Cherries

Cracking Eggs

August 30th, 2017

Written by: Tony Anderson

eggs

Longtime members know that I have written about a “not-all-eggs-in-one-basket” energy portfolio more than once. I have always been a proponent of a balanced portfolio of power supply in order to keep prices affordable over a long period of time.

What I am seeing and what I have been reading over the past several months is making me uneasy. It feels like the industry is drifting away from a balanced portfolio of power. I worry that we may one day wake up to find our basket contains fewer eggs.

I recently read that three out of every 10 coal generators have closed permanently in the past five years. By 2023, there may be 54 nuclear plants in operation. This would be down from the 65 that were in operation in 2013.

It doesn’t take an industry expert to see that there will be more coal plants closing in the coming decade. The fact that some states are now subsidizing nuclear facilities to keep them open and save thousands of jobs is also clear evidence that the nuclear industry is at a perilous stage as well.

At some point in our future, the biggest eggs in our basket will be natural gas and wind. Solar will remain solid but a very minor egg. The coal and nuclear eggs are clearly showing signs of cracking.

Why? Low natural gas prices and declining renewable costs are the big reasons. Natural gas pricing is all about supply. Today, we have an abundant supply. Renewables are currently competitive due to federal subsidies and declining production costs.

Another publication I came across a short time ago quoted an industry expert who believes that the shale gas boom is not a revolution. He believes that it simply bought the U.S. a decade or so of normal supply before facing another period of scarcity. Before the present gas boom/revolution, similar experts said we were going to run out of natural gas. Your guess is as good as mine as to which expert to believe.

What I do know is that the U.S. Department of Energy came out with a report that said fossil fuels still accounted for 81 percent of all energy used last year. This is the lowest percentage of fossil fuel use in the last 100 years. As the yoke drains from the coal egg, the natural gas shell continues to expand.

What happens when renewable subsidies go away? What happens when states no longer subsidize nuclear facilities? It is a simple process of elimination to conclude that natural gas could become even more important.

What can we do about it? It’s an easy answer to type, but a harder one to execute as our options and opportunities seem to be dwindling. However, we simply must continue to try to maintain a diverse portfolio at every turn.

Our coal and nuclear eggs need to be handled with care. The eggs in the renewable basket need to maintain their current declining prices. Finally, we need to be looking at stable, long-term contracts for natural gas eggs. It is a delicate balancing of many baskets as we try to make it back to the house in an ever-swirling environment without cracking any eggs.

Tony Anderson

Categories: Energy PolicyManager's ColumnMichigan Country LinesRatesReliabilityRenewable EnergySolar

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22 thoughts on “Cracking Eggs”

  1. John lombardi says:

    You should have mentioned technology is a huge unknown which will contribute to future energy opportunities. Also, the future of transportation will be electric and we need off peak rate structure that will reduce capital investment. It will be a slow change but it has begun and will accelerate. All major vehicle manufactures are committed to early 2020s.

  2. Kevin Breen says:

    Thanks for your discussion of this important issue. It does raise a couple of issues for me. You mention subsidies for solar energy and that it will only by a minor player in the years. to come. I wonder why it will only be a minor player? It seems like solar has the potential to be a much bigger player. I will read your article on solar in the coming days. Also, you mention subsidies for renewable energy sources, but is it not true that fossil fuel industries also enjoy subsidies? Certainly in the age of global warming fossil fuels enjoy a subsidy by not paying for the costs of global warming’s ill effects: sea level rise, forest fires, heat waves, increased rain events, etc.

    These are just normal questions that arise from your article. I do appreciate the discussion forum you create.

    1. Tony Anderson says:

      It is my opinion that solar will be only a minor player due to the sheer lack of sunlight in Michigan. Coal, nuclear and natural gas can generate almost every hour of every day. Wind will operate 35-45% of the time. Solar is less than 20% on a year round basis. Thus, there will be the need for better battery storage, more massive solar installations or both. Batteries will get better and cheaper but it is a slow process. I just can’t see solar achieving 20% of total generation in Michigan in my lifetime. Heck, 10% is going to be a huge mountain to climb. As far as fossil fuel not paying the costs of global warming, I will always maintain that you can’t charge these fuels for global warming unless you credit them for all the good they have done since the beginning. How many lives have been saved by refrigeration alone? What about the countless life saving operations under lights powered by coal and natural gas? Wherever there is a cost, there has to be a benefit in my book. If some can scoff at the benefits of fossil fuel generation, others can do the same with global warming. It is a never ending argument with no clear winner. Better to spend our time on solutions like electric cars, time of use rates, energy efficiency, conservation and improved technology for all forms of generation.

  3. Dear Mr. Anderson,

    As Cherryland customer and client who has taken the step of installing solar on my own home, I could not disagree more with your assessment of “a balanced portfolio” moving forward that includes oil, coal and nuclear options. All one has to do is to look at the disaster at Fukishima, which is in no way resolved, to see the folly of continuing to use nuclear power. There is still no answer to what to do with nuclear waste, and we have plants storing waste on our shores that are vulnerable to both natural disasters and potential terror attacks. With more climate catastrophes ramping up, it’s only a matter of time before another horrific “accident” occurs. Worrying about several hundreds of jobs lost is nothing compared to the loss of life, massive poisoning and destruction that would last thousands of years with one accident.

    Climate change cannot be abated if we continue to burn fossil fuels, period. We are in the most dire crisis for the survival of life on the planet. The first step toward mitigating CO2 is of course a reduction in the use of energy- finding more efficient ways to live. Just shutting off lights and equipment in businesses, high-rises and factories when not in use, reducing waste on all levels, would make energy far more cost-effective. No one ever talks about this, because we are a spoiled and wasteful population, gobbling up far more than our share of energy on the planet.

    There are many new solar and wind technologies starting up each month, in which we should be investing, rather than having a retrograde attitude about saving our addiction to dirty, dangerous and life-threatening forms of production. We need to ask, (perhaps it’s already too late,) whether a “job” that contributes to destroying life on the planet, is a “job” worth saving.

    We have opportunity to invest in Hydro, tidal power in our lakes, in wind and solar, if we have the will to do it. Conservation and reduction in use must be part of the package. Destroying the environment so that we can all live it up wastefully for a few more years is not an answer. Yes, these issues are politically painful and they require educating people on a creative path forward to a clean future. We have no time to waste.

    Hurricane Harvey should strike fear in the hearts of anyone concerned about where we are headed. There are more climate disasters and worse ones on the near horizon, and unless we stop acting like we still live in the 1950’s, we are headed down a very dark road. We will have to break a few eggs in order to make a sustainable future, if there is to be a future at all. The alternative is no eggs at all.

    Sincerely,
    Elizabeth Paxson
    231-943-1316

    1. Tony Anderson says:

      You make some great points but we will have to agree to disagree on nuclear. Nuclear energy is not a folly. It is a carbon free form on energy. We simply must get the storage right. Fukushima did not happen in the US. To put that one on the US nuclear industry is not fair. Climate change will not be abated in any meaningful way without nuclear energy. I will always stand by that statement. Energy conservation is certainly a great piece to the bigger solution. It is an individual choice that anyone can work to improve. Our power supplier, Wolverine Power Cooperative, has committed to 10 MW of solar at above market prices. So, I do believe the Cherryland family is doing its part to encourage solar investments by area residents and businesses. You also mentioned hydro. Running water is the cleanest form of 24/7/365 generation there will ever be. Try to re-license an existing plant or build a new hydro facility and you will see roadblock after roadblock of environmental opposition. Fish preservation seems to take precedent over planet preservation during every hydro debate I have witnessed in my working career. I wish I could explain this human phenomenon.

      1. D. Povich says:

        I’m curious when such a “client” goes solar, did they request that Cherryland disconnect their electrical service? Or do they choose to be “spoiled and wasteful” only when the sun doesn’t shine on their Ivory Tower?

        Remember people, the first step towards “mitigating CO2” is to temper your hyperventilation.

        1. Tony Anderson says:

          The solar installations that we work with are not disconnecting from the Cherryland grid. They either supplement their in-home usage or they put 100% onto the grid in return for a price above the wholesale market.

  4. Stephen Sanders says:

    As a liberal with a scientific background, I agree with you that nuclear should be one of the pillars of our electric supply. With care, we should be able to do this safely. I break with you on coal however. While I take your point on diversity, I believe that unless coal can be burned cleaner than now possible, the dangers of climate change outweigh the diversity of power argument. I am willing to pay more to keep the planet sustainable.

    1. Tony Anderson says:

      Well said and understood. I do believe we can do coal cleaner than we have in the past. I am hopeful that technological gains can be made at some point in the future that will allow us to have a diverse portfolio while reducing air pollutants.

  5. Thomas Corwin Sr says:

    Tony, very good article. Thanks for staying on top of this balancing act.
    I do have a question, what is the percentage of our local energy that is
    produced by the solar project at the office?

    Thanks for all you do.

    Tom Corwin Sr

    1. Tony Anderson says:

      Thanks for your kind words. The array by our office is very tiny. There are 224 panels producing 224 watts each. It would take 1500 panels to power our office alone. Over by the Wolverine Power Cooperative headquarters on M55 near Cadillac, there are more than 4,000 panels at 335 watts each available for leasing by individual Cherryland members. The Wolverine facility is slightly more than 1 MW in size. If dedicated just to Cherryland, this solar array would be less than 2% of our needs. Because solar only produces energy on a very part-time basis, it is hard to make it a large percentage of our needs. When you add wind and hydro to our portfolio, Cherryland is 19% renewable. Then, toss in the nuclear generation we buy from and you get a total power supply portfolio that is 56% carbon free. There is no other utility in Michigan at this level.

  6. Please encourage renewable energy in every way possible; lead us into a sustainable model.

  7. Dan says:

    You need to see the longterm benefits of developing a smaller, regional power supply without so much reliance on the current grid system. Promote renewable and quit lamenting the loss of old pollution-heavy energy. Your grandchildren will applaud your foresight.

  8. Pennie Lambert says:

    Another solid, common sense article by Tony Anderson. Cherryland has been a part of my life and the life of my parents and grandparents for many generations. Thanks for your reliable service!

  9. Roger says:

    Good article. Make sure you don’t make the mistake of labeling “renewables” as a single egg. There are many forms of renewable energy. You make a very good point that relying to much on cheep natural gas makes our portfolio unbalanced. We need to keep our energy sources balanced even if it means we pay a little more today. It will save us from catastrophe in the future.
    One point missing from your article is the prospect of small scale contributions from members. Wind and solar are difficult and costly to implement on a large scale, but so are coal and nuclear when you try to make them clean and safe. If we can make small systems of solar panels, wind turbans, and batteries cheap enough for nearly every homeowner and business to invest in that would change the face of energy. Have you considered a new paradigm of small scale generation in large numbers feeding into the grid?

  10. J4Zonian says:

    CONG falls from tall building

    Coal, gas, and oil are zombies–dead, but still walking and able to do quite a bit of damage 150,000 dead in the US alone, despite decent pollution controls). And of course gas causes as much global warming as coal, and pollutes groundwater, etc. Nuclear is dying but not quite dead. And what we have left is an increasingly diverse energy mix, which is beating all of those in price and new installations even though fossil and fissile fuels get 10-13 times as much in subsidies, (a lot more than that when we recognize corn ethanol is not renewable, but a money and fossil fuel laundering scheme) and the IMF estimates $5trillion a year in fossil externalities alone, a form of subsidy we allow CONG to get away with. https://www.wsj.com/articles/imf-estimates-trillions-in-hidden-fossil-fuel-costs-1431958586

    Clean safe renewable energy will keep drawing farther ahead until in the very near future fossil fuels are recognized as what they are–the energies of the 19th century–and are gone. The cheapest and best sources in every way are efficiency, conservation and wiser lives; we also have increasingly plentiful and ever-cheaper onshore and offshore wind, both distributed and utility PV, 24/7 solar thermal, clothesline paradox energies like passive and active solar water and space heating and cooling, solar cooking, and Annual Cycle Energy Systems. Hydro, micro-hydro, geothermal, and smaller but locally important amounts of tidal, wave, OTEC and other energies round out the diverse mix of the 21st century.

  11. Joseph Ambrosi says:

    Thank you Mr Anderson for a great article. I enjoy reading all of them. It seems to me the number one concern for you is to keep prices for energy affordable. Would it not be better to have an approach of reliability of energy looking towards the long term. Should Cherryland make major investments in solar panels and wind generators so on sunny days and windy days we are getting all our energy needs from these two sources and than on cloudy/nighttime and windless days we can go to our natural gas supply? This cannot be done immediately but as prices keep falling it makes more sense. I am definitely no expert on the subject but this makes sense to me.

    1. Tony Anderson says:

      Thanks for the kind words. Our power supplier, Wolverine Power Cooperative, is constantly evaluating costs of power and the balancing of sources in our overall portfolio. The price of wind and solar is certainly a reason that our percentage of renewable energy has grown over the last decade. It will obviously remain a factor in the decade to come.

  12. Karen Wachs says:

    Mr Anderson: You are as out of touch with renewable energy prospects in Michigan and the rest of the U.S. as President Trump is.
    https://www.youtube.com/watch?v=5Ugt9DbNVPk

    1. Joseph Ambrosi says:

      Karen. Thank you for sharing. Very interesting

    2. Tony Anderson says:

      Cherryland Electric Cooperative and the Wolverine Power Cooperative family of cooperatives serving more than 250,000 meters from the Grand Rapids area to the bridge have a portfolio of power that is 56% carbon free. There are no other utilities in Michigan even close. Together, Cherryland and Wolverine are leading the way and certainly very much in touch with the prospects of all forms of energy. And, an upcoming rate increase in 2018 will be our first in almost 7 years.

  13. Robert L says:

    makes me cringe when we loose yet another source of power, mostly the dams in our area. I strongly feel that “all of the above” is the only way to safely, cost effectively, and possible the most importantly, the national security of having multiple sources of power…. As an individual, power companies should make it easy for an individual to sell power back to the power company. Just another source of power, whatever manner that individual produces it.