A state plan to connect fossil-fuel-powered “Bloom Boxes” to the regional electric grid to help subsidize a new Newark factory would mean less business for wind and solar power companies in Delaware, state officials and critics of the idea agree.
Officials in Gov. Jack Markell’s office say the decision to declare fuel cells a renewable power source – despite running on natural gas – will help grow another piece of a cleaner-energy industry, while generating 900 or more jobs in Delaware.
“You are trading some out-of-state wind and out-of-state solar support for Delaware jobs,” said Brian Selander, Markell’s spokesman.
Critics contend that the trade-off gives Delaware a short-term economic boost but weakens long-term demand for truly carbon-free electricity.
“To change the definition of renewable in a state that has such a vulnerable environment is a very scary thing,” said former Democratic Rep. Diana McWilliams, one of the sponsors of the 2005 law requiring Delmarva Power to buy a portion of its power from naturally regenerating sources like wind, solar and geothermal.
Today, Delmarva Power is required to buy 25 percent of its power from renewable sources by 2025. The company has signed contracts for offshore and land-based wind power and is helping support the utility-scale Dover SunPark as well as the development of thousands of small home-and business-based solar installations.
But a different sort of anxiety holds sway these days – a stagnant economy and crumbling manufacturing base – and Delaware welcomed Bloom Energy’s offer this summer to build a fuel-cell factory on the site of the shuttered Chrysler plant in Newark.
The state is providing Bloom with $16 million in direct economic development incentives.
The deal also requires Delmarva to put two clusters of Bloom fuel cells at local substations, adding 30 megawatts of power to the grid. The cells will be paid for with an unpredictable premium by Delmarva customers. The arrangement would provide Bloom with $751 million in revenue over 21 years, including a subsidy of an unspecified amount.
To make the project palatable to Delmarva, Markell successfully pushed lawmakers in June to change the state code, allowing Delmarva to count the fuel-cell purchase against its “renewable portfolio standard” requirements. Delmarva can reduce the amount of solar power it buys each year by between 25 percent and 35 percent or use it instead of wind-power purchases.
A proposed fuel-cell rate tariff is pending before the Public Service Commission.
Markell’s natural resources secretary, Collin O’Mara, points out that Bloom’s fuel-cell boxes produce half the carbon dioxide emissions, one-third of the nitrogen oxide and a mere fraction of the sulfur dioxide that coal-fired generation pumps into the air.
The deal with Bloom would relieve Delmarva of having to support another large solar farm built by out-of-state developers or buying credits from wind farms in Pennsylvania or Ohio, Selander said.
“This was done in a way that has minimal impact, while maximizing the opportunity to put Delawareans back to work,” Selander said.
This arrangement means that only Delmarva, which has 300,000 electric customers, would subsidize the Bloom project through electric bills. Customers of the Delaware Electric Cooperative, with about 84,000 customers, and Delaware’s nine municipal utilities, with 65,000 customers, currently have no contract with Bloom. State officials say they’re trying to convince the others to sign separate contracts.
McWilliams called the deal inequitable. Delmarva customers shouldn’t have to shoulder the entire burden of a statewide economic development project, she said.
The involvement of Delmarva was a compelling element for Bloom, which gets to not only build a factory in Delaware, but receives a buyer for its product, Selander said.
Bloom is based in California, which provides substantial subsidies for locally sited, cleaner power sources such as fuel cells. The refrigerator-sized “Bloom Boxes” are in use at such high-profile businesses as Google, Wal-Mart and Bank of America.
Bloom’s fuel cells are designed to run on a variety of renewable sources. For instance, “Bloom Boxes” installed at eBay’s headquarters in San Jose, Calif., run on biogas, which is made from landfill waste. Delaware officials hope the Delmarva units also will run someday on a regenerating feedstock.
For now, the Delmarva units would run on natural gas, which the utility’s customers would provide to Bloom at no cost.
Instead of burning the gas, as happens at a combined-cycle gas turbine plant, a fuel cell uses an electrochemical reaction, at lower temperatures, to convert natural gas into electricity.
O’Mara said that makes a fuel cell a significantly cleaner way to use natural gas – and less of it.
It may not, however, be the most efficient way to reduce carbon emissions, said Shu Sun, an analyst at Bloomberg New Energy Finance.
Modern combined-cycle gas turbine plants produce about the same amount of carbon emissions as running that gas through a fuel cell, at a much lower price, Sun said. O’Mara said this may be true but only at the larger gas turbine facilities.
Neal Sullivan, director of the Colorado Fuel Cell Center, noted fuel cells emit far less nitrous oxide, a major air pollutant, than burning the natural gas.
“Natural gas came out of the ground. That’s not really renewable,” Sullivan said. But that may be more of an argument about words rather than science, he said.
“The benefits of what they bring are in the spirit of what these programs and laws were created for,” Sullivan said.
Delaware Democrats, many of whom supported the original bill, agreed. Not a single Democrat voted against the law that redefines natural-gas-powered fuel cells as renewable.
McWilliams, the Democratic lawmaker who left Delaware two years ago to move to New Mexico, takes a different view. It’s popular to get behind job creation, but this project offers “short-term gains that might really set us back in the long term” to create sustainable solar and wind businesses, she said.
Delaware’s solar industry is looking at the law change warily.
Dale Davis, president of the Delaware Solar Energy Coalition, which represents solar installers and manufacturers, said the state has assured him that Delaware installers will see the same amount of business as before the law was changed.
But Davis worries about the precedent.
“Why don’t we declare clean coal renewable, or nuclear?” Davis said.
Davis’ worry has become real in the coal states of Pennsylvania and West Virginia. Both states have allowed technologies that reduce emissions from coal to be treated like wind or solar when it comes to fulfilling state “alternative” power goals.
The wind industry, which produces far more power than any other renewable resource, would feel the brunt of such changes to state renewable portfolio standards, said Matt DaPrato, an analyst with IHS.
State requirements give wind and solar developers a long-term view of demand, making it one of the most important programs keeping the industries vital, he said.
There’s a real concern among analysts that states will be willing to weaken these requirements in the face of economic difficulties, once the heavier, later-year requirements begin to set in, DaPrato said.
Peter Kelley, a vice president at the American Wind Energy Association in Washington, said “renewable means it never runs out.”
Changing the requirements “injects a level of unpredictability that is not helpful to the actual renewable energies,” Kelley said.
It may feel right now as if there’s an unlimited supply of natural gas, but prices are expected to be markedly higher a year from now as demand increases once economies rebound, Kelley said.
Natural gas is seen as far cleaner than coal but still emits some carbon when combusted.
Increasingly, gas has been drilled from rural Pennsylvania and elsewhere using a controversial method called “fracking,” or hydraulic fracturing. A combination of water, chemicals and sand is blasted deep into the earth to fracture shale formations, letting natural gas escape.
In Pennsylvania, fracking wastewater is permitted to be partially treated and dumped into rivers from which communities get their drinking water, although there are state efforts under way to try to reduce this.
Researchers are studying whether higher levels of carcinogens downstream from these treatment plants are a result of fracking wastewater.
This, said Bill Zak, a Lewes environmentalist who led efforts to cut emissions at the coal-burning Indian River Power Plant, is a big reason to be skeptical that fuel cells represent a major advance.
The idea of the renewable portfolio standard was to encourage zero-emission, self-replenishing electricity, he said.
If a fossil fuel, however transformed, can be considered renewable, “for me, the definition of renewable portfolio ceases to have real meaning,” Zak said.
A Republican, Sen. Joe Booth, of Georgetown, comes to the same conclusion through different reasoning.
Booth has been skeptical of subsidies for renewable energy, and adding in fuel cells creates a wider range of fuels eligible for subsidies.
“If we’re going to keep watering this down, calling this renewable and that renewable, pretty soon, you’ll have subsidies for everything,” Booth said.