Changing and challenging winds in the power industry

It's an awkward time in the energy business. Coal is plentiful, but coal-gas generation is carbon-spewing, and the body politic won't tolerate that. Wind is promising but might not be enough. In the midst of this transition is Energy Northwest, the public-utility consortium whose customers are still paying for nuclear plants that were never built.
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(American Electric Power)<br />Click to enlarge

It's an awkward time in the energy business. Coal is plentiful, but coal-gas generation is carbon-spewing, and the body politic won't tolerate that. Wind is promising but might not be enough. In the midst of this transition is Energy Northwest, the public-utility consortium whose customers are still paying for nuclear plants that were never built.

Both locally and nationally, efforts to have our cake and eat it, too, seem to be running a bit behind schedule. Burn coal and you produce carbon dioxide. Let that carbon dioxide escape into the atmosphere, and it traps heat, accelerating global climate change. If you want to halt climate change without foregoing the opportunity to burn the United States' estimated 271 billion tons of coal (27 percent of the world's supply), you must "sequester" the carbon – remove it from the waste stream, stick it into the ground, and keep it there.

As a centerpiece of the Bush administration's plan to produce energy from "clean coal," a public-private partnership called the FutureGen Industrial Alliance was going to build a coal power plant that sequestered carbon right there in Illinois. No more. The federal government, which was footing 76 percent of the bill, has announced that FutureGen is history.

"Michael J. Mudd, chief executive of FutureGen Alliance, said that the Bush administration's decision would set back the timetable for carbon capture and storage technology that is considered essential for meeting targets for greenhouse gas emissions," Steven Mufson reported in The Washington Post. Projected cost of the plant had nearly doubled to $1.8 billion. Added Rebecca Smith and Stephen Power in The Wall Street Journal: "The crippling blow dealt to FutureGen, the U.S. government's marquee effort to develop a "clean coal" power plant, will make it harder for the utility sector to slash carbon-dioxide emissions and keep coal in the mix over time as a cheap electricity source."

Closer to home, Energy Northwest's proposed 680-megawatt Pacific Mountain Energy Center at Kalama, Wash., is dead or stalled because it would appear to run afoul of a new Washington law. That law requires any new fossil-fuel-fired generating plant that produces more than 1,100 pounds of CO2 per hour (i.e., more than a natural-gas-fired plant) to somehow sequester the carbon emissions. Energy Northwest says it can't be done and wants the requirement waived, as the law provides. The State of Washington says they haven't tried, as they law requires.

So depending on how you look at it, the Pacific Mountain Energy Center could be a little ahead of its time (the technology's not mature yet) or a little behind (coal-gas is a dirty old way to make electricity). Either way, it's an awkward sell right now. An Energy Northwest executive said at a hearing last June that the project "is not dead," but some in the energy business aren't so sure. The technological and political challenges faced by Energy Northwest and other projects coincide with changing technological and political winds.

The plant would combine oxygen with a slurry of coal or petroleum coke to form a gas, then burn the gas to turn turbines. Waste heat from the gasification process and from the first combustion process would turn other turbines. Technically, this makes the operation an "integrated gasification combined cycle" generating plant, or IGCC. It is basically a gas-fired generating plant that manufactures its own gas – much as an early-20th-century gasworks turned coal into lighting gas beside Lake Union, long before the city of Seattle transformed the site into Gas Works Park.

Energy Northwest, a joint operating agency of Washington public utilities, applied in 2006 to the state Energy Facility Site Evaluation Council (EFSEC) for certification. The Washington Department of Ecology and two coalitions of environmental groups have intervened. This will be the carbon-sequestration law's first test.

Neither EFSEC nor the Department of Ecology has developed rules yet for sequestration. Energy Northwest is stepping into uncharted territory. No one else will be allowed to go through the process until rules are in place.

Pumping CO2 into the earth isn't an entirely new idea. People have already pumped the gas deep into old oil wells to boost production, although no one knows whether or not the CO2 will stay there forever. People are also testing the idea of injecting CO2 through bore holes into basalt, like the deep basalt flow that covers much of the Columbia Basin in Eastern Washington and Oregon. Theoretically, the CO2, liquified by the high pressure and heat deep underground, will seep into crevices, react with minerals in the rock, and form limestone - which isn't going anywhere, ever.

Under Washington law, if a utility has a sequestration plan and finds after a good-faith effort to carry it out that sequestration isn't feasible, the utility can buy carbon offsets from power plants elsewhere in the western U.S. or Canada. Energy Northwest says sequestration at the Pacific Mountain Energy Center isn't feasible and proposes buying offsets. It argues that the "measure of technological and economic feasibility for geological or other permanent sequestration ... is a cost of $5/tonne [of] CO2."

Critics don't accept that $5 threshold. And they don't believe Energy Northwest has the plan that state law requires. Assistant Attorney General Michael Tribble, functioning under EFSEC rules as counsel for the environment, has characterized Energy Northwest's current filing as nothing more than "a plan to have a sequestration plan."

Critics also argue that Energy Northwest has never demonstrated that sequestration isn't feasible. The Northwest Energy Coalition, the Washington Environmental Council, and the Sierra Club, represented by Earthjustice, argue in a recent brief that "mass market commercial availability is not the same as feasibility. A technology may be 'feasible' i.e. capable of being done, long before it is commercially available to a mass market." They argue that the Legislature wanted the law to push development of sequestration technology, not wait until the technology was available off the shelf.

"The core of the dispute involves timing," explains Assistant Attorney General Laura Watson. "Energy Northwest argues that it is entitled to determine now that sequestration is infeasible, which would excuse Energy Northwest from developing a detailed plan. The State Parties take the position that Energy Northwest cannot [determine] that sequestration is infeasible until it develops a bona fide sequestration plan and makes a good faith attempt to implement that plan."

If the Pacific Mountain Energy Center goes down in flames, it won't be the first power plant that the joint operating agency now known as Energy Northwest has failed to build. Once upon a time, doing business as the Washington Public Power Supply System (WPPSS), the organization gained national notoriety for a quixotic attempt to build five big nuclear plants – Three at the federal Hanford nuclear site in Eastern Washington near Richland, and two near Satsop, Wash., west of Olympia. Construction costs mushroomed, demand for power shrank, the well of Wall Street capital ran dry, and only one of those plants was finished. (As the Columbia Generating Station, it currently contributes 1,157 megawatts to the Northwest power grid.) The other four were abandoned, triggering the largest municipal default in American financial history.

WPPSS itself may have receded into the dim recesses of the region's consciousness, but WPPSS payments continue to show up every month on the region's electric bills. The Bonneville Power Administration had guaranteed nearly all the bonds sold to finance the first three plants. BPA customers will continue paying for those uncompleted plants through 2021. Currently, the annual debt service tab runs to roughly $311 million.

The Northwest Power and Conservation Council's first big job was deciding whether to bail out the WPPSS projects. It decided not to. The council's current plan, drawn up in 2004, foresees no new nuclear plants. It does foresee up to 5,000 megawatts of wind capacity by 2025.

The council seems to have guessed wrong about wind. Wind planning in the Northwest is "going crazy," says the council's John Harrison. The Pacific Northwest is awash in proposals for new wind farms. The region seems likely to reach 5,000 megawatts by the end of 2012.

Construction costs have skyrocketed, but the wind rush goes on. Cost is no longer the only consideration. Washington, along with California and some 20 other states, has established a renewables portfolio standard that requires a utility to get a certain percentage of its power from alternative sources by a certain date. Washington's Initiative 937, passed last year, requires 3 percent by 2012, 15 percent by 2020. Hydro doesn't count.

The portfolio standard isn't the only thing pushing utilities toward wind. Looking down the road, virtually everyone foresees a federal effort to penalize carbon emissions. The Northwest Power and Conservation Council's current energy plan assumes a modest carbon tax will go into effect when the next president is inaugurated. In addition, fossil fuel prices have become extremely volatile.

And despite the sharp rise in construction costs, no one has backed away from wind. Bellevue-based Puget Sound Energy, which serves some of Washington's fastest-growing areas, expects to add 2,600 megawatts of generating capacity by 2025, none of it from coal or nukes – or IGCCs. PSE plans to get 31 percent of its new power from wind and conservation. For the rest, the company expects to burn natural gas supplied by pipeline from Canada and perhaps by a liquified natural gas tanker terminal along the Northwest coast. Gas plants emit no more than 1,100 pounds of CO2 per hour, so they don't require sequestration.

When PSE developed a so-called integrated resource plan, it looked closely at two scenarios: current trends, which assumed a modest carbon tax but no major effort to reduce greenhouse gas emissions; and a green scenario, which did assume a major effort and therefore a heavy carbon tax. Under the first scenario, IGCCs without sequestration looked like the cheapest source of power. Under the second, IGCCs with sequestration looked cheapest. But IGCCs without sequestration aren't an option any more. And, the company concluded, IGCCs with sequestration aren't an option yet. PSE assumes that geological sequestration will become practical around 2021. As PSE's integrated resource plan manager, Phillip Popoff, explains, "It gets to be a real timing issue."


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About the Authors & Contributors

Daniel Jack Chasan

Daniel Jack Chasan

Daniel Jack Chasan is an author, attorney, and writer of many articles about Northwest environmental issues.