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Illinois searched for solutions for tomorrow's electric supply

 

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But wind and solar energy do not supply a steady, baseline power resource, and even at their best they generally fall off in output at exactly the times of the day that power demands sharply rise, in the morning and evening.

Conventional power plants powered by coal or nuclear energy take hours or even days to shut down and start up. The result is that expanding wind and solar power in the countries where they are most successful will depend on a quantum-leap increase in battery technology.

This was the take-home message after The Northwestern Workshop on Wholesale Electricity Markets: Hurdles to Overcome on 29 January, 2013.

The conference was the work of Northwestern University's Kellogg School of Management's Center for Mathematical Studies in Economics and Management Sciences, the Kellogg Ford Motor Company Center for Global Citizenship, and the Initiative for Sustainability and Energy at Northwestern (ISEN).

The workshop sought to bring together regulators, academics and industry representative with an interest in electricity markets, with an aim to identifying issues affecting wholesale electricity markets.

I think the key is a shared goal and vision, Federal Energy Regulatory Commission (FERC) Commissioner John Norris said in kicking off one meeting. There's not one best solution, but there is a maximum efficiency in a shared goal.

The conference drew on people with first-hand knowledge of Europe's success in building renewable electric power systems.

Most of the renewable energy in the world is hydroelectric, but hydro does not have enough of an opportunity for growth, explained the moderator of the first session, Jorge Vasconcelos. We see considerable recent growth in wind and solar energy in Europe, particularly in Germany and Denmark, Vasconcelos said, and Euope has a 20-20-20 goal for wind and solar: 20 percent of the power supply from wind, and solar generation by 2020.

As Europe moves toward larger-scale solar and wind projects, there will have to be large changes in how electric markets work, Vasconcelos added. Vasconcelos was the founder and first chairman of the Council of European Energy Regulators.

Antonio Lpez-Nicols Baza, representing the European Network of Transmission System Operators of Electricity, expanded on the message.
The move to Renewable Energy Supplies increases market complexity, disturbs the investment climate for traditional sources and gives a tendency to re-regulate, Lpez-Nicols said. We will need an additional 52,300 kilometers of transmission lines in the next ten years.

In Europe this is bringing an effort to agree on a package of network codes governing marketing, generation and transmission of electric power. There are currently nine power management units in Europe, Lopez-Nicols explained, which he called regional implicit auctions. The investment in the system will add up to 100 billion Euros over the next 10 years.

"The RES is completely changing the European power system," he concluded.

 

 



Vasconcelos

 

The viewpoint from an American solar energy company came from Pete Kadens, CEO of SoCore Energy. He stressed that the low cost of natural gas, the retirement of aging coal-fired power plants are creating a market for solar power.

Kadens made a comparison to Southwest Airlines' tactic of buying jet fuel futures as a hedge against price increases as an example of how solar energy can be a cost hedge for utilities.In more colorful remarks closing the day, John Rowe, chairman emeritus of Exelon Corp., noted that the wholesale electricity marketplace is not up to the job and neither is the regulation of that market.

Rowe noted that longtime Senate Finance Committee chairman Russell Long used a witticism about "killing a cat by stuffing it with butter."

We now have a lot of programs being stuffed with butter to improve the electricity system, Rowe noted. Exelon is a leading advocate of open markets, but Exelon is now figuring out how to get in line with the other cats.

The Environmental Protection Agency is tasked with regulating carbon emissions, Rowe noted, but no strategy for direct emission controls or marketplace regulation has emerged in the United States. "The key is to incorporate these costs into the market without screwing up the markets," he said.

This can't be done in a piecemeal fashion, Rowe warned. "Partial deregulation is like moving the traffic in Britain from the left side of the road to the right, and starting with the lorries."

The first step, Rowe suggested, is energy conservation. A second step is using cheap natural gas from hydraulic fracturing ("fracking") in combined cycle engines that use the waste heat in the exhaust of one power source to drive a second power generator. This will speed up the closing of old coal-fired power plants, Rowe predicted, perhaps more quickly than regulatory programs.

"Mayor [Rahm] Emanuel has considered paying a utility to shut down a coal plant, but now fracking has done it for free," Rowe said.

"If we try to incorporate greenhouse gases into the marketplace, natural gas will dominate markets for a very long time, gas will dominate electricity supply, it will reduce CO2 and renewable alternatives will be sought eventually," Rowe predicted. "We have a decent chance of muddling through here."

 

The Next Fifty Years

 

Across town at the University of Illinois at Chicago another meeting on 26 Feb. 2013 probed "The Next 50 Years" in electric energy supply for northern Illinois. The meeting was sponsored by UIC Institute for Policy and Civic Engagement  and the UIC Energy Initiative. Speakers related how the power industry has moved from a top-down public utility to a partially deregulated marketplace that is moving slowly toward the "smart grid" that will fold renewable power sources into a modern distribution system.

The UIC's William Ryan said the changes are not coming quickly, but noted, "Look at all the changes in the Internet in the last 40 years." He stressed that when the Internet was first developed, a person never would have predicted the uses it has today. The solar and wind power industries may be in that same stage.

With no representatives of the power industry at the meeting, much of the discussion focused on how small-scale actions for energy conservation can pay off in building new industries and creating markets for renewable energy.

"We're already paying for sustainability, noted Anne Evans of the Center for Sustainable Technology. "We pay for the cost of not doing the right things as well as the cost of doing the right thing."

Ryan stressed that the electric power market has grown by only 1 percent over the last ten years while wind and solar energy producers have been trying to move into a static market.

"The biggest thing we need in technology now is a big hole where we can store electricity," Ryan stressed. "We turn off wind turbines now at night because there is no demand. Efficiency only makes the problem worse."

 

Energy at the Crossroads

 

third meeting on 11 March 2013 hosted by the Baker and Mackenzie law offices focused on barriers to sustainable energy. Titled "Illinois Renewable Energy at a Crossroads: Why 2013 will be a make or break year," the evening session was sponsored by The Chicago Clean Energy Alliance, the Illinois Coalition to Advance Renewable Energy, Wind on the Wires, The Illinois Solar Energy Association, The Clean Energy Trust,  The Clean Energy Illinois PAC and The Environmental Law and Policy Center.

The Panel included:

Richard M. Saines, who heads the North America Climate Change and Environmental Markets Practice for Baker & McKenzie. He served as moderator.

Eric Thumma, Director, Policy and Regulatory Affairs Iberdrola Renewables 

Barry Matchett, Co-Legislative Director & Policy Advocate The Environmental Law and Policy Center (ELPC)

Mark Pruitt, Principal Illinois Community Choice Aggregation Network. Pruitt was the first director of the Illinois Power Agency, and advises communities throughout Illinois, including the City of Chicago, on community choice aggregation.

Saines launched the discussion with an overview of the regulatory climate for renewable energy in Illinois. In short, it's a mess.

"Certain policies have created a tension in this area," Saines began. "We do not have a federal policy or program. A number of states have developed state-based programs, but all are slightly different.

Specifically, 29 states plus the District of Columbia have Renewable Portfolio Standards (RPS) which provide for buying and selling certificates of units of sustainable energy production among utilities and suppliers that have to meet state requirements on how much of their total energy must be from sustainable sources. Illinois' official goal is one of the more ambitious, seeking to have 15 percent of electricity coming from renewable sources by 2025.

The shift by municipalities to buying from Alternative Retail Electric Suppliers (ARES) means that supply contracts have shrunk to less than three years while banks and other financers of new power generation want to see contracts guaranteeing purchases for 10 to 20 years. "An unintended consequence is that no new RE generation will likely be built in Illinois," Saines stressed.

There are currently three compliance mechanisms for collecting and distributing money to pay for renewable energy project in Illinois, but one of them is open to having the money "swept out" by the governor and/or legislature and used for other purposes.

The focus of the meeting at Baker and Mackenzie was Senate Bill 103, pending legislation in Springfield that would move the funds into two more simple mechanisms and retain them for energy programs.

The session can be viewed on You Tube.