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Wisconsin’s Electrical Energy Situation
in 2001
By Wm. Hurrle Bill Hurrle works in the renewable energy field Changes in scale and technology have IOUs (investor owned utilities)
frozen in the headlights of onrushing history. Voters won’t buy new nuclear
generators, neither will investment bankers. Coal is almost as bad a business
proposition, unless IOUs reject restructuring and get approval for new
coal plants as regulated assets with guaranteed returns, i.e. shift the
risk to ratepayers. A new coal plant is a $500 million, 20-year bet in
the face of global warming, acid rain, mercury pollution and new technologies.
People are more interested in clean air. There are alternatives to central,
coal-fired electrical generation of electricity. There are no alternatives
to clean air.
With increased population, and with increased awareness in the larger population, there are no empty backyards to build new generation plants and run transmission lines. Siting them is a fight, expensive, bitter and long. Lines have to be maintained and soak up 10-12% of the power put into them. And, if constructed they put the system at risk from weather. Winds in the Valders area tumbled several giant steel transmission towers last spring. Ice took out New England for weeks a couple years ago. The original transmission system was built piecemeal; not designed for large interregional power transfers needed if we continue with the center-margin, fossil-fuel generation model. NIMBYism (not in my backyard) contributes to the IOU’s slow build up
of new facilities. It is sure to be fueled by a recently released report
on EMF (electric and magnetic fields caused by voltage and current) by
the California Department of Health Services that notes a stronger correlation
between miscarriages, cancer rates and EMF exposure. The report suggests
a 50% potential correlation between exposure to EMF and childhood leukemia,
adult brain cancer and Lou Gehrig’s disease. Up to 40% of the 60,000 miscarriages
a year in California “might be attributable to exposure to maximum EMF
fields,” says the report. Now correlation is not causation. Two decades
of big science probing EMF’s health effects has been inconclusive, and
this study is sure to attract flak. But the door remains open.
Helping that happen will be real time pricing for electricity. Real
time pricing is needed to make the market give signals that will reduce
peak demand. Prudent managers will not build a business or a building that
puts them in the way of demand and use charges for electricity at peak.
Prudence dictates time of use strategies, an efficient shell, cool daylighting
and building integrated pvminimizing exposure to out-of-control, budget-busting
energy bills. Prudence means investing in internet controls over the electrical
load, buying futures, options, forward- and guaranteed-price contracts.
Smart managers will turn the increased risk into opportunity. They’ll position
their businesses to sell power at fat profits to the less aware and those
with less ability to shape their loads.
The Los Angles Times reports that $228 million of demand side (efficiency/conservation
on the customers’ side of the meter) money was boondoggled by California
IOUs. Had it been spent properly it would have saved 1,000 MW, about two
large power plants’ production, enough to avoid recent shortages. California,
which has one of the lower per capita consumption rates in the U.S., was
saving less energy before the troubles began than it was five years ago.
If war is too important to be left to the generals, electrical generation
is too important to be left to the IOUs. That is the real lesson of California’s
deregulation fiasco.
Efficiency and RE investments make great economic arithmetic, especially when local economic multipliers are factored in. The PSC says we now have an 18% reserve, adequate, that demand grows by 2.2-3%/year, and that we need to add 250-300 MW a year (0.022 x 11,000MW) to keep up. Negawatts are as good as watts, better, they are cheaper. (Negawatts. Amory Lovins’ term for energy freed up by efficiency. E.g. if Jones’ new fridge uses less electricity; it can be used by Smith’s computer without investment in more generating/transmission capacity.) By buying the cheapest sourcesefficiencyfirst, we can stop increases in demand and stretch current capacity adequacy. Governor Davis says last year Californians cut weather-corrected peak load 12.2%, and electricity usage 10.5% in response to the troubles. This is before surcharges started to boost bills. See: www.energy.ca.gov/electricity/peak_demand_reduction.html. This is voluntary. The news from California is that there is now a surplus of electricity. The state contracted for 43% of IOU electricity, but now needs only 35%. The surplus must be sold on the open market. With weak demand; lower prices. So far the loss to the state is $46 million. The summer and the economy have been cooler, a help, but efficiency gains shrunk the market, which will change utility attitudes. If Californians can reduce use by 10%, can’t we? There 85% of the customers are served by IOUs. They were offered a 20/20 deal: use 20% less electricity, get a 20% rebate. And 34% of them did it, almost 40% in San Diego, earning $66 million in rebates and saving a whopping 5,500 mega watts. The lesson: demand side management works when deals are structured to be attractive to customers. A working group from five US national labs, Argonne, Lawrence Berkeley, National Renewable Energy, Oak Ridge and Pacific Northwest, concludes that a “wide array of policy and technology options provides many low-cost pathways to a cleaner energy future.” They used three scenarios, Business as Usual (BAU), Moderate and Advanced for adoption of efficiency and RE technologies. The Moderate scenario is driven by a domestic carbon trading system that equilibrates at a carbon permit value of $25/tC. The Advanced uses $50/tC. In the Advanced scenario “the nation consumes 20% less energy in 2020 than it is predicted to require in the BAU forecast.” “In both the Moderate and Advanced scenarios. . . the nation pays less for its energy than in the BAU forecast. This is largely due to the accelerated development and deployment of energy-efficient technologies.” They put downward pressure on energy prices. “The net effect is that by 2020 the Advanced scenario’s energy bill is $23 billion lower than in the Moderate scenario and $124 billion lower than in the BAU forecast, even with the cost of carbon permits included.” The benefits don’t include reduced vulnerability to oil supply disruptions, cleaner air and improved balance of payments. There would be “no net cost to the U.S. economy.” There is an argument to be made that an efficiency and renewable energy strategy is necessary for the nation’s defense. We spend billions on keeping access to Middle Eastern oil. We spend more billions for the oil. Neither expenditure guarantees security. If a fraction of the money were spent inside the U.S. on efficiency and renewables we would be both more secure and richer. If Wisconsinites reduce electrical energy use by two percent a year, no new plants with their increased costs and pollution would be needed. States with fossil fuel components to their economies, e.g. coal mines, will take a hit if efficiency and RE are developed. Wisconsin has no fossil fuels. The growth of wind, bioenergy, efficiency and other green industries would bring new employment opportunities here. Agriculture, bioprocessing, lightweight materials fabrication, sensor and control systems, and energy service companies would grow. We are good at these. An efficiency first and RE strategy would create new jobs, put wind in Wisconsin’s economic sails, reduce environmental and public health damages, and begin the shift to a sustainable way of life. Social and environmental goals are sometimes in conflict with the need for capitalist institutions to constantly grow. The IOUs cited Wisconsin’s low electrical growth rate when they argued to remove the investment cap. They said they had to go out of state to get better returns to stay competitive, and with the cap’s removal they can. It is in our interest to lower the electrical use rate even more. It is also in our interest to have healthy, Wisconsin-based IOUs. With the current legal structure, we should be able to do both. We can also start to reward IOUs for providing services instead of selling kWh. Nobody wakes up saying, “I have to get my 20 kWh today.” We want light, pleasant temperatures for inside spaces, hot coffee and cold beer. We are buying efficiency. From the early 1970s to now appliances bought in Wisconsin use 50% less electricity. The population increases 1.1% a year, but residential energy use only increases 0.5% a year. The number of commercial users increases 1.5% / year, use in that sector only increases 1%. In 1990 $1.41 worth of electricity produced $1,000 of gross state product, in ’99, $1.34. We are wringing more light and shaft horsepower out of every kWh, and we can get better at it. An energy efficiency hip population needs to become a Wisconsin characteristic. Two score high performance homes in Oneida have bills of $350-$400 for all energy, all year. Maybe this year they are up to $600. Many homes spend that much a month. Oneidas don’t go to Tulsa to buy groceries. Money saved on energy bills spends at least one more time in Wisconsin. Every high performance home adds at least $1,000 to our cash flow every year. There are 25,000 housing starts in Wisconsin annually. If they were built to high performance standards, it would add $25 million to the state’s economy this year, $50 million the next, etc. It is economic development by import substitution, and we now export $10 billion a year on imported fossil fuels. Wisconsin’s Energy Star Home program shows builders how. Getting them and the market to care is another matter. About 90% of commercial, industrial and institutional facilities were built before 1985 and fewer than 25% have been upgraded with more energy-efficient HVAC and lighting systems. The 100+ Wisconsin companies in the Focus on Energy Program have identified $1.5 million in energy cost savings at a cost of $2.2 million. The investments average a 1.5 year payback, a 35% return on investment. However, if we can’t manage a fifth of the savings Californian’s have, there is still growth in demand. It has to be dealt with. Wind generation is ready. Germany gets 6,100 MW from wind. The Danes
have 12,000 jobs related to wind generation of electricity, get 13% of
their load now, and are aimed at 50% by 2030. Government tax, investment
structures, and laws have opened the door to 175,000 Danes joining wind
cooperatives. The Colorado PUC ordered Xcel to build a 162 MW wind farm
near Lamar. Texas plans to have 2,000 MW of wind electricity by 2009. Getting
200 MW a year, 80, 2.5 MW turbines, is certainly doable.
Manure methane turbines will add more MW; 400 cows run a 100 kWh generator. Can we retrofit 500, 400-cow and larger operations over a decade? That is 50 MW, improved surface water and more jobs. We can get 250 MW a year with renewables. With reduced growth in demand, the 550 MW of new generation under construction, and the 1,103 MW of PSC approved new construction, that is enough new capacity to keep us responsibly positioned. There are another 1,010 MW of applications on file, and 2,025 MW that applications are expected fornone of it coal. We have not explored how much at-peak power might come from industrial plants which, like Georgia Pacific’s in Green Bay, can make money selling power instead of product. Wisconsin is not in a crisis. We need to structure laws and benefits to put pv on roofs, to build wind generation farms, and to enable regional biomass electric cooperatives to form. They would put a floor under the forest-based economies of the northern counties. We must start to grow energy crops such as industrial hemp, fast-growth poplars, and willows. More than half of farm income is government support. We might as well get something we want instead of more millions of pounds of low-quality surplus cheese. A problem is peak power demand. Average demand ranges from 4,600 MW to 6,300 MW. It is expensive to build generators to deal with a few hundred hours of peak demand that sit idle for the rest of the year’s 8,760 hours. The considerable capital for them has to be repaid every month, and they have to be maintained. The MW in capacity planned to come on line in the next few years, mostly merchant power, is enough to take care of growth in demand at peak in the near future and give us time to bring more efficiency and renewables on line. Another problem is the aging of existing base load plants. Nuclear ones should be retired asap; coal ones need rebuilding with slightly cleaner units sited right where the old plants are. Or, they have to be replaced with much cleaner and more efficient renewable energy technologies. The coal-steam generating plants IOUs want aren’t built to deal with a few hundred hours a year of peak electrical demand. We are not that dumb. Wisconsin hydro, fossil- and nuclear-steam generation capacity now is 9,300 MW; non-peak loads are half to two-thirds of that. WEPCO, WPS and Alliant are trying to stampede us with the need at peak in a few geographic pockets and use sectors to build base load capacity so they can sell electricity out of state at the expense of Wisconsin’s already stressed environment. We know cancers are caused by fossil combustion (radiation and hormones are the other drivers, and burning coal releases plenty of radiation, too). We know NOx triggers smog. We know mercury is already too high for the health of animals who eat fish. What a tourist attraction! Besides destroying public health and the environment, building coal plants locks us into the past and blocks the way to the future. We must identify the economic and geographic sectors most responsible for increases and devise programs targeted to control them. Utility and PSC energy priest hoods generate agitprop to convince us energy demand is inelastic (California shows this is not true) and approaching crisis. That we have no other choice but to increase fossil-generated supply. But there is. Regulated utilities are in the business of piling up assets to increase their guaranteed returns. The PSC is supposed to keep the build up in line with need. Utilities have a history of overbuilding. Business- as-usual Republicans have dominated the PSC for 15 years. It is not a control over IOUs. It is a rubber stamp, a cheerleader. It is time for a paradigm shift. There is great confusion between price and cost. A $0.06 kWh is low priced, but if the costs IOUs have shifted off their balance sheets are counted, it is not cheap. Think of breast cancers, trashed surface waternow all Wisconsin lakesstrip mines, global warming, destroyed forests, reduced tourism, grade F air on many days in eastern Wisconsin counties, and exported money. Efficiency negawatts cost less than the IOUs’ wholesale price. Many clean, higher-priced RE kWh have a reasonable cost compared to coal-fired kWh when all the externalities are counted and are competitive with kWh produced by turbines and diesel generators that run only for peak demand’s 200 hours a year. People need to know this. But we really don’t have a choice. If we value our health and Earth’s,
we have to stop using fossil carbon to generate electricity and begin to
use renewables. Corporate bosses don’t want to hear that change message.
It is the task of the culturally creative minority to convince a majority
that the corporadoes’ denial is neither honest nor honorable. We can’t
expect much help from bought off legislators and bureaucratic policy makers.
Organizing the coop structures, laws and financing that make it happen would be a way an ambitious down state politician could reach enough voters to become governor. The really big idea: once in office s/he could form an alliance with Illinois, Minnesota, Iowa and the Dakotas to build wind turbine electric farms that electrolyze water into oxygen and hydrogen. The hydrogen would be piped to the region’s metros and the Upper Midwest would become a lead in the switch to a hydrogen economythe next big thing. A problem with the efficiency and RE strategy is that it has been marginalized for decades. There are not many people able to do the work, few ESCOs (energy service companies, GENCOs and LINECOs are the others in utilspeak) that can help educate, manage and evaluate the new workforce/programs. Wisconsin Energy Conservation Corporation and the Energy Center of Wisconsin are the biggest, Franklin Energy Services and a few others are also players. But it is thin. All are building up to manage Public Benefits money, the $1.48 check off on your utility bill. Duke Power and other monsters are cruising, looking to take it away from local control. We don’t want that any more than we want them buying our IOUs. Duke and ConEd have bigger bottom lines than Wisconsin’s. Sic the DNR, the PSC, the AG on them, ha! Mosquitoes vs. mastodons. The challenge is how to keep our GENCOs healthy and away from takeovers as they figure out their places in a historic/technical shift away from what they’ve always done. Electrical generation is no longer a natural monopoly, a business that burns fossil carbon in central plants and sends electrons to distant places. But we can’t keep IOUs solvent at the cost of public health, worse environmental decline, holistic economics, missing the boat of new technologies’ promise, and depressing Wisconsin-based ESCOs. It is too high a price. If it is the end of an era for IOUs, it is the end of an era for consumers, too. No more mindless slurping of cheap kWh. No more leaving it to the IOUs to produce endless quantities however. Citizens must take control of decisions about production, must produce more of their own electricity, and must certainly embrace efficiency. No more cheap-to-buy, expensive-to-run motors, pumps, fans, lights and appliances. No more fossil carbon pollution. From now on prices will rise to meet true costs, and sunshine will show the way to sustainability, economic and environmental. We are in a time of transition. It will take a generation or so to complete. We’ve already started. We have to admit it, set goals and get on with it. Anything else prolongs the agony, increases the chaos and costs. Resources to a sustainable future: No Regrets Remodeling: Creating a Comfortable Healthy Home that Saves Energy, by the editors of Home Energy magazine, ISBN 0-9639444-2-8, 222 pages, 1997, $19.95. Residential Energy: Cost Savings and Comfort for Existing Buildings, John Krigger, 2nd edn., ISBN 1-88012-008-9, 280 pages, 1996, $35.00. Web sites: www.buildingscience.com, www.healthhouse.org, www.epagov.homes. Shelter Supply has a catalog with ideas and products that are helpful, 800-762-8399. It has the Energy Efficient Builders Association Builder’s Guide: Cold Climate Edition, which is the bible for high performance house construction. www.eeba.org sells it, too. Wisconsin Energy Conservation Corp., 211 S. Paterson St., Madison 53703, 800-969-9322, www.weccusa.org, manages many programs funded by Public Benefits money. These include the Wisconsin Energy Star Home program and supports for renewable energy projects. Home Power: The Hands-On Journal of Home-Made Power, POB 520, Ashland, OR 97520, 800-707-6585, www.homepower.com. A 2nd class mail subscription is $22.50 for six issues a year. This magazine covers renewable energy technologies. Practical Photovoltaics: Electricity from Solar Cells, Richard Komp, 3d edition, Aatec Publications, ISBN 093794811X, 1999, $18.95. The theory and practice of pv in a non technical presentation. It covers history, manufacture, use and politics. Wind Power for Home and Business, Paul Gipe, Chelsea Green Publishing Co., ISBN 0930031644, 1993, 432pp, $35. This is the most complete reference book on wind energy. If you are just learning or looking to buy, this is the book to read. The Passive Solar House, James Kachadorian, Chelsea Green Publishing Co., ISBN 0930031970, 1997, 220 pp., $24.95. This plus the Builder’s Guide will provide the information needed to connect your house with the sun. A high performance home can get a third of its annual heat needs through south-facing windows. Here about eight per cent of the floor area in south-facing glass is optimum. Alternative Energy Sourcebook, ed. John Schaeffer, Real Goods, Ukiah, CA, 1-800-762-7325, www.realgoods.com. This is a fat catalog filled with all kinds of information about renewable and conservation technology and materials, which Real Goods sells. Powering the Midwest: Renewable Electricity for the Economy and the Environment, Brower, Tennis & Denzler, Union of Concerned Scientists, www.ucsusa.org, 2 Brattle Square, Cambridge, MA 02238, 617-547-5552. The book is out of print, but findable. The web site is a mine of information. Rocky Mountain Institute, www.rmi.org, has a newsletter, $20/yr., and a long list of publications, e.g. Least-Cost Electricity Strategies for Wisconsin: Practical Opportunities to Save over a Billion Dollars a Year, which was testimony in the PSC’s advanced plan IV, 1985. (IOUs have since killed advanced planning.) RMI is involved in energy, transportation, water, climate change, economic renewal, corporate sustainability, forests and security. It advises nations and big utilities as well as working with communities on resource issues and economic revitalization. The Canadian web site for renewables is worth a cruise: http://retscreen.gc.ca. Energy Federation Inc., has catalogs for compact fluorescent lights and fixtures, weatherization and ventilation products, 800-876-0660. Efficient appliances: www.homeenergysaver.lbl.gov/HES/ACEEE/intro.html, www.aceee.org. Windows: www.efficientwindows.org Green building: www.BuildingGreen.com, www.wgba.org. Renewable energy (solar +): www.mrea.org (education), www.aaasolar.com (products). Natural Capitalism: Creating the Next Industrial Revolution, Paul Hawken, Amory and L. Hunter Lovins, ISBN 0-316-35316-7, Little, Brown & Co., 1999, 396 pg., $26.95. Power Surge: Guide to the Coming Energy Revolution, Flavin & Lenssen, W.W. Norton, ISBN 0-393-31199-6 (pbk), 1994, 382 pp., $10.95. This is a Worldwatch, www.worldwatch.org, Environment Watch Environmental Alert Series book. |
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SOUL
Inc.
P.O. Box 11
Mosinee, WI 54455
800-270-8455
info@wakeupwisconsin.com