frugally; it racked up four of a possible five points in LEED's water efficiency category.
Rainwater gathered from half of the warehouse roof flows into a 90,000-gallon underground storage tank that furnishes water for restrooms and landscaping. A half-inch of rain fills the tank, which went dry for the first time in August, according to Woelfle. Any overflow from the tank, along with water from elsewhere on the site, ends up in a lined retention pond; any excess pond water is filtered and sent into the local stormwater system.
Other Features/No Direct Renewables
Other green features at the Honda facility include native Oregon plants in the landscaping, an eco-lawn in front that requires just four annual mowings, interior paint free of volatile organic compounds and more than 99-percent construction waste recycling.
For example, there is no direct application of renewable energy. Honda contemplated installing two small wind turbines on a 3.5-acre expansion area behind the plant, and 120 solar photovoltaic cells on the roof, Woelfle said. But a cost analysis showed a 104-year payback on those features at pre-energy crisis electric rates; even with today's higher power rates, he said, the payback would still be about a half-century. Honda does purchase green power from Portland General Electric.
Honda also planted in the expansion area 4,600 Noble fir trees, which, when they mature, it plans to donate to a local non-profit organization. But this initiative did not earn LEED points because it was considered a monoculture, according to Woelfle.
Still, Honda officials liked having the LEED benchmark. Van Gaasbeek called it "the best way to measure" the facility's greenness. Additional LEED rating systems becoming available will help Honda "make more aspects of our facilities environmentally friendly," she said.
The company has already put in green materials at several other facilities, she said, and created a green specifications manual. A recently remodeled parts warehouse in Southern California features energy-efficient lighting as well as green finishes and furniture, she said.
As a sign of the Northwest Regional Facility's prospective influence elsewhere, the city of Gresham touts the facility as "a valuable precedent for future development" of "eco-industrial parks" in the vicinity.--Mark Ohrenschall
The biggest solar-electric system in the Pacific Northwest is generating electrons to help make potato chips.
A 114-kilowatt-capacity solar photovoltaic installation went into service earlier this fall at the Kettle Foods facility in Salem. This array hosts nearly three times the capacity of the region's next-largest solar-electric system, Energy Northwest's 39-KW-capacity White Bluffs Solar Station north of Richland, WA.
Kettle Foods--which makes natural snack foods including potato chips and tortilla chips--is taking advantage of substantial state and federal tax incentives and an Energy Trust of Oregon grant. These sources cover about 90 percent of the solar system's $675,000 cost, according to contractor David Parker of Advanced Energy Systems. He called that an "unprecedented ... huge reduction in the cost for commercial PV or industrial PV."
These incentives are "obviously attractive," said Kettle Foods general manager Marc Kramer in a news release. The company's expected payback on the solar installation is about seven years. He also said the "commitment and quality of our outside partners ... really made a difference," naming the Trust, Oregon Department of Energy, Portland General Electric and Advanced Energy Systems.
Kramer described his company's interest in innovation, "whether it be a potato chip or some form of alternative energy ... Beyond our ongoing product innovation, our commitment to solar energy is by far our boldest step." The company also buys green power from PGE and uses biodiesel fuel for vehicles.
Christopher Dymond of the Oregon Department of Energy credited Kettle Foods for its approach. "I think [the solar system's] uniqueness is really that this particular industry--they make chips, they don't make solar photovoltaic wafers--is stepping beyond what their focus is to include clean energy."
Going Solar
In early 2003, Kettle Foods' Russ Read spotted the 25-KW-capacity solar system on the Pacific Cooperative building in downtown Eugene, according to an Oregon Solar Energy Industries Association news release.
Read called Parker--contractor on the Eugene array--inquiring about solar for Kettle Foods. Parker developed three different-sized proposals, along with financial incentives.
The 114-KW chosen size reflects a full solar covering atop the plant's warehouse, which holds stored products and supplies, Parker told Con.WEB. "They didn't want to go on the factory roof of the building. There were a lot of obstacles," such as vent stacks and grease emissions.
Meanwhile, a number of financial benefits made solar much more economically attractive.
Kettle Foods is applying Oregon's Business Energy Tax Credit (35 percent of project cost over five years, although under recent legislation 20 percent of this credit is now reduced through 2005), as well as a five-year accelerated depreciation and an investment tax credit at the federal level. The company also gets accelerated depreciation on state income taxes for five years, according to Parker.
And, the Energy Trust is providing a $112,000 grant. This PV system meets several Trust goals, according to an agency staff memo. It generates renewable energy for a commercial food business--a sector that has made little use of direct renewables--and it showcases a large solar application. The Trust obtains the project's green tags for 15 years.
Together these various incentives provide about 90 percent of the total system cost, leaving Kettle Food responsible for about $67,000 net cost over five years, according to Parker. "It's such a positive cash flow for them, it's a no-brainer," said Dymond.
Kettle Foods Solar System
In addition to its size, the Kettle Foods solar system also is noteworthy for its speedy construction, Parker said. His firm got the contract Aug. 22 and faced a completion deadline of Sept. 30, because of tax considerations at the end of Kettle Foods' fiscal year.
The biggest installation challenge involved strengthening the roof structure and building raised curbs to accommodate the weight of 15-plus tons of solar equipment, he said.
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| Kettle Foods' 114-kilowatt-capacity solar-electric system occupies the warehouse roof at its Salem, OR facility. (Photo courtesy of Advanced Energy Systems) |
Parker praised the "can-do attitude of Kettle Foods people" in helping to get the project installed by the deadline--twice as fast as it would normally take.
The 114-KW system consists of 616 Sharp modules--each rated at 185 watts--arranged in 56 strings of 11 modules apiece, according to Parker. Operating voltage is about 400 volts direct current; the solar power runs through junction boxes and combiners to the inverter and an isolation transformer. The three-phase alternating current electricity is then put to practical use. "We're feeding directly into circuits, so that motors, lights, fans, things operating in the factory" are solar-powered, Parker said.
Although the system is rated at 114-KW DC, the actual AC rating is about 90 KW, Parker said, with deratings for real-world performance and efficiency losses through the inverter and wiring.
He anticipates an annual solar-electric production of 112,000 kilowatt-hours. That's roughly 5 percent of Kettle Foods' total electricity consumption, and enough to produce the equivalent of six million bags of potato chips. In summer the system could supply as much as 25 percent of the facility's peak demand.
Although the Willamette Valley is not renowned for sunshine, Parker quoted Energy Trust board member John Reynolds as saying Salem actually ranks above the U.S. average for solar radiation. On a recent cloudy November day, the system was cranking out some 30 KW AC, Parker said.
Any excess solar electricity (such as when the plant is closed) flows into Portland General Electric's grid as net-metered power, credited to Kettle Foods at retail rates. "That helped make the economics work," Parker said. He noted PGE allowed the net metering even though Oregon law only requires it for systems of 25 KW capacity or smaller.
Parker expects even larger solar-electric systems to arise on Oregon commercial and industrial facilities, with the availability of tax incentives and Energy Trust public-purposes funding. "All it takes is an entity like the Energy Trust set up in a state to have a consistent program that offers generous incentives, and of course people are going to take advantage of it," said Parker.
With this financial assistance, businesses can install solar economically, according to Dymond.
"I think we're on the path toward seeing this stuff being an affordable energy option for on-site generation," he said, although, he acknowledged, "We're still some years out before it stands on its own without incentives."--Mark Ohrenschall
The clock is running down on Bonneville Power Administration's 3-year-old deal to purchase power from a proposed 49.9-megawatt-capacity Northern California geothermal project now stalled by litigation in federal court.
An opt-out clause can kick in for BPA if project developer Calpine cannot show, by year's end, that the Fourmile Hill geothermal resource is commercial--a determination yet to happen, despite some drilling activity at the site near the California/Oregon border.
Bonneville has made no decisions, spokesman Bill Murlin told Con.WEB Nov. 20. "The ball's in [Calpine's] court right now. If they come up with a provable resource, we go on."
A pending court decision and extreme winter conditions will push further resource exploration to next spring, while BPA and Calpine consider options.
Bonneville announced an agreement in December 2000 to buy up to 49.9 aMW from the proposed venture, at a cost of 5.7 cents per kilowatt-hour over 20 years (see Con.WEB, Dec. 21, 2000).
The proposed plant, however, is mired in controversy. Opposition has come from some Native Americans, environmental groups and nearby residents, who consider geothermal development an unwelcome intrusion on a relatively remote and natural setting, jeoparidizing Native American spiritual practices as well as local environmental qualities.
Searching for Steam
"Fourmile Hill must be proved up commercially this season or we can opt out," said BPA spokesman Ed Mosey. "So far, commercially exploitable steam has not been found."
In mid-2002 Calpine halted major efforts to prove out the prospect--including an exploratory drilling program that a company spokesman said had yielded "positive results"--after the Pit River Tribe and environmentalists sued Calpine and the U.S. Bureau of Land Management, which had approved the project in 2000. Argued by Earthjustice attorneys, the suit cites fears that the development would diminish and pollute the natural setting, which some of the region's Native Americans consider sacred.
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The project site, on the Medicine Lake Highlands in north-central California, is within the Modoc National Forest, about 30 miles from the Oregon border. It's part of a larger area dominated by a volcanic caldera that has been the focus of geothermal interest since the mid-1960s. By 1998, Calpine ended up with most of the area's lease holdings. But in doing so, it also ended up with the associated controversy.
The U.S. District Court in Sacramento heard arguments in the Fourmile Hill suit on Sept. 10, and may rule before year's end. But even so, extreme winter conditions at the project site, where snowdrifts 20 feet deep are typical, would preclude further exploration work before BPA's option expires.
"We're waiting for the ruling," Calpine spokesman Kent Robertson told Con.WEB. "If it's in our favor, we could begin additional resource testing as soon as spring."
BPA's Mosey didn't shut the door on an extension of the agreement. "We're aware of the delays," he said. "We're talking with Calpine and considering what our options are about that."
Even though activities at Fourmile Hill are in abeyance, new controversy surrounds it. Project opponents suspect that a proposed geophysical survey funded by the California Energy Commission is evidence of massive development.
But Calpine says it isn't conducting the survey, nor did it commission it. "This is definitely not a Calpine-led initiative," Robertson said. "But I'm sure that we'll get access to the results, since it's being funded by a public agency."
The survey, conducted by San Francisco-based GSY-USA, would use non-invasive magnetotelluric methods to probe the subsurface for geothermally altered regions that exhibit increased conductivity. The results could help identify likely drilling targets, which Robertson said would help Calpine's efforts at Fourmile Hill and the adjacent Telephone Flat, another geothermal prospect opposed by the lawsuit's plaintiffs. The U.S. Forest Service recently finished taking public comments, and is preparing a study of the survey's environmental impacts.--Rick Adair and Mark Ohrenschall
When it comes to raw fuel costs, wind beats thermal energy resources hands down.
Unlike coal, natural gas or uranium, wind is freely available and does not have to be mined, washed, processed, piped, shipped, milled or fabricated.
However, wind comes and goes as it pleases, and its will o' the wisp intermittency is a key issue affecting the economics of wind power and determining the most cost-effective role wind can play in a given utility's resource portfolio, utility officials and energy policy observers say.
Wind Cost Rules of Thumb
As a "rule of thumb," wind power's capital costs are about $1,000 per kilowatt of capacity, said Jeff King, senior resource analyst for the Northwest Power and Conservation Council. A natural gas-fired combined-cycle combustion turbine runs about $665 per kilowatt of capacity, he added.
At the busbar, a hypothetical 100-megawatt-capacity wind power plant built this year in eastern Washington or Oregon will produce 30 average megawatts of energy for about 3.26 cents per kilowatt-hour, assuming the federal production tax credit of 1.8 cents/KWh, King estimated (the credit is scheduled to expire Dec. 31). Wheeling and shaping wind-generated energy to suit the needs of purchasing utilities add about 1 cent/KWh to the cost, King said.
Energy Northwest Wind Project
Energy Northwest sells wind energy from its Nine Canyon Wind Project to eight utilities for 3.5 cents/KWh to 3.6 cents/KWh, said Dan Porter, the joint operating agency's manager of generation project development. Energy Northwest sells the energy at cost to public utility districts serving Okanogan, Grant, Benton, Chelan, Douglas, Grays Harbor, Lewis, and Mason counties (Mason PUD No. 3), Porter said. The 48-MW-capacity project is in the midst of expansion to 63-MW capacity.
The public agency equivalent of a production tax credit is the Renewable Energy Production Incentive (REPI), worth 1.8 cents/KWh, which Energy Northwest receives for Nine Canyon. "The REPI risk is borne by the purchasers," Porter said. If the federal government discontinued paying the incentive, "We can't be the deep pockets."
Buyers of Nine Canyon's output must shape the energy using other resources, either their own generation, as is the case with Grant, Chelan, and Douglas PUDs, or through the Bonneville Power Administration's system, as is the case with Benton and Grays Harbor PUDs, Porter said.
PacifiCorp Rides the Wind
Wind's cost-effectiveness is influenced by the costs of competing resources necessary to serve a utility's loads, said Virinder Singh, an environmental policy analyst with PacifiCorp. His investor-owned utility, which serves 1.5 million retail customers in six Western states, this year adopted an integrated resource plan that calls for acquiring 1,400 MW of wind to help close a resource deficit estimated at 4,000 MW and to maintain a 15-percent reserve margin over the next 10 years.
PacifiCorp also plans to acquire 540 MW of demand-side and load-control resources, 2,100 MW of coal and gas-fired baseload capacity, 1,200 MW of peaking capacity and 700 MW of shaped purchase contracts, the IRP said.
PacifiCorp's wind acquisition plans, if carried out, would more than double the Northwest's current wind capacity of 597 MW (a figure that includes regional projects as well as regional utility/Bonneville Power Administration shares of Wyoming wind farms, according to the American Wind Energy Association).
Gas price volatility was "a big factor" that persuaded PacifiCorp to significantly boost wind power expansion, Singh said.
Competitive wholesale power markets have resulted in "boom and bust" cycles of oversupply and undersupply of generation in the West, the IRP stated. Since gas-fired generation is now the preferred new resource, "this ties (Western Energy Coordinating Council) electricity prices to natural gas prices and their attendant uncertainty and volatility," the IRP said. The plan said "alternative resource plans must be evaluated in terms of their exposure to price volatility, in addition to their long-run average costs."
PacifiCorp's IRP analysis showed that four variations of diversified portfolios resulted in the lowest 20-year present value revenue requirement, ranging from $12.3 billion to $12.4 billion. In contrast, revenue requirements for various combinations of coal and gas resource portfolios ranged from $12.6 billion to $12.9 billion.
In a 2002 study, Lawrence Berkeley Laboratory concluded the cost of hedging gas price risks, through instruments such as swaps, could be enough to tip the competitive edge to wind and other renewable resources not exposed to fuel price risk. Gas price derivatives that lock in prices for 10 years cost gas buyers roughly 0.5 cents/KWh between 2000 and 2002, according to the analysis, written by lab researchers Mark Bolinger, Ryan Wiser and William Golove.
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| (Courtesy of American Wind Energy Association) |
The LBL study said the 0.5 cents/KWh hedging cost "should either be added to the cost of variable-price gas contracts" or credited to wind. "To do otherwise would be to compare apples to oranges: by their nature, renewable energy resources such as wind power carry no natural gas fuel price risk, and if the market values that attribute, then the only appropriate comparison is to the hedged cost of natural gas-fired generation," the study said.
For PacifiCorp, the wind production tax credit was a "huge factor" making wind development economical, Singh said. Without the credit, the 20-year revenue requirement would rise by $353 million, the IRP estimated.
"We had a lot of questions about integrating wind into the grid. There is the intermittency question, what we would need to shape wind, and what the opportunity costs would be," Singh said. The IOU's analysts estimated wind integration costs of 0.6 cents/KWh, "which seemed quite low." In the analysis, PacifiCorp examined integrating wind into the utility's eastern and western control areas. The eastern area is dominated by baseload coal, while hydro in the western area provides shaping flexibility. "But we still came up with $6," Singh said.
Integration cost factors include system imbalance and incremental reserves necessary for firming, the IRP said. However, doubling the system integration cost estimate would raise the 20-year revenue requirement by less than 1 percent, the plan said. "System integration costs alone do not impact the financial decisions to add additional wind to the system," the IRP said.
The IRP also included the results of "what-if" analyses to assess how portfolio costs would change if, for example, no wind capacity were built.
In the no-new-wind scenario, the IRP analysis found that the revenue requirement for its lowest cost portfolios would rise $68 million to $75 million because of increases in variable costs. In PacifiCorp's western area, combined-cycle combustion turbines and peakers would run longer and more often, the analysis found.
Transmission, Capacity Factor Issues
Two related factors that influence wind's costs are transmission and the resource's relatively low capacity factor. Point-to-point transmission service on BPA's grid will run a wind plant 0.4 cents/KWh to 0.5 cents/KWh, according to Mike Raschio, a BPA transmission account executive.
"All of our wind resources are east of the mountains, but the largest loads are west of the mountains. When you buy point-to-point transmission services, based on the capacity factor of the (wind plant), you're buying three times as much transmission capacity as you'll ever need," said Deb Malin, a BPA renewable power account executive.
BPA plans to offer a storage and shaping service that would enable wind plants to store their output in the Columbia River for week-later delivery as a shaped, firm product, said Elliot Mainzer, manager of pricing on BPA's trading floor. BPA's service, which would send blocks of power to customers during high-load and low-load hours, "would take a good chunk of the uncertainty" out of wind's availability. BPA will market the service to both publicly owned and investor-owned utilities. "The region is learning more and more how to integrate wind. For BPA to help facilitate and advance the (wind) market, is a good thing," Mainzer said.
The storage component of the service will probably cost utilities around 0.6 cents/KWh, Mainzer said. The transmission component's cost has not yet been worked out, he added.
A related issue is wind's capacity value. "We haven't had the resources to do a study," King said. "It hasn't been a big issue in the Northwest because we're not a capacity market. Clearly, wind is at a disadvantage because of its capacity factor. If you had to integrate wind into the grid from scratch, you'd have to build enough transmission to take the fullest possible output."
If wind plants could be assured of accessing a market to sell unused transmission capacity, the cost of delivered wind energy could be cut from approximately 4.3 cents/KWh to 3.7 cents/KWh, King estimated.
PacifiCorp's IRP does not assign wind a capacity value, but the document offered a "what-if" analysis assuming that 15 percent of new wind capacity would contribute to the 15 percent reserve margin PacifiCorp is seeking. The result was that the present value revenue requirement would drop $100 million.
"If the built wind capacity did contribute to the planning margin at its expected capacity factor of 32-36 percent, the amount of new capacity installed in the system through 2013 could be reduced by approximately 475 MW," the IRP said.
"We hope we can revisit the capacity issue next year," Singh said.
Transmission policies that do not accommodate wind's intermittent characteristics can skew the market to wind's disadvantage, according to the American Wind Energy Association. Wind energy is particularly sensitive to transmission costs because developers must build where the wind blows, said an AWEA paper on transmission issues.
"Yet many transmission policies assume that generators can control and predict their generation levels and penalize them when they do not. Plainly, these policies make no more sense for wind generators than would policies that penalize coal plant operators for their ramp rate limitations," the paper said.
AWEA advocates allocating embedded transmission costs to end-users rather than generators, as well as real-time balancing markets, elimination of pancaked transmission rates and standardized interconnection procedures.--Jim DiPeso
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