Everyone knows the energy sector is changing in the United States. Some of the changes are obvious. Giant windmills are an accepted part of the landscape, as are solar farms covering acres upon acres. But there’s another side to this so-called energy revolution. It’s a darker side, one that rarely gets talked about. For you see, not every shade of green is as bright as people think.
The first short story I ever wrote, almost 40 years ago, was titled “Fulton Power and Light.” I thought it a whimsical tale, introducing a frustrated consumer, one Jim Fulton, who gets sick of lousy service and high prices from his electric utility. So, learning that the utility must purchase excess electricity if one generates it, Fulton purchases a large generator to power his home and make money from the utility he despises. What seemed fanciful four decades ago has become reality today.
The era of the big coal-fired power plant in the United States is over, although it flourishes in many parts of Asia. The era of small-scale generation to fill in the demand gaps that renewables create has just begun. There are more and more small generators powered by natural gas or diesel fuel operating on the electric grid while simultaneously staying off environmentalists’ radars.
Enter the term “demand response program” in your favorite search engine. You'll get dozens of hits that describe demand response programs in terms of reducing the need for electricity when demand is at peak levels. Big users enter into agreements with independent system operators to lower usage at such times. This is, in fact, part of demand response programs. But it’s arguably not the most important part, and it’s certainly not the part where fortunes can be made.
More and more people are aware that wind and solar power aren’t uniformly reliable and can be distressingly unreliable in many locations across the country. When demand exceeds the renewables available to dispatch power to the grid, there are really only two practical choices to fill that gap. One is energy storage. At locations where the geography is favorable, excess energy during low-demand times can be used to pump water to a substantially greater height, such as a hilltop. Then, during high-demand times, that water can be released to spin a power-generating turbine. The other way to store power, effective and economical large-scale battery storage, isn’t yet available, and many question whether it will ever be available.
If you can’t store energy, then the only other way to fill the demand gap is with quick-starting fossil-fueled generation assets that can be dispatched in a short amount of time. Traditionally, this peaking role has fallen to relatively large natural gas-fired turbines (essentially big jet engines) built by companies such as GE and Siemens. Unfortunately, natural gas, which was once the darling fuel for groups such as the Sierra Club, has fallen out of favor with the environmental set. Big gas-fired peaker plants capable of generating hundreds of megawatts (MWs) of power are becoming more and more difficult to permit against the determined opposition of environmental NGOs.
There are multiple methods for skinning the power-requirement cat. If a plant with three 100-MW turbines can’t be built to fulfill peak demand, might not a few score diesel and natural gas-fired internal combustion engines in the 500-kW to 2-MW class do the job? Answer: They can, they are, and they will, to an ever greater extent.
The demand response program provides a key incentive for these small-generation assets. There are a lot of facilities that require their own backup power and thus build and maintain engines in the right size range. Although the power distribution company might pay in the range of $20 to $40 per MW for normal base load power, someone who has emergency generation assets and participates in demand response can make hundreds, even over a thousand, dollars per MW when they’re dispatched to meet peak demand.
Don’t be fooled by institutions that claim to be 100 percent powered by clean energy. That’s almost never true. A facility may pay for renewable energy capacity, but that’s not the same as saying that the electrons the facility uses actually come from a wind farm hundreds of miles away. And the dirty little secret that many of these supposedly clean, green facilities share is that they’re making a nice little pile of money by using their fossil fuel backup generation assets in demand response mode.
Ironically, generating peak demand power in this mode is unquestionably worse for the environment than the traditional big peaker plant model. The little guys are less efficient, generate more greenhouse gases per MW, and, because their exhausts are so much closer to the ground, cause greater local exposure to air contaminants. Personally, I don’t lose any sleep over those differences, but it’s always interesting to find another example of the law of unintended consequences.
For the most part, this new generation activity is flying under almost everyone’s radar. Regulatory requirements vary, but in most states, one can install a small fossil-fuel electric generator without having to obtain an environmental permit. No permit, no reporting requirements. No reporting requirements, no one can assess the air pollution impacts associated with this new model. I doubt many people would want to. It’s a classic don’t ask, don’t tell scenario.
The folks who operate the grid get the stability they need, while environmentalists can point to increasing use of renewables and claim that it doesn’t endanger grid liability one little bit. The only real casualty here is the truth. But when you work in the environmental industry long enough, you come to find that when the truth takes another hit, it just means that it’s Tuesday.
