Good and informative article on green utilities, with a backdrop of U.S. policy:
"...a green transformation will have to pivot on electricity and the existing electrical grid. ... The story of wind, solar, geothermal and biomass energy development in the United States is an appalling tale of missed opportunities and willful negligence."
-------------------------------------------------------------------
Big Is Beautiful
by Christian Parenti
The Nation, May 7, 2007 issue
Terry Hudgens is a classic oilman: thick drawl, square jaw, engineering degree from the University of Houston, twenty-five years with Texaco in the oil patch, which ended with his running the company's $5 billion-a-year natural gas business.
These days Hudgens lives in Portland, Oregon, epicenter of organic coffee and
politically correct unshavenness. To hear him talk, you could think he is
wearing Birkenstocks: Instead of the good-old-boy discourse of the petroleum
industry, Hudgens now speaks about "the power of the wind" and the future of
clean energy.
But this is not the story of a midlife crisis, a businessman gone groovy at
age 55. Instead, Hudgens has brought his hard-nosed oil-patch logic to the
frontiers of renewable energy. He is now CEO of PPM Energy, a subsidiary of
ScottishPower and America's second-largest and possibly fastest-growing wind
power company. He got into wind for the same reason he got into oil--it's a good
way to make money.
"This is wind power on a grand scale," says Hudgens. He is talking about
projects like Maple Ridge Wind Farm, the biggest power plant of any sort built
in New York during 2006. The farm's 195 huge white wind turbines, with blades
as long as jet wings perched atop tall steel towers, are spread across miles
of ridgeline in Tug Hill, New York, catching steady airflow off the Great
Lakes. On a good day this farm will produce 321 megawatts of power, as much as a
midsize coal- or gas-fired plant.
The green future wasn't supposed to look like this. In the environmental imagination of the 1960s and '70s, the ecological ideal was something quaint, a village where every house had solar panels, a windmill and a vegetable garden where the lawn once soaked up pesticides. E.F. Schumacher told us that "small is beautiful," and to this day many environmentalists see large centralized systems as inherently bad.
But the speed and magnitude of climate change dictate that we begin the
transformation away from carbon-based fuels now--and on a very large scale. Only
a few decades remain if we are to avoid cataclysmic runaway global warming and
its attendant crises. Realistically, a green transformation will have to pivot on electricity and the existing electrical grid. At one end of the grid, zero-emission vehicles can be plugged in, while at the other end zero-emission power plants--most likely owned by large for-profit companies--can feed the system electricity.
Large utility-scale renewable energy offers important economies of scale. In Denmark industrial-scale wind farms already supply 20 percent of the country's power; Germany and other European countries are close behind. The American
Council on Renewable Energy estimates that with "consistent public policy"
and enough investment, 70 percent of America's energy consumption could be
generated from renewable, carbon-free sources by 2025. Another
government-supported study estimates that with radical efficiency efforts, renewable energy
could supply all US electrical needs by 2030.
So, how have renewable utilities developed thus far? Who are the key players?
How do they relate to the rest of the economy? What technologies work best?
And what are the real economics of creating a green power grid?
The story of wind, solar, geothermal and biomass energy development in the
United States is an appalling tale of missed opportunities and willful negligence. The government has refused to use subsidies to jump-start green power, but it lavishes public money on fossil fuels. To the extent that the transition to utility-scale green power has begun--with the emergence of companies like Hudgens's PPM and huge wind farms under construction in California, Texas and the upper Midwest--it is no thanks to government initiative.
Petroleum and coal companies received more than $33 billion in direct
subsidies between 1992 and 2002. The 2005 energy bill gave the oil and gas
industries $6 billion in subsidies while filthy coal will get about $10 billion over
the next five years. This public largesse takes the form of everything from
R&D support and loan guarantees to accelerated capital depreciation schedules
in the tax code.
Meanwhile, renewables have struggled to insure even a basic production tax
credit, or PTC, of 1.9 cents per kilowatt hour. This modest incentive was
designed to create a stable income for firms willing to risk breaking into the
utilities market with new technology. It's important to stress that this tax
credit does not reward construction for construction's sake; it rewards only the
actual delivery of energy to the grid. But this rational little subsidy,
initiated in 1992, was never enacted for more than one year at a time, and it
was routinely allowed to expire. Last year the PTC was finally renewed for two
consecutive years; it will likely be locked in for five or ten years. That
has triggered a huge wave of private investment in green utilities.
Of all the renewables, wind is among the most profitable. Although it
supplies only 1 percent of total US electricity, it is the fastest-growing of the
renewables: Installed wind capacity jumped by almost a third last year, to
11,603 megawatts. That is about equal to ten major nuke plants or twenty typical
coal plants.
"This is heavy industry," says Mike Jacobs of the American Wind Energy
Association. "Building windmills is leading to a lot of investment and job
creation in traditional industrial areas." Demand for steel towers, gearboxes and
those jet-wing-sized blades is creating positive links to some economically
battered regions. Last year Gamesa, a large Spanish turbine manufacturer, opened
a factory in an abandoned US Steel plant in Pennsylvania. The world's largest
wind turbine maker, the Denmark-based Vestas, is opening a plant in
Colorado. In North Dakota, sometimes called the Saudi Arabia of wind, DMI industries
is emerging as the king of windmill tower construction.
Meanwhile, farmers from Texas to the Dakotas to New York are making money by
"double cropping"--that is, renting space in their fields to wind-harvesting
utility companies. There is now so much investment flowing into wind--tens of
billions of dollars looking for projects--that turbine producers cannot keep
up with demand. Many are sold out through 2008.
Thanks to twenty years of bad US energy policy, the leading wind turbine
producers and wind farm operators are not American: Suzlon Energy is based in
India, Gamesa in Spain, Vestas in Denmark, Mitsubishi in Japan and Siemens in
Germany. GE is the only large US firm with substantial investments in wind
turbine production.
"Wind is getting much more efficient," says Hudgens. Wind also rates high in
terms of its so-called energy return on investment: that is, the amount of
energy that goes into producing the windmills that then produce energy. "The
average new windmill going online today produces about three times as much
power as the ones built just seven years ago," Hudgens explains. And as the
turbines get bigger and more efficient, they move more slowly and do less damage
to migrating birds and bats--though the environmental threat of windmills has
always been exaggerated by wind's opponents, usually rich rural landlords who
find wind technology unsightly.
Solar is another promising technology with a variety of applications.
Photovoltaic panels on large commercial roofs are becoming popular in Sunbelt
states and even in northern states. These "rooftop" systems are highly
efficient--no energy is lost in transmission--but such systems typically can't supply
more than 15 percent of a client's energy needs.
Utility-scale photovoltaic farms also exist, but these are rarely bigger than
sixty megawatts. However, the largest in the United States is 760 megawatts,
owned by Tucson Electric Power Company, and is set to more than double in
size by 2009. But photovoltaic panels are expensive; pure silicon crystals,
from which they are made, are in increasingly short supply.
A simpler technology is concentrating solar power (CSP), or solar thermal, in
which fields of mirrors concentrate the sun's heat onto a central tower to
boil mineral oil, the steam from which then spins a turbine to create electricity. Several CSP plants generate about sixty megawatts each, though Southern
California Edison has a series of linked plants in the Mojave Desert that
generate 354 megawatts.
Geothermal--hot water spewing out of the ground--produces only about 2,800
megawatts nationwide but could produce fifty times that with proper investment.
However, "we've been nickel-and-diming renewable development," says Karl
Gawell of the Geothermal Energy Association. With surprising equanimity, he
adds, "The federal government currently spends no money on geothermal R&D."
Landfill gas, the noxious methane seeping from the underground mountains of
consumer glories past, already produces a surprising amount of energy, as do
various types of biomass such as "digesting" pig waste, cow manure and
fermented grass clippings.
But the most productive of all the renewables is the oldest. Hydropower,
mostly owned by major utility firms, produces about 9 percent of all US
electricity. When electrification began in the 1880s, hydro was king; by 1920 water
produced 40 percent of American electricity. During the big government, big
vision days of the New Deal, hydro construction boomed: Think Hoover Dam, Grand
Coulee Dam, Tennessee Valley Authority, etc.
Dams are much disparaged for killing fish--or, in fact, killing whole rivers.
But state-of-the-art hydro can avoid much of that. And if climate change is
allowed to run out of control, we can kiss the riparian habitat goodbye
anyway. "Currently only 3 percent of existing US dams are harnessed for power,"
says Jeff Leahey of the National Hydropower Association. A crash program of
carbon emissions reduction would no doubt involve retrofitting many existing
dams with fish-friendly power turbines. But when I ask Leahey about such plans
and whether the hydropower industry is lobbying for them, he is rather
dispassionate. "Lately, the direction has really been away from hydro."
Cutting-edge hydropower, often called kinetic hydro, doesn't even require
dams. In New York City's murky East River, a new firm called Verdant Power has
installed a small field of underwater turbines that generate ten megawatts of
electricity from the might of the river's tides (in fact, the East River
isn't a river at all, but a tidal strait). That's small-scale, but advocates of
kinetic hydro say it could be a useful part of a larger solution: New York
State could produce 600 megawatts of power this way--that's half of what a
typical nuke plant produces.
A major problem facing green utilities is the battered condition of our
electrical grid. Two decades of radical deregulation have allowed utility
companies to cut back on maintenance. Electricity demand has increased by about 25
percent since 1990, but the rate of investment in transmission facilities has
decreased by about 30 percent. Companies find it more profitable to simply
overload the old grid. The result is congestion, which means rising
inefficiency: In 1970 only about 5 percent of electricity was lost during transmission;
now the rate is almost double that. It also means large blackouts like the
one that hit the Northeast and Midwest in August 2003. A green future--with
plug-in vehicles at one end of the wires and renewable energy suppliers at the
other end--will lean on the grid even harder.
"Five years out, the electrical grid, the infrastructure, is going to be a
serious problem," says Mike Jacobs. "The last time a huge round of transmission
lines was built was in the 1970s, in response to big blackouts in the
1960s." This impending crisis of the electrical infrastructure will require robust
government action--tough new regulation to force reinvestment rather than
profit-taking.
In canvassing the leaders of the green power industry, I was repeatedly
struck by their timidity: Their discourse is polite, their vision limited. The
wind industry has settled on a goal of supplying 20 percent of US electricity by
2020. Why so little? Why not more, sooner? When I press Hudgens, he says
simply, "We're not projecting greater growth. But it's not impossible."
Given the crisis we face as a species, carbon-free electricity ought to be a
top priority. Subsidies for fossil fuels should be eliminated and replaced
with mercilessly steep carbon taxes. This money, and more, should underwrite
clean power generation and a massive overhaul of the national grid. Aggressive
state action may also be needed to sweep away NIMBYs who oppose wind farms on
aesthetic grounds.
Though it clashes with America's free-market mythology, aggressive state
intervention has propelled all the tectonic shifts in our economic history. From
granting land rights for plantations, to the creation of the railroads, to
the rise of Big Oil and the creation of the aerospace and high-tech industries,
government support has always helped the market along. It's time to couple
these traditional tools--subsidies and tax incentives--with punitive
regulation and tax levies to euthanize fossil fuels and build a green grid.
----------------------------------------------------
"...a green transformation will have to pivot on electricity and the existing electrical grid. ... The story of wind, solar, geothermal and biomass energy development in the United States is an appalling tale of missed opportunities and willful negligence."
-------------------------------------------------------------------
Big Is Beautiful
by Christian Parenti
The Nation, May 7, 2007 issue
Terry Hudgens is a classic oilman: thick drawl, square jaw, engineering degree from the University of Houston, twenty-five years with Texaco in the oil patch, which ended with his running the company's $5 billion-a-year natural gas business.
These days Hudgens lives in Portland, Oregon, epicenter of organic coffee and
politically correct unshavenness. To hear him talk, you could think he is
wearing Birkenstocks: Instead of the good-old-boy discourse of the petroleum
industry, Hudgens now speaks about "the power of the wind" and the future of
clean energy.
But this is not the story of a midlife crisis, a businessman gone groovy at
age 55. Instead, Hudgens has brought his hard-nosed oil-patch logic to the
frontiers of renewable energy. He is now CEO of PPM Energy, a subsidiary of
ScottishPower and America's second-largest and possibly fastest-growing wind
power company. He got into wind for the same reason he got into oil--it's a good
way to make money.
"This is wind power on a grand scale," says Hudgens. He is talking about
projects like Maple Ridge Wind Farm, the biggest power plant of any sort built
in New York during 2006. The farm's 195 huge white wind turbines, with blades
as long as jet wings perched atop tall steel towers, are spread across miles
of ridgeline in Tug Hill, New York, catching steady airflow off the Great
Lakes. On a good day this farm will produce 321 megawatts of power, as much as a
midsize coal- or gas-fired plant.
The green future wasn't supposed to look like this. In the environmental imagination of the 1960s and '70s, the ecological ideal was something quaint, a village where every house had solar panels, a windmill and a vegetable garden where the lawn once soaked up pesticides. E.F. Schumacher told us that "small is beautiful," and to this day many environmentalists see large centralized systems as inherently bad.
But the speed and magnitude of climate change dictate that we begin the
transformation away from carbon-based fuels now--and on a very large scale. Only
a few decades remain if we are to avoid cataclysmic runaway global warming and
its attendant crises. Realistically, a green transformation will have to pivot on electricity and the existing electrical grid. At one end of the grid, zero-emission vehicles can be plugged in, while at the other end zero-emission power plants--most likely owned by large for-profit companies--can feed the system electricity.
Large utility-scale renewable energy offers important economies of scale. In Denmark industrial-scale wind farms already supply 20 percent of the country's power; Germany and other European countries are close behind. The American
Council on Renewable Energy estimates that with "consistent public policy"
and enough investment, 70 percent of America's energy consumption could be
generated from renewable, carbon-free sources by 2025. Another
government-supported study estimates that with radical efficiency efforts, renewable energy
could supply all US electrical needs by 2030.
So, how have renewable utilities developed thus far? Who are the key players?
How do they relate to the rest of the economy? What technologies work best?
And what are the real economics of creating a green power grid?
The story of wind, solar, geothermal and biomass energy development in the
United States is an appalling tale of missed opportunities and willful negligence. The government has refused to use subsidies to jump-start green power, but it lavishes public money on fossil fuels. To the extent that the transition to utility-scale green power has begun--with the emergence of companies like Hudgens's PPM and huge wind farms under construction in California, Texas and the upper Midwest--it is no thanks to government initiative.
Petroleum and coal companies received more than $33 billion in direct
subsidies between 1992 and 2002. The 2005 energy bill gave the oil and gas
industries $6 billion in subsidies while filthy coal will get about $10 billion over
the next five years. This public largesse takes the form of everything from
R&D support and loan guarantees to accelerated capital depreciation schedules
in the tax code.
Meanwhile, renewables have struggled to insure even a basic production tax
credit, or PTC, of 1.9 cents per kilowatt hour. This modest incentive was
designed to create a stable income for firms willing to risk breaking into the
utilities market with new technology. It's important to stress that this tax
credit does not reward construction for construction's sake; it rewards only the
actual delivery of energy to the grid. But this rational little subsidy,
initiated in 1992, was never enacted for more than one year at a time, and it
was routinely allowed to expire. Last year the PTC was finally renewed for two
consecutive years; it will likely be locked in for five or ten years. That
has triggered a huge wave of private investment in green utilities.
Of all the renewables, wind is among the most profitable. Although it
supplies only 1 percent of total US electricity, it is the fastest-growing of the
renewables: Installed wind capacity jumped by almost a third last year, to
11,603 megawatts. That is about equal to ten major nuke plants or twenty typical
coal plants.
"This is heavy industry," says Mike Jacobs of the American Wind Energy
Association. "Building windmills is leading to a lot of investment and job
creation in traditional industrial areas." Demand for steel towers, gearboxes and
those jet-wing-sized blades is creating positive links to some economically
battered regions. Last year Gamesa, a large Spanish turbine manufacturer, opened
a factory in an abandoned US Steel plant in Pennsylvania. The world's largest
wind turbine maker, the Denmark-based Vestas, is opening a plant in
Colorado. In North Dakota, sometimes called the Saudi Arabia of wind, DMI industries
is emerging as the king of windmill tower construction.
Meanwhile, farmers from Texas to the Dakotas to New York are making money by
"double cropping"--that is, renting space in their fields to wind-harvesting
utility companies. There is now so much investment flowing into wind--tens of
billions of dollars looking for projects--that turbine producers cannot keep
up with demand. Many are sold out through 2008.
Thanks to twenty years of bad US energy policy, the leading wind turbine
producers and wind farm operators are not American: Suzlon Energy is based in
India, Gamesa in Spain, Vestas in Denmark, Mitsubishi in Japan and Siemens in
Germany. GE is the only large US firm with substantial investments in wind
turbine production.
"Wind is getting much more efficient," says Hudgens. Wind also rates high in
terms of its so-called energy return on investment: that is, the amount of
energy that goes into producing the windmills that then produce energy. "The
average new windmill going online today produces about three times as much
power as the ones built just seven years ago," Hudgens explains. And as the
turbines get bigger and more efficient, they move more slowly and do less damage
to migrating birds and bats--though the environmental threat of windmills has
always been exaggerated by wind's opponents, usually rich rural landlords who
find wind technology unsightly.
Solar is another promising technology with a variety of applications.
Photovoltaic panels on large commercial roofs are becoming popular in Sunbelt
states and even in northern states. These "rooftop" systems are highly
efficient--no energy is lost in transmission--but such systems typically can't supply
more than 15 percent of a client's energy needs.
Utility-scale photovoltaic farms also exist, but these are rarely bigger than
sixty megawatts. However, the largest in the United States is 760 megawatts,
owned by Tucson Electric Power Company, and is set to more than double in
size by 2009. But photovoltaic panels are expensive; pure silicon crystals,
from which they are made, are in increasingly short supply.
A simpler technology is concentrating solar power (CSP), or solar thermal, in
which fields of mirrors concentrate the sun's heat onto a central tower to
boil mineral oil, the steam from which then spins a turbine to create electricity. Several CSP plants generate about sixty megawatts each, though Southern
California Edison has a series of linked plants in the Mojave Desert that
generate 354 megawatts.
Geothermal--hot water spewing out of the ground--produces only about 2,800
megawatts nationwide but could produce fifty times that with proper investment.
However, "we've been nickel-and-diming renewable development," says Karl
Gawell of the Geothermal Energy Association. With surprising equanimity, he
adds, "The federal government currently spends no money on geothermal R&D."
Landfill gas, the noxious methane seeping from the underground mountains of
consumer glories past, already produces a surprising amount of energy, as do
various types of biomass such as "digesting" pig waste, cow manure and
fermented grass clippings.
But the most productive of all the renewables is the oldest. Hydropower,
mostly owned by major utility firms, produces about 9 percent of all US
electricity. When electrification began in the 1880s, hydro was king; by 1920 water
produced 40 percent of American electricity. During the big government, big
vision days of the New Deal, hydro construction boomed: Think Hoover Dam, Grand
Coulee Dam, Tennessee Valley Authority, etc.
Dams are much disparaged for killing fish--or, in fact, killing whole rivers.
But state-of-the-art hydro can avoid much of that. And if climate change is
allowed to run out of control, we can kiss the riparian habitat goodbye
anyway. "Currently only 3 percent of existing US dams are harnessed for power,"
says Jeff Leahey of the National Hydropower Association. A crash program of
carbon emissions reduction would no doubt involve retrofitting many existing
dams with fish-friendly power turbines. But when I ask Leahey about such plans
and whether the hydropower industry is lobbying for them, he is rather
dispassionate. "Lately, the direction has really been away from hydro."
Cutting-edge hydropower, often called kinetic hydro, doesn't even require
dams. In New York City's murky East River, a new firm called Verdant Power has
installed a small field of underwater turbines that generate ten megawatts of
electricity from the might of the river's tides (in fact, the East River
isn't a river at all, but a tidal strait). That's small-scale, but advocates of
kinetic hydro say it could be a useful part of a larger solution: New York
State could produce 600 megawatts of power this way--that's half of what a
typical nuke plant produces.
A major problem facing green utilities is the battered condition of our
electrical grid. Two decades of radical deregulation have allowed utility
companies to cut back on maintenance. Electricity demand has increased by about 25
percent since 1990, but the rate of investment in transmission facilities has
decreased by about 30 percent. Companies find it more profitable to simply
overload the old grid. The result is congestion, which means rising
inefficiency: In 1970 only about 5 percent of electricity was lost during transmission;
now the rate is almost double that. It also means large blackouts like the
one that hit the Northeast and Midwest in August 2003. A green future--with
plug-in vehicles at one end of the wires and renewable energy suppliers at the
other end--will lean on the grid even harder.
"Five years out, the electrical grid, the infrastructure, is going to be a
serious problem," says Mike Jacobs. "The last time a huge round of transmission
lines was built was in the 1970s, in response to big blackouts in the
1960s." This impending crisis of the electrical infrastructure will require robust
government action--tough new regulation to force reinvestment rather than
profit-taking.
In canvassing the leaders of the green power industry, I was repeatedly
struck by their timidity: Their discourse is polite, their vision limited. The
wind industry has settled on a goal of supplying 20 percent of US electricity by
2020. Why so little? Why not more, sooner? When I press Hudgens, he says
simply, "We're not projecting greater growth. But it's not impossible."
Given the crisis we face as a species, carbon-free electricity ought to be a
top priority. Subsidies for fossil fuels should be eliminated and replaced
with mercilessly steep carbon taxes. This money, and more, should underwrite
clean power generation and a massive overhaul of the national grid. Aggressive
state action may also be needed to sweep away NIMBYs who oppose wind farms on
aesthetic grounds.
Though it clashes with America's free-market mythology, aggressive state
intervention has propelled all the tectonic shifts in our economic history. From
granting land rights for plantations, to the creation of the railroads, to
the rise of Big Oil and the creation of the aerospace and high-tech industries,
government support has always helped the market along. It's time to couple
these traditional tools--subsidies and tax incentives--with punitive
regulation and tax levies to euthanize fossil fuels and build a green grid.
----------------------------------------------------
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