One more reason we won't see windmills on Coal Mountain

good questions (4.00 / 1)

I commend you for taking a open-minded look at this project.

What you are pointing out is the financial structure of a wind project is completely different than, say, a coal-fired electric plant. For wind, it's huge upfront costs and then no fuel costs thereafter. For coal (or natural gas) it's big upfront costs and big ongoing costs. That means wind projects are quite sensitive to discount rates.

This diary "The cost of wind, the price of wind, the value of wind" is an excellent primer on the subject. It's written by someone who finances wind projects for a living. He's written extensively on the pros and cons of wind power.

Some of the key points Jerome makes about wind power:

- "It's a low-emissions, home-grown, fixed cost supplier."
- "As a market pricing mechanism, the effect is lower prices for consumer thanks to its zero-marginal cost"
- "Its drawbacks, i.e. mainly intermittency, can be priced and taken into account by the system."

I would say a coal-to-liquid fuel (CTL) plant in Mingo County and the carbon capture and storage (CCS) work at Mountaineer both have a lot more risks associated with them. The CTL plant has no firm plans for CCS and we have no idea if the CCS project will succeed or how much it will cost to get it to work at full-scale.

Yet they are both getting lots more political and public financial support. Coal River Wind would bring far more benefits to West Virginians and deserves just as much support.

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by: Clem Guttata @ Thu Oct 29, 2009 at 08:58:27 AM UTC

Thanks for pointing to that excellent diary (4.00 / 2)

Everyone should read it. The power market does not take some large externalities into account (like environmental and human health damage). How competitive wind is depends on how we value (through regulation or public investment) those externalities, which is a political decision. West Virginia has in effect chosen to value those externalities at close to zero so far - and perhaps, at this point, is actually subsidizing coal beyond that, as a study in Kentucky has shown is true there.
http://www.maced.org/coal/exe-...

I'd like to point out that Americans pay huge premiums for perceived values far beyond the costs of production in many markets - brand names, specialty foods, luxury items of all sorts. In Austin, Texas, electric rate-payers were given the choice of subscribing to wind power, and 9,000 households are currently paying an average of $20 extra a month for wind power. (Subscriptions are limited to the amount of wind power available and only become available as they add new turbines.) I couldn't find numbers on businesses who are subscribed, but they include IBM, Dell, AT&T, SEMATECH, Apple, AMD, Freescale, National Instruments.

Austin also has a huge efficiency program with free energy audits and a wide variety of rebates.

http://www.austinenergy.com/En...

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by: JAWVMM @ Thu Oct 29, 2009 at 13:52:04 PM UTC

[ Parent ]

valid ideas (4.00 / 1)

Good points, and I have to confess that I think the branding is a positive approach.  I like letting people choose to pay more for renewables, rather than having the government impose increased costs on existing energy.

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by: viscount coal @ Fri Oct 30, 2009 at 02:09:52 AM UTC

[ Parent ]

People's choice (4.00 / 1)

The Austin model works there because Austin Energy is a truly public utility - it is owned by the City of Austin. The Texas market is deregulated, and the alternative is natural gas generation, not coal, so the price differential is not as large. At one point when natural gas prices soared, wind subscribers ended up paying less.

I used Austin as an example to make the point that there are some people who will pay for intangibles, and will suffer some inconvenience for the greater good. But educating everyone to what the total costs are and changing people's values enough on this issue for everyone to do that voluntarily is a very slow process. The first anti-litter campaign started in West Virginia 50 years ago. The roadsides are cleaner now than then, but I suspect it is almost entirely due to people cleaning up after others than people not tossing things out of their car windows, from the amount of trash that accumulates in my yard.

I still think of the government as "the people." You can think of the branding approach as allowing people to choose in a kind of direct democracy, and it's a good way, in the absence of regulation, to include externalities in the price. But the advantage of our representative democracy that makes political decisions for all of us is that it can balance the costs and benefits that the market won't. And many fewer people have to learn enough about the costs and benefits to balance them.

The market will not take the externalities into account unless they are built into the price by regulation or compensated for by subsidies.  The market will always produce the product as cheaply as possible, and if it can exploit shared resources like air, land, water, and health without penalty, it will. At least theoretically, the government, the collective people, will take the costs not in the market into consideration. It is how we have agreed to agree on how not to trample on each other.

One of the saddest things I have heard lately is "Our mountains, our coal." Our government needs to be saying "Not your mountains, not your coal - everyone's mountains, everyone's coal, everyone's air and water. You are a few among many, and your needs must be balanced against everyone else's. They are not less important, but they are not more important."

(And before anyone jumps on me, yes, I realize that West Virginia politics is not necessarily working as the ideal described.)

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by: JAWVMM @ Fri Oct 30, 2009 at 16:07:46 PM UTC

[ Parent ]

another reason for wind (0.00 / 0)

If you read through Jerome's diary, you'll see that one of the ways that wind is really helpful is in relation to the dispatch curve and feeding in a low cost power source.

For all the PR that W.Va. makes about coal being a low cost source of power, it's a huge problem when a run up in fuel costs (e.g., coal prices) results in the power company asking for a 43% rate hike in one year (even after the coal prices have come back down!).

W.Va. consumers--residential and commercial--would be much better off with a more diverse energy portfolio to keep energy prices more predictable.

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by: Clem Guttata @ Fri Oct 30, 2009 at 10:24:40 AM UTC

[ Parent ]

$20 Million Interest-Free (4.00 / 1)

Here we go - interest-free bonds for clean power - this is going to hydro at Willow Island
http://wvgazette.com/News/2009...

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by: JAWVMM @ Fri Oct 30, 2009 at 01:18:45 AM UTC

There is another limitation to wind power (4.00 / 1)

all across the US that few people have talked about yet.  Read this article from the WaPo about a local electrical co-op in MN.  http://www.washingtonpost.com/...

The article makes an interesting point.  "[T]he land close to existing lines had mostly been snapped up and that small projects, when grouped together, add stress to the grid. If the analysis is correct, renewables will not be able to continue to expand without transmission upgrades, raising complex questions about who will pay."

All of the land based wind farms built in WV have been built near existing transmission lines.  I have heard that the most recent projects, like the one near Elkins, are now requiring additional transmission upgrades to be viable.

Wind turbines must be spread over a large area to generate even relatively small amounts of power.  Experts say that wind power is not very "energy dense."  To collect all that wind power, you need lots of transmission lines.

That's fine as long as you are building wind farms near existing lines.  As soon as you have to start building lots of new transmission lines to connect new wind farms, the economics of new wind power development turn around in a hurry.

You get very little electrical output per dollar invested in new transmission for wind power.  That is why the Big Wind developers like AEP, which has large wind projects in Texas (sorry WV coal industry), Boone Pickens (Texas too) and yes, Al Gore, a major figure in a venture capital firm backing Big Wind developments, want the costs of new transmission for wind power pushed off onto consumers.  If they (the Big Wind developers) had to pay for new transmission to hook up their wind farms, they couldn't get anyone to invest in their projects.

That's why Big Wind isn't the answer either.  It makes much more sense for the US to develop distributed generation based on very small scale generation (rooftop solar, backyard wind turbine, local fuel cell power storage supplemented by combined cycle natural gas plants).  That and investment in real energy efficiency and reuse.  We now have the technology to do the micro-grid in a big way.

We don't need any new wind farms in WV.  We need lots of micro-generation on the east coast and urban centers.

We don't need to prove that mountains can be "productive."  They are fine just the way they are.

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by: Calhouner @ Fri Oct 30, 2009 at 12:11:00 PM UTC

any estimate? (0.00 / 0)

Do you have any kind of estimate as to what the requirements (and/or ball park costs) would be for transmission line upgrades needed to hook up Coal River Wind?

I still think that having 98% of our electric generation from a single fuel stock with increasingly volatile prices is an unnecessary economic risk for W.Va. There's room in the state's energy portfolio to add a couple more wind farms.

I do agree that encouraging micro-generation is very good policy (as is more aggressive conservation and efficiency programs). Within W.Va., updating our net metering regs would be a good start to promoting such projects.

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by: Clem Guttata @ Fri Oct 30, 2009 at 13:13:56 PM UTC

[ Parent ]

Net metering is not good enough. (4.00 / 1)

We need net sales.  Most net metering systems, including WV's are dictated by the big utilities.  Net metering allows for credits against household power use, but does not generally allow for consistent net sales of power for which the power company pays the power producer.

Do you want to rejuvenate rural West Virginia and provide reliable income to WV's farmers?  Set up a net power sales system that pays small producers to produce electricity and requires power companies to buy that power at rates that will allow small producers to pay off their investment and generate income.  Both Germany and Denmark have systems like this that work very well.  Ireland has started a small scale program as well.

I do not have any idea of the transmission system around Coal River Mountain.  I have not read the published feasibility study, so I don't know if the study made any assessment of the transmission situation.  If the study did not include such an assessment, it was deficient in proving the feasibility of the project, but I just don't know.  Maybe someone else who has read the Coal River wind study can answer that question.

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by: Calhouner @ Fri Oct 30, 2009 at 13:57:53 PM UTC

[ Parent ]

Coal River Transmission Line (0.00 / 0)

The proposal assumed $8 million for 10 miles of
115 kV line.

(I notice the cost was based on North Dakota and Texas figures, places that are notably flatter than the Coal River Valley, but maybe that doesn't have much impact on cost.)

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by: JAWVMM @ Fri Oct 30, 2009 at 14:36:56 PM UTC

[ Parent ]

The consumer shouldn't pay? (4.00 / 1)

I agree we need efficiency, re-use, and as much distributed power as possible. I agree with Clem that there is room for a few more wind turbine projects here, as long as they do not require new large transmission lines. If wind replaces some coal generation, there should be transmission capacity available as long as wind can be placed near existing transmission lines.

But I am puzzled as to why "the costs of new transmission for wind power pushed off onto consumers" is a bad thing. West Virginia ratepayers shouldn't be paying for the transmission of electricity to the East Coast, as in PATH, but surely the East Coast consumers should be. Higher rates for consumers mean they will use less; prices seem to be way more effective in changing behavior than educating people to conserve.

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by: JAWVMM @ Fri Oct 30, 2009 at 14:58:21 PM UTC

[ Parent ]

The problem with pushing the costs of new transmission for (4.00 / 1)

wind power off onto consumers is that it is such a bad investment.  Consumers could be paying the costs of lots of other new power projects that would deliver much better returns in terms of grid reliability, new solar and wind power resources as well as value for consumers.

Instead of subsidizing large energy corporations by having consumers build transmission lines to their projects, both federal and state governments should be subsidizing investment by home owners and farmers in small scale generation as it being done in Germany and Denmark.

The German entry has won the US DoE's Solar Decathlon two years in a row mainly because the German house was capable of earning extra points by producing a large surplus of power from its solar panels.  Germany's entry used only solar panels and equipment that can be bought at any building supply store in Germany.  Any German household can go to a building supply store and buy modular components to build a home generating system that will allow them to provide for their own use and sell power into the grid.

I'm not opposed to consumers paying for new energy solutions, but they should be good solutions, not more problems.

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by: Calhouner @ Fri Oct 30, 2009 at 16:09:33 PM UTC

[ Parent ]

I see - thanks (0.00 / 0)

Yes, the flip side of regulation is that the government is making those decisions; in a deregulated market, the market would decide. Maybe I should make an impassioned argument for the market ;-)

I agree that in addition to improved net metering (by which I mean, and I think Clem meant, what you were saying about net sales), we need much more encouragement of weatherizing and other conservation and support for solar. He is richest who needs the least.

West Virginia has huge advantages in lifestyle and mindset, I think, for localization and conservation. We still tend to want to do things ourselves or by someone we know. We still have a large number of family-owned farms (somewhere mentioned but I haven't been able to verify yet, more than any other state - must be proportionately, because it isn't absolutely. Many of our towns are still walkable, or could easily be made so again. And mostly we are already small and decentralized.

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by: JAWVMM @ Fri Oct 30, 2009 at 17:01:45 PM UTC

[ Parent ]

Watch out, the derulated market in California somehow, (0.00 / 0)

just somehow, encouraged by the commodity trading of energy by people who were never going to actually use the energy, increased the price of natural gas, and it just "jumped" at the Arizona border. My little brother thought it would mean he could buy wind generated power from Tehachapi.

NFTT: Support My Team or I Will Dance

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by: CA Berkeley WV @ Fri Oct 30, 2009 at 18:51:08 PM UTC

[ Parent ]

Regulation (0.00 / 0)

I was referring to my impassioned defense of regulation above. Deregulation was not such a disaster in Texas. Both systems have drawbacks.

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by: JAWVMM @ Sat Oct 31, 2009 at 02:46:57 AM UTC

[ Parent ]

As grid engineer George Loehr points out, (0.00 / 0)

deregulation is a misnomer.  There are now more regulations and lawyers and consultants in the electric power than there ever where when states regulated electricity.  In the "old days" utilities were vertically integrated and investment was regulated to make sure that capacity, maintenance and service were kept in balance.  With "deregulation" generation, transmission and customer service were split apart and everything that was done within the vertically integrated utilities now has to be managed by separate contracts and regulations.  Because there are so many more independent entities, there is much more regulation.

Meanwhile, the energy traders, like Enron, AEP and Goldman Sachs can operate behind the scenes and skim of the big bucks while everyone else pays the costs for the system.  "Deregulation" means freedom for energy traders to operate in a completely non-transparent world with no controls.

Yes, deregulation gives us good things like net metering and small generator access to the grid, but it also leads to manipulation behind the scenes like Enron's adventure in California.  Enron traders were calling up power generating plants and telling operators to keep the plant off line, so that Enron traders could create artificial shortages to drive power auction prices to astronomical levels.  The only reason they got caught was because Enron collapsed financially.

Neither FERC nor the Justice Department ever investigated anyone criminally for what happened in California.  All of the means remain in place for the same thing to be happening now.  This kind of manipulation can go on as a low level all the time and no one would ever know.

I now lean toward re-regulation and complete state control of power companies.  Right now we are seeing just the opposite with the Obama administration continuing Cheney's drive for federal control of the national electrical system.  That will only help the big corporations that trade energy by the megawatt.

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by: Calhouner @ Fri Oct 30, 2009 at 20:30:21 PM UTC

[ Parent ]

Other Transmission Lines (4.00 / 1)

What are the costs to run power to a dragline?  I heard one approximation that a dragline requires about as much electricity as a "small coal-fired power plant" produces.  I also realize those lines are temporary and some of the material costs can be recouped.

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by: civil_joe @ Fri Oct 30, 2009 at 16:50:59 PM UTC

[ Parent ]

It's exactly that "no can do" attitude that one might expect from a coal operator. (3.00 / 3)

However, the last sentence in your post tells it all, pal. The fact is that the WV Dept. of Energy has those numbers, and has worked with other county communities and contractors. Unfortunately, its vaunted Office of Coalfield Community Development not only failed Raleigh County miserably when it didn't share that insider knowledge and help them to develop their energy project, it broke both the law (SMCRA) when it allowed Massey to file a "post mine land use Master Plan" which spells out reclamation to the level of "forest fish and wildlife".

   

"Postmining land use. Regarding postmining land use, a general performance standard is that operators are to "restore the land affected to a condition capable of supporting the uses to which it was capable of supporting prior to any mining or higher or better uses...."  [30 U. S. Code 1265(b)(2)].

    "     Additional standards exist when coal producers avoid the AOC requirement and flatten our mountains. Operators are supposed to receive a variance from WVDEP to bypass the AO requirement. The social compact dictates that the public gains something in post-mining usage. There are two separate but similar SMCRA provisions which define what producers must do to receive a permit to decapitate the mountains.  [30 U. S. Code secs. 1265(c) and 1265(e).]

    "     The postmining land use must be "industrial, commercial, agricultural, residential or public facility (including recreational facilities)."  [Sec. 1265(c)(3)]. It must "constitute an equal or better economic or public use" as concluded after consultation with "land use planning agencies...."  [Sec. 1265(c)(3)(A)].  There must be a "specific plan" with "appropriate assurances" that the proposed postmining land use is realistic.  [[Sec. 1265(c)(3)(B)].

    "     The seven indicators of realistic usage may be summarized as:  compatible with adjacent land uses, obtainable according to data regarding expected need and market, assured of investment in public facilities, supported by public agency commitments, having adequate private funding, being part of the reclamation plan, and properly designed. A later requirement states that "no damage shall be done to the natural watercourses."  [Sec. 1265(c)(3)(E)].

   "     West Virginia's OSM-approved program, through state law (statutes and regulations), is supposed to ensure that reclamation and post-mining land use requirements are met. The state program's deficiencies were recognized in OSM's 1998 oversight report and in its May 1999 report on AOC and postmining land uses.    What actually has happened in postmining land use of decapitated mountains is that most of them are flat pastures and rolling hayfields in rural, isolated areas with poor infrastructure.

  source"

Regarding the cost of a wind farm, we all know that Governor Manchin and state lawmakers have been quite generous when it comes to subsidizing his cockamamie coal to gas pipe dream. Now before you whine that the lack of a power grid in Raleigh County was the reason that the state wouldn't subsidize the wind farm, remember that Manchin was more than generous with subsidies for Consol despite the fact that there were no pipes to carry the CO2 all the way to Texas!

To add insult to injury the WV Department of Energy didn't even bother to show up at the permit hearing in Charleston to help Raleigh county community plead its case regarding the revocation of Massey's illicitly passed permit.

Finally, there's always been deep mine extraction, which of course, would leave the mountains standing to support the wind farms. I'd think that someone who goes by the name "viscount coal" would realize that.

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by: One Citizen @ Fri Oct 30, 2009 at 14:43:54 PM UTC