Wednesday, October 10, 2007

A Better Way To Satisfy Demand Without Expensive, Unsightly Transmission Lines

What if we could avoid construction of several hundred miles of unsightly, expensive high voltage transmission lines and instead create the conditions for installation of $6 billion in new solar power generation in the mid-Atlantic region?

It can be done. All it takes is some willpower and creativity. Here's the background.

Demand for electricity in the mid-Atlantic is booming. To meet that demand, electric utilities are proposing a number of new high voltage transmission lines, the largest of which is a 250 mile, $1.4 billion project by Dominion Power and Allegheny Power. Smaller projects around Norfolk and in Maryland bring the total cost of these unsightly new lines to around $2 billion, with the final cost probably being a good deal higher.

The main reason utilities need to build new transmission lines is to meet projected peak power demand in coming years. Peak power demand in our region comes on hot summer days when air conditioners are on full throttle. Typically, there may be 10-15 days when demand gets high enough to put a strain on the electric grid. The rest of year, the grid can handle our power needs without too much of a sweat.

Many opponents of the new transmission lines say they're simply not needed--that we can stave off the demand through conservation and construction of smaller generating plants closer to the areas with high demand. We're not so sure about that. Conservation is great--we encourage it (and practice it) here at the Curmudgeon. But as long as we have cheap power here, people aren't likely to conserve as much as we need them to. And they darn sure aren't going to turn off the A/C when it gets to 100 degrees.

There is an alternative, however: solar electricity. The great thing about solar electricity is that it's at its peak on hot summer days, exactly when it would be needed most. In contrast, transmission lines don't produce a single watt of electricity. Indeed, they lose electricity--the further the power has to travel from generation to use, the more is lost.

Here's how Dominion, Allegheny and the other mid-Atlantic utilities could translate $2 billion in transmission lines into $6 billion in new solar capacity. For most homeowners and businesses, solar electricity is not yet economical. However, if they could get a 30-40 percent subsidy, on top of federal (and sometimes state) tax credits, solar suddenly starts to look like a winning proposition.

Suppose the utilities subsidized one-third of the cost of solar installations, up to the $2 billion they were instead going to spend on ratepayer-financed transmission lines. That would translate into $6 billion in new solar capacity. Since the solar installations are placed at the same site as electric consumption (i.e., homes and businesses) there is no need for any additional transmission lines.

We could offset a large amount of peak power demand in this region with $6 billion in new solar cells on those critical hot summer days.

Our back of the envelope calculation is as follows: the peak output of the Curmudgeon's $20,000 solar array is about 2200 watts (2.2 kilowatts), reached in the middle of the afternoon on a sunny summer day. That's about .11 watts per dollar invested. So $6 billion would translate into 660 million watts, which is 660 megawatts--the generating capacity of a medium to large nuclear reactor. Except that in this case, almost no electricity would be lost in transmission, and our calculation is conservative because Dominion could find better sites than the Curmudgeon's (we don't have a true southern exposure) and could achieve economies of scale that we can't.

The net result would be have Dominion and other utilities partner with thousands of businesses and homeowners--generating an additional investment of $4 billion by those individuals and businesses--to bring widely distributed solar generation right to the source of demand.

The key to achieving this is to give Dominion and the other utilities the incentive to invest in solar power, rather than to invest in transmission lines. It's not that difficult--California has already done it.

We think that, given the right incentive, a private utility like Dominion would learn to become quite efficient at siting and installing solar power, thus bringing the cost down to some degree. (Solar will remain expensive, however, for a few more years due to capacity shortages in the industry.) Dominion would be likely to identify ideal candidates--for example, a larger business with plenty of unobstructed south-facing roof space--and then approach them with the subsidy needed to make the installation economical. Dominion would also be able to develop a unit with the expertise to install solar efficiently, and it would have sufficient purchasing power to obtain better deals on solar panels, inverters and other required equipment.

Of course, this process would also generate a huge "green" dividend, and if trading carbon credits becomes the norm, Dominion could reap fairly large additional benefits by selling its carbon credits to other utilities. In contrast, no transmission line is ever going to generate any carbon credits.

Ultimately, it becomes a "win-win" for both Dominion and its customers, not to mention the many thousands of landowners who won't be impacted by hundreds of miles of new steel towers and humming transmission lines. Why can't this be done?

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