An Energy Bill Proposal for the State of Colorado BGE Consulting Angela Cook Erica Johnson Nick Goldstein Chris Bunch Jake Walter Kindra Priest
Introduction The following report contains a realistic balanced energy proposal for the state of Colorado based on the requirements outlined in Amendment 37 of Colorado s Constitution [source 7]. It details the necessary steps for Colorado to meet its future energy needs, while increasing the implementation of clean and efficient renewable energy. As a matter of focus, this plan details projected residential electrical consumption for the year 2020 and provides a plan detailing how to meet this increased demand. Further, ecologically concerned citizens would experience only minor energy rate increases (which are expected regardless of the energy source) and participate in other programs in order to fund infrastructure for the growth of renewable energies in the current energy portfolio. The implementation of this plan would avoid the expansion of greenhouse gas emissions by replacing the use of coal with clean energy sources. Currently, renewable energies contribute 0.97 TWh of the total electrical production [4]. Further construction of wind farms and a residential photo-voltaic (PV) solar panel program for new homes will allow the state to achieve the goal of making renewable energies 15 percent of the electrical production for 2020 projected residential consumption. This plan provides for an additional 1.81 TWh of electricity through the home solar program and an average 0.87 TWh electrical power from an additional wind farm by the year 2020, for a total of 2.68 MWh per year of renewable energy production [4&1]. For comparison, a 500 MW coal-fueled power plant produces about 3.65 MWh of electricity in one year. By putting this plan into action, which should stimulate further growth of the renewable energy market, the construction of a new coal fired power plant can be delayed or avoided 1
altogether. Also, a residential electrical conservation program will reduce consumption in the future. Projected Growth and Increased Electrical Demand With data ranging from 1964 to 2001 pertaining to electrical consumption by the residential sector in Colorado, an exponential model was plotted and projected into 2020. This model predicted a growth rate of approximately 3.6% per year, and predicted 2020 residential electrical consumption of about 28 TWh. In order to model the phenomena of conservation, this trendline was adjusted to increase the influence of relatively lowconsumption years. Applying a reduced growth rate of 2.9% per year allowed a more realistic analysis based on the energy needs observed by our state. A 2.9% per year growth brought Colorado residential electrical consumption down closer to 25 TWh. This value was chosen as the basis for our goal of 15% renewable energy consumption by 2020, which equates to 3.75 TWh. See Appendix 1 for graph data. 30 25 Colorado Residential Electricity Usage Res with conservation Expon. (w/ conservation) Expon. (w/o conservation) 20 TWh 15 10 5 0 2 1980 1990 2000 2010 2020
Residential Conservation Program In order to decrease overall electrical consumption, an alternative pricing structure should be implemented to reduce consumption growth rates by 2.9% to 3.5% per year. According to energy expert Hartmut Spetzler, time-of-use pricing would be an effective method of encouraging residential electrical conservation. In a time-of-use price schedule, electricity rates are higher during the peak usage times, which normally occur during the morning and evening hours. Charging more for electricity when demand for it is the highest encourages conservation. At this time, we cannot suggest a price schedule that would specifically meet our conservation estimates. We recommend further research into market conditions so that an appropriate pricing structure can be developed. Residential Solar Power Initiative The initiative requires that all new homes built on the grid from January 1 st 2007, through December 31 st, 2020, must be equipped with state required PV systems. These homes must be located on the grid, have unobstructed direct sunlight between the hours of 9:00 am and 3:00 pm, and must install state approved PV system no smaller than 1.5kW and no larger than 10kW. We project that the total number of new homes built during the 14 year span of our project will be 475,000. [16] See Appendix 2 for the methodology of this prediction. Also outlined in the initiative is a required incentives program. Neither the builder nor the homeowner can receive the incentives until the home is in service. The builder receives a federal rebate of 30% of the cost of installation, up to $2,000 per new 3
home built before 2020 with the required PV systems. Since the cost of our smallest PV unit is higher than the maximum for which the federal rebate applies, the maximum amount of $2,000 is expected to be received [2]. Through a buyback system equivalent to net metering, the homeowners can receive credit towards their next month s electric bill for net excess electricity generated by their system. Because $0.095 per kwh is the current electricity rate, the consumer will receive $0.095 per kwh back to their bill. This rate will change in order to match the rate for electricity at any given time. If there is a net excess generation at the end of the year, the homeowner would be paid for that credit. In order to accommodate this system, the state would require that net metering systems be installed at each new home in lieu of conventional meters and in addition to the said PV units. To ensure maximum efficiency and net excess generation, it is recommended that all homes be built with energy-efficient heating and cooling systems. To describe net metering in terms of savings per year, the homeowner will be saving $280 per year on energy bills, assuming $0.095 per kwh cost of electricity and 3,000 kwh per year of energy produced, according to estimates calculated by Xcel energy. This amounts to a savings of $5,600 over the twenty year lifespan of the PV system. Typically, a 2.0 kw rated PV system costs $10,000, but because the builder is receiving an initial credit of $2,000 for placing theses systems on the home, this savings would also be passed on to the homebuyer through the cost of the home. Thus the cost to the consumer is only $2,400 ($11,000- $2,000- $5,600= $3,400) over the course of twenty years. 4
Wind Power The current installed capacity in Colorado of wind power electrical generation stands at 292 MW [12]. Based upon fluctuating wind speeds, the actual power production of this infrastructure is about 0.6 TWh annual [Appendix 3]. As a contributor to our energy budget, we require the construction of another large wind farm in Washington County (eastern Colorado) which has an average wind speed of 5.1-5.6 m/s [8]. This area is currently poised for wind farm construction by Greenlight Energy [18]. There will be approximately 145 Vestas turbines, each rated at 2.75 MW peak capacity. This installation should generate on average 0.87 TWh of electricity per year. Spacing between the turbines was determined based on the 100 m diameter of the rotor blades [18]. The distance between each turbine is approximately three rotor diameters (300 m) and the distance between row spacing is approximately 7-10 rotor diameters (3/4 to 1 km). This results in the wind farm being spread out over a minimum of 11, 000 acres. Construction of the Washington County wind farm will begin in 2007. See Appendix 3 for calculations regarding the development of a new wind farm. Implementation Costs Cost estimate calculations for the PV initiative were based on prices for modules, mounting brackets, and inverters from The Sustainable Village (a solar retailer) in Boulder and include a 15% discount adjustment for wholesale purchases by developers. Homeowners interested in a 1.5 kw rated system can expect to pay approximately $7,000 more for their new home. A 2.5 kw rated system will increase the cost of a new home by 5
about $11,000. These estimates account for government and utility company rebates as well as approximate installation costs, but exclude future maintenance costs. [17] Based upon an industry estimate including all construction materials, labor and land, the cost of installation for a wind farm is approximately $1,000 per kw of installed capacity [11]. For the proposed 400 MW capacity wind farm, the total cost comes to approximately $400 million, plus $50 million earmarked for maintenance and future upgrades. Paying for Development The estimated cost of building and maintaining the wind farms is $450 million. The estimated excess cost of the solar panel installation is $2,400 per unit (for a unit with a 2kW average rating), or about $1.14 billion total. Combined, the cost of our proposed bill is approximately $1.6 billion. In order to fund these projects, we propose a surcharge of $0.0058 per kwh for residential customers. Over the fourteen year span of our proposal, this adds up to about $1.6 billion, based upon an average (over the fourteen year life of the plan) electricity use of 19.8 TWh per year. This should just cover the costs of the project. The economic impact to consumers is minimal, increasing the average bill by only $4 per month. Based upon statistics indicating the average electric bill in Colorado was $56 per month in 2003, this is a 7% increase in the cost of electricity. Environmental and Economic Savings The economic and environmental impacts of this proposal are profound. Our combined efforts in wind and solar power generation, in addition to existing renewable 6
energy sources, equal that of a coal power plant. By the end of our project, our wind farms and PV systems, along with existing renewable energy sources, will produce the same amount of energy as a 500 MW coal-fired power plant in the same amount of time. Our combined cost of $1.6 billion for the solar panels and wind equipment are essentially equal to the construction of a new coal-fueled power plant and the coal that would be needed to run it for fourteen years. The added cost for the implementation of renewable resources is almost the same as it would have been to build a new coal plant in order to meet the increasing demand for electricity. However, since the new solar PV systems and likewise new wind farms by themselves do not generate the same amount of electricity as a coal-fired power plant, the cost of implementing this plan ends up being slightly more than the construction of a new coal-fired power plant. The environmental impact of our proposed bill is extremely significant. By delaying, and hopefully eliminating, the need to build a new coal fired power plant, we will save an estimated 1.4 million tons of coal every year. By not burning this coal, we will prevent the emission of 10,000 tons of sulfur dioxide, 10,200 tons of nitrogen dioxide, 3.7 million tons of carbon dioxide, and 720 tons of carbon monoxide every year the construction of a new coal-fired power plant is delayed. We will also prevent releasing many other toxic heavy metals and small particles into the atmosphere. Our proposed bill is a step toward an environmentally friendly and economically feasible energy future. [3] 7
Appendix 1: Data for projected energy consumption growth Data for each year of energy consumed: RESIDENTIAL ENERGY Year Tril Btu TWh 1982 30.9 9.055896 1983 32.5 9.52481 1984 29.6 8.674904 1985 30.2 8.850746 1986 30.2 8.850746 1987 31.5 9.231739 1988 32.6 9.554117 1989 32.7 9.554117 1990 33.4 9.788574 1991 34.5 10.11095 1992 34.9 10.22818 1993 36.4 10.66779 1994 37.3 10.93155 1995 38.6 11.31254 1996 40.5 11.86938 1997 41.8 12.25037 1998 43.2 12.66067 1999 44.8 13.12958 2000 47.9 14.0381 2001 49.4 14.47771 2002 11.89754998 15.42485 2003 309.6921126 15.72484 2004 318.0722692 15.83558 2005 326.6791899 16.40456 2006 335.5190108 16.99399 2007 344.5980339 17.60459 2008 353.9227322 18.23713 2009 363.4997535 18.8924 2010 373.3359254 19.57121 2011 383.4382607 20.27441 2012 393.8139615 21.00288 2013 404.470425 21.75752 2014 415.4152485 22.53928 2015 426.656235 23.34912 2016 438.2013986 24.18807 2017 450.0589701 25.05716 2018 462.2374032 25.95747 2019 474.7453803 26.89014 2020 487.5918187 27.85631 8
Data for energy consumed reflecting conservation efforts: RESIDENTIAL ELECTRICITY USAGE Year Tril Btu TWh 1982 30.9 9.055896 1983 32.5 9.52481 1984 29.6 8.674904 1985 30.2 8.850746 1986 30.2 8.850746 1987 31.5 9.231739 1988 32.6 9.554117 1989 32.7 9.554117 1990 33.4 9.788574 1991 34.5 10.11095 1992 34.9 10.22818 1993 36.4 10.66779 1994 37.3 10.93155 1995 38.6 11.31254 1996 40.5 11.86938 1997 41.8 12.25037 1998 43.2 12.66067 1999 44.8 13.12958 2000 47.9 14.0381 2001 49.4 14.47771 2002 11.89754998 15.42485 2003 309.6921126 15.72484 2004 318.0722692 15.81343 2005 326.6791899 16.26798 2006 335.5190108 16.73559 2007 344.5980339 17.21665 2008 353.9227322 17.71153 2009 363.4997535 18.22064 2010 373.3359254 18.74438 2011 383.4382607 19.28317 2012 393.8139615 19.83745 2013 404.470425 20.40767 2014 415.4152485 20.99427 2015 426.656235 21.59774 2016 438.2013986 22.21855 2017 450.0589701 22.85721 2018 462.2374032 23.51423 2019 474.7453803 24.19013 2020 487.5918187 24.88546 9
Regression data for conservation 15.83558 1.007042618 1.005634 16.40456 1.035930441 1.028744 16.99399 1.035930441 1.028744 17.60459 1.035930441 1.028744 18.23713 1.035930441 1.028744 18.8924 1.035930441 1.028744 19.57121 1.035930441 1.028744 20.27441 1.035930441 1.028744 21.00288 1.035930441 1.028744 21.75752 1.035930441 1.028744 22.53928 1.035930441 1.028744 23.34912 1.035930441 1.028744 24.18807 1.035930441 1.028744 25.05716 1.035930441 1.028744 25.95747 1.035930441 1.028744 26.89014 1.035930441 1.028744 27.85631 1.035930441 1.028744 10
Appendix 2: 2500 Growth of Colorado Households Co lorado House holds (x 10 00) 2250 2000 1750 Historical Data Predicted Trendline 1500 1995 2000 2005 2010 2015 2020 2025 Year Growth in the number of new households was calculated based on census data and projections taken from the Colorado Division of Housing's "Advances" website. Estimates are for households of all income brackets throughout the state. A logarithmic trendline was extrapolated using data from 1999 thru 2007. Colorado households numbered 1,874,259 in 2006 and based on our projection will hit about 2,350,000 by 2020, for an estimated growth of about 475,000 new renter and owner occupied households over the course of the rooftop solar PV initiative. [16] 11
Appendix 3: Wind farm calculations The actual power production of Colorado s current installed wind capability was determined based on the annual energy production of 65,043 MWh from the Peetz Table wind farm. Taking the annual energy production and dividing it by the number of hours in a year results in 7.4 MW produced in a one hour period. 65,043MWhs 8.76 10 hrs 3 7.4MW In order to find the percentage of efficiency with which the Peetz Table wind farm is converting wind energy into electrical energy, the ratio of megawatts generated is divided by the total installed capacity and multiplied by 100. 7.4MW 29.7MW 100 25% This percentage of efficiency was determined reasonable by energy expert, Hartmut Spetzler, and used in calculating the power out-put of the current wind potential (0.6 Twh) per year as well as expected actual output for the proposed wind farm (0.8 TWh) per year. Based upon a pre-determined electrical projected need from wind energy of 0.8 TWh for 2020, we proposed the construction of a new wind farm. Upon shopping various turbine providers, we settled on the Vestas company of Denmark. Further, they offer an affordable 2.75 MW turbine. Given our previous efficiency, determined from a wind farm at a similar location, and in order to produce total 0.8 TWh from wind energy, we require 145 turbines on this new farm to reach the goal. Given a turbine diameter of 100 m, spacing across of 3 rotor diameters, and a downwind gap of 8 rotor diameters, we determine the minimum required area for a 145 12
turbine wind farm to be 11,000 acres, at a minimum. This configuration could be spread out based upon real estate constraints. 13
Appendix 4: Paying for Development Calculations In order to calculate the money that would need to be generated in order to cover the difference in the cost of a PV system, we assumed the average PV system would have a rating of 2.0 kw and cost $10,000. We then subtracted the federal rebate and the estimated savings on energy costs over a 20 year lifespan of the system. The savings on energy costs were obtained from Xcel Energy company estimates regarding their current solar rebate program. $10,000 - $2,000 (federal rebate to builder) - $5,600 (energy bill savings to homeowner) = $2,400 remaining cost per unit ($2,400 per unit) * (275,000 units built) = $1.14 billion total cost Plus the cost of the wind implementation: $1.14 billion + $0.45 billion = $1.6 billion In order to pay for this, we recommend a rate increase of $0.0058 per kwh. At an average use of 19.8 TWh per year over 14 years: (19.8 TWh per year) * ($0.0058 per kwh) * (14 years) = $1.6 billion 14
For more information: Sources used 1. Governer's Offive of Energy Management and Conservation http://www.state.co.us/oemc/ 2. Tax Incentives Assistance Project http://www.energytaxincentives.org/ 3. How Coal Works http://www.ucsusa.org/clean_energy/fossil_fuels/offmen-how-coal-works.html 4. Energy Information Administration http://www.eia.doe.gov/ 5. National Renewable Energy Laboratory http://www.nrel.gov/ 6. Online Encyclopedia http://www.wikipedia.org 7. Colorado Amendment 37 http://www.dsireusa.org/documents/incentives/co26r.htm 8. Wind Project Database http://www.awea.org/projects/colorado.html 9. Safeway Wind Energy http://shop.safeway.com/corporate/safeway/windenergy/windenergy_peetztable.htm 10. Colorado Renewable Energy Resources http://www.energyatlas.org/pdfs/lowres/atlas_state_co.pdf 11. Vestas Wind Systems A/S http://www.vestas.com/discoveruk 12. Understanding the Wind Power Industry: http://www.interwestenergy.org/windpower_wildlife.pdf 13. Xcel Energy http://www.xcelenergy.com 14. No. 887. Energy Consumption-End Use Sector and Selected Source by State: 2000, U.S Energy Information Administration, State Energy Data Report, 2000 annual 15. Assessing the cost of new coal-fired power plants, By: Hoskins, Bill, Booras, George, Power, 00325929, Oct2005, Vol. 149, Issue 8 15
16. Number of colorado households data http://www.dola.colorado.gov/housing/hhinc2a.cfm 17. PV system prices "Renewable Energy" catalog from The Sustainable Village 717 Poplar Ave Boulder, CO 80304 (www.thesustainablevillage.com) 18. Greenlight Energy http://www.greenlightenergy.com 16