Article From the Las Vegas Sun: "Renewable Energy Elusive"
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
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
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."
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
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.
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
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
"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
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
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
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
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."
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
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
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
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
"I wish I knew what the silver bullet was for the starting gun,"
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