Midwest public interest group proposes renewable resource plan

By the OGJ Online Staff

HOUSTON, Mar. 13�A new energy plan that substitutes renewable resources for coal and nuclear plants in the US Midwest would raise total electricity costs by 1.5% in 2010 but would also sharply reduce nitrogen oxide and sulfur dioxide emissions, proponents said.

The Environmental Law & Policy Center, a Chicago public interest group, said its proposal to "repower" the Midwest depends on increased use of biomass, wind energy, and solar resources; improved energy efficiency; and technically advanced gas-fired electric generation. Part of the funding for the plan would come from extra charges tacked onto consumer electricity bills.

Developing "clean energy efficiency and renewable energy resources is the smart and sustainable solution to the Midwest's pollution problems, to power constraints at summer peak demand times, and to challenges in meeting the region's overall electricity needs," the center said.

Because the Midwest relies on old coal-fired plants, the region generates 21% of the nation's electricity, but also produces 31% of the sulfur dioxide (SO₂) pollution, 32% of the nitrogen oxide (NO₂) pollution, and 26% of the carbon dioxide (CO₂) pollution.

Without significant changes in public policy, the center said, coal generation would steadily increase under a business-as-usual approach, leading to a 30% rise in CO₂ between 2000-2020. The center said its clean energy development plan would tap largely underutilized Midwest resources such as biomass and wind spurring regional job growth.

It said the plan's benefits include:

� A 56% reduction in SO₂ and 71% reduction in NO_x emissions by 2020, compared to the business-as-usual approach.

� A 37% reduction in CO₂, compared to 2000, putting the Midwest on target to meet the Kyoto Protocol goals by 2010.

� A decline in electricity demand, rather than a projected 1%/year increase. Energy efficiency savings would avoid the need for 290 billion kw-hr of generation, roughly equivalent to the output of 100 coal plants of 500 Mw each.

Of the total efficiency savings, the center projected about 24% are available in Ohio; 20% in Illinois, 16% in Michigan, and 14% in Indiana. It said these can be achieved by boosting more efficient lighting, water heating and space cooling equipment, and by deploying more efficient industrial motors and drives.

It projected such savings will require a 2.3�/kw-hr investment, significantly less than the cost of new generating and transmission capacity, for a projected $12.1 billion in savings by 2020.

Noting the Midwest has "enormous" untapped biomass energy potential from crop residue and energy crops, the center is proposing cofiring with biomass in existing coal plants and installing combined heat and power systems (CHP) at large industrial facilities. The center said Indiana, Michigan, and Ohio will use more CHP because of their higher concentration of industial facilities.

Modern CHP equipment can convert biomass to steam, heat, and electric power with near 90% efficiency, the center noted. It predicted biomass is likely to create many more jobs than it would displace "because money flowing into agriculture creates a large number of jobs." And because biomass fuels are rarely shipped long distances, it said, the money spent on this energy development tends to remain in local communities.

At roughly 2-3�/kw-hr, biomass cofiring and CHP are the most cost-effective forms of renewable energy, the center said. Biomass has the greatest development potential in Illinois, Indiana, and Ohio, because of the opportunities for cofiring in existing coal plants and their agricultural land, the center said.

The greatest wind power potential is available in the Great Plains states, where a large number of projects are already under way. Iowa, Minnesota, and Wisconsin have installed 500 Mw of new wind capacity with another 500 Mw under construction or in the works.

Falling costs have helped foster wind power development. In 2000 wind power was produced at 3-6�/kw-hr, but by 2020 wind generating costs are expected to decline to 3-4�/kw-hr, according to the center. It said responsible siting practices can reduce the impact on wildlife and natural resources.

New efficient natural gas generation would provide 10% of Midwest electric generation in 2010 and 25% in 2025. But gas should be considered a transitional fuel rather than a long-term solution, the center said.

To help spur implementation of the energy efficiency projects, the center recommended each state institute a charge of 0.3�/kw-hr on all customers. In addition, it recommended each state establish a renewable investment fund supported by a charging electricity customers 0.1�/kw-hr. Its purpose would be to help underwrite technologies still in development.

The center also recommended a series of electricity policy changes that would benefit renewable energy resources, including:

� Elimination of "pancaked" transmission charges in favor of a single "postage stamp" rate. Rate structures should take into account the intermittent nature of wind and solar power operations.

� Adoption of net metering that pays customers retail rates for surplus generation provided back to the grid and utility.

� Adoption of uniform safety and power quality standards to insure safe and economical connection to the electricity distribution systems.

� Waiving of interconnection charges for small wind power, solar photovoltaic panels, and fuel cells. State utility regulatory commissions should require these steps if not undertaken voluntarily by utilities.

� Elimination of the exemption for small diesel generators from Clean Air Act regulation.