Energy Mess, Continued

UNRELIABLE SERVICE

Today’s Chicago Tribune carried an article reflecting a reality that will become more and more common as time goes by. The article is titled “Deerfield files suit against ComEd” in their Friday, April 18 edition. Deerfield is a suburb of Chicago and ComEd is the local electrical distribution company that provides power, a wholly owned subsidiary of Exelon. ComEd’s “solution” is to raise rates to fix the problem, while Exelon’s stock is at an all-time high due to the money that they make selling power that costs them very little to generate (our broken regulatory system in Illinois at work).

The city of Deerfield claims that their electrical supply is unreliable. They state that they have had 1,377 outages between 2000 and 2007 and only 13% of these outages were weather related. These outages typically caused flooding due to shut off sump pumps, food to become spoiled, and are a general nuisance.

This type of activity will grow more common in the future, since lack of continuity in generation causes a lot of the outages (poorly run and maintained distribution and transmission systems also contribute significantly to these outages). I wouldn’t be surprised if in the future homes had built-in back up generating capacity, especially high end homes, to insulate them from at least short term fluctuations in the grid.

NEW JERSEY NUCLEAR PLANT

New Jersey is also considering building another nuclear plant, their first plant since 1973, according to this article. While I applaud Corzine (their governor, the guy who got into a car accident without a seat belt & almost died) for trying to do this, the odds of this plant ever seeing the light of day are near zero. The NIMBY’s are already going nuts – from the article:

“Environmental groups were sharply critical of Mr. Corzine’s 15-year energy plan. Jeff Tittel, director of the New Jersey chapter of the Sierra Club, said the governor “needs to step up and lead New Jersey to a cleaner, greener future with more wind, solar and better energy efficiency goals.”

Dave Pringle of the New Jersey Environmental Federation said, “The question is not coal versus nuclear to keep the lights on, but rather those antiquated, dangerous technologies versus cutting-edge clean renewable and efficient solutions.”

If there was an opportunity to bet whether or not this plant ever gets completed I would bet against it, hands down. The plant is needed but the NIMBY’s have too many tools at their disposal through the courts to allow this to go forward, and a typical governor isn’t going to spend all of his political capital building a plant that won’t even go into operation while he is still in office (best case, the lead time is 10 years +).

Don’t believe the hype – no one in America has the stones anymore to brave public opinion enough to get this built.

An additional tool in the NIMBY catalog is re-licensing by the Nuclear Regulatory Commission (NRC). While no new plants are being built, there are plans to continue to utilize older nuclear plants beyond their original 40 year life span. This article describes how NY (under their former disgraced governor) is using the NRC re-licensing procedure to try to halt a significant chunk of their total generating capacity, which seems suicidal. Read it and weep.

NATURAL GAS

Due to the fact that NIMBY’s and poor-deregulation plans have gutted our ability to build new coal or nuclear generation (and don’t even get anyone started on dams and hydropower – the fish!), natural gas is the fuel of choice. Natural gas turbines are much more expensive to run than coal, nuclear, or hydro but are the only plants that can get permits.

In parallel, gas is used for heating, and our supply is limited. Even though the US has ample supplies of natural gas (like Coal), there are heavy restrictions on when and where we can drill for this resource. Thus our supply of natural gas has not been growing in line with demand for heating, much less for demand when power generation is added in.

In today’s Wall Street Journal there is an article titled “Surge In Natural Gas Price Stoked by New Global Trade”. Natural gas used to trade at a rate of about $2 / unit for many years, and now is near $10. However, the price of natural gas around the world is much higher – it can fetch $20 in Japan today (you can also blame this on the US dollar declining in value).

Due to the LNG technology, natural gas can be compressed and then stored on tankers and taken across the ocean. The US used to be a preferred destination for natural gas, but now exporting countries are shipping elsewhere where they can receive a higher rate. In the old days, when demand was limited, buyers used to be able to demand long term contracts at below market rates. In the current market where supplies are tight, the sellers are selling at the spot rate and taking advantage of these high prices.

The net of all this is that the price of natural gas may increase in the US, which will make our power situation (and heating situation) even worse. Since the US is a net importer of natural gas, we will have to pay world market rates at some point for our gas or we just won’t get any, it is as simple as that.
MANITOBA HYDRO PLANT

To end this post on a good note, the province of Manitoba in Canada is considering some new hydroelectric capacity that would provide power through transmission lines into Minnesota. This article describes how they are planning to build and sell 250 MW worth of power for export to the USA.

In my trips to Canada I noted that, if anything, the NIMBY’s were fiercer than they are in the USA. However, Canada is a large scale energy exporter and they have the massive coal tar sands up and running, which has to be driving the environmentalists batty.

If they can pull this off it will be one small victory in trying to keep the lights on.

Cross posted at LITGM