Tuesday, March 25, 2014

Energy and Environmental Newsletter

AWED's latest Energy and Environmental Newsletter is now available online. There are a LOT of good articles there, so please check them out...In our so far successful effort at promoting science-based energy sources in North Carolina, there are frequent push-backs from those whose green religion is offended.

For example, a well-intentioned NC environmentalist was recently trying to convince me that wind energy was a great thing for North Carolina. I politely explained that industrial wind energy is a technical, economic and environmental net loser.

In response, he disputed the economic part by writing me: North Carolina has 0% electricity from wind, and its average electrical rate is 8.54¢/KWH. Iowa has 20%± electricity from wind, and its average electrical rate is 7.56¢/KWH.    That otherwise, apparently intelligent individual considered that information to be proof positive that wind energy is very economical.

So, the question is: does that tidbit prove that wind energy is lower cost?

NO, and here is a brief explanation as to why not. The reality is that NC's residential electricity rate is about 40% lower than Iowa's (!)— so what would be the conclusion from that?

Electricity Costs: North Carolina vs Iowa

A well-intentioned NC environmentalist was trying to convince me that wind energy was a great thing for North Carolina. I explained that industrial wind energy is a technical, economic and environmental net loser.

In response, he came back with a typical Sierra Club answer (a purposefully superficial soundbite, aimed at deceiving uninformed citizens): North Carolina has 0% electricity from wind: avg electrical rate 8.54¢/KWH. Iowa has 20%± electricity from wind: avg electrical rate 7.56¢/KWH. Does that tidbit prove that wind energy is lower cost? Absolutely not, and here is a brief explanation why:

1) Let’s start by looking at the claim more closely. Not sure where thosenumbers came from but the 2014 EIA data shows that the latest Iowaresidential electricity rate (the least manipulated electricity indicator) is10.88¢/KWH. The same 2014 EIA data shows that the latest North Carolinaresidential electricity rate is 10.93¢/KWH: essentially the same.

2) There is often a significant difference between the electricity produced in a state and what is consumed in that state (which is not calculated, but estimated). Just because 20%± of Iowa’s electricity production is wind energy, that does not mean that 20%± of Iowa’s electricity usage came from wind energy.

3) It is impossible to meaningfully compare electricity costs of two such states, as neither one is an electricity island. In this case, Iowa is part of an eight state group (Midwest ISO), and North Carolina is paired with South Carolina.  The electricity costs in any of these states is heavily influenced by the composite picture of their regional partners.

4) If one persists in the state-vs-state illusion, then there are plenty of states that could be used to “prove” that wind energy is extremely expensive. For example, let’s compare NC to a more representative eastern state: New York, which has an RPS and has been heavily promoting wind energy: North Carolina’s residential electricity rate is 10.93¢/KWH,  New York’s residential electricity rate is 18.48¢/KWH. Case closed!

5) When a wind project is built, there often is a reduction in gas use. A superficial assessment would conclude that this reduces CO2, 1:1. However:

a) the type of gas facility that is reduced is typically a “CC,” which is a high efficiency, low CO2 source (and it’s not necessarily in the same state),

b) on the other hand another type of gas facility (“CT,” again, not necessarily in the same state) is usually added in, as it is a faster responder needed to balance the wind energy. The problem is that CT is a low efficiency, higher CO2 producing type of gas turbine, and/or

c) there is a reduction in the Grid’s safety margin. Even though this is a wind specific cost, it is always disguised.

6) It’s interesting that Iowa is put forward as a “success” for wind, when in reality coal is by far its largest source for electricity. The lowest cost source for good US coal is Wyoming — so coal costs in nearby Iowa are much less than in NC. [According to the EIA the difference in coal costs amounts to 2¢±/ KWH.] So the amount of coal used, plus Iowa’s proximity to Wyoming, are two major reasons why Iowa is a relatively low cost electricity state.

7) An economic reality for the Iowa situation is that the wind producers there are getting substantial taxpayer subsidies (between Section 1603 Grants and Production Tax Credits). These amount to another 3¢±/KWH in Iowa wind electricity costs that are shouldered by taxpayers instead of ratepayers.

8) An additional economic influencer is that Iowa wind developers are financially benefitting from an artificial program called RECs (Renewable Energy Credits). This means that they can sell their electricity twice: once to a regional utility company, and then get a second payment from a utility company in a state that has an RPS. The net effect of this contrived arrangement is that the electricity rates are artificially lower in Iowa.

9) Another reality in the Iowa vs NC comparison, is that Iowa does not have a consequential RPS, while NC does. What this means is that NC ratepayers are effectively mandated to buy Iowa’s wind energy RECs. That requirement translates to artificially raising NC’s rates, especially compared to Iowa’s.

10) Taking all these factors into account results in Iowa’s residential electricity being 4¢±/KWH (40%±) more expensive than North Carolina’s. This premium is purposefully being disguised by wind energy proponents, so that the true consequences of their energy policies will not be noticed by consumers. See this recent report, which comes to the same conclusion: the states with more wind energy are paying a premium. Don’t be taken in by the Iowa ruse…..John Droz, jr. 3/17/14

(I'm circulating this to a wider audience, as some of the answer will have some applicability to you, no matter where you live.)

Thank you for your continued support!

John Droz, jr., physicist & environmental advocate

As always, please pass this on to open-minded citizens. If there are others who you think would benefit from being on our energy & environmental email list, please let me know. If at any time you'd like to be taken off the list, please let me know that too.

No comments: