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Study Highlights a Least Cost Energy Vision for the U.S.

least cost energy

The United States has traditionally treated energy policy as a state responsibility. Each state has a separate public utilities commission that regulates the largest utilities, legislatures pass policies such as renewable portfolio standards or efficiency standards to achieve specific goals and state energy offices craft programs to help achieve those goals. Elected officials like to stress the public benefits for their state, including: environmental, public health, affordability, and economic development and job creation.

As a state legislator and then energy secretary in Colorado, this was certainly at top of my mind. But if we are to think about our nation as a whole, it is questionable whether this state by state construct is either the most environmental benign or the most cost effective approach.

A recent study by National Oceanic and Atmospheric Administration (NOAA) Scientist Dr. Christopher Clack imagines a different paradigm and the results are staggering.

The study takes a novel approach to resource planning with an eye toward the most cost effective mechanism for delivery electricity to the nation’s energy consumers. The study starts with high-resolution weather data and overlays this with NREL’s latest information on resource capacity potential. Combined with this information are other traditional energy resources and hourly load data throughout the country.  The model is called the National Energy with Weather System (NEWS) model.

Of course the energy needs a way to travel around the country, so it imagines an internetworked system of high voltage DC transmission lines throughout the country and includes the costs of such a system into the overall calculated costs of energy.

The results highlight a couple of interesting findings: 1) When renewable resources are internetworked, they can be prioritized based on tying their generation times to demand times and it turns out our country has a wide variety of generation times depending on the weather. 2) Areas of the country with the “best” renewable resource capacity aren’t always the areas that will produce the highest value power. While traditional least cost wind resources, for example, might be assumed to be in what is termed the “wind river” through the center of our country, when one considers coincidence with demand, the most cost effective resources are much more geographically diverse. Similarly, we might assume the southwest, with powerful solar resources, would be the least cost solar generation – but the sun is rising three hours earlier in the east, and generating power that can be put on the grid and the southwest resources are generating energy long after the sun has gone down in the east, but while there is still coincident peak demand. 3) When we view the nation, as an internetworked system of resources, the costs for all consumers is lower – including the costs associated with transmission. 4) The least cost approach also produces significant reductions in pollution.

The study evaluated three pricing scenarios: 1- high-cost RE, low-cost NG; 2 – mid-cost RE, mid-cost NG; and 3- low-cost RE, high-cost NG. Each scenario produced resources costing on average significantly lower than the reference case. All reduced carbon emissions by varying degrees below 1990 levels, with the greatest reduction in the low-cost RE/high-cost NG scenario, which yielded a 78% reduction in carbon emissions below 1990 levels and a 13% reduction in electricity price by 2030. The greatest cost savings was a high-cost RE and low-cost NG scenario that reduced the national average cost of electricity 25% while reducing emissions 33% below 1990 levels by 2030.

The findings of this study validate the theory that broad regional integration of renewables reduces integration costs. But it also finds that the least cost approach to managing our energy resources also happens to be the best way to reduce harmful pollution.

There certainly are issues that need to be resolved. For example, in the study, transmission costs are based on straight lines between transmission nodes located in each state. Of course, there are no straight lines – a new version of the NEWS model is overlaying existing rights of way with railroad lines to identify pathways that will minimize opposition to the location of transmission and get a better idea of true costs. Also, utility business models would need to be a part of any transition – no longer would utilities be earning a rate of return on generation produced to meet the demands of their customers, instead they would be providing power into a larger network of consumers and generators.

But, it is a great starting point for a national strategy on electricity production and delivery with scientific analysis verifying that a national energy resource strategy is the lowest cost and cleanest way to produce and deliver energy.

All it takes now is the national political will to pursue a national vision for electricity infrastructure management akin to other large national infrastructure projects of the past such as the interstate highway system, the railway system and the nations large hydro-electric projects. Short of that, regions of the country could decide that it is in their best financial interest to develop a regional approach to resource management.

Either of these would be a more logical, cheaper and cleaner way to generate electricity than the balkanized system of today.

Photo Credit: Chad Cooper via Flickr

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