Grand Island city leaders agreed this week to join a new wind energy project – the fourth the city has joined in the past 12 years.
But not everyone supports the city’s dabbling in renewable energy.
Ward 1 Councilman Randy Gard, who took office Tuesday night, questioned why the city would want to participate in the Laredo Ridge Wind Project near Petersburg. He may be a political newcomer, but Gard is the recently retired chief executive officer of the multimillion-dollar Chief Automotive production plant that was relocated from Grand Island last year.
Gard raised concerns that Laredo owners required the city to sign a 20-year participation agreement that locked in guaranteed pricing for Laredo. It will cost Grand Island $145,000 to buy 1 megawatt of power in 2011 and then cost 2.5 percent more every year after that.
That nearly doubles the city’s cost over the term, Gard said.
Grand Island Mayor Jay Vavricek also questioned the agreement, saying that renewable energy production is costly and inefficient compared to the city’s own energy production by its coal-fired power plant, the Platte Generating Station.
Vavricek campaigned on promoting efficient and effective government.
Utilities Director Gary Mader said there’s no doubt that wind energy costs more to produce than generating electricity from coal, but the research gained from participating in all four wind energy projects is invaluable.
“The finances of wind energy are not comparable, at the present time, with conventional fossil fuel generation,” Mader said. “It’s more expensive to use renewables.”
But political discussions are under way that could mandate that all utilities participate in renewables, he said.
Having participated in renewable projects gives Grand Island a leg up in the future, Mader said.
“If at some point in time, renewable use is mandated, wind energy looks to be a very viable renewable and one of the most economical renewables in the state of Nebraska,” he said.
“Over the last several years there’s been a great deal of scrutiny over the fuels used to produce electricity in the country,” Mader told the council. “Fossil fuels are particularly coming under increased scrutiny.”
At the same time, talks are heating up about the use of renewable energy sources, and which of those may be best suited to meeting American energy demands, Mader said.
Talks on the state and federal level are even centering on renewable portfolio standards, which may demand every electric utility have a certain percentage of its energy produced through renewable means. Mader said current talks have ranged anywhere from 10 to 25 percent.
Some utilities have even adopted a goal of achieving a 10 percent renewable mix. If Grand Island did that, it would require a capital cost of $50 million, Mader said.
Instead, Grand Island has entered in-state wind projects at minimal levels and is relying on renewables for less than 1 percent of the city’s overall power demand.
Participation in the renewable projects is simply to stay current on the latest technologies, Mader said.
“A good deal of these resources are still developing,” he said of renewables. “They are getting better over time.”
Where they end up, or how they will ultimately affect Grand Island, isn’t yet known, he said.
So while renewable benchmarks are still under federal discussion, Grand Island Utilities leaders felt it prudent to get involved on the ground level of renewables by participating at the most minimal level in the projects that became available in the state.
That has meant 1 megawatt of power purchased from the three existing wind energy projects – Springview, Ainsworth, Elkhorn Ridge – and now Laredo Ridge.
Mader said Grand Island Utilities is gaining knowledge on how renewables work, how reliable they are, what type of power output they generate, what the costs are, and how the different projects operate under different business models.
The Springview project started in 1998. Two 750 megawatt turbines were installed in north central Nebraska near Springview. The project was funded half by grants and the rest by partners, including Auburn Utilities, Grand Island Utilities, KBR Power District, Lincoln Electric System, the Municipal Energy Agency of Nebraska and the Nebraska Public Power District.
Equipment failure and unit downtime plagued the project and it was shut down last year, Mader said. The overall cost was $23 per megawatt hour and Grand Island received enough power to supply six houses a month.
Ainsworth started in 2005. It had 36 turbines of 1.65 megawatt each. Grand Island was a partner with Nebraska Public Power District, Municipal Energy Agency of Nebraska, and JEA of Jacksonville, Fla. Grand Island has received enough power to supply 293 houses each month at a cost of $45 to $55 per megawatt.
Elkhorn Ridge started in 2009 and is an 80 megawatt wind farm located near Bloomfield in northeast Nebraska. It’s privately owned, making it eligible for some tax breaks and rebates not available to public utilities.
Laredo Ridge is also privately owned and is an 80 megawatt farm located near Petersburg. The power produced is being bought by Nebraska Public Power District and sold by NPPD to partners such as Grand Island. The cost per megawatt is about $45, Mader said.
Because of the current economic state, Mader doesn’t anticipate another renewable opportunity in Nebraska to come up soon.
Regarding concerns on the length of contract, 20-year participation agreements are the norm in the industry, he said, as power plants are built for lengthy durations.
“The bottom line is this is going to increase costs,” said Councilman Scott Dugan.
“My problem with this is that we’re going to start spending money because we want to dabble in this to keep current,” Dugan said. “I think there’s better ways for us to get our knowledge than to spend $145,000 and more each year to keep abreast of things.”
It’s also important to put the cost in perspective, Mader said.
The $145,000 cost is small compared to the $12 million in fuel costs Grand Island Utilities incurs every year supplying its own power plants. Coal prices have gone up 85 percent in the last five years.
“There are some big changes occurring in the market – that’s literally millions of dollars a year,” Mader said. “This is a relatively small amount.”
He said wind is fairly sensitive as a power source. It has to be strong enough to power the turbine, but not so gusty as to cause damage.
A power source must be able to not only produce energy, but also meet demand, Mader said. Wind produces energy, but it’s not a good demand source because when there’s no wind, there’s no energy. There’s no way to store the energy produced for future demand, he said.
“This is to keep our information flowing so we can learn how these things work,” Mader told the council. “It’s not a critical issue to the department, just a matter of judgment and participating to understand these operations.”
The council agreed to join the project on a 9-1 vote, with Gard voting no.
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