RURAL NELSON MEETING
6:00 PM, THURSDAY, MAY 21ST, 2009
THE NELSON CENTER
The Future of Energy
presented by Gary Wood, CEO, Central Virginia Electric Cooperative
jointly sponsored by Rural Nelson and the Nelson County Community Development Foundation
Gary began with a brief history of CVEC and rural electrivication. CVEC was founded in 1937, and has grown over the years to its present size of 35,000 accounts. CVEC's goal is to improve the lives of its customers. It has two primary roles: first to buy electricity and second to distribute it to its customers through a well maintained system. Customer bills have two components. The first is the purchase of electricity which currently stands at approximately 4.3 cents per kilowatt hour. The second component is the distribution of electricity which costs about 4.2 cents per kwh bringing the total to 8.5 cents per kwh. CVEC has one of the cheapest rates in the region. The average cost in the state is 9.5 percent and most cooperatives are slightly higher.
Recently the growth in demand for electricity has significantly exceeded the growth in customer base which means that customers are using more electricity. Since 1980 there has been significant, growth in electricity demand nationwide. The patterns of electricity usage have changed over the years. Cooling has increases as has water heating but refrigeration has declined due to more energy efficient appliances. Indoor lighting has risen. Cooking is about the same. The largest increase has been in TV's, computers, chargers, etc. Flat screen TV's have recently pushed electric usage to new highs.
Natural gas has seen the greatest growth in recent years as a producer of electricity. From 1950 to 1970 the cost of producing electricity declined. With the advent of the oil crisis of the 1970s the cost of producing electricity has steadily increased. Congress, recognizing the economic and national security implications of using expensive foreign oil to generate domestic electricity has created incentive for the production of affordable, renewable energy. Complicating implementation of some initiative is the debate over what constitutes renewable energy. Certainly, solar, wind, geothermal and biomass qualify but other initiatives such as the use of carbon certificates is less clear. Each state is setting its own renewable definition. In Pennsylvania, for example, waste coal is considered renewable. Many states consider new hydro power renewable as well.
Many technoligies are geographically limited. Concentrated solar in the southwest has promise due to the intensity and predictability of sunlight but is often hampered by long transmission distances. Wind farms represent the greatest growth in renewable energy but have limitations as well. This area's best wind power is found on the tops of the Blue Ridge Mountains. Turbines noise is a point of contention as it can be very loud near the turbines but most people are typically located far from the turbines. For example, offshore wind farms offer isolation from noise but present other problems such as transmission of the electricity generated. The farther a source of renewable enerby is from the consumer of the energy the greated the cost.
Tidal power currently represents only a very small portion of U.S electrical production but is attracting a lot of research. Obviously it is limited geographically. Biomass is feasible electric generation but biomass electric plants tend to be very small and must be located near the source of the biomass due to the expensive cost of transporting biomass. Typically one plant can serve only a 50 to 70 mile radius. Wood chips and switch grass are examples of biomass. Landfill gas can produce only a very small amount of energy. There is very little geothermal energy in the northeast but may be feasible for small power plants elsewhere.
CVEC is a member of PJM, a regional area wholesale power market located in the PA NJ MD area, and which covers parts of 13 states. PJM is responsible for regional planning of generation
and transmission. In PJM the fuel mix is coal, natural gas, a little nuclear and a little
solar and only 4% is renewable. This 4% comes from hydopower, pump storage, solid waste, biomass, wind, captured methane and other gases. The promising growth areas for fuel sources for PJM are wind and biomass. CVEC's contract with PJM extends through May, 2012. Due to the favorable price terms of this contract CVEC wil not break it even though it precludes the sale of renewable energy. After that date PJM will sell CVEC renewables if the government requires the use of some renewable energy. With the end of the contract and potential requirements for some renewables consumers may see the price of electricity double. Renewable Energy Certificates hold promise as a means of favoring more renewable energy but a Virginia legal decision disqualifies them as renewable energy unless the electricy actually consumed is produced using true renewables. There is pressure to change this law in the future.
CVEC is currently negotiating for future contracts that will involve some renewables for various reasons including meeting fluctuating demand. Coal plants and nuclear plants are very difficult to slow down, so storage systems like pump storage is useful in storing potential energy. CVEC is considering various types of renewable plants to find the correct balance between price and sustainable energy sources.
Conservation appears to be the most viable strategy to decrease our dependence on foreign energy sources and on energy that constributes to the carbon probem. If a homeowner wants to make a greater effort to conserve he/she may want to consider home solar and wind technoligies. Although there are subsidies for employing the technologies there use will still be very expensive (perhaps in excess of 15 cents per kwh). On the positive side the homeowner can send excess power production back into the grid and be paid for it. In 2012 when the new CVEC contract will take effect CVEC's kwh cost will be between 12 and 13 cents, making alternative technologies more cost effective. The best use of solar energy is to supply hot water as this does not require converting sunlight into electricity. It is even possible for those near a small stream to try hydropower. In Virginia you can aggregate (form a group of homeowners) to build a bigger power plant and sell excess energy production back to the power company which will distribute the power through its powerline network.
Still energy efficiency and conservation appears to be the key. It is easier and cheaper than anything else. This will be a theme from all electric utilities going forward. Building new plants is terribly expensive, especially nuclear plants. Expect rates to go up 50 to 60% for CVEC in 2012, and to go up another 5% in the next few years after that. Trying to reduce carbon emissions will also be expensive. Carbon trading may play a significant role in the future, even in financial markets. Senator Webb favors a straight carbon tax, where governments can offer rebates. Utilities are trying to remind the legislature that carbon taxes will be hardest on the southeast, which is so coal dependent. They will have much less effect in California. Implementation of renewable energy sources will take time due to the high cost at present.
The use of Energy Star appliances requires a greater cost up front but very often can pay for itself in energy savings. The use of appliances that are "on demand" represent more potential savings.
Meeting tomorrow's energy requirements will have other challenges such as public protest over the environmental impact of power plants, wind turbines, dams and transmission lines.
State of the art meters hold promise for cost efficiencies. Many can now be read remotely which means a utility company employee need not visit your house to "read" your meter. Others can show the homeowner energy costs on a minute by minute or, potentially, appliance by appliance basis. Awareness of immediate energy consumption may give incentive to the homeowner to be more energy aware and take actions to conserve, especially at peak demand times.
These smart meters are sometimes found in new homes, but retrofitting can be expensive as they require a microprocessing system. People might also look into natural gas powered water heaters rather than electric as they are more cost-effective. Capturing savings from off-peak uses is a challenge as almost all peaks come from summer heat.
The presentation was followed by a lively question and answer session.