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Article From the Las Vegas Sun: "Renewable Energy Elusive"

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  • gildacabral
    http://www.lasvegassun.com/sunbin/stories/sun/2005/oct/12/519498058.ht ml?rademacher Today: October 12, 2005 at 7:39:15 PDT Renewable energy elusive Nevada
    Message 1 of 1 , Oct 13, 2005
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      http://www.lasvegassun.com/sunbin/stories/sun/2005/oct/12/519498058.ht
      ml?rademacher

      Today: October 12, 2005 at 7:39:15 PDT

      Renewable energy elusive
      Nevada Power hits roadblocks trying to move away from fossil fuels
      By Kevin Rademacher
      Las Vegas Sun

      Nevada lawmakers first required the state's big electric utility
      companies to use renewable energy in 1997, insisting that they get 1
      percent of their total power from sources such as solar, geothermal
      or wind power by 2010.

      In 2001 the state toughened the standard, making the requirement 15
      percent by 2013. This year lawmakers raised the demand to 20 percent
      by 2015.

      Along with those overall goals came annual targets that, despite
      years of trying, have yet to be met. Regulators, power-plant
      developers, consumer advocates and utility executives cite a series
      of well-documented problems that have stalled the process --
      economics and Enron Corp. among them.

      Despite the problems, none is prepared to concede defeat. That
      resolve has been shored up by the painful fact that fossil-fuel-
      generated power is getting expensive, very expensive.

      Nevada Power Co. in June asked state regulators for $62 million in
      rate increases. Last month the $62 million increase was approved by
      regulators, pushing the average residential customer's monthly
      electric bill higher by $4.63, or 3.7 percent. The culprit was the
      soaring price of natural gas, which powers most electric utility
      plants.

      Despite the increase, utility executives and state analysts concluded
      that because of continued increases in natural gas prices Nevada
      Power's request was short by as much as $85 million.

      "We are at a point where we can't put all of our eggs in one basket,"
      Public Utilities Commission Chairman Donald Soderberg said of the
      need to diversify the energy landscape. "If we are not preparing for
      the next decade now, we are going to be in even worse shape."

      Nevada Consumer Advocate Adriana Escobar Chanos agreed.

      "I think people are really starting to understand that it's
      essential," she said. "There's just no ignoring it anymore."

      High standards

      Nevada's renewable energy mandate has been hailed as one of the
      nation's most aggressive, and advocates claim it's fitting since the
      state is rich in sunshine, wind and, in Northern Nevada, geothermal
      energy.

      As unstable fossil fuel markets rattle consumers, it has made
      Nevada's early move toward renewable energy seem prescient.

      Statistics from the National Renewable Energy Laboratory in Golden,
      Colo., indicate that the national average wholesale price utilities
      pay per kilowatt hour for wind power is between 3.5 cents and 5
      cents. Geothermal is about 8 cents per kilowatt hour, as are large-
      scale, turbine-powered solar power plants. For photovoltaic power --
      generated through solar panels -- the price is 20 cents to 25 cents
      per kilowatt hour.

      The price Nevada Power pays for its power is 5.2 cents per kilowatt
      hour. That price excludes general rates, which cover administrative
      costs and those for building and maintaining transmission systems.

      As international markets such as China and India increase demand on
      fossil fuels and environmental concerns limit exploration of
      additional natural gas resources, the price gap is expected to close
      between traditional electric generation and renewable energy.

      "We would argue that the cost of renewables, no matter which form, is
      going to be more predictable because the cost is almost all capital,"
      NREL spokesman George Douglas said.

      Predictable costs

      Experts say that while long-term economic factors point to
      continually rising fossil fuel prices, renewable power costs could
      fall as increased use leads to improved manufacturing conditions and
      better technology.

      Douglas said limited manufacturing activity for solar cells,
      accompanied by growing demand, has kept prices high.

      "That's going to break," he said, pointing to companies gearing up
      production levels. "At some point, the lines (between traditional
      power generation and renewable power) are going to cross."

      Tim Carlson, a former economic development executive who is trying to
      develop renewable power plants, agreed that the lines will cross, but
      only if the current situation remains unstable. Moves toward
      renewable power in the late 1970s and early 1980s stalled when energy
      prices stabilized. It's that uncertainty that adds to hesitation as
      renewable plants are slow to take shape.

      "It's all going to be a matter of economics," Carlson said. "If it
      stops because of some quirky thing, it's going to be a problem."

      There's no denying that progress has been slow. Nevada Power failed
      to meet its first two incremental goals. The company is working with
      regulators to establish a compliance plan to meet the standards in
      the future.

      "It's going slower than we would like it to proceed," said Roberto
      Denis, vice president of energy supply for Nevada Power and Sierra
      Pacific Power Co. in Reno. "The reasons lie, possibly, in many
      quarters."

      When the state made its first update to its renewable requirement in
      2001, it coincided with a major meltdown in the state's utility
      industry. The fallout of the Western energy crisis and a heated legal
      battle with energy trader Enron left Nevada Power in financial
      trouble.

      That, developers argued, put the brakes on renewable power plants
      that are financed based on power purchase agreements with the
      utility. A deal with a junk-rated utility was worthless to a
      developer's financial backers.

      "We tend to forget about a power company that went into the toilet,
      so to speak," Carlson said. "If things hadn't happened the way they
      did, I think we'd be further down the line."

      Denis also points out that developing renewables is not as simple as
      throwing up a windmill. He said wind steady enough to harness for
      power, while prevalent in Nevada, is often located in remote areas.

      "That means there are no roads, no people and no electric
      infrastructure," he said. Without transmission lines, the power is
      useless, and running lines solely for the wind generation is
      expensive, ultimately pushing the cost of power to unreasonable
      levels.

      Then there's the availability of the power once the plant is built.
      Most renewable energy is not considered baseload power, meaning that
      it is not always available. Wind power is only available when the
      wind is blowing, and solar power is only available when the sun is
      shining.

      Such shortcomings could require the utility to maintain backup
      supplies from traditional sources. Douglas said that such issues
      could be overcome by placing -- in the case of wind power -- wind
      farms in several locations.

      "The wind is going to be blowing somewhere," he said.

      Denis said it's those types of calculations that are being made now.

      "It's trying to come up with a combination of renewables and whatever
      we have to do when the sun isn't shining and the wind isn't blowing,"
      he said. "It's doable. It is not unreasonable to think that we can
      come up with the resources we need to shore it up."

      Economic engine

      Beyond the need to diversify the electric supply, Nevada economic
      development officials also have their eye on the potential jobs that
      renewable power could generate.

      In July, North Carolina-based Solargenix Energy LLC received more
      than $15 million in incentives from the Nevada Commission on Economic
      Development for its proposed solar energy power plant in Boulder
      City.

      The commission granted the company about $6 million in sales and use
      tax abatement incentives for the $106 million in equipment needed to
      build the 350-acre, 65 megawatt power plant. Solargenix also received
      $9 million in property tax abatement through a program created by the
      2003 Legislature to promote renewable energy development.

      The company secured a lease with Boulder City in 2003 to build the
      plant.

      The plant could generate enough power for 18,000 hotel rooms in Las
      Vegas, Solargenix Executive Vice President Jeff Myers told the
      Commission on Economic Development in July.

      Myers also said the plant's development would begin within "the next
      several months" and it should be operational by early 2007.

      Tim Rubald, interim executive director of the Commission on Economic
      Development, said the Solargenix plant could be the first step in a
      booming Nevada industry. He said the commission has, in recent
      months, talked with several companies in the renewable energy
      industry about setting up in Nevada. Those companies are expressing
      interest in manufacturing everything from windmill blades to
      turbines.

      He cited comments by Lt. Gov. Lorraine Hunt, who heads the
      commission, describing Nevada as the "Middle East" of renewables.

      Finding the right spark to get the industry rolling has not been
      easy.

      "I wish I knew what the silver bullet was for the starting gun,"
      Rubald said.


      Brought to our attention by David Gordon.
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