Cost of gas versus alternatives in the US

Large post full of info..
Wednesday, February 16, 2011

Statement on Interior’s proposed wildlife guidance for wind turbines
February 15, 2011 (American Wind Wnergy Association)

“The wind energy industry cannot support the guidance on wildlife issued last week by the Department of the Interior and its U.S. Fish and Wildlife Service (referring to both Draft Voluntary, Land-Based Wind Energy Guidelines and Draft Eagle Conservation Plan Guidance).

“The wind industry participated for more than two years in a public, collaborative Federal Advisory Committee (FAC) process, which also included representatives of states, tribes, and leading wildlife conservation groups such as Defenders of Wildlife, National Audubon Society, Bat Conservation International, and The Nature Conservancy. It resulted in consensus recommendations on wind turbine siting that wind energy developers broadly supported…[The guidance] deviates significantly from the consensus recommendations…”

click to enlarge

“…[A]s released, it could…[1] Delay construction of projects by up to three years, and require operating projects to retroactively conduct post-construction wildlife studies for a minimum of two and as much as five years, adding unforeseen costs to the operating budgets of these facilities…[2] Require “adaptive management”, which could include operational changes, such as shutting off turbines at certain times of the year, which will add further unquantifiable costs to even projects already permitted and operating…[3] Request analysis on wildlife-based sound impacts without any peer-reviewed scientific evidence that sound related to the construction and operation of wind farms has the potential to impact wildlife…[4] Greatly expand applicability under the National Environmental Policy Act (NEPA) to projects built on private lands, adding time and costs to developing wind projects, when there is no federal staff to perform this vastly increased amount of administrative work.

“Industry analysts say more than 34,000 MW of potential wind power development, $68 billion in investment, and 27,000 jobs are at risk due to USFWS policies on golden eagles alone. Those numbers are expected to grow exponentially with analysis of the full scope of the proposed guidelines. Therefore they threaten the nation’s ability to meet the renewable energy targets set forth by the President and three Cabinet officers…”

click to enlarge

“The wind energy industry has a long history of being proactive on wildlife issues, funding millions of dollars worth of wildlife research and mitigation, including establishing and participating in the American Wind Wildlife Institute, the Bats and Wind Energy Cooperative, the National Wind Coordinating Collaborative, and a habitat conservation plan to conserve Indiana bats and another for whooping cranes and lesser prairie chickens…Wind power is far less harmful to birds than communication towers, tall buildings, airplanes, vehicles, cats, and numerous other human-caused threats including the conventional energy sources that wind power displaces…Wind turbines are estimated to cause fewer than three out of every 100,000 human-related bird deaths in the U.S., and will never cause more than a very small fraction of bird deaths no matter how extensively wind power is used in the future…

“According to a study by the New York State Energy Research and Development Authority (NYSERDA), non-renewable energy sources ‘pose higher risks to wildlife’ in the New York/New England region than renewable sources…coal ‘is by far the largest contributor’ to wildlife risks…[and] wind was the only [energy source studied] that did not present population-level risks to birds…The industry cannot support the guidelines as currently drafted…[and hopes] they will be revised to be consistent with the consensus recommendations.”

New, balanced approach calculates lifetime solar energy cost
Angela Hardin, February 7, 2011 (Argonne National Laboratory)

“Researchers at the U.S. Department of Energy’s (DOE) Argonne National Laboratory in partnership with an analyst at Gartner, Inc. have developed a new and more instructive approach to calculate the lifetime cost for a solar-generated energy system for comparison to other energy systems.

“Usually when people consider the cost of solar energy, they use the dollars per Watt metric, which is only a measure of the initial capital cost and the solar panel vendor’s performance specification. This doesn’t take into account the actual energy you will get from the system or other cost factors such as maintenance. A far more informative metric is the levelized cost of energy (LCOE). [LCOE is the cost of an energy supply over its lifetime per energy unit produced.]”

click to enlarge

[Seth Darling, co-author,Assumptions and the levelized cost of energy for photovoltaics:] “In typical LCOE projections for solar energy, many assumptions are swept under the rug, and we wanted to make a small step toward lifting up that rug and showing how you can truly get a handle on those assumptions to develop a more accurate picture of the potential costs…”

[Seth Darling, co-author,Assumptions and the levelized cost of energy for photovoltaics:] “Specifically, the Argonne approach uses a Monte Carlo simulation that statistically selects from probability distributions to account for the uncertainly associated with various cost and production parameters…”

click to enlarge

“A Monte Carlo simulation can produce millions of possible performance outcomes that might occur in the future, weighted to reflect their likelihood…A variety of stakeholders, including investors and policymakers, are tracking the generational development and commercialization of solar technologies and require greater insight into the projected costs of a solar energy project to aid in decision making…

“Argonne’s optimized approach to calculating the LCOE for photovoltaics will provide each group with better guidance. However, implementing this approach will require development of more rigorous data sets of location-specific solar panel performance and other parameters. Fair comparison to traditional energy sources, such as coal or natural gas, will require a re-examination of the hidden costs associated with those technologies.”

Renewable Cost Parity: Is Wind Competitive With Gas?
Dave Levitan, February 8, 2011 (Climate Central)

“…[T]he American Wind Energy Association (AWEA)…[says] wind power is now largely cost competitive with natural gas…Experts have suggested that natural gas, with its apparently smaller climate impact and widespread availability [could be a better short term energy source]…[But] in several recent power purchase agreements…wind power has been sold in the surprisingly low range of five to six cents per kilowatt-hour…[I]ndependent industry data…[also suggests] wind’s growing competitiveness with natural gas…

“…[But] the most recent Energy Information Administration estimates place the cost of a new onshore wind installation at 9.7 cents per kilowatt-hour, and a new advanced cycle natural gas plant at 6.3 cents per kilowatt-hour…AWEA’s statement of competitiveness with natural gas does include the federal incentives for wind power, primarily the renewable energy production tax credit. The credit can lower the price of wind power by 2.2 cents per kilowatt-hour, and is currently set to expire at the end of 2012. Including this straightforward subsidy, and excluding various other factors from the wind power economics equation can lead one to make the claim of cost parity…”

Existing nat gas is a little cheaper than existing wind… (click to enlarge)

“…[W]ind in certain areas requires massive transmission line projects, as well as backup generators — often powered by natural gas — to smooth out wind’s variability…The claim of cost parity [usually] does not include these costs…[but] fossil fuels also benefit from enormous federal incentives, though not in such a handy cents-per-kilowatt-hour form. Instead, subsidies are applied at the point of drilling or mining, and many are permanent rather than temporary features of the tax code.

“…[I]t is not just policy that has changed the economics of wind power development in recent years. Technological innovation and economies of scale also help, and if natural gas turns out to be less attractive from a carbon perspective than previously thought, there is a chance that could play a role in boosting wind energy as well…[N]atural gas’s reputation as a cleaner fossil fuel could be misleading. The frequently cited claim that a natural gas plant has about half of the climate impacts of a coal plant might be based on false assumptions, because it fails to take into account leaks of methane — a potent greenhouse gas — from gas infrastructure, as well as other emissions generated when extracting natural gas from the ground…”

…but nat gas prices are notoriously volatile and there is no guarantee it will be cheaper than new wind. (click to enlarge)

“…These findings cast doubt on the idea of spending billions to move from coal to gas as a bridge toward a renewable energy future…[but] the possibility that natural gas may have a greater environmental impact than previously thought might not change relative costs on short time scales…[but until there is a price on emissions] learning that natural gas is worse for the environment doesn’t actually lead to any consequences…

“Still, market pressures make it wise for utilities to consider what sort of environmental regulations might eventually enter into force, and the new information could play a role in improving wind and other renewable sources’ position…[Meanwhile wind is an ideal hedge]…AWEA foresees utilities following such logic this year: more than 5,600 megawatts (MW) of wind were under construction at the start of 2011 (the total currently online around the country is about 42,000 MW, enough to power more than nine million homes), and the group thinks there will be an increase in total installations versus last year.”

State Renewable Energy Standards Under Attack from GOP Legislators; Legislators in Montana, Colorado, Minnesota and Missouri are trying to weaken or dismantle RPS policies, creating instability in clean energy markets
Maria Gallucci, February 9, 2011 (Solve Climate via Reuters)

“Republican legislators in Montana, Colorado, Minnesota and Missouri are separately trying to weaken or dismantle the renewable portfolio standards in their states, which are seen as crucial to U.S. efforts to reduce greenhouse gas emissions and develop a globally competitive clean economy.

“Officials pushing the bills say that energy prices soar and consumers suffer when utilities are required to allocate a certain percentage of electricity from renewable sources like wind and solar. Clean energy groups counter that lowering the bar on state renewable energy policies would stifle new investment and kill jobs…”

click to enlarge

“If passed, the bills would go against the trend among most states to strengthen standards and attract clean energy developers by creating a market for renewables…Twenty-seven states and the District of Columbia have mandatory standards in place, and seven states have renewable portfolio goals…In the last two years, states such as California, New York, Nevada and Colorado have voted to increase or even double their requirements.”

click to enlarge

“…[S]tates act as a kind of laboratory of best practices and success stories for federal climate policy. President Obama in his State of the Union address last month called for 80 percent of the country’s electricity to come from cleaner sources by 2035, such as solar, wind, natural gas, nuclear and ‘clean coal.'”

[Warren Leon, consultant, Clean Energy States Alliance:] “Budgets are tight at the state level, and people are rightfully looking at ways to save money. So a lot of ideas get thrown out there…[but] renewable generation diversifies the electricity supply and tends to make electricity prices less vulnerable to fluctuations in fossil fuel prices. In the case of New York and California, where the [energy commissions] have evaluated their RPS’s, they have found that … the net effect is to lower electricity prices.” posted by Herman K. Trabish @ 5:46 AM