Could Minnesota get by on 100 percent renewables?

Posted on 03/13/2012 by Dan Haugen

Minnesota could affordably meet all of its electricity needs from wind and solar power, if those sources were coupled with the right mix of energy storage and efficiency improvements.

That’s the conclusion of a new report released today by the Institute for Energy and Environmental Research (IEER), a Maryland-based policy research group.

“It’s a first cut on how you would maintain the same level of reliability” — and cost — using only renewables, says Arjun Makhijani, IEER’s president and senior engineer.

IEER is a member of RE-AMP, which funds Midwest Energy News.

Under the 100-percent renewables scenario described in the report, Minnesota would be less vulnerable to swings in fossil fuel prices, it would have cleaner air and water, and it would only pay the equivalent of another 1-2 cents per kilowatt hour after energy efficiency gains are factored in.

Makhijani is author of Carbon-Free and Nuclear-Free: A Roadmap for U.S. Energy Policy, a 2007 book that argues the nation should move away from all forms of fossil fuel and nuclear power. The report on Minnesota renewables is among the first to take a closer look at the technical and economic feasibility of that goal on an individual state level.

The report examines Minnesota’s electricity needs for every hour of the year (based on 2007 data from Xcel Energy) and compares it to the potential wind and solar generation in the state during those same times. It finds that for most of the year, a bulked up commercial wind and rooftop solar sector could satisfy all of that demand, with a 12 percent cushion on top.

There are gaps, however, just like there are periods now, such as on hot summer days, when electricity demand exceeds utilities’ normal generating capacity, which forces them to fire up dirtier and expensive backup generators. Under an all-renewable scenario, there would be times in late summer when demand would exceed the state’s likely potential wind and solar power.

Just as with today’s peak load challenges, strategic investments in energy efficiency could eliminate many of these deficits between demand and generation. Makhijani calls the gaps that remain “relational peaks,” those crunch times when renewable generation falls below demand.

Under Makhijani’s vision, this is where energy storage comes in. Instead of turning to gas or oil peaking plants, utilities and grid operators could fill these gaps with a mix of storage technologies, including compressed air and pumped hydro energy storage. For its cost analysis, IEER used compressed air energy storage.

The report forecasts that transitioning from gas, coal and nuclear to wind, solar and storage would increase the price of electricity, but it says much of that increase could be masked by gains in energy efficiency. “If we do efficiency right, it can make a lot of things happen,” says Makhijani.

IEER says more study is needed, including closer looks at state-wide energy efficiency and storage potential, as well as regional, Midwest studies of demand dispatch, storage, “relational peaks,” and other grid-level issues.

Makhijani says moving toward a 100-percent renewable electricity system would be consistent with Minnesota’s existing goals, such as its legislative pledge to cut greenhouse emissions 80 percent by 2050. He says Minnesota should set a new goal of a 100 percent renewable energy standard, with realistic benchmarks and milestones.

The state’s public utility commission should also require utilities to include a 100-percent renewable model in their resource planning documents, he says.

“You’re not going to get there if you don’t put the idea on the table,” Makhijani says.

Dan Haugen is an Energy Journalism Fellow at Midwest Energy News. Contact him at dan@danhaugen.com.

Photo by 4Neus via Creative Commons

Forum to address energy’s role in national security

Posted on 03/02/2012 by Dan Haugen

Rear Admiral Neil Morisetti, UK's Climate & Energy Security Envoy

Rear Admiral Neil Morisetti, the United Kingdom's climate & energy security envoy

Military leaders are increasingly connecting the dots between energy, climate and national security issues. We’ve reported here before on the U.S. military’s push to go green with solar, biofuels and other renewable technologies.

Across the pond, defense leaders in the United Kingdom have also made energy and climate a top priority. Rear Admiral Neil Morisetti is the United Kingdom’s climate and energy security envoy. He’s speaking this afternoon at a public forum on energy and security issues hosted by the University of Minnesota’s Institute on the Environment.

Midwest Energy News spoke with Morisetti on Thursday before his visit to Minnesota. The following is a transcript of our conversation, with slight edits made for clarity and conciseness.

How and when did you first start to think about energy and climate change as national security issues?

I think there’s been a growing awareness and their relationships over the last five or six years. A report was written in 2007 by CNA, a Washington-based think tank. Their military advisory board did a piece on climate change and the impact on national security. Subsequently they’ve done some work on energy as well.

There are a number of issues that will impact our secure, sustainable and affordable supplies of key natural resources — energy, water, things that we need for economic prosperity. In the case of energy [those issues may include] supply and demand, geophysical events, Arab Spring, issues today around the Strait of Hormuz, the outcome of natural disasters and events like Fukushima last year.

There’s also a recognition that the consequences of climate change can increase the risk of instability in those parts of the world that are already suffering from stresses, parts of the world where we’ve seen conflict. It’s a belt the size of the equator up through the tropics. It runs around though Africa, Asia, South America, and it’s a part of the world where we get our oil and gas. It’s where the trade routes and particularly where the energy routes run.

As the head of the British military said at the end of last year in a keynote speech, his greatest fear about national security is about not having economic growth and prosperity. The point being, in all our societies, key to our security and well being, as opposed to simply national borders, is economic prosperity. With that in mind, in both our countries, in the 2010 QDR defense review here and in the UK’s strategic defense security review in the same year, we started to factor in these issues of the impact of climate change as a threat multiplier, as a risk multiplier, not least as it impacts on sustainable supplies of energy.

What are some of the ways in which our energy choices affect national security today?

[The U.S.] imports somewhere in the region of a billion dollars of energy every day, coming in from parts of the world that we have seen instability, where as a result prices have gone up. We saw it in Libya last year. We paid about an $18 a barrel premium. We’re seeing it with issues in Iran today, but also Libya’s production isn’t back yet. It’s down in Sudan. It’s down in Yemen. It’s down in Syria. And all that is doing is pushing the price up.

We need to be more energy efficient, to make better use of energy that’s in our own countries. I know you can say there’s lots of oil and gas in America, but these are global markets and the price is only going in one direction, as you can see from the price of gas at the pump. This morning’s New York Times was talking about how $5 a gallon gas isn’t far away. But even if you just use the resources in your own country, your oil and gas, the challenge of course is because it’s a global market and the supplies are sent to those who pay the most, you’re still paying a high price.

A new relationship with energy is what we’re trying to achieve, and that’s the same in the military. We’ve always used a lot of energy. It’s a big component of our expenditure. We’ve had to develop energy strategy, because if we don’t we won’t be able to afford to deliver some of our military outputs that are so essential.

How are national security leaders around the globe responding to these looming, emerging challenges?

I think there is a growing awareness around the world. I was just in India two weeks ago and energy security is right at the top of their agenda as well. They need energy for their growth and economic development, and the risk to that, from a variety of sources, means they’ve got to think about their energy policy. It’s the same in other countries.

We need to be more efficient. We’ve been looking at how we optimize performance of equipment. For example in the UK, with one of our fleets of helicopters we’ve worked on the engines to get 25 percent better fuel performance. The way we use equipment [such as] generators, to make sure they’re more energy efficient.

But also we’re making use of renewables. Today in Afghanistan, Marines and soldiers are using roll-out solar blankets and photovoltaic cells when they’re deployed away from their main bases to charge batteries for their radios, as opposed to having to carry around lots of spares. And in the big operating bases we’re making use of renewables as well; not just solar but geothermal and others as well, to generate power and reduce the number of convoys we need from either the north or the south, which are vulnerable to interception and disruption. We’ve regrettably lost lives doing that, and there’s a high fiscal cost as well of getting the fuel into theater.

Are we doing enough? What else should military leaders be doing to either avoid or adapt for these scenarios?

I think we’ve started the process. We clearly need to do more. I think we’re now focused on doing more. If I speak for the UK, we’re now looking at energy as a commodity and factoring that into our thinking with our new equipment programs. In the wider context of climate change, we’re beginning to understand how we can help other government agencies, departments and organizations in building capacity and developing resilience in those parts of the world where climate change is going to have its greatest effects and perhaps increase the risks of conflict and instability. An example of that might be helping a country’s coast guard develop the ability to patrol their economic zone off the shore in order to look after resources, whether it be fish or minerals.

What gives you hope that our militaries are up for these challenges?

Have a look at the Department of Defense website and see all the things they’re doing today. It’s an organization that’s fighting a number of conflicts, it’s under budgetary pressure, and look at the amount of effort that’s being put into addressing these issues. What’s impressive is the fact you have an energy strategy that recognizes the importance of energy and the need to address it; also the amount of research that’s going on, whether it’s in biofuels or battery storage. A lot of it is on a public-private basis, not just from a military context.

I think at the end of the day, many of the benefits that we accrue in the military will also be open eventually to wider society, in the same way that we’ve seen it with GPS, the Internet, solar panels, from defense and space programs.

Any other key points you plan to make during Friday’s event?

It’s very tempting if you’re in North America or northern Europe to say that these issues of instability that are perhaps accentuated by the impacts of climate change doesn’t affect us because it’s a long ways away. It’s important that we understand we live in a globalized world; that what happens a couple hundred thousand miles away is just as important by the indirect effect it has as events happening much closer to home.

What we’ve got is a global problem which requires pursing a global solution. In doing so we will gain opportunities and benefits. I talk about it from a defense perspective. We’re doing all the work on energy because it improves our business model. We’re more effective doing our job. We reduce risk, and we reduce our costs. I think most people, whether they’re in the commercial sector or government or as private individuals, should try to achieve that in their use of energy. It’s about opportunities as well as challenges.

Rear Admiral Neil Morisetti will speak today, Friday, March 2, at University of Minnesota’s Institute on the Environment public forum on energy and national security issues. The public forum will take place from 3 to 4:30 p.m. in the lobby level conference room of the Cargill Building, 1500 Gortner Ave., St. Paul.

Coal’s changing economics trigger new view of future

Posted on 02/20/2012 by Dan Haugen

The Laskin Energy Center in Hoyt Lakes, Minnesota (Photo by Joel Dinda via Creative Commons)

We’ve long known about the hidden health and environmental costs associated with burning coal, but until very recently, no one questioned that it was a cheap source of electricity for utility customers.

Today, the economics of coal are changing.

The nation’s aging coal-burning power plant fleet faces rising repair and maintenance costs, looming environmental regulations, and increasing competition from cleaner energy sources. For the first time in history, scenarios are emerging in which coal can no longer be assumed the most cost-effective option for utility ratepayers.

In Minnesota, that shift has recently prompted a new reporting requirement for the state’s investor-owned utilities.

Every couple of years, those utilities are required to file something called an integrated resource plan. It’s a document that describes the utility’s forecast for how much electricity it expects to have to generate during the next 15 years, as well as its plan for how it intends to reliably and affordably provide that power to customers. The state’s Public Utility Commission needs to approve the plans.

Minnesota Power, a public utility with 144,000 customers in central and northeastern Minnesota, filed its most recent resource plan in 2009. The company continues to decrease its reliance on coal, which accounted for 95 percent of generation in 2005 and will be reduced to 75 percent in 2013 thanks to recent wind farm investments.

However, during the resource plan’s public comment period, two separate interveners submitted modeling studies showing that Minnesota Power could potentially reduce costs to its ratepayers by shutting down two of its older and smaller coal-burning power plants, the 75-megawatt Taconite Harbor and 110-megawatt Laskin Energy Center.

The studies were filed by the Minnesota Department of Commerce and the Minnesota Center for Environmental Advocacy (MCEA), a member of RE-AMP, which also publishes Midwest Energy News.

“If you took [the small coal-fired power plants] out of the Minnesota Power system and allowed them to disappear, to be retired, the cost to their customers of providing energy over the next 15 years would be lower without these power plants,” said Beth Goodpaster, an attorney who directs MCEA’s clean energy program.

However, the coal-shutdown scenario wasn’t considered in Minnesota Power’s most recent resource plan. The utilities commission asked the utility to follow up with its own analysis of what would happen to rates and reliability if it were to close the power plants. That report, called a baseload diversification study, was completed earlier this month. Its conclusion doesn’t contradict the concerns raised by the state and environmentalists.

Minnesota Power’s report says that under “stringent” environmental regulation scenarios, the added capital investment required to keep its small coal-fired units in compliance would be great enough that replacing them with natural gas generation would be lower cost for customers. Even under a less stringent regulatory scenario, Taconite Harbor may not be cost-effective after 2020.

Among the new and pending rules that are expected to add costs for older coal plants are the Cross State Air Pollution Rule (CSAPR), the National Ambient Air Quality Standards (NAAQS), and the Mercury and Air Toxics Standards (MATS) Rule.

Not a ‘snap decision’

The question now is, what happens next?

A public comment period is open on the baseload diversification study until May, after which the state’s utility commission will decide the next step.

MCEA wants the utilities commission to take action sooner than later to begin phasing out the plants. Minnesota Power, though, says it’s focused on incorporating the information into its next resource plan, due in summer 2013.

“There are certain groups or certain stakeholders that may have expected different things out of this study,” said Minnesota Power spokeswoman Amy Rutledge. “It was never intended that the study would come out and that we would make some kind of snap decision whether or not to keep a coal plant open. There is a lot of information here that we are going to have to look deeper at.”

The key uncertainties lie in how stringent pending pollution regulations will be written, as well as the timing and scope of federal carbon legislation. As those policies and regulations take form, the details will determine whether these smaller, older coal plants can compete economically with newer, cleaner energy sources.

Meanwhile, Minnesota’s utility commission has requested similar baseload diversification studies from Otter Tail Power and Interstate Power & Light.

The studies mark a shift in the way the way regulators and others evaluate utility portfolios. Even a decade ago, no one would have argued coal wasn’t in ratepayers’ best economic interest.

“What we would argue in a case at the public utilities commission in the ’90s or even early ’00s is that you ought to take opportunities to reduce carbon dioxide emissions because it’s better for the planet, but we didn’t try to say that it’s also cheaper if you do this,” Goodpaster said.

Minnesota Power says its study doesn’t consider the socioeconomic impact of shutting down its smaller coal plants, which are located in Schroeder, Minn., and Hoyt Lakes, Minn.

“These decisions are decisions that have great impact,” Rutledge said, “and it’s not a decision that we would make lightly.”

Study: Minnesotans willing to pay premium for E85

Posted on 02/16/2012 by Dan Haugen

(Photo via USDA)

Minnesota drivers like their E85, and they’re willing to pay a premium for it.

A new study by a Michigan State University economist shows that even when the higher ethanol blend is a more expensive option than regular gasoline, some flex-fuel vehicle owners in Minnesota continue buying the higher-blend ethanol.

E85, which contains a mix of 85 percent ethanol and 15 percent gasoline, is almost always less expensive per gallon than regular gasoline, which in Minnesota typically contains 10 percent ethanol. But because of E85′s lower energy content, the relative cost per mile of using it can vary.

Soren Anderson, an assistant professor of economics, examined sales and price data from 200 Minnesota fueling stations between 1997 and 2006.

“When the price of E85 rose relative to gasoline, the market didn’t disappear,” Anderson said. “There were still people buying E85 even when its price was quite a bit higher [relative to] gasoline.”

Anderson argues that researchers should take this consumer preference into consideration when calculating the cost of policies such as the federal renewable fuels standard.

Several studies have examined how drivers respond to changes in gasoline prices, but little was known about how ethanol blend prices affect consumer decisions. Anderson concluded that a 10-cent-per-gallon increase in E85 prices caused demand to fall off between 12 percent and 16 percent. That’s significant, but smaller he would have guessed knowing that drivers could have easily switched to conventional gasoline.

“They value something about that fuel when they’re willing to buy it even when the per-fuel-mile price is high,” Anderson said.

The study didn’t survey drivers about their motivations, but it says possible explanations include perceived social and environmental advantages, or misunderstanding about how the fuels compare.

Sales of E85 ethanol have continued to grow in Minnesota, according to statistics publicized this week by the American Lung Association in Minnesota.

Minnesotans bought an estimated 19.8 million gallons of E85 in 2011, making it the third best year for E85 and best since the pre-recession record of 22.5 million gallons in 2008. Gasoline sales, meanwhile, fell to 2.4 billion gallons in 2011 from 2.5 billion gallons in 2010.

“I think it’s a sign that E85 has really become well established in Minnesota,” said Bob Moffitt, spokesman for the American Lung Association of the Upper Midwest. “It’s got a really solid base of customers. The number of stations is not growing quite so fast as it was in the earlier years, but we’re steadily adding numbers.”

Moffitt takes issue with the second part of Anderson’s study, which concludes that even accounting for the “sizable” premium some drivers are willing to pay for ethanol, the federal renewable fuel standard is an expensive way to reduce greenhouse emissions — about $70 per metric ton of carbon dioxide emissions avoided, Anderson calculated.

Anderson acknowledges in his report that the carbon cost is based on current assumptions about the price of ethanol and gasoline, either of which could change due to political, economic or technology factors, such as a game-changing breakthrough in cellulosic ethanol production. If greenhouse emission reductions is the goal, Anderson said in an interview that a more direct policy such as a carbon tax would be less costly to consumers.

The federal renewable fuel standard will require 36 billion gallons of annual production by 2022, with no more than 15 billion gallons coming from corn-based ethanol. Many of the assumptions Anderson makes about its cost come directly from the U.S. Environmental Protection Agency’s regulatory impact statement for the policy.

Moffitt said one of Anderson’s assumptions — that E85 ethanol nets 36 percent fewer miles per gallon than conventional gasoline — is not what they’ve observed and heard from drivers. In real life it’s closer to a 15 percent or 20 percent decrease, Moffitt said.

Ethanol offers benefits beyond reducing greenhouse gases, too, Moffitt said. Anderson’s study focuses solely on greenhouse gases and consumer impacts. The EPA’s policy impact report counts $2.6 billion worth of energy security benefits, up to $2.2 billion in health benefits, and $13 billion in new farm income. (Also: millions of pounds of new nitrogen and phosphorus pollution in the Mississippi River.)

“Gasoline powered vehicles produce a lot more than just greenhouse gas. They’re the single largest source of air pollution in Minnesota,” Moffitt said. “Any steps we can take toward cleaner, more renewable fuels is a step in the right direction.”

On that point, it would seem many Minnesota drivers agree.

Should red and blue states be green and black instead?

Posted on 01/25/2012 by Dan Haugen

A presidential election year is upon us again, and that means the return of maps splitting the nation into red and blue states.

James Lenfestey thinks we should be seeing green and black instead.

Lenfestey, a Minneapolis poet and former journalist, spoke at a monthly Environment Minnesota breakfast Tuesday about the politics of energy. (Environment Minnesota is a member of RE-AMP, which publishes Midwest Energy News.)

The oil and coal industries have influenced U.S. politics so much in recent decades, Lenfestey explained, that many red states would be better represented as black for the oil and coal interests they support. Blue states, meanwhile, have led the way on green energy.

Lenfestey’s first exposure to the fossil-fuel industry’s political machine came while working as an editorial writer for the Minneapolis Star Tribune in the early 1990s. After writing editorials about climate change, he began receiving mail from an organization called the Global Climate Coalition.

The now-defunct GCC was among the earliest fossil-fuel backed groups to begin spreading scientific-sounding misinformation about climate change issues. He calls them Potemkin villages — fake groups meant to give the appearance that science or the public is behind it.

The mission of these groups has been to confuse the public about the science behind greenhouse gases and global warming. They not only borrowed strategies from the tobacco industry, but some of the same individuals who defended tobacco now work for these fossil fuel groups.

The latter claim is documented in the recent book “Merchants of Doubt: How a Handful of Scientists Obscured the Truth About Climate Change,” by Naomi Oreskes (who penned an editorial this week in the Los Angeles Times and appeared Tuesday on NPR’s Talk of the Nation.)

Lenfestey characterized it as an information war, and the side that believes society needs to take action to curb greenhouse emissions is “absolutely losing” the public battle.

One reason countering climate misinformation is so difficult is that those spreading it only need to sow enough confusion to stall action. “All they want is stalemate,” said Lenfestey.

Another factor that makes it challenging is the state of media. “My old game, the mainstream media, is very much part of the problem,” he said. The amount of coverage of climate change issues has plummeted in the past half decade, and much of the coverage that remains focuses on the controversy rather than the facts.

How do climate-change believers turn the conversation around? Lenfestey offered some advice for how people can better communicate. When people criticize government subsidies for clean energy technologies, for example, remind them that hydraulic fracturing wouldn’t exist if it weren’t for years of government support.

Perhaps Lenfestey and President Obama’s speechwriters are reading the same pointers, because that’s how Obama framed the issue in Tuesday evening’s State of the Union speech.

“[I]t was public research dollars, over the course of thirty years, that helped develop the technologies to extract all this natural gas out of shale rock – reminding us that government support is critical in helping businesses get new energy ideas off the ground,” the president said.

Obama only mentioned climate change once in the speech, in noting that Congress is too divided to take on the issue at all.

Lenfestey noted that presidents and their advisers have been talking about the risks of climate change or fossil fuel emissions since the Lyndon Johnson administration. Whether more energy-politics-as-usual will follow this speech is to be seen.

Renewable or not? How states count hydropower

Posted on 01/13/2012 by Dan Haugen

North Dakota's Garrison Dam has a nameplate capacity of 583 MW. (Photo via Army Corps of Engineers)

When is hydropower a renewable energy source?

The answer, at least from a policy perspective, depends on the state.

How hydropower is counted toward renewable electricity standards varies from state to state perhaps more than any other type of generation.

More than 30 states have passed renewable electricity standards, which require utilities to generate a percentage of their power from renewable sources.

Every state counts some hydropower, but the fine print is far from uniform.

In the Midwest, for example:

•Iowa and Minnesota allow utilities to count electricity from small hydropower facilities only. Iowa doesn’t define small, while Minnesota sets the upper limit at 100 megawatts.

•Illinois, Michigan, and Missouri don’t count hydroelectricity from facilities that require the construction of new dams or significant expansion of existing ones.

•Ohio will let utilities count hydroelectricity only from facilities that are not detrimental for fish, wildlife, water quality or “cultural resources.”

•North Dakota counts all hydropower in its renewable electricity standard.

•In July 2011, Wisconsin added new hydropower restrictions to its renewable standard. Utilities can only start counting hydroelectricity from large facilities after 2015.

One reason renewable policies place qualifications on hydroelectric facilities is that most of them were already built when states started discussing the policies. Counting all available hydro would significantly water down the impact in some places.

“The whole point of a [renewable standard] is to increase the amount of renewable energy in a state,” says Kyle Aarons, a solutions fellow with the Center for Climate and Energy Solutions. “Since hydropower has been around for over 100 years in some areas, if they counted all hydro their targets would have to be unrealistically high or they wouldn’t actually be encouraging any new renewables from coming online.”

Utilities didn’t need new incentives to build hydropower facilities, Aarons said. They had already been investing in hydropower for reasons other than its renewable qualities.

That was the situation in Minnesota as lawmakers were working on the state’s renewable policy in 2007. Canada’s Manitoba Hydro is a major power supplier to the state’s utilities, and it was preparing for a major expansion at the time.

“We wanted to see Minnesota develop its own resources rather than have a standard that would allow Minnesota utilities to meet it simply by buying hydropower from a major development,” says State Rep. Bill Hilty, DFL-Finlayson, one of the bill’s main authors.

The environmental impact of the Manitoba Hydro project was also of concern, says Hilty. It’s an issue that’s come up elsewhere, too, as states drafted their renewable policies, says Rupak Thapaliya, national coordinator for the Hydropower Reform Coalition.

“Hydroelectric is not always clean,” says Thapaliya. “Some states tend to be very protective of the ecosystems and they are hesitant to qualify hydro because first of all it’s not as clean as say, solar.”

A project’s size, however, is a poor measure of its environmental impact, says Thapaliya. That’s why the Hydropower Reform Coalition advocates for an approach more along the lines of Ohio, which specifically addresses environmental impact, rather than Iowa or Minnesota, which simply cap the size of facilities that are counted.

Organizations such as the Low Impact Hydropower Institute and American Rivers issue certification to hydroelectric facilities that meet environmental guidelines. Pennsylvania requires hydro to have that certification in order to be counted in renewable portfolios.

The National Hydropower Association doesn’t believe that’s necessary.

“Any hydro project that gets built today or that gets relicensed has to meet all of the federal and state environmental laws that are on the books,” says Jeff Leahey, the associations’ government affairs director.

When Congress was discussing a national renewable standard, the hydropower association supported a measure that wouldn’t have counted hydro as renewable but also wouldn’t have counted it in utilities’ non-renewable portfolios either.

A utility that hypothetically drew 50 percent of its power from hydro and was required to generate 25 percent from renewables would base the calculation only on the other half of its portfolio that didn’t come from hydro, lessening the burden.

A more aggressive clean energy policy, such as the 80 percent by 2035 target that President Obama has proposed, would need hydro to succeed, says Leahey:

“We don’t think you can get to the amount of clean energy generation that policy makers are calling for unless you include hydro.”

How Hydro Counts Towards States’ Renewable Goals

Click on the markers to see how states count hydropower in their renewable electricity standards.

View State Renewable Portfolio Standards & Hydropower in a larger map
Source: Hydropower Reform Coalition

An earlier version of this story omitted North Dakota among states that count all forms of hydropower in their renewable standards.

How Germany slashes emissions while growing GDP

Posted on 11/07/2011 by Dan Haugen

A newly constructed home in Germany, with solar panels.

I’m attending the Institute on the Environment’s E3 (Energy, Economy and Environment) conference today at the University of Minnesota (disclosure: as a freelancer I’ve written for the institute’s magazine).

This morning we heard from the German Embassy’s energy and environment counselor, Friedo Sielemann, who talked about how his country became one of the world’s clean-energy success stories.

Germany has reduced greenhouse emissions 24 percent compared to 1990 levels and it now generates more than 20 percent of its electricity from renewables. And it’s achieved that without disrupting its economy, Sieleman said.

“We often hear that if you do this or that for the environment, your economy will suffer,” Sieleman said. Germany, however, has grown its GDP even as energy use and emissions have decreased. “These three are not automatically connected.”

How did it do it? The key was effective policies, particularly its system of feed-in tariffs, Sieleman said.

“It’s a very simple and very effective law,” he said. Basically, it says if you generate renewable energy, grid operators have to buy it at a fixed price and give it priority on the grid. The price is fixed for 20 years and decreases over time.

That fixed price gives investors security and predictability. The premium grid operators pay for renewables is ultimately passed onto electricity customers. The model doesn’t involve state subsidies.

The goal isn’t to give “eternal support” for renewables, Sieleman said, but rather to help new technologies compete.

More than one-third of Germany’s renewable energy comes from wind. Hydropower accounts for about 20 percent, and solar is over 10 percent. The rest comes from biomass.

There’s nothing particularly unique about the amount of wind or sun in Germany, but it has one resource that isn’t so plentiful here in the United States: consensus.

Germany has broad support for its climate change and renewable policies — “as broad as it can be in a democracy,” Sieleman said. That consensus “helps enormously.”

Photo by Tim Fuller via Creative Commons

Can civil disobedience halt Keystone XL?

Posted on 09/06/2011 by Drew Kerr

More than 1,250 opponents of the Keystone XL pipeline were arrested at the White House over the last two weeks in what has been described as one of the largest environmentally-minded acts of civil disobedience in recent history.

Among those taken into custody were 70-year-old NASA scientist James Hansen and well-known author and environmental activist Bill McKibben, who was arrested on Aug. 20 and spent three days in jail.

After his release, McKibben wrote in Mother Jones that the protest accomplished two things: it thrust the debate over the 1,700-mile pipeline onto the national stage, and it “helped make it clearer that President Obama should be the focus of anti-pipeline activism” (Obama is being asked to sign a permit for the project because the pipeline crosses the U.S.-Canada border).

Barack Obama has the power to stop it, and no one in Congress or elsewhere can prevent him from doing so. That means—and again, it couldn’t be simpler—that the Keystone XL decision is the biggest environmental test for him between now and the next election. If he decides to stand up to the power of big oil, it will send a jolt through his political base, reminding the presently discouraged exactly why they were so enthused in 2008.

The fate of the $7 billion project continues to hang in the balance despite the mounting opposition. In a review released on Aug. 26, the U.S. State Department declared the pipeline posed limited environmental hazards. Top U.S. officials have already voiced support for the project as a way to reduce reliance on oil less stable and friendly states in the Middle East.

The demonstrations against the pipeline are likely to pick up in the coming months, however.

On Sept. 24, McKibben’s 350.org is sponsoring a global day of action, Moving Planet, calling for a transition from fossil fuels to clean energy. Tar Sands Action, the group that organized the White House sit-in, is hinting at a second wave of action. And protests are also being planned for Oct. 7, the day congressional leaders are scheduled to hold their final hearings on the Keystone XL proposal.

For McKibben, the movement rising up against the pipeline is drawing parallels to the civil rights era. Writing after his arrest, he drew on the experience of Martin Luther King Jr., whose peaceful protests eventually undid the country’s codified racial injustices.

We may not be facing the same dangers Dr. King did, but we’re getting some small sense of the kind of courage he and the rest of the civil rights movement had to display in their day—the courage to put your body where your beliefs are.

We all know how the civil rights story ended. The question now: how will it end for those standing up against Keystone XL?

Photo Courtesy Josh Lopez.

Are renewable standards driving up utility rates?

Posted on 05/17/2011 by Dan Haugen

Photo by ninjawil via Creative Commons.

When Minnesota passed one of the nation’s most aggressive renewable portfolio standards in 2007, Minnkota Power wasted no time in ramping up its wind capacity. Believing the cost of wind power would go up, the Grand Forks, N.D., generation and transmission co-op locked in long-term contracts to cover its needs for the next 25 years.

Then the economy went south, dragging electricity demand and wholesale prices down with it. Minnkota, along with the 11 rural electric distributors it serves in North Dakota and northwestern Minnesota, suddenly found itself stuck with more wind power than it needed. It’s been selling the excess at a loss ever since, making up the difference with a half-cent per kilowatt-hour surcharge on its customers.

The fees have helped fuel the perception, particularly among rural electric co-ops, that Minnesota’s renewable energy policy is driving up the price of electricity. Others, though, including state energy officials, point to the utility’s unusually large and early hedge on wind prices as a primary cause of its recent losses.

The Minnkota case illustrates just how complicated it can be to calculate the impact of state renewable mandates on electricity rates. Variables such as fuel prices, wholesale rates and energy demand are in constant flux, and decisions about what and when to buy can affect the return on capital investments.

With many states’ renewable targets ramping up right as their economies struggle to rebound from the recession, politicians are scrutinizing the costs of renewable policies and requesting information about how they affect electricity rates.

They’re not likely to find a simple answer.

However, the most comprehensive studies to date and the experience of utilities so far suggest that, by and large, renewable portfolio standards haven’t had a significant impact on customers’ bills. Still, there’s room for more study, and in some states, including Minnesota, there remains relatively little data about the ratepayer impact of renewable policies.

‘20 studies on each side’

The Minnesota Chamber of Commerce has been pushing for legislation that would require utilities to include data in their biennial resource plans about costs incurred from complying with the state’s renewable standard, which calls for 25 percent of electricity to come from renewable sources by 2025.

The legislation appears likely to pass with little opposition because both supporters and critics of the state’s renewable policy believe a study of costs will result in evidence that supports their position. The Chamber says it is neutral on the issue.

“We get folks who call us and say: hey, my utility rate is going up. How much of this is [because of] the renewable energy standard?” said Bride Seifert, the chamber’s energy policy manager. “We’d like to know the answer, because there’s 20 studies on each side of the table.”

One of the larger reviews of renewable portfolio standards was a 2008 report (PDF) from the Lawrence Berkeley National Laboratory. The study looked at data on a dozen state renewable policies enacted before 2007. The estimated impact on electricity rates varied by state, but it was a fraction of a percent in most cases and just over 1 percent in two states, Connecticut and Massachusetts. “There is little evidence of a sizable impact on average retail electricity rates so far,” the report concluded.

One of the report’s co-authors, Galen Barbose, said in an interview that they are collecting data for an updated version of the report. So far he said he hasn’t seen any new information to suggest their conclusion about rate impacts will change significantly in the next edition.

A 2009 study by the U.S. Energy Information Administration modeled the potential impact of a 25 percent nationwide renewable electricity standard. It, too, noted that rate impacts would vary by state, with renewable-rich regions like the Great Plains and Northwest meeting the targets more easily. Overall, though, it projected no impact on rates through 2020, followed by a less than 3 percent increase by 2025. By 2030, however, it projected little difference in rates with or without a national renewable mandate.

The Minnesota Free Market Institute and American Tradition Institute reached a very different conclusion in an April 2011 report (PDF), which claims Minnesota’s renewable electricity standard is going to cause rates in the state to skyrocket by as much as 37 percent by 2025.

Utilities’ experiences vary

Xcel Energy, the state’s largest utility, has come up with a much smaller number: $0.003. That’s the difference Xcel forecasts between its projected per-kilowatt-hour energy price in 2025 under its proposed wind expansion plan compared to a hypothetical scenario in which it stopped adding new wind capacity after 2012.

Asked to comment on the Free Market Institute’s study, Xcel Energy spokesman Steve Roalstad said, “It doesn’t seem to be moving in that direction.” The cost of adding renewable energy sources, especially wind, continues to fall and has become very competitive with traditional generating sources, he said.

The utility already files information about the impact of renewables on its rates as part of its regular resource planning documents. Roalstad said the company would be happy to provide any additional information to comply with the Chamber’s proposed legislation. But the ratepayer impact so far, he said, is insignificant.

Otter Tail Power, which serves about 130,000 customers in the Dakotas and western Minnesota, has had a similar experience. Todd Wahlund, Otter Tail’s vice president for renewable energy development, said the company would have added wind capacity regardless of Minnesota’s renewable standard. That’s because it’s been the most economical option.

“Absent these wind resource additions, an alternative resource would have been needed, and from our analysis, other options would have been higher cost,” Wahlund said.

Duluth-based Minnesota Power was among the first utilities to cite complying with the state’s renewable standard as a factor in a rate increase case with state utility regulators. Spokeswoman Amy Rutledge said, however, that renewables accounted for only a small portion of the increase.

“Our rate increases have been largely the result of large environmental retrofit projects to reduce emissions at our largest generating facilities,” Rutledge said.

Long-term benefits

Xcel says adding renewable energy sources to its system has reduced its environmental regulatory risk, and that diversifying its power sources is a good way to protect customers against rate increases in the event that natural gas prices go up again. “Wind power can be a very effective hedge against the volatile nature of natural gas prices, even taking into account wind’s intermittent nature,” Roalstad said.

Warren Leon, project director for States Advancing RPS, an association for state policy people who work on renewable mandates, says the cost of complying with them should be fairly straightforward for utilities to calculate. But states should also be asking: “Are there benefits to the thing produced that also deserve to be studied, even though they are harder to pin down?”

Supporters say there are environmental and job-creation benefits (which, as the legislation is currently written, wouldn’t be a part of the reporting process proposed by the Minnesota Chamber.) But there are also benefits that specifically relate to keeping down electricity rates, Leon said.

For example, when the New York State Energy Research and Development Authority studied its renewable standard, it concluded that adding wind capacity helped lower overall rates by reducing the need to buy energy from more expensive power plants during peak generating hours.

Minnesota State Rep. Bill Hilty, one of the architects of Minnesota’s renewable policy, said some critics have exaggerated the financial impact by attributing the full cost of transmission upgrades as a cost of wind power. In reality, he said, many of those upgrades would have needed to happen anyway, and distributing more renewable power across the grid reduces the need for even greater upgrades.

A bet on wind

That doesn’t mean utilities haven’t encountered costs in trying to achieve those longer-term benefits. In a brief written statement, Great River Energy blamed its wind energy purchases for increasing retail customer bills by about 1.6 percent, or about $18 per year for an average homeowner. The generation and transmission co-op serves about 645,000 customers in Minnesota and Wisconsin.

“The environmental benefits of wind energy come at a cost,” said Great River Energy member services vice president Jon Brekke. “To ensure reliability, Great River Energy must retain sufficient capacity to meet peak load conditions. In effect, wind energy resources duplicate some of this capacity, resulting in additional costs for our members.”

Minnkota Power’s predicament stems from locking in big, long-term wind contracts immediately following the passage of the Minnesota renewable legislation, which required utilities to generate 7 percent of electricity from renewables in 2010. By 2012, they’re expected to be at 12 percent, and it gradually ramps up to 25 percent in 2025.

Minnkota Power has sailed past all of those milestones already. By 2009 it had signed contracts for 357 megawatts of wind power from two North Dakota wind farms. Today it’s already generating more than 30 percent of its electricity from renewable sources.

“We wanted the best available sites and the best available rates,” spokesman Kevin Fee said.

The company made a bet that wind contracts would cost more in the future. That might still end up being the case, but for now Minnkota is paying a premium it can’t recoup through sales. The cost of new wind generation has continued to go down. The real hurt has been the decline in electricity demand and wholesale electricity prices due to the recession. Minnkota is now selling its wind power for 2 cents less per kwh than it’s paying for it, and it’s assessed the loss to customers in the form of a surcharge.

A December report from the Minnesota Office of Energy Security said Minnkota’s “dilemma” should serve as a caution about the risks of overbuilding renewable capacity. “It remains to be seen how Minnkota’s customer-owners ultimately will be affected,” the report notes.

“In the long run, we think it’s going to pay off,” said Fee.

Dan Haugen is a Minneapolis freelance writer who covers business, technology and environmental topics.

This work by Midwest Energy News is licensed under a Creative Commons Attribution-NoDerivs 3.0 United States License.

Upton honored by U.S. Chamber of Commerce

Posted on 03/31/2011 by Ken Paulman

Rep. Fred Upton of Michigan, who notably reversed his stance on regulating carbon emissions in his fight for chair of the House energy committee earlier this year, has received an award from the U.S. Chamber of Commerce.

Upton is the winner of the “Spirit of Enterprise” award for, among other things, “standing firmly against overreaching regulations and job-destroying mandates.”

The U.S. Chamber is one of the groups Upton reportedly met with, along with Sen. James Inhofe, to craft a strategy to to block EPA regulation of greenhouse gases.

The Chamber gives Upton a score of 93% for voting along with their issues. But despite Upton’s turnaround on climate rules, that score is consistent with Chamber ratings from previous years.

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