The Oil Drum

107 comments on Wind power: some lessons from 2006

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tstreet on June 3, 2007 - 10:58am

My local municipal utility (Estes Park,Colorado) gets less than 1% of its electricity from wind. This is fully a function of a program whereby customers voluntary pay a 1.3 cents surcharge per kwh to increase the wind contribution. This program has been in effect since 1999, has only 108 participants out of 9300 customers and is obviously almost a complete failure. Our base charge per kwh is 8.63 cents.

What suggestions might you have to get my utility to acquire more of its electricity from wind (btw, the farms are in southern Wyoming, a great area for wind). The utility gets 67% of its power from coal, with the rest covered by hydro and gas.

Does this surcharge seem reasonable? Would it make more sense to set a goal for wind (ideas?) and then charge the appropriate additional amount per customer to get there? What is the likely cost impact per customer or per kwh?

I know you would need a lot more information as the specific utility's cost structure to precisely answer these questions, but I thought you might be able to give some sort of ball park answer or helpful suggestions to turn my utility around.

We have a formed a citizen's group which will meet with the local utility in a couple of weeks to discuss this as well as other issues including why the hell they won't allow net metering and why they provide no incentives for solar PV.

Given the data you provided on wind power prices above, should I conclude that the wholesale price of coal electricity is still cheaper. I still need to find out what they pay for coal electricity but my guess is that the only thing they care about is the bottom line, forgetting all negative externalities.

Best hopes for a lot more wind and solar. Geothermal,too!

Tom in Colorado

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Jerome a Paris on June 3, 2007 - 1:17pm

There are two ways to get people to buy "green" electricity: one is, like in your case, by way of a surcharge on the normal price. The other is by way of a fixed price linked to the actual cost of generation (if the utility does it itself) or its purchase price (if it buys from a third party). Until two years ago, both implied similar prices for consumers; however, after the rise in gas prices last year, the second option suddenly became cheaper than the normal price (and some utilities had to close the programme to new clients!).

Today, it would make sense to offer "green" electricity at a fixed price, linked to actual generation costs (of wind), and selling it, beyond the fact that it's green, as more stable into the future (protection against energy price increases).

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tstreet on June 3, 2007 - 2:38pm

The problem, as I see it, with the current program is that the vast majority of people have no economic interest in paying more for a good than is necessary. Why should they pay extra and give the rest of their fellow customers a free ride. In any event, the surcharge approach has clearly been shown to be a failure which I think back up my theory.

Under the "fixed price" approach, I assume that existing customers would face prices that go up and probably mostly down based on the future costs of wind. But once the fixed price of wind dips below that for all other sources, wouldn't most people rush in to change their payment plan. In that event, wouldn't you have to shut most people out of the program because of capacity constraints?

If wind becomes cheaper than the cost coming from the rest of the produced power, including coal, then the it would be in the utility's interest to switch to wind as much as possible without regard to any program that might be in effect. Under this scenario, all customers would benefit from lower overall prices.

Regardless, I think my particular utility needs to come up with a realistic goal for percentage of electricity generated by wind, figure out the cost to get them there, and then spread whatever additional costs are involved over all customers. I think that the vast majority of customers would not be sophisticated enough to choose wind with a fixed price, while projecting possible future benefits.

The goal, I think, should be to move to as much renewable energy as we can as fast as we can. We are running out of time.

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WNC Observer on June 3, 2007 - 7:33pm

We have the same free rider problem in NC. One can pay increments of $4/mo on top on one's normal bill for 1KW/mo of "green" energy (a basket of wind, solar, hydro, etc.) Unfortunately, this is just structured as a "contribution". The big problem, as I see it, is that if (or rather, when) there are price increases or service curtailments down the line due to FF supply shortages, those will be distributed equally to all residential customers, regardless of participation or non-participation in the NC GreenPower program.

This program would be a lot more attractive if participation could secure one a preferential claim upon power generated by renewable sources in the future. If one is making an investment, it only seems right that one should expect some return on that investment.

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DelusionaL on June 4, 2007 - 7:03am

WNC,
I really like your idea of invest/return on power. It would be the best way to deal with a lack of leadership/foresight on the part of our gov./population

However, I would question if the returns of power might be taken away from you in an energy constrained future. Given that the purchasers would be a small minority of the population they would hardly have a strong political voice.

The same could be said for personal power generation investments but that is where I will be investing. I think it will be too easily justified to keep essential goods and services running that any grid tied power will be used there first.