Combined heat and power plants killed by gratuitous delays

Michael Giberson

An article on the barriers to combined heat and power plants from Forbes:

Utilities that want to can often hit projects with repeated delays. [Neal Elliott of the American Council for an Energy-Efficient Economy] describes the sort of scenarios he’s seen. “Require an interconnection study, takes 60 days, present the study, 60 days to do that, the utility takes 90 days to review that, then if they have any questions, you have another 30 days. … When it adds up, it may take a year or two or three. And time is money.”

Some time and money are, of course, needed to ensure that the system integrates properly, Elliott says, but gratuitous delays have “killed more CHP projects than anything else,” he says.

A spokesman for the electric power industry notes that not all electric utilities oppose CHP projects, saying “Every utility is regulated mostly by its state… Whether it can recover costs for efficiency programs is regulated by the states.”

True, but curious. It does raise a question as to why the state regulator must toss a carrot to the utility in order for the utility not to use its monopoly control over the distribution grid to frustrate small time competition by hospitals, universities, airports or other users with concentrated needs for power and heat in the same area.

(HT to Sean Casten at Gristmill. Casten is President & CEO of Recycled Energy Development and was 2007 president of the U.S. Combined Heat and Power Association.)

The Pickens Plan and other stories involving wind energy

Michael Giberson

  • T. Boone Pickens, the oil and gas billionaire now making a splash in wind energy, has released the “Pickens Plan” for reforming the U.S. energy landscape. In brief, use a lot more wind power to displace natural gas used in electric power generation, and use the natural gas to displace gasoline in transportation uses.

    Geoff Styles provides an assessment and commentary on the plan, concluding it is “an idea that merits further analysis and consideration.” The USA Today also reports on the Pickens Plan. Pickens has an op-ed in the Wall Street Journal: My Plan to Escape the Grip of Foreign Oil.

  • The Utility Wind Integration Group has said, “Hydropower has long been viewed as a perfect fit for wind generation,” because the ready controllability of hydro overcomes some of the most obvious drawbacks of wind generation. But “perfect fit” is not the same as saying “no brainer.” It still takes effort to get the two energy sources to work together, and you need functioning contingency plans for rare events.

    Last week operators at the Bonneville Power Administration had to cut hydro generation drastically in response to an unexpected surge in power, forcing dam operators to spill more water than expected and potentially threatening migrating salmon.

  • Apparently part of the problem was that the wind power operators didn’t answer calls from the BPA, or didn’t understand instructions to cut back on output. It was the first time the BPA has called wind power operators with such requests.

  • In the Dallas Morning News, Elizabeth Souder reports on the current status of wind power in Texas: “Lawyers representing nearly everyone in the power industry have been airing these concerns to the PUC [of Texas] during the past couple of years as commissioners consider wind transmission.” The story suggests that the Texas approach may be the model for integrating wind power elsewhere in the country, perhaps justifying the heavy investment in sorting out the issues in Texas first.

Oil inventories are falling, but what does it mean?

Michael Giberson

At Energy Outlook, Geoff Styles writes:

Oil prices set another record last week, closing above $145 per barrel for the first time, on the strength of heightened fears of an attack by Israel or the US on Iran, combined with a dip in US commercial oil inventories below 300 million barrels, their lowest level since the end of January and at the bottom of their seasonal historical average range. But although lower inventories are generally a bullish signal for the market, we shouldn’t forget that the relationship between prices and inventories runs in both directions. Current and expected future prices, along with actual supply and demand, play a significant role in guiding companies in setting their desired inventory levels.

Styles continues, “Determining whether a drop in inventories reflects tight supplies or expected future weakness depends on a broader array of indicators,” and then examines some of those indicators to see what can be said about oil inventories and oil prices.