An Open Letter to the Cape Cod Commission

An Open Letter to the Cape Cod Commission

Subject: Public Hearing Comments on the New Generation Wind Project

Dear Commission Members,

My name is Charles Kleekamp, a resident of Sandwich. I'm a retired registered professional electrical engineer. As a point of disclosure, I am a past director of Clean Power Now, an advocacy group for renewable energy. I do not have any financial interest or employment opportunities with any renewable developer.

I would like to share with you some technical information about the New Generation Wind Project and the related benefits.

Fossil Fuel Avoidance

Let me start by stating that every MWh of wind energy will always replace a MWh of fossil fueled electricity primarily from oil and natural gas.

The factual reason is that ISO NE, the grid administrator of the wholesale market, has a policy to allow renewable energy sources with zero fuel costs like wind and hydro, to bid into the into the hourly market auction at the bottom of the bid stack. The intent is to insure that wind and hydro will always be dispatched before sources with higher fuel costs and harmful emissions [1].

Even though the price of fuel is zero for renewables, it does not mean that the cost of producing electricity from these sources is zero. None-the-less, according to the ISO rules wind and hydro bids will always be dispatched when and as available [2]. These renewable sources will receive the "uniform clearing price" as will all winners in the auction for dispatched power. They are known as "price takers".

Since electricity cannot be stored on the grid, some oil or gas fueled generator, or combination thereof, defined as "marginal units" at the top of the bid stack will have to be backed-off as wind comes on line [3]. As such, those fossil fueled generators will then consume proportionately less fuel at their resulting lower production levels [4].

The 17 MW New Generation Wind Project with a conservative capacity factor of 25% will generate about 35,000 MWh per year [5].

Knowing the heat rate of an oil fueled steam generation plant one can calculate the amount of oil avoided due to the addition of this wind power, and it is some 56,000 barrels or 2,352,000 gallons over a year [6].

Likewise, knowing the heat rate of gas fired combustion turbines one calculates that about 260 million cubic feet of gas consumption could be avoided per year [7]. And that's enough natural gas to provide heat and hot water to some 2,260 homes [8].

Of course, the 35,000 MWh of wind generated electricity can supply about 4,700 typical homes [9].

The marginal plant back off would be a combination of oil and gas units, most likely gas units since the price of oil has all but closed down oil fired steam generators. From the 2008 ISO Marginal Emission Rate Analysis we can calculate the following emission avoidances [10].

The estimated wind power from the New Generation Wind Project will avoid the emission of about 16,000 tons of carbon dioxide each year [11]. This is equivalent of taking 4,200 cars off the road [12].

In addition the detrimental health and effects of 11,500 pounds of sulfur dioxide and 7,300 pounds of nitrogen oxides will be avoided [13]. The nitrogen oxides are responsible for ground level ozone that exacerbates asthma attacks and other respiratory problems. It is astounding that Cape Cod has been out of compliance with EPA air quality limits for many years.

Wind Impact on the Wholesale Electric Market Price

Since wind power will always displace some or all of the highest marginal bidder's offer, it will lower the clearing price for the entire wholesale electricity market thereby effectively lowering the cost of electricity to all users. For a large wind farm like Cape Wind, it is estimated to save consumers billions of dollars over its lifetime [14]. For smaller windfarms like New Generation, the system savings will be proportionately lower but none-the-less significant.

In addition, long term Power purchased Agreements (PPAs) for 10 to 25 years for wind power can be arranged at a fixed price (plus an inflationary cost) since they are independent of the extreme volatility of fossil fuels. The wind is free and forever.

How soon we forget that just 10 years ago the price of natural gas was about $2/mmBTU and the wholesale cost of electricity was 4 cents/kWh. Just before the current rescission the cost of natural gas (which fuels 40% of New England's power plants) was up to $14/mmBTU. Now it has dropped to about $4/mmBTU. The wholesale price of electricity pre-recession was about 12.5 cents/kWh, but now it is between 8 and 9 cents/kWh.

The point is that wind power can help smooth and lower the brutal swings of oil and gas prices, hence stabilize electricity prices.

Although the selling price of the wind power from the New Generation Wind Project is yet to be determined it is expected to be competitive and produce a long term profit for the developers. As a case in point, the 1.6 MW privately funded turbine of Notus Clean Energy now operating in Falmouth is expected to make a profit by selling its excess power to NStar at the existing wholesale price at whatever it may be at the time of generation.

Conclusion

Wind is to be considered a replacement fuel that avoids the use of oil and natural gas in a proportional amount to generate electricity. Benefits include the reduction of environmentally harmful and unhealthful emissions. In addition, the stabilizing impact on long term electricity costs and reduction of imported oil and natural gas [15] are significant benefits.

It is for these reasons that I would encourage the Commission to favor the construction of the New Generation Wind Project.

Sincerely,

Charles Kleekamp, P.E. Ret.

Footnotes

1. ISO NE, "Electricity Costs and Pricing in New England's Power Market," February 2006.

2. This is true even if the wind power is sold in a private power purchase agreement as PPAs are also placed and dispatched from the bottom of the bid stack. See "Analysis of the Impact of Cape Wind on New England Energy Prices," Charles River Associates, February 8, 2010.

3. Defined in the "Marginal Emission Rate Analysis," of ISO NE for the year 2007, p. 1

4. Both base load and cycling generators reduce the heat input (in BTU) in a linear fashion as the electricity production decreases. The efficiency at lower levels is only slightly less (one percent) than at full load as indicated in EPA analysis data.

5. 17 MW times 8,760 hours/yr = maximum production of 148,920 MWh. A CP of 25% results in a production of 35,040 MWh.

6. The heat rate of a typical oil fueled cycling steam generator is about 10,000 BTU/kWh. A barrel of #6 residual fuel oil has a heat content of 6,287,000 BTU. Therefore to generate a MWh of energy, about 1.6 barrels of oil or 66.8 gallons of fuel per MWh are consumed. So 35,000 MWh from wind avoids the consumption of 35,000 x 1.6 bbls = 56,000 bbls or 2,352,000 gallons.

7. The heat rate of a typical combined cycle gas turbine generator is about 7,500 BTU/kWh. A cubic foot of natural gas when consumed releases about 1,000 BTU. So 35,000 MWh from wind avoids the consumption of about 260 million cubic feet of natural gas.

8. According to the American Gas Association the average New England home uses about 89,000 cu. ft. for heating and about 26,000 cu. ft. for domestic hot water. Therefore the avoided 260 million cu. ft. could serve some 2,260 homes a year.

9. A typical New England home uses 618 kWh/month (National Grid DPU case) or 7.4 MWh/year. So 35,000 MWh of wind electricity can supply about 4,700 homes.

10. Based on the "ISO-NE 2008 Generation Emissions Report: Preliminary Results," H. Saarela, May 25, 2010. And they are: CO2 964#/MWh; SO2 0.33#/MWh; NOx 0.21#/MWh.

11. CO2: 35,000 MWh times 964 #/MWh = 33,740,000 #/yr or 16,870 tons/yr.

12. Assume 10,000 miles per year at 25 MPG yields 400 gallons of gasoline. A gallon of gasoline consumed produces 20 pounds of CO2. This typical auto therefore emits 8,000 #/ year or 4 tons/yr. Thus 16,000 tons/yr divided by 4 tons per auto yields 4,000 autos/yr.

13. SO2: 35,000 MWh times 0.33 #/MWh = 11,550 #/yr. NOx: 35,000 MWh times 0.21 #/MWh = 7,350 #/yr.

14. "Analysis of the Impact of Cape Wind on New England Energy Prices," Charles River Associates, February 8, 2010. Cape Wind would lead to aggregate savings in the wholesale cost of electricity over 25 years of $4.6 billion.
15. The largest power plant in Massachusetts, the Mystic Generation Station at 1,958 MW uses imported liquefied natural gas (LNG) to directly fuel their combustion turbines.

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