COVID-19 latest challenge to wind power in Wyoming
- Apr 16, 2020 3:06 pm GMTApr 16, 2020 6:20 pm GMT
- 1185 views
Wind power is a key component of Wyoming's renewable energy production future, but maximizing its potential development is dependent on public land use, permitting regulations, transmission requirements, and distance to and demand by customers.
Now the COVID-19 pandemic is adding another factor that will influence wind power's future development in the state.
"As of this spring, it is very hard to describe the 'health' of the wind industry in Wyoming," said Rob Godby, a University of Wyoming economist and deputy director of the UW's Center for Energy Regulation and Policy (CERP).
The wind industry's health depends on several things, Godby said.
"The first and most immediate one is that delays in the supply chain for current and scheduled construction could harm the ability of projects to get federal tax credits before they expire unless legislation is changed to account for the delay," he said. "They were scheduled to end this year, and if construction is delayed, this could harm some projects."
Secondly, Godby said some decisions in the Wyoming Legislature earlier this year and rulemaking being finalized after legislation last year could affect the planning going on by PacifiCorp to retire coal fired power plants and its planned buildout of wind farms to provide cheaper energy to customers. Those actions were outlined in the PacifiCorp's 2019 Integrated Resource Plan (IRP).
"We will not know how that plays out and whether changes in the original plan occur for some time," Godby said.
Finally, he said the pandemic's impact on the economy and the ability to continue financing large projects could be affected by the expected recession to follow.
"Depending on the damage this economic downturn causes, it could affect both the companies involved in wind development in the state and the sources of financing they depend on," Godby said.
Efforts by state leaders to extend the life of Wyoming coal power plants may create some uncertainty for the wind industry, he said. If coal power plant retirement timelines are extended, that could influence the need for and development of new wind facilities.
"We won't know for some time as the new legislation will require additional rulemaking at the Wyoming Public Service Commission (PSC), and until that rulemaking is clear, the uncertainty could have some effect," Godby said.
Last year, Rocky Mountain Power, a subsidiary of PacifiCorp, announced its "Energy Vision 2020." It outlined plans to upgrade Rocky Mountain Power's wind fleet with longer blades and new technology, adding around 1,150 megawatts of new wind in 2020, likely in Wyoming, and constructing a new, 140-mile, 500-kilovolt Gateway West transmission segment in 2020.
"PacifiCorp's 2019 Integrated Resource Plan anticipates significant investments in additional wind power resources after the EV 2020 projects are completed," said David Eskelsen, Rocky Mountain Power and PacifiCorp spokesman.
Eskelsen said the next step is for the company to complete a formal request for proposals, and obtain regulatory approval of that RFP from the utility commissions in Wyoming and other states it serves.
"Following the IRP action plan, the company will seek bidders who can deliver generating projects from any source that can achieve commercial operation by the end of 2024," Eskelsen said. "We anticipate issuing the RFP this summer. Bids received will then be evaluated by an independent expert, by utility commissions and by the company. The RFP will give more certain pricing of the best options available to serve customers in the future."
Wyoming's advantages and challenges
There are advantages for wind power in the state's energy production portfolio, according to Jason Beggar, Wyoming Infrastructure Authority executive director. The authority was created in 2004 by the Wyoming Legislature to support and promote the state's energy resources.
"Of course, the wind blows a lot," Beggar said. "We have lot of wide open spaces. And there are a lot of other reasons on the surface that makes Wyoming seem like a really good place to start a lot of wind projects."
Last year, a study by Godby and fellow UW economist Ben Cook stated that in 2019, Wyoming ranked sixth out of 11 Western states with nearly 1,500 megawatts of wind energy production. At the same time, more than 4,500 megawatts in new development was under construction or in the permitting process. When the Wyoming projects are completed, the study estimates the state could be the leader in wind energy production.
Their analysis also identifies that there is there is some small flexibility in raising taxes on wind power that would allow the state to still be competitive as a site for wind farms. But the study warns that increasing taxes too much would result in a net loss of revenues due to the fewer wind farms being built in response.
Beggar said there are a couple of significant challenges to building projects in Wyoming that don't exist in many other states.
"The first is the fact that we have such a large percentage of federally owned lands," Beggar said. "If you're trying to build a wind project in Iowa, you talk it over with the farmers and the landowners, you get your agreement, and you go build one. In Wyoming, a project triggers a National Environmental Policy Act (NEPA) review, which could cost hundreds of millions of dollars and take 10 years. It adds a significant cost and time delay that really doesn't exist in a lot of other places."
Beggar pointed to the Chokecherry and Sierra Madre Wind Energy Project south of Rawlins as an example of what issues developers face. The Power Company of Wyoming estimated the project will generate up to 3,000 megawatts of power in southeastern Wyoming, create 1,000 construction, operation and maintenance jobs, and produce enough energy to power nearly 1 million homes by the time it is completed. The Obama administration initially approved the two wind farms in 2012. The project didn't receive the second of two Bureau of Land Management environmental assessments until 2019.
Another challenge, Beggar said, is how Wyoming fits into the nation's power grid. New transmission lines crossing public land in Wyoming and other states must meet federal and local permit requirements. Also, the lines must go to where the customers are who want renewable energy, which could be hundreds of miles. That is the case in getting power from the Chokecherry and Sierra Madre wind farms to southern California.
"Wyoming is not part of a big organized market like you see in the Midwest and the East," Beggar said. Wind power producers in states like Iowa or Texas have customers in the same location, he added.
Coal still king, but wind not ignored
An adviser to Wyoming Gov. Mark Gordon said the state is committed to wind in its overall energy strategy. But extending the life of coal use is important to the nation's power grid, said Randall Luthi, Gordon's chief energy adviser.
"Currently, Wyoming is the third-largest energy producing state in the nation," said Luthi. "Yes, coal has been the foundation for many years, both in terms of energy and revenue, and, frankly, we are going to dance with the one who brought us along with other partners. Even in today's coal market, Wyoming coal supplies approximately 11% of the nation's electricity. Wyoming still provides about 40% of the nation's coal supply and provides over 5,000 jobs."
The issue is not whether coal is an abundant, reasonably priced source of fuel for electricity, Luthi said.
"The issue is the release of CO2," he said. "That is one of the reasons the governor encouraged the Legislature to pass House Bill 200, which provides incentives and requirements for utilities to consider the use of carbon capture technology to extend the life of coal-fired plants. This will be one of the tools Wyoming will use to remain a major producer of electrons and reducing the amount of CO2 being released in the atmosphere."
"Wind is also a source of energy, and Wyoming also has abundant supply of wind," Luthi said. "Wyoming still continues to encourage companies to build wind farms under the same stringent safety and environmental requirements we ask of all energy producers. Wind is not being downplayed with the existing production tax credits and overall interest in low CO2; the wind industry seems to be moving along and thus not in the public eye."
Technological innovations are going to continue to push down the cost of electricity generated by wind power, said Jonathon Naughton, UW mechanical engineer professor and Wind Energy Research Center.
Naughton said the cost of producing electricity from wind has come down in the past five years to the point that the government incentives for building wind farms are no longer needed. Uncertainty over how efforts to reduce CO2 emissions will impact the cost of operating coal power plants is also increasing interest in cheaper renewable energy, he added.
"We kind of know what the operational cost of wind farms will be over the next 20 years," Naughton said. "So, wind has become very attractive to utilities. Even independent owner-operators are installing it because of those factors. It's cheap, and you kind of know the price, as well."
Producing electricity through wind power is cheaper than coal or natural gas, according to a 2019 report by the financial advisory firm Lazard. The firm estimates coal costs between $66 and $152 per megawatt-hour of electricity generated, natural gas costs between $44 and $68, and wind is between $28 and $54.
Naughton was part of an international group of experts called together in 2017 by the U.S. Department of Energy's National Renewable Energy Laboratory (NREL) to examine three "grand challenges" that will drive the innovation needed for wind to become one of the world's primary sources of low-cost electricity generation.
The resulting paper was published in the journal "Science" in October 2019. The three challenges identified were:
Improved understanding of the wind resource and flow in the region of the atmosphere where wind power plants operate.Addressing the structural and system dynamics of the largest rotating machines in the world.Designing and operating wind power plants to support and foster grid reliability and resiliency.
How those challenges are met will influence the future of wind energy in Wyoming and the world, Naughton said.