Joe Romm recently wrote a piece for Climate Progress titled Nuclear Power Is Losing Money At An Astonishing Rate. In that post Romm exaggerates the amount … [Read More...] about Why are nuclear plants losing money at an astonishing rate?
Deepwater Wind has completed attaching blades to the last of five massive, 6 MWe peak capacity wind turbines that make up the 30 MWe Block Island Wind Farm. That is one of the final steps in the process of installing and commissioning the facility.
By the end of 2016, the developer expects that the project will enter commercial operation and begin providing the first electricity from offshore wind turbines to the US electricity grid. It is a development with far reaching implications and several lessons available to be learned.
Consistently Powerful Political Support Is A Key Component
This modest-sized installation has been in the works since 2008. In April of that year, Rhode Island issued a request for proposals. Eight organizations submitted bids. In September, a five person panel appointed by the Gov. Donald Carcieri Administration selected Deepwater Wind LLC, a then-new entity from New Jersey without prior wind installation experience, to be the project developer.
Initially, the public utility commission (PUC) rejected the project’s negotiated power purchase agreement (PPA) on the basis of excessive cost. In 2009, the state legislature passed a law supported by the Carcieri Administration tasking the PUC to prioritize project benefits like creating a new industry with local employees and producing clean power that are not strictly economic.
The final PPA starts with an electricity price of $244 per MWh. During the next 20 years, National Grid will purchase the full output of the facility at a price that increases by 3.5% every year. In year 20 of the agreement, the price paid for Block Island Wind Farm power will be $479/MWh.
In September 2010, Deepwater Wind hired Jeff Grybowski, Donald Carcieri’s former Chief of Staff as its chief administrative officer and senior Vice President for strategy and external affairs. Mr. Grybowski has since been promoted to to company CEO while developing a strong reputation in the offshore wind industry as a policy guru.
Here is a quote from promotional material published by his alma mater, Brown University, in advance of his giving an invited talk there in the fall of 2015.
Deepwater Wind is now installing the first offshore wind farm in the United States off the coast of Rhode Island, the Block Island Wind Farm. Moving this pioneering project forward has required overcoming unique and complex financial, environmental permitting, contractual, regulatory, and construction hurdles. Jeff Grybowski, Deepwater Wind’s CEO, will discuss this success and what it means for the development of clean energy in the United States.
Grybowski has been at the forefront of shaping the federal and state policies supporting offshore wind in the US, including playing key roles in the development of federal rules governing the leasing and permitting of offshore wind projects, federal tax policies supporting renewables, and policies at the state level throughout the northeast for offshore wind, transmission, and renewables.
The project has overcome a number of challenges and schedule modifications; in an October 2012 issue of North American Windpower it was described as a $205 million project with an expected completion date before December 31, 2012.
It will only miss the initial date by slightly less than four years. That’s not too bad for a first-of-a-kind project developed during trying times in the energy market.
The current tally for the complete project is $451 million, which includes $225 million for equipment, construction and installation, $118 million for design, legal and permitting, and $108 million for the undersea cable needed to connect the facility to the established mainland grid.
Though the project will qualify for the 30% of project cost investment tax credit (ITC) in lieu of the production tax credit (PTC), the developer has not yet made it clear how much of those costs will qualify for the credit.
The undersea cable is an integral part of the project’s operation and economics; though Block Island residents are the customers most often mentioned, the Island’s peak power demand during the height of tourist season is only 5 MWe.
Instead of supplying that small amount of power directly to Block Island, Deepwater Wind’s agreement is with National Grid. That large utility will mix its production with other wholesale power supplies and pass the PPA costs to all of the customers that it serves. Individual homeowners served by the utility will thus pay about $1.35 per month for the small amount of expensive power.
Avoiding NIMBYism With Substantial Local Benefits
One way that the project developers proactively dispelled local objections to the wind facility was to carefully design and package the system so that it provided substantial benefits for island occupants and visitors. It then worked diligently to ensure that people understood how the project would directly improve their lives.
Because the wind farm is only 3 miles off of the southeast coast of Block Island, the island is a good location for the required electrical substation to combine the output of the five turbines and send it to shore. After decades of discussion and dreaming, the island could be connected to the grid and no longer need to generate its electricity by burning high cost, high pollution diesel fuel in locally operated and maintained generators.
Electricity for both commercial and retail customers on the island has cost as much as $600 per MWh (60 cents per kWh) in recent years, with a fuel adjustment surcharge accounting for up to 75% of the total cost.
The new undersea cable allows Block Island Power Company to become a distribution-only utility. It will purchase its power from the New England grid at a much more affordable price than is possible when burning diesel fuel. The undersea cable is robust and fault tolerant; the backup power concept in the remote case of failure will become portable generators transported to the island by barge.
Another pleasant benefit for island residents and visitors will be vastly improved communications capability via the six strand fiber optic cable that was included in the package.
I spoke with Whitney Kneisley of the Storm Trysail Club, which hosts the annual Block Island Race Week. Ms. Kneisley told me that the club’s members — like most sailors — are strong supporters of clean energy projects. They are excited about the Block Island Wind Farm, especially since the five turbine installation does not interfere with the normal routes taken during the round the island race that they sponsor.
State Of The Art Turbines
The project’s wind turbines will be Haliade 150’s, a new design from GE’s recently acquired Alstom division. The nacelles are mounted on towers that are 100 m tall above the water; the height from water surface to the highest swept point is 180 m.
Deepwater Wind announced the contract signing for this cutting edge design in February 2014. The first unit of the new design had completed initial installation in November 2013; the design completed its final type certification in January 2015. (Details from 4Coffshore.com)
Clean Energy Jobs
Some parts of the towers were fabricated by 14 newly hired employees at Specialty Diving Services in a large hanger type building at the Quonset (Rhode Island) Business Park; the turbines and blades were manufactured by Alstom in France; the 20 mile long undersea cable was fabricated in South Korea; and the steel jacket foundations anchoring the towers to the seabed were manufactured in Louisiana by Gulf Island Fabrications, a company with experience building foundations for offshore oil and gas drilling rigs.
Approximately 330 temporary construction and electrical workers were involved in the actual tower, turbine and cable installation.
Once the wind farm is in operation, Deepwater Wind hopes to move on to additional projects, including one that is aiming to serve Long Island, another island with high electricity rates and a power supply system dependent on burning oil.
Note: A version of the above first appeared on Forbes.com under the headline of Is Offshore Wind Finally Ready To Serve U.S. Power Needs?`
Joe Romm recently wrote a piece for Climate Progress titled Nuclear Power Is Losing Money At An Astonishing Rate.
In that post Romm exaggerates the amount of support that the New York Zero Emissions Credit (ZEC) will provide, absolves the massive build out of industrial scale wind and solar from any responsibility for contributing to the situation, offers an incomplete analysis of the real causes and effects of unsustainably low wholesale market prices and provides a slanted suggestion for implementing a solution.
How big is New York’s Zero Emission Credit?
Like many observers that do not like the idea of helping existing nuclear plants survive temporary market conditions, Romm accepts the very high end of the estimated range of costs for the New York ZEC. With a link to a Huff Post piece By an infamously antinuclear author named Karl Grossman, Romm describes the plan as a “$7.6 billion bailout of nuclear.”
That description overlooks the fact that the equation for the administratively-determined price of the ZECs includes a term that will automatically reduce the amount paid when the predicted wholesale market price of electricity rises above $39 per MWh. Unsurprisingly, given Grossman’s known antinuclear attitude, his article did not mention How wholesale electricity prices above $56 per MWh would result in zero cost ZECs.
Romm should have known better than to trust a single source, especially one with a long-standing agenda of eliminating nuclear energy.
Should we blame renewables?
Romm also takes issue with the notion that unreliable energy system growth is causing market price problems for nuclear energy. He admits that wind, solar, biomass, geothermal and waste-to-energy are still receiving substantial direct payments and market mandates from governments at the local, state and federal level, but he claims that those subsidies are appropriate for emerging technologies that ar still progressing down the cost curve. Besides, he says, those generous subsidies are scheduled to be phased out.
Romm is apparently banking on the fact that many readers don’t know that wind and solar subsidies have been in place since the early 1990s and have been “scheduled” to be phased out at least 5 times already.
Instead of blaming his favorite power systems, Romm says that we should blame “cheap natural gas.” He avoids acknowledging that the massive buildout of wind and solar enabled by the $25 billion that the Recovery Act has dolled out to renewable energy programs has successfully increased the quantity of wind and solar electricity generated by an amount that has finally begun to be visible in EIA statistical reports.
Since weather-dependent sources displace mostly natural gas fired electricity if they are available, the increase in renewable generation has contributed to the current gas market oversupply and low price situation. If the electricity produced by new wind turbines in Texas, Illinois and Iowa had come from burning natural gas, there would not be a gas glut threatening to overflow available storage reservoirs.
The glut is the reason prices are low; fracking makes gas abundant, but it does not lower the cost of extraction compared to conventional drilling.
Blame market design
Romm turns to Peter Fox-Penner for an explanation of the market challenges facing nuclear power plants. His published quote from that conversation is intriguing and offers an opportunity to find common ground.
While I agree that premature closure of safely operating existing nuclear is a terrible idea from the climate policy standpoint, he overlooks the fact that this consequence is neither “unintended” nor the “fault” of solar and wind. This is the very-much-intended result of the way electric markets were designed, and you can be sure this design was not formulated by wind and solar producers and is in so sense their fault.
I concur. The current market structure was purposely invented by market-manipulating entities like Enron to give an advantage to natural gas traders, build an alliance between natural gas and renewable energy and crowd nuclear energy out of the market in order to enable increasing sales for both gas and renewable power systems.
Price on carbon
Romm once again blames the nuclear industry and independent nuclear advocates for not sufficiently supporting the fatally flawed 2009 climate and energy bill. He says the bill would have put a price on carbon, but it did so through the same “cap and trade” mechanism that has proven incapable of actually addressing carbon emissions in example markets like Europe and California.
The politically determined amount of available credits for incumbent producers has invariably been set so high that those credits usually trade for a value that is too low to influence system purchase decisions. They are often so low that they don’t even influence operational choices between burning high emission fuels like brown coal instead of somewhat lower emission fuels like natural gas.
Romm is right that a price on carbon would help nuclear energy from both established plants and new projects compete, but that price needs to be predictable and sufficiently high before it will influence decision making. The rising fee and dividend approach advocated by the Citizens Climate Lobby and James Hansen has a much better chance of successfully reducing CO2 emissions.
Nuclear energy is not inherently uncompetitive. Fuel costs are low and predictable, equipment is durable and often needs little maintenance or repair, life cycle emissions levels are extremely low, waste is compact and easily managed and paying people fair salaries for productive work is an economic benefit, not a disadvantage.
The established nuclear industry, however, has done a lousy job of controlling its costs and marketing the benefits of its product.
It needs to work more effectively to ensure that regulators do not ratchet requirements, especially when they are imposed for the purpose of producing the right political “optics” with no measurable improvement in public safety. Achieving that condition will require the industry to take a more adversarial approach to regulators. Under the American system of jurisprudence regulators and the regulated are not supposed to be friends and partners.
There is also a need to recognize that innovative, advanced reactor systems that incorporate lessons learned during the past 60 years of commercial nuclear power generation offer the opportunity for long lasting cost reductions. Many of the smaller designs offer the same kind of volume-based learning curves that have so effectively reduced the cost of weather-dependent collector systems like wind turbines and solar panels.
I agree with Romm on the subject of nuclear energy subsidies. They are unaffordable because nuclear is far too productive to remain a small and emerging technology whose subsidies can be lost in the weeds. At this point, that same statement can be made about wind and solar energy. Subsidies for those systems need to actually phase out this time or they will become ever more unaffordable.
They will also become an increasingly important obstacle to the real goal of cleaning up our electricity generating system and enabling it to grow rapidly to provide an ever larger share of our total energy needs.
If you plan to attend future nuclear energy rallies, it might be worthwhile to practice singing Battle Hymn of the Atom. It’s sung to the tune of Battle Hymn of the Republic Update (posted August 16 at 6:45 PM EST) After incorporating the inputs from comments here, this is the current version. Battle Hymn of […]
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