The Union of Concerned Scientists has gone through the catalog of America’s coal plants, and found hundreds of mostly small, old, polluting, inefficient generating units that just aren’t worth operating any more, even on a purely economic basis. They looked at several different sets of assumptions, including different natural gas prices going forward, a price on carbon, whether or not the competing natural gas fired generation would need to built new, or whether it existed already with its capital costs paid off, and whether or not the production tax credit for wind ends up being renewed. In all of the scenarios considered, they found substantial coal fired generation that should be shut down on purely economic grounds, above and beyond the 288 generating units that are already slated for retirement in the next few years. They also found that some companies — especially those in traditionally regulated monopoly utility markets in the Southeast — are particularly reluctant to retire uneconomic plants, perhaps because they can effectively pass on their costs to ratepayers, who remain none the wiser.
When people compare the cost of gas-fired electricity and renewables, they usually don’t price fuel cost risks, and at this point that’s really just not intellectually honest. Risk-adjusted price comparisons are very difficult because nobody will sell a 30 year fixed price gas supply contract, and that’s what you’d need to buy to actually know how much your gas-fired electricity will cost. Even a 10 year futures contract doubles or triples the cost of gas. You can’t buy renewables without their intrinsic fuel-price hedge, and that hedge is valuable. The question shouldn’t be “Is wind the absolute cheapest option right now?” it should be “Given that wind will cost $60/MWh, are we willing to live with that energy cost in order not to have to worry about future price fluctuations?” And I think the answer should clearly be yes, even before you start pricing carbon.
Last night I went to a presentation by the Renewables Yes technical and financial modeling team. They’ve put up a bunch of information about their modeling efforts on the web site. I’ve organized nine short videos of a previous iteration of the presentation into a single 90 minute playlist here if you want to see it yourself. It’s definitely worth watching if you use electricity in Boulder! This post is my attempt to digest and rephrase their conclusions.
Pravda has put out a helpful timeline of the current Georgia-Russia conflict
Maybe I have a one track mind but, I don’t think this kind of conflict often erupts for purely egotistic political reasons. There’s a lot of energy backstory that isn’t being told in that Russian chronicle, such as the sabotage by someone of natural gas and electricity supplies headed into Georgia from Russia (gee, I wonder who it could have been… in the depths of a Caucasian winter in January 2006), the subsequent commissioning of the South Caucasus gas pipeline in December 2006, and all of the wrangling that’s been going on over the trans-Caspian gas pipeline since the mid 90s (Russian and Iran don’t want it, everyone else does, because Russian and Iran have gas already, and everyone else gets their gas from them).
Perhaps the largest diplomatic stick Russia can wield today is its oil and gas reserves (assuming they don’t want to actually like, invade a NATO country, or shoot off some plutonium fireworks), and they are jealously guarding the ability to wield that stick. Georgia has successfully circumvented them with the pipeline from Baku to Turkey (and eventually on to Europe), and I think in part now, they’re paying the price, so that others in central Asia with gas they’d like to independently pipe out of the region, including, perhaps most importantly, Iran, think twice about setting up their own circumvention. For instance, Iran built a pipeline into Armenia. It was supposed to be extendable, eventually onward to Turkey and Europe. Before it was built, Gazprom bought a controlling interest in the pipeline company, and summarily reduced the diameter of the pipeline from 1.4m to 0.7m, making it unable to carry enough gas for extending it to Turkey and Europe to be worthwhile.
I think that the blurring, or erasure, of the lines separating nations and corporations is interesting, and at least somewhat unexplored. (Maybe one major difference is that a nation-corp can more dependably rely on its nation’s armed forces to step in occasionally. Though, historically, US companies have had a pretty good chance of getting help on demand, at least in Latin America). We wouldn’t be surprised if Exxon did something like buy up a potential competitor, but when a nation does it, how do we react? In oil and gas, all of the major players are nation-corps. I think this is actually one of many very good reasons for the industrialized world (that, by and large, has used up its oil and gas) to invest heavily in renewable alternatives to oil and gas. If we develop renewables for national security (and environmental) reasons, the costs may well be reduced enough that other economies can use them simply because they’re cheap, distributed (more difficult to sabotage than a pipeline or LNG terminal), and don’t require you to be on good terms with Russia, or Iran, or Saudi Arabia, or Venezuela, or get permission from the IAEA to spin up your centrifuges.
Pipelines are beasts curiously subject to consensus, because they are so easy to destroy. If anybody in the area doesn’t want one to function, it doesn’t. So Russia may well be able to maintain its pre-eminent position as gas supplier to Europe for a long while to come, and keep the squeeze on in central asia indefinitely. At least, until we stop relying on natural gas. Or until someone in central asia really decides it doesn’t want Russia’s natural gas infrastructure to function. Now wouldn’t that be fun for everyone!