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New Energy Sources Gather Steam
Although fossil fuels — notably coal and natural gas — are finite resources, the United States still depends on these two sources for 68 percent of its electricity generation. Another 20 percent is supplied by nuclear power. Of the remaining 12 percent, about 7 percent is hydropower and less than 1 percent is wind power.
Put another way, the United States uses about 71 quadrillion Btus (quads) annually, according to Richard Moorer, deputy assistant secretary for technology development in the Office of Energy Efficiency and Renewable Energy of the U.S. Department of Energy. Renewable energy, including hydropower and biomass, accounts for 5.9 quads, or about 8 percent.
But though the numbers are small, they are growing. “The combined annual compound growth rate for wind and solar renewables is about 30 percent,” says Steve Strong, president of Solar Design Associates in Harvard, Mass. “That means this market is growing faster than computers and cell phones in their early days.”
One sign of the strength of alternative energy is the number of utilities offering green pricing programs. According to National Renewable Energy Laboratory data, as of October 2003, 33 states had utilities with such programs.
As of December 2002, the U.S. Department of Energy reported the top 10 utility green pricing programs were Austin Energy, Portland General Electric, Sacramento Municipal Utility District, PacifiCorp, Xcel Energy, Los Angeles Department of Power & Water, Tennessee Valley Authority, We Energies, Alliant Energy and Puget Sound Energy, with average megawatts supplied ranging from 33 to 3.1.
“Facility executives willing to purchase green power actually are helping to pay for adding green power solutions someplace on the grid,” says Terry Peterson, Electric Power Research Institute (EPRI) consultant for solar power and green power marketing. “You cannot purchase specific electrons, of course. You get the electrons on the grid. It’s like dipping your canteen into a lake. You get whatever mixture of water is in that lake. But when there are cleaner streams feeding that lake, everyone benefits. And green power customers are helping to pay for clean streams into those lakes.”
Wind Power Developments
Among renewables, wind energy capacity is soaring, with the United States installing 1,687 megawatts in 2003, according to data from the American Wind Energy Association (AWEA). AWEA places current cumulative capacity in the United States at 6,374 mw by year-end, with utility-scale turbines operating in 30 states. California has 2,043 mw of installed capacity. Texas is second with 1,293 mw; then come Minnesota with 563 mw, Iowa with 472 mw and Wyoming with 285 mw.
Those numbers pale in comparison to the picture in Europe. AWEA says Germany alone has an installed capacity of 14,609 mw. Spain has 6,202 mw, and Denmark is at 3,110 mw. According to estimates by the European Wind Energy Association, the installed capacity of wind power in the European Union by the end of 2003 was equal to about 2.4 percent of total EU electricity. By comparison, less than 1 percent of U.S. electricity is generated by wind.
Wind power potential is highest in many pockets in the far West, as well as large areas in the central Midwest, according to National Renewable Energy Laboratory data.
Wind is an established renewable resource, capable of competing head to head with dirty coal, says Strong. To prove how mainstream the technology is becoming, Strong cites the willingness of conservative conglomerate GE to scoop up the wind division of Enron. “They booked more than $1 billion in sales in less than the first year of operation,” says Strong. “The strategists at GE are all business and they are enthusiastically embracing wind.” He adds that GE also is in photovoltaics again, which suggests to Strong that wind and its sister solar will continue enjoying double-digit, compound annual growth rates.
Shaded states are those with green power pricing programs. The numbers designate how many utilities, including municipally owned ones, offer programs in each state.
Source: National Renewable Energy Laboratory
According to Glenn Hamer, executive director of Solar Energy Industries Association, global electricity production from photovoltaics is doubling every two years. “We expect to produce more than 1 billion watts in 2004,” Hamer told the House and Senate Energy and Water Appropriations Subcommittee. “However, increasingly, that production occurs in Japan and Germany.”
Worldwide solar production in 2003 was more than 760 mw, up significantly from 550 mw in 2002. However, the U.S. produced just 109 mw of that power, leaving the country that produced the first watt of commercial photovoltaic power — in 1954 at Bell Labs — significantly behind Japan and Germany.
But hope is shining on the horizon. Concentrating solar power systems currently produce 354 mw of clean power in the California desert. Construction has begun on a 50-mw plant in Nevada and a 1-mw plant in Arizona.
The Department of Energy’s Photovoltaics Roadmap now predicts that solar electricity will be available for less than 8 cents per kilowatt-hour within 10 years.
Solar’s potential shines across the continental U.S., with even the lowest resources offering the opportunity to produce 2 to 3 kwh per square meter daily. In the Southwest, many areas offer the potential for 7 to 8 kwh. But even in the Northeast, 3 to 4 kwh are available in most areas, according to data from the National Renewable Energy Laboratory.
Fuel Cell Developments
One 40-year-old technology just making its way into commercial development is the fuel cell. This “battery in reverse” generates electricity through a chemical reaction rather than storing it. Eighty to 90 percent efficient when the waste heat from the reaction is utilized, fuel cells might have had the most potential of all alternative sources for power except for a couple of things: Nearly all of them need hydrogen to work and the most readily available source of hydrogen is in fossil fuels, especially natural gas. Plus fuel cells are not emissions free. Though they may use hydrogen for emissions-free operations, the process of getting hydrogen from fossil fuels generates significant amounts of carbon dioxide and other greenhouse gases.
“Fuel cells are still in the relatively early stages of commercial development,” says Anna Monis Shipley, American Council for an Energy-Efficient Economy’s
(ACEEE) industry program research associate. Further development is needed to improve the cost and performance of the technology.
“We predict that the growth in the beginning years will be fast — in many cases doubling or tripling each year — but that since the current manufacturing capacity is still low, the total technical potential remains rather small until 2012,” says “Stationary Fuel Cells: Future Promise, Current Hype,” released in March.
Combined Heat and Power Developments
Today, the United States gets about 56,000 mw of electrical generation from combined heat and power (CHP) or cogeneration, according to data from the ACEEE. That’s a significant rise from the less than 10,000 mw around in 1980. The industry, along with the U.S. Department of Energy and the Environmental Protection Agency, hope to see CHP capacity double by 2010, with about 50,000 mw of capacity added. That would bring CHP to roughly 14 percent of the U.S. electric generating capacity, according to ACEEE.
CHP combines electric generation with a gas or diesel generator, fuel cell or microturbine with waste heat used for space heating, domestic water or absorption cooling. These systems are increasingly used as stand-alone or distributed generation sources where excess power can be fed back into the grid.
However, there are regulatory and market issues CHP must overcome, according to ACEEE. First, there are no national standards for the interconnection of distributed generation technologies to the electric utility grid. This problem affects all distributed generation sources, such as PVs, wind and CHP. In addition, there may be backup utility rates and exit fees charged to customers that build CHP facilities. And current regulations do not recognize the overall energy efficiency of CHP — typically 68 percent, with some new systems exceeding 90 percent. By comparison, separate heat and power systems typically operate at a combined efficiency of about 45 percent.
CHP systems often work well in urban environments. The city of Milwaukee, for example, is using a microturbine cogeneration system that began as a backup power system for Milwaukee’s water tower and municipal building, which has been converted into commercial offices. The heat portion was to be the backup heat source for the boilers. Today, because the system is running so well, the microturbines not only meet most of the buildings power needs but also answer the first call for heat, while the boilers act as the backup source.
Hugo Heyns, director of business programs at Wisconsin’s Focus on Energy, says the project was supported by Focus on Energy, the local utility, the city and the Milwaukee School of Engineering (MSOE), which is monitoring the system very closely. Although tests of smaller turbines have been performed for several years, this project is one of the first projects in the United States to test a large, 60 kilowatt, microturbine, according to Glenn Wrate, director of MSOE’s master of science in engineering program.
Incentives, Rebates Today
Utility-based incentives and rebates also are moving the technologies forward in many states. For example, the California Energy Commission currently is offering cash rebates of $3.20 per watt for photovoltaic installations of less that 30 kilowatts. For wind power installations, the rates are $2.10 per watt for the first 7.5 kw and $1.10 per watt for increments between 7.5 kw and 30 kw. The average installed cost for photovoltaic systems is about $8 to $10 per watt. The commission is also offering $3.60 per watt for installations of solar thermal electric systems and fuel cells up to 30 kw. In addition, the state’s individual utilities offer 147 rebate programs.
California also offers a solar or wind energy system credit that can be used against net tax. The credit is equal to the lesser of 7.5 percent of the cost minus any government financial incentives or $4.50 per rated watt of the system.
About 20 states offer financial incentives for fuel cells. In Connecticut, for example, the fuel cell initiative is part of the state’s Clean Energy Fund, which is designed to encourage the use of renewable and ultra-clean generation technologies.
New Jersey’s renewable portfolio standard mandates that 4 percent of the kilowatt-hours sold by each electric power supplier and each basic generation service provider be from renewable energy sources, including fuel cells. Recognizing the state’s idle rooftops as a prime location for new power generation, New Jersey also has incentives for solar power. A net metering law being developed will make it easier for solar users to connect to the grid and provide excess electricity into the system.
Incentives and rebates for alternative power sources have changed since the first generation of programs in the 1970s, according to Joel Stronberg, Washington representative for the American Solar Energy Society.
“In the 1970s, the federal government tried to push solar and wind technology forward in advance of their service and supply infrastructure,” says Stronberg.
Alternative energy support was strong during the Carter Administration, but since that time support has been limited and mixed. As the industry foundered in the United States, the lead for technology and development went overseas to Germany, Japan and other nations. Over time, the industry matured and the technology became more sophisticated. Prices dropped for both solar and wind powered technologies, even without tax incentives or government subsidies.
The experience of September 11 and the resulting focus on Homeland Security also pointed to the weakness inherent in central power station generation. “Massively integrated grids for electricity are very vulnerable,” says Stronberg. “If a switching station gets hit, it can put millions of people in the dark.”
By contrast, capacity for renewables such as wind and solar energy is decentralized. What’s more, the installations can be constructed significantly faster than central power stations and generally do not require the permitting and environmental considerations of central systems using fossil fuel sources.
“A traditional power plant takes 6 to 10 years from concept through startup,” says Mick Sagrillo, president of the Midwest Renewable Energy Association. Wind farms, distributed across good locations to cover a service area, can be up and running in a year.
So why aren’t utilities putting in solar and wind farms everywhere they make practical sense? “When a utility is faced with the need for additional generation, it typically must demonstrate to regulators or shareholders that it will build a plant to generate that power in the least costly manner,” says Peterson of EPRI. “That, unfortunately, is invariably some form of fossil fuel plant. To get approval for renewable power sources means getting approval to pay a premium that may be a fraction more, as in the case of wind power, or significantly more, as in the current price of solar power, than a fossil plant. So the dilemma is that even when utilities are interested in providing for public benefit with less polluting power sources, there is a likelihood that management will be criticized for it.”
Even with these drawbacks, Peterson sees “good prospects” for both wind and solar power and says “both could be less costly than some fossil plant alternatives. Today, that’s less true for solar than for wind, but solar is more abundant across the United States, so with future cost reductions it also holds much promise.”
Lessons From Overseas
In Europe and Asia, alternative energy offers relief from pollution’s harmful effects on individual countries and their neighbors. Also, because power generally has a much higher price tag than in the United States, renewables and alternatives such as CHP have made tremendous inroads.
Odd-Even Bustnes, a consultant with the Rocky Mountain Institute, notes that wind, solar and CHP have made significant inroads in European Union countries. He cites such successful programs as Germany’s recently concluded 100,000 roofs program, which encouraged many residences and office buildings to install solar hot water systems. “It was very successful,” says Bustnes. “A lot was learned from the program, and it brought the cost of producing solar hot water systems down.” Now, the program is pushing into African and Asian markets.
The United States held the lead in early renewable technologies, Strong says. “We were the undisputed leader during the 1970s, and we virtually walked away from those investments” when federal support lagged. Luckily for the renewables industry, the Dutch and the Danes embraced wind options, while the Japanese and the Germans saw great potential in solar power. “Now, we are in last place relative to these technologies,” says Strong.
What needs to happen to expand alternative energy use? The experts say that state incentives absolutely help, particularly as the fate of a federal energy bill and any potential incentives or tax credits remains uncertain.
Moorer from the Department of Energy notes that even without tax incentives, the federal government encourages the use of renewable power options through the Federal Energy Management Program. The government also is working to educate people on the availability and practicality of green power programs. “In 2003, even though customers paid a premium, about 1.2 billion kwh of green power was sold,” Moorer says.
EPRI’s Peterson believes renewable energy credits or green tags will help expand green power purchased from utilities. Green tags entitle companies to claim that a percentage of their power is from sustainable energy sources. “There are businesses who will purchase extra green tags so that they can legitimately claim that their products are produced entirely with renewable energy,” says Peterson.
Pricing Changes Come
With the notable exception of fuel cells, which is a developing technology, the other alternatives — wind, solar and CHP — are proven. “As long as wind stays in the 3 to 4 cents per kwh range, it will compete very favorably in the marketplace with fossil fuels,” says Moorer. “In the case of photovoltaics, the cost of electricity currently is in the range of 20 cents per kwh, and we are trying to drive that down to 6 cents per kwh.”
CHP also is very cost competitive, particularly for those who cannot afford downtime from utility outages, says Bustnes. “Electricity from the grid is about 99.9 percent reliable, or ‘three nines reliable,’ which means you may expect to experience about 9 hours of blackouts annually,” Bustnes says. “With distributed power systems, your efficiency should rise to five or six nines, or closer to about 30 seconds per year in expected downtime. For critical operations such as banking, where power loss could cost millions of dollars per hour of system downtime, reducing that potentiality with in-house CHP installations becomes not just very attractive, but also very lucrative on a risk-adjusted basis since millions in losses are avoided.”
After shrinking in 2002, the market for distributed energy resources, notably engine generators, microturbines and fuel cells began rebounding in 2003, according to Primen, an energy market intelligence company and an affiliate of EPRI.
A primer study, released in late January, estimates more than 12,000 North American energy users with demands in the 100 kw to 10 mw range are strong prospects for distributed energy resources. Although the bottom line is crucial when decisions are made about purchasing distributed energy systems, economic savings alone won’t convince a prospect to become a buyer, says Nicholas Lenssen, a senior director at Primen. “Distributed energy vendors also need to satisfy energy-user concerns such as ongoing maintenance of equipment, environmental permitting and natural gas fuel price escalation.”
According to “Stationary Fuel Cells: Future Promise, Current Hype,” by ACEEE, fuel cells are expected to play a significant role in CHP applications, provided several things occur:
1. Government-supported R&D
2. Government-supported near-term markets
3. Continued decline in the cost of fuel cells
4. Market conditions continuing to drive distributed generation demand
“Assuming that all of these events continue to take place within the next 10 to 15 year timeframe,” says the study, “it is reasonable to expect commercially viable fuel cells for each fuel cell technology type at that point.”
Fuel cells hold great promise for the future. For facility executives interested in today’s technology options, CHP and wind are viable and competitive with conventional coal-fired power. Solar currently is a higher-priced alternative but it is rapidly gaining acceptance. In fact, the International Brotherhood of Electrical Workers (IBEW) offers a 40-hour program on solar-specific skills and it is installing renewable technologies on its union halls and training facilities across the country.