Thursday, March 25, 2010

Vermont and Renewables

Vermont PSB Commissioner O'Brien spoke about Vermont Yankee at a meeting this past Saturday. In other words, the meeting took place just a few days after Shumlin said that Germany got 30% of its juice from solar. O'Brien also discussed renewables. He believes we should encourage renewables in a measured fashion. He was concerned that constantly expanding the feed-in tariffs for renewables will have a bad effect on Vermont's economy.

A "Feed In Tariff" is a government mandate that utilities must buy renewable power at a certain price, whether or not that price is in accordance with the market price of other forms of power. For example, Vermont currently has Feed In Tariffs for 50 MW of renewable power at 12 cents per kWh (landfill gas) to 30 cents per kWh (solar). The market price for electricity is around 6 or 7 cents, but Vermont utilities must buy renewable power at the feed-in tariff prices.

O'Brien urged the people at the meeting to Google "Feed In Tariffs and Spain." Spain got rather carried away with such tariffs. This New York Times article describes the problems of excessive use of Feed In Tariffs in that country.

O'Brien also brought copies of a December 2009 study done by the Vermont Department of Public Service: The Economic Impacts of Vermont Feed In Tariffs. This study shows that above-market costs of electricity due to tariffs will affect the Vermont economy until 2026, and cause a net job loss after the facilities are built. Higher electricity rates will suck money from other potential endeavors. Except for the period during construction, the new renewable facilities will not provide enough jobs to offset the effect of the higher electricity prices.

Vermont Tiger notes that solar orchards are beginning to sprout in Vermont. Wind turbines are as big as airplane wings, and they grow in wind farms. Solar panels grow in orchards. Therefore, our state will stay rural, with (wind) farms and (solar) orchards, despite the land use effects of distributed generation.

Actually, I am in favor of renewables, even if they give the facilities cutesy names. I started out in geothermal energy. I was a project manager in geothermal (renewable) at EPRI before I switched to nuclear. I want renewables to succeed. But I have to agree that just mandating them, no matter the cost, is not the way to do it.

We need some feed-in tariffs and some renewables, because if we don't build renewables, they won't improve. O'Brien is right however. Let's not go the way of Spain here and encourage as many renewables as possible. This will lead to gold rush for the high feed-in tariffs, economic stagnation and taxpayer revolt. We've already seen some of this in Vermont. The highest feed-inn tariff in the last round was solar at 30 cents kWh. As expected, the solar offering was oversubscribed with people trying to get in on the deal. Vermont held a lottery to decide who would actually be allowed to build the solar and make good money at ratepayers expense.

Shumlin may think that Germany gets 30% of its electricity from solar, but we shouldn't try this at home.

Related Notes:

Eventually, Shumlin was forced to realize that Germany got only 1% of its electricity from solar. I need to do a completely different post on the follow-up to that incident. For example, this was the first time that I was described as "biting a junkyard dog." Probably the only time anyone will describe me that way. Thanks, Dan!!

In his talk, O'Brien also noted that Vermont's carbon footprint is mainly due to transportation and home heating, not electricity. The day before he spoke, David Bradish of the Nuclear Energy Institute, analyzed Vermont's data from the Regional Greenhouse Gas Initiative (RGGI). Bradish is a blogger and economist, or maybe I should say an economist who blogs. Bradish notes that Vermont is so far below its RGGI allowances that if Vermont Yankee closed, we could actually replace much of the power with a gas plant and still be "in spec" with RGGI. Bradish writes: Thus, conveniently, a gas plant and a little bit of renewables should allow Vermont to satisfy its RGGI requirements. It’s almost like the people involved in the RGGI deal-making for Vermont knew that VY can’t be replaced without fossil-fuels, a fact that all of us in the nuclear community are well aware of.

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