Eleven Western states will spend $200 billion in the next two decades to upgrade their electricity systems. That pot of money could spur major economic growth if invested in deployment of renewable energy and digital smart grid technologies, utility experts and advocates of clean power say.
Or, if it is spent on additional analog infrastructure and fossil fuels, it could prevent job creation and boost global-warming emissions.
A new report from the Western Grid Group, an alliance of 25 regulatory experts, environmental groups and renewable energy leaders, presents these two, vastly different choices as the region’s electric sector plans its first steps for using the money.
The 180-page study is the first in a series of WGG reports to get regional grid planners, state legislatures and utility regulatory commissions to consider policies that increase efficiency, add more renewable resources and lure clean energy businesses and manufacturers out West.
“The choices that we make over the next 20 years are going to be key,” Carl Linvill, co-author of the report, told reporters during a Wednesday web conference. “They’re going to lay the foundation for the Western electricity system out to 2050 and beyond. Now is the time to consider what kind of grid the West wants.”
Linvill heads the Aspen Environmental Group and previously served in Nevada on the Public Utilities Commission and as energy adviser to former Gov. Kenny Guinn.
Using the planning documents that utilities routinely submit to the Western Electricity Coordinating Council, the WGG report determines how future power generation, distribution and transmission would look if current renewable energy targets and policies don’t change. It then considers how more aggressive energy-efficiency and clean power goals could alter the picture.
“It creates a contrast where, for the first time, you’re actually looking at where you could end up,” Carl Zichella, director of Western energy for the National Resources Defense Council, told SolveClimate News. NRDC belongs to the 25-member alliance.
“The idea of illustrating the magnitude of the choice that we have right now is one of the great strengths of the plan,” he said.
The WGG will distribute the report to various Western electricity players, including the nearly 40 authorities that operate the region’s system, ahead of a second report, which is set for a September release.
The Two Scenarios
According to the August analysis, “Western Grid 2050: Contrasting Futures, Contrasting Fortunes,” the Western electricity sector will have to spend about $200 billion by 2030, regardless of federal and state energy policies enacted between now and then.
Much of that will go to retiring or replacing older coal, gas and nuclear facilities. New generation and transmission will also be built to match rising demand as populations and state economies grow, and to accommodate electrified vehicles on the grid.
In the “business-as-usual” scenario, in which the West continues to rely on power from coal and natural gas, fuel prices and supply risk would likely tick up while air pollution and its associated health risks, carbon emissions and water use will all increase substantially, it found.
In this option, investments in renewable technologies, energy efficiency measures and electric car infrastructure are made, but only to the extent that modest legislation requires.
The authors anticipate that natural gas prices and the cost of carbon emissions will gradually rise over the next 40 years, making this course of action as much as $46 billion more expensive than the “clean energy vision” detailed in the report. If fuel and carbon costs stay low, however, the traditional approach could cost $12 billion less.
Under the clean energy scenario, states would aggressively scale back electricity consumption by updating the electrical grid to a digital grid with advanced information and communications technologies that can track and help shrink consumer power usage. The smart grid can also better handle large loads of intermittent renewable sources, such as solar and wind.
Electricity investments in the cleaner scenario would create up to 130,000 full-time jobs to build and operate new infrastructure and develop and export cutting-edge technologies. The installation of large-scale and distributed renewable energy projects — plus home efficiency improvements — can also put people to work locally, the report said.
Amanda Ormond of WGG said on the conference call: “There are myriad benefits from developing a clean energy economy. Part of that is being globally competitive and being able to develop the technologies and processes here than can then be [exported] around the world.
“By having a vision and a document that policymakers can gravitate around, we have a path that we’re trying to follow.” Until now, she continued, “that path has been completely abstract.”
Western States Relatively Clean
Helping matters for WGG is that many Western states are already driving their own ambitious programs, though collaboration has traditionally been limited among the 38 “balancing authorities” that operate the electric systems in Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming.
In general, utilities in these Western states are relatively clean. According to Energy Information Administration statistics, the states consumed nearly 68 percent of the nation’s hydropower electricity generation in April 2011. In that same month they accounted for 11 percent of the nation’s coal generation and nearly one-third of its renewables, about half of which came from California alone.
The Golden State, which aims to get 33 percent of its electricity from renewables by 2020, ranks No. 1 in the nation for the most solar power capacity, at nearly 930 megawatts, and for its number of green jobs, which reached nearly 320,000 positions in 2010, according to a recent report by the Brookings Institution.
In Colorado, former Gov. Bill Ritter said his administration’s 30 percent renewables goal for 2020 has helped grow wind power to the 2,000 megawatts that will likely be installed by the end of 2011, from the 275 megawatts that were installed when he took office in 2007.
During Ritter’s term, Danish wind turbine maker Vestas opened four manufacturing facilities in the state that now employ some 2,500 people. Germany’s SMA Solar Technology, the world’s largest maker of solar inverters, also set up shop in Colorado and employs 700 people.
“We did see an economic relationship to clean energy policy,” Ritter told reporters. “Our Colorado story would say that the [WGG] report is accurate, where contrasting those two visions is concerned.”
The grid report is “one of the best and most comprehensive things I’ve seen that tells a region of the United States that this is how we can move and do it in a fashion that can make a meaningful difference,” he said.
The True Costs of Carbon
Still, Linvill said that a regional carbon trading market and a price on carbon that would make coal-fired plants more expensive is crucial.
In the absence of such a carbon penalty, he said, the business-as-usual approach would appear cheaper than the clean energy vision, adding to its allure for strapped states. But that thinking ignores the hidden costs of carbon-based energy, he said, which include higher health care expenses, an increase in climate change impacts and weakened national energy security.
“A region-wide carbon market is important, so that the full cost of carbon emissions are counted for, and so that we make our choices in recognition of those costs being present,” Linvill said, though no such scheme yet exists.
The four-year-old Western Climate Initiative aims to cap carbon dioxide emissions and use tradable permits as incentives for clean energy development in seven U.S. states and four Canadian provinces, though participants are still working toward a protocol for the market-based trading program.
In California, which is working on implementing the nation’s first-ever state carbon trading program, industry compliance has been pushed back from Jan. 1, 2012, to 2013 to give authorities time to analyze alternatives to cap and trade. Carbon emissions from 600 industrial plants in the state could create about $10 billion in allowances by 2016, officials say.