Kansas has wind potential, if it is willing to act on it
Published on -10/23/2007, 11:26 PM
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By DUANE SCHRAG
To understand Rep. Josh Svaty's excitement about wind energy, it helps to remember his Bohemian roots.
"The predominance of people who settled Ellsworth County were either Czechs or Germans," Svaty, D-Ellsworth, said in a recent address to the Salina League of Women Voters. "The reason it was settled by Czechs and Germans is because it was dirt cheap. It's nasty, dirty soil. It's rocky. It's never been very good for anything but grazing cattle, and we farm the creek bottoms. And we've put up with the nastiest, hottest wind that anyone could ever feel.
"Finally, after 130 years, we find out that nasty, hot wind is actually worth money. And it's the greatest message we could ever have."
Wind enthusiasts say Kansas is on the cusp of becoming a significant player in the wind energy market. What's more, wind is -- by some accounts -- the next big thing.
"Wind was kind of considered a joke 10 years ago," said Jim Roberts, project manager for development of the 200 megawatt wind farm that is about to be built in Cloud County. "Now, it's, 'Hey, we better sit up and pay attention.' "
Kansas should be on the cutting edge of wind generation. It has some of the best sites in the country.
"Everybody agrees we are in the top three (states)," said Jim Ploger, climate energy manager at the Kansas Energy Office, which is a division of the Kansas Corporation Commission. "I like to quote a 2002 study by the United States Public Interest Research Group that actually puts us at No. 1."
And yet, wind energy companies have struggled in Kansas. Horizon has been ready to build a wind farm in Cloud County for years -- land leases were put in place back in 2003 -- but only recently found buyers for the power. The first turned out to be Empire District Electric, based in Joplin, Mo.
Then, on Oct. 1, Westar announced it will be buying 96 megawatts of capacity from the Cloud County wind farm -- about half the farm's potential output -- as part of Westar's plan to aquire 300 megawatts of capacity by early 2008, and 500 megawatts by 2010.
The state's No. 1 wind farm, Elk River near Beaumont in Butler County, also sells its power to Empire. The Spearville wind farm sells its electricity to Kansas City Power and Light, also based in Missouri. And power from Kansas' first large commercial wind farm, the 112 megawatt wind farm near Montezuma in Gray County, initially was purchased by Kansas City, Mo.-based Aquila.
"Kansas has tremendous potential and opportunity in the area of wind energy," said Lt. Gov. Mark Parkinson, "despite that we have lagged behind other states in the development of wind."
Why is Kansas behind?
The short answer: It's complicated, and thoughtful people disagree. Wind proponents say the state has provided little leadership, either through regulation or incentive. State officials say Kansas has been perceived as being anti-wind, which has encouraged citizens opposed to wind. Utilities insist they're embracing wind just as fast as they can.
The Database for State Incentives for Renewable and Efficiency, which is funded by the U.S. Department of Energy, shows Kansas is next to dead last in the nation (ahead of only Arkansas) when it comes to incentives for renewable energy.
Sites with the best wind energy potential often are located far from population centers and might not have ready access to transmission lines.
"That wind potential can't be accessed unless you have transmission," Svaty said.
Many utilities maintain that adding any significant quantity of wind-powered generation will make the electric grid too unstable, because you never know when the wind will start blowing. Or stop.
Although wind power widely is regarded as being more expensive than conventionally generated power, it is cheaper today than electricity generated by natural gas-fired generators. It's not cheaper than coal-fired generators. But wind advocates say that's only because the environmental costs of pumping millions of tons of carbon dioxide into the atmosphere every year aren't added to balance sheets.
And if you think utilities are eager to pick up those environmental costs, consider Westar Energy's announcement last month that it has adopted a climate change policy and believes the utility industry has an obligation to take a leadership role in the debate.
One of its seven climate change principles: "We will support public policies and initiatives that recognize and correct for possible extreme financial consequences that could result from the imposition of greenhouse gas regulations."
Westar, the state's biggest electric utility, is based in Topeka and serves Salina.
Coal-fired power plants nationally spit out 1 million pounds of carbon dioxide every second. They generate about three-fourths of the electricity in Kansas.
"The coal industry has a huge Achilles heel that is way more economically serious and way more complicated than the integration of a variable resource like wind into a regionwide electric grid," said Michael Noble, executive director of Fresh Air, a Minnesota-based nonprofit organization that promotes wind energy.
In fact, Noble says, regionwide electric grids can not only integrate wind but do so at very low cost.
"It's the heart and soul of the debate," he said.
The grid: Rocket science
If keeping an electric grid running properly doesn't qualify as rocket science, it comes close.
The objective absolutely is simple: For every light bulb and flat-panel television and cell-phone charger that is turned on, make sure enough juice is added to the circuit.
Oh, by the way, for every light bulb and flat-panel television and cell-phone charger that is turned off, take a corresponding quantity of power off the grid.
"Every time anybody flips a switch, electric demand goes up," said Jay Caspary, director of generation at Southwest Power Pool, which manages the electric grid that covers Kansas, Oklahoma and parts of Missouri, Arkansas, Texas, New Mexico, Mississippi and Louisiana. "The load changes constantly."
What the grid operator has to do is forecast around-the-clock electricity demand, down to 15-minute intervals. Complex computer programs rely on weather forecasts and a myriad of other factors to guess when you'll turn your air conditioner on and how long you'll leave it running, when you'll turn your lights off, just how much each zone on the grid will use.
The grid operator then ensures that exactly the right amount of electricity is delivered to that zone. The process never stops -- all day, every day, load projections are made, electricity is scheduled and then delivered.
When generators are fueled by something like coal or natural gas or nuclear fission, the grid operator doesn't have to wonder how much electricity is available. This is sometimes referred to as firm capacity or dispatchable power -- there is almost absolute certainty about how much electricity is available.
When the wind
Wind turbines don't operate on quite as rigid a schedule. They rarely produce more than 40 percent of the time; many produce at half that because the wind comes and goes. They are said to be an intermittent resource.
Bob Johnson, executive manager of engineering and energy services at Hays-based Sunflower Electric Power Corp., cringes when he reads a wind farm with "X" megawatts of generating capacity will meet the electricity needs of "X" thousand homes.
Never mind the generating capacity.
"They could never, ever serve even one home," he said. That's because at some point the wind will stop but demand for electricity hasn't.
Wind proponents have no quarrel with that logic, although they might point out one promising technology is compression storage -- excess energy compresses gas that powers generators when the wind subsides.
But they argue the analysis is a smokescreen that obscures the larger reality.
"There's been a lot of debate and discussion about how much wind you can integrate into the system and not upset the apple cart," said Rob Freeman, chief executive officer of Tradewind Energy, the Lenexa-based company developing the Smoky Hills Wind Farm in Lincoln and Ellsworth counties. "Operating an intermittent resource, except maybe in very extreme circumstances, is actually quite manageable for utilities. And the reason is, they are accustomed to managing a load that fluctuates minute by minute. They are very adept at managing an ever-fluctuating load profile.
"If you put an intermittent resource into the mix -- it helps to think about it as a negative load -- it actually has a really small impact on the load curve. In operational terms, it really is no different than what they manage all the time."
Conventional wisdom of established utilities has been that only a tiny fraction of the total electricity pool -- something on the order of 5 percent -- can reliably come from wind. That has prompted wind energy proponents in the United States to wonder how some European countries seem to be able to rely far more heavily on wind (Denmark satisfies 21 percent of its national electricity needs with wind and plans to raise the bar).
And a series of U.S. studies in the past five years have confirmed these wind proponents' hunches -- the mix of wind can be raised dramatically (in 2006 just less than 1 percent of our electricity came from wind) without adding substantial cost.
The 'What if' exercises
The studies are mammoth "what if" exercises. They assemble all relevant data for a multi-year period in a certain area -- the actual minute-by-minute electricity demand forecasts that were made at the time, the actual electricity usage, weather forecasts and the actual wind conditions that materialized, spot market prices for electricity, etc.
A computer model then simulates what would have happened had the energy portfolio included a certain percentage of wind power. By using the same rules that drove the decision-making process at the time, researchers can accurately determine how events would have played out if more wind -- up to 30 percent -- had been added to the mix.
Since actual conditions are used in these simulations, the costs that would have been incurred by the various scenarios can be calculated.
"The key findings of two major new studies completed in 2006 in Colorado and Minnesota broadly are consistent with those in earlier work, and (at a minimum) show that wind integration costs are generally approximately 5 cents per kwH, or less, for wind capacity penetrations of up to 15 percent," says the 2006 Annual Report on U.S. Wind Power Installation, Cost and Performance Trends, a publication of the U.S. Department of Energy.
"What these studies highlight is that, in fact, with up to 20 or 25 percent penetration ... it's very doable," Freeman said. "It's not a big problem."
Producing wind, cheaper
So why don't we have more wind energy?
Part of the explanation is the economics have been changing rapidly. According to the U.S. Department of Energy, the cost of generating electricity from wind fell from 6.1 cents a kilowatt hour in 1998 to 3.3 cents in 2005. The huge demand for wind turbines now is pushing the price back upward.
Even so, electricity from newly installed wind farms now is cheaper than power from gas-fired plants.
But wind proponents say there are other barriers to the adoption of wind. One is inertia.
"All these utility guys are pretty much used to working with dispatchable resources, that they can pretty much turn on and turn off," Freeman said. "So when you throw an intermittent resource into the mix, from an operating perspective it is a new thing and something they have to learn to deal with."
Roberts offered a similar view.
"I think you're starting to see more and more of them really invest in studying wind energy and how can we make this fit," he said. "So many of the utilities are old school. Change is hard."
Another reason has to do with the way utilities are allowed to price their power.
"I don't know what the current policies are in Kansas, but in many places in the United States electric regulators have made it very easy to pass on the cost of fuel," said Mike Sloan, managing consultant with the Wind Coalition, a nonprofit organization based in Austin, Texas. It addresses wind issues in Texas and the region managed by the Southwest Power Pool, which includes Kansas.
"Many utilities, if natural gas prices go up one month, boom, they show up on your bill the next month. What it's done is take the risk off the utility and shifted it entirely onto the consumer, so utilities have no motivation to minimize fuel costs.
"That should be a risk that's borne by the utility. If they are responsible for that, they are much more likely, I think, to make decisions that would recognize the value of things like wind power."
In Kansas, those fuel costs show up -- with or without a boom -- on your bill.
"You look at the last decade of utility legislation in Kansas, and it's riddled with pass-throughs," Svaty said.
Taxing greenhouse gases
Fuel costs aren't the only pass-throughs that might influence a utility's decision to invest in wind. Many observers believe it's only a matter of time before taxes are levied on greenhouse gas emissions.
Gov. Sebelius welcomes a federal tax, but doesn't think a state tax would be productive, Lt. Gov. Parkinson said.
The remaining question is, who will pay it? Will that be a pass-through also?
Westar's global warming policy statement suggests the utility doesn't think it should be the one to shoulder the burden.
Wind proponents argue the cost is one utilities should bear, and once that happens the argument about the viability of wind will be over.
"Global warming regulations are inevitable," says Noble of Fresh Air. "It is going to involve some controls or limits on carbon dioxide emissions that will result in a significant financial charge. It will not be free to emit carbon into the atmosphere.
"So why do I keep pretending that coal is cheaper than wind? Why do I not factor in a $10 or $20 per ton tax and say, 'Wow, not only is wind a little bit cheaper, if appears that if global warming regulations are serious it's going to be a lot cheaper,'" he said.
"You know what the unpleasant answer to that is? The CEO or the utility does not bear that risk. The people who open their electric bills bear that risk. When you ask the utility CEO, 'How are you managing your financial risk related to carbon?' they don't have any financial risk because ratepayers have that risk. So the huge economic advantage of wind is not seen on the balance sheets."
The two, main problems
Parkinson said the governor's office went searching for answers a year ago.
"I spent a bunch of time in November and December talking with wind farm developers, environmentalists, utility heads and other folks that are for or against wind, to try to figure out what the problem is in Kansas," he said. "Consistently, I got two reasons. One reason is there's a perception that the Kansas Corporation Commission would not reimburse utilities for building wind power."
The second reason was lack of transmission.
The commission's perception, he explained, is the regulators would not approve wind unless it was the cheapest alternative.
Brian Moline, long-time chairman of the Kansas Corporation Commission, now retired, bristles at that suggestion.
"You know, he's said that before," Moline said. "The suggestion that the reason why utilities have not made more investment in wind or other renewables is because the KCC won't approve it is absolutely wrong. I was around there for 20 years. Never once has anybody come to the KCC and asked us to approve (a renewable portfolio standard)."
Wind proponents say adopting a renewable portfolio standard, which forces utilities to add renewable energy to their portfolios, is the most effective way of accelerating the adoption of wind.
In fact, Moline said, the Legislature wouldn't even approve a bill that directed the commission to merely study the issue.
"Somebody might say, 'Well, why didn't you just open up a hearing and go out and order it?' " Moline said. "Because we are supposed to implement what the Legislature decides, not make their decisions for them. And when they have a legislative session and refuse a bill that directs the commission to just study it, how are we supposed to read that?"
Parkinson did his research nine months ago. Since then, two of the three commissioners -- Moline and Bob Krehbiel -- have retired or moved on.
"Shakeup at the KCC: Moline, Krehbiel out; Wright, Harkins in" announced the Citizens' Utility Ratepayer Board in its July newsletter.
Parkinson declined to call it a shakeup.
"Well, we have two new commissioners," he said.
Whether this will change either the commission's image or its philosophy (or the Legislature's) remains to be seen. But wind proponents say there are plenty of other reasons wind hasn't gained more traction in Kansas.
Renewable portfolio standards
Consistently near the top of everyone's list is the lack of a renewable portfolio standard. States that adopt them require utilities obtain a certain percentage of their power from renewable sources. Typically, these percentages inch upward each year. Illinois, Minnesota and Oregon have adopted standards that call for 25 percent renewable by 2025; New York wants 24 percent by 2013.
Texas' standard is 5,880 megawatts by 2015.
"In Texas, RPSes have been extremely important," says Beth O'Brian, clean energy adviser for the Texas chapter of Public Citizen, the nonprofit lobbying group founded by Ralph Nader. "It was huge. It was fundamental. It was essential. It basically creates an immediate demand."
Kansas has no renewable portfolio standard, and finding a policy-maker willing to press for one isn't easy.
Although the governor's office supports the idea, it doesn't endorse a state renewable portfolio standard, Parkinson said. Rather, Sebelius has proposed what has been called "10 by '10, 20 by '20" -- meaning that renewable energy will make up 10 percent of state's portfolio by 2010, and 20 percent by 2020. These are voluntary targets.
Svaty said because utilities voluntarily have agreed to add renewable energy to their portfolios, there's no need to pass a law requiring it.
Also, Kansas has no net metering law, which would mean consumers who generate their own electricity could sell excess power back to their local utility at retail rates.
"It kind of democratizes power," Svaty said. "It's been done in 37 other states, and it's been rather painless, and people still wake up in the morning and they're still alive. But if you would come to a committee hearing in Topeka and listen to us talk about net metering, it's extraordinary. I've never heard a Chicken Little quite as outrageous -- the sky is falling, the sky is falling, net metering will make everyone's power price jump, double, triple, through-the-roof."
Wind won't be easy
For all its promise, wind energy faces daunting challenges. Advances in rotor and turbine technology and weather forecasting have made reliance on wind easier than ever, but, still, only a small fraction of a turbine's potential output is considered reliable.
Consider Austin Energy, the city-owned utility that provides electricity to Texas' state capital. It offers a program called GreenChoice, the largest of its kind in the country.
Austin Energy has a diverse electricity portfolio, relying on a mix of nuclear, coal, natural gas and wind to generate its power. The GreenChoice program gives customers a chance to sign up for renewable energy, but it's more than a token gesture: While all the other customers have a fuel charge that varies with market prices, GreenChoice customers have a fixed charge that represents the wind energy costs.
"We're sold out," said Ed Clark, director of communications for Austin Energy. This is the fourth block of wind power Austin Energy has purchased. Customers who signed up for the last block are paying 3.5 cents in wind charges, compared to the current fuel charge of 3.04 cents.
But the first block of customers are paying 1.7 cents, and the second 2.8, he said.
"There's a bunch of people who have been saving money for a long time," he said.
But in order to make this wind power available, Austin Energy had to line up a back-up source of electricity for nearly all its wind energy. The Electric Reliability Council of Texas, which operates the electric grid in much of Texas, requires all utilities file an energy plan, every day, that shows how much electricity it expects its customers to use during every 15-minute period of the next day, and where it plans to get that power from.
The 9 percent rule
If the power source is a wind farm, the Electric Reliability Council of Texas counts only 8.7 percent of the farm's rated capacity. Never mind wind farms typically produce 20 percent to 40 percent of their rated capacity in the long term. What matters is the short term.
"On any grid in America, you have to show firm generation for every bit of your load," Clark said. "ERCOT is interested in what it can depend on. Every single day of the year, at 'X' hour, what can you be absolutely sure you can get, based on history, out of this wind farm. We don't care how many wind turbines are out there. You can count 9 percent."
And this is the first year the electric grid operator has been so generous with wind farms. In previous years, wind farms were allowed to count only 2.6 percent of their rated capacity, said Dottie Roak, a spokesman for the Electric Reliability Council of Texas.
It's even tougher in Kansas. The Southwest Power Pool's formula for calculating a wind farm's capacity is based on its output during the peak hour during each of the past three years, Johnson said, with Sunflower Electric.
Sunflower, which has a contract for about half the output from the Gray County wind farm, can count none of that as firm capacity, he said.
So it's perhaps not surprising some industry observers don't see wind becoming a significant source of energy anytime soon. This is what the federal Energy Information Administration says in its 2007 Annual Energy Outlook:
"Despite rapid growth projected for biofuels and other non-hydroelectric renewable energy sources ... oil, coal and natural gas are still projected to provide roughly the same 86 percent share of the total U.S. primary energy supply in 2030 that they did in 2005."