July 29, 2010 - demand response; Alaska energy advisor challenged

Thursday, July 29, 2010

Today's energy related snapshot: a truck hauling wood chips near the Capitol in Augusta, Maine. Woody biomass is one of Maine's major energy resources, and we see thousands of tons of it trucked across the state on a daily basis. After all, Governor Baldacci has called Maine the "Saudi Arabia of biomass".

Wood chips

Put on your policymaker hat and let's talk about the power grid. It is summer, and it is hot. In addition to running businesses and households as usual, people are using a lot of air conditioning. This places a large demand on the electric grid. Specifically, grid planners need to make sure there's enough generation available to cover the region's demand for electricity. Traditionally, this has included both baseload and peaking generation. Baseload generation serves the portion of electric demand that is constant throughout the year, while peaking generation is used less frequently to meet spikes in demand. In some cases, particularly where electric demand has flattened due to loss of industrial load, peaking units might not run even one day per year. (In New England, this generally doesn't disqualify them from receiving payments for the capacity value they provide. In the market makers' view, it isn't the peaking generator's fault that load diminished.)

In recent years, we've found another way to cover peak electric load without having to build an expensive new generator that may only run infrequently: demand response. In essence, demand response means covering electric load by having individuals or companies volunteer not to use power from the grid in response to peak demand conditions. In exchange, these demand response participants should be compensated -- not only for the energy they didn't use, but also for the value of the service they provide to the grid. Generally, this service has a value comparable to the corresponding amount of generation avoided. Demand response thus lowers electric rates and the cost of the electricity that is being provided into the system.

Alaska, like many states, is focusing its government on energy issues. Gov. Sean Parnell named former state senator Gene Therriault (whose district is "North Pole" - no joke) as his energy advisor -- not an unusual move. This occurred at about the same time Senator Therriault stepped down from elected office. However, there is a claim that the position of energy advisor was created during Therriault's term as an active legislator. If so, under the Alaska Constitution and state law, he could not take any state job created while he was in office for one year. An Anchorage Daily News editorial now calls for his resignation.

The Arizona Corporation Commission has adopted a strong energy efficiency and conservation standard. Arizona regulated electric utilities will be required to reduce the amount of power they sell by 22 percent over 2005 levels (adjusted for population growth) by the year 2020 through conservation and efficiency. They can take credit for efficiency projects funded since 2005. The Southwest Energy Efficiency Project led the charge for this measure; they project ratepayer savings of $9 billion over the next ten years. 2% of the savings must come from demand response.

Here's an interesting Time article on underground coal fires -- which are more widespread and emit more pollution than we may know.

In Maine, a $50,000 grant from Time Warner Cable will help fund a new energy efficiency education program at two island schools. The Island Institute is starting its "Energy for ME" program, designed to teach students about energy issues and how -- and why -- they should conserve. About 75 kids on Vinalhaven and North Haven at North Haven Community School and Vinalhaven School are expected to participate in the program next year.

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