The 2000-2001 California Energy Crisis made almost daily
worldwide news and thrust energy policy irrevocably to the
forefront of the public's attention. Five years later, we now see
that period as a watershed in attitude and policy for the state,
as well as for the U.S.
What is different today? What trends have shaped our present
policy from that crucible? What technological breakthrough
will revolutionize our efficiency and cost?
These are some of the major shifts in thinking in the public
arena in the past year:
- Record-breaking weather is underscoring a growing belief
that man-made warming is leading to a global disaster
- Record cost of gasoline is fueling the desire to wean
California and the U.S. from sources of fuel produced
by unstable foreign governments
- The cost of natural gas tripling after Hurricane Katrina
- The belief that renewable sources of power, especially
solar photovoltaic, wind power and biomass to replace
petroleum-based fuel can compete now
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Heat Waves and Record Electric Demand
How would our new policies and system upgrades perform
under pressure? California would find out much sooner than
expected.
In late July, a high-pressure system locked over the American
Southwest. Ten days of record heat, a 1 in 50 occurrence,
exceeded peak demand five years before the power systems
operator expected it with more than 50 Gigawatts needed on
July 24. (See Figure 2 Demand curve) The news after it was all
over is that nothing happened. Not a single power outage due
to lack of resources (although there were distributed outages
resulting from transformer equipment failure). With Flex
Your Power and Voluntary Load Reduction Programs in place
we had a large voluntary public response in conservation with
approximately 1500 Megawatts saved (enough to power most
of Silicon Valley). In all but one day, operating reserves
exceeded 7 percent.
The Central Dilemma
So, we sailed through it all, even better than heat waves in
other parts of the country. Not one power plant went down.
Not one power line was lost. Not one blackout occurred.
This appears to verify that California has new polices wired for
success, principally:
- Energy efficiency is now first priority at the utilities and
with the business community.
- The spinning bubble meter is dead! Five million smart
meters are being installed by PG&E. Companies like
Energy Connect have moved into the California market to
help customers save 25% and more with electricity timeof-
use strategies as they have in the Philadelphia /New
Jersey area and Chicago.
- The priority of renewables is state law and Governor
Schwarzenegger spearheaded solar spending of $3 billion
on 3000 megawatts of solar power in the next ten years,
enough to power nearly two Silicon Valleys.
- Wind power has become a juggernaut, nearly as cheap as
natural gas power.
- We have solved our "wires" challenges across the state and
near San Francisco allowing us to begin closing old, inefficient
plants like Hunter's Point.
- Some of the most successful and innovative solar power
companies have their headquarters here in Silicon Valley
(ReGRID, Akeena Solar, Miasole, and Sun Power).
- We even have a new solar manufacturing plant committed
to the Valley, setting us up to become a center of excellence
in this arena.
Is there still any reason to be concerned about our future? Maybe.
Over Reliance on Natural Gas?
One hurricane, then a second one exposed our weakness. Just
like 6 years ago, the first rumblings of revolutionary change
began in the natural gas market.
Three headlines further clarified the emerging risk:
- India declares a moratorium on new natural gas plants
after 2012.
- New natural gas pipeline to connect the gas-hungry
eastern market with sources in the west.
- Russia cuts off natural gas to customers in Europe.
When hurricane Katrina mowed over the Gulf of Mexico,
wrecking 15% of the nation's capacity to deliver natural gas,
prices soared 200% to an all time high of $15.62 (per thousand
cubic feet).
Now customers are paying attention. Risk management plans
become required strategy. We were saved by a very mild winter,
but experts predict $10-15 gas may become normal.
The problem exposed by these events: "Half of our baseload is
supplied by natural gas."
We are vulnerable and there is currently no workable substitute.
New policies to control CO2, which will be signed by
the Governor and the CPUC this year will render abundant
and cheap conventional coal power not available. In addition,
nothing has less legislative support than new dams for clean
hydropower, and building a new nuclear plant is still officially
illegal in the state.
Can Wind and Solar Step In?
Why can't we just switch to renewable power like solar and
wind? Why not indeed?
Unfortunately, the physics of power production include limitations
that are seldom discussed. Wind generated power's
secret is that the closer we get to the peak, the more it disappears.
For July 24, 2006, our all-time record day, wind sources
lost 80% of its capacity by the time we reached the peak in
late afternoon, not even providing 2% of what we needed.
This is typical. California use peaks from 3 to 6 pm, but wind
typically peaks at 2 in the morning. Wind power must be
backed up by baseload such as natural gas, nuclear and
hydro-power. This fundamental weakness will remain until
cost-effective energy storage technology catches up.
What About Solar?
Although less intermittent, solar power similarly suffers from
a lack of coincidence with peak use, and is 2 to 5 times more
costly per kilowatt generated. The good news is that breakthroughs
in thin-film technology may change this.
Further, neither solar nor wind can function to uphold the
voltage of the grid to keep it stable from damaging surges and
sags. Only baseload plants provide these "ancillary services" to
smooth the bumps and dips created by these resources. This
adds even more hidden costs.
What, then, does our future hold? That depends.
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Future Cost of Power in a Carbon
Constrained World
What will be the cost premium for our policy choice to tax
carbon-based sources of fuel? The Electric Power Research
Institute has researched this and has presented their findings
in a diagram. It displays the heavy toll on coal-fired power
sources. Depending on the carbon tax selected, the cost of coal
could double. Natural gas costs could increase by nearly as
much.
Nuclear power's low cost is low and stable over the entire
period of concern.
What policy decisions do these suggest? First, there is a significant
cost to California customers from our CO2 policy
leadership. Because we have shut off the cheapest and cleanest
baseload resources, namely hydro and nuclear, we will have a
default natural gas only policy.
Like Europe and China, we may need to change to compete in
the long term.
IGCC = Integrated Gasification Combined Cycle
NGCC = Natural Gas Combined Cycle
PC = Pulverized Coal
Capture = Carbon Dioxide sequestration
Policy and Technology Needs and Breakthroughs
First some good news. There are some bona-fide technological
revolutions coming that will bring breakthrough efficiency
and customer control of the cost challenges. We will highlight
just two, LEDs and vanadium batteries.
Light Emitting Diodes(LED's)
In ten years your home may have lights that may not need to
be changed in our lifetime (unless your toddler breaks it). It is
the same glow from your cell phone and traffic lights.
In an incandescent lamp, the heating causes the filament to
glow. With an LED it's the semiconductor material itself that
emits light. In addition, the intensity of the light can be
changed, along with the color, unlike traditional lights that
after installed are always the same.
LEDs have a 50 to 100 times longer lifetime than incandescent
lamps and save 90 percent in energy costs. LED home lighting
will be commercially available in the next three to four years.
Lighting is presently responsible for roughly 20 percent of
electricity consumption. Researchers believe that the adoption
of LEDs could reduce the U.S. electrical demand by 10 percent.
New Storage Technologies
A sophisticated Silicon Valley energy manager recently said,
"If I had access to vanadium battery technology three years
ago, I would have installed them instead of my cogeneration
plant.
The concept is simple. Put the facility on Time-of-use pricing.
Charge the batteries during the night when power is very
cheap (often less than 2 cents/kWh). Expend the batteries during
the daytime when prices exceed 10 cents. What is the
breakthrough? An expanded source of electrolyte solution to
keep the battery working all day. (Insert schematic). This
holds the potential to make wind a more meaningful source.
For customers, it can cut costs many fold and eliminate timeintensive
operations and maintenance as well as natural gas
procurement.
A comparison of promising new storage technologies is presented
below highlighting their advantages and disadvantages.
Tough Decisions in the Next Few Years
California will do well for electric capacity in the coming few
years. But new carbon taxes on fossil fuel plants and the high
cost of dependence on renewables threaten to drive California
costs up even further, making it even harder to compete with
other high tech regions. (See Figure below)
Electricity Cost Comparisons Between U.S. Regions
This year, California's residential, commercial, and industrial
electricity costs are already the third highest among the
10 regions compared. Most troubling is that California's residential
and industrial rates have jumped over 10% compared
to last year. New statewide policies in procurement may exacerbate
this trend. However, new customer risk management
strategies and emerging efficiency and demand response
choices will also mitigate this effect.
A Golden Opportunity: