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Not-So-Green Superhighway

Unforeseen consequences of dedicated renewable energy transmission.

Fortnightly Magazine - February 2012

increases in between 25 and 50 percent of the plants in the existing coal fleet, with potential capacity increases of 5 percent and 15 percent.

If additional transmission built for RE generation enabled capacity increases in 25 percent of the existing coal fleet, the average capacity of the entire coal fleet could be increased by about 1.5 to 4 percent—4 GW to 12 GW. This could increase annual coal-fired generation by about 30 to 80 billion kWh, and increase annual coal demand by 25 to 75 million tons—even assuming no new coal plants are built.

If the additional transmission built for RE generation enabled capacity increases in 50 percent of the existing coal fleet, the average capacity of the coal fleet could be increased by about 3 to 8 percent—10 GW to 25 GW. This could increase annual coal-fired generation by about 60 to 160 billion kWh and increase coal demand by about 50 to 150 million tons—even assuming no new coal plants are built.

Using the means of these estimates, the expanded transmission required by RE would enable an increase in the average capacity of the existing coal fleet of about 15 GW (5 percent); an increase in annual coal-fired generation by 100 billion kWh; and an increase in annual coal demand of 57 million tons.

Thus, the new transmission required by RE could enable expansion of coal-fired generation by the equivalent of about 30 new coal plants by 2020. This expansion could be very rapid, since no new siting, permitting, or construction would be required. And the electricity produced would be inexpensive—about 5 cents per kWh.

Green Policy Dilemmas

An RES mandate could cause serious economic and policy dilemmas. A mandated RES requires not only a massive build of RE generating facilities over the coming decade but also, of necessity, a very large increment in transmission and requirements for near-100 percent backup. This will be very costly; the total, actual costs of achieving an RES by 2020 could exceed $500 billion—instead of the JP Morgan estimate of $275 billion. These are actual cost estimates and include the implicit costs of RE, such as federal and state government subsidies and mandated utility cross-subsidies.

This raises the question of what the actual, unsubsidized cost of the RE-generated electricity in 2020 is likely to be. Taking reliability, capacity factors, transmission requirements, and backup power requirements into account, the actual 2020 costs of the RE technologies could be twice as high as EIA estimates. The actual 2020 levelized cost of energy, in 2010 dollars, could be as high as 30 cents per kWh of onshore wind, and 50 cents for offshore wind; 80 cents for PV and 55 cents for ST; 16 cents for geothermal; and 17 cents for biomass.

This presents some interesting dilemmas.

The increased electricity generation from existing coal plants enabled by the new transmission would probably cost about 5 cents per kWh—three to 15 times cheaper than the likely costs of the RE generation. Even if some of the coal plants had to be retrofitted with additional environmental controls, they

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