Friday, March 25, 2011

New Study Shows Gas Loving Wind - Needs Subsidies to Love More of It

A new INGAA study puts some meat on the bones of the relationship between the natural gas industry and the wind industry.

I haven't read the study, but I did search the document for "capacity factor" and quickly found:

"This analysis concludes the average of 15.6 percent for the three capacity factors in Exhibit A4‐5 applies to all units that will be used to backup wind generation.  While perhaps on the high side, it is desirable to apply a higher‐than‐expected value to not understate the gas use for firming renewable generation in this analysis"

Exactly as I expected, and exactly the reason states 'investing' in wind trail states that aren't, in reducing emissions.  Investing in cleaner gas plants would always be a better utilization of funds ... but that isn't seen as the issue by industries that are increasingly geared not to efficiency in providing products and/or services, but in getting other people to pay for inefficient products and/or services.

The Executive Summary Section's final paragraph summarizes the point of the study; "Also unresolved is how all of the costs associated with firming generation will be recovered in the prices charged in power and electric transmission markets.  Electric power pricing should be structured in a way that ensures such costs can be recovered as a part of the price of electricity and in a manner that does not put gas‐fired backup at a disadvantage with other firming options."

I am skeptical that OCGT new-builds would provide cleaner peaking power than scrubbed up, co-fired, existing coal sites (specifically in Ontario).  I am certain the consumer would not value, from any perspective, the natural gas output (which we are probably paying about $100.MWh for), with hydro output (for which we currently pay under $40/MWh).  Problems with many generation sources, including nuclear, would be met by the development of cheaper storage options.  I'd speculate these 3 better options, cleaned-up existing units, hydro, and storage (which could be hydro) are the target of the reports concern about other sources being given preference over gas.

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