December 15, 2009

Greg Harman
San Antonio Current QueBlog

Over the past few weeks, CPS Energy staffers have been finalizing some new figures on how much energy San Antonio will need and when. And, for anyone who has even casually been following the recent scandals at the City-owned utility, it comes as no surprise that they are significantly different from those trotted out again and again over the summer to support a nuclear solution.

Recently departed General Manager Steve Bartley and other staff members had been warning the community of a power shortfall coming in 2020, one that required the rapid expansion of the South Texas Project nuclear project outside Bay City. The expansion was to take a decade to license and build, and would gobble up, at a 40-percent ownership stake, $5.2 billion of our dollars.

However, in the first redraft of CPS’ Strategic Energy Plan since the spring, Chief Sustainability Officer Chris Eugster told the CPS Board of Trustees on Monday that a new source of power generation wouldn’t be needed until 2023 – that the amount of energy needed has dropped roughly by half.

"It’s really has given us another three years to make that decision," said Eugster. "We are going to seriously have to rethink our generation capacity over the long run."

Also, the power needed in the 2020s won’t be "baseload" power that runs all the time, like nuclear or coal. Instead, gas-fired peaking units that can be cut on and off quickly better suit the need of 2023. Natural gas is a great complement to renewables like wind and solar, as a current cover story in Solar Today, "Texas: The Next Solar Superpower?" points out.

Because of solar’s variability, many grid managers and utility operators expect that new solar installations will need auxiliary natural gas-fired capacity to function as backup firming power, with estimates varying anywhere from 0.5 to 1 MW of natural gas required for every 1 MW of solar power. In this regard, Texas is well ahead of the rest of the country. Over recent decades, Texas has installed a significant capacity of natural gas generators for baseload and peaking power.

…

Much of the natural gas capacity in Texas is underutilized, making it available to provide firming power when solar and wind resources are not available. Developers can then concentrate on building solar farms without also having to build natural gas plants.

However, in a strange twist of data, the reassessment also suggests nuclear expansion is still a better investment than natural gas, by a hair. Eugster said the City would still be able to afford the STP expansion if the ovenight costs were as high as $13.9 billion. That’s without financing. Previous estimates have suggested financing would tack another $3 billion on the total figure.

[In a conversation today, Eugster said natural gas would likely cost in the "upper eights" or around 8.8-cents per kilowatt hour, while nuclear power would be in the "lower eights," 8.2, 8.3-cents per kilowatt hour. "So it’s pretty close," he said, while stressing again that placing a price target on nuclear and natural gas is extremely challenging.]

But the heart of the message was decidedly not pro-nuclear.

"There are issues with the nuclear expansion that we had a hard time modeling," Eugster said. "One is the uncertainty of cost and the future escalation. I mean, what will the final cost of the nuclear plant be? There’s no way for us to model that.

"The expansion timeline is also not well aligned with when this city really needs this additional power. The plant comes online before our projected need. And increasingly, it looks like the lock-in to the long lead-time for the nuclear expansion may prevent capitalizing on new technology or pricing breakthroughs in renewables or energy storage."

CPS has been selling the city the nuclear expansion suggesting it would cost $13 billion with financing, a figure the local environmental community has dismissed from the get-go, placing the figure closer to $17 billion, and later suggesting it could climb to $23 billion.

A new cost estimate from Toshiba, which had been operating by a figure $4 billion higher than the city’s mantra of $10 billion, is due by year’s end. CPS is expected to present the City Council two paths forward – one nuclear, one non-nuclear – in January.

One of the key points of Eugster’s presentation was the value of the time the city has gained before any expensive, involved decision must be made.

"The fact that we can wait five-plus years before a next generation plant is required would allow us to evaluate developments of the renewables, the energy storage, and evaluate the performance of [efficiency]. And the gas option, it’s not a decision we have to make today, it would be a good back-up if renewables or energy efficiency or energy storage don’t play out as quickly as people are saying."

Or, as he told the Current this afternoon: "With nuclear, we’ve got to go now, we’ve got to spend this huge amount of capital which there’s some unknowns about right now. Whereas with the gas option, we’ve got time to wait, and the value of that time to wait is hard to quantify. It’s like you got an option value on a house. There’s some value there to that. You can check it out, you can see if you like it, and you can go ahead and purchase it, and you can walk away."

So it feels an awful lot like the happy ending where we walk away together and follow the decentralized energy strategies CPS officials had been considering putting on ice to make way for nuclear’s cost.

Beyond nuclear, we can gussy up our "smart" grid and advanced metering systems, get our weatherization and renewable energy rebates on steroids, and keep those solar and wind pitches coming from a rapidly developing, pollution-free, low-carbon industry.

Is it too terribly unjournalistic to say "yippee"?

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Oh, and someone requested we post the CPS investigation report to the Board of Trustees: Here’s the leaked draft version; here’s the sanitized version.

Happy reading!