There is also the question of how much power a new thermal plant is actually going to produce. Regional utilities assume that a nuclear plant will generate 75% of its maximum theoretical capacity, and that coal plants will produce 85% of their maximum capacity. In real life, however, thermal plants don't do nearly as well as they're supposed to. For example, the average capacity factor for nuclear plants bigger than 800 MW is 53 % . If you apply the actual national average capacity factor for large nuclear plants to BPA's current cost estimate of 6 cent~/kwh (all of the nuclear projects being considered by regional utilities are in the 1200MW range), the cost goes up to 8½ cents/kwh. The record is even more dismal in the Northwest. Trojan, cur-. rently the region's one and only operating nuclear plant, has a lifetime capacity factor of around 40%, and is considered to be operating at full capacity at 1040 MW instead of the 1130 MW it was designed to produce. Centralia coal plant, currently the only.coal plant west of the Cascade Range, has a lifetime capacity factor of ~round 50%. Voodoo Economics What all of this means is that nuclear and coal generation are' among the most expensive energy options available to the Northwest (see table). Unfortunately, utility customers may never see how much thermal power is really costing them. . . Instead of charging the actual cost of that power to customers who use it (usually called marginal cost pricing), utilities hide the costs of new increments of expensive thermal power by averaging the cost in with the cost of cheap hydropower. This bizarre economic ritual, commonly known as average cost pricing,.made,sense forty years ago when utilities were still reaJizing new economies of scale and each new plant delivered electricity at a lower price. Utilities that were installing cheaper facilities still had to amortize more expensive plants that they had already built, ahd average cost pricing helped them recover their costs. But over the last ten years, the Northwest ratepayers may be forced to pay for a decision over· which they ha~e no direct control. cost of new thermal generation has gone through the roof, and the effect of average cost pricing is to stand e.conomics on its head. Because ratepayers see the average cost of power instead of the marginal cost, there is much less incentive to conserve or use renewable. energy that is clearly cost effective when compared to the thermal alternative. Ponder, for example, what the average Washington family of four could do to conserve electricity with their$l9,000 share of WPPSS Projects 1-5. • There.are some strange and subtle side effects inherent in the nature of the Hydro Thermal Power Program. For example, utilities normally use their cheapest generating sources to produce the power that is needed all the time (called baseload power), and only use their expe_nsive power generators for the peaks of energy consumption (called peaking power). However, since nuclear and coal plants can't be turned on and off, the situation is reversed, and the cheap hydro power is used for peaking power instead. If there is ' more hydropower available than the Northwest needs (four years out of five the difference between what utilities expect from dams on the Columbia River and what they actually get is more than the annual electrical consumption of Oregon), that cheap power is sold to private utilities and the aluminum industry at rates far below the marginal cost of tl}ermal power. Ratepayers, meanwhile, are s'till • paying for expensive thermal plants. Northwest utilities expect power rates ,o quadruple over the next several years as thermal plants come to make up a larger part of the rate base. Long before that point is reached, many renewable energy options that are already cheaper than thermal plants will beFebruary/March 1981 RAIN Page 17 come cheaper than the average cost of electricity as well. The problem is that money for thermal plants has to be committed several years in advance. With average cost pricing, by the time it is apparent to most utility customers that conservation and renewable en- ·ergy is the cheapest option, the money will have already been spent on centralized power plants. In the ultimate utility scenario, the Northwest would be systematically looted t9 provide the enormous amounts of capital necessary for thermal power plant~, expprt-ing its· regional wealth for the privilege of making the transition/mm a power grid based on renewable energy to one based on fos'si! ~uel~. -: \, f • ·A str9ng, to~munhy~based renewable energyJllOVement . could exert a powerful.influer)ce:. ,. on the region's energy·future. Marginal Costs of New Generation or Replacement Sources of Electricity in the Pacific Northwest Conservation Retro"fit Full Weatherization New Construction Conservation Conservation w/Direct Gain Conservation w/Trombe Wall Conservation w/Solar Greenhouse Direct Gain Trombe Wall Greenhouse Hot yVater Heat Pump Active Solar DHW Industrial Heat Recovery Industrial Electric Efficiency Industrial Cogeneration • Biomass Cogeneration* Large Hydro Retrofit Turbine* Micro Hydro Large Wind* Small Wind · Geothermal Electri~-,,. Geothermal Heating Wood Heat Utility·Photovoltai~* (1990) • 'J R~sidentj_al Photovoltaic (1990) Coal* Nuclear* 1 • Current Costs of Hydroelectricity from the Federal Columbia Rive~System* ¢/kWh •0'.7 2.5 0.5-0.7 0.9 1.4 1.6 1.0 2.7 2.4 4.0-6.0 5.0-7.0 0.7 r_ .) 0.7-1.0 '4.3-4.6 ) • ) 1d 3.2-4.6 . : 2.2-3.7 .1. 19-6.8 -~fi . ·. 5.7 6.2-14:9 3.6-6.s· .. 1 -2.4-3.4 ·2:'9.:.8.5 5.8-9. 2 •• . 6.2:.:9:g • 1 • -\ •• ~ 1 •· ifb+ • • ,• 1, • '' ~. • 6.0"-1'5.0 " "Cost of power at the plant. Transmission, distribution, and profits add, another 0.5 to 2.0 ¢kWh to consumercosts. • • - •..• Sources: Ecotope, Alternatfve Energy Development Commission: Bonneville Power Administration
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