Southern governors push for more Gulf oil revenue


Alabama’s and Mississippi’s governors got no commitment Monday from Obama administration officials as they pressed for Gulf coast states to get a larger share of money from Gulf oil wells to help cover the risk of spills.

But they were told that some drilling rigs might be allowed to return to work before a moratorium on deepwater drilling ends Nov. 30.

Alabama Gov. Bob Riley and Mississippi Gov. Haley Barbour used the Southern Governors’ Association convention in suburban Birmingham to press the funding issue with two officials of the Obama administration: senior adviser Valerie Jarrett and assistant secretary of Interior Wilma Lewis.

Riley said states should share in more of the federal revenue because the massive BP PLC oil spill was a wakeup call about what could happen to the states’ economies. “I’m not sure any of the Gulf coast states had any idea of the risk we were taking,” Riley said.

Gulf coast states get a small share of the revenue from federal leases for Gulf oil wells and are scheduled to get more in 2017, but state officials are supporting bills in Congress that would accelerate that to 2010. That would mean millions for Alabama, Mississippi, Louisiana and Texas.

“I am sure the administration is hearing your voices,” Lewis said. But despite repeated prodding by Riley, that’s as far as she would go.

North Carolina Gov. Bev Perdue told the administration officials that her state would oppose drilling off its coast unless it gets a share of the revenue and is convinced the drilling is safe.

“We understand the risk-rewards system. And we would be willing to take the risk for the country if the supply is there, but only if there is some potential reward for the people of my state,” she said.

The convention offered Barbour an opportunity to air his frustration with the administration’s moratorium on deepwater drilling, particularly after President Obama did not discuss it Sunday in his visit to New Orleans.

Lewis said people must remember that 11 workers lost their lives in the April accident. She said a six-month pause to Nov. 30 was needed to make safety changes and make sure a future spill can be contained. But she said some rigs that are deemed to be safer than others might be allowed to return to work before Nov. 30.

Barbour said the moratorium had worsened the spill’s economic impact on the Gulf states and caused oil companies to increase their interest in drilling in areas far beyond the Gulf. “I don’t know how to describe it other than pouring salt in a wound,” he said.

Barbour and Riley also complained about a lack of information about the administration’s recovery plan for the region, headed by former Mississippi Gov. Ray Mabus.

Jarrett said the structure of the recovery plan will be shaped with input from state and local officials and will be unveiled in the fall.

Wind Power Won’t Cool Down the Planet

Robert Bryce, The Wall Street Journal, 24 August 2010

The wind industry has achieved remarkable growth largely due to the claim that it will provide major reductions in carbon dioxide emissions. There’s just one problem: It’s not true. A slew of recent studies show that wind-generated electricity likely won’t result in any reduction in carbon emissions—or that they’ll be so small as to be almost meaningless.

This issue is especially important now that states are mandating that utilities produce arbitrary amounts of their electricity from renewable sources. By 2020, for example, California will require utilities to obtain 33% of their electricity from renewables. About 30 states, including Connecticut, Minnesota and Hawaii, are requiring major increases in the production of renewable electricity over the coming years.

Wind—not solar or geothermal sources—must provide most of this electricity. It’s the only renewable source that can rapidly scale up to meet the requirements of the mandates. This means billions more in taxpayer subsidies for the wind industry and higher electricity costs for consumers.

None of it will lead to major cuts in carbon emissions, for two reasons. First, wind blows only intermittently and variably. Second, wind-generated electricity largely displaces power produced by natural gas-fired generators, rather than that from plants burning more carbon-intensive coal.

Because wind blows intermittently, electric utilities must either keep their conventional power plants running all the time to make sure the lights don’t go dark, or continually ramp up and down the output from conventional coal- or gas-fired generators (called “cycling”). But coal-fired and gas-fired generators are designed to run continuously, and if they don’t, fuel consumption and emissions generally increase. A car analogy helps explain: An automobile that operates at a constant speed—say, 55 miles per hour—will have better fuel efficiency, and emit less pollution per mile traveled, than one that is stuck in stop-and-go traffic.

Recent research strongly suggests how this problem defeats the alleged carbon-reducing virtues of wind power. In April, Bentek Energy, a Colorado-based energy analytics firm, looked at power plant records in Colorado and Texas. (It was commissioned by the Independent Petroleum Association of the Mountain States.) Bentek concluded that despite huge investments, wind-generated electricity “has had minimal, if any, impact on carbon dioxide” emissions.

Bentek found that thanks to the cycling of Colorado’s coal-fired plants in 2009, at least 94,000 more pounds of carbon dioxide were generated because of the repeated cycling. In Texas, Bentek estimated that the cycling of power plants due to increased use of wind energy resulted in a slight savings of carbon dioxide (about 600 tons) in 2008 and a slight increase (of about 1,000 tons) in 2009.

The U.S. Energy Information Administration (EIA) has estimated the potential savings from a nationwide 25% renewable electricity standard, a goal included in the Waxman-Markey energy bill that narrowly passed the House last year. Best-case scenario: about 306 million tons less CO2 by 2030. Given that the agency expects annual U.S. carbon emissions to be about 6.2 billion tons in 2030, that expected reduction will only equal about 4.9% of emissions nationwide. That’s not much when you consider that the Obama administration wants to cut CO2 emissions 80% by 2050.

Earlier this year, another arm of the Department of Energy, the National Renewable Energy Laboratory, released a report whose conclusions were remarkably similar to those of the EIA. This report focused on integrating wind energy into the electric grid in the Eastern U.S., which has about two-thirds of the country’s electric load. If wind energy were to meet 20% of electric needs in this region by 2024, according to the report, the likely reduction in carbon emissions would be less than 200 million tons per year. All the scenarios it considered will cost at least $140 billion to implement. And the issue of cycling conventional power plants is only mentioned in passing.

Full comment: The Wall Street Journal, 24 August 2010

Exclusive: Will wind farms pick up the tab for new nuclear?

James Murray, BusinessGreen, 24 Aug 2010

Wind farm developers fear National Grid proposals designed to accommodate nuclear power plants will lead to a huge increase in backup costs. Wind farm operators could see their overheads increase by millions of pounds a year as a direct result of plans to upgrade and reinforce the grid to cope with a new fleet of nuclear reactors.

A number of renewable energy developers are angry at National Grid’s decision to retain the current charging regime it operates for providing backup power, despite the fact costs are expected to soar when new nuclear power plants come online towards the end of the decade.

National Grid released a consultation document in June detailing how the proposed development of six nuclear power stations would require the grid operator to increase the amount of backup power, known as “spinning reserve”, that it has available to call on in the event of a large power plant failing, from 1,320MW to 1,800MW.

The company estimated that as a result, the annual cost of providing so-called Large Loss Response will rise from £160m a year to £319m.

The consultation looked at a number of approaches to charging energy firms to cover the increased cost, but in a letter to Ofgem National Grid commercial director for transmission Alison Kay said the company had decided to retain the current regime, whereby generators are charged an equal amount per megawatt they provide to the grid.

Wind farm operators are known to be furious at the decision, which they claim will see them face an unfair doubling in charges from National Grid, despite the fact the company concluded in its consultation that generators with less than 350MW of capacity, including all operational wind farms in the UK, “pose no additional loss risk to the system”.

In contrast, nuclear developers, who argued that targeting the increased charges at larger power plants would jeopardise plans for a new fleet of reactors, are delighted at a decision that will see the increased cost of backup spread right across the energy industry.

Writing in her letter to Ofgem, Kay revealed that the decision to retain the current charging regime was driven in part by fears that changes would delay the new nuclear build programme.

“Information received through the recent consultation indicates that increasing costs on larger users could delay the commissioning of a large nuclear plant by a number of years, with any shortfall in generation capacity likely to be made up through a new CCGT [combined cycle gas turbines] plant,” she said. “This eventuality would increase the difficulty in meeting European and governmental environmental targets by delaying essential investment in lower-carbon technologies.”

Speaking to, a spokesman for National Grid admitted some wind farm operators were frustrated by the decision. But he argued that developers working on larger offshore wind farms that will generate more than 350MW were pleased that they would not now face additional charges.

However, wind industry insiders insist support for National Grid’s proposals among offshore wind farm developers is in fact very low. They argue that even the largest proposed offshore wind farm sites are likely to use a number of different cables to connect them to the mainland, meaning any one connection is unlikely to exceed the 350MW mark that would mean they pose an additional risk to the grid.

Some wind farm operators are now urging Ofgem to challenge National Grid’s decision, arguing that the proposed charging regime will result in wind farms and other renewable energy projects effectively picking up a sizable chunk of the bill for the nuclear industry. They are insisting that Ofgem should adhere to the “polluter pays” principle and make sure nuclear operators pay for the additional backup capacity that they will require.

There are also suspicions within the industry that National Grid has been ” leaned on” by the nuclear lobby in order to ensure the increased cost of backup is shared by all generators – a charge rejected by National Grid.

See post here.

Drillers May Face Months of Waiting Even After Obama Lifts Deep-Water Ban

By Jim Efstathiou Jr., Bloomberg

President Barack Obama’s administration may agree to an early end for its moratorium on deep-water oil and gas drilling while backing new regulations that may keep rigs idle for months afterward.

Obama is likely to lift the drilling ban in October, ahead of its scheduled Nov. 30 expiration, said Michael McKenna, president of MWR Strategies, an oil industry consulting firm in Washington. Heightened scrutiny of drilling’s risks may delay the resumption of operations by companies such as BP Plc and Apache Corp. until mid-2011, McKenna said.

The administration halted drilling in waters deeper than 500 feet after BP’s Macondo well in the Gulf of Mexico blew out April 20. Government officials from Gulf Coast states say the moratorium is ravaging a regional economy already hit hard by the spill, putting the White House under political pressure to end the ban early, McKenna said.

“Lifting the moratorium is almost unimportant,” McKenna said in an interview. “It’s how different the regulatory regime is going to be after. The end game here is to make it a very, very difficult and time-consuming regulatory process.”

The BP blowout killed 11 workers and set off the largest U.S. oil spill. The moratorium imposed in response idled 33 rigs, two of which have since left the Gulf to drill elsewhere, and may cost 23,247 jobs by the administration’s own estimate.

Now, offshore drillers will have to provide third-party verification that equipment such as blowout preventers, a device that failed at BP’s well, is working. The new standards were proposed in June by the Bureau of Ocean Energy Management, the Interior Department unit that oversees offshore drilling. Operators must also estimate the most oil that could gush in a spill.

Bromwich’s Hearings

Interior Secretary Ken Salazar and Michael Bromwich, head of the bureau, have said the ban can be lifted before Nov. 30 if the industry shows it has improved safety and developed means to contain another spill. Nothing is likely to happen before Bromwich’s public hearings on the oil spill conclude in mid- September, Bromwich has said.

“I’m hopeful that on spill containment, on spill response, and also on drilling safety, we will accumulate the information over the course of these next several weeks; that we will be able to, in a principled way, shorten the moratorium,” Bromwich said at an Aug. 4 hearing in New Orleans on offshore drilling.

Oil producers are frustrated by some of the administration’s new requirements, said Dan Naatz, vice president of federal resources for the Washington-based Independent Petroleum Producers of America. He cited as an example the lack of an industry standard to calculate the worst- case discharge from a well blowout.

Delaying the Process

“Some of those things seem like they’re inconsequential, but they can really delay the whole process,” Naatz said. “The efforts are moving in the right direction, but we’ve still got a long way to go.”

New regulations also apply to drillers in shallow water that aren’t under the moratorium Obama imposed in late May. Two permits for new shallow-water wells have been approved since revamped safety requirements were issued June 8, according to the bureau’s website. The fewest permits issued in one month last year was eight, Louisiana Lieutenant Governor Scott Angelle said at the Aug. 4 hearing.

“That’s not a positive sign,” said Erik Milito, director of upstream and industry operations for the Washington-based American Petroleum Institute, which represents oil and gas producers.

“We have no desire and nobody has secretly instructed me to slow-walk these shallow-water drilling applications,” Bromwich said at the New Orleans hearing. “It’s in everyone’s interests to get these processed and approved and get those people back to work.”

Environmental Studies

Before the disaster, deep-water wells in the Gulf of Mexico, including BP’s Macondo well, were granted “categorical exclusions” from the full studies required by the National Environmental Protection Act. Such blanket exceptions will no longer be issued while the administration’s review is under way, Salazar said on Aug. 16.

“In light of the increasing levels of complexity and risk — and the consequent potential environmental impacts — associated with deep-water drilling, we are taking a fresh look at the NEPA process,” Salazar said.

That doesn’t mean each new drilling permit will require a full environmental study, which Milito of the American Petroleum Institute estimates could take 12 to 18 months.

Instead, operators of the 31 drilling rigs still idled by the moratorium must submit new exploration plans and reapply for permits to drill, according to the Interior Department. Those plans will be subject to a less rigorous environmental assessment, a compromise opposed by environmental groups.

‘Really No Change’

“Despite all the rhetoric, there’s really no change,” said Bill Snape, senior counsel for the Center for Biological Diversity in Tucson, Arizona. “The categorical exclusions became the symbol of corruption. Now the administration is using that metaphor and, somewhat cynically, saying we’ll ramp it up just slightly and claim we’ve made progress.”

The administration will use the faster environmental review on rigs idled by the moratorium to “get them back into action quickly” while it develops rules for new applications, said David Pettit, senior attorney with the New York-based Natural Resources Defense Council. Complying with other new safety standards may still take months, he said.

Bromwich made the estimate that the moratorium would cost 23,247 jobs in a July 10 memo to Salazar that became public last week after it was filed with U.S. District Judge Martin Feldman in New Orleans. Feldman is weighing the industry’s legal challenge to the ban.

“We are working day in and day out with industry to help them raise the bar on their safety practices, blowout containment, and spill-response capabilities so that deep-water drilling can resume as soon as safely possible,” Kendra Barkoff, an Interior Department spokeswoman, said yesterday in an e-mail.

See more here.

Wind-Energy Purchases Lead California Power Agency to Borrow $533 Million

By Christopher Palmeri and Esmé E. Deprez on Bloomberg

Southern California Public Power Authority, provider of electricity to almost 5 million people, plans to sell $533.1 million of municipal bonds in the biggest scheduled tax-exempt sale of the week.

JPMorgan Chase & Co. will lead marketing of the debt, which is rated fourth-highest by both Standard & Poor’s and Fitch Ratings, at AA-. The authority expects to sell the biggest tranche, $40.8 million in 20-year maturities, at 40 basis points, or 0.40 percentage point, above AAA rated municipal bonds, said Vernon Oates, finance and accounting manager.

“The fact that it’s a AA- issue, with a little extra yield in a high-tax state, this is really going to dominate the calendar,” said Howard Cure, director of municipal bond research at Evercore Wealth Management in New York, which oversees about $1.5 billion.

The proceeds from the authority sale will be used to prepay for power from the Windy Point/Windy Flats Project, a 114- turbine wind-energy farm in Washington state. The Pasadena-based authority is purchasing the electricity on behalf of the Los Angeles Department of Water and Power and the city of Glendale.

California businesses, including utilities, are required by state law to reduce their greenhouse-gas emissions such as carbon dioxide to 1990s levels, in part by purchasing more renewable energy, Oates said. The authority lowers the cost by prepaying for the electricity, he said.

Columbia River

The Windy Flats Project spans 26 miles (42 kilometers) along the Columbia River and will generate 500 megawatts of electricity upon completion in 2011, enough to power more than 250,000 households per year, according to Cannon Power Group, the San Diego-based developer of the facility.

Yields on 20-year AAA tax-exempts fell to a record-low 3.68 percent on Aug. 20, according to Municipal Market Advisors, an independent research firm that began the index in 2001.

Twenty-year municipal energy bonds with ratings similar to those of the Southern California power authority yielded 4.44 percent on Aug. 20, the lowest since October, according to Bloomberg Fair Market Value data.

Southern California Power Authority’s previous sale of tax- exempt debt was in May, when it offered $110 million. Tax-exempt bonds from the May sale maturing in 2027, the biggest tranche of that issue, traded Aug. 20 at an average yield of 3.63 and price of 112.8, compared with a 4 percent yield and a price of 109.85 at issuance.

Seventeen-year AA energy bonds, one level higher, traded Aug. 20 at a yield of 4.21 percent, Bloomberg Fair Market Value data show.

Public power bonds received no ratings downgrades from Fitch in the second quarter. Power was one of only three areas of eight to earn that distinction. Seven power bond issues were upgraded, Fitch said in an Aug. 19 report.

This week’s issuance is slated to drop to $3.7 billion, the lowest for a regular trading week since Sept. 4 and down from about $7.1 billion in debt last week, according to data compiled by Bloomberg.

Following are descriptions of pending sales of municipal debt in the U.S.:

HOUSTON, America’s largest city by population after New York, Los Angeles and Chicago, plans to issue $229 million in revenue bonds as early as this week to refinance debt. The issue is rated third-highest by both S&P, at AA, and Moody’s Investors Service, at Aa2, and fourth-highest by Fitch, at AA-. Marketing will be led by RBC Capital Markets. (Updated Aug. 23)

MIAMI-DADE COUNTY, Florida’s largest, plans to issue $217.3 million in debt, including $203.9 million in Build America Bonds, as early as this week. The county, rated third-highest by S&P, at AA, and fourth-highest by Moody’s, at Aa3, will use the majority of the issue to fund transportation projects. Loop Capital Markets LLC will lead marketing of the bonds. (Updated Aug. 23)

PENNSYLVANIA TURNPIKE COMMISSION, set up in 1937 to help manage the state’s highways, plans to issue about $600 million in tax-exempt debt and taxable Build Americas as early as this week. The revenue bonds, rated fourth-highest by Moody’s at Aa3, will be used for capital-improvement projects. Bank of America Merrill Lynch will lead marketing of the notes. (Updated Aug. 23)

Blown in the Wind

The U.S. should stop wasting billions to subsidize unreliable wind energy projects.

By Robert Bryce
Posted Monday, Aug. 16, 2010, at 1:38 PM ET

They like everything big in Texas, and wind energy is no exception. Texas has more wind generation capacity than any other state, about 9,700 megawatts. (That’s nearly as much installed wind capacity as India.) Texas residential ratepayers are now paying about $4 more per month on their electric bills in order to fund some 2,300 miles of new transmission lines to carry wind-generated electricity from rural areas to the state’s urban centers.

It’s time for those customers to ask for a refund. The reason: When it gets hot in Texas – and it’s darn hot in the Lone Star State in the summer—the state’s ratepayers can’t count on that wind energy. On Aug. 4, at about 5 p.m., electricity demand in Texas hit a record: 63,594 megawatts. But according to the state’s grid operator, the Electric Reliability Council of Texas, the state’s wind turbines provided only about 500 megawatts of power when demand was peaking and the value of electricity was at its highest.

Put another way, only about 5 percent of the state’s installed wind capacity was available when Texans needed it most. Texans may brag about the size of their wind sector, but for all of that hot air, the wind business could only provide about 0.8 percent of the state’s electricity needs when demand was peaking.

Why does Texas get so little juice from the wind when it really needs it? Well, one of the reasons Texas gets so hot in the summer is that the wind isn’t blowing. Pressure gradients—differences in air pressure between two locations in the atmosphere—are largely responsible for the speed of the wind near the Earth’s surface. The greater the differences in pressure, the harder the wind blows. During times of extreme heat these pressure gradients often are minimal. The result: wind turbines that don’t turn.

Lest you think the generation numbers from Aug. 4 are an aberration, ERCOT has long discounted wind energy’s capabilities. In 2007, ERCOT determined that just “8.7 percent of the installed wind capability can be counted on as dependable capacity during the peak demand period for the next year.” And in 2009, the grid operator reiterated that it could depend on only 8.7 percent of Texas’ wind capacity.

The incurable variability of wind is not restricted to Texas. Consider the problems with wind energy during the frigid weather that hit Britain last winter. In January, the Daily Telegraph reported that the cold weather was accompanied by “a lack of wind, which meant that only 0.2 [percent] of a possible 5 [percent] of the UK’s” electricity was generated by wind over the preceding few days.

Understanding wind’s unreliability is critically important now, at a time when America’s basic infrastructure is crumbling and in desperate need of new investment. In June, the Government Accountability Office issued a report that said that “communities will need hundreds of billions of dollars in coming years to construct and upgrade wastewater infrastructure.” Add in the need for new spending on roads, dams, bridges, pipelines, and mass transit systems, and it quickly becomes clear that politicians’ infatuation with wind energy is diverting money away from projects that are more deserving and far more important to the general public.

Imagine a company proposed to construct a bridge in Minneapolis, or some other major city, that would cost, say, $250 million. The road would be designed to carry thousands of cars per day. But there’s a catch: During rush hour, the thoroughfare would effectively be closed, with only 5 percent, or maybe 10 percent, of its capacity available to motorists. Were this scenario to actually occur, the public outrage would be quick and ferocious.

That’s exactly the issue we are facing with wind energy. The reality is that towering wind turbines—for all their allure to certain political groups—are simply supernumeraries in our sprawling electricity delivery system. They do not, cannot, replace coal-fired, gas-fired, or (my personal favorite) nuclear power plants.

Despite these facts, wind-energy lobbyists have been wildly successful at convincing the public and—more importantly—politicians, that wind energy is the way of the future. More than 30 states now have rules that will require dramatic increases in renewable electricity production over the coming years. And wind must provide most of that production, since it’s the only renewable source that can rapidly scale up to meet the requirements of the mandate.

The problems posed by the intermittency of wind could quickly be cured if only we had an ultra-cheap method of storing large quantities of energy. If only. The problem of large-scale energy storage has bedeviled inventors for centuries. Even the best modern batteries are too bulky, too expensive, and too finicky. Other solutions for energy storage like compressed-air energy storage and pumped water storage are viable, but like batteries, those technologies are expensive. And even if the cost of energy storage falls dramatically—thereby making wind energy truly viable—who will pay for it?

Wind turbinesAn unbiased analysis of wind energy’s high costs and flaccid contribution to our electricity needs is essential in this time of economic constraint. Despite the dismal economic news, despite the fact that the wind-energy sector, through the $0.022 per-kilowatt-hour production tax credit, gets subsidies of about $6.40 per million Btu of energy produced—an amount that, according to the Energy Information Administration, is about 200 times the subsidy received by the oil and gas sector—wind-energy lobbyists are calling for yet more mandates. On July 27, the American Wind Energy Association issued a press release urging a federal mandate for renewable electricity and lamenting the fact that new wind-energy installations had fallen dramatically during the second quarter compared to 2008 and 2009. The lobby group’s CEO, Denise Bode, declared that the “U.S. wind industry is in distress.”

Good. Glad to hear it. It’s high time we quit blowing so much money on the wind.

See report on Slate here.

More than half of Britain’s wind farms have been built where there is not enough wind

Fiona Macrae

It’s not exactly rocket science – when building a wind farm, look for a site that is, well, quite windy. But more than half of Britain’s wind farms are operating at less than 25 per cent capacity. In England, the figure rises to 70 per cent of onshore developments, research shows.

Experts say that over-generous subsidies mean hundreds of turbines are going up on sites that are simply not breezy enough.

Britain’s most feeble wind farm is in Blyth Harbour in Northumberland, where the nine turbines lining the East Pier reach a meagre 4.9 per cent of their capacity.

Another at Chelker reservoir in North Yorkshire operates at only 5.3 per cent of its potential, the analysis of 2009 figures provided by energy regulator Ofgem found. The ten turbines at Burton Wold in Northamptonshire have been running for just three years, but achieved only 19 per cent capacity.

Europe’s biggest wind farm, Whitelee, near Glasgow, boasts 140 turbines. But last year they ran at less than a quarter of their capacity.

The revelation that so many wind farms are under-performing will be of interest to those who argue that they are simply expensive eyesores.

Michael Jefferson, the professor of international business and sustainability who carried out the analysis, says financial incentives designed to help Britain meet green energy targets are encouraging firms to site their developments badly.

Under the controversial Renewable Obligation scheme, British consumers pay £1billion a year in their fuel bills to subsidise the drive towards renewable energy.

Turbines operating well under capacity are still doing well out of the scheme, but Professor Jefferson, of the London Metropolitan Business School, wants the cash to be reserved for the windiest sites.

He said: ‘There is a political motivation to drive non-fossil fuel energy, which I very much respect, but we need more focus.’

He suggests that the full subsidy be restricted to turbines which achieve capacity of 30 per cent or more – managed by just eight of England’s 104 on-shore wind farms last year.

Those that fall below 25 per cent should not be eligible for any subsidy. Professor Jefferson said: ‘That would focus the mind to put them in a sensible place.’

Britain has 2,906 wind turbines spread over 264 sites. But a further 7,000 are planned for the next 12 years to meet European targets on cutting greenhouse gas emissions.

Nick Medic, of Renewable UK, which represents the wind industry, said talk of efficiency was ‘unhelpful’. He added: ‘Other types of energy, from hydro to nuclear, operate at 50 per cent efficiency at best due to factors including maintenance shut downs and fluctuating.

See more here.

How Less Became More: Wind, Power and Unintended Consequences in the Colorado Energy Market

Sometimes things are not what they seem. Nowhere is this more evident than in the realm of state and federal energy policies. In 2004, Colorado became the 17th state to adopt renewable energy standards when voters passed Amendment 37. Colorado reaffirmed its commitment to wind and solar energy in 2007 when the state legislature passed HB 1281, increasing the requirement for utilities to purchase renewable energy by 100%, and by adopting the Climate Action Plan in which renewable energy plays a central role in the state’s strategy of reducing “greenhouse gas emissions by 20% below 2005 levels by 2020.”

The expected environmental benefit of these measures is perhaps best summarized in this quote from Environment Colorado: “Smog and air pollution continue to plague much of Colorado and part of the problem is caused by coal-fired power plants. Requiring a modest 10 percent of our electricity to come from renewable energy sources is equivalent to eliminating the pollution from 600,000 cars per year, thereby reducing smog and easing costly health problems.”

According to advocates, renewable energy will not only be a major tool to reduce our carbon output, but also, by displacing coal and natural gas, renewable energy will reduce smog and other air pollution, presumably by reducing sulfur dioxide (SO2) and nitrous oxides (NOX
), principal components of ozone and smog.

This report, sponsored by the Independent Producers Association of Mountain States, concludes that the emissions benefits of renewable energy are not being realized as planned based on examination of four years of Public Service Company of Colorado (PSCO) operational history. Integrating erratic and unpredictable wind resources with established coal and natural gas generation resources requires PSCO to cycle its coal and natural gas-fired plants.3 Cycling coal plants to accommodate wind generation makes the plants operate inefficiently, which drives up emissions. Moreover, when they are not operated consistently at their designed temperatures, the variability causes problems with the way they interact with their associated emission control technologies, frequently causing erratic emission behavior that can last for several hours before control is regained. Ironically, using wind to a degree that forces utilities to temporarily reduce their coal generation results in greater SO2, NOX and CO2 than would have occurred if less wind energy were generated and coal generation were not impacted.

An analysis of the Electric Reliability Council of Texas (ERCOT), which also operates under a mandate to use renewable energy, validates the emissions findings for PSCO. The underlying problem is the same for both PSCO and ERCOT: the generation capacity of wind resources has become too large relative to the capacity that is available from coal and natural gas facilities.

Natural gas-fired combustion turbines and combined-cycle facilities are designed to accommodate cycling. Because gas resources are insufficient to offset all of the wind energy produced in PSCO and ERCOT, coal units must be cycled to counterbalance the amount of wind that cannot be offset by natural gas. As a result, when the wind energy is generated at a high enough rate, PSCO is forced to scale-back generation from its coal-fired resources. But, coal equipment is not built for cycling. Coal boilers are designed to be operated as a base load resource – in other words, to operate at a consistent output level all the time. Cycling causes coal units to operate less efficiently and reduces the effectiveness of the environmental control equipment, substantially increasing emissions.

The results of this study help explain why PSCO’s coal-fired plants located in the Denver non-attainment area have experienced an increase in SO2, NOX and CO2Figure I-1 rates over the past few years. below shows the change in emission rates generated at the plants in proximity to the Denver non-attainment area – Valmont, Arapahoe, Cherokee and Pawnee, and the Comanche plant located outside of Pueblo. Between 2006 and 2009 despite the introduction of over 700 MW of wind energy, all of the Denver area plants except Cherokee show higher levels of SO2 rates, all show higher levels of NOX rates and all but Pawnee show higher levels of CO2 rates. The Cherokee plant switched to a lower sulfur coal in 2008, thus, even the lower SO2 readings at that plant cannot be attributed to the benefits of wind energy. Furthermore, during the 2006-to-2009 period, generation from the non-attainment area plants fell by over 37%, which makes the increase in emission rates even more significant particularly in light of the EPA’s announced intent to mandate tighter restrictions on SO2 and NOX emsion levels by 2011.

Read much more of yet another example, this one domestically of the unintentional consequences of jumping into wind power, assuming it would be clean and efficient in the full report.

LED Bulb Edges Below $20

This week, Home Depot fired a new marketing salvo in what is expected to be a broader national effort to get home customers to adopt LED lighting.

The Home Depot

A 40-watt-equivalent bulb sold online at Home Depot.The retail giant began selling one of the light bulbs in its highly energy-efficient lineup at a surprisingly affordable price of just under $20 online. Bricks-and-mortar stores will follow in September.

While $20 hardly sounds like a deal at first blush, such bulbs are expected to last as long as 30 years. Not long ago, such bulbs were not expected by most experts to cost less than $30 until 2012.

That’s the year, of course, when a federal law takes effect requiring that all bulbs sold in the United States be 30 percent more efficient than current incandescent bulbs. Even with improvements, incandescent bulbs are not expected to meet those standards, so many manufacturers are working on pushing their LED bulbs.

Unlike compact florescent bulbs, which have been unpopular with consumers because of the pallid light they cast, some newer LED bulbs are closer to the warmth and brightness of the regular incandescent. Home Depot says it is actively encouraging consumers to compare.

Home Depot is working with a Florida manufacturer, the Lighting Science Group, that also does contract work with National Aeronautics and Space Administration. Other manufacturers like the light bulb colossus General Electric have their own entrants in the affordable LED market.

A company spokeswoman said that the bulbs, which are sold under the EcoSmart label, are already so popular with consumers that they are having trouble keeping them in stock.

Without Matt Simmons: Has Peak Oil, Well, Peaked?

By Michael Corkery

Matt Simmons, the maverick investment banker who championed the concept of peak oil, died of a heart attack in a hot tub in Maine. He was 67.

Bloomberg News Simmons is best known for raising the alarm, in books, in lectures, television interviews and to anyone who would listen, that the world’s oil reserves had peaked.

The concept of “peak oil” wasn’t new when Simmons wrote Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, in 2005. In fact, peak oil was first posited by a geophysicist named M. King Hubbert in the 1950s who predicted that world oil supply would peak in 1995.

But Simmons helped to being the theory to the mass media, after traveling to Saudi Arabia in 2003 to research that nation’s secretive data on oil reserves, or the amount of oil able to be pumped out of the ground. His book became an instant classic among conspiracy theorists. It gained mainstream exposure when, in the summer of 2008, crude-oil prices began spiking to $147 a barrel and American drivers were getting crushed at the gas pump.

“I find it ironic that here we have the biggest industry on earth, and I’m one of the few people to figure out that we have a major problem,’’ Simmons told Fortune in September 2008. “And I did it all in my spare time. How stupid and tragic is that? I shouldn’t be one of the only folks that actually has a handful of ideas of how we can keep from blowing each other up and get through this.”

Simmons’ stood out because of his street credibility, not with environmentalists, but in the oil industry, where he worked for decades as an investment banker. He started his own firm Simmons & Co in 1974. He espoused maverick views, but he was still of the industry establishment (admired by T. Boone Pickens and an energy adviser to George W. Bush)

It was against the backdrop of peak-oil concerns that the industry underwent a consolidation wave, as companies clamored for greater share of a finite resource, and oil giants made plays for natural gas, such as Exxon Mobil’s acquisition of XTO late last year.

Simmons was back in the limelight this spring when BP oil’s rig in the Gulf of Mexico exploded. He went out on a limb (his critics say too far out) by predicting in June that the spill would cause BP to go bankrupt and that “if a hurricane comes and blows this to shore, it could paint the Gulf Coast black.”

In recent weeks, BP has capped the leak and independent scientists have found that environment damage from the spill has been less than initially feared. (Simmons supported offshore oil drilling in 2008, but said Americans need to change their energy-consumption habits because even offshore sources wouldn’t produce enough oil to sustain world demand.)

Peak oil remains hotly contested and the information about reserves from less than forthcoming from such oil-rich nations as Saudi Arabia and Nigeria is incomplete, to say the least. Regardless, peak oil has lost one of its most eloquent adherents.

See Wall Street Journal story