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The GLOW in NY State Dims to Essentially Nothing

by nb41 Wed Sep 28th, 2011 at 11:48:13 AM EST

GLOW is an acronym for Great Lakes Offshore Wind, and this relic of the People's Power Company of NY State (NYPA, alias New York Power Authority, entirely owned by NY State, though in practice, NY State may be partly owned by NYPA...) recently canned its SECOND attempt at offshore wind in NY State. The first was a 140 MW project near NY City, also canned, and now it's third attempt at offshore will be further offshore of Long Island in federal waters. Here is a brief description of the  gory details.

As with all things NYPA, this is at core a political decision, in this case in favor of methane derived from fracking and against renewable energy that is job creating and reasonably priced. Is there a relation between the $44,000 contribution that one of the purported Sith Twins of our time (David Koch) made to one of our Governor's campaign funds, qualifying him (and lots of others) for the term "Koch Whore?" Well, as the saying for the NY Lotto (otherwise know as another tax on working class people) goes, "Ya Never Know"

So, next time NYPA issues an RFP, will anyone of note even bother? Two strike-outs, and third time is a charm? Actually, why bother, when all of the work involved in putting such a project together can actually have a higher probability of coming to reality in Europe.

Anyway, the apparent victor in this NYPA fit of cowardice in the natural gas fracking biz, who is busy in neighboring Pennsylvania, where fracking, like "clean coal" and nukes are considered a "green" and "renewable" energy source. Or so I was told at a recent wind energy conference (Great Lakes Wind Collaborative). Oh, would George Orwell roll his eyes at that one, or what?  In the 2011 battle of wind vs. Ngas, Ngas won big time. Of course, the local GOP (Republican, ex-Grand Oil Party, and now Gas and Oil Party) politicians are rubbing their hands in glee at the prospect of large cash deposits into their campaign coffers, as well as PR and "consulting" jobs for a lot of their friends, who will no doubt contribute generously at election time...

In Western NY last year, Ngas only provided 2.6% of the electricity in our neck of the woods (NYISO Zone A), since, at the average generation price of 3.92 c/kw-hr, Ngas is TOO DARN EXPENSIVE to use to make electricity, even at presently depressed prices that are about half of the price deemed necessary by banks like Credit Suisse to justify such underground efforts. Most electricity is made from coal in 3 facilities, and we get some from the Niagara Falls Power project (most is exported elsewhere), which is made at less than 0.2 cents/kw-hr. But, with fracking, there is essentially no difference in the Greenhouse Gas potential of coal vs/. natural gas, due to the large "fugitive" emissions of methane during the fracking process (20 frackings per well.... see here). So, if you wanted to boost local Ngas consumption, and heating for the residential, commercial and industrial markets is shrinking (as is the money to pay for that heat), how would you boost local consumption?

Well, you could spring for a new 140,000 bbls/day Gas to Liquids (GTL) plant, which could suck down something like 1.4 billion standard cubic feet/day (about 2.2% of US Ngas consumption). After all, lots of places around here would welcome that with open arms and tax subsidies up the wazoo, and there is plenty of cooling water and customers, too. But that would be a $25 billion investment, and in the USA these days, such things are not allowed... So, next on the list of ways to boost consumption of methane is to convert that presently none-too-valuable hydrocarbon into electricity. Then factor in the prospect of no renewal of the operating license for the Indian Point reactor complex (about as desired as a fully primed skunk at a fancy rich person's wedding reception), with a potential of 2000 MW of needed electricity (128 billion cubic feet/yr of Ngas), or a 12% increase in Ngas consumption.... and some salivation in the gas industry is to be expected.

So, we could have given the boot to Ngas in the regions electricity supply, as well as the prospect of being the regional garbage dump for fracking "waste" (sorry, "treatment facility at Niagara Falls - goes great with tourism, I have been told). Instead, like Johnny in the movie "The Shining", it's BACK! The thing that is gone is the prospect of 24,000 jobs-years of local construction/manufacture (the non-wind turbine parts of the project) jobs in a region with really disgusting real rates of unemployment. But hey, we still get to be the regional welfare recipients of the Wall St money machine (it is NYC money from the Big Casino that now supports upstate NY, due to the massive loss of manufacturing and farming jobs). That counts for something, doesn't it? After all, if we don't get a few crumbs of the gambling proceeds from (supposedly) our banksters, who will?

Of course, NYPA could be issuing RFP's for 1 to 2 GW per year of ONSHORE wind for the next  20 years, or they could hire someone to build them and just own them outright. They could have done that with the offshore project, too. I just got offered a chance to buy NYPA bonds at 3.25% for 10 years (declined), and I bet 20 year ones would go for around 4%. At those rates, a NYPA owned farm should be able to make offshore electricity for around 14 c/kw-hr, and they would get a 2 c/kw-hr rebate from the Federal govt for the initial 10 years (REPI). Offshore wind at 12 c/kw-hr.. well, it's not 4 c/kw-hr, but it's affordable, and a cure for a lot of unemployment, too. A Keynesian-like stimulus, only doe with little to no tax payer funding. But maybe that is heresy, these days, too.


The county councilman that voted against this cited costs. These are the same guys that approve all kinds of ludicrous pork for their contractor friends. A joke.
by Upstate NY on Wed Sep 28th, 2011 at 06:19:50 PM EST
Actually, it did not take much to do it in, and here was always the high cost excuse. But, if NYPAa was serious about offshore wind, they should have owned it and financed it with NYPA bonds, which are rated at least AAA. Get someone else to buy/build/install it, but have NYPA own it. At 12 to 14 c/kw-hr vs. 20 c/kw-hr, you just can't beat lots of low cost financing when it comes to offshore wind. I wouls say that finance costs rule.


by nb41 on Wed Sep 28th, 2011 at 08:20:28 PM EST
NYPA is a weird beast. It has so much excess power, but it's controlled by politicians. Heck profits from NYPA are even used to subsidize public housing in NYC. The whole enterprise is a bizarre structure that hasn't been reformed in decades. It's hard to get it to do the sensible thing.
by Upstate NY on Wed Sep 28th, 2011 at 09:54:24 PM EST
[ Parent ]
NYPA is rumored to be posting profits of close to $400 to $500 million this year, and that money will be swept into the NY State budget. It's about 10% of the money that would be taken in by continuing the "millionaire's tax" in NY State that expires at the end of this year. That Cuomo, what a freakin' Republicrat....

One recent source of profits is via their pumped hydroelectric storage unit at Lewiston, NY (part of the Niagara Falls complex). In 2010, they made an average of  of 57 MW of electricity that was sold into the NYISO Zone A. They consumed about 95 MW of el-cheapo hydro (cost = 0.2 c/kw-hr) made during non-peak times when their water withdrawal allotment from the Niagara River is highest (night time), and converted that into peak power that probably averaged around 6 c/kw-hr.

They made 499,320 MW-hr from the pumped hydro unit, and at $60/MW-hr, that is "only" $29.96 million. The cost to make 832,200 MW-hr was about $1.66 million, for an easy $28.3 million. So, it's not all of their profit, but an example of what they can do, and it also has the added feature of driving down the profits of polluters (nukes, coal, Ngas) significantly, as well as eliminating the need for about 5.6 billion standard cubic feet of methane (peak units are less efficient that combined cycle ones), which is also good (0.5% of state Ngas consumption).

If NYPA had any balls bigger than the size of your average helium nucleus (mass of volume, take your pick), they would go on a construction binge and put lots more pumped hydro units across the state. We have lots of mountain/big hill/lake or river/transmission line combinations all across the state, which would allow for some serious reductions in the usage of Ngas for peak electricity production. These would also flatten the daily electricity cost profile, and take a big bite out of the rentier/extraordinary profits abstracted by owners of coal and nuke units, or in some cases big Ngas units via the pumped hydro Merit Order Effect. After all, in a NYISO Zone with a combination of combined cycle and single cycle Ngas fired units such rentier profits would also be made due to the lower thermal efficiency/higher operating cost of single cycle vs. combined cycle units, or those rare places where they still do co-gen around the state. These pumped hydro units are going to be  essential when we have a electrical system essentially all renewable energy based, which is where we should be heading to, but which we now seem to be running away from at a serious pace and into the arms of Ngas frackers.

I guess one of the heads of Gov. Cuomo's economic revitalization councils is the CEO of National Fuel Gas (aptly referred to as NFG), which is becoming a serious fracker (Pa, W. Virginia) via their Seneca Resources subsidiary. They aim to supply about half of the Ngas to their monopoly saddled customer base. Hard to tell, eh? Oh well, that's why he is one of the highest paid exec's in WNY at over $6 million/yr, which is a pittance by comparison to other parts of NY State, but it is mostly monopoly derived money. Ugh..


by nb41 on Thu Sep 29th, 2011 at 10:54:45 AM EST
A couple more things to add to this. About a decade ago, one of the dirtiest coal producing plants in America was reopened in Tonawanda, NY which is just below Niagara Falls. The amount of particulate this plant dumps as the wind blows (ironically enough it mainly falls on the wealthiest suburbs in the region, Williamsville and Clarence) is enormous, and it certainly contributes to the region's higher than average cancer rate. And yet, though it regularly pays big fines for exceeding even the much lowered limits allowed by the Bush administration, it's still in operation.

Since I live close to the Niagara River (10 minute bike ride and the Canadian border), I always notice the boom that gets lowered into the water in the early Fall to prevent the turbines from the hydroelectric plant from getting chunked up by the huge balls of ice rolling down the river. That boom stays until the late spring. When the ice backs up, it acts as a natural air conditioner/refrigerant dropping the temperatures by 10 degrees. On a hot April day, when it's 75 degrees in the city, I can ride my bike just 10 minutes to the river, and the temperature there will be 60 degrees. This represents a huge expense for the people living along that river since heating costs rise because of the boom. You would think we'd catch a break from the plant, but our electric rates are higher than much of the state and even higher than the municipalities in other states that the power plant sells electricity to.

by Upstate NY on Thu Sep 29th, 2011 at 12:21:24 PM EST
[ Parent ]

New York offshore wind farm project moves one step closer
(17 September 2011)

Even as opposition to the Cape Wind offshore project ratchets up, the Long Island-New York City Offshore Wind Collaborative is moving forward with plans to build a wind farm which would supply power to the Big Apple.

An offshore wind farm proposed off the coast of New York City took one more step towards realization on Thursday as the companies behind the project applied for permission to build the wind farm in federal waters.

The Long Island-New York City Offshore Wind Collaborative, comprising New York power company Consolidated Edison (Con Edison), and the state-owned power authorities of Long Island and New York (LIPA and NYPA) filed a lease application for the 350MW project with the offshore regulator, the Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE).

If successful, the project could see 97 turbines built 13-17 miles off the Rockaway Peninsula and Long Island, with an initial capacity of 350MW. The partners could eventually expand the project to 194 turbines with a capacity of 700MW, NYPA said.

Selling politically an offshore wind farm is tough at a time when natural gas prices (and thus power prices) are depressed by low demand and the shale gas bubble.

The long island one might stand a better chance (as prices there are permanently higher thanks to that built but never commissioned nuclear plant...)

Wind power

by Jerome a Paris (etg@eurotrib.com) on Thu Sep 29th, 2011 at 02:57:36 PM EST
This is typical for NY State, however. All the development happens in NYC and the capital, Albany. Last year, there was an analysis that $1.5 billion had been invested by the state in Albany over the last decade, while $35 million had been invested in Buffalo. And just yesterday Cuomo announced they would be investing $4.5 billion in nanotechnology infrastructure in Albany again over the next decade.

Similarly, the legislature approved fracking for Western New York, but banned it in Central and Eastern New York, where most of the drinking water for NYC comes from.

by Upstate NY on Thu Sep 29th, 2011 at 03:13:05 PM EST
[ Parent ]
Selling it politically is the key phrase, and it really has nothing to do with the price of natural gas. This type of project is basically industrial and manufacturing oriented, where the price of this electricity would actually get diffused state wide, so no one would really know the difference. The difference between onshore and offshore were pretty much known from the start.... The same objections would apply if NYPA put in an RFP for 600 to 1000 MW of onshore Low Wind Speed Turbine projects (which would get about the same output as 500 MW of offshore), "it's too expensive".

I guess here is the money quote, or shot, depending on your degree of cynicism (which I would guess is pretty darn advanced these days):

The CEO of our local natural gas monopoly, which is also busy becoming a natural gas producer via fracking in Pennsylvania (Seneca Resources subsidiary) is now the Gov.'s main economic development dude (right after his Wall Street pitch for equity investors in their fracking adventures bombed, possibly because some of the listed production costs were so low as to border on/delve into the fraud category). He needs more natural gas demand to boost gas prices to justify "swiss cheesing" the Appalachians for methane. And the only way to boost gas demand is to use more gas to make electricity (no way will he get to undercut the old, paid off coal burners and old, paid off nukes in price). And no way will gas demand get boosted in NY State if more of those freakin' wind farms get installed. Plus every one of those wind farms installed clobbers electricity prices via the Merit Order Effect, just for good measure, further depressing gas prices. Good for most of us, bummer for his overpaid self.

But "high electricity prices that might stimulate manufacturing and construction in environmentally friendly ways" is definitely verbotten these days in NY State. Odds are, the new Long Island project will suffer the same fate as the old one, even though it will be out of sight of coastal viewers (maybe they will still shudder under its out of sight presence). And it is so easy to kill it off, because a lot of the beneficiaries of this would be middle class types, who no longer seem to qualify as human beings. I guess you would call them people excluded from "The Serious People" contingent. Besides, odds are more money is going to be needed for our local Bankster contingent - who can never seem to get enough these days -  when the mule that is Greece either kicks back hard, or else collapses under the weight of the bond vigilantes greed.


by nb41 on Fri Sep 30th, 2011 at 10:05:29 AM EST
[ Parent ]

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