My response to Entergy New Orleans CEO Charles Rice, or, Poorly executed falsehoods at the Gulf Coast Leadership Summit
This morning I had the pleasure of attending the Gulf Coast Leadership Summit’s meeting: “Strategies for Developing Clean Energy in the U.S. Gulf Coast”.
The Gulf Coast Leadership Summit was an odd sort of conference. In a hotel conference room (nothing good happens in hotel conference rooms), well-dressed, well-heeled professionals and politicians discussed the future of our region. Which is problematic, as many of these “leaders” are the very people who have enacted and supported political decisions to assure that we have no future.
I am speaking specifically of U.S. Senator Mary Landrieu, Representative Steve Scalise, former Representative Joseph Cao, and of course, Charles Rice, the new CEO of Entergy New Orleans.
Hoary lies: Entergy and renewables
Mr. Rice was a panelist on the “strategies for developing clean energy” panel, which is also odd; as he does not appear to have any strategies or interest in developing clean energy. Instead, he offered a series of poorly thought out and disingenuous excuses, which – sorry, Louisiana – utility executives do not dare to try in other parts of this nation or the developed world.
Among Mr. Rice’s statements, one stood out as truly absurd – his claim that “wind is five times as expensive as natural gas”. It was very unfortunately that my one question – the only one that was allowed – was limited by a hostile moderator who claimed that we had gone over time. However, Mr. Rice asked me to back up my statement, which was that natural gas is around six cents a kilowatt-hour and wind eight to nine, so I will.
LCOE details – how much do wind and natural gas cost?
Now, the technical details. First, we tend to measure this cost in levelized cost of electricity – the cost of power produced over the lifetime of generation units. This is problematic and somewhat arbitrary for several reasons. First, for those energy sources with fuel inputs – like natural gas – the costs of these inputs have to be estimated. Second, organizations tend to have their own proprietary LCOE models.
Third, the cost of any type of generation depends upon the region. However, since Mr. Rice made such a broad statement, I assume we are talking about national averages.
A quick web search found Energy Information Administration (EIA) data offering U.S. levelized costs 2009 for plants entering service in 2016. The EIA is a problematic source. Among other deficiencies, they tend to vastly under-report solar electric (photovoltaic) electricity generation, but they are a good starting point.
The EIA estimates natural gas plants at between USD 0.0631/kWh for advanced combined cycle plants and USD 0.0661 for conventional combined cycle plants. Other natural gas technologies are as high as USD 0.1245/kWh.
Or as I said – six cents per kWh.
The report also estimates wind at USD 0.097/kWh, however it also assumes that the best sites for wind will be taken, and that generation will move to less favorable areas. The cost it estimates for the best sites is USD 0.082/kWh.
OK – eight to ten (not nine) cents per kWh.
Greentech media researcher Brett Prior gave similar numbers a 2010 report, but put wind at USD 0.074/kWh and combined cycle natural gas plants at USD 0.062/kWh.
Just for reference – we who live in New Orleans pay a retail rate of around USD 0.14/kWh – well above both of these costs. I highly doubt that Entergy is getting USD 0.06/kWh out of its cranky, inefficient old Michoud natural gas plant, which it runs to supply a portion of our demand at times of peak power usage.
Renewable energy in Louisiana – sugar and sun
Clearly this was a clumsy attempt to discredit renewables, but it was also a red herring. Like the rest of the Deep South, Louisiana has very limited land-based wind resources.
What we have, in spades, is biomass in the form of crop residues – notably sugarcane bagasse and rice hulls, as well as lumber mill residues. All of these residues are already brought to a central location for processing.
Bagasse is also already burned to supply steam and power – but not efficiently, as sugar mill owners cannot get a decent price for their power from Entergy, and thus do not invest in modern, efficient boilers.
We also have moderately good solar potential – though far better than Germany (the world solar leader), or Ontario (North America’s second largest solar market).
Solar is significant for our state for a number of reasons. It was noted during the panel that we get only five or so hours of peak solar output per day, which Mr. Rice used as an excuse to discredit solar as a source of power.
What Mr. Rice did not mention is that these are the five hours when we most need power, and when it is most expensive for Entergy to generate electricity to feed our need for, among other things, air conditioning.
This greater need for power during some periods is called peak load.
Solar and putting a price on peak load
What does supplying peak load cost, in terms of dollars and cents? I have been searching for an answer to this question for some time. Recently, the Tennessee Valley Authority (TVA) put out a program for mid-sized renewables, which while lackluster (far better than any utility policy Entergy has put forward) offered a novel price approach – rates paid are for time of generation, both by time of day and month.
The lowest rate paid for the program is for generation at night during the winter, at USD 0.0443. The highest rate is for afternoons in summer months, at USD 0.160.
The TVA values power produced during peak periods almost four times as highly. Which is relevant because the TVA’s service area – Tennessee, Kentucky, and Northern Alabama and Mississippi – has a similar climate. If anything, peak power should be worth more in Louisiana, where the need for summer cooling is more intense.
So in truth, we should compare solar not to our average electricity rates, but some multiple thereof, as solar produces the most power during these periods. And suddenly solar is not so expensive.
I will also note that the choice of natural gas is the most favorable to Entergy. Entergy is the second largest operator of nuclear power plants, and last time I checked the River Bendd Plant (one of two nuke plants in Louisiana – the other, Waterford 3, is in Killona) was looking to install a new reactor.
The IEA’s estimate for “advanced” nuclear is USD 0.1139, which is actually quite favorable, as many estimates are putting nuclear much higher due to escalating costs for engineering services and steel, not to mention the inevitable cost overruns that the nuclear industry is famous for.
Of course, none of this includes the other costs associated with Entergy’s fuels of choice – nuclear and natural gas, including the poisoning of groundwater from fracking to obtain shale gas, the issues of spent fuel disposal from nuclear power, or multiple safety issues with both technologies.
Conclusion: the problem is our utility
Diversification of our energy sources to include renewable energy is a financially viable if not superior option for practically all regions of the world, Louisiana and the Deep South included. All that is needed are the policies to make this happen.
It would be wonderful if we could all sit down at the table, sing Kumbabaya, and build a clean energy economy. But some people are not interested in Louisiana developing its renewable energy potential.
Entergy wants to keep us dependent upon dirty, dangerous natural gas and nukes, and has fought tooth and nail, with small armies of lawyers, to assure that we do not develop 21st century clean energy industries. I saw this personally while part of the Alliance for Affordable Energy’s campaign for a renewable portfolio standard in 2009-2010.
So if you wonder why we have no real renewable energy development in Louisiana, and no “green jobs”, look no further than that large, dark building in the CBD. And your power bill.