Troyer's Wind Power Initiative - Feast or Folly?

[Wrinkle]

While wind power has a proven track record, today's environment has made its' real potential something less than it could be under different circumstances.

IAC, ANY wind power provided the City of Tulsa in this climate will come at a premium over conventional, commercial, large-user rates. The savings would come from locked in long term rates becoming less than future, escalated rates, 10 or 20 years from now.

At least, that's the way things are structered today.

So, initiating wind power now will actually represent an increased cost, not a reduction. Certainly, better for the environment, but have to wonder if now is the time for the extra costs.

If we'd have done this 5 years ago, we'd be in pretty good position. Can't say the same today.

While it's possible for wind energy to present itself as a cost reduction, the required involvement of PSO for transmission will certainly preclude the possibility.

I'd dare them to prove me wrong.

[RecycleMichael]

So, it costs a little more today. You can't say that it will cost more in five, ten or twenty years.

This could be the perfect time to build the network. Energy costs are low, material costs are low and there is a desire for more employment, especially in technology fields. If traditional energy costs go up next year like they did last year, alternative energy projects like this began to make real economic sense.

Secondly, a tribe is doing the work and all the city is discussing is buying some power from the project. No price committment has been set, nor actual power generated. Why don't you wait until there are actual details before you attack the concept?

[Grizzle4D8]

Drill, baby, DRILL! 

[Chicken Little]

Why don't you wait until there are actual details before you attack the concept?

Where's the fun in that? [/snark]

It's a potential local enterprise; the tribes need to diversify; it'll put locals to work; it's self-reliant and very Okie...the tribes could even buy the turbines from up in Catoosa.  I wonder if we'd have the option to unhook ourselves from the grid, if we wanted to or if the grid fails.  What's not to like about the idea?

I see no evidence that the window on wind energy has slammed shut, despite the efforts of entrenched industries.  Why shouldn't we study it?

What is wrong with having a choice of energy providers in the future?  I thought you conservatives embraced competition?  Hedging our bets through diversification sounds pretty sensible to me, especially when contrasted with Wrinkle's plan, which seems to rely on the good graces of an absolute monopoly and their "discounted" rates.

Maybe it's not competition that you hate, maybe it's new ideas.  If they study this and recommend that it cash flows, will you fight it?  Do I even need to ask?

For the record, if they want to drill on public land, and can do so without harming the quality of our parks, then we should look at that, too.  But we KNOW that the oil underneath us will run out before the wind does.

[cannon_fodder]

My concern with wind energy is three fold:

1) Wind is not generally produced in significant quantities in areas in which it would be consumed.  Transportation of said resource is prohibitively expenses and reduces efficiencies as well as reliability.  

2) Wind energy is not widely available during peak usage periods.  In the air conditioned doldrums of summer the winds die down.  Peak wind is in the spring and fall when usage is reduced.

3) Wind energy is not a replacement for "conventional" power.  Factories, businesses and homes demand reliable power from a utility.  That utility can supply reliable power from many sources, but wind is not among them.  It can, at best, supplement existing power.

Since you have to have the conventional power sources available in case of a low-wind day, the wind resource becomes a duplicate expense.  A fixed cost in facilities to produce power conventionally, and then duplicate part of that production in wind energy.  While the wind is free, the fixed cost of the turbines is not.  Very often the savings in fuel doesn't justify the duplicate expense of the wind generation itself.

Furthermore, conventional power requires a lead time to get it running.  You can't switch on a coal or nuclear plant.  So while the wind blows, often coal is still burning as a standby.  If done right there is of course a fuel savings, but it can not be 100%.

4) Wind energy is not cost effective.  Even in the ideal locations wind farms currently exist they are not cost effective.  Governmental subsidies are needed to encourage the construction of wind turbines.

These subsidies can create additional problems: over production of a sometimes unneeded variable resource.  The result has seen wholesale electrical prices in the negatives.  Producers paying people to take power off the grid (noticeably in West Texas).



I'm not advocating AGAINST wind energy.  I think research into wind is important.  More important is a method to transform wind energy into a form than can be stored.  As hydrogen, water lifts, batteries, transformers, or otherwise.

At least wind is a net energy gain.  A solar panel will not, in the course of its life, produce enough energy to manufacture itself.  There is a debate on whether ethanol is a net energy gain (aside from the market and other issues with it).  Natural gas is relatively expensive and has other potential uses, as well as being a transportation problem in parts of the company and a non-renewable resource.  Hydro has pretty well run its course as the environmental damage is assessed and potential sites have dried up (pun intended).  

Our current energy policy, that of having no policy, is clearly not sustainable.  So doing something is better than nothing.  But I hope we do not zealously promote an idea as a panacea that will not cure our ills.  However, I'm glad we are seriously looking into it.

[Wrinkle]

While each of you have posted rational thoughts, it's clear most do not really understand the issue, nor what I stated. I didn't 'attack' the concept/project. I asked questions.

Without posting my resume', let's just say I have some real-life experience here. Probably at least as much as anyone involved in this phase of the project.

The question was "feast or folly". To simplify, would you be willing to pay $0.09/Kwh for electricity that now costs us $0.06-$0.07/Kwh, just because it's sourced from wind?

Ten years from now, when then-current rates may approach $0.10-$0.12/Kwh, it would be good, of course, assuming the current rate was indeed fixed (most PPA's have built in escalation clauses, too).

So, the timing would seem an important fact to consider. When the City is running a $10M deficit and employees are taking 8 furlough days, I proposed to question how significant an increase in electric rates today would fit.

It's pretty clear the source is your issue, and for most of you, that's me.

[Chicken Little]

My concern with wind energy is three fold:

1) Wind is not generally produced in significant quantities in areas in which it would be consumed.  Transportation of said resource is prohibitively expenses and reduces efficiencies as well as reliability.  

Transportation of electrons?  Driving coal from Wyoming to some Oklahoma burner seems expensive, too. How is that less expensive or less reliable than allowing electrons to flow from Osage County (or other nearby counties).

2) Wind energy is not widely available during peak usage periods.  In the air conditioned doldrums of summer the winds die down.  Peak wind is in the spring and fall when usage is reduced.

It saves coal and gas (which we have lots of) for peak times...again how is that inefficient?

3) Wind energy is not a replacement for "conventional" power.  Factories, businesses and homes demand reliable power from a utility.  That utility can supply reliable power from many sources, but wind is not among them.  It can, at best, supplement existing power.

And what's wrong with having it as a supplemental source of energy?  Who in the world is saying we dump all other potential sources of energy?  Red herring?

Since you have to have the conventional power sources available in case of a low-wind day, the wind resource becomes a duplicate expense.  

We also have a monopolies for providers.  Is competition duplicative?  Redundancy and competition are values to embrace when you are talking about something as fundamental as electricity.

A fixed cost in facilities to produce power conventionally, and then duplicate part of that production in wind energy.  While the wind is free, the fixed cost of the turbines is not.  Very often the savings in fuel doesn't justify the duplicate expense of the wind generation itself.

And very often it DOES justify the duplicate expense.  Competition may drive down costs.  Intransigence may result in further diversification.  Doing nothing does...nothing.

Furthermore, conventional power requires a lead time to get it running.  You can't switch on a coal or nuclear plant.  So while the wind blows, often coal is still burning as a standby.  If done right there is of course a fuel savings, but it can not be 100%.

This happens anyway.  Peak plants (peakers) have always been a part of our grid.  Okies produce natural gas.  And so, high-efficiency gas peakers make wind, solar, and other alternates particularly attractive locally.

4) Wind energy is not cost effective.  Even in the ideal locations wind farms currently exist they are not cost effective.  Governmental subsidies are needed to encourage the construction of wind turbines.

Says who?  Most of the studies that account for transportation of coal seem to indicate that wind is now competitive.  Not to mention CO2; you can presume it's not a factor, and leave it out of your accounting...but what if it does end up mattering, as most scientist are saying?

These subsidies can create additional problems: over production of a sometimes unneeded variable resource.  The result has seen wholesale electrical prices in the negatives.  Producers paying people to take power off the grid (noticeably in West Texas).

Grid sharing is getting smarter all the time, in both policy and practice.  It doesn't get better if you don't try.

I'm not advocating AGAINST wind energy.  I think research into wind is important.  More important is a method to transform wind energy into a form than can be stored.  As hydrogen, water lifts, batteries, transformers, or otherwise.

At least wind is a net energy gain.  A solar panel will not, in the course of its life, produce enough energy to manufacture itself.  There is a debate on whether ethanol is a net energy gain (aside from the market and other issues with it).  Natural gas is relatively expensive and has other potential uses, as well as being a transportation problem in parts of the company and a non-renewable resource.  Hydro has pretty well run its course as the environmental damage is assessed and potential sites have dried up (pun intended).  

Our current energy policy, that of having no policy, is clearly not sustainable.  So doing something is better than nothing.  But I hope we do not zealously promote an idea as a panacea that will not cure our ills.  However, I'm glad we are seriously looking into it.

You're right.  Storing renewable energy is a problem, for solar, too, but there's no time like the present to change.  That's why we need to keep looking at things like hydrogen.  I don't even mind carbon sequestration as a path for research, because gas sequestration of hydrogen may be something we end up needing.  It's not hard to be a full on enthusiast for renewable energy if you are an Okie.  So many of these new paths to energy production overlap with existing pathways...drilling, fractionation, piping, storage...it's all useful technology with renewables and good for Oklahoma.  We've got wind, sun, gas, and experienced hands.  Bring it.

You think Boone likes this stuff because he's a greenie?  He likes it because he's already positioned.  And so are we for the same reasons.

[rwarn17588]

As a user and consumer of alternative energy (I have solar panels on my house) and as one who has researched the issues, I think I might have a few viable thoughts on the matter.

-- That area where the Cherokees want to put a wind farm is a really good location. It's on the upper reaches of wind efficiency.

The best part is there's already a transmission line nearby. So there isn't going to be much outlay in terms of infrastructure, except for actually putting those windmills up.

-- Just because there's no wind in Tulsa during very hot days doesn't mean there isn't in the western half of the state. A hundred miles or so west makes huge difference in wind. I've been in places like Hydro and Clinton when it was 105 degrees, yet the wind was still blowing 20 to 25 mph. The wind, quite simply, blows nearly all the time in that region. It doesn't in Tulsa.

-- Having a lot of extra electricity during the summer is a good thing, especially when power-grid loads are high because of air conditioning. Sure, last month my A/C run a lot. But the sun was out a lot, too, so I ended up with a $20 electric bill.

-- It's a pretty good time to set yourself up for alternate energy now with a weak economy and bargains are to be had. Energy is going to become more expensive in the coming years, not cheaper, and it makes a lot of sense to get some diverse energy sources going now.

[cannon_fodder]

Wrinkle:  To be short on the topic, I don't think you can justify a 33% increase in cost for wind power.  I wish you could and I think it would be worth a 10% premium.  But a full 1/3 increase is severe.  If the trend will be upward or a carbon tax a real possibility, then invest now for the payoff later (what's the lifespan of those turbines?).  If we think such a project will help solidify Tulsa as the Renewable Energy Capital of the World, then go for it.  But if it will be a neat project that might help but will definitely cost a ton of money . . . I think I have to pass.

Chicken Little:

Please don't think I am arguing with you.  I'm just giving what my limited research of a few years ago yielded.  I'm open to being convinced I am wrong, things have changed, I didn't consider an angle, or that technology has progressed.

1) Transportation of coal by rail is highly efficient.  Transportation of electrons on our current technology suffers from fairly high inefficiencies.  Not only is the construction and maintenance of the infrastructure expensive but the transport itself has a loss ratio associated with it.  On average transmission in the United States losses 7.5% of power to the grid over our relatively short distance transmission.  However, research indicates you can transport electricity as far as 4,000 miles cost effectively with a updated grid . . . so your point on investment and development is well noted.

Just sayin' as far as cost is concerned, it isn't cheap.

2) My point there was to indicate that wind power can not be utilized to satisfy peal demand.  Thus, duplication of infrastructure would be required.  You can't replace a coal plant with a wind farm.

3) Nothing is wrong with having a supplemental energy source.  But when you more than double your fixed expenses to supplement each watt then it can become a problem.  Generally, either traditional or wind producing capacity will be sitting idle.  Idle assets are an expense most businesses can not sustain.  It is doubtful the savings in fuel will offset the additional cost of the fixed assets.

4) Production of energy is monopolized and regulated in this country as a way of reducing inefficiencies.  It is not efficient or practical to have two producers independently generating and transmitting electricity as power enjoys a huge advantage from economies of scale.  Having two power plants running at 50% capacity is a waste of one entire power plant.  Which the consumer will ultimately pay for.

Competition is essentially a non-factor since the product is a commodity.  One consistent supply of power is presumably the same to an end user as any other. Thus, one well regulated utility can provide the same service much cheaper than two competing services would be able to.

Now, again, with the advance in technology it is becoming more and more possible to accurately track loads and transmission factors (not an expert here, just picked up some stuff).   With new sources of micro generation it might be possible and efficient to allow or even mandate (as is common in some places) access to the grid.  In which case a wind farm can contribute to the grid by selling power into it.   Which can create a new set of problems for a utility to handle but live and adapt I suppose.

Competition is always preferred, but in all instances it is not the most efficient system to get the job done.  Technology has and is enabling us to deregulate more and more aspects of industry to allow competition to improve them (who wants to go back to monopoly phone or cable?).

I ignored the cost of carbon as it is currently an economic unknown and in Oklahoma the benefit of "green energy" probably wouldn't sell at a 33% premium.  Not saying that is good or bad, just the economics of it.
- - - - -

All that said, I think Oklahoma and Tulsa I particular should strive to be in the forefront of alternative energy technology.  If I had the cash I would endow a renewable energy department at the University of Tulsa and grants for such business to locate here.  Drawing on our energy infrastructure to head in a new direction. 

I think eventually the technology will be there to efficiently draw energy from the sun in different renewable ways (other than nuclear, all energy is ultimately solar).  My only question is if we are to a point where we can begin investing.

[TulsaSooner]

If a tribe were to sell electricity, I doubt the City/State would benefit in the form of sales taxes, Franchise fees or any other assessment that is currently paid by/through PSO.

[Wrinkle]

Let's start with my own electric bill.

Electricity from AEP-PSO is costing me $0.0746/Kwh which includes the basic service cost plus the usage cost.

By the time I add Franchise Fees, Federal Fees, State, City & County Sales Taxes and other line-item costs, it totals $0.088/Kwh.

There's just over 18% of added costs to actual usage costs.

I'd certainly be in the residential class, and probably considered a low user (at about 1,000 Kwh/mo average), so my rate structure is likely among the highest of any user type.

Rate structures for commercial interests and high usage users drops these rates to as low as $0.04/Kwh, probably averaging between $0.05-$0.06/Kwh. That's where I'm guessing the City of Tulsa would rank. There's some question as to how much of the Franchise Fees and taxes may be applied to the City, but think they all go away.

Current rates for wind energy are between $0.06 and $0.065/Kwh WHOLESALE (to the public utility). And, that assumes a wind farm large enough to qualify for State and Federal Production Tax Credits, which make them economical.

In recent years, wind energy wholesale rates have been as low as $0.045-$0.05/Kwh, but 60% increases in the installed cost of wind turbines over the last 3-4 years has reversed the downward trend of the last 20 years.

Wind turbine installed costs are $1,500-$2,000/Kw of installed capacity today, which includes interconnection, but not transmission.

In order for a wind farm to qualify for state and Federal Production Tax Credits, it MUST be at least 50MW of installed capacity. At 30% capacity, that comes to about 15MW of actual delivered product.

....more later, gotta go.

[Wrinkle]

As a user and consumer of alternative energy (I have solar panels on my house) and as one who has researched the issues, I think I might have a few viable thoughts on the matter.

-- That area where the Cherokees want to put a wind farm is a really good location. It's on the upper reaches of wind efficiency.

The best part is there's already a transmission line nearby. So there isn't going to be much outlay in terms of infrastructure, except for actually putting those windmills up.

-- Just because there's no wind in Tulsa during very hot days doesn't mean there isn't in the western half of the state. A hundred miles or so west makes huge difference in wind. I've been in places like Hydro and Clinton when it was 105 degrees, yet the wind was still blowing 20 to 25 mph. The wind, quite simply, blows nearly all the time in that region. It doesn't in Tulsa.

-- Having a lot of extra electricity during the summer is a good thing, especially when power-grid loads are high because of air conditioning. Sure, last month my A/C run a lot. But the sun was out a lot, too, so I ended up with a $20 electric bill.

-- It's a pretty good time to set yourself up for alternate energy now with a weak economy and bargains are to be had. Energy is going to become more expensive in the coming years, not cheaper, and it makes a lot of sense to get some diverse energy sources going now.

I'd agree with you on all counts, except the first one.

The site north of Newkirk is, at best, a Class 3 wind zone.

My initial, and very incomplete, analysis of that area indicates it would produce in the 17%-20% capacity range. Maybe a little better, but a full third less than normal break even of around 30%.

Utility-Scale wind farms are usually (all in Oklahoma) built in Class 4 or larger wind zones.

[cannon_fodder]

Oklahoma wind power map:
http://www2.ocgi.okstate.edu/website/owpi2/viewer.htm

OKC has much better potential than Tulsa.  Tulsa County is all considered "poor."  Osage has some marginal, a little "fair", and a few tiny dots of "good."  Transmission lines access much of the fair and come close to the good.

Not sure of the exact proposed location.

[Wrinkle]

Wanted to add something here about what was stated in the Tulsa World Article of 7/27/2009.

The World quoted Mr. Brett Fidler, Tulsa's director of sustainability, as saying:

He stressed the importance of the energy audit in determining how much wind power the city might buy.

I have to suggest that an energy audit is completely unnecessary for this purpose. There are valid reasons for doing an energy audit, but for determining how much wind energy to purchase is not one of them.

The last paragraph of this article left we wondering if this is really about wind energy at all:

Funding for the audit has not been determined, Fidler said. Options include federal stimulus funding from the city's Energy Efficiency and Conservation Block Grant or the use of the performance contractor Johnson Control, which has a pending memorandum of understanding with the city for the work, he said.

....pending memorandum of understandings do not pay for audits.

And, pending memorandum of understanding is neither a legal document nor written yet if it's pending.

This seems more about Johnson Controls doing an energy audit.

[Wrinkle]

Just another thought on all this.

If the City of Tulsa wished to provide some percentage of its' total energy via wind, they could purchase it this afternoon via any of several methods currently available, but most likely through AEP/PSO's existing program.

There's really no need to become even remotely involved in a new wind farm development. Just call up and buy it.

The ONLY advantage in the approach mentioned would be a lower, fixed rate over a long term. And, I suggest that's not likely with the proposed project scenario.

A wind farm at that location will be doing all it can to justify its' economic existance, and probably not succeed, IMO, unless it's able to contract at better than favorable rates.

So, that's what's really bothering me about this whole deal. Like so many other 'public' type projects around here, the taxpayer is the one least considered, rather, only considered as cash flow.