Critics of green energies have long argued that current technologies are not cost efficient or reliable enough to add to the state’s electric grid. Now, for the first time ever, the state’s Public Utilities Commission agrees. And by agreeing, Colorado will not be frying birds in midair because of solar technology that heats up the air to 1000 degrees F, as has recently happened in California.
Almost five years after the Colorado Public Utilities Commission opened the door for experimental projects like concentrated solar power in Saguache County, a December PUC decision shuttered a planned $600 million, 125-megawatt project in the San Luis Valley expected to add more than $1 billion in costs over the next 25 years.
The failure of SolarReserve to secure a Section 123 cost exemption in order to pursue a power purchase agreement for its solar project—a condition necessary to break ground—spells the end of years of permitting and regulatory filings by the company and its allies. It also once again raised the concerns widely associated with intermittent sources of electricity generation—namely cost and reliability.
The estimated $600 million project began as two 100 MW concentrated solar towers, each towering 656 feet above the valley floor near Alamosa, but was later reduced to towers representing 75 MW and 50 MW, respectively.
Though the California-based company had secured a 1041 conditional land use permit from the commissioners of Saguache County, lingering questions remained about the impact on the environment, including the migratory birds that fill the valley each year, including the sandhill cranes. According to the Denver Post, a mortality study at a smaller-scale California demonstration site indicated the loss of birds and bats, and concluded that the Colorado project would have a larger impact.
A similar concentrated solar photovoltaic project in California went online earlier in February 2014 plagued by reports that the solar array was “killing and singeing” birds with temperatures reaching 1,000 degrees Fahrenheit.
Among the four proposed Section 123 bids offered to the PUC, SolarReserve’s molten salt solar thermal project was rejected as “not being cost effective” due to an additional $45 million in annual incremental costs, or more than $1 billion in the twenty five year time frame examined, according to the PUC.
“Although there may be societal benefits of SC01 and SC02, the incremental cost of $45 million per year is not reasonable,” the PUC wrote in its findings, adding that the decision came after a “fair and thorough analysis” of the bids.
The PUC added that, of the four Section 123 bids, “none are cost effective,” citing Public Service research. “The Company asserts that the bids are not priced reasonably in comparison with commercially available technology bids.”
Section 123 provided a regulatory carve-out to projects that represented “a new energy, or energy efficient technology, or a demonstration project” that presented significant “societal benefits.” This included solar thermal with storage, a feature of the SolarReserve project, which proposed using molten salt storage of sunlight captured during the day to provide electricity overnight.
“We recognize that it was difficult for such resources to demonstrate cost effectiveness in comparison to other resources in this all-source solicitation,” noting that other natural gas and conventional wind and solar bids were more cost effective.
“Each of their [Section 123] associated costs is far more expensive than the costs of any of the traditional technologies available in this solicitation. The benefits these proposed resources are expected to provide do not justify their higher costs,” the PUC wrote.
SolarReserve Senior Development Manager Adam Green pushed back after December’s PUC ruling.
“It seems they did not appreciate that the economic benefits our project would bring to Colorado are greater than its costs. It is unfortunate that they did not fully weigh the value of jobs, economic development, water conservation, and innovative storage technology; instead, it seems they simply focused on the dollar cost,” Green told the Alamosa Valley Courier.
In October 2013, SolarReserve wrote to the PUC, rejecting its proposed energy resource plan that recommended none of the Section 123 projects be approved.
“PSCO’s [Public Service] analysis of the Section 123 bids is based on an incorrect premise—that larger scale Section 123 technologies should be ‘priced reasonably competitive with commercial technology bids’—and fails to give due consideration to the Section 123 statutory ‘beneficial contributions’ provided by the Project,” SolarReserve wrote, calling the cost-benefit examinations by Public Service “flawed.”
“By definition, new energy technologies are not yet commercial and do not compete on a price basis with commercial technologies,” said SolarReserve. They argued that the PUC’s own considerations in a 2007 rulemaking decision regarding Section 123 made the PUC’s requirement to give consideration to new technologies “effectively renders strict adherence to the least cost resource requirement in our rules moot.”
SolarReserve had hoped to tap into a 30 percent federal investment tax credit by bringing the project online by the end of 2016.
In rejecting the four Section 123 bids, the PUC noted that “Public Service may be reaching the limits of the flexible resources on its system for the integration of intermittent resources and voltage optimization, and the storage of intermittent energy may become more important in the future.”
To address these problems, the PUC ordered a new report due later in 2014, addressing “various available storage technologies and how they could be used to reduce costs and increase the reliability of the system with increasing intermittent generation resources.”
The concern over infrastructure costs and the cost to ratepayers, as well as the challenge of incorporating ever-larger amounts of intermittent generation sources like solar and wind, is not a new topic at the PUC.
In June 2012 comments by PUC staff engineer Inez Dominguez indicated that off-peak load and wind generation in particular was “alarming.”
The integration of intermittent sources like wind would overwhelm the system, either with higher costs or decreased reliability. Bringing in wind and curtailing conventional, coal-fired generation during off-peak periods would result “in an economic penalty to the Public Service customers because more expensive wind generation would be supplying their load.”
Cutting off the wind, however, would also penalize ratepayers, as the “take or pay” agreements give wind first priority.
But the Public Service engineer also highlighted reliability concerns. “In its simplest terms as it concerns the customers, reliability deals with keeping the lights on. This reliability issue may occur when the wind suddenly stops blowing and a significant amount of wind generation is lost to the balancing authority,” Dominguez said.
“When this event happens, the balancing authority needs to replace the lost generation quickly enough to keep from tripping off the load. This means that the generation in reserve to cover such an event has to be quick enough in its response to cover the lost generation,” Dominguez continued.
For Colorado ratepayers, this backup generation comes from “gas fired combustion turbine generation reserves” that displace “more economic base load coal fired generation,” only adding to the cost, and “complexity” of the load balancing requirements.
According to Dominguez, these examples suggested a “flag that Public Service may have too much wind generation.”
PUC’s rejection of all four storage bids, however, did not eliminate these ongoing concerns over the system’s ability to incorporate intermittent wind and solar sources.
Among the four rejected bids, the PUC denied approval for a gas-fired carbon capture bid that would have added $120 million in additional annual incremental costs over 20 years, or nearly $2.4 billion in nominal costs, according to the PUC.
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