by Planning Engineer
Power System Planners do not have the expertise or knowledge to say whether or not the benefits of reducing carbon emissions are worth the costs. However they should be respected as experts for obtaining a better understanding of what the implications and costs of such programs are.
Unfortunately many non-experts, driven by fear of AGW, have done much to cloud, distort and ignore critical issues around the cost and capabilities of renewable energy and the realities relating to the provision of electrical power. This is harmful because even if carbon reductions justify any level of power system costs; we are better served knowing at least generally the range of those costs. If however, a balancing between costs and emission reductions is required – it is crucial that we understand the true costs and challenges imposed by renewable energy. To provoke discussion this post offers some preliminary thoughts, observations and personal opinions.
Where are we now? The US is seeing exponential growth in renewable resources. This is largely because of the mandates or directives imposed upon utilities. Examination of these renewable programs today could provide valuable information to drive future decision making in the power supply area. Potentially real world results modelled along with falling costs for renewables and estimated benefits from carbon reduction could drive the further expansion of renewables. However what is being observed is that you need ridiculously high valuations for carbon reduction to justify significant increases in renewable generation. Current efforts to increase renewables have abandoned carbon valuations and focused instead on mandates, directives and incentives that are not built upon any sort of comprehensive cost benefit analysis. A cynical observer might believe that the urgency to adopt renewable mandates is driven by fears that we must take action now; as such action will not be justifiable in the near future as the true costs and benefits become better understood.
Myth 1 – Utilities are too conservative and unwilling to investigate and utilize new and promising technologies. In the US alone there are hundreds of utilities operating on very different business models including Investor Owned Utilities, Cooperatives, Municipals, Energy Marketers, State and Federal entities. No group of related utilities provides even 5% of the US market. Furthermore, FERC Order 1000 allows non-utility power suppliers to compete as well. Additionally the development of alternative resources is not just limited to the US. The idea that the collective reluctance of a diverse mix of utility engineers, or worse a conspiracy among them, is slowing down the implementation of alternative technology does not make sense. Those who argue that we must trust climate scientists on climate issues should also consider trusting the experts when it comes to power supply.
Myth 2 – The US has a third world grid. The Eastern Interconnection is the largest, best machine ever built. It’s highly reliable, flexible and economic. The idea that it, or the other two US grids, function as third world grids or are less than smart has been promulgated by entities hoping to make a buck (GE/Siemens) and by those who wanted to hide the costs of adding renewables to the grid (Wind/Solar).
While utilities have had occasional (and unacceptable) blackouts– they have learned from these and made improvements to lessen the likelihood of such events. Much of what is being called for as regards a smart grid has little or nothing to do with reliability. Pushing what is new and different is good for consultants, those producing the new technology and those who want to subsidize specialized costs. The balancing voices speaking in defense of the current grid do not have the same incentives, motivations or resources and as such are not as widely heard.
Myth 3 – All Megwatts are equal – An electric power system is very complex and must operate within narrow parameters while balancing loads and resources and supporting synchronism.
Conventional rotating machinery such as coal, nuclear, and gas plants as well as hydro generation provide a lot of support to the system. This includes reactive power (vars), inertia, regulation of the system frequency and the capability to ramping up and down as the load varies. Most renewable resources lack these important capabilities and furthermore are only intermittently available (not dependable). Since wind turbines must rotate at variable speeds their rotational energy cannot be used to support the system.
Some, but not all of the disadvantages of solar and wind energy can be mitigated at extra costs through electronic and mechanical means. When these resources only make up a small percentage of the generation on the system, it is not a big deal. The system is strong enough that utilities are ok with letting a small percentage of solar lean on the system. But as the penetration of solar and wind energy increases the system robustness will degrade and reliability will be compromised without costly improvements. Such additional costs are not generally applied to renewable resources at this time.
Myth 4 – Renewable resources will degrade the reliability of the power system. This may or may not be seen as a myth. Could a power system operating similar to ours be built that relied on only renewable resource? The answer is yes and no. As noted above there are essential system characteristics that most renewables do not supply or supply well. However a renewable system could be coupled with extensive batteries and other storage devices, large mechanical flywheels and condensers (basically an unpowered motor/generator that can spit out or consume reactive power). These devices could approximate the behaviors of our conventional power system but they would require huge and prohibitive costs. On top of the renewable resources, the total cost for such a system would be many multiples times the cost of our current systems.
This “confusion” between cost and reliability allows it to be technically true that renewables do not necessarily degrade the system. But in practice they do, or they pass high costs on to others. When it’s advocated that some reasonable portion of cost recovery come from renewables it is denounced as unfair, discriminatory or anti-competitive. The new resources and technologies have significantly different operational characteristics than conventional technology and sometimes from each other. Planners typically assume the best for renewables but unanticipated results have already occurred. We don’t know how good our models are or how well we understand their expected performance as compared to technologies that have played out over decades. Renewables increase risks and costs.
Myth 5 – There are many success stories of renewable generation supporting the increase usage of such technology. There are some successes but the overall success of such technologies has been greatly overblown and exaggerated. This myth perhaps deserves a series of posts. We cannot replace large (or significant) amounts of conventional technologies with wind and solar without either wrecking the economy or degrading system reliability or both. Countries, regions and entities that have aggressively undertaken renewable, solar or wind ventures have not seen results which would justify their emulation. Sometimes the costs are hidden subsidies such as tax credits, biased cost allocation and creative financing.
Misinformation is rampant. “Major breakthroughs” regarding alternative technology are frequently announced but typically do not materialize. We frequently see stories as to how much of countries resources are provided by renewables and pleas are made for the US to reach for those levels. A country is not always the same thing as a power system. For example Germany can only have a large amount of solar and wind (for the exorbitant cost they incurred) because they are interconnected to a bigger more balanced grid. The important fact is that the power system that Germany is a part of does not have that high a level of renewables. Similarly Denmark has a lot of wind based generation, but they too are not a standalone system – their wind level would be highly problematic if they were not integrated with the vast hydro facilities in Norway and Sweden
The true costs of these renewables are often hidden though cost shifting and subsidies. The approval of such projects frequently rely on cost shifts along with the most optimistic projections imaginable for the alternative technology and highly pessimistic projections for conventional alternatives. Reality does not match projections for renewable performance. Similarly when performance is analyzed, many costs and burdens imposed by renewable technology are ignored. This topic calls for a much more thorough treatment, but from the sidelines there are many large and small observations that can be made which seemingly in the real world always come out to show renewables underperforming and conventional technology over performing. For example: Wind facilities are not lasting nearly as long as projected due to bearing failures. The output of solar and wind facilities is typically less than projected during peak periods. More costly maintenance than projected is required for renewables. Conventional technology usually exceeds planned life and with refurbishment and can last years longer than it is credited for. Conventional fuels have not escalated anything like assumed projections. Unanticipated improvements to the system are often needed to integrate the operation of renewables. Backup generation required by renewables is not adequately accounted for.
A significant problem is that mandates are made with little, bad or no information. After that programs are judged as to how well that met the mandate, but the mandate’s themselves escape scrutiny. Renewable technologies can be touted as successful because they enabled a Utility to meet a mandate, but that is not the same as saying they would be successful compared to other technologies in an open evaluation.
As a magician can show a gullible audience that a cage is empty by selective exposure, so too can studies of renewables show their apparent benefits. But the seasoned observer in both cases can recognize that there is a curtain that likely has tiger behind it. Unfortunately, as a lead in to Myth 6, it may be the case that often nobody with decision making ability really cares whether or not renewables meet their performance expectations or not. The sponsoring utilities can still be granted a good return on such investment and others are pleased with vague “understandings” that they are doing something “worthwhile” for the environment
Myth 6 – Consumers are protected by their public service commissions and other regulatory bodies. Some commissioners (or other regulatory enforcers) are political appointees and some are elected. In theory they oversee the utility and look out for the consumers. They generally have broad powers and can determine critical items such as rate of return, capital inclusion, rate increases and cost recovery. Many commissioners and regulators lack training and expertise and believe that protecting consumers from CO2 emissions can be done more cheaply than possible or that it is more important than their traditional responsibility of ensuring that the utility provide economic and reliable power. I’m afraid that contrary to the design, in far too many cases utilities are trying to look out for their customers and protect them from their commissioners.
Political pressures exist for all power suppliers, but for brevity I will focus on Investor Owned Utilities (IOU’s) to describe the workings of power supply planning. An IOU’s primary goal is to earn a rate of return for their investors, their secondary concern is providing economic and reliable power. All things equal Utilities seek to do both. However Utilities focused on providing reliable and economic power to their consumers can find themselves under significant pressure from their green regulators. Their decisions are criticized (with hindsight) and cost recovery and rate of return decisions can be very punitive. Utilities pursuing green programs that satisfy their commissioners can be well rewarded regardless of the bottom line cost on consumers. Political oversight based on cost recovery makes it so a utility might prefer a more costly less effective program that harms their consumers but is rewarded by the legislators.
Many small renewable projects have been undertaken for the purpose of relationship enhancements with regulators. Regulators have huge power to cripple or reward utilities. Politics impact utility resource decision making and it is generally biased towards (not away) from renewables and there is little incentive to negatively evaluate much less publicize the shortcomings of such programs once they are undertaken. Speaking honestly and truthfully to regulators and other stakeholders can easily be re-interpreted by them as the utility being anti-renewables, inflexible and protectionist. Worst case as noted they can find some of your decisions imprudent and not allow cost recovery.
My comments above should not be taken to imply that I believe that Planners or Utilities deliberately undertake significant projects to the detriment of their consumers in order to gain benefits from their regulators. I believe it is a much more subtle process. Utilities are criticized and chastised for not embracing renewables and face additional scrutiny and demands which hurt their bottom line. Over time with pressure study assumptions begin to fall in line more with those of the regulators. Perhaps against better judgment – alternative technologies are credited with higher performance, lower maintenance and/or greater longevity than is warranted. Existing technology does not receive similar benefits and may be penalized. Fuel prices for conventional technology are projected to steeply escalate. High compliance costs are associated with conventional technology. Extra costs to the transmission system associated with intermittent resources are ignored or minimized. The strategic value of experience with new technology is given a high value. Individually most any of these study decisions may be reasonable; collectively they skew the results tremendously. Planners who buy into the benefits of renewables are more likely to participate in forums with environmental groups, industry renewable task forces, and PR opportunities because it matches their perspectives and their presence helps the utilities image.
Some personal observations: I believe there is one large investor owned utility that is adding a bit of solar, just to please the Public Service Commission so that they can get a Nuclear Plant built and have a decent return approved for the investment. Pushing back on solar could cost them far more than the solar program they are adopting. While I think IOUs generally do the right thing the perverse incentives make that difficult. If the Commission is going to approve both your solar and your nuclear and you will get a good return on both, it’s hard for a business to insist on consumer good against the wishes of the Public Service commission who is supposedly looking out for those same consumers.
The major generation alternative to renewables:
Even with studies skewed by overly optimistic treatment of alternative energy and overly pessimistic treatment of conventional technology it’s still generally hard to make the alternative technology appear competitive with natural gas generation. Major studies built upon biased assumptions favoring alternative technology, nevertheless show huge costs for renewable resources as opposed to high gas generation scenarios. To get around this alternative resources are given huge amounts of credit for clean air impacts, conventional technologies are punished, all concurrent with low availability and high projections for natural gas prices (or gas generation is ignored as an option). At national workshops on the future of the grid various scenario’s around skewed assumptions on future resources are developed and discussed. In one forum I asked why we did not have a scenario assuming plentiful and cheap natural gas availability (as forecast by many). After a bit a silence the response was that fracking could be curtailed and that gas generation might be limited in the future. Quite a remarkable statement when you consider the myriad assumptions and uncertainties built into the modeling scenarios that are needed to favor renewables. How reasonable is it to be so optimistic on one hand and so pessimistic on the other? If the optimism shown towards renewables applied in other areas as well, we’d see projections showing huge amounts of generation at highly affordable costs from improved clean coal technology.
Ignoring C02 emission issues, there is no question that over the next 20 years that with the commonly projected availability and cost of natural gas that gas turbines and combined cycle plants should make up the overwhelming bulk of resource additions. Cheap plentiful natural gas is a path to a low cost secure energy future for America. If gas plants are limited by environmental or other reasons, we face a much more costly and challenging future. The economics, operations and reliability benefits offered by modern gas generators cannot be approached with even the most optimistic foreseeable projections for large scale renewables. We need comparisons of this scenario to the renewable scenarios. Likely the savings from natural gas over renewables would be significantly large enough to support carbon capture or other more effective carbon reduction programs.
In the end, to many people the facts and numbers don’t matter. This hit home hard with me once a few year back. The Sierra Club was touting a big efficiency program but their numbers seemed off. The calculation of such efficiency benefits is easily subject to manipulation, but I found it strange their numbers were so low. After a close examination of the original study I saw that they had confused units between Mega and Giga in their calculation and were under expressing the benefit of the touted program by a factor of 1000 in the presentation I had sat through and all their printed material. Accidently they were saying the program was 1000 times less effective per dollar invested than their analysis warranted. I wrote them a nice note explaining that their program would look much better if they revised the numbers. I never heard anything back nor did any updates on their material ever appear. The numbers did not matter. They were presenting an emotional argument for the program and the number associated with it sounded just as big to them regardless of whether they were expressed correctly in GWHs or incorrectly in the much smaller units of MWHs. For most of us, at the end of the day it does matter whether our monthly bill is $200 or $200,000 and so we need to pay attention to people who transcend emotion and have some facility with numbers. If we should be panicking – let’s panic intelligently
The EPA is considering broad and sweeping mandates that will aggressively drive increased renewables and hinder traditional generation technology greatly to the detriment of power system costs and reliability. In public dialogues, utilities typically have not wanted to upset their regulators. Planners don’t want to upset their employers. So in the public conversation the voices of vested interests, alarmists and others drown out the more muted voices of the experts. As policy makers grapple with issues around CO2 it would be highly desirable if System Planners could share their knowledge and expertise without fearing censure.
I expect we will hear more honesty from utility experts. We are moving past the point where the industry is mostly only accommodating token and small programs that have small limited impacts upon grid costs and reliability. The potential EPA mandates would have major impacts adversely hurting grid reliability and economics. The money that pours into the grid from such a change could greatly benefit utilities and planners in terms of business and work opportunities. However I believe most planners and utilities recognize that the overall impacts to society (unless needed to aver environmental disaster) would be extremely harmful in the net analysis. I hope that the voices of concerned utility experts are not drowned out by the noise of “true believers” or disbelieved because of false accusations of self-interest.
Biosketch: Planning Engineer has over 30 years’ experience in the electric utility industry and has overseen generation planning and transmission planning. He is a registered Professional Engineer with a Masters in Electrical Engineering and graduate training in Policy Analysis. He has and continues to serve on a variety of regional and national committees in the power supply arena.
JC note: This is a guest submittal from a long time reader of Climate Etc. I requested this column because on a previous thread “Planning Engineer” shared some perspectives that deserved to be expanded into a guest blog. Planning Engineer is posting anonymously because he wanted to frankly share his personal views and not have them tied directly to his current employer. As with all guest posts, keep your comments civil and on topic.