PUCO has issued their 2011 report on SB221. "Alternative Energy Portfolio
Standard Report ... Case No. 12-2668-EL-ACP". The average cost for non-solar was $65/MWh for electric distribution utilities and $13.40 for electric service companies. Since Ohio produced one percent of its electricity by renewables in 2011, the costs allocated to residential consumers using 1000 kWh/month were 65 cents and 13 cents respectively. To get the net cost, the cost of conventional generatio needs to be subtracted from these numbers and I don't yet have that information..
Wednesday, July 31, 2013
Tuesday, June 11, 2013
More Renewable Energy Does not Mean Higher Electric Rates
Columns in order are:
State,
Residential Electric Rates, (a)
Unemployment, Percent (b)
Renewables, Percent (c)
IA 10.85 5.0 26.2
MN 11.37 5.5 18.8
WI 13.27 7.2 8.1
MI 14.14 8.8 4.4
IL 10.37 9.5 4.2
WV 9.85 7.3 3.6
IN 10.38 8.7 3.5
KY 9.33 7.9 3.0
MO 10.07 6.7 2.1
OH 11.66 7.0 1.6
(a) Electric Power Monthly, February 2013; December 2012 rates used.
State,
Residential Electric Rates, (a)
Unemployment, Percent (b)
Renewables, Percent (c)
IA 10.85 5.0 26.2
MN 11.37 5.5 18.8
WI 13.27 7.2 8.1
MI 14.14 8.8 4.4
IL 10.37 9.5 4.2
WV 9.85 7.3 3.6
IN 10.38 8.7 3.5
KY 9.33 7.9 3.0
MO 10.07 6.7 2.1
OH 11.66 7.0 1.6
(a) Electric Power Monthly, February 2013; December 2012 rates used.
(b)
Bureau of Labor Statistics: Unemployment
Rates for States, Monthly Rankings, Seasonally Adjusted, Feb. 2013. http://www.bls.gov/web/laus/laumstrk.htm
(c) Ref (a); Amount Generated in 2012Friday, May 24, 2013
Average Electric Rate Increase is Larger in States without Renewable Mandates.
Four Left Columns have States with Renewable Energy Mandates;
Four Rightcolumns have States with Goals or No Mandates.
Friday, May 17, 2013
Generating Electricity - Coal vs. Gas Cost
Comparison between renewable energy and fossil fuels is complicated by the different cost structures. the cost of renewables is essentially the cost of construction, while the cost of fossil fuel plants includes a considerable fuel cost.
Articles on competition between coal and natural gas only take into account fuel prices. The logic appears to be that there is plenty of excess capacity and that the utility is flexible enough to choose which fuel to purchase. However, comparisons between fossil fuels and wind energy need to include fixed costs, because the fuel cost of wind is zero.
Table 1 compares the costs of generating using different fuels. Remembering that these are approximations, the results mirror the current situation - wind is cheapest and natural gas is most expensive.
Table 1. Comparison of Costs to Generate Electricity
Fuel Data as of 15 May 2013
(see Appendix for details of the calculations)
Fuel NYMEX Cost of Fuel, $ Total Generation Cost, $/MWh
Coal 59.85 48.44
Natural Gas 4.02 53.35
Wind 0.00 45.30(a)
(a) “IRS: PTC Will Be worth Slightly More in 2013“, North American Wind Power, 04 April 2013
APPENDIX: MATHEMATICAL ANALYSIS
The cost of generating electricity consists of two parts, fixed and variable costs:
E = F + K --- (1)
Where E is the cost of electricity generation in $/MWh (Megawatt-hour), F is fixed costs, K is variable costs.
I estimated the cost of electricity generated using natural gas on my blog http://alanpeg.blogspot.com on 30 Jan. 2013:
E(ng) = 23.2 + 7.5H --- (2)
Where E(ng) is cost of electricity generated by natural gas in $/MWh and H is the cost of 1000 cu. ft. of gas using the Henry Hub price on the New York Mercantile Exchange (NYMEX) in dollars, which can be found at http://www.wtrg.com/. Since the number, 23.2, in dollars, accounts for fixed costs, the fuel cost is 7.5H.
The corresponding cost for coal is derived from data reported in “Year-to-date natural gas use for electric power generation is down from 2012”, from Today in Energy, issued by EIA on April 11, 2013.
K(co) = (20 + C)/2.5 --- (3)
Where K(co) estimates the variable cost of electricity generated by coal in $/Mwh and C is the price of coal ($/ton). Table A.1 reports the fixed cost, estimated by subtracting Equation (2) from the total cost of electricity.
Table A.1. Estimation of Fixed Costs for Coal
Used in Generating Electricity
Year Electric Gen. Cost, $/MWh Coal Price, $/ton VariableCost, $/Mwh Eq. 2 Fixed Costs, $/MWH
2008 57.5 (a) 90 (c) 44 13.5
2013 51.5 (b) 60 (d) 32 19.5
(a) “Costs of Coal Fired Electricity” posted in Ecoal, Jan. 2011
(b) “Directory: Cents Per Kilowatt Hour”, downloaded from PESwiki on 11 May 2013.
(C) “Regional Coal Spot Prices”, Federal Energy Regulatory Commission 07 Nov. 2008
(d) Cost of a ton of coal on the NYMEX, which can be found at http://www.infomine.com/investment/metal-prices/coal/
Wednesday, April 24, 2013
League of Womenv Voters Testimony on Electric Rates
To: Senate Public Utilities Committee
From: Alan R.
Rosenfield, ScD FASM, Energy Specialist, League of Women Voters of Ohio
Date: April 23, 2013
Re: Testimony on SB 58, Retail
Electric Service
There has been concern that the renewable
energy requirements of 127-SB221 will lead to costs beyond the three-percent
cost cap required by the legislation. I have found that these renewable energy
costs are negligible and are likely to remain so for quite a few years.
My cost comparison is between natural gas and
wind power. Gas is currently the cheapest fossil fuel, whose rapid increase in
usage threatens the dominance of coal. Wind power has increased more slowly,
but is the largest source of renewable energy. The price of fulfilling the
mandate of 127-SB221 is essentially the cost difference between gas and wind
power sources.
The history of the cost comparison is
complicated. Five years ago, when 127-SB221 was enacted, gas was significantly
more costly than wind. Shortly thereafter the price of natural gas fell
sharply. In the spring of 2012, when the price of gas was at its bottom,
electricity generation by wind cost about forty percent more than generation
using natural gas. However, over the last year, gas prices have risen and the
costs for the two energy sources are now similar.
What does this all mean to the homeowner faced
with a monthly electric bill of more than $100? When gas prices were at their
historical lows last spring, the renewable-energy requirement added about 30
cents to his utility’s monthly cost to supply him with electricity. If the wind
tax credit had not been available in 2012, the additional cost would have been
33 cents more. Today the extra cost is about five cents (the Attachment to this
testimony shows how to obtain residential rates from power-plant rates).
Since it costs the utility about $100 per household
per month to provide electricity, renewable energy costs far under one dollar
are a small cost of doing business. Clearly the three-percent cost cap is not
in danger of being exceeded.
There are financial benefits to the small cost
of 127-SB221. Just as counties in Eastern Ohio have benefited from the shale
gas boom, there have been benefits to counties in Western Ohio from wind power.
Citizens and local governments in Paulding County, population about 20,000,
have already received about $1.5 million from the Timber Creek Wind Farm.
There are concerns that renewable-energy costs
will sharply escalate in the future. The
small costs of 127-SB221 so far are partly due to the small amounts of
renewable energy being used in Ohio - 1.5 percent of electricity produced last
year and 2.5 percent this year. When the next session of the General Assembly
convenes in 2015, the requirement will be 3.5 percent; for the following
General Assembly, in 2017, it will be
5.5 percent. So, five years from now, non-renewable energy will still supply
almost 95 percent of our electricity. It is difficult to see how renewables
will have a significant effect on costs even then and it is clear that the
three-percent cost cap is very unlikely to be exceeded.
Will the cost cap ever be exceeded? Predictions of the future depend on
assumptions made by economists; and the further in the future, the less
accurate their predictions are likely to be. Instead of making predictions, I
will discuss factors that need to be taken into account:
1. The futures prices of natural gas are
currently stable.
Contracts for future delivery of natural gas are traded on the New York
Mercantile Exchange. The prices there are the consensus opinion of the most
knowledgeable traders. Currently prices of natural gas for delivery in May 2014
are about the same as for May 2013; there is no indication that a sharp drop in
gas prices is in the offing.
2. The price of wind power has fallen. Electricity generation
by wind is no longer expensive. It is now 40 percent lower than it was five
years ago.
4. Increasing the amount of renewable energy
does not cause increased electric rates. I have surveyed ten Midwestern and Appalachian
states (Illinois, Indiana, Iowa, Kentucky, Michigan, Minnesota, Missouri, Ohio,
West Virginia, and Wisconsin) As of December 31, 2012, Ohio generated the least
renewable energy and had the third highest residential electricity rates. Table
1 (attached) shows the data. Comparison among all of these states showed no
tendency for residential rates to be higher in states with greater amounts of
renewable energy.
In conclusion, the three-percent price cap of
127-SB221 has not been approached and chances are small that it will be
approached within the next few years. There appears to be no reason to modify
it.
Attachment: How
Generation Rates Affect Utility Bills
There are several claims that renewable energy
mandates cost customers millions of dollars. For example, the Corpus Christi
Caller-Times recently reported that an opposition activist claimed that the
Texas renewable law cost consumers $70 million per year. Since residences in
Texas account for about half of the electricity used in the state, their share
is $35 million. This amount is divided among about ten million households for
an average of $35 per year or thirty-five cents per month.
An alternative is to compare the costs of
generation. During last year’s debate on SB315, discussion in this committee
included the comment that wind energy then cost $20 per Megawatt-hour more than
gas powered electricity. One Megawatt-hour is 1000 kilowatt-hours, which is
close to the electricity used monthly by the typical Ohio household. But last
year SB221 required only 1.5 percent of electricity to be renewable. So the
renewable-energy premium was only 1.5 percent of $20 of thirty cents per month.
TABLE 1: STATE ECONOMIC
AND ENERGY DATA
State
|
Residential
Electric Rates,
(a)
|
Unemployment
Percent (b)
|
Renewables
Percent (c)
|
Illinois
|
10.37
|
9.5
|
4.2
|
Indiana
|
10.38
|
8.7
|
3.5
|
Iowa
|
10.85
|
5.0
|
26.2
|
Kentucky
|
9.33
|
7.9
|
3.0
|
Michigan
|
14.14
|
8.8
|
4.4
|
Minnesota
|
11.37
|
5.5
|
18.8
|
Missouri
|
10.07
|
6.7
|
2.1
|
Ohio
|
11.66
|
7.0
|
1.6
|
W. Virginia
|
9.85
|
7.3
|
3.6
|
Wisconsin
|
13.27
|
7.2
|
8.1
|
(a) Electric
Power Monthly, February 2013; December 2012 rates used.
(b) Bureau of Labor Statistics: Unemployment Rates
for States, Monthly Rankings, Seasonally Adjusted, Feb. 2013. http://www.bls.gov/web/laus/laumstrk.htm
(c)
Ref (a); Annual result for 2012
Monday, April 8, 2013
Price Changes Favorable to Wind
Since April, 2012 the price of natural gas on the NewYork Mercantile Exchange has risen by almost $2 per 1000 cu.ft. (http://www.eia.gov/dnav/ng/hist/rngwhhdM.htm; http://www.wtrg.com/). At the same time, the IRS reports that the average cost of electricity from wind was $42.30 per MWh last year (north american windpower, IRS:PTC will be Worth Slightly More In 2013, 04 April 2013 ). I had been using $55.
On the other hand, I have been using $23.1 per MWh as fixed costs for gas. According to EIA (Levelized Cost of New Generation Resources in the Annual Energy Outlook 2012) the actual value is $19.1. So I have been overestimating the cost of gas-powered electrical generation by $4 per MWh.
On the other hand, I have been using $23.1 per MWh as fixed costs for gas. According to EIA (Levelized Cost of New Generation Resources in the Annual Energy Outlook 2012) the actual value is $19.1. So I have been overestimating the cost of gas-powered electrical generation by $4 per MWh.
Monday, March 4, 2013
Texas Renewable Energy Costs
According to caller.com (Corpus Christi) ‘The conservative Texas Public Policy Foundation’ said that “the renewable energy credits trading program will cost Texas consumers about $70 million this year.” If we ask how much it costs the average homeowner, we get a very different perspective. About half of the electricity costs in Texas are borne by residential customers (EIA Electric Power Monthly), lowering the $70 million to $35 million. Texas has about ten million households (U.S. Census, Quick Facts), which lowers the cost to $3.50 per year per household or about 30 cents per month. Considering the high cost of residential electric bills, this is a small fraction of the utilities’ cost of doing business
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