Utility Co-op Connection
Need for new baseload capacity, expanded
transmission are huge challenges for RECs
By Anne Mayberry,
Rural Utilities Programs
USDA Rural Development
ural electric
cooperative utilities
will need to double
generating capacity by
2020 due to current
and projected growth, according to a
recent report issued by USDA Rural
Development’s Utilities Programs. The
report, Rural Electric Power Generation
and Capacity Expansion, notes that
because of the significant lead time
needed to add baseload capacity, many
cooperatives are already behind the
curve.
Baseload is electricity generated 24
hours a day, seven days a week and
fueled by coal, nuclear energy and,
sometimes, natural gas.
In addition to the need to add
generation, the report sees lack of
transmission capacity as another cause
for concern. This is a key constraint in
development of renewable energy
resources in rural areas because the
transmission grid, which delivers energy
from points of generation to demand
centers, is operating at capacity.
Peak demand climbing
Peak demand for electric power is
expected to increase by more than
135,000 megawatts (MW), or 17.7
percent during the next 10 years.
Capacity is projected to increase by
only 77,000 MW, the report predicts.
Rural electric generation and
transmission (G&T) cooperatives
generate approximately 5 percent of the
nation’s electric power. Recent surveys
conducted by the National Rural
Electric Cooperative Association
indicate that a 10-year capital
requirement of $65.5 billion is needed
to meet planned capacity. This includes
$49.9 billion for new generation, $10
billion for transmission and $3 billion
for environmental requirements.
A number of factors have affected
the ability of electric utilities to plan for
future growth. These include: rising
construction costs, legal challenges to
environmental permits, uncertainty
relating to carbon dioxide emission
limits and the inability of USDA Rural
Development’s electric program to fund
baseload projects.
Noting that a balanced approach is
necessary to maintain system reliability,
sustain economic growth and allow time
for development of new technologies,
the USDA report says that a mix of
strategies must be developed. The
report’s findings have been echoed by
those of other industry organizations.
The Edison Electric Institute, a
trade association representing for-profit
electric utilities, released its own report
in November. EEI notes that “all types
of new-generation capacity will be needed, including natural
gas, coal, nuclear and renewables. Nearly 40 gigawatts of new
renewable capacity will be needed just to meet state
requirements.”
Capital spending to upgrade distribution and transmission
facilities nationwide may surpass investment in new
generation, the study found, EEI says. Spending on “smart
grid” technologies to ramp up efficiency — along with new
power lines to integrate renewable electricity sources — will
account for much of that spending.
A “smart grid” uses technology to better manage electric
generation, transmission and consumption to reduce costs
and the impact on the environment, while improving service
and operating efficiencies. EEI estimates that utilities will
need to invest a minimum of $1.5 trillion during the next 20
years to meet basic infrastructure requirements.
Broad energy portfolio needed
The Electric Power Research Institute (EPRI) has said
that a full portfolio of sources is necessary to meet both
energy and environmental needs. EPRI calls for a balanced
approach to limit carbon emissions, while maintaining system
reliability, sustaining economic growth and providing time
for development and deployment of technologies.
While carbon capture and storage will not be widely
available until after 2020, according to EPRI, a viable
solution will require a mix of strategies, including energy
efficiency, renewable resources, new nuclear capacity, clean
coal generation, carbon capture and storage, plug-in hybrid
vehicles and distributed energy resources.
EPRI’s carbon dioxide reduction model calls for emissions
to be capped at 2010 levels until 2020, and then reduced by 3
percent annually. This approach is expected to reduce carbon
dioxide emissions to 1990 levels by 2030.
USDA Rural Development’s Electric Program is playing a
key role in this effort. “Our goal is to help further the
advancement of these technologies,” the USDA report says.
USDA is assisting Basin Electric Cooperative in North
Dakota with the installation of carbon-capture technology at
an existing coal-fired generation plant. When operational,
the technology will remove a portion of carbon dioxide and
feed it into Basin’s compression and pipeline system. Smaller
portions of carbon dioxide will be removed from the pipeline
to test sequestration capability.
Former USDA Secretary Ed Schafer, in a recent address
to Basin Electric Power Cooperative’s annual meeting, told
co-op members that “Finding ways to expand our use of coal
while protecting the environment will open up great
possibilities for the nation as a whole….Historically, coalfired
plants have been the backbone of electric power
generation in rural America, providing close to 60 percent of
its power.”
Schafer said that while utilities continue to pursue new
energy sources, “taking coal out of the equation leaves a gap
that will be difficult to fill.”
Carbon reduction technology costly
“To develop a successful strategy to reduce carbon dioxide
emissions requires a strong investment in what is already a
capital-intensive sector of the economy,” explains Former
Rural Development Utilities Program Administrator Jim
Andrew. “Times are changing, and we must change with the
times.”
Another good example of these changes — the new
National Renewables Cooperative Organization (NRCO) —
will also help rural electric utilities meet renewable portfolio
standards.”
Rural electric cooperatives from approximately 20 states
joined to form the NRCO to facilitate development of
renewable resources nationwide, help co-ops meet renewable
portfolio standards and assist with legislative and regulatory
initiatives.
Cooperatives, owned by their members, have said that
consumers must be considered in greenhouse gas emission
policies because of the costs associated with climate-change
goals.
“The economy of this country is highly dependent on
reliable electricity…that dependence is growing as more of
the economy shifts to the service sector and as we move to
energy dependence,” the USDA report notes. “The
development of alternative transportation fuels, regardless of
the feedstock, will also require significant sources of new
generation.
“Continued development and improvement of new
renewable generation technologies, the manufacture of these
technologies and their development to reduce emissions will
add economic and employment opportunities,” it continues.
“Much of that investment will be in rural America.”
