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The Good: Senate’s Clean Energy First Bill Could Reduce More Emissions at Lower Cost than Walz/House Proposals

I recently posted my testimony from Rochester on the Clean Energy First (CEF) bill currently circulating around the Minnesota State Senate. Today, I’ll elaborate on the good parts of the Senate’s Clean Energy First Bill, tomorrow, I’ll talk about the bad parts, and Wednesday, I’ll propose some amendments that would improve the bill.

The Good

The most important improvements offered in this bill, compared to the version put forward last session by Governor Walz and the Minnesota House of Representatives, is the classification of large hydroelectric dams as a “renewable” or “carbon free” resource, the bill legalizes new nuclear power plants, and it also allows for technologies like carbon capture and sequestration, which allows Minnesotans to continue to utilize America’s abundant, affordable, energy resources far into the future.

To help understand how important these provisions are, it is helpful to examine the alternative legislation proposed last session. The legislation championed by Governor Walz would have required 100 percent of Minnesota’s electricity come from carbon free resources by 2050, while refusing to legalize large hydro, nuclear, or carbon capture technologies, essentially making it a 100 percent wind, solar, and battery storage mandate.

Such a grid is impossibly expensive to build and maintain. In fact, a slideshow presented by Xcel Energy at the Midwest Governor’s Association in March of 2019 shows the modeled wholesale price of electricity in California with a 100 percent carbon free mandate using renewable energy sources and battery storage.


As you can see, the cost of electricity under this scenario is $1.61 per kilowatt hour, which is nearly 16 times higher than Minnesota’s current electricity prices, according to 2018 data from the Energy Information Administration.

This means the average Minnesota family, consuming 786 kilowatt hours of electricity per month, would see their Green New electric bill reach $1,265 per month. Furthermore, this is just accounting for the wholesale costs of electricity, which does not factor transmission, distribution, or other associated costs into the equation.

In contrast, the CEF bill introduced in the Senate legalizes large hydro, nuclear, and carbon capture, which will be indispensable technologies to deploy if lawmakers are serious about decarbonizing the grid.

If you haven’t downloaded the app ElectricityMap yet, I highly encourage you to do it because the app shows which source of electricity are serving the grid, in real time, in regions throughout the world. It also shows the greenhouse gas intensity of these grid at that moment.

You will see that the “greenest” areas on the map utilize large hydro and nuclear power, not wind and solar, to achieve a low emissions rate. For example, Ontario, Canada is consistently among the greenest areas of the world because it utilizes dispatchable sources of carbon free power that are not dependent upon weather patterns.

In contrast, Germany is often touted as a leader on energy issues, but the reality of the situation is that despite spending hundreds of billions of Euro on wind and solar power, the unreliable nature of these electricity sources means the German electricity grid runs on coal, with wind and solar hood ornaments that simply serve to increase costs.


Germany also has the highest electricity rates electricity rates in Europe, and Germans pay electricity prices that are three times higher than those in the United States, due largely to the nation’s poor energy policy decisions.

Despite these high costs, Germany has failed to meaningfully reduce their carbon dioxide emissions since 2008. German politicians have spent a lot of money, to achieve a little greenhouse gas reduction.


Minnesotans can either decide to take the failed, and enormously expensive German path to reducing CO2 emissions by pursuing more wind and solar, or they can reap far better results at lower cost using hydro, nuclear, and carbon capture.

Hydroelectric

Most people are amazed when they hear the Next Generation Energy Act, passed in 2007, does not count large hydroelectric power as renewable energy. This indefensible omission has significantly increased the cost of meeting Minnesota’s 25 percent renewable energy mandate by refusing to count the nearly 12 percent of electricity that Minnesota currently imports from Manitoba Hydro.

Counting large hydro to cut costs and improve reliability is enormously popular in Minnesota, as 81 percent of respondents to our quarterly Thinking Minnesota poll favored allowing large hydro to count as a “renewable” resource.

While there are few suitable sites for large hydro in Minnesota, Manitoba has the potential to greatly increase it’s capacity of large hydroelectric dams. This legislation will remove unnecessary roadblocks to purchasing this low-carbon power and give developers incentive to build more dams, knowing the electricity provided can satisfy clean energy mandates.

Nuclear

Nuclear power offers several cost and reliability benefits compared to wind and solar power. To fully understand these advantages, it is necessary to understand the limitations of wind and solar. For starters, nuclear power plants are incredibly productive. In 2018, data from EIA show Minnesota nuclear plants generated 100 percent of their summer-rated capacity, easily making them the most productive power plants on our grid.

In contrast, Minnesota’s wind fleet was not very productive, generating just 33 percent of its potential over the course of the year, and solar produced just 18.7 percent of its potential output. These percentages, known as capacity factors, make it much more expensive to get the same amount of electricity from wind and solar, compared to nuclear power.

For example, let’s say we want to generate 1 megawatt of power from a nuclear plant, a solar facility, and a wind facility. In order to do so, we would need to build three megawatts of wind and more than five megawatts of solar to equal the output of one megawatt of nuclear power.


When the lower productivity of wind and solar are taken into account, nuclear power is less expensive than solar, and more expensive of wind, as you can see in the table above, but this does not tell the whole story.

According to the National Renewable Energy Laboratory, wind turbines only last 20 years, and solar panels last 25 to 40 years. In contrast, nuclear plants are initially licensed for 40 years, and Turkey Point became the fist nuclear plant in the United States to be approved for an 80-year operating lifetime. If we assume a 60-year lifetime for nuclear plants and calculate the cost of producing that same one megawatt of power over this time frame, nuclear power is the clear winner in terms of cost.

It should also be noted that these estimates are conservative because nuclear power would not require tens of billions of dollars in transmission spending that would be needed to integrate more renewables on to the grid, which will substantially increase costs for ratepayers.
The advantages of nuclear power become even more stark if we examine the cost reductions that could be achieved by using South Korean nuclear technology that is being deployed in multiple countries around the globe.

The APR1400 is a 1400 MW reactor, and because of the high capacity factor of nuclear reactors, just one of these reactors would produce as much electricity as Minnesota’s entire existing wind fleet for far less cost. In fact, it would cost 20 percent less to generate 1 MW of power from the APR1400 than wind or solar in the first 20 year increment, and 3.75 and 4.8 times less than wind or solar over a 60 year period.


These factors are why American Experiment’s award winning research Doubling Down on Failure: How a 50 Percent Renewable Energy Standard Would Cost Minnesota $80.2 Billion, concluded that using nuclear power instead of wind and solar could produce a reliable, 80 percent carbon-free grid at a cost that was $22 billion to $52 billion less than relying on intermittent renewables. Had we used the costs of the APR1400 in our analysis, using nuclear power would save between $48.6 billion and $65 billion, compared to a grid powered by approximately 54 percent wind and solar power.

Adding carbon capture and sequestration technology as a qualifying resource is also commendable because it allows dispatchable, fossil-fuel powered resources to be utilized into the future.

For all the talk about climate change being an “existential crisis,” politicians like Governor Walz are fixated on reducing emissions in the most expensive, and least effective way possible. Unlike the Governor’s plan, CEF could lower emissions at less cost by allowing all of the tools, which consist of large hydro, nuclear power, and carbon capture, to remain in the toolbox.

I highlight “could” because I fear the bill, as currently written, will increase electricity costs for all Minnesotans by making it too easy for utility companies to close down their reliable, low cost coal units and build wind and solar power, which will cause electricity prices to increase. I’ll elaborate on these problems tomorrow.

*Edited on January 29, 2020. The title was changed from “The Good: Senate’s Clean Energy First Bill Would Reduce More Emissions at Lower Cost than Walz/House Proposals” to “The Good: Senate’s Clean Energy First Bill Could Reduce More Emissions at Lower Cost than Walz/House Proposals.”

 

 

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