Utilities adding wind power, upgrading dams, buying credits
Wind turbines are sprouting in parts of the state, their giant stalks and slowly churning blades rendering futuristic landscapes.
To supporters of a law that required utilities to use more renewable energy, it’s a brighter future, where electricity’s less expensive and the environment’s healthier.
To others, the law just means more waste, as they fear it’ll lead to higher prices by forcing utilities to invest in energy they might not need.
“This mandate has clearly ramped up development of wind way more aggressively than it ever would have without it,” said Jim Litchfield, an energy consultant who appreciates benefits of wind as a renewable power source but has concerns about the law.
On Jan. 1, the 17 largest electricity providers in Washington are required to meet the first goal of sweeping renewable-energy rules approved by voters in 2006. As of next year, 3 percent of the energy those companies supply their customers must be from renewable sources built after March 1, 1999. The standard increases to 9 percent in 2016 and 15 percent in 2020.
All 17 utilities are on track to comply, said Howard Schwartz, senior energy policy analyst with the state Department of Commerce.
As energy regulations in Washington and other states force energy companies to use more renewable energy, production of electricity from wind in Washington has soared. From 2005 to 2009 wind generation in the state increased more than 600 percent and accounted for 3.5 percent of all the electricity generated in Washington in 2009.
Even so, state statistics show that much of that wind power is sold out of state, a trend experts expect to shift once the first mandate goes into effect Jan. 1.
While wind will play a big role in reaching renewable-energy goals at most companies, Avista, at least at first, expects to meet much of its requirement through upgrades at existing dams.
“We’re well positioned to meet our 3 percent target in 2012,” said Bob Lafferty, Avista’s director of power supply.
Inland Power and Light will meet its first goal by buying renewable energy credits from another power company. The two other largest providers in the Spokane area, Vera Water & Power and Modern Electric Water Co., have fewer than 25,000 customers and are not required to follow the rules.
Avista might tap Oakesdale project
Avista supplies 630 average megawatts of power to Washington customers. To meet the first goal, Lafferty said about 25 average megawatts – enough electricity for about 19,000 homes – must qualify under the law as renewable. About 19 of those will come through upgrading dams to produce more power. The utility has purchased 5.7 renewable-energy credits to make up the rest.
Lafferty said Avista is seeking a long-term contract with an electricity producer to supply an additional 35 average megawatts of renewable energy to help meet the 9 percent goal in 2016. Though still a few years away, Lafferty said, Avista has opted to pursue a contract now because of tax incentives for wind turbines and a downturn in construction costs.
Avista won’t say who might get the contract, but one bidder could be First Wind, a Boston firm that’s planning to build Palouse Wind, a 65-turbine wind farm near Oakesdale, about 45 miles south of Spokane.
Ben Fairbanks, First Wind’s development director in the Northwest, said he could not comment on Avista’s search for a renewable-energy provider, but added: “Palouse Wind would be an ideal project for Avista and its ratepayers given the proximity” to Avista’s 236,000 Washington electricity customers.
First Wind plans to use an existing nearby Avista line to transmit power from the site, where construction could start as early as this summer if a permit is approved, he said.
‘We don’t need any power’
While Avista hasn’t taken a position on the law approved by voters, Inland Power and Light Co. has strongly opposed the rules since they made the ballot in 2006.
Kris Mikkelsen, Inland’s CEO, questions why the cooperative should have to participate when more than 80 percent of the energy it uses already is renewable.
Inland, which serves 38,000 customers, gets its electricity from the Bonneville Power Administration, mostly from dams. About 2 percent of its supply is from wind, but some of that may not count toward Inland’s goal because not all of BPA’s wind power is generated within a boundary specified in Washington’s law, Mikkelsen said.
“You have to meet the renewable standard whether you need power or not,” she said. “We don’t need any power.”
Mikkelsen said Inland will pay $200,000 to buy renewable energy credits from a West Side power company.
Inland’s $55 million annual budget can handle the early cost of the law, Mikkelsen said, but the price could increase significantly when the next deadline hits in 2016 and demand for wind spikes.
“The renewable-energy certificates are going to get a lot more expensive,” Mikkelsen said.
Danielle Dixon, senior policy associate for the NW Energy Coalition, said most of BPA’s wind energy will count toward the goals.
Supporters of the law argue that supply of wind-generated power is growing at a pace that should dampen cost increases. They also say possible rule changes in California that may require more of that state’s renewable energy to be generated in-state also could take pressure off demand in the Northwest. Backers also note that the law includes a cap so a utility doesn’t have to pay more than 4 percent of its revenue to meet the goal, or 1 percent if its energy demand is flat or falling.
A push to qualify other sources
State leaders continue to hear from a variety of energy interests pushing for changes in the law – including one supported by at least one influential House Democrat that would allow power companies to count energy from new nuclear plants toward the goal. Legislators say they don’t expect changes to be made to the law this year.
John McCoy, D-Tulalip, chairman of the state House Energy, Technology and Communications Committee, said he believes the law should be changed to allow any energy source to qualify as long as it meets a greenhouse gas emission threshold. State officials will work with the Pacific Northwest National Laboratory to create a proposed standard for the Legislature to consider next year.
McCoy said part of his intent would be to allow power from new nuclear power plants to count toward meeting the mandates. He acknowledged that given the ongoing nuclear crisis in Japan, “there’s a PR issue that has to be gotten over” to win support for building more nuclear plants.
Dixon, of the NW Energy Coalition, said nuclear power may be attractive because of its low emissions, but it’s extremely expensive and has significant safety and waste challenges.
“It’s just not renewable,” said Dixon, who helped write the renewable-energy law.
Dixon said the coalition is open to ideas about setting standards for what qualifies as a renewable-energy source. But since the state already has emissions rules for building new plants, simply qualifying any technology that meets emissions caps could render the renewable energy law useless, she said. She noted that current law allows numerous energy choices, including biomass, solar, landfill gas and others that some utilities have chosen to pursue.
Among other changes proposed in the Legislature:
• Inland Power and Light wants the law changed to exempt electricity providers that serve mostly rural areas.
• Avista has lobbied to allow its Kettle Falls biomass plant, which burns wood waste and became operational in 1983, to count toward its renewable goal.
• The city of Spokane hopes legislators qualify the Waste-to-Energy Plant’s energy as renewable.
Russ Menke, director of the Spokane Regional Solid Waste System, said the plant earns about $12 million a year by selling power to Puget Sound Energy in a contract that expires at the end of the year.
Puget Sound is paying about 9 cents per kilowatt hour. The plant likely can expect about 5 cents per kilowatt hour after its current contract ends unless the energy is deemed renewable – a scenario that would make the plant’s electricity value close to 10 cents per kilowatt hour.
Wind’s promise and challenges
The wind doesn’t always blow, and that can make adding wind farms a challenge for electricity providers that prefer more constant, reliable sources.
Ken Dragoon, a senior resource analyst with the Northwest Power and Conservation Council, said adding wind can help companies control costs, especially if natural gas prices increase, because wind has no fuel cost. He said dams and natural gas plants will continue to be relied on during peak demand. Wind turbines, however, allow power companies to slow the use of other fuels.
“If fuel costs go up, wind and gas are a great combination together,” Dragoon said.
Litchfield, the first director of power planning for the Northwest Power and Conservation Council, has many concerns about the law but said one benefit of it was to spur the growth of wind energy and diversifying the region’s power sources.
Still, he wonders if the law and others like it in other states are forcing the construction of more wind turbines than are needed, especially since the recession has changed projections of energy growth.
Dams can help balance wind slowdowns, but they have limitations, in part, because of requirements for river flows to protect fish, said Phil Jones, a member of the Washington Utilities and Transportation Commission. That makes natural gas plants a more likely option for growth as energy companies in the Northwest balance fluctuations in wind.
That will make the future of energy in Washington, as Jones said, “windy and gassy.”
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