Angus Talks Energy

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Maine Senator Angus King photo by Kay MannOn June 27, 2016, the Maine State Chamber of Commerce invited Senator Angus King to speak about energy-related issues as they relate to Maine businesses. Green Energy Maine was there and brings you this report.

WASHINGTON

King began at the national level, speaking about energy matters that he has been working on in Washington. He currently serves on the Senate Energy Committee. The Senate passed a significant energy bill 2 months ago. In order to pass it, the two parties left out the 20% of items that they could not agree upon and passed the 80% they did agree on. The House wrote and passed instead a very fossil-fuel-heavy bill. Next, a conference committee of the 2 houses must meet and iron out the differences between the two bills. King does not have high hopes that it will be successful.

King related a cautionary tale: In December 2015, a power grid control operator in Ukraine watched his computer “go nuts” all on its own. Malware had wiped out the computers in the control center, followed by a blackout that affected 360,000 homes. There were thousands of phone calls into the control center. This was a sophisticated, 6-hour attack that is being taken as a message to demonstrate what this unnamed cyber-attacker is capable of. 

The Ukrainian grid is not as highly digitized as ours is. This meant that people could throw breakers manually and stop the damage within 6 hours. Here in the USA, we could be more susceptible due to our more highly digitized system. A task force is being formed that will allow our system to recover from cyber attacks. It is not a question of whether but when a major attack will be made. In fact, in the current defense bill, leaders are beginning to make determinations that will decide when a cyberattack is regarded as an act of war.

Many of what King called “the fossil fuel state senators” want to be able to export crude oil. In negotiating for this, some of the tax breaks on renewables (the Investors’ Tax Credit and the Producers’ Tax Credit) that were due to expire at the end of 2016 have been extended as a trade for the right to export crude oil. The ITC and PTC will be tapered out over several years instead of ending suddenly.

Right now, there is a huge push in DC to export liquified natural gas or LNG, notably from Louisiana. The price of natural gas is low now in the US and it is very high in Asia. Exporting gas would cause our energy supply to go where it fetches a higher price and would in effect give away one of the few market advantages that we enjoy over Asian economies.A study has been done to predict what would happen to prices if X amount of NG were exported. The Senate energy committee resolved verbally to never export more than 9% of production but were not willing to write it into law.

Maine Senator Angus King photo by Kay MannTRANSPORTATION

Next, King addressed the sector of the economy that uses 28% of all energy consumed in the USA: transportation. The electrification of transportation is coming. King himself is driving a Nissan Leaf, which gets approximately 100 MPGe and goes 70 mph. The next generation of Leafs will have a 200 mile range. Tesla is coming out with a new generation and there is a long waiting list for them. Many other auto manufacturers are offering EV’s, as well.

The electrification of cars will allow us to use power at low demand times of day by charging vehicles at night. The New England grid capacity is 30,000 MW and typical daily demand is 13,000 MW. There is huge excess capacity, as it was build for peak summer loads. If the laws of supply and demand work here, the cost of charging vehicles at night will be cheaper. This will help to balance out the load on our grid.

Transmission and delivery is half the cost of power in most places. If the cost is spread over more times of day, this will also be reduced.

Maine Senator Angus King photo by Kay MannNEW ENGLAND REGION

King introduced the audience to a phone app called “ISO to Go”, which gives real time electricity generation sources and costs for every state in New England. Demand charges are also demonstrated; there is a large peak at midday which can be flattened off by using more power at night.

One third or 10,000 MW of the power generation plants in the New England grid will be retiring over the next decade (nuclear, oil and coal). We need to plan for how to replace these. Over 80% of the new generation plants in recent years use natural gas and gas is cheap right now. The danger lies in the fact that we are making major investments in infrastructure that increases our dependence on a single commodity whose price can spike in a few years. 

The only thing  we know about predictions is that they are wrong. UMaine Professor Emeritus Dick Hill’s rule applies to gas as well as oil: “the price of oil in the future will always be the opposite of what you predict. If you build infrastructure to use a cheap fuel, you will increase demand and so the price will rise.”

King admits that natural gas has been great for new England in the recent short term up until now, and for the long term, he says that diversification of fuel sources is wiser.

MAINE

Next, King focused just on Maine. Right now, our delivered electricity cost is lower than any state north of PA. This is because most other states south of PA are getting electricity generated from coal, which is cheap. Northeastern states also do not participate in subsidized power sources such as the Tennessee Valley Authority and the Bonneville Power Project, which generate cheap power.

One problem we have in New England is a gas pipeline constraint. Spectra has done 2 studies in their pipeline to increase the flow capacity. The question is who would pay for pipeline increases. The pipeline companies only own the pipeline,so the ratepayers of the gas utilities would have to make the investment. The MPUC is wrestling with exactly this issue right now. If we invest in greater pipeline capacity now and find that we don’t need it in 10 years, it will have been a mistake. It is a tough call and no one knows what will happen. It has to be a region-wide decision because all of the New England states would benefit.

It is really tough to make good long term bets in a short term market environment. 

Hydro Quebec is clean, renewable and already built. We have to ask, “what is the cost of getting this power to our market?” There is not yet adequate transmission to bring enough of it to us as of now. The other question is whether the transmission line CAN be built and at what price. Hydro Quebec has signed a contract with Vermont and the terms are “market-based”. So the terms for Maine would also be likely follow the price of natural gas as they already do. There would be no point in building this transmission when we could get power from natural gas at the same cost.

Nuclear power, while clean, has a very high capital cost and is difficult to permit and there is the matter of what to do with the waste. The newer, advanced nuclear plants have a very high capital cost. Hydro and wind power cost about $2 million per MW to build; nuclear is about $5 million per MW. Operating costs of all three are very low, as feedstocks are cheap or free.

Renewables are here already. Maine is on a mountain of fiber. Many hospitals and other buildings in northern Maine are already being heated with biomass and this keeps the money in the local economy.

Biomass is carbon neutral, not causing a net addition to the atmosphere as it is an alternative to letting waste rot in the forests. Wind, solar and hydro are also plentiful here. Although there are not many more opportunities to develop more hydropower here, there is great opportunity for solar and wind, especially offshore wind. Offshore wind power is very expensive now because it has not been done before. Just as solar prices are coming down now because the use is going up, we can expect the price of offshore wind to do the same. Onshore wind costs have come down by 30% over the past 10 years. Critics say that offshore wind and hydro are 35% efficient; this figure actually describes their capacity factor. A hydro plant’s capacity factor is 40-50% because of higher and lower flow rates at different times of year. Nothing has a 100 percent capacity factor.

There is no free lunch in energy: everything has a cost and an impact. If people like having lights at night, they need to accept power generation plants of various types.

Maine Senator Angus King photo by Kay MannNEW APPROACHES TO ENERGY

Solar and wind are intermittent power sources, so you need a “battery” of some kind to store the power at times of high production and low demand. The big exciting opportunity today in energy is in batteries to store large amounts of power, whether grid-scale or home-scale. Tesla is building the largest factory in the country to produce these batteries.

Solar costs have dropped dramatically because of mass production. Insulation is now more expensive than solar panels. We can foresee a day when all roofing shingles will generate power.

Distributed generation of energy is the most disruptive technology in energy today. King introduced a bill in 2015 call the “Free Market Energy Act” to protect the right of people to generate their own power. The cost of having the grid act as “the battery” should be set at a fair level that remunerates the grid operator without hurting the consumer.

Demand response is the solution to evening out costs at different times of day. Many agree that utilities should offer a lower cost for power that they consume at off-peak times. As an example, King told about a family he visited In Norway in 1986, who had a solid rock thermoelectric heater. At night, it was heated up by low-cost electricity and it radiated heat all day.

In Europe, the water is more shallow, so their offshore wind turbines are standing “knee high” in water. UMaine’s Aqua Ventus technology is being piloted and has significant potential to generate power from floating, offshore turbines.

King finished by citing what he modestly called, “King’s Rules of Energy”:
1. There is no free lunch, except in Iceland.
2. Bets made on short term conditions can have long term risks. We must not make decisions that preclude taking advantage of future opportunities.
3. Diversity is good. Even higher cost short-term investments can provide insurance against the volatility of fuel prices.
4. Innovation is key. A key function of the federal government is to support research and development.
5. Climate change is real. Renewables are always going to be better if the economics are close.
6. It makes sense to take advantage of indigenous resources. We have no oil and no gas in Maine. We do have fiber, sun, wind and hydro in plentiful measure.

Photo credit: Kay Mann

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