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infinite energy

The California Electric Power Crisis and Alternative Energy
Published in IE Issue #36, March/April 2001
by Jed Rothwell
The big story this month in conventional energy news is the shortage of electricity in California. It is unclear how this energy crisis came about. Politicians blame the power companies for gouging the public, the power companies say they are bankrupt, businesses and the public are upset with the rolling blackouts. Most people agree that deregulation was poorly thought out, because it freed wholesale prices while putting a cap on end-user customer prices. California Gov. Gray Davis California Power Gridcalled deregulation a "colossal and dangerous failure" that had allowed "profiteering companies from out of state" to raise wholesale electricity prices by a factor of ten or more.

The crisis was exacerbated by a run of bad luck, as an unusual number of plants shut down for unscheduled, unexpected reasons. A nuclear plant ceased operations at the height of the power crisis after a storm at sea tore up kelp, which clogged the cooling water inlet.

It is not clear how much of the crisis is caused by lack of new generating equipment, and how much by economic and regulatory problems, and power company economics. No major power plants were constructed in the last ten years. In the early 1990s, most power companies said there was 30% excess generating capacity. This excess, plus improved performance from plant upgrades, met the demand for years. In the late 1990s demand grew faster than expected, and capacity fell behind. As power shortages grew, spot prices shot up. The utility companies began to lose billions of dollars. They soon became technically bankrupt, and out-of-state power companies refused to extend credit to them. Natural gas suppliers were demanding payment in advance from either the utilities or the state government. The financial crisis came to a head in January 2001 when PG&E defaulted on payment of $726 million in short term debt. On February 6, the state government arranged a deal whereby it will buy electricity at $60 to $65 per megawatt hour, and sell it to the utilities. This compares to spot market prices as high as $300 to $500. The state allocated $10 billion to fix what the San Francisco Chronicle called "the wreckage of California's energy deregulation plan." The state has been spending $45 million per day in emergency allocations to buy power, which is more money than it spends per day on higher education.

California Power TableThe policy of capping consumer prices while freeing wholesale prices made sense, because it was expected that breaking up monopolies would lower power costs by 25%. This was a reasonable expectation; historically, over the long term, energy prices have always fallen. But others argued that capping consumer prices was totally self-defeating to deregulation.

The California Energy Commission table shows what happened in the last decade. From 1990 to 1999, demand increased moderately and steadily by a total of 9%. The San Francisco Chronicle quotes a higher estimate made by the Edison Electric Institute, that consumption grew by 4% percent in 1996 and 3.4% in 1997, and it suddenly spurted 10% in 2000. According to this table, in 1999 total demand was 23 billion KWH higher than it had been in 1990. In the meanwhile, imports fell by 12 billion KWH, geothermal fell by 3 billion KWH, and generation with oil stopped altogether. The difference, 44 billion KWH, was made up mainly by increasing electricity from hydroelectricity, coal, and gas.

Although overall energy imports fell 18% during the 1990s, imports are a problem today. California generally exports electricity to the north for heating during the winter, and imports electricity in summer to meet the demand for air-conditioning in Southern California. This winter it has been forced to import during December and January. The problem is aggravated because much of the power in Washington is generated from hydroelectricity and there has been a drought in the Northwest.

The cost of natural gas has shot up nationwide in recent months. Natural gas is an ideal fuel for low-pollution, high-efficiency electric power generation, and utility companies worldwide have been building gas-fired generators. Unfortunately, they have acted simultaneously without considering the fact that everyone else is doing the same thing, and the supply of natural gas is limited. About a third of California's electricity comes from natural gas, and most of the generators now under construction will use it. The consensus of opinion in mainstream newspapers seems to be that California must now rush to build huge centralized electric plants, which are mainly gas-fired. Unless the price of natural gas declines, in a few years this policy will ensure that electricity is plentiful but much more expensive than it is now.

It is disturbing that many newspapers are blaming the crisis on California's strict environmental regulations and its alternative energy initiatives. If alternative energy caused this problem, you would expect that alternative energy use would have increased during the 1990s, but instead it fell. Steadily increasing use of wind power during the 1990s would have averted shortages today. The cost of wind power has fallen 80% since 1980, and it is now 4 to 6 cents per kWh, nearly as cheap as coal, the cheapest conventional fossil fuel energy source.

The people of California invested a great deal in inefficient, first generation wind farms in the 1980s. The profit and know-how gained from these ventures led to today's gigantic wind generators, which are far more cost-efficient, quiet, and long lasting. According to the American Wind Energy Association (AWEA), wind now supplies 1,800 MW in California, and it will soon increase to 2,000 MW. The maximum wind generation capacity in the state is 6,000 MW, conservatively. Wind generation can be added more quickly than conventional sources; a 200 MW wind park can be built in one year, compared to two to three years for a fossil fuel plant, or five to ten years for a nuclear plant.

California's peak demand is 46,000 MW, so wind could meet only 13% of demand. Surrounding states have far more potential wind power. The AWEA says that the total wind energy potential of California, Nevada, Wyoming, Montana, Washington, and Oregon combined is more than 600,000 MW. However, some of the best sites are far from the cities that need the power, and far from existing power transmission networks. Building new power lines meets as much or more resistance from communities as new generator plants.

North Dakota, Texas, Kansas, South Dakota, and Montana together have enough potential wind power to generate all of the electricity used in North America. However, they are far from population centers in other states, and an electric power distribution grid cannot economically transmit power thousands of miles. Transmission losses might be reduced by using the electricity for electrolysis and then sending hydrogen gas through natural gas pipelines. The hydrogen could be used to generate electricity with fuel cells in cities, a process which produces only water as a byproduct. Hydrogen leaks more easily than natural gas, so the pipelines would have to be re-lined on the inside. This can be done with existing techniques.

In January 2001, construction began on a 300 MW wind park in Wallula, Washington near existing power transmission lines. Another 260 MW plant is being built in Nevada. Both projects should be completed by the end of the year. A 200 MW wind park is being constructed in Southern California. This total of 760 MW is dwarfed by conventional power plants now under construction in California, which will supply 6,723 MW. However, the conventional plants have been underway for some time and they will not be finished until 2003; if the cost of natural gas remains high, they will produce electricity at much greater costs than the wind farms. The combined new construction of gas and wind generators would eliminate power shortages, except that about half the plants in California are over thirty years old and many may need to be phased out soon. California's oldest existing wind parks could be upgraded to produce far more electricity.

The AWEA reported that during 1999, more than 3,600 MW (3.6 GW) of new wind generators were installed worldwide, bringing total installed capacity to approximately 13.4 GW. This growth in capacity per annum is about the same as the growth of nuclear power in 1969 and 1970. Nuclear power reached its maximum growth in 1985, with 31 GW added that year. It reached its maximum total installed base of 328 GW in 1990, providing 17% of the world's electricity. At present growth rates of 30% per year, wind power will surpass nuclear power by 2025.

The Chronicle estimates that the energy fiasco has cost the citizens of California $40 billion. That would be enough money to build 40,000 MW of wind parks in the neighboring states, nearly enough to provide pollution-free, zero-fuel, renewable electricity for the entire state of California, provided that on-demand gas generators are available for a fraction of demand, which may be needed when abnormal weather causes high or low winds, disrupting generation.

. New York Times
. San Francisco Chronicle
. American Wind Energy Association,
. U.S. Department of Energy, Hydrogen Program Plan
. Scientific American, September 1990, Special Issue, Energy for planet Earth.
. California Energy Commission,


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