Renewable Electricity Standards
10:15 Hobson: We agree with the DOE that the potential for wind energy and solar energy in the Southeast are limited. Solar will not be a large source. Landfill methane will be a good source for small-scale generation. We think that a national one-size-fits-all standard is bad. We must either buy credits or pay an alternative compliance payment to the government. It essentially imposes a tax on resource-poor areas. We’ve assessed that 15% impact on our customers. It would be a billion dollars a year. There are 25 states with renewable portfolio standards. Not one of the 25 states’s standards is consistent with the proposed national standard. We believe federal funding and incentives with local standards is the best way.
10:20 Reedy: “I’d put my money on the sun.” That was Thomas Edison in 1931. The president’s vision for the DOE’s solar initiative lies behind the forces under discussion today. I spent most of my career with utilities. Ultimately utilities make decisions all about risk. How can inherently risky ventures such as steam-powered coal plants work? They are very complicated, have unreliable fuel sources, and offer environmental risks. Renewables will lower the risk.- Economic feasibility: PV systems without financial incentives are projected to cost 9 cents per kilowatt hour by 2020 instead of 31 cents now. Florida consumers pay 12 cents now. By 2020 they can be expected to pay 18 cents per hour. One major frustration to the solar industry is comparing the base rate of convention to the peak rate of solar.
10:32 Markey: You’ve estimated that the Southeast can squeeze out no more than 5% from renewables. The DOE estimates you can get at least 15% by 2020, in large part from biomass. How do you respond?
Hobson: I”m not sure there’s an appreciation for the amount of biomass that is required to fuel a powerplant capable of powering the Southeast. We’ve looked at putting in 50 megawatt plants and the number of plants that could be sited is small.
Markey: Can you show us your analysis and show where the Bush administration is wrong?
Hobson: Yes.
Markey: Wind in the Southeast?
Ms. Floyd: We’ve been not talking about offshore wind. The Southeast has the shallow waters needed.
Hobson: I don’t agree. The Southeast has the unique characteristic of standing in the pathway of hurricanes. Wind turbines are not capable of withstanding even a Class 3 hurricane. We’ve done work with Georgia Tech to look at offshore wind.
Markey: Florida is the Sunshine State. You’re saying that it should be renamed the Cloudy State?
Hobson: Gov. Crist reminded us that it is indeed the Sunshine State. There are probably areas in Florida that solar would be a real option. It is a very geographically diverse state. A lot of work would have to be done to make the leap that Florida would actually become the Sunshine State for solar energy.
10:38 Blumenauer: Mr. Hobson, you supplied us with a map of solar intensity. I wonder what the solar intensity map of Germany, with 4-5 times the amount of solar use, would look like.
Floyd Certainly Germany does not have terrific solar insolation. They’ve built a tremendous industry. The Southeast compares well to the Northwest. Large-scale solar for rural areas with high efficiency are being built.
Foster My home state of Minnesota also has a significant paper and pulp industry, like the Southeast, and is using biomass plants. It’s selling biomass pellets to the Great Lakes regions.
Blumenauer Do these observations have any relevance?
Hobson I don’t want to give the impression that a southern company doesn’t think there are any applications. We’re talking about the generation of electricity. I don’t have the luxury for investing in energy that will be available for a small amount of time. If I need solar and it’s not available my customers are going to suffer. Renewable resources can help in niche situations and on the margins. You have to have energy sources you can rely on 24 hours a day 7 days a week.
Blumenauer I’m struck that there other regions with the same issues that are able to make this work.
10:45 Cleaver: Q about the energy transport question.
Sloan A lot of the debate is where is the energy going to be produced instead of where it’s going to be used. A great example is Joplin, Missouri. It’s using wind energy from Kansas. Part of it is that question. Infrastructure is very important. It will be produced in the best areas, then moved.
10:49 Sertheth-Handlin South Dakota and rural America is awesome.
10:50 Recess.
11:37 Floyd We’re going to have to invest in the infrastructure. We’re investing in smart grid technologies.
Markey Texas at 2000 per year is just at the dawn of wind energy. Is 200,000 megawatts of wind for the nation by 2030 realistic?
Sloan In Texas alone we have sites capable of supporting 500,000 megawatts, 150,000 megawatts worth of high-quality sites. But there has to be infrastructure. Texas doesn’t have the NIMBY issues of non-energy producing states.
Hobson Wind won’t be available when I need it.
Sloan We hear these issues all the time. Europe uses very high penetrations of wind. In Denmark 35% of the energy comes from wind. Wind power makes the system more reliable because utility planners don’t count on it. You have enough lights in this room to light the room, but if the lights went out you could open the curtains behind you.
Hobson If I have enough capacity on the ground to meet my load with traditional resources, it makes a lot of sense to use the free fuel of wind when I can. But I have to build the traditional capacity. My customers are paying twice as much. I think it becomes problematic when we’re building 40% capacity factor wind turbines for a 90% reliability system.
Markey How does Denmark do it?
Hobson I’m not an expert on Denmark.
Markey Why don’t you look that up.
Hobson My suspicion is that they have a backbone electrical system or interconnections with other countries.
Markey My suspicion is that where’s there a will, there’s a way.
Floyd I want to put my venture capital hat on and say that $2.4 billion in capital didn’t go into the status quo. There’s investment going into various technologies, including energy storage. There is new technology being developed.
Foster My home state of Minnesota has high wind energy use. Much of our energy comes from Manitoba hydroelectric.