How much is Clean Energy worth to you?

Southeastern Offshore Wind farm photo-Simulation

Last week I went to a clean energy lunch lecture series on the topic of offshore wind power off the southeastern seaboard of the U.S. It was very interesting and featured researchers, utility representatives, engineers, and interested public. A study mentioned at the talk was the Southern Winds study conducted by Georgia Tech and Southern Company which basically said that offshore wind power off the coast of Georgia was feasible.

The main issue preventing construction of off-shore wind turbines on the southeastern seaboard of the U.S. is the high cost of power that off shore wind turbines would provide. I asked the speakers why off-shore wind turbines are successful in other countries (like U.K.) and not the U.S. The main reason has to do with the fact that incentives for off-shore wind are better in the U.K.; mostly due to the fact they have Renewable Obligation Credits (ROCs). So in order for off-shore wind turbines to be successful in the U.S. we would need the following:

Public Support - In order for offshore turbines to be successful, the public has to support wind turbines out in the ocean. Yes, you may be able to see them while working on your tan at the beach. But isn't this better than seeing a smoke stack from a coal fired power plant? If the public truly wants clean energy, they have to get over NIMBYism.
Regulatory Support - Easing the way for offshore wind
Financial Incentives - Putting a higher value on clean energy than dirty (fossil-fuel) energy

In order for our energy policy makers to be convinced it is worth providing financial incentives and/or spending more for clean energy, they have to feel that the pubic (i.e. voters) are willing to pay a little more for clean energy.

But how does a politician go about quantifying this? Sure, everyone would choose clean energy over dirty energy if it didn't cost them anything, but once they have to start paying for it? And then what about how much clean energy would they pay an increase for? I would pay 30% more for 100% clean energy (meaning the fossil fuel plant 1 mile from my house would come down and I could breathe cleaner air when I'm huffing on my bicycle). But I wouldn't be willing to pay 30% more on my electricity bill if only 10% of my electricity came from clean energy! So the million dollar question becomes: What is the best combination of price increase the public is willing to pay for a percentage increase in clean energy ?

After the lecture, I asked some of the experts in southeastern energy policy if they knew of a study which attempted to gauge the public's appetite for clean energy spending if a quantifiable result came from that spending. The answer: "I'd like to see it!"

In order to get answers to this question, we have to make some assumptions. Let's take wind power off the coast of Savannah, Georgia as an example. Below is a hypothetical example that will be used as the basis of a clean energy poll:

Georgia Power has a coal fired power generating facility north of Savannah called Plant McIntosh. This plant is rated at right around 163 MW. There is a clean energy proposal to replace the coal plant with 163 MW worth of offshore wind turbines. Since the capacity factor of wind turbines aren't as high as coal, the remaining power production will be made up by natural gas, which is cleaner burning than coal. The (hypothetical) plan states that the offshore wind turbines replacing the coal plant will raise the rates that the ratepayers pay by about 15 %, BUT it would take Savannah's number of red smog alert days from 15 down to 2. Along with increasing the air quality, it will also boost the local economy by 5% over the next 5 years as companies move in to support the construction and product installation of the wind turbines (and all the businesses catering to the new workers).

So the question is: If you are a ratepayer in the Savannah area, would you be willing to pay an increase in your electrical power generation if the air quality drastically improves (thus improving the health of you and your family) AND your local economy improves. Based on these facts, what increase in electric rates are you willing to pay for clean energy in the form of offshore wind power?

[polldaddy poll=3859125]

Here's my message to researchers, educators, policy makers, and clean energy professionals: Quantify the benefits of clean energy. No longer can policy makers say, "Pay more for clean energy because it's better for Mother Earth". The truth is, in a down economy, the public is much more conscious of how they spend their money. Policy makers have to frame it differently. Instead of trying to convince people to support clean energy because it is the right thing to do (which it is), we have to convince people to support clean energy because it is the right thing to do and it saves money in the long term because the health costs on the public decrease as air/land/water quality improve while improving the local economy. Again: Quantify the benefits of clean energy.

Once policy makers can clearly communicate in quantitative terms the advantages of clean energy, the public can provide realistic answers as to how much clean energy is worth to them.

Tags:

offshore wind power

roc

wind nimby

Category:

Clean Energy

Wind

Comments

Anonymous (not verified) Mon, 10/04/2010 - 12:45

I voted 0%. I don't think the argument should be put into the perspective of needing to pay more. If it wasn't for dirty energy/utility lobbying groups, and greedy commercial utilities, who's business model relies on constantly increasing demand, clean energy and associated conservation shouldn't cost anything more. Up here in the Pacific Northwest, we're blessed with our depression "New Deal" era Federal dams, which have given nearly a century of cheap power ($0.02 kWh, wholesale). The same goes for your region's TVA. The funny thing is that as both Oregon and Washington State put in more private wind energy projects, our utility bills are actually going down. There's a specific line item on my bill for 'wind energy production credit' which means the more the wind blows, the cheaper our power gets. Currently it's on the order of $5-15 a month on my $45-120 monthly bills. The more energy we generate and don't consume in this region, the more power we can sell into the ultra-expensive, deregulated markets. Since our regional grid is Federally managed, along with the majority of our generation, and they can't make a profit on that power - it drives customer rates down, instead of going into shareholder's pockets. The few private market fossil-fuel based generation plants in the area hate it, since the more clean energy is dumped onto the market directly influences their wholesale rates. It's also interesting to note that although we have some of the cheapest rates in the nation, we're also one of the most efficient in terms of per-household, and have kept at the same household consumption levels for the past 40 years - which flies in the face of most supply-side economists and Jevons' Paradox nay-sayers. There's no reason why conservation & increased clean energy generation needs to end up costing rate payers 10-100% more per kWh. For the most part, the private industry and associated deregulation has proven itself to be a failure for ratepayers and the environment.

ckmapawatt Mon, 10/04/2010 - 14:57

Steve, Excellent comment and great point. I'd actually love to see an un-biased study comparing regulated vs. unregulated electricity markets and how each performs in terms of economic and environmental cost. While I usually favor de-regulation in most economic activities, the issue with power generation is that external costs are usually not factored into dirty fossil fuel power production (i.e. coal plant in TX pollutes the air over New Orleans). When ever you have an issue of pollution that crosses state/nation lines, or impacts the air that the collective society breathes, I favor some form of regulation. It's funny how those who worship at the alter of the almighty dollar are always willing to sacrifice the environment!

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