Maine enacts biomass energy support

Maine has adopted a new law to support the state's biomass energy industry.  Governor Paul LePage has signed LD 1676, An Act To Establish a Process for the Procurement of Biomass Resources, as emergency legislation.  As a result, the bill has been enacted into law as Public Law, Chapter 483, from the 127th Maine Legislature.

The Maine State House.

The bill directs the Maine Public Utilities Commission to initiate a competitive solicitation as soon as practicable.  That solicitation will ask for proposals for 2-year contracts for up to 80 megawatts of biomass resources.  To qualify, a biomass resource must be a source of electrical generation fueled by wood, wood waste or landfill gas that produces energy that may be physically delivered to the ISO New England or Northern Maine Independent System Administrator markets.  A resource must also operate at least at a 50% capacity for 60 days prior to the initiation of a competitive solicitation and continues to operate at that capacity except for planned and forced outages.

The law gives the Commission some direction on how to select proposals for contracting.  It requires the Commission to seek to ensure, "to the maximum extent possible" that a contract provides benefits to ratepayers as well as in-state economic development benefits, reduces greenhouse gas emissions, promotes fuel diversity, and supports or improves grid reliability.

The costs of the contracts, other than above-market costs, and all direct financial benefits from the contracts must be allocated to ratepayers according to Maine's statute on allocation of costs and benefits of long-term energy contracts.  Above-market costs will be paid for from a cost recovery fund created by the new law, which allocates up to $13.4 million from the unappropriated surplus of the state's General Fund. 

March 31, 2011 - Canada backs Lower Churchill hydro project

The Canadian federal government has just announced that it will support the Lower Churchill hydroelectric project in Labrador.  The $6.2 billion project has been in the planning phases for years, but now appears to be moving forward.

Rich in natural resources, Canada is home to a great number of rivers with significant hydropower potential.  Many of these rivers have been dammed and developed in the past century; second only to China, Canada is now a leading producer of hydropower in the world.  In recent years, Canada has been one of the few countries to produce a majority of its electricity from hydropower, with some provinces like Quebec, Manitoba, and Labrador producing over 90% of their electricity from hydro dams.

Since 1971, much of the Churchill River's flow has been diverted into the Churchill Falls hydroelectric station.  At 5,428 MW, the existing Churchill Falls project has the second largest capacity of any power station in North America.  The Lower Churchill project entails building two new plants (Gull Island and Muskrat Falls) with a combined capacity of over 3,074 MW.

It remains to be seen what form the support of the Canadian federal government will take.

March 15, 2011 - US nuclear industry

As Japan assesses the damage from last Friday's magnitude 8.9 earthquake and tsunami, one element of the disaster that remains ongoing involves damage to several of that nation's nuclear power plants.  Utility Tokyo Electric Power has imposed blackouts due to a 25 percent capacity shortage, which may be the least of the concerns stemming from the damaged nuclear plants.  Concerns over meltdown and release of radioactive materials loom larger.

A recent snapshot of the price of gas in Maine: $3.539 per gallon for 87 octane regular.

In the immediate wake of the situation in Japan, it may be helpful to consider a snapshot of the U.S. nuclear power industry.  According to the U.S. Energy Information Administration (1 page PDF), in 2009 the U.S. nuclear industry was composed of 104 generators with an aggregate nameplate capacity of 106,618 megawatts.  This represents about 9.5% of the nation's 1,121,686 MW total installed nameplate capacity.  Electricity derived from nuclear power thus ranks third in nameplate capacity behind natural gas (459,803 MW) and coal (338,723 MW).

Nuclear power plays an even bigger role in the U.S. electric industry on a megawatt-hour basis.  Remember that megawatts of capacity refer to how much energy could be produced at a given moment if all the units ran full-bore, while megawatt-hours of energy refer to how much energy was actually produced.  In 2010, nuclear power produced 981,815 thousand MWh out of a total 4,120,028 thousand MWh produced -- or about 24% of the nation's total electric generation.  This is due in part to the high capacity factor of nuclear power, meaning that nuclear plants tend to run near their full capacity and have minimal downtime.

Let's keep Japan in our thoughts and hope the people and the nation recover well and quickly.

February 16, 2011 - Louisiana natural gas production

Natural gas is a key component of the U.S. energy mix.  Even here in New England, relatively far from gas production zones, gas-fired generation accounts for more than a third of the electricity produced.  Where local distribution companies operate, consumers can also use gas for heating.

Louisiana is a major source of natural gas supply in the U.S.  While the Outer Continental Shelf (OCS) offshore Louisiana provides a large part of the gas flowing out of the state, north Louisiana’s Haynesville Shale is seeing increased production.  Laid down as sediments in a shallow marine environment during the Jurassic (about 150 million years ago), the Haynesville Formation includes shale units that are now about 2 miles deep beneath northwestern Louisiana, southwestern Arkansas, and eastern Texas.

Gas production from the Haynesville Shale is booming, thanks in part to hydraulic fracturing or “fracking”.  That's the same technique of cracking open the gas-containing strata by forcing high-pressure water, chemicals, and mechanical "proppants" underground to hold the layers of rock open and let the gas flow out.  About 61% of Louisiana’s gas production came from the formation, bringing the state's total 2010 production to around 2 trillion cubic feet of natural gas.  That level of production is not only 36% above 2009 levels, but is moreover the highest level of production since 1984.

The environmental impacts of this technique are still under evaluation, but customers are already feelign one impact of fracking: low gas prices, as the nation's supply has risen significantly. According to the federal Energy Information Administration, natural gas prices are predicted to average $4.02 per thousand cubic feet in 2011, about 9% below 2010's average pricing.

Will gas continue to be produced at these levels?  Will these low prices continue?  Are any other regulations needed to protect safety and the environment?  If so, what will that mean for gas pricing?

February 8, 2011 - nuclear power in Utah?

Nuclear power is one element in the mix of U.S. electric power generation sources.  In 2010, nuclear power from 104 plants accounted for 19% of net electric generation in the country, or about 670 terawatt-hours.  (That's 670,630,000 megawatt-hours.)  On a net electric generation basis for 2010, nuclear ranked below coal and gas, but above all other resource types.  Since 1977, no new nuclear plants have started construction, due to reasons including cost, safety concerns, and local siting opposition.

The tide against new nuclear power plants may be shifting.  In 2007, the Tennessee Valley Authority approved plans to restart construction on the Watts Bar Unit 2 plant near Spring City, TN; its sister plant was the last domestic civilian reactor to reach commercial operation, while Unit 2 has sat in a state of 80% completion since 1988.

A number of new nuclear plants are now in the planning stages around the country.  In Utah, a plant proposed by Blue Castle Holdings is proposing to build a two-unit plant near Green River. Nuclear plants need a large amount of water for cooling and steam production; Blue Castle has obtained leases for the annual use of 50,600 acre-feet of water from the San Juan and Kane County water conservancy districts.  Those leases stem from 1960s-era unused water appropriations for coal-fired generation plants that were never constructed; Blue Castle has filed to change the leases to allow for nuclear generation.  Blue Castle's project remains on the drawing board, with other key permits not yet sought (like approval from the Nuclear Regulatory Commission, which Blue Castle hopes will be obtained by 2016).  What role will Utah play in a nuclear renaissance?

December 28, 2010 - a history of heating my house, and current economics

In the wake of yesterday's blizzard, I've been thinking about how we heat our homes.  At over 150 years old, my house has kept people dry and warm for quite some time.  Much of the house remains the same as it was originally, while other "new" systems like electricity and running water have been installed later in the house's history.  Its heating systems have likely been changed several times in those years.

[Photo: down by the docks on Monhegan Island, Maine.  A large cache of propane tanks rests just out of view on the right.  Propane provides a major part of Monhegan's space heating energy needs.]

When the house was built, its residents likely burned wood to keep warm.  The front room or parlor on the first floor had a fireplace, as did the bedroom above the parlor.   (These fireplaces are now bricked up, as the chimney they used is now dedicated to an oil furnace situated in the basement.)  Until 1885, wood was the dominant fuel used to heat homes in the U.S.  After 1885, wood was surpassed by coal as the dominant heating fuel in the U.S.  It isn't clear whether my house was ever heated by coal.

Today, my house has three primary heating systems: an oil furnace in the basement that feeds warm air to the first floor, a propane "decorative appliance" in the kitchen, and small amounts of electric heat (a baseboard in one room, and a portable heater).  How much does it cost for me to operate these resources?  How are my decisions affected by that cost structure?  What should I do differently?

A few data points:

The portable electric heater is rated at 1,500 W.  In one hour, it uses 1.5 kWh.  One kWh = 3,412 Btu.  Thus in one hour of maximal operation, the heater puts out 5,118 Btu of heat.  Over the past several years, I've paid an average of 15.5 cents per kWh delivered.  This means the portable electric heater costs 23.25 cents per hour of operation -- or yields 146 Btu per penny.

According to the Maine Office of Energy Independence and Security, oil in Maine is retailing for an average price of $2.98 per gallon as of 12/20/2010.  In general, a gallon of heating oil contains about 138,690 Btu.  This divides out to 465 Btu per penny assuming 100% efficiency - or 386 Btu per penny at a more realistic 83% efficiency.

The Maine OEIS reports that the statewide average for propane based on a use of 925 gallons a year is $2.74 per gallon.  Notably, a gallon of propane contains less usable energy than does a gallon of oil; a gallon of propane might contain 91,330 Btu.  This divides out to 333 Btu per penny assuming 100% efficiency.  Even assuming 80% efficiency, this yields 266 Btu per penny.

Compare wood, a fuel the house is no longer set up to burn.  Wood can be an imprecise fuel type, with great variability in both how much wood is really in a delivered cord, as well as in how many Btu are available per cord.  (It's supposed to be 128 cubic feet per cord, but in practice air spaces mean there is almost never that much wood in a cord.)  The EIA recommends a figure of 20,000,000 Btu per cord.  Prices vary widely, but $200 per cord isn't a bad price in Maine.  Using that figure, you get 1000 Btu per penny assuming 100% efficiency, or 800 Btu per penny at a more reasonable 80% efficiency.  This makes wood seem like an attractive option.

Btu per penny may not be the only factor I consider in allocating my heating burden across these fuel sources.  For example, I can set the portable electric heater up anywhere in the house, while the oil-based warm air system is permanently installed in the first floor of the house.  Wood may appear economical, but without further capital investment (in a wood stove) is unavailable as a heating source.  Still, this look at the history of the house is illustrative.  What did previous owners spend on heating?  What fuels did they use?  Do we pay more today to heat our house than they did in 1860?  Are we more comfortable today than was the house's first owner?

November 11, 2010 - Veterans Day, and US military energy

Happy Veterans Day.  In honor of the day, let's peek at what the US military is doing on one energy issue: preparing for changes in fuel availability.

[Photo: a reminder of summer, Monhegan Island, Maine.]

Did you know that this year, the US Navy successfully completed tests in Norfolk on a 49 foot-long riverine command boat powered by a 50/50 mix of diesel and algae-derived biodiesel?  In the wake of this spring's Joint Operating Environment report noting possible future scarcity of oil (as in "peak oil"), the military is predicting that it may need to have assets that can run on a variety of fuels.  This spring's report predicted the possibility that the the world's surplus oil production capacity might be sucked up within two years, resulting in a potential excess demand of nearly 10,000,000 barrels a day within the next five years.  In addition to ships, the Navy's interest in adding flexible fuel capacity has also led to biofuels and coal-derived synthetic fuels to power jet engines as well.

Military applications add a national security aspect onto the basic arguments in favor of biofuels as part of a fuel portfolio.  While initial algae-derived biofuels delivered to the military were relatively expensive (reportedly $424 per gallon), the price has already fallen significantly as production capacity responds to the increased demand.  Will the predictions in the Joint Operating Environment report come true?  If so, being able to run on a variety of more cost-effective fuels including biofuels may prove invaluable.