Boulder Can Own Its Power With Distributed Generation

If Xcel proposes "business as usual" with its exposure to fossil fuels and a rate hike of 33 percent in nine years, Boulder's case for municipalization becomes starkly stronger.
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The city of Boulder is on the way to creating a new, clean energy future in a process that may mean breaking away from Xcel Energy and creating its own municipal utility. Conversely, Boulder could consider partnership with Xcel in a plan created by the utility to help the city meet its energy goals. Those goals are to democratize, decentralize and decarbonize the energy supply for the city.

However, it turns out that Xcel Energy may not provide a proposal to Boulder. In last week's City Council study session, City Manager Jane Brautigam said that there is no firm date for presentation of a proposal; indeed there is no assurance that there will be one. Xcel has already missed two deadlines this year after tangling with the city last year over Boulder's request for a partnership plan.

And if Xcel punts, or gives a proposal that is heavily similar to "business as usual" with all of its exposure to fossil fuels and a rate hike of 33 percent in the next nine years, then the case for municipalization becomes starkly stronger.

If Boulder creates a municipal utility, its energy system will rely on two major modes of generation. One will be natural gas-powered base load energy, provided most likely by one of the independent power producers cast off by Xcel (as it builds its own natural gas plants to replace a lot of old coal burning capacity). The second will be distributed and efficient generation of clean power around the city to push back against that use of gas.

Some have pointed out some well-known environmental threats of natural gas. It's not so clean on a life cycle basis due to fugitive emissions of methane. Only loads of research could force people to see gas as being "worse than coal," as alleged, since after all coal outgasses methane every moment that it's exposed to air -- on top of being Pigpen when it comes to releasing CO2 and toxins upon combustion. Bottom line: no one should be shocked to learn that a large increase in the use of gas is merely a side-step toward greenhouse gas reduction.

But here's why natural gas is still a necessary step:

The quick ramping capability of natural gas power units enables renewable energy to supply the grid with little or no concerns for reliability. This is how grids are stabilized now anyway in the face of intermittent loads such as appliances going on randomly. Gas is therefore the "bridge fuel" for putting a bridge between coal's rigid base load power and the dodgy ways of everyday demand; in the same way, natural gas can lead to a world heavily powered by renewables.

Therefore the picture clean energy advocates in Boulder are aiming for is one where the city gets its base load from natural gas and then the community pushes back on the gas with increasing inputs from wind and solar. Of particular interest, the cost of integrating that intermittent solar on the grid can be reduced by, get this, adding more solar! Research out of Lawrence Berkeley National Labs has shown that the cost of integrating solar power onto the grid drops rapidly as installations get dispersed, over say, a 25-mile spread. If a grid area is gifted with one solar plant, the cost of integration is four cents per kilowatt hour. If the system has five solar plants, integration costs one cent/kwhr. And with 25 plants, that cost drops to a quarter-cent per kilowatt hour.

And solar costs are plummeting. There's been a 50 percent price decline in solar modules since 2008, and a 20 percent decline in the installed price in 2010 alone, according to Climate Progress.

The recent, rapid price decline of solar is one reason that David Crane, CEO of the large utility NRG, has all but told Forbes' Todd Woody that NRG will jump into the residential solar business, the backbone of DG:

"We think over the next three to five years the solar business will migrate heavily from a utility-sized solar business to a more of a distributed solar model driven by consumer demand not by government largesse," he said. "And we expect to be out in the forefront of that."

When local generation is spread round a community of small providers, what you get is distributed generation.

And to save even more on energy and integration, add demand response, which means contracting with customers to shunt their energy use at critical times. Add to that combined heat and power (CHP) which is any well-designed use of excess heat off of combustion turbines and processing plants to give extra services like hot water for heating and cleaning.

According to Sean Casten, CEO of Recycled Energy Development, Denmark gets 50 percent of its power from CHP, and the state of Maine gets 33 percent.

These efficiency solutions are most suitable to the business model of a municipally owned utility which can be in the business of reducing customer demand. By contrast, an investor-owned utility cannot sharply cut that which pays its investors, which is the sale of more electrons.

There are more known economic benefits of local power. Boulder's pals at National Renewable Energy Labs put out a study in 2009 showing a tendency for locally-owned wind power generation to proffer nearly three times as many jobs as absentee-owned resources, with a total economic boost up to three times better than absentee-owned.

More on jobs: the installation of new solar PV yields up to 14 times more jobs for coal's and natural gas' one job produced on new projects, and wind offering up to four times as many jobs also. The renewables also yield better permanent jobs, too, as reported in 2009 study from UC Berkeley.

If Xcel does not provide a plan for how Boulder can join the city in a new direction, Boulder's job is to plan out a safe transition to a natural gas-fired power provider who can keep the lights on and integrate increasing amounts of renewables and efficiencies at a price in line or less than what they'd be paying otherwise.

On the pathway to owning its own power, Boulder will need to do lots of outreach and education about the energy options in a concise and accurate way. Leaders will also need to spell out for voters the nuances among of bond ratings and the bonding instruments that are especially attractive for municipalities. Reports of "unlimited bonding authority" have created a flap among doubters, when the subject matter is revenue bonds.

But one thing is not in question, and that is whether our town can attract world class talent for a very exciting clean energy proposition.

In its still-heavy reliance on fossil fuels, Xcel may find its situation getting more precarious. David Crane put it this way: "There is reason to assume that as a post-industrial society that might be getting more serious than it has about conservation and efficiency with widespread support for more renewables, if a company like ours were to find itself as the fossil fuel power generation company, we would be in a business that is in terminal decline." David Crane perfectly voices what so many in Boulder are suspecting, and that's what they want to get free of, with the help of their home-rule rights assured in Colorado's constitution.

A version of this column ran in the Boulder Daily Camera. Correction: That earlier version stated that research about natural gas cited by Bob Greenlee in the Camera was not yet released. In fact the research was released just before press time at the Camera.

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