tag:blogger.com,1999:blog-27188198584340723092024-03-12T21:22:26.745-04:00Granite ViewpointAn independent voice, exploring happenings in New Hampshire and New EnglandGranite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.comBlogger60125tag:blogger.com,1999:blog-2718819858434072309.post-64551798410567879602010-01-31T16:40:00.017-05:002010-09-14T16:52:42.739-04:00US unemployment animation shows relative strength in NH<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html" target="_blank"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://3.bp.blogspot.com/__WiQMRfj4vM/S2YLi0uz_nI/AAAAAAAAAcc/OOlpcYXPRxw/s800/unemployment+map.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5433042693367529074" /></a><br />I stumbled on <a href="http://cohort11.americanobserver.net/latoyaegwuekwe/multimediafinal.html">this neat animation</a> that visualizes changes in unemployment rates across the country during the recession (hat tip: <a href="http://www.coordinationproblem.org/2010/01/the-great-recalculation-visualized.html">Coordination Problem blog</a>).<div><br /></div><div>As the animation completed, I was struck by how New Hampshire was pretty much alone in the northeast as a lone bright spot (mostly bright red, indicating a 5-6% rate) in a sea of dark red and purple across much of the rest of the country. </div><div><br /></div><div>Unfortunately, <a href="http://www.unionleader.com/article.aspx?headline=Jobless+rate+climbed+in+2nd+year+of+recession&articleId=85a177f8-d901-4613-942b-189c29f8fbc5">new data released last week</a> show the overall NH rate has increased to 7.0%. That's still well below the US average unemployment rate of 10%, but it moves most of the state from bright red to dark red or even purple in the animation.</div><div><br /></div><div>One other thing from the animation that struck me was how well the midwestern farm states seem to be faring in this downturn. That shouldn't be surprising, since demand for agricultural products usually holds up better than demand for durable goods in a recession. Still, seeing all that bright yellow spread across the farm-belt really drove it home for me.</div><div><br /></div><div>I did a bit of googling in search of a midwestern viewpoint (rather than a granite one) and I stumbled on <a href="http://www.minnpost.com/stories/2010/01/25/15281/crop_farming_diverse_economy_helped_hold_minnesotas_09_jobless_rate_down">this article by Sharon Schmickle at MinnPost.com</a>. It provides some local color on the employment and economic situation in the farm-belt region. </div><div><br /></div><div>As an aside, <a href="http://www.minnpost.com/">MinnPost.com</a> has an interesting new-media business model. They're a non-profit web-only publication staffed by professional journalists doing feet-on-the-ground reporting:</div><div><br /></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com2tag:blogger.com,1999:blog-2718819858434072309.post-33188059207940461162010-01-25T14:57:00.017-05:002010-01-25T23:35:26.964-05:00Electricity in NH - Did Massachusetts voters just save PSNH ratepayers some money?<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/S146R1vyViI/AAAAAAAAAcM/uRidipXeePo/s1600-h/IMG_8481.jpg" style="text-decoration: none;"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://2.bp.blogspot.com/__WiQMRfj4vM/S146R1vyViI/AAAAAAAAAcM/uRidipXeePo/s800/IMG_8481.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5430842278815094306" /></a><div style="text-align: center;">Construction of scrubber at Merrimack Station in Bow, NH (summer 2009)</div><div><div style="text-align: center;"><br /></div><div>Occasionally, events and circumstances interconnect in unexpected and intriguing ways. The election of Scott Brown to the US Senate by Massachusetts' voters could give us another example of this and may have a surprising impact for New Hampshire.</div><div><br /></div><div>The <a href="http://www.graniteviewpoint.com/2009/06/electricity-in-new-hampshire-cap-and_25.html">economics of PSNH's scrubber project were looking a bit tenuous</a> in light of increased costs, lower natural gas prices, and looming carbon pricing legislation. Last week's election may end up changing all that. In fact, it may even make the cost of electricity from a "scrubbed" Merrimack Station relatively inexpensive for PSNH ratepayers.</div><div><br /></div><div style="text-align: left;">First, there was <a href="http://www.bloomberg.com/apps/news?pid=20601130&sid=amwVQ_OSFtRg">this from Bloomberg</a> last week:</div><div><p></p></div><blockquote><div><p>“A large cap-and-trade bill isn’t going to go ahead at this time,” Senator <a href="http://search.bloomberg.com/search?q=Dianne+Feinstein&site=wnews&client=wnews&proxystylesheet=wnews&output=xml_no_dtd&ie=UTF-8&oe=UTF-8&filter=p&getfields=wnnis&sort=date:D:S:d1" onmouseover="return escape( popwSearchNews( this ))">Dianne Feinstein</a>, a California Democrat, told reporters in Washington yesterday. </p></div></blockquote><div>The cap-and-trade bill may not be completely dead, but most pundits believe it's at least mostly dead. This follows the Republican takeover of a seat formerly held by Democratic Senator Ted Kennedy in Massachusetts. </div><div><br /></div><div>Impact on the environment notwithstanding, the death of cap-and-trade legislation could save PSNH ratepayers a hefty sum. Carbon emissions were estimated to cost $20-30 per ton and Merrimack Station alone emits over 3.5 million tons of carbon each year.</div><div><br /></div><div>As a sort of plan B, in case the cap-and-trade bill failed, the EPA has been threatening to regulate carbon emissions itself under its Clean Air Act authority. The EPA recently classified CO2 as a dangerous pollutant and appeared poised to enact new regulations on emissions.</div><div><br /></div><div>With last week's election, congress may now block the EPA's move to regulate CO2. At a minimum, the election results will make it tougher for the EPA to claim new regulatory authority. That means "plan C" may be called into action. Under plan C, the EPA would tighten regulations on other pollutants that coal-fired power plants emit, namely sulphur dioxide and mercury. The idea is that tighter regulations would increase the cost of making electricity with coal, and thus reduce the use of coal as a fuel for making electricity. This would be easier to do politically than enacting new legislation or claiming brand new regulatory authority over CO2, and would likely still result in a large decrease in CO2 emissions as a side effect.</div><div><br /></div><div><a href="http://blogs.ft.com/energy-source/2010/01/25/the-death-of-us-coal/">Here's a quote</a> from Kate Mackenzie at the Financial Times' FT Energy Source blog:</div><div><p></p></div><blockquote><div><p>Like many others, Bernstein Research analyst Hugh Wynne thinks the election of Scott Brown to a Massachusetts Senate seat last week is a death knell for cap-and-trade legislation, at least under this administration (we don’t necessarily agree with this assessment, but more about that later). And like others, he points to new EPA regulations as being an alternative source of curbing greenhouse gas emissions.</p><p></p><p>Only instead of the EPA’s CO2 endangerment finding, it’s the proposed tightening of sulphur dioxide emissions rules that Wynne says could affect US coal-fired power plants so much that US demand for coal goes into ’secular decline’.</p><p></p></div></blockquote><div>And there's the real twist. Merrimack's new scrubber is expected to limit emissions of both sulphur dioxide and mercury to amounts that are well below any future EPA limits. The plant will still be spewing out plenty of nasty CO2, but it should have no trouble complying with even the most stringent EPA regulations on sulphur dioxide or mercury.</div><div><br /></div><div>So if SO2 and mercury regulations are the path the EPA takes to reduce coal-fired power plant emissions of CO2, that could set up a second windfall for PSNH ratepayers. As non-scrubbed coal plants begin limiting output or shutting down, coal demand around the country would likely decrease. That could result in reduced coal-prices and thus a lower cost of electricity for coal-fired (and scrubbed) power plants like Merrimack Station.</div><div><br /></div><div>I know there are a ton of 'ifs' in the scenario described above, but it doesn't seem that far-fetched from a political standpoint. Personally, I think some sort of carbon pricing scheme would be a good thing overall. But if climate legislation does fail, I suppose it wouldn't hurt for PSNH ratepayers to get a little windfall. As usual, when it comes to electricity in New Hampshire, we're sure living in interesting times.</div></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com1tag:blogger.com,1999:blog-2718819858434072309.post-68332205950983650012010-01-15T16:05:00.002-05:002010-01-15T18:14:27.952-05:00Electricity in NH - No choice for residential customers (continued)<div>I did a recent <a href="http://www.graniteviewpoint.com/2010/01/electricity-in-nh-retail-electricity.html">post on electricity choice in New Hampshire</a> and I mentioned that for residential ratepayers, New Hampshire is stuck in a restructuring limbo. The regulatory framework for residential choice is ready to go, but so far there are no power marketers willing to offer energy to residential customers.</div><div><br /></div><div>The problems from our current lack of choice fall into two buckets. The first has to do with utilities having to guess the future in hopes of securing reasonable and stable electricity rates for consumers. The second potential problem revolves around PSNH's continued operation of generating resources and the allocation of costs for those resources to various types of ratepayers.</div><div><br /></div><div><b><span class="Apple-style-span" style="font-size: medium;">Do you go with the oil pre-buy option, or do you like to let it ride?</span></b></div><div><br /></div><div>Reasonable people can disagree on the extent to which utilities should pre-buy their customers' electricity. Should utilities mostly use long term power purchase agreements? Should they favor shorter term agreements? Should they just roll the dice and buy power on the spot market? New Hampshire's limited electricity choice forces residential ratepayers into a one-size-fits-all approach that's a little like requiring everyone to enter into an oil pre-buy agreement. This may be ok for some, but it's probably not right for everyone. </div><div><br /></div><div>The idea of paying a little extra to secure a steady supply of a commodity at a reasonble price is often used in business. During the 2008 oil price surge, Southwest Airlines was very adept at protecting itself from oil price increases by correctly hedging their jet fuel needs on the futures market. Meanwhile other airlines were forced to buy fuel at market prices, and they paid dearly. Still, this guessing game is far from a certainty and for each success story, there's a case of a company betting wrong or paying higher costs with no benefit.</div><div><br /></div><div><div><b><span class="Apple-style-span" style="font-size: medium;">Should your electric utility be an active or passive investor?</span></b></div><div><b><br /></b></div></div><div>A hedging approach doesn't always make sense and it often increases costs. Another analogy comes from the world of stock market investing. There are two schools of thought in investment management, an active approach and a passive or index investing approach. The passive approach says that even professionals can't "out guess" the market and over time, the average performance of active managers will be no better than the market overall. In fact, research suggests that average returns from active management may be even less than market returns because of the added costs of trying to beat the market. These passive or index investing adherants think paying active managers is a bad idea that just pads the pockets of investment advisory firms.</div><div><b><span class="Apple-style-span" style="font-weight: normal;"><br /></span></b></div><div>This same debate could also be applied to procurement of electricity and is another reason why establishing a strong system of retail electric choice is important. Some folks may want to take a passive approach to energy procurement and avoid bets on future prices. Others may be confident that analysts can successfully predict future market conditions. They may want their energy provider to place bets on future electricity prices in hopes of getting lower rates or greater rate stability. </div><div><br /></div><div>There are plenty of arguments for both sides in the passive vs active electricity procurement debate. To be sure, securing financing for a new power plant depends on long-term power purchase agreements to help mitigate risks, so it wouldn't be in anyone's interest for these contracts to go away completely. Still, regardless of which side is right, even without retail choice, regulators could require transition energy suppliers to separate out their "active management" activities and perhaps create multiple rate programs (offered by a single utility) to allow customers to chose the approach that works best for them.</div><div><br /></div><div><span class="Apple-style-span" style="font-size:medium;"><b><span class="Apple-style-span" style="font-weight: normal;"><span class="Apple-style-span" style=" ;font-size:16px;"><div><b><span class="Apple-style-span" style="font-size:medium;">Who should bear the cost and risks of upgrades to legacy plants?</span></b></div><div><span class="Apple-style-span" style="font-size:medium;"><b><br /></b></span></div></span></span></b></span></div><div>There's another issue with New Hampshire's lack of residential energy choice. It has to do with PSNH's continued operation of "grandfathered" electriciy generating plants and revolves around who bears the cost and risks of upgrades to these plants. Under NH's original restructuring plan, PSNH divested itself of many generating assets, but was allowed to retain some older plants that had limited life left in them. Merrimack and Schiller stations (both coal plants) are two examples. The intent was that eventually, PSNH would retire all of their generating capability and leave power generation to non-utility independent power producers. Unfortunately, or perhaps fortunately, PSNH has been able to keep their legacy coal plants running at a reasonable cost. They've also done some upgrades over the years such as converting one of Schiller's coal units to biomass.</div><div><br /></div><div>The result of this, so far, seems to be that PSNH's ownership of these legacy plants is actually helping to keep electricity costs down. Since these old plants are already paid for, burn mostly inexpensive coal and were built when regulations were less stringent, they're generally cheap to operate and couldn't easily be replaced. Although some would argue we're actually paying an additional environmental cost for these plants' electricity due to their high carbon emissions. </div><div><b><span class="Apple-style-span" style="font-weight: normal;"><br /></span></b></div><div><div><b><span class="Apple-style-span" style="font-size:medium;">Merrimack Station and the unpriced "coal" option</span></b></div><div><span class="Apple-style-span" style="font-size:medium;"><b><br /></b></span></div></div><div>Although things may have gone alright so far, additional issues arise as more expensive upgrades are done to these plants. For example, PSNH was<a href="http://www.graniteviewpoint.com/2009/06/electricity-in-new-hampshire-merrimack.html"> mandated by the NH legislature to install a "scrubber" at the Merrimack Station plant</a> to reduce the plant's mercury and sulphur emissions. Everyone agrees that lower sulphur and mercury emissions are a good thing, but as always, the question is - who will pay for it and who will bear the risk?</div><div><br /></div><div>And here's the real problem. No one knows what's going to happen to the economics of coal-based power generation over the 15-20 year life of the $457 million scrubber project. If coal prices stay low, carbon emissions don't get priced, and oil and natural gas skyrocket, the scrubber project will seem like a great investment. We'll be glad we kept the plant going. On the other hand, if coal prices increase, natural gas prices decrease, or carbon emission prices skyrocket out of control, the scrubber project is likely to be a loser and the economics of using Merrimack Station for power generation could become very tenuous.</div><div><br /></div><div>Nothing new there. Everyone knows there's risk and uncertainty with any large capital project. The problem shows up when you look at how each scenario is likely to play out given our current regulatory framework and competitive market. If the scrubber project turns out to be a good decision, PSNH will be able to offer lower rates and business customers, since they have a choice, are more likely to choose PSNH as their energy supplier. If the scrubber turns out to be an economic dud, and coal plants are shuttered because they aren't economical to run, business customers can just choose an energy supplier other than PSNH - one that's not saddled with the high costs of the scrubber. In either case, residential ratepayers are stuck buying their power from PSNH at whatever price they offer, even if that price includes the costs of an uneconomical scrubber. In finance, the ability to "choose the best option after the fact," without paying for it is referred to as an unpriced option. It's a heads businesses win, tails residential ratepayers lose situation. </div><div><br /></div><div>Just to be sure I wasn't missing something, I checked in with the folks at <a href="http://www.oca.nh.gov/">New Hampshire's Office of Consumer Advocate</a>. They brought two additional points to my attention that I hadn't considered. First, if PSNH's rates for residential ratepayers do increase above the competition due to the scrubber, it's possible that a competitive supplier will step in to sell power to residential ratepayers, since they'd be able to beat PSNH's prices. Another consideration is that if the costs of the scrubber are not being fairly allocated, the PUC and legislature may intervene and introduce stranded costs recovery rules to more fairly allocate the costs of the scrubber between residential and business ratepayers.</div><div><br /></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com1tag:blogger.com,1999:blog-2718819858434072309.post-37675562147126831072010-01-10T11:57:00.008-05:002010-01-13T10:07:42.833-05:00Antifreeze - What's a dog's life worth these days?<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/S0oU6Lx0VVI/AAAAAAAAAbU/7WwLEIqLhvQ/s1600-h/Bailey+headshot.jpg"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://1.bp.blogspot.com/__WiQMRfj4vM/S0oU6Lx0VVI/AAAAAAAAAbU/7WwLEIqLhvQ/s800/Bailey+headshot.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5425171690947892562" /></a><div style="text-align: center;">Bailey - our 6 year old Brittany</div><div><div style="text-align: center;"><br /></div><div>A few weeks ago I did <a href="http://www.graniteviewpoint.com/2009/12/residential-sprinklers-whats-life-worth.html">a post about a proposal to require residential sprinkler systems</a> in New Hampshire and I tried to find estimates for the "cost per life saved" for these systems in order to help put the cost into perspective. <div><br /></div><div>So naturally, when I saw <a href="http://www.boston.com/news/local/new_hampshire/articles/2010/01/06/nh_house_wants_antifrees_to_taste_bitter/">this AP report at boston.com</a> about legislation to require a bitter-tasting additive in retail antifreeze sold in NH, my first question was - What's the cost per pet life saved?</div><div><br /></div><div>If you've been wondering this too, fear not. I'm on it!</div><div><br /></div><div>To compute the cost, I decided to go with a national estimate, since NH specific numbers were too hard to find. First, I learned that as many as <a href="http://commerce.senate.gov/public/index.cfm?FuseAction=Hearings.Testimony&Hearing_ID=69615271-2d4d-4f84-b692-9f1d8c7ca5ef&Witness_ID=5339d213-7dad-48ed-a815-8b3c71b44345">10,000 pets die each year </a>in the US as a result of antifreeze poisoning. </div><div><br /></div><div>Next, I found a rough cost estimate from <a href="http://icreport.loc.gov/cgi-bin/cpquery/?&sid=cp109s5nKF&refer=&r_n=sr220.109&db_id=109&item=&sel=TOC_7003&">this 2005 US Senate committee report </a>on the issue:</div><div><p></p><blockquote>Under S. 1110, if the CPSC determines that the use of the bittering agent in engine coolant or antifreeze would have no adverse effects on the environment, coolant and antifreeze manufacturers would be required to add the agent to certain product mixtures. The bill would exempt coolant and antifreeze distributed to original manufacturers (such as motor vehicle manufacturers) and garages that purchase wholesale engine coolant or antifreeze for purposes other than retail sales. According to industry sources, about 160 million gallons of coolant and antifreeze are sold in the U.S. retail market each year. Industry and government sources indicate that adding the bittering agent to product mixtures would cost manufacturers less than $0.03 per gallon of coolant or antifreeze. Furthermore, the industry expects to incur some costs associated with upgrades necessary for storing denatonium benzoate at manufacturing plants. Industry sources estimate such costs to fall between $50,000 and $70,000 per plant. Based on those data, CBO estimates that the costs associated with this mandate would not exceed $6 million per year. </blockquote><p></p></div><div><div><br /></div><div>This is all pretty rough, but it should be good enough for a ball park estimate. The CBO cost figure of $6 million per year along with an (admittedly high) estimate of 10,000 pets saved per year, yields a <b>cost per pet saved of around $600</b>.</div><div><br /></div><div>This is probably a best case scenario, since there's concern that the bitter tasting additive may not deter all pets from drinking antifreeze. Also, most of these initiatives exempt manufacturers and garages that purchase antifreeze in bulk, so some cases of poisoning will likely still occur from leaks and improperly disposed untreated antifreeze. </div><div><br /></div><div>I found conflicting data on whether many people are killed by antifreeze poisoning in the US. One report indicated as many as 1400 children are treated for poisoning each year, however reports of deaths seem rare. In fact, according to <a href="http://www.ddal.org/antifreeze/news/">this site</a>, most of the recent human deaths from antifreeze were intentionally self-inflicted or due to homicide.</div><div><br /></div><div>New Hampshire's proposed antifreeze legislation comes on the heels of similar initiatives in several states including Oregon, Washington, New Mexico, Arizona, Tennessee, Vermont, Maine, Virginia and California.</div><div><br /></div><div>Links</div><div><a href="http://icreport.loc.gov/cgi-bin/cpquery/?&sid=cp109s5nKF&refer=&r_n=sr220.109&db_id=109&item=&sel=TOC_7003&">Senate Report 109-220</a> </div><div><a href="http://www.awfnj.org/updates/S979%20Summary.pdf">NJ Senate Bill S979</a></div><div><a href="http://www.wpcva.com/articles/2009/06/16/chatham/news/news37.txt">Law Targets Poisoning by Antifreeze - Altavista Journal, Virginia</a></div></div></div></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-80751125892501138802010-01-05T09:23:00.012-05:002018-02-09T09:45:07.762-05:00Electricity in NH - Retail electricity choice has fallen short<div style="text-align: center;">
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<span class="Apple-style-span" style="font-size: medium;">Screenshot of </span><a href="https://www.puc.nh.gov/" target="_blank"><span class="Apple-style-span" style="font-size: medium;">NH PUC website</span></a><span class="Apple-style-span" style="font-size: medium;"> on electric power choice</span></div>
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I've blogged about the general framework for <a href="http://www.graniteviewpoint.com/2009/11/electricity-in-nh-restructuring.html">electricity market restructuring in New England</a> and I've touched on some of the specifics for New Hampshire. Overall, our electricity restructuring effort seems to be working out reasonably well. Unfortunately though, for New Hampshire's residential electricity customers, restructuring is a story of unfinished business. <br />
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New Hampshire's restructuring model sought to eliminate the monopoly that local utilities had over electricity generation, distribution, and delivery. Under the new approach, the maintenance of the electricity distribution and delivery system would still be handled by a monopoly utility, but the provision of virtual "energy" to ratepayers would be the responsibility of independent power marketers. The plan follows an approach similar to the telephone long distance model. Power marketers would offer retail electricity customers various energy rate plans and would then contract with power generators or procure power using ISO-NE's <a href="http://www.graniteviewpoint.com/2009/11/electricity-in-nh-bulk-electricity.html">bulk electricity trading markets</a>. </div>
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<b><span class="Apple-style-span" style="font-size: large;">PUC has been unable to bring residential choice to NH so far</span></b></div>
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Although NH regulators tried to open up electricity markets to consumer choice, their attempts have failed so far, at least for residential customers. Currently, business ratepayers in New Hampshire <a href="https://www.puc.nh.gov/ceps/shop.aspx" target="_blank">can choose from around 10 or 12 energy suppliers</a>, but residential ratepayers have no choice and seem to be permanently stuck with their "transition" energy supplier (aka their old monopoly power company).</div>
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Even though residential electricity customers are stuck with their monopoly energy supplier, you'd never know that from reading the NH PUC's website on electricity choice. The site talks about the benefits of choice and even lists several competitive suppliers. Unfortunately, there's not a single mention anywhere on the site that none of the competitive suppliers service residential customers. </div>
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<span class="Apple-style-span" style="font-size: large;"><b>What retail choice might look like</b></span></div>
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For examples of some potential benefits of retail electric choice, consider the market in New Hampshire for home heating oil. Folks in New Hampshire that heat with oil have lots of choices. We can stick with one company and sign up for automatic delivery. We can call around each time we need a fill and get the best rate. If we're concerned about the environment, we can choose one of the new biofuel offerings. Finally, if we're worried about the variability of oil prices throughout the winter, we can choose a rate-lock plan. With retail electricity choice, electricity consumers could have many of these same options.</div>
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Texas gives us an example of how electricity choice might have turned out. To be sure, Texas is no shining star of ultra-low electricity rates, but their electricity choice model is well developed and shows us a glimpse of how things could look in New Hampshire. This website (use zipcode 75001) shows a list of rate plans available to texas electricity consumers. For a comparison datapoint, PSNH currently charges around 9 cents per kilowatt hour for energy.</div>
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Pennsylvania has also developed retail choice for electricity consumers. The state's <a href="http://www.oca.state.pa.us/Industry/Electric/">Office of Consumer Advocate website</a> has information for consumers about the state's retail electricity choice program, along with <a href="http://www.oca.state.pa.us/Industry/Electric/elecomp/ElectricGuides.htm">several price comparison charts</a> that show the offerings available in different parts of the state.</div>
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The retail electricity choice programs in Texas and Pennsylvania offer variable pricing plans, rate lock plans, and even green-energy plans. There seems to be something for everyone. To be sure, some folks may find this all too confusing and might rather let their state PUC figure it all out for them. Unfortunately, the PUC is forced to create a "one size fits all" rate structure and can't possibly make decisions that are optimal for everyone.</div>
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<b><span class="Apple-style-span" style="font-size: large;">Where should New Hampshire go from here?</span></b></div>
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In the end, I think residential electricity choice would be a good thing and I hope we get it here in NH. Sure, there will always be consumers who are under-served by having to fend for themselves and some may prefer to have someone else make the choice - and take the blame for making the wrong choice. </div>
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In addition, there will always be studies that show restructuring has lowered rates or caused rates to skyrocket. It just depends on the time period chosen and what's been happening to fuel prices (like natural gas and coal) over the period evaluated. As I've said before, you can't evaluate the efficacy of restructuring just by taking a snapshot of electricity rates. You've got to consider the risk model and the generation mix and evaluate rates in that context.</div>
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<br /></div>
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Still, in New Hampshire, our regulatory framework is set up for retail choice, and in order for our framework to function properly, retail choice must be established for residential electricity consumers. Without a choice, residential ratepayers are at a distinct disadvantage compared to businesses and consumers may end up getting a raw deal. </div>
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<br /></div>
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If an effective retail market for energy won't form on its own, the NH PUC will have to act to correct the situation. That could mean incentives to create more retail offerings, or we may need a complete restructuring of how retail electricity rates are set. In either case, leaving NH ratepayers in this restructuring limbo seems like the wrong approach.</div>
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Links</div>
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<a href="http://www.eia.doe.gov/cneaf/electricity/page/restructuring/new_hampshire.html">US Energy Information Administration, NH restructuring timeline</a></div>
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<a href="http://www.oca.state.pa.us/Industry/Electric/">Website for Pennsylvania Electric Choice</a></div>
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<a href="http://www.electricityderegulationblog.com/uncategorized/retail-electricity-providers-often-offer-lower-rates-survey-finds"></a></div>
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Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com3tag:blogger.com,1999:blog-2718819858434072309.post-5723069531071913862009-12-30T19:18:00.021-05:002009-12-30T21:30:13.795-05:00Electricity in NH - Did restructuring cause higher prices in New England?<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/SwgpaTwUpfI/AAAAAAAAAYA/MHiBRFp69b8/s1600/seabrook-station-nuclear-plant.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://4.bp.blogspot.com/__WiQMRfj4vM/SwgpaTwUpfI/AAAAAAAAAYA/MHiBRFp69b8/s800/seabrook-station-nuclear-plant.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5406616884614571506" /></a><div style="text-align: center;">Seabrook Station Nuclear Power Plant - Seabrook, NH<br /></div><div style="text-align: left;"><span class="Apple-style-span" style="color:#0000EE;"><span class="Apple-style-span" style=""><span class="Apple-style-span" style="color:#000000;"><br /></span></span></span></div><div style="text-align: left;"> </div><div style="text-align: left;">With more snow coming and the faint hum of the oil burner in the background, it seems like a good time for a follow-up in my <a href="http://www.graniteviewpoint.com/2009/11/electricity-in-nh-restructuring.html">electricity restructuring series</a>. Lately, there's been a growing concern that restructuring is not working and perhaps we should re-evaluate our current "simulated market competition" approach to electricity markets.</div><div><br /></div><div>In Connecticut, some state officials <a href="http://www.wfsb.com/iteam/21512835/detail.html">want to return to the old regulated monopoly model</a>. The justification is that electric rates in Connecticut are higher than nearly anywhere else in the country and they say that's proof that restructuring has failed. These officials point out that the lowest electricity prices are often found in states that still use the regulated monopoly model for electricity generation.</div><div><br /></div><div><div><b><span class="Apple-style-span" style=" ;font-size:large;">Correlation does not imply causation</span></b></div></div><div><br /></div><div>In light of these assertions, I'm reminded of a favorite phrase of economists, scientists, and statisticians - <a href="http://en.wikipedia.org/wiki/Correlation_does_not_imply_causation">Correlation does not imply causation</a>. In other words, when two things are related, you can't just <i>assume</i> that one caused the other. Just because New England has high electricity rates and has restructured their electricity markets doesn't mean that restructuring caused the high rates.</div><div><br /></div><div>In fact, in Connecticut, and in New England, electricity rates have long been higher than average rates in the rest of the country. Generally, the states where electricity restructuring took hold were the states with the highest rates to begin with. That makes sense since we New Englanders have a pretty strong "if it ain't broke, don't fix it" sensibility. If electricity rates in New England weren't broken, my guess is we'd have left well-enough alone.</div><div><br /></div><div>It turns out that the main explanation for higher electricity rates in New England is that for lots of reasons, we decided to generate our power with more expensive fuels like nuclear, natural gas, and oil and we don't use as much cheap coal as other regions. In the US overall, inexpensive coal is used to generate almost half of all electricity, while in New England, it's used to produce only 12%. Nuclear, gas, and oil together produce almost 70% of electricity in New England, but only 40% nationally. Our focus on fuels such as nuclear and natural gas keeps our air cleaner, and may be necessary due to our region's resources, but it comes with a cost. </div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/Sy_m_tGKFHI/AAAAAAAAAaI/EM5PaeOaUBc/s1600-h/ne-electricity-generation-by-fuel.JPG" style="text-decoration: none;"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/Sy_m_tGKFHI/AAAAAAAAAaI/EM5PaeOaUBc/s800/ne-electricity-generation-by-fuel.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5417802858861565042" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 606px; " /></a></div><div style="text-align: center;">Source:<a href="http://www.iso-ne.com/nwsiss/pr/2009/10.5_final_master_2009_october_ethier_chadalavada_background_presentation.pdf"> ISO-NE Report on 2009 Summer Demand</a> (slide 21)</div><div><br /></div><div><br /></div><div style="text-align: center;"><b>Power Generation by Fuel Source in the US</b> (<a href="http://www.eia.doe.gov/neic/speeches/newell121409.pdf">EIA Report, slide 20</a>)</div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/Sy_uwhOwKiI/AAAAAAAAAaY/jd1w2ZnZ7UQ/s1600-h/us-electricity-generation.JPG"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/Sy_uwhOwKiI/AAAAAAAAAaY/jd1w2ZnZ7UQ/s800/us-electricity-generation.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5417811394071374370" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div><br /></div><div>Connecticut legislators also have another beef with restructuring. They argue that ISO-NE's marginal-price-based <a href="http://www.graniteviewpoint.com/2009/11/electricity-in-nh-bulk-electricity.html">bulk power markets</a> cause ratepayers to overpay for electricity. They say that paying all generators the price that "clears the market" and matches up supply with demand gouges consumers and sends excess profits to lower-cost energy producers. There may be something to this concern, but the challenge is to find a solution that can correct the problem without introducing even greater inefficiencies.</div><div><br /></div><div><div><b><span class="Apple-style-span" style=" ;font-size:large;">Marginal pricing - it's just how free markets roll</span></b></div><div><span class="Apple-style-span" style="font-size:large;"><b><br /></b></span></div><div><b><span class="Apple-style-span" style="font-weight: normal; "><div style="text-align: center; ">Source: <a href="http://en.wikipedia.org/wiki/File:Supply-and-demand.svg">wikipedia user Pawl Zdziarski</a></div></span></b></div><div><b><span class="Apple-style-span" style="font-weight: normal; "><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/Sy_qEdj2kaI/AAAAAAAAAaQ/1mFHR3_zX3U/s1600-h/supply-demand-graph.JPG"><img src="http://1.bp.blogspot.com/__WiQMRfj4vM/Sy_qEdj2kaI/AAAAAAAAAaQ/1mFHR3_zX3U/s800/supply-demand-graph.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5417806239125377442" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 599px; " /></a></span></b></div><div><b><span class="Apple-style-span" style="font-weight: normal; "><div style="text-align: center; "><a href="http://en.wikipedia.org/wiki/Supply_and_demand">Supply and demand</a> intersect at market clearing price and quantity</div><br /><div>Under <a href="http://en.wikipedia.org/wiki/Supply_and_demand">marginal pricing</a>, the market price for everyone is set by the last unit of a good that's needed and supplied in the market. All suppliers (power generators) are able to sell their output at that last or marginal price. If the cost of supplying the last unit is roughly the same as the cost of supplying all other units, this isn't a big deal. However, if the marginal cost of production (the cost to make each additional unit of output) is sharply increasing, producers who have lower costs get excess profit because they get to sell their inexpensively produced output at the market price set by the last unit produced. In electricity generation, low-cost coal based producers can get a bonus because the marginal price of electricity is usually set by more expensive natural gas generators. Under a regulated monopoly model, utilities could only recover their actual cost of generating the power needed, plus a fixed profit.</div><div><br /></div></span></b></div><b><div><span class="Apple-style-span" style="font-weight: normal;">Although these inefficiencies can be real, in a free market system, most prices are set using marginal pricing. Marginal pricing is how the market figures out the price of a gallon of gasoline, the price of a home, and the price of a new TV. Sure, there are other approaches, but in reality, once you decide that a market-based pricing scheme isn't good enough, you're on the hook to out-design the market and that's usually tough to do. Reverting to the regulated monopoly cost-plus approach has its own inefficiencies. The question boils down to which "synthetic" market structure can achieve the best result.</span></div><div><br /></div><div><b><span class="Apple-style-span" style="font-size:large;">Generating capacity - do you come from a land of plenty?</span></b></div><div><br /></div><div><span class="Apple-style-span" style="font-weight: normal;">One important step in assuring that the cost of electricity is reasonable is to assure that there's enough generating capacity. Under perfect, free-market competition, there would be hundreds of firms entering and exiting the power generating market and the supply of generating capacity would naturally meet up with the demand. Unfortunately that didn't happen with power generation in the early days of restructuring, and some regions experienced serious electricity shortages as demand grew faster than supply.</span></div><div><br /></div><div><span class="Apple-style-span" style="font-weight: normal;">Since the market didn't naturally build the needed capacity, regulators tweaked things by creating a system of "capacity payments" to encourage power generators to build and maintain enough capacity to serve the market's needs. That sounds reasonable, but as with much of restructuring, getting the incentives right has been tough. In practice, capacity payments aren't just paid to owners that build new plants, they're also paid to existing power plant owners. Many economists believe this is inefficient and raises prices more than is needed to assure adaquate capacity.<br /></span></div><div><br /></div><div><b><span class="Apple-style-span" style="font-size:large;">In the end, it's all about the risk</span></b></div><div><br /></div><div><span class="Apple-style-span" style="font-weight: normal;">While it's vital for restructuring that regulators get the market mechanisms and incentives right, the more I learn, the more I become convinced that a huge part of the equation is understanding how risk is allocated, and how we'd like it to be allocated. Exactly how should the risks of a new coal scrubber, wind plant, or nuclear power plant be allocated? Who should pay if things don't turn out as planned? Who should profit if things go better than planned? </span></div><div><br /></div><div><span class="Apple-style-span" style="font-weight: normal;">Advocates of the regulated monopoly approach suggest that because regulated utilities have a lower cost of capital, they can offer a less expensive model for power generation. IMO, this view is incorrect. Unlike merchant power generators, utility power plant owners are basically risk pass-through entities. They have lower financing costs because the risk of their capital projects is passed on to ratepayers. Sure, there are some benefits from the certainty of a captive consumer base, but most of those benefits can also be enjoyed by merchant generators using power purchase agreements to pre-sell their output. In the end, there's really no free-lunch in terms of cost-of-capital. The power plants that regulated utilities build are every bit as risky as those that merchant generators build. It's just a question of how the risk is allocated and who pays if things go bad.</span></div><div><br /></div><div><span class="Apple-style-span" style="font-weight: normal;">It seems that trying to figure out if one regulatory scheme is better than another without delving into the risk model is like trying to decide if bonds are better than stocks by looking only at last month's returns. Unless you've uncovered what the risks are and who's on the hook for them, the pricing at any instant could be a mirage.</span></div><div><br /></div><div><span class="Apple-style-span" style="font-weight: normal;">So, did restructuring cause higher electricity prices in New England? Personally, I don't think so. There have certainly been challenges in getting the market structure right, and these could have increased costs some. Still, I don't see any obvious signs of market failure either. To me the key in all this is to get the incentives and the risk sharing right. </span></div><div><br /></div><div><span class="Apple-style-span" style="font-weight: normal;">Developing a robust electricity generation and delivery system that can meet our needs today and in the future involves taking risks. The ultimate question is this: How much risk do we, as electricity consumers want to transfer onto investors and how much are we willing to shoulder by ourselves? IMO, a purposeful allocation of risks and rewards should drive electricity market structure and getting that right will lead to the best outcome for consumers and for our economy.</span></div><div><br /></div><div><br /></div></b></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-69391153553823374172009-12-23T13:15:00.013-05:002010-01-03T20:40:02.396-05:00Portsmouth based carbon capture firm completes pilot<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/Sj6ypBMTZCI/AAAAAAAAAGM/QVjkGPXSDHM/s1600-h/IMG_8440aaa.jpg"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/Sj6ypBMTZCI/AAAAAAAAAGM/QVjkGPXSDHM/s800/IMG_8440aaa.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5349909825127146530" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 10px; margin-left: auto; text-align: center; cursor: pointer; width: 400px; " /></a><div style="text-align: center;">Coal fired power plant in Bow, NH</div><div><br /></div><div>I came across a recent <a href="http://www.seacoastonline.com/articles/20091223-NEWS-912230349">report by SeacoastOnline</a> about a company in Portsmouth called <a href="http://www.powerspan.com/">Powerspan</a> that's doing some pretty cool work with carbon capture technology. Apparently, the firm just completed a pilot program on a 1 megawatt coal plant in Ohio that helped prove out their technology and lay the groundwork for a future commercial deployment.</div><div><br /></div><div>Carbon capture is a technique that helps clean up the output from coal-fired power plants. In NH, <a href="http://www.graniteviewpoint.com/2009/06/electricity-in-new-hampshire-merrimack.html">PSNH is working on cleaning up emissions from our largest coal plant, Merrimack Station</a>, but this effort will only remove mercury and sulfur dioxide, not carbon.</div><div><br /></div><div>As <a href="http://www.graniteviewpoint.com/2009/06/electricity-in-nh-merrimack-scrubber.html">I've mentioned before</a>, for lots of reasons, coal is likely to be an important part of our energy mix for decades to come. Anything we can do to economically clean up the output from coal power plants is a good thing. It's neat that we've got a company right here in the seacoast of New Hampshire that's helping to solve this tough worldwide problem.</div><div><br /></div><div>Although this is promising technology, Powerspan still has some big work ahead of them, especially in terms of economics. The <a href="http://www.powerspan.com/pilotresults.aspx">firm's press release</a> on the pilot indicates that using their technology will cost around $50 per ton of carbon removed from a coal plant's output. While this is apparently a breakthrough compared to competing carbon capture technologies, $50 per ton is still nothing to sneeze at. </div><div><br /></div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/Sky2ovnFTTI/AAAAAAAAAIk/i6MzbrTlKbE/s1600-h/Capital+v+Operating+Cost+3.jpg"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/Sky2ovnFTTI/AAAAAAAAAIk/i6MzbrTlKbE/s800/Capital+v+Operating+Cost+3.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5353854868128091442" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 642px; " /></a><div style="text-align: center;">Some very rough power generation costs (using $20 per ton for coal emissions) </div><div style="text-align: center;"><br /></div><div>For some perspective on that cost, consider the data in my <a href="http://www.graniteviewpoint.com/2009/07/electricity-in-nh-power-generation.html">power generation economics post</a> from last July. In one of the later graphs, I priced carbon emissions at $20 per ton to show the impact of emissions on the economics of coal generation (see graph above). Generating a megawatt hour of power using coal can easily produce a ton of carbon emissions, so adding in a $50 per ton charge instead of $20 would significantly increase the cost of power from coal. In fact, adding $50 a ton for carbon capture would move coal's fuel and operating cost from 4.5 cents to 7.5 cents per kWh in the graph above. That could make coal uncompetitive versus other approaches.</div><div><br /></div><div>Still, we shouldn't be too negative about the costs of carbon capture. The technology is still in its infancy and we're likely to see major breakthroughs along the way. Also, as long as we're subsidizing other emerging clean power generation technologies like wind and solar, it seems only right that carbon capture is included in the mix. </div><div><br /></div><div>IMO, we should think of investing in power generation technology the way we think about personal investing. We should take a "portfolio" approach and diversify in order to minimize our risks and maximize opportunity. Even though wind and solar are showing great promise right now, we shouldn't put all our research eggs in one basket. </div><div><br /></div><div>It's going to be a long haul to get to a cleaner energy future and I don't think anyone really knows what that future will look like. Personally, I'm glad to see these local folks working hard and smart to help us find the best way there.</div></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com2tag:blogger.com,1999:blog-2718819858434072309.post-28138119917901169332009-12-20T20:30:00.004-05:002009-12-20T20:56:45.484-05:00Portsmouth building boom slowed by credit crunch<div style="text-align: left;">Fallout from the credit crisis and financial meltdown of 2007-2008 is still all around us these days. Even with improving conditions, you can hardly read a newspaper or watch the news on TV without some mention of the crisis and its impact. Although many people and businesses have been financially impacted, physical signs of the crisis are just now starting to show up on our local landscape.</div><div><div><br /></div></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFdbbQuF3I/AAAAAAAAAZA/YipEC3LELiw/s1600-h/IMG_0236a.JPG"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFdbbQuF3I/AAAAAAAAAZA/YipEC3LELiw/s800/IMG_0236a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5413710952831784818" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 10px; margin-left: auto; text-align: center; cursor: pointer; width: 600px;" /></a></div><div><div><div><div style="text-align: center;">Construction of hotel in Portwalk project (<a href="http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=merchants+row+shopping+center++portsmouth+nh&sll=43.078022,-70.760263&sspn=0.002429,0.004329&ie=UTF8&hq=&hnear=Merchants+Row+Shopping+Center,+Portsmouth,+Rockingham,+New+Hampshire+03801&ll=43.078418,-70.759764&spn=0.013385,0.023603&z=15">map</a>)</div><div><br /></div><div>I was in Portsmouth the other day and I did a quick photo shoot of some of the development projects underway. I had done a similar tour earlier in the year and while some of the projects seem to be going along strong, others have been delayed or scaled back. Causation can be hard to pinpoint, but it's probably a safe bet that many of the delays in these projects are due to financing issues or concerns about the economy.</div></div></div><div><br /></div><div><div><div>In downtown Portsmouth, the Portwalk project is still moving along, although the developer split the project into three phases and is only working on phase I currently. Phase I includes a 128 room Residence Inn by Marriott and 12,000 sq feet of retail space. Phases II and III include condos (or maybe apartments), more office and commercial space, and a parking garage but seems to be on hold indefinitely at this point.</div></div></div></div><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFeMZEWV1I/AAAAAAAAAZQ/Oxff5QVlZpk/s1600-h/portwalk-overview.jpg"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFeMZEWV1I/AAAAAAAAAZQ/Oxff5QVlZpk/s800/portwalk-overview.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5413711794056615762" /></a><div style="text-align: center;">Rendering of the proposed Portwalk project (<a href="http://www.portwalknh.com/renderings.html">portwalkNH.com</a>)</div><div style="text-align: center;"><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/SyFdTrcsucI/AAAAAAAAAY4/o_RiJ4-UP7U/s1600-h/IMG_7188a.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://2.bp.blogspot.com/__WiQMRfj4vM/SyFdTrcsucI/AAAAAAAAAY4/o_RiJ4-UP7U/s800/IMG_7188a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5413710819738040770" /></a><div style="text-align: center;">Parade Mall (Portwalk site) just before demolition (June 2009)</div><div style="text-align: center;"><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFdTSS2U8I/AAAAAAAAAYw/QIsbzy8vnyk/s1600-h/IMG_7973a.JPG" style="text-decoration: none;"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFdTSS2U8I/AAAAAAAAAYw/QIsbzy8vnyk/s800/IMG_7973a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5413710812985840578" /></a><div style="text-align: center;">Parade Mall demolition (June 2009)</div><div><div style="text-align: center;"><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFdTHSfCNI/AAAAAAAAAYo/JLXWy1j7jAQ/s1600-h/IMG_0096a.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFdTHSfCNI/AAAAAAAAAYo/JLXWy1j7jAQ/s800/IMG_0096a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5413710810031524050" /></a><div style="text-align: center;">Shell of Residence Inn is nearly weather tight (Dec 2009)</div><div style="text-align: center;"><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFdbt51h4I/AAAAAAAAAZI/o1Ef2XF_I_A/s1600-h/IMG_0233a.JPG"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFdbt51h4I/AAAAAAAAAZI/o1Ef2XF_I_A/s800/IMG_0233a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5413710957836076930" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a><div style="text-align: center;">View of Residence Inn from Maplewood and Deer (Dec 2009)</div><span class="Apple-style-span" style="color:#0000EE;"><div style="text-align: center;"><span class="Apple-style-span" style="color:#000000;"><br /></span></div></span><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFdS7zgjwI/AAAAAAAAAYg/67O_pOGcyCw/s1600-h/0418d_portwalk2_b.jpg"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/SyFdS7zgjwI/AAAAAAAAAYg/67O_pOGcyCw/s800/0418d_portwalk2_b.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5413710806948810498" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a><div style="text-align: center;">Rendering of Portwalk's Residence Inn from Hanover Street (<a href="http://www.portwalknh.com/renderings.html">portwalknh.com</a>)</div><div style="text-align: center;"><br /></div><div>A Westin Hotel has also been approved across the street from the Portwalk project. The Westin project appeared ready to go, and the hotel was even listed on the Westin's website. However, there are no signs of construction and the hotel listing on the Westin website has been removed. There's no official word on the status of the project at this point.</div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/Sy7JteSmOjI/AAAAAAAAAZg/BzqiFMwRo_Q/s1600-h/IMG_0214a.JPG"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/Sy7JteSmOjI/AAAAAAAAAZg/BzqiFMwRo_Q/s800/IMG_0214a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5417489184835648050" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">Site of future Westin Hotel next to Deer Street in Portsmouth (<a href="http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=deer+street+portsmouth+nh&sll=37.0625,-95.677068&sspn=43.983628,58.623047&ie=UTF8&hq=&hnear=Deer+St,+Portsmouth,+Rockingham,+New+Hampshire+03801&ll=43.078586,-70.760386&spn=0.002488,0.005515&z=18">map</a>)</div><div><br /></div><div>Also downtown, the <a href="http://www.cbre.com/USA/US/NH/Portsmouth/property/Martingale.htm">Martingale Wharf project</a> is just now coming out of a 9 month long stall. Work has recently started again on this 50,000 sq ft retail, commercial, and residential condo project on Bow Street after months of sitting idle.</div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sy7LzbEBBHI/AAAAAAAAAZo/KaTx9gmnWsU/s1600-h/IMG_7744a.JPG"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/Sy7LzbEBBHI/AAAAAAAAAZo/KaTx9gmnWsU/s800/IMG_7744a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5417491486071653490" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">Photo of Martingale Wharf project from across the river taken in June 2009 (<a href="http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=bow+street+portsmouth+nh&sll=37.0625,-95.677068&sspn=43.172547,48.339844&ie=UTF8&hq=&hnear=Bow+St,+Portsmouth,+Rockingham,+New+Hampshire+03801&ll=43.078878,-70.755923&spn=0.001221,0.002752&t=h&z=19">map</a>)</div><div style="text-align: center;"><br /></div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/Sy7Lz3EWgCI/AAAAAAAAAZw/JAdB1vyHAKw/s1600-h/IMG_0208a.JPG"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/Sy7Lz3EWgCI/AAAAAAAAAZw/JAdB1vyHAKw/s800/IMG_0208a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5417491493589254178" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">Photo from December shows little progress on the project since June</div><div style="text-align: center;"><br /></div><div>On the positive side, the project at the old Pier One Restaurant site (soon to be residential condos) appears to be moving along despite the tough economic conditions, as shown in the photo below.</div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/Sy7Nm7C5LWI/AAAAAAAAAZ4/dcZjwqrqiX8/s1600-h/IMG_0192a.JPG"><img src="http://1.bp.blogspot.com/__WiQMRfj4vM/Sy7Nm7C5LWI/AAAAAAAAAZ4/dcZjwqrqiX8/s800/IMG_0192a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5417493470341836130" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">Photo of work at the old Pier One Restaurant site at the end of State Street (<a href="http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=state+street+and+dutton+ave+portsmouth+nh&sll=43.077881,-70.752929&sspn=0.002343,0.005504&ie=UTF8&hq=&hnear=State+St+%26+Dutton+Ave,+Portsmouth,+Rockingham,+New+Hampshire+03801&ll=43.078165,-70.752742&spn=0.001221,0.002752&t=h&z=19">map</a>)</div><div style="text-align: center;"><br /></div><div>Finally, the City of Portsmouth project to relocate the waterfront deck at Poco's Restaurant and rehabilitate the public right-of-way seems to be coming along. With the construction of a new building at Martingale's Wharf, this area now offers the only riverfront view on this section of Bow Street.</div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/Sy7NnOgh90I/AAAAAAAAAaA/zkI9X5ZfoVk/s1600-h/IMG_0202a.JPG"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/Sy7NnOgh90I/AAAAAAAAAaA/zkI9X5ZfoVk/s800/IMG_0202a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5417493475566417730" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">View of small city park under construction behind Poco's Restaurant (<a href="http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=pocos+bow+street+cantina+portsmouth+nh&sll=43.078716,-70.756679&sspn=0.002488,0.005515&ie=UTF8&hq=pocos+bow+street+cantina&hnear=Portsmouth,+NH&ll=43.078728,-70.757268&spn=0.000622,0.001379&t=h&z=20">map</a>)</div><div style="text-align: center;"><br /></div><div>Additional links</div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.portwalknh.com/index.html">PortwalkNH.com</a></div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.cathartesprivate.com/index.htm">Cathartes Private Investments (portwalk developer)</a></div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.fosters.com/apps/pbcs.dll/article?AID=/20080626/GJNEWS_01/796610531/-1/FOSNEWS">Uncertain Economy delays much of Portwalk (Fosters - 6/2009)</a></div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.seacoastonline.com/articles/20090401-NEWS-904010376">Martingale Wharf project delayed (SeacoastOnline - 4/2009)</a></div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.fosters.com/apps/pbcs.dll/article?AID=/20091126/GJNEWS_01/711269759/-1/NEWS26">Martingale Wharf project receives extension (Fosters - 11/2009)</a></div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.cbre.com/USA/US/NH/Portsmouth/property/Martingale.htm">Martingale Wharf project (CB Richard Ellis developer)</a></div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.starwoodhotels.com/westin/property/overview/index.html?propertyID=1772">Westin Hotel Portsmouth website (hotel not built yet)</a></div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.seacoastonline.com/articles/20091024-NEWS-910240339">Westin's opening date in Portsmouth reported too soon (SeacoastOnline - 10/2009)</a></div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.seacoastonline.com/articles/20090426-NEWS-904260344">City to experience construction boom (SeacoastOnline 4/2009)</a></div><div><br /></div><div><br /></div></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-29583501332753306422009-12-18T19:05:00.019-05:002010-01-19T08:59:26.496-05:00Residential Sprinklers - What's a life worth these days?<div style="text-align: left;"><span class="Apple-style-span" style="font-style: italic; ">... The cost-per-life-saved for residential sprinkler systems is estimated at between $2-$36 million (in US dollars) according to reports from New Zealand and Canada.</span></div><div><br /></div><div style="text-align: center;">Cost per life saved in $ CAD (<a href="http://dsp-psd.pwgsc.gc.ca/Collection/NH18-22-90-238E.pdf">Canadian Housing Information Centre</a>)</div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SywoDS9_3RI/AAAAAAAAAZY/os3D_Bfejt8/s1600-h/cost-per-life-saved+chart.JPG"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/SywoDS9_3RI/AAAAAAAAAZY/os3D_Bfejt8/s800/cost-per-life-saved+chart.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5416748488916458770" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 514px; " /></a></div><div><br /></div><div>According to a recent <a href="http://www.wmur.com/news/21988857/detail.html">WMUR-TV report</a>, the New Hampshire State Building Code Review Board has voted to require sprinkler systems in new residential construction starting in 2012.</div><div><br /></div><div>Most fire safety officials laud the use of sprinkler systems for their ability to save lives, reduce injuries to building occupants and firefighters, and reduce the costs of fire damage. There's not much debate about whether sprinkler systems save lives and reduce property damage. They do.</div><div><br /></div><div>The debate comes in when officials try to figure out if the savings are enough to offset the estimated $1.00 to $1.50 per square foot that sprinklers will add to the cost of constructing a new home. With the<a href="http://www.census.gov/const/C25Ann/sftotalsqft.pdf"> average square footage of new construction in New England</a> running at around 2200 square feet, sprinklers could easily mean a $2500 to $3000 increase in cost.</div><div><br /></div><div>That's where the analysis starts to get interesting and the squeamish head for the exits. Just how much is a life worth anyway? People say you can't put a value on a human life, but I say heck, engineers and safety officials have to do it all the time. Vehicle designers, transportation system planners, and of course, medical professionals are all too familiar with this gruesome mortality math. To start, I found<a href="http://www.usfa.dhs.gov/statistics/state/index.shtm"> this encouraging table from the US Fire Administration</a> that shows that NH has the lowest fire death rate in the country, at 4.6 deaths per year per million. Regardless of where you stand on the sprinkler issue, that's good news.</div><div><br /></div><div>Next, I did some quick googling and the first sources on cost-per-life-saved for residential sprinkler systems that I found were outside the US. (I wonder if this says something about our collective squeamishness here in the US).</div><div><br /></div><div><a href="http://www.branz.co.nz/cms_show_download.php?id=923">This report from New Zealand</a> estimates the cost per life saved at around $2-$5 million dollars (I did a currency conversion from the numbers in the report). <a href="http://dsp-psd.pwgsc.gc.ca/Collection/NH18-22-90-238E.pdf">Another report from Canada </a>put the cost per life at a whopping $36 million. Still another <a href="http://www.firesprinklers.org.uk/Services/Documents/Fire%20Prevention%20article%20Mar00.pdf">report from the UK</a> puts the number at around $1 to $2 million. Finally, the only US report I could find in my quick google search, from the Pennsylvania builders Association, puts the cost at over $80 million per life saved. Obviously, there's plenty of room for fudging the numbers and some of the groups producing these estimates have a vested interest in inflating the numbers to avoid new regulations, but at least you can get an idea of the order of magnitude. </div><div><br /></div><div>Soooo, What say you? Are you worth $2 million? or maybe $5? How about $80. Just some food for thought...</div><div><br /></div><div>To be fair, <a href="http://www.usfa.dhs.gov/citizens/all_citizens/home_fire_prev/sprinklers/">advocates of these mandates</a> point out that they not only save lives and reduce injuries, but they also can protect property by reducing the severity of fires. The economics might be a bit tenuous, but I can't really blame the folks that have to run into burning buildings for advocating for more fire-safety equipment. These regulations would almost certainly make the outcomes they witness in their day-to-day jobs a lot less horrific.</div><div><br /></div><div>More Links:</div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.usfa.dhs.gov/citizens/all_citizens/home_fire_prev/sprinklers/">US Fire Administration (FEMA)</a></div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.usfa.dhs.gov/citizens/all_citizens/home_fire_prev/sprinklers/facts.shtm">USFA home sprinkler myths and facts</a></div><div> <a href="http://www.usfa.dhs.gov/statistics/state/index.shtm">USFA State Fire Death Rates</a></div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.homefiresprinkler.org/">HomeFireSprinkler.org</a></div><div> <span class="Apple-tab-span" style="white-space:pre"> </span><a href="http://www.usfa.dhs.gov/media/press/2009releases/120309.shtm">USFA fire safety tips for the holidays</a></div><div><br /></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com5tag:blogger.com,1999:blog-2718819858434072309.post-86544432627323710132009-11-24T08:54:00.017-05:002018-02-09T09:46:37.834-05:00Electricity in NH - Restructuring Overview<div style="text-align: left;">
<span class="Apple-style-span" style="font-style: italic;">"...the ultimate challenge for the bonsai designer is to expose the essence of the tree. "</span></div>
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<span class="Apple-tab-span" style="white-space: pre;"><span class="Apple-style-span" style="font-style: italic;"> <span class="Apple-tab-span" style="white-space: pre;"> </span></span></span><span class="Apple-style-span"><span class="Apple-style-span" style="font-style: italic;">- </span><a href="http://www.google.com/url?sa=t&source=web&ct=res&cd=4&ved=0CBIQFDAD&url=http%3A%2F%2Fbooks.google.com%2Fbooks%3Fid%3DPoPD5hwB-K8C%26pg%3DPA9%26lpg%3DPA9%26dq%3D%2522the%2Bultimate%2Bchallenge%2Bfor%2Bthe%2Bbonsai%2Bdesigner%2Bis%2Bto%2Bexpose%2Bthe%2Bessence%2Bof%2Bthe%2Btree%2522%26source%3Dbl%26ots%3Dc3Qsnd-vcc%26sig%3D4nvE24EPAzlFyGrJf_6n5T84t3A%26hl%3Den%26ei%3DE4wKS4mkMYOxlAf92OSEBA%26sa%3DX%26oi%3Dbook_result%26ct%3Dresult%26resnum%3D4%26ved%3D0CBMQ6AEwAw&ei=E4wKS4mkMYOxlAf92OSEBA&usg=AFQjCNFhEcGX8t0ImfctM4WC6ywnE4URCQ&sig2=MYvrImVRq9WINeJ3OIk9kA"><span class="Apple-style-span" style="font-style: italic;">Herb L. Gustafson</span></a></span></div>
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<a href="http://4.bp.blogspot.com/__WiQMRfj4vM/SwqIkzCMZaI/AAAAAAAAAYI/cimZ7Rcz4Sk/s1600/dwarf_Japanese_Juniper_wiki_ragesoss.jpg" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5407284468367779234" src="https://4.bp.blogspot.com/__WiQMRfj4vM/SwqIkzCMZaI/AAAAAAAAAYI/cimZ7Rcz4Sk/s800/dwarf_Japanese_Juniper_wiki_ragesoss.jpg" style="cursor: hand; cursor: pointer; display: block; margin: 0px auto 0px; text-align: center; width: 500px;" /></a><br />
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(source: <a href="http://en.wikipedia.org/wiki/File:Dwarf_Japanese_Juniper,_1975-2007.jpg">wikipedia user ragesoss</a>)</div>
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Beginning in the early 1990s, electricity markets in New Hampshire and across the country have been restructured and reorganized. As with the Bonsai tree pictured above, regulators have worked hard to shape these new markets, trimming, pruning, and pinning up where necessary. The goal is to coax the new electricity markets to take on the shape of capitalism's beloved free markets.<br />
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<b>Electricity Market Restructuring - Some historical context</b><br />
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In the early days of commercial electric service, electric companies mostly developed into natural monopolies. Although <a href="http://knowledgeproblem.com/2009/11/04/breaking-news-retail-power-competition-to-end-in-lubbock-after-more-than-90-years/">there were exceptions</a>, especially in the early wild-west days of the industry, it was soon recognized that it didn't make sense to string up redundant sets of wires to serve each potential customer. For most of the twentieth century, electricity was provided under the staid and stable regulated monopoly model. Electric utilities were vertically integrated and provided everything from power generation, to transmission, to neighborhood distribution and customer service. Utilities were typically organized as investor owned for-profit firms, or municipal non-profits. Under either model, outcomes were generally stable and predictable for everyone involved.<br />
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Then in the 1980s, there was a national trend to deregulate and restructure several industries that had historically been heavily regulated. This move was partly fueled by the success of the conservative movement under Ronald Regan, and was later spurred along by the collapse of communism in the Soviet Union and a nearly worldwide change-of-heart on the benefits of free-market capitalism . By the early 1990s, in the US and around the world, several industries, including airlines, telephony, and gas and electric utilities, were deregulated or restructured in hopes of harnessing the forces market competition to the benefit of investors, customers and the economy.<br />
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<b>Electricity Market Restructuring - The rationale</b><br />
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The timing of the global sea-change toward free markets couldn't have been worse for regulated electric utilities. By the late 1980s, the industry was suffering from the effects of multiple energy price shocks during the 1970s followed by a nasty nuclear hangover. The cost-plus-guaranteed-return pricing model of regulated electric utilities was a natural fit for nuclear power's high capital cost, low energy cost model. With nuclear power, utilities hoped to leverage their cheap access to debt and lock in the price of electricity for years to come. <br />
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Nuclear power promised boundless clean electricity that according to its advocates would be "too cheap to meter." If only it had turned out to be so. By the late 1980s, the nuclear "experiment" was floundering in a sea of red ink and ratepayers across the country were fed up. Businesses and industrial users in the Northeast were especially hard hit by high electricity costs and demanded action from their state legislators.<br />
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Meanwhile, supporters of "deregulation" suggested that the utilities' experiment with nuclear power wasn't the problem per se. It was just that the risk-model was broken and the regulations were excessive . They suggested that with a free-market approach, investors would be free to search out new ways to generate electricity as they saw fit. With enough competition and enough experimentation, free-markets would ferret out the lowest cost solution and everyone would win. As a bonus, it would be hapless investors who would bear the costs of the failures, not ratepayers.<br />
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The plan to move the electricity industry toward a free market structure started with an analysis of where competition had the best chance of working. Electricity generation seemed like the most obvious place to start. The idea was that if independent power producers were given open and free access to statewide and regional electricity grids, market competition could flourish.<br />
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<span class="Apple-style-span" style="font-weight: bold;">Electricity Market Restructuring - The model</span><br />
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To make way for competition in power generation, the market power that utilities enjoyed in both generation and transmission had to be diminished. Different states took different approaches, but New England generally followed the design presented in the <a href="http://www.ferc.gov/students/whatisferc/history.htm">Federal Energy Regulatory Commission's (FERC)</a> <a href="http://www.ferc.gov/legal/maj-ord-reg/land-docs/order888.asp">Order 888</a>, which was issued in 1996. This order, along with subsequent orders, presented a framework where utilities would sell off their generation capability and give up control over the power grid to pave the way for competition. Most reform plans included the creation of a <a href="http://www.ferc.gov/industries/electric/indus-act/rto.asp">regional transmission organization</a> to manage the power-grid and create a fair and open process for connecting to the grid. The groundwork for restructuring in New Hampshire was kicked-off with the <a href="http://iso-ne.com/aboutiso/co_profile/timeline/index.html">creation of ISO-NE in 1997</a>. Regional system operators were also charged with the task of creating standardized wholesale power markets, where market participants could sell and buy electricity as though it was a commodity.<br />
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The creation of <a href="http://www.graniteviewpoint.com/2009/11/electricity-in-nh-bulk-electricity.html">standardized wholesale power markets</a> paved the way for another market reform. Once power could be traded like a commodity in a "virtual world" running parallel to the wires and transformers, end-customers could choose who to buy their power from. Regulated utilities would still maintain the distribution infrastructure, but customers could choose to buy their power from an independent "power marketer" instead of their local utility. The model was similar to long-distance phone service, where customers could choose a long-distance provider other than their local telephone company.<br />
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Finally, restructuring would leave legacy utilities as regulated monopolies to maintain local power distribution systems and take care of customer service. In New Hampshire the original idea was for utilities to sell off their generation and transmission resources, however some utilities, most notably PSNH, were permitted to retain some "grandfathered" resources until the end of their useful life. All regulated utilities in New Hampshire are prohibited from building or owning new power plants and new transmission resources.<br />
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<b>Restructuring - Progress and Pitfalls</b><br />
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As I've mentioned in previous posts, New Hampshire relies on ISO-NE for both <a href="http://www.graniteviewpoint.com/2009/10/electricity-in-nh-power-grid.html">maintaining the power grid</a> and <a href="http://www.graniteviewpoint.com/2009/11/electricity-in-nh-bulk-electricity.html">operating regional power markets</a>. I've also posted about the companies in New Hampshire that <a href="http://www.graniteviewpoint.com/2009/06/electricity-in-nh-power-generation.html">own and operate power plants</a> as independent power producers. ISO-NE also maintains a connection queue so that power plant owners can get open an fair access to the power grid.<br />
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So far, so good, but unfortunately, it's not all roses from there. The model for competitive electricity markets here in New Hampshire is complicated and evolving. For lots of reasons, it's been tough to get the structure just right, and <a href="http://www.cato.org/pub_display.php?pub_id=2609">some believe that the current "sort of a free-market" system is deeply flawed</a>. Still others are confident that the right mix of regulation and market incentives can and will be found, and the benefits will far outweigh the costs.<br />
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<span class="Apple-style-span" style="font-weight: bold;">Status of Electric Industry Restructuring (Source: </span><a href="http://www.eia.doe.gov/cneaf/electricity/chg_str/restructure.pdf"><span class="Apple-style-span" style="font-weight: bold;">DOE EIA</span></a><span class="Apple-style-span" style="font-weight: bold;">, 2003)</span></div>
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<a href="http://2.bp.blogspot.com/__WiQMRfj4vM/SwqevN6JWXI/AAAAAAAAAYY/LXYne2q6Sd0/s1600/status+of+electric+restructuring+by+state.JPG" onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}"><img alt="" border="0" id="BLOGGER_PHOTO_ID_5407308836636285298" src="https://2.bp.blogspot.com/__WiQMRfj4vM/SwqevN6JWXI/AAAAAAAAAYY/LXYne2q6Sd0/s800/status+of+electric+restructuring+by+state.JPG" style="cursor: pointer; display: block; margin-bottom: 0px; margin-left: auto; margin-right: auto; margin-top: 0px; text-align: center; width: 600px;" /></a><br />
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There's lots to cover with this topic, so the plan is to do a short series of posts on some of the challenges that we're facing with restructuring here in New Hampshire and around the country.<br />
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Stay tuned...</div>
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Links</div>
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<a href="http://www.iso-ne.com/aboutiso/co_profile/history/index.html">History of ISO-NE</a></div>
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<a href="https://www.ferc.gov/students/ferc/history.asp" target="_blank">History of the Federal Energy Regulatory Commission (FERC)</a></div>
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<a href="http://www.ferc.gov/industries/electric/indus-act/competition.asp">FERC Electric Competition Webpage with timeline of all rule-making docs</a></div>
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<a href="http://www.ferc.gov/legal/maj-ord-reg/land-docs/order888.asp">FERC Order 888 - Promoting wholesale competition through open access</a></div>
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<a href="http://www.eia.doe.gov/cneaf/electricity/chg_str/restructure.pdf">New Hampshire restructuring timeline (pdf, pg 76)</a></div>
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Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-77529175672348387352009-11-20T13:39:00.013-05:002009-11-22T08:29:56.770-05:00Electricity in New Hampshire - Quick take on nuclear power<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/SwgpaTwUpfI/AAAAAAAAAYA/MHiBRFp69b8/s1600/seabrook-station-nuclear-plant.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://4.bp.blogspot.com/__WiQMRfj4vM/SwgpaTwUpfI/AAAAAAAAAYA/MHiBRFp69b8/s800/seabrook-station-nuclear-plant.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5406616884614571506" /></a><div style="text-align: center;">Seabrook Station Nuclear Power Plant - Seabrook, NH<br /></div><div><br /><div>David Brooks at the<a href="http://nashuatelegraph.com/Home/"> Nashua Telegraph</a> and <a href="http://granitegeek.org/">GraniteGeek</a> put up a <a href="http://granitegeek.org/blog/2009/11/20/vermont-yankee-shows-the-difficulty-of-a-nuclear-future/">post</a> today on nuclear power and the issues around extending the license on the Vermont Yankee nuclear plant. As Dave pointed out <a href="http://granitegeek.org/blog/2009/10/01/seabrook-nuke-plant-to-seek-20-year-license-extension/">earlier</a>, the Seabrook Station nuclear power plant is also applying for a license extension. Dave says that he's "pro-nuclear, but ready to waffle at a the drop of an isotope."</div><div><br /></div><div>Well, I'll see Dave's waffle-readiness and raise him one. I'm decidedly undecided on nuclear, but ask me again in 5-7 years and I may have an opinion. I suppose my wait-and-see attitude puts me more on the side of the <a href="http://www.philly.com/philly/blogs/attytood/Nabobs_natter_about_the_passing_of_William_Safire_1929-2009.html">nattering-nabobs-of-negativism</a> for now. </div><div><br /></div><div>There are around 50 nuclear power plants under construction worldwide (<a href="http://www.world-nuclear.org/info/inf63.html">~</a><a href="http://www.prnewswire.com/news-releases/reportlinker-adds-china-nuclear-power-industry-report-2009-69653827.html">24 in China</a>, none in the US). Included in that mix are three next-generation plant designs that are purported to have much better economics than nuclear designs of years past. As I indicated in an earlier <a href="http://www.graniteviewpoint.com/2009/09/industry-along-piscataqua-river.html">post on Westinghouse Electric in Newington</a>, the three new designs are the <a href="http://www.ap1000.westinghousenuclear.com/">AP1000 from Westinghouse</a>, the<a href="http://www.gepower.com/prod_serv/products/nuclear_energy/en/new_reactors.htm"> ESBWR and ABWR from GE-Hitachi</a>, and the <a href="http://www.areva-np.com/scripts/info/publigen/content/templates/show.asp?L=US&P=1655&SYNC=Y">EPR from French owned Areva</a>.</div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sp76WgywdNI/AAAAAAAAATA/4awN98X88mw/s1600-h/AP1000ReactorCutaway.jpg"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/Sp76WgywdNI/AAAAAAAAATA/4awN98X88mw/s400/AP1000ReactorCutaway.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5377010269793842386" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">Cutaway View of Westinghouse Electric's new <a href="http://www.ap1000.westinghousenuclear.com/ap1000_glance.html">AP1000</a> reactor design</div><div><br /></div><div>If these new designs pan out and can 1) keep construction delays to a minimum, 2) stay roughly on budget, and 3) operate reliably for a few years, we'll find ourselves in a new era of nuclear power. If that happens, there could be a seismic shift in our approach to emissions-free base load power generation.</div><div><br /></div><div>OTOH, the capital markets are still loudly saying no-thanks to nuclear power. That's why the nuclear projects underway today are mostly being built by oppressive regimes with excess cash (China can only buy so many US treasuries), and by state-run or regulated monopolies that are able to push nuclear power's project risk onto ratepayers. By anyone's math, getting nuclear power to be economical is a tough nut to crack. The cost-of-capital problem for nuclear is insurmountable without ratepayer guarantees, government financing, or a big change in market sentiment. To make matters worse, recently there's been some bad news on the next-gen design front (see <a href="http://www.bloomberg.com/apps/news?pid=20601101&sid=aG5TOwGH.f64">here</a> and <a href="http://www.nuclearpowerdaily.com/reports/Nuclear_safety_bodies_call_for_redesign_of_EPR_reactor_999.html">here)</a>. IMO, it's too early to tell how serious these design issues are and I still have an open mind on the future. But, it's going to take a while to see how this movie ends.</div><div><br /></div><div>As far as the old plants go, I'm for milking them for all we safely can. Seabrook just finished refueling this month and is back online and good to go for another 18 months. The emergency sirens were tested last Wednesday and since I'm in the evacuation zone, I was able to hear them loud and clear. </div><div><br /></div><div>Perhaps I'll be proven wrong, but with nuclear power, I'm less worried about safety and much more worried about economics. Sure, the safety and disposal challenges are real, but IMO, the economic issues are bigger. Many people claim Seabrook is providing us with loads of economical electricity. Unfortunately, that's only true if you ignore the PSNH bankruptcy, the huge losses by investors and ratepayers, and the fire-sale of the plant to FPL/NextEra. Granted, some of the delays at Seabrook were due to regulatory/licensing issues, but that wasn't the whole story. </div><div><br /></div><div>In the end, with Seabrook we made the ultimate investing mistake of buying high and selling low. I suspect FPL did fine with their investment in Seabrook, but for the rest of us, not so much. As for this new generation of nuclear power plants - only time will tell. </div><div><br /></div><div>So ask me again in 5-7 years and I may have an opinion.</div><div><br /></div><div>Links:</div><div> <a href="http://www.cato.org/pub_display.php?pub_id=9740">Cato.org: Nuclear Energy, Risky Business (10/2008)</a></div><div><br /></div></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-52019545340853714692009-11-16T08:05:00.014-05:002009-11-19T09:08:35.484-05:00Electricity in NH - Residential Solar PV<div style="text-align: left;"><span class="Apple-style-span" style="font-style: italic; ">Thanks to generous federal and state incentives, solar PV electric systems are currently ON SALE in NH for almost 50% off!</span><br /></div><div style="text-align: left;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sv2H_ChzQ4I/AAAAAAAAAWg/dqCRL-GBN0o/s1600-h/IMG_1247a.JPG"><br /></a></div><div style="text-align: center;"><span class="Apple-style-span" style="color: rgb(0, 0, 238); text-decoration: underline;"><span class="Apple-style-span" style="color: rgb(0, 0, 0); "><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/Sv8WwfpWyFI/AAAAAAAAAXw/qD9UIHKEvp0/s1600-h/IMG_1248a.JPG"><img src="http://1.bp.blogspot.com/__WiQMRfj4vM/Sv8WwfpWyFI/AAAAAAAAAXw/qD9UIHKEvp0/s800/IMG_1248a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5404063100252375122" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></span></span></div><div style="text-align: center;">Energy efficient solar home built by Heather Parker in Portsmouth, NH</div><div><br /></div><div>New Hampshire resident Heather Parker included solar photovoltaic (PV) electric modules as part of her ambitious project to construct a super-efficient solar home in Portsmouth, NH. This new home lives and breathes energy efficiency, right down to its bones. The house sports a passive solar design, super-insulating materials throughout, and a solar-thermal hot water heating system. Each of these systems is interesting on its own, and you can read more details <a href="http://www.greenalliance.biz/blog/archives/200910/guest-blog-portsmouth-solar-home-one-many-slated-be-featured-during-weekends-nh">here</a> and <a href="http://www.nhsea.org/resource/gboh_detail.php?h_id=111">here</a>. But for this post, I'd like to focus on the home's solar photovoltaic electric system.</div><div><br /></div><div><span class="Apple-style-span" style="font-weight: bold;"><span class="Apple-style-span" style="font-size: large;">Solar Electric Systems - A case study</span></span></div><div><br /></div><div>The photo above shows the array of 16 <a href="http://us.sunpowercorp.com/residential/products-services/products/panels.php">SunPower 210 watt PV modules</a>, mounted on the right-hand side of the home's roof. The 3.4 kW solar electric system was designed and installed by <a href="http://revisionenergy.com/">ReVision Energy, of Liberty, Maine</a>. Because Heather's home is so efficient, this 3.4 kW system should provide a large portion of the home's annual electricity needs.<br /></div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/Sv2H-6vDx6I/AAAAAAAAAWY/A_SSn6HwlBU/s1600-h/IMG_1225a.JPG"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/Sv2H-6vDx6I/AAAAAAAAAWY/A_SSn6HwlBU/s800/IMG_1225a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5403624642902738850" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">inverter (right), solar meter (top left), PSNH meter (bottom left)</div><div style="text-align: left;"><br /></div><div style="text-align: left;">In the photo above you can see the <a href="http://us.sunpowercorp.com/residential/products-services/products/inverters.php">SunPower 3000m inverter</a>, which was mounted on an outside wall to conserve indoor living space. In addition to the inverter, ReVision Energy also installed a separate solar meter between the inverter and the home's main circuit panel. Just underneath the solar meter is PSNH's electric meter. This appears to be an <a href="http://www.itron.com/pages/products_detail.asp?ID=itr_000240.xml&pgtype=&subID=ar">Itron model C1S</a> solid-state watt meter. According to <a href="http://www.itron.com/">Itron's website</a>, these meters can be equipped with optional "personality modules" to provide advanced features such as time-of-use (TOU) metering, load profiling, and RF-transmission.</div><div style="text-align: left;"><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/Sv2H-xfHitI/AAAAAAAAAWQ/sJ_s3-e72Mg/s1600-h/IMG_1251a.JPG"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/Sv2H-xfHitI/AAAAAAAAAWQ/sJ_s3-e72Mg/s800/IMG_1251a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5403624640419957458" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 300px; " /></a></div><div style="text-align: center;">PSNH owned Itron C1S Digital Watt Meter</div><div><br /></div><div><br /></div><div><span class="Apple-style-span" style="font-weight: bold;"><span class="Apple-style-span" style="font-size: large;">Solar Electric Systems - Price trends and sizing</span></span></div><div><br /></div><div>The cost of photovoltaic (PV) solar modules has dropped rapidly recently and the efficiency of PV systems is ever increasing. You'd think that generating clean electricity from the sun would be an economic no-brainer. Well, as usual, it's not so simple.</div><div><br /></div><div>According to the <a href="http://www.solarbuzz.com/Moduleprices.htm">SolarBuzz.com retail price summary</a>, PV modules currently retail for around $4.34 per watt in the US. An inverter to convert the system's DC output into AC that can be tied to the power grid runs another $.71 per watt. Add in the cost of other supplies and installation and the total cost for a complete solar electric system can easily range between $6 and $10 per watt. A new PV solar electric system, sized at 5kW-7kW to cover a good portion of a typical NH home's electricity usage of <a href="http://www.eia.doe.gov/emeu/reps/enduse/er01_new-eng_tab1.html">7,000 kWh per year</a>, could easily cost upwards of $50k. That's a serious investment! Of course, the easiest place to start reducing costs is with lower consumption, which Heather's house shows is possible. Thanks to its super energy-efficient design, it uses about half the power that a conventional house uses each year.</div><div><br /></div><div>OK you say, the upfront cost for a new solar electric system may be high, but it's a one-time charge and in exchange you get clean and free energy for years to come. Also, in New Hampshire there's a <a href="http://www.nh.gov/oep/programs/energy/RenewableEnergyIncentives.htm">$3 per watt rebate</a> from the <a href="http://rggi.org/">RGGI</a> renewable energy fund, administered by the state of NH and the NH Public Utilities Commission (up to $6k max). In addition, residential installations can qualify for a<a href="http://www.nh.gov/oep/programs/energy/RenewableEnergyIncentives.htm#federal"> federal tax credit</a> worth 30% of the installed cost of the system. With all these great incentives, it's should be much easier for PV solar electric systems to be economical, even here in New Hampshire.</div><div><br /></div><div><span class="Apple-style-span" style="font-weight: bold;"><span class="Apple-style-span" style="font-size: large;">Running the numbers - Can a PV project make economic sense?</span></span></div><div><br /></div><div>To find out how economical a new solar electric system might be, we need some data. We need to determine how much electricity the system will generate. A system that's rated at 5 kW, can only produce that peak output with perfect conditions. As with other electricity generation approaches, we need to know the system's "capacity factor" or it's annual production rate. Also, solar panels produce DC current that must be converted to AC for home and electrical grid use. This conversion, along with other system losses, reduces efficiency. We need to somehow find a way to take all this into account and extrapolate from raw system capacity into a realistic estimate of actual kWh production. Then we need to somehow convert that production into dollars so we can perform a discounted cash flow analysis to see if it's all worth it.</div><div><br /></div><div>Sound like a lot of work? Well, as usual, <a href="http://www.youtube.com/watch?v=T-9I4An5f10&feature=related">there's an app for that</a>. No, not an iphone app. I found a neat website that has the perfect tool for conducting financial analysis on residential PV projects. It's called <a href="http://www.pvcalc.com/">PVCalc</a>. This great tool integrates data on regional solar radiation, local electricity rates, and state and federal tax credits to provide users with an estimate of how much money a PV project can save each year and over its lifetime. PVCalc is based on a calculator made by the <a href="http://nrel.gov/">National Renewable Energy Laboratory</a> (NREL) called <a href="http://pvwatts.org/">PVWatts</a>. Although PVWatts is very similar to PVCalc, I found the user interface on PVCalc to be much friendlier. (FYI, I used this <a href="http://pvcalc.com/SelectZip.aspx">advanced version of the tool</a> for the analysis below)</div><div><br /></div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sv8VhKcxtWI/AAAAAAAAAXo/CDWXX27ukuU/s1600-h/IMG_1242aa.jpg"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/Sv8VhKcxtWI/AAAAAAAAAXo/CDWXX27ukuU/s800/IMG_1242aa.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5404061737352803682" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">Composite of output from Heather's <a href="http://us.sunpowercorp.com/residential/products-services/products/inverters.php">Sunpower 3000m inverter</a><br /></div><div><br /></div><div>As I said before, Portsmouth solar home owner Heather Parker was generous enough to share the details of her solar electric project, so we can use this "real world" data in our analysis. The image above is a composite of four photos that shows the alternating output from Heather's DC to AC inverter. I took these shots late in the afternoon near sunset, so the array was only producing 527 watts at the time. In the mid-afternoon, the array produces as much as 2,700 watts. Another inverter display shows that the system produced a total of over 9 kWh of electricity on the chilly November day I visited. You can also see that since the system was installed a couple of months ago, it has produced a total of 735 kWh of electricity. Finally, the home's reduced intake of electricity from PSNH has already lowered carbon emissions from local power plants by an estimated 1,250 pounds. </div><div><br /></div><div>That all sounds good so far. The environmental benefits of solar electric systems are undeniable. But to figure out the economics, we need to do some number crunching. For that, we turn to the <a href="http://pvcalc.com/SelectZip.aspx">PVCalc</a> tool. Here are the inputs that I fed into the tool (<a href="http://www.nrel.gov/rredc/pvwatts/changing_parameters.html">detailed descriptions of each input</a>):<br /></div><div><ul><li>Location - Portsmouth, NH 03801 - Pease Intl TradePort<br /></li><li>Electricity from PSNH, rate R - residential service<br /></li><li>Array type is fixed<br /></li><li>3.4 kW DC rating<br /></li><li>77% derate factor (<a href="http://rredc.nrel.gov/solar/calculators/PVWATTS/version1/system.html#derate">more info on derate factor</a>)<br /></li><li>45 degree array tilt (on roof)<br /></li><li>155 degree azimuth (direction roof faces)<br /></li><li>$23,450 installed system cost<br /></li><li>$840 annual electric bill (before project)<br /></li></ul></div><div>So how will Heather's project fare? Well, as you can see below, the summary information tells us right away that this project has great promise. If the analysis is correct, the payback time is just over 15 and a half years and the money saved over the 30-year life of the project is estimated at over $23k. But those results just scratch the surface. Take a look at the tool's output below:</div><div><br /></div><div><span class="Apple-style-span" style="font-weight: bold;"><span class="Apple-style-span" style="font-size: large;">Running the Numbers - Digging into the PVCalc output</span></span></div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/Sv2PRWvo1fI/AAAAAAAAAXI/XLCYQUzWIuo/s1600-h/summary-table.JPG"><img src="http://1.bp.blogspot.com/__WiQMRfj4vM/Sv2PRWvo1fI/AAAAAAAAAXI/XLCYQUzWIuo/s800/summary-table.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5403632656240399858" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 500px; " /></a></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sv2PNEAPSvI/AAAAAAAAAXA/GIO1xPietX0/s1600-h/annual-electricity-savings.JPG"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/Sv2PNEAPSvI/AAAAAAAAAXA/GIO1xPietX0/s800/annual-electricity-savings.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5403632582490278642" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 500px; " /></a></div><div style="text-align: center;">Summary information and estimated annual savings</div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sv2PNAmvSxI/AAAAAAAAAW4/tBqtKRoZcpo/s1600-h/monthly-kwh-production.JPG"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/Sv2PNAmvSxI/AAAAAAAAAW4/tBqtKRoZcpo/s800/monthly-kwh-production.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5403632581578017554" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 500px; " /></a></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/Sv2PM4Ln42I/AAAAAAAAAWw/hwRN85rYji0/s1600-h/monthly-electricity-savings.JPG"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/Sv2PM4Ln42I/AAAAAAAAAWw/hwRN85rYji0/s800/monthly-electricity-savings.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5403632579316802402" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 500px;" /></a></div><div style="text-align: center;"><br /></div><div style="text-align: center;">System Cost after Tax Credits and Rebates</div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/Sv2PMmWey7I/AAAAAAAAAWo/F7IZ_AStMEI/s1600-h/pv-cost-breakdown.JPG"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/Sv2PMmWey7I/AAAAAAAAAWo/F7IZ_AStMEI/s800/pv-cost-breakdown.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5403632574530505650" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 500px; " /></a><div></div><div style="text-align: center;"><br /></div><div style="text-align: left;">Lots of good stuff in the PVCalc output, that's for sure. You really can see that the tax credits and rebates are an important part of the equation. In Heather's case, the credits covered almost 50% of the system's installed cost. For fun, I manually calculated a break-even kWh price for the project. It worked out to 22.1 cents per kWh without the tax credit and rebate factored in and 11.5 cents per kWh after subtracting them out.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: bold;"><span class="Apple-style-span" style="font-size: large;">Running the Numbers - Discounted cash flow analysis </span></span></div><div><br /></div><div style="text-align: left;">The PVCalc tool also does some sophisticated capital project analysis. In particular, the tool performs a <a href="http://en.wikipedia.org/wiki/Discounted_cash_flow">discounted cash flow</a> (DCF) analysis to compute an <a href="http://en.wikipedia.org/wiki/Internal_rate_of_return">internal rate of return</a> (IRR) and <a href="http://en.wikipedia.org/wiki/Net_present_value">net present value</a> (NPV) for the project (these are shown on the amortization tab). You may recall that I mentioned DCF when we did our analysis of <a href="http://www.graniteviewpoint.com/2009/07/electricity-in-nh-wind-power.html">commercial wind projects in NH</a>. When analyzing capital projects, even home solar electric projects, DCF is the gold standard because it factors in the idea that a dollar received today is worth a lot more than a dollar received in 30 years.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SwBMXlEC9hI/AAAAAAAAAX4/74l-itPv1Js/s1600-h/cash-flow-table.JPG"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/SwBMXlEC9hI/AAAAAAAAAX4/74l-itPv1Js/s800/cash-flow-table.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5404403520814380562" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 436px; " /></a></div><div style="text-align: center;">Estimated yearly cash flows for project (non-discounted)</div><div style="text-align: center;"><br /></div><div style="text-align: left;">To compute a net present value, the project's future cash flows are "discounted" or adjusted to "today's value" dollars. Next, these "present values" are added together and the initial project cost is subtracted from the sum or netted out. If the resulting NPV is positive, the project will yield net savings (because the present value of future cash flows is greater than the project's cost). If NPV is negative, the project is not likely to be economical. Also, the higher the NPV, the better. NPV is computed using a "discount rate" that takes into account the project's riskiness. Since home energy efficiency projects are pretty low risk, a discount rate of 5% (which is the PVCalc default) seems appropriate. It might even be little on the conservative side, but better safe than sorry.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: bold;"><span class="Apple-style-span" style="font-size: large;">Running the Numbers - What if things don't go as planned?</span></span></div><div style="text-align: left;"><br /></div><div style="text-align: left;">Below I made a table that shows what happens to the PVCalc outputs when some of the key input parameters are changed. This "sensitivity analysis" helps identify how dependent the project's success is on the accuracy of the inputs. Since it's impossible to predict the future with certainty, sensitivity analysis is helpful to show whether a project will still be economical if things don't turn out exactly as planned.</div><div style="text-align: left;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sv7Z_j6cy5I/AAAAAAAAAXY/apAF1a5a9Xw/s1600-h/sensitivity+analysis.JPG"><br /></a></div><div style="text-align: left;"><span class="Apple-style-span" style="color: rgb(0, 0, 238); text-decoration: underline;"><span class="Apple-style-span" style="color: rgb(0, 0, 0); "><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sv7kEqIAKvI/AAAAAAAAAXg/SFyTEko7GYo/s1600-h/sensitivity+analysis.JPG"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/Sv7kEqIAKvI/AAAAAAAAAXg/SFyTEko7GYo/s800/sensitivity+analysis.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5404007371569638130" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 641px; " /></a></span></span></div><div style="text-align: left;"><br /></div><div style="text-align: left;">Right away, you can see that success for Heather's project is highly dependent on how fast PSNH's electricity rates increase over the life of the project. The tool's default assumption is a 5% annual increase in rates. The table above shows that with a more modest 3% annual increase, the NPV of the project declines significantly. That's no surprise, since the value of the electricity produced by Heather's solar array is directly related to PSNH's electricity rates. Still, even with a very modest 3% annual increase in rates (we wish!), the project still has a positive NPV, which means it will be economical even in that unlikely circumstance. On the flip side, should electricity rates increase by 7% a year, the project's NPV would increase to nearly $9k, more than double the NPV of the baseline scenario. A 7% rate of increase in electricity prices may sound high, but when you consider expected inflation rates, the long-term outlook for fossil fuel prices, and pending carbon-pricing initiatives, 7% doesn't seem far-fetched at all.<br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><div style="text-align: left; ">You can also see from the table above that the system's <a href="http://rredc.nrel.gov/solar/calculators/PVWATTS/version1/system.html#derate">derate factor</a> has a huge impact on the project's economics. The derate factor represents the overall efficiency of the system. The solar array's raw DC output is multiplied by the derate factor to determine net electricity production, so the higher the derate factor the better. With a 69% derate factor, instead of the 77% default, the NPV practically drops in half. Conversely, with an 85% derate factor, the NPV increases by nearly 50%. This shows that the PV array's nameplate rating is only part of the story. The efficiency of the whole system has to be considered. As an example, according to this <a href="http://rredc.nrel.gov/solar/calculators/PVWATTS/version1/derate.cgi">NREL derate calculator</a>, increasing inverter efficiency by just 3% and keeping the panels from getting soiled could increase a system's derate factor from 77% to over 83%. </div><div style="text-align: left; "><br /></div><div style="text-align: left; ">Next, I varied the azimuth angle to see what that would do. When Heather was deciding how to position the house on the lot, she had a dilemma. By positioning the house so the roof faced south east instead of due south, she got a much nicer view. However, Heather knew that facing the solar array at 155 degrees instead of due south at 180 degrees would reduce her available solar energy. Using PVCalc, we can see that this decision only dropped the NPV by $500 and still left her with plenty of net savings. Considering the nicer view, it seems like a smart tradeoff. I also experimented with a 40 degree roof pitch to simulate what mounting the array on a 10/12 roof would do, compared to using Heather's 12/12 pitch roof (45 degrees). That change actually resulted in a slight improvement in the NPV. </div></div><div style="text-align: left;"><br /></div><div style="text-align: left;">Finally, I experimented with some financing options to see how they might affect the project's NPV. I assumed cash payment for all my earlier scenarios, but I wanted to see how using a home equity loan would impact the results. Since a home equity loan is usually tax deductible, part of the interest paid on the loan is "refunded" and that will defray the project's costs. You can see that with a 5% home loan, the NPV of the project increases from $3,719 to $4,971. That increase in NPV is largely the result of the tax break on the financing, as shown on <a href="http://7086104156204356932-a-1802744773732722657-s-sites.googlegroups.com/site/graniteviewpoint/uploads/Portsmouth-PV-with-loan.pdf?attachauth=ANoY7cpSyyrW5S_hNwq8va9kHAw0xMDfinFkoKz33KAi00RrMhEfQoTLQG5mmeXbXPok_EnkLXR5-j6pnY43gCOlOoiy7VA_x0zq59kO4D2rU0v818WFRXCKKr09YZDLQrRg9ZpWAYf62P7XYNkL28U3WdaSQMr-oyV59t1pK2VQpBntmgpl2JsTzVHK0IrN_W14xfiwfPHrlu9SNXIGi7ygzA7HBXXd5jqBI_nK6hL6Fqv6R7njWDA%3D&attredirects=0">the last page of this pdf report</a>. To do a complete cash vs. finance analysis, you'd need to also factor in the after-tax return you expect to receive by investing the cash instead of using it to pay for the project.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><span class="Apple-style-span" style="font-weight: bold;"><span class="Apple-style-span" style="font-size: large;">Solar Electric Systems - What's the bottom line?</span></span></div><div style="text-align: left;"><br /></div><div style="text-align: left;">As you can see, varying these input parameters causes the NPV to bounce around all over the place. This is why sensitivity analysis is so important. It let's you evaluate a project under a <span class="Apple-style-span" style="font-style: italic;">range possible of outcomes</span>. Based on this analysis, it's a pretty good bet that the project's NPV will fall somewhere between $0 and $9000, and any of these outcomes would be great for Heather. Our sensitivity analysis has shown that in the face of many uncertainties, the project's economics are quite robust.<br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;">So after lots of number crunching, it looks like Heather's solar electricity project is a winner, both for the environment and for her pocketbook. Even if some of her assumptions about the system's efficiency or PSNH's future electric rates turn out the be wrong, it's very likely that this project will still be a great investment. Plus, no matter how you slice it, dumping 2 tons less of carbon into the air every year can't be a bad thing!</div><div style="text-align: left;"><br /></div><div style="text-align: left;">Links:</div><div style="text-align: left;"> <a href="http://www.PVCalc.com/">PVCalc Home</a></div><div style="text-align: left;"> <a href="http://7086104156204356932-a-1802744773732722657-s-sites.googlegroups.com/site/graniteviewpoint/uploads/Portsmouth-PV-with-cash.pdf?attachauth=ANoY7cppYxMvKs84q5SQjRGMBVnroJ7wpiMdRgsIhfgM4J8u-9ZR-8AI9DWSb6ICP00EpC3NblAG9EqHGoJLN6VK-iTMFCCDhD7UAARgP_R2wG9uDRu5sUjvxIDmAUbk15n4DEN1_OxilT0OMnTeNt9qbY2WUsITTJODSD98Y3JXnvLU-u1BJP-Pg8Mn-IBZ4K2ZkDwlVgr-P-1agbIPyxsk6vT7bGVEf2FysKjVFBdD7k_JVgoo7fA%3D&attredirects=0">PVCalc Output w/no financing (pdf)</a></div><div style="text-align: left;"> <a href="http://7086104156204356932-a-1802744773732722657-s-sites.googlegroups.com/site/graniteviewpoint/uploads/Portsmouth-PV-with-loan.pdf?attachauth=ANoY7cpSyyrW5S_hNwq8va9kHAw0xMDfinFkoKz33KAi00RrMhEfQoTLQG5mmeXbXPok_EnkLXR5-j6pnY43gCOlOoiy7VA_x0zq59kO4D2rU0v818WFRXCKKr09YZDLQrRg9ZpWAYf62P7XYNkL28U3WdaSQMr-oyV59t1pK2VQpBntmgpl2JsTzVHK0IrN_W14xfiwfPHrlu9SNXIGi7ygzA7HBXXd5jqBI_nK6hL6Fqv6R7njWDA%3D&attredirects=0">PVCalc Output w/loan (pdf)</a></div><div style="text-align: left;"> <a href="http://view2.fatspaniel.net/PV2Web/merge?&view=PV/standard/Simple&eid=107505">Yarmouth, ME high school real-time PV solar output</a></div><div style="text-align: left;"> <a href="http://www.nhsea.org/resource/gboh_detail.php?h_id=111">NHSEA Green Building Open House</a> </div><div style="text-align: left;"> <a href="http://www.greenalliance.biz/blog/archives/200910/guest-blog-portsmouth-solar-home-one-many-slated-be-featured-during-weekends-nh">Green Alliance Blog Post</a> </div><div style="text-align: left;"> <a href="http://greeninc.blogs.nytimes.com/2009/11/13/is-solar-power-expensive-or-competitive/">NY Times article - Is Solar Power Expensive or Competitive</a></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com14tag:blogger.com,1999:blog-2718819858434072309.post-39360536025241356262009-11-11T18:20:00.002-05:002009-11-16T08:03:52.300-05:00News You Can Use - Appliance Rebate Edition<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/SvsB4jk-WKI/AAAAAAAAAWA/qmg7nj6eCcg/s1600-h/washer-dryer.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://2.bp.blogspot.com/__WiQMRfj4vM/SvsB4jk-WKI/AAAAAAAAAWA/qmg7nj6eCcg/s800/washer-dryer.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5402914249095665826" /></a><div style="text-align: center;">Kenmore high-efficiency washer and dryer<br /></div><div><br />Yesterday, our washing machine died after a relatively short life of only six and a half years. It's one of those newfangled front-loading machines. These new machines can really get clothes clean and they're great from an energy efficiency standpoint, but IMO they're much less reliable than the old-fashioned top-loaders of yesteryear. Our last top-loader gave us around 15 years without a service call before it died. Granted, my sample-size is small, but I'm beginning to wonder if the higher capital costs and replacement costs of these new designs negate all the efficiency savings benefits. Replacing your washer twice as often is expensive and can't be very environmentally friendly.<div><br /><div>Anyhow, despite the fact that our old washer was energy efficient, I thought we might be able to benefit from the appliance rebate program that was part Recovery and Reinvestment Act of 2009 (stimulus bill). Some have called the program cash-for-appliance-clunkers. Unlike the auto cash-for-clunkers program, the appliance rebate program is administered by the states. Each state is allocated funds for the program ($1.2 million for NH) and submits an implementation plan to the US Dept. of Energy for approval.</div><div><br /></div><div>Now the bad news - well for me anyway. New Hampshire decided to buck the national trend and try to be a bit innovative in their implementation of the appliance clunkers program. Instead of offering rebates for air conditioners, refrigerators, washing machines, and other appliances, New Hampshire's <a href="http://www.nh.gov/oep/recovery/seearp.htm">Office of Energy and Planning</a> decided to target the rebates at home heating equipment and hot water heating systems (including solar-thermal). Their <a href="http://www.nh.gov/oep/recovery/news/documents/101509.pdf">official press release</a> notes that there's <a href="http://www.nhsaves.com/residential/es_appliance.html">already a state rebate program</a> for energy efficient appliances, so targeting these new rebates toward heating and hot-water applications will give New Hampshire a bigger bang for the buck, energy efficiency-wise. </div><div><br /></div><div>On its face, the plan seems to make sense and it's always good to see New Hampshire leading rather than following the herd in terms of innovative state programs. I'll try not to be bitter that Uncle Sam won't be helping to buy us a new washing machine. </div><div><br /></div><div>Hmmm. Come to think of it, maybe a new thermal-solar hot water system might be nice - as long as I can get some help paying for it, that is...</div><div><br /></div><div>Links:</div><div> <a href="http://www.energy.gov/newhampshire.htm">US DOE Recovery Act info for NH</a></div><div> <a href="http://www.nh.gov/oep/recovery/seearp.htm">NH Office of Energy and Planning website</a></div><div> <a href="http://www.nh.gov/oep/recovery/news/documents/101509.pdf">NH OEP press release from Oct 15</a></div><div> <a href="http://www.nh.gov/oep/recovery/documents/seearp_nh_program_plan.pdf">NH OEP program application to DOE</a></div><div> <a href="http://www.energy.gov/newhampshire.htm">NHBR article from Nov 6</a></div><div><br /></div></div></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com2tag:blogger.com,1999:blog-2718819858434072309.post-40346115003884924392009-11-11T11:05:00.015-05:002009-11-16T08:02:30.584-05:00Electricity in NH - Bulk Electricity Markets<div style="text-align: left;"><span class="Apple-style-span" style="font-style: italic; ">It's 9:00 am, do you know what the bulk price is for electricity in New Hampshire?</span><br /></div><div><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SvlyULnTXnI/AAAAAAAAAVo/M2Fesv2IxfM/s1600-h/electricity+markets.JPG"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/SvlyULnTXnI/AAAAAAAAAVo/M2Fesv2IxfM/s800/electricity+markets.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5402474919048207986" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 534px; " /></a><div style="text-align: center;">Source: <a href="http://iso-ne.com/portal/jsp/lmpmap/Index.jsp">ISO-NE Locational Marginal Price Map</a> (<a href="http://www.iso-ne.com/portal/help/lmpmap.pdf">full description</a>)</div><div><br /></div><div>A competitive electricity market depends on the the ability of producers and consumers of electricity to transact business in an environment that's organized, transparent, and free from manipulation. The producers of bulk electricity are power plant owners while the consumers include regulated utilities, large businesses, and power marketers. Power marketers are companies that resell energy to customers as their their "energy supplier." Currently in New Hampshire, residential customers must purchase energy from their utility because no power marketers have chosen to serve residential customers. Businesses in New Hampshire <a href="http://www.powerischoice.com/pages/puc_home.html">can choose from among a dozen or so energy suppliers</a>.<br /></div><div><br /></div><div>In New England, the bulk electricity market is operated by ISO-NE. You can think of ISO-NE as running something like a stock exchange, where buyers place bids for the power they need and generators place offers for power they're willing to supply. The photo above is a screenshot from ISO-NE's website that shows the real-time location-based marginal prices (LMP) for bulk electricity at 9am yesterday. The differences in prices between the states are due to transmission line losses from power having to travel greater distances and from congestion surcharges resulting from power having to travel over congested transmission lines. In reality, the bulk power market system is much more complex than this map shows. It contains <a href="http://www.hydro.org/events/NE%20ISO%20Overview%20-%20Hepper.pdf">over 900 distinct pricing "nodes"</a> (pg 12) that include every generation station and many aggregation points for bulk load. In addition, there are several pricing nodes at key transmission system interconnects. The graph only shows representative data from key nodes throughout the system.</div><div><br /></div><div>The prices shown in the map above are for a megawatt hour (MWh) of electricity. One MWh is 1000 kilowatt hours (kWh), so a price of $39.10 per MWh comes out to about 3.9 cents per kWh. That's the bulk price at a relatively low-demand period. For comparison, the retail energy charge for PSNH residential customers is around 9 cents per kWh. PSNH's regulated 9 cent rate is much higher than the 3.9 cent rate because it's an average rate and it takes into account peak demand periods where the bulk rate can jump to over $150 per MWh (15 cents/ kWh). PSNH's retail rate also includes a wholesale to retail markup. You can see why many are calling for time-of-day metering to more closely tie the price people pay for electricity to the actual cost of electricity. If using electricity in the afternoon cost 3 times as much as using it overnight, would you change your behavior?</div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SvreWA7SwMI/AAAAAAAAAV4/DwHzjowgLJI/s1600-h/hourly+electricty+prices.jpg"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/SvreWA7SwMI/AAAAAAAAAV4/DwHzjowgLJI/s800/hourly+electricty+prices.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5402875172771512514" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 642px; " /></a></div><div style="text-align: center;">Bulk electricity prices on a hot summer day (source : <a href="http://iso-ne.com/markets/hst_rpts/hstRpts.do?category=Fivemin">ISO-NE</a>)</div><div style="text-align: center;"><br /></div><div>ISO-NE's bulk power market is only virtually connected to physical electricity production and consumption. This connection is accomplished through a web of regulations and contract settlement procedures. A purchase on the bulk market doesn't suddenly start the flow of electricity to the buyer nor does a sale mean that a generator must start their turbines spinning. These bulk markets are a parallel financial universe that mirrors the physical world and provides a means for market participants to "settle up" for the power they produce or consume.</div><div><br /></div><div>Generally, power plant owners and bulk electricity "loads" have three options at their disposal for exchanging virtual "rights" to electricity. The first two options are operated by ISO-NE and include the real-time market described above as well as a day-ahead market. The day-ahead market can be used by utilities and other loads to cover part of their estimated demand for the next day with pre-purchased electricity. This gives participants protection from minute-to-minute market volatility and provides important price stability to both generators and loads.</div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/SvrFRtvZexI/AAAAAAAAAVw/QPEW4uujAJk/s1600-h/electricity+markets2.JPG"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/SvrFRtvZexI/AAAAAAAAAVw/QPEW4uujAJk/s800/electricity+markets2.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5402847611111176978" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 563px; " /></a><div style="text-align: center;">On-peak day-ahead price history (source: <a href="http://www.ferc.gov/market-oversight/mkt-electric/new-england/2009/11-2009-elec-ne-archive.pdf">FERC</a>)<br /></div></div><div><br /></div><div>The third way for generators and loads to pre-negotiate prices for electricity is through bilateral contracts. A bilateral contract is a contract between a generator and a load to supply a specified amount of power at a pre-negotiated price during a pre-negotiated period. These contracts can be for power supplied the next day, or they can be for power to be supplied over a period of years. They're an important component of competitive electricity markets because they provide long-term stability and predictability in an otherwise highly volatile market. Bi-lateral contracts are essential for plant owners to secure long-term financing and they also allow utilities and large businesses to control their exposure to unexpected spikes in the price of electricity.</div><div><br /></div><div>Finally, in addition to managing the market for bulk electricity, ISO-NE also manages several other electricity related markets and auction processes. The goal is to create what I'd call "virtual electricity products" which include things like <a href="http://www.hks.harvard.edu/hepg/Papers/Kristiansen.mkts.for.ftrs.Oct.03.updated.May.04.pdf">financial transmission rights</a>, <a href="http://www.iso-ne.com/support/faq/fwd_cap_mkt/gen/index.html">forward capacity payments</a>,<a href="http://www.iso-ne.com/support/faq/asm/#faq1"> ancillary services</a> (eg <a href="http://en.wikipedia.org/wiki/Operating_reserve">providing spinning reserves</a>), and renewable energy credits. ISO-NE, under the guidance of the <a href="http://www.ferc.gov/">Federal Energy Regulatory Commission</a> (FERC), attempts to harness market forces to manage both the supply and demand of things like transmission line capacity, generation capacity, backup reserve capability, and renewable electricity generation. These artificial markets are very complex and regulators are continuously tweaking them to make them operate more effectively. That's a good thing, because badly functioning electricity markets can really make a mess of a state's economy, <a href="http://en.wikipedia.org/wiki/California_electricity_crisis">as California found out</a> a few years back.</div><div><br /></div><div>Additional Links:</div><div> <a href="http://www.iso-ne.com/committees/comm_wkgrps/prtcpnts_comm/ftr_lttr/mtrls/jun52008/lmp-ftr_presentation.pdf">In-depth presentation on Locational Marginal Pricing (LMP)</a></div><div> <a href="http://www.ferc.gov/market-oversight/mkt-electric/new-england/2009/11-2009-elec-ne-archive.pdf">FERC document with ISO-NE bulk market historical pricing info</a></div><div><br /></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-29011078360515560292009-11-04T19:00:00.003-05:002009-11-04T19:56:39.045-05:00Mr. GraniteViewpoint goes to Concord<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/SvFwrMca6EI/AAAAAAAAAVg/uC2sM1o6NuY/s1600-h/IMG_0930a.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://2.bp.blogspot.com/__WiQMRfj4vM/SvFwrMca6EI/AAAAAAAAAVg/uC2sM1o6NuY/s800/IMG_0930a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5400221315571050562" /></a><div style="text-align: center;"><a href="http://en.wikipedia.org/wiki/New_Hampshire_State_House">New Hampshire State House</a>, built in 1819 (<a href="http://www.bing.com/maps/default.aspx?v=2&FORM=LMLTCP&cp=r610z1914kfk&style=b&lvl=1&tilt=-90&dir=0&alt=-1000&phx=0&phy=0&phscl=1&scene=28974337&encType=1">bird's eye view</a>)<br /></div><div><br /><div>When I visited <a href="http://en.wikipedia.org/wiki/Concord,_New_Hampshire">Concord</a>, NH a few weeks ago to <a href="http://www.graniteviewpoint.com/2009/10/taxes-in-new-hampshire-tax-summit.html">attend the tax summit,</a> I got a chance to visit our state capital for the first time. Living in the seacoast, I don't make the trip over to Concord very often. I've been to the LL Bean Outlet, Company C, and even a few of the shops on Main Street. But I'd never been inside the State House.</div><div><br /></div><div>The tax summit was actually held in the Legislative Office Building, but since there were several breaks over the course of the two day summit, I had plenty of time to wander around to the other government buildings.</div><div><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SvFwrHADT4I/AAAAAAAAAVY/q4Tbd0KiPPQ/s1600-h/IMG_0944a.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 400px;" src="http://3.bp.blogspot.com/__WiQMRfj4vM/SvFwrHADT4I/AAAAAAAAAVY/q4Tbd0KiPPQ/s800/IMG_0944a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5400221314109886338" /></a></div><div style="text-align: center;">Wandering the halls of the State House</div><div><br /></div><div>Once I got past the State House entrance hall (called the Hall of Flags), walking through the interior hallways and past the offices of the grand old building reminded me of the classrooms at my old college. The NH State House <a href="http://en.wikipedia.org/wiki/New_Hampshire_State_House">was originally built in 1819</a> and apparently is the oldest state house in the country that still houses the legislature in their original chambers.<br /></div><div><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/SvFwq6yn-VI/AAAAAAAAAVQ/sytmbPdOVPs/s1600-h/IMG_0940a.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://2.bp.blogspot.com/__WiQMRfj4vM/SvFwq6yn-VI/AAAAAAAAAVQ/sytmbPdOVPs/s800/IMG_0940a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5400221310832343378" /></a><div style="text-align: center;">NH Senate Chamber <br /></div></div><div>The Senate Chamber (above) is located in the northeast corner of the State House on the second floor.</div><div><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/SvFwqsvdRpI/AAAAAAAAAVI/gi3cBQ7EmZQ/s1600-h/IMG_0952a.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://3.bp.blogspot.com/__WiQMRfj4vM/SvFwqsvdRpI/AAAAAAAAAVI/gi3cBQ7EmZQ/s800/IMG_0952a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5400221307060962962" /></a><div style="text-align: center;">NH House Chamber<br /></div></div><div style="text-align: center;"><br /></div><div>After checking out the normal visitor photo spots throughout the State House, I ventured into some areas that are probably less traveled by visitors. In particular, I headed down into the basement to the cafeteria. </div><div><br /></div><div><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/SvFwc2U5qHI/AAAAAAAAAVA/03IyY0yAd58/s1600-h/IMG_0978a.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://4.bp.blogspot.com/__WiQMRfj4vM/SvFwc2U5qHI/AAAAAAAAAVA/03IyY0yAd58/s800/IMG_0978a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5400221069115762802" /></a><div style="text-align: center;">Cafeteria in the basement of the NH State House<br /></div></div><div><br /></div><div>Since I had some time before the next summit meeting session, I decided to hang out in the cafeteria and take advantage of the free public wifi provided throughout the State House. The food in the cafeteria was reasonably priced, and I could enjoy it while catching up on my email and the news of the day. </div><div><br /></div><div>The cafeteria is a bit on the austere side as you can see from the photo above. There were no <a href="http://www.nowhampshire.com/2009/04/09/state-house-bathroom-renovations-exclusive-photos/">fancy sinks or marble countertops</a> here. Still, it proved to be a great spot to rest and re-group before heading to the afternoon tax summit sessions. </div><div><br /></div><div>As an added bonus, I saw a few well-known elected officials taking their lunch breaks. I wonder if any other state governments offer their citizens the opportunity to share a brown-bag lunch with their legislators in a basement cafeteria?</div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/SvFwcuLo4dI/AAAAAAAAAU4/-D675LCHkH4/s1600-h/IMG_0962a.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://2.bp.blogspot.com/__WiQMRfj4vM/SvFwcuLo4dI/AAAAAAAAAU4/-D675LCHkH4/s800/IMG_0962a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5400221066929430994" /></a><div style="text-align: center;">"Secret" underground passageway between the State House and the Legislative Office Bld.<br /></div></div><div><div style="text-align: center;"><br /></div><div style="text-align: left;"><div>Wandering around out of the cafeteria, I discovered a "secret" underground passageway that leads back to the Legislative Office Building (LOB). It was great to be able to stealthily move between the State House and the LOB without having to face the protesting mob above - ok, there were only 20 or so tax-protesters and they seemed pretty well behaved.</div><div><br /></div><div>I think there's another tunnel to the annex building that's across Capital Street, but I didn't check that one out.</div><div><br /></div></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/SvFwccW3BpI/AAAAAAAAAUw/gfgBFxtjOd4/s1600-h/IMG_0983a.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://4.bp.blogspot.com/__WiQMRfj4vM/SvFwccW3BpI/AAAAAAAAAUw/gfgBFxtjOd4/s800/IMG_0983a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5400221062144657042" /></a><div style="text-align: center;">Legislative Office Building (Old Post Office), Concord, NH<br /></div></div><div><br /></div><div><div style="text-align: left; ">Once through the tunnel, I arrived in the basement of the Legislative Office Building, which was <a href="http://www.nationalregisterofhistoricplaces.com/NH/Merrimack/state2.html">built in around 1875</a> as a post office. At one time, the building was used to house the US District Court. Today, it provides meeting space and offices for several legislative committees.</div><div><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/SvFwcMZawwI/AAAAAAAAAUo/0LAb5uOvQvc/s1600-h/IMG_0967a.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://2.bp.blogspot.com/__WiQMRfj4vM/SvFwcMZawwI/AAAAAAAAAUo/0LAb5uOvQvc/s800/IMG_0967a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5400221057860420354" /></a><div style="text-align: center;">Entrance hall of Legislative Office Building<br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;">Overall, I found the NH State House and associated buildings very approachable for visitors. I double-checked to make sure I could take photos and then wandered around freely looking for good shots.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">At one point, a NH State Trooper approached me to ask if I needed directions. It was right after I finished taking the tunnel photos and I'm pretty sure I may have been caught on video looking suspicious (I mounted my camera on a monopod to get the shot without a flash). Anyhow, the officer was very friendly and when I explained that I was taking pictures for my blog, he wished me luck and headed on his way.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">So if you haven't <a href="http://www.gencourt.state.nh.us/nh_visitorcenter/default.htm">visited "your" state capital yet</a>, I highly recommend it. When you go, be sure to check out the secret tunnels and the free wifi in the basement cafeteria.</div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;"><br /></div></div></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com2tag:blogger.com,1999:blog-2718819858434072309.post-46051736404250424882009-10-28T18:00:00.037-04:002009-11-16T08:02:52.632-05:00Electricity in NH - The Power GridWikipedia calls a power grid "an interconnected network for delivering electricity<a href="http://en.wikipedia.org/wiki/Electricity" title="Electricity"> </a>from suppliers to consumers." That makes it sound simple. Almost trivial. In reality, our electrical grid is a high-tech marvel that covers a huge geographic distance and contains tens of millions of connections and interconnections.<div><br /></div><div>The graphic below shows a simplified schematic for a power grid (it comes from Germany, so there are probably differences in practices/technology here in the US).</div><div><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/SudvobMaonI/AAAAAAAAAT4/pdyE3Vd9RzY/s1600-h/532px-Electricity_grid_schema-_lang-en.jpg"><img src="http://1.bp.blogspot.com/__WiQMRfj4vM/SudvobMaonI/AAAAAAAAAT4/pdyE3Vd9RzY/s800/532px-Electricity_grid_schema-_lang-en.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5397405418712113778" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 532px; " /></a><div style="text-align: center;">(Source: <a href="http://en.wikipedia.org/wiki/File:Electricity_grid_schema-_lang-en.jpg">wikipedia.org user JMesserly</a>)</div><div style="text-align: center;"><br /></div><div style="text-align: left;">I'm going to let <a href="http://en.wikipedia.org/wiki/Electrical_grid">wikipedia do the heavy lifting describing how a power grid works</a>. In addition to their power grid article, they also have interesting articles on <a href="http://en.wikipedia.org/wiki/Electricity_generation">electricity generation</a>, <a href="http://en.wikipedia.org/wiki/Electric_power_transmission">electricity transmission</a>, and <a href="http://en.wikipedia.org/wiki/Electricity_distribution">electricity distribution</a>. Passing these topics off to Wikipedia leaves space here for specifics about the power grid in New England and in New Hampshire. <br /></div><div><br /></div><div>New Hampshire's power grid is managed by a non-profit <a href="http://en.wikipedia.org/wiki/Regional_Transmission_Organization">Regional Transmission Organization</a> called ISO New England Inc. (<a href="http://en.wikipedia.org/wiki/ISO_New_England">ISO-NE</a>). ISO-NE manages the power grid for New Hampshire, Maine, Vermont, Massachusetts, Rhode Island, and Connecticut. According to their <a href="http://iso-ne.com/aboutiso/index.html">website</a>, ISO-NE has three responsibilities:</div><div></div><blockquote><div>1) Ensure the day-to-day reliable operation of New England's bulk power generation and transmission system</div><div><br /></div><div>2) Oversee and ensure the fair administration of the region's wholesale electricity markets</div><div><br /></div><div>3) Manage comprehensive planning for the region's bulk power system</div></blockquote><div></div><div><p>Also, here's <a href="http://en.wikipedia.org/wiki/Regional_Transmission_Organization#Reasons_for_creating">another take</a> on the role of Regional Transmission Operators like ISO-NE<br /></p><p></p></div><blockquote><div><p>Today’s power industry is far more than a collection of power plants and transmission lines. Maintaining an effective grid requires management of three different but related sets of flows – the flow of energy across the grid; the exchange of information about power flows and the equipment it moves across; and the flow of money between producers, marketers, transmission owners, buyers and others.</p></div><div></div></blockquote><div>Although the reliable operation of the grid itself is nothing to take for granted, I'm especially interested in the operation of the bulk energy markets and in the ISO-NE planning process. I'll cover bulk energy markets in another post and focus here on ISO-NE's plans for the New England power grid.</div><div><br /></div><div>I found two documents on ISO-NE's <a href="http://iso-ne.com/">website</a> that detail the issues facing New England's power grid. The first document is the <a href="http://iso-ne.com/trans/rsp/2009/rsp09_final.pdf">ISO-NE 2009 Regional Power Plan</a>. This 171 page report, produced annually, details and tracks the 10-year planning and forecasting results for New England's power grid. The second document is <a href="http://www.iso-ne.com/pubs/pubcomm/pres_spchs/2009/iso-ne-necpuc-2009.pdf">a collection of presentations made by ISO-NE</a> at the <a href="http://www.necpuc.org/symposium.htm">NECPUC Symposium</a> last May. In this document, there's information about New England's dependence on Natural Gas for electricity generation as well as a good summary of the challenges of integrating renewable energy into the regional power grid.</div><div><br /></div><div><span class="Apple-style-span" style=""><span class="Apple-style-span" style="font-size:large;">Key facts about New England's bulk power generation and transmission system</span> </span></div><div><ul><li>6.5 million households and businesses serviced (14 million people)</li><li>Over 350 generators and 8,000 miles of high-voltage transmission lines</li><li>13 interconnections to systems in NY and Canada</li><li>More than 33,000 MW of total supply</li><li>All-time peak demand of 28,130 MW, set on August 2, 2006</li><li>More than 400 participants in the marketplace (those who generate, buy, sell, transport, and use wholesale electricity or implement demand resources)</li><li>$12 billion annual total energy market value (2008)</li><li>Over $4 billion in transmission investment from 2002-2009. $5 billion planned for next 10 years</li><li>Six major 345-kilovolt projects constructed in four states</li></ul></div><div style="text-align: left;"><span class="Apple-style-span"><span class="Apple-tab-span" style="white-space:pre"> </span>(source: </span><a href="http://iso-ne.com/trans/rsp/2009/rsp09_final.pdf"><span class="Apple-style-span">2009 ISO plan pg 17, fig 2-1</span></a><span class="Apple-style-span">) </span><br /></div><div><br /></div><div>So what are the most pressing issues that ISO-NE identifies in their latest planning document? My read is that the most pressing issues fall into four broad categories:</div><div><span class="Apple-style-span" style="font-weight: bold;"></span></div><blockquote><div><span class="Apple-style-span" style="font-weight: bold;">1) Transmission line capacity</span> - Can New England's power grid move electricity from generation resources to loads (consumers) with minimal congestion and is the transmission infrastructure robust enough to handle unexpected failures with minimal system-wide impact?</div><div><br /></div><div><span class="Apple-style-span" style="font-weight: bold;">2) Adequacy of generation resources</span> - Given the locations of the loads in the system and the available or planned transmission capacity, will there be adequate, well-located, and reliable generation resources to meet the needs of electricity consumers. Also, is the system robust and able to handle down-time due to planned maintenance, equipment failures, fuel supply issues, or other unexpected events?</div><div><br /></div><div><span class="Apple-style-span" style="font-weight: bold;">3) Integration of wind and other variable-output generation resources</span> - Can the power grid operate reliably with the introduction of large amounts of variable-output generation? Wind is a particular problem in this respect, because output from wind-farms is tough to forecast and alternate generation resources can take time to bring online. </div><div><br /></div><div><span class="Apple-style-span" style="font-weight: bold;">4) Implementation of <a href="http://www.oe.energy.gov/smartgrid.htm">smart grid</a> technologies </span> - Strategically reducing demand during times of peak-load or equipment failure can dramatically reduce costs compared to sizing generation and transmission capability to handle worst-case scenarios.</div></blockquote><div>Assuring that the transmission infrastructure can meet New England's needs both today and in the future requires ISO-NE to manage and forecast several variables simultaneously. The introduction of minimum requirements for renewable power generation has added a new dimension to the infrastructure planning problem. It's not enough to assure the power grid can transport electricity from the generation plants to the load areas. Today, ISO-NE has to make sure that the infrastructure will be able to support the correct "mix" of generation resources to meet physical electricity demands as well as these regulatory requirements.</div><div><br /></div><div style="text-align: left;"><span class="Apple-style-span" style="font-size:large;"><span class="Apple-style-span" style="font-weight: bold;">Major Transmission additions in New England (</span></span><a href="http://iso-ne.org/trans/rsp/2009/a_video_slides.pdf"><span class="Apple-style-span" style="font-size:large;"><span class="Apple-style-span" style="font-weight: bold;">source ISO-NE</span></span></a><span class="Apple-style-span" style="font-size:large;"><span class="Apple-style-span" style="font-weight: bold;">)</span></span></div><div style="text-align: left;"><span class="Apple-style-span" style=" font-weight: bold;font-size:18px;"><br /></span></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/SuiQc5xeXKI/AAAAAAAAAUI/JEXPtG8qqFE/s1600-h/ISO-NE_transmission_projects2.JPG"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/SuiQc5xeXKI/AAAAAAAAAUI/JEXPtG8qqFE/s800/ISO-NE_transmission_projects2.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5397722979622608034" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 572px; " /></a></div><div><br /></div><div style="text-align: center;">Numeric key to map above</div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/SuiQcgmc2nI/AAAAAAAAAUA/mdnH2qx1yzw/s1600-h/ISO-NE_transmission_projects_txt.JPG"><img src="http://1.bp.blogspot.com/__WiQMRfj4vM/SuiQcgmc2nI/AAAAAAAAAUA/mdnH2qx1yzw/s800/ISO-NE_transmission_projects_txt.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5397722972865485426" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 489px; " /></a></div><div><br /></div><div>As you can see from the above graphics, there are several transmission projects underway or under evaluation in New England that should reduce power grid congestion, improve reliability, and help deliver energy from planned renewable projects.</div><div><br /></div><div><a href="http://www.necpuc.org/ppt/Meleski2009.pdf">This presentation by Merrill Lynch/Bank of America</a>, discusses the economics and financing of transmission projects. Slide 6 shows some cost estimates for some of the projects listed above. The cost estimate for the NSTAR project (number 3 above) was $275 million, while the Main Power Reliability Program (number 9) is estimated to cost $1.5 billion. Now you know where that "transmission charge" line item on your electric bill comes from.</div><div><br /></div><div>Slide 8 of that same Merrill presentation lists financing details for some other transmission projects. It appears that as with other capital projects, financing costs are highly dependent on how the deal's structured and who bears the risks. For example, the $600 million Neptune project in NY and NJ was apparently financed with all debt at 1.25% over the LIBOR rate (say 4-5% total in 2008). Meanwhile, the $1.1b TrAIL project in PA, WV, and VA was financed with a blended 50/50 debt/equity mix. That means half the financing was at LIBOR+1.875% and the other half cost 12.7%. Apparently, a key to Neptune's low financing cost was a 20-year power purchase agreement that helped minimize the risk to debt holders.</div><div><br /></div><div style="text-align: left;"><span class="Apple-style-span" style="font-size:large;">Proposed HVDC transmission line projects for New England (</span><a href="http://www.iso-ne.com/pubs/pubcomm/pres_spchs/2009/iso-ne-necpuc-2009.pdf"><span class="Apple-style-span" style="font-size:large;">source ISO-NE</span></a><span class="Apple-style-span" style="font-size:large;">)</span></div><div style="text-align: center;"><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/SuiSR333bNI/AAAAAAAAAUQ/S-6Thd8EvFY/s1600-h/ISO-NE_HVDC_projects.JPG"><img src="http://1.bp.blogspot.com/__WiQMRfj4vM/SuiSR333bNI/AAAAAAAAAUQ/S-6Thd8EvFY/s800/ISO-NE_HVDC_projects.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5397724989157240018" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 576px; " /></a></div><div><br /></div><div><div>The map above shows some proposed <a href="http://en.wikipedia.org/wiki/High-voltage_direct_current">high-voltage direct-current (HVDC)</a> projects that are under evaluation in New England. HVDC transmission technology represents the state-of-the-art in moving large amounts of electricity over medium and long distances. It can be used in both over-land and under-sea applications. Many of the proposals listed above will help assure that renewable energy can be carried from places like Canada, New Hampshire, and Maine to population centers in Boston and points west and south.</div><div><br /></div><div>The figure below shows the capacity for wind projects that are currently in the ISO-NE connection queue. Interestingly, the total for proposed new wind capacity for New England is 2.7 gigawatts. That might sound like a lot, but in the US overall, <a href="http://www.awea.org/newsroom/releases/10-20-09_AWEA_Q3_market_report.html">1.6 gigawatts of wind capacity was installed</a> in just the last three months. </div></div><div><br /></div><div style="text-align: left;"><span class="Apple-style-span" style="font-size:large;">Wind projects in ISO-NE queue (</span><a href="http://www.iso-ne.com/pubs/pubcomm/pres_spchs/2009/iso-ne-necpuc-2009.pdf"><span class="Apple-style-span" style="font-size:large;">source: ISO-NE</span></a><span class="Apple-style-span" style="font-size:large;">)</span></div><div style="text-align: center;"><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/Sui4c5bvuJI/AAAAAAAAAUg/DD3gcv1jk_M/s1600-h/ISO-NE-wind-project-queue.JPG"><img src="http://1.bp.blogspot.com/__WiQMRfj4vM/Sui4c5bvuJI/AAAAAAAAAUg/DD3gcv1jk_M/s800/ISO-NE-wind-project-queue.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5397766959996582034" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 583px; " /></a></div><div><br /></div><div>In addition to transmission capacity issues, some electricity sources, particularly wind, have output that's variable and tough to predict. Quick-start natural gas fired generators, demand management techniques, and pumped storage resources can provide a good complement to wind. Coal and nuclear generation, while valuable as base-load resources, aren't as good at complementing wind generation, since they take too long to fire-up when wind output is much lower than predicted.<br /></div><div><br /></div><div>Demand management is another topic that's getting plenty of attention in power grid planning. When planners encounter constraints in either generation or transmission capacity, under the old model, the only solution was to build more power plants and transmission lines. But building an infrastructure that's sized to handle the very peak of demand, or the unlikely failure of multiple generating resources, adds lots of cost and may not be the most economical solution. </div><div><br /></div><div>Newer <a href="http://www.oe.energy.gov/smartgrid.htm">smart grid</a> technologies, along with various existing load management techniques, allow ISO-NE to incorporate demand-management into their planning process. For example, a large industrial user may agree to turn off large power-hungry machinery when called upon to do so. In exchange, this industrial user will receive a regular capacity payment similar to payments that power plant owners receive for agreeing to provide at-the-ready standby power. From a planning perspective, a promise of load reduction can be just as good as a promise to start up a <a href="http://en.wikipedia.org/wiki/Gas_turbine#Industrial_gas_turbines_for_electrical_generation">gas turbine generator</a>. </div><div><br /></div><div>The simple example above is just the tip of the iceberg for demand-response and demand management. Equipment is being installed to allow grid operators to automatically control large amounts of load. Also, ISO-NE has implemented market-based approaches to securing demand-response resources. As of summer 2009, ISO-NE had over 1.9 gigawatts of committed demand-response resources (<a href="http://iso-ne.com/trans/rsp/2009/rsp09_final.pdf">page 43, tbl 4-8</a>). That's more than one and a half times the output from the Seabrook nuclear power plant and it could mean that fewer power plants and transmission lines will need to be built. </div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sui4EidmOAI/AAAAAAAAAUY/w3OANXLjkH4/s1600-h/Elster_Type_R15_electricity_meter.jpeg"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/Sui4EidmOAI/AAAAAAAAAUY/w3OANXLjkH4/s800/Elster_Type_R15_electricity_meter.jpeg" border="0" alt="" id="BLOGGER_PHOTO_ID_5397766541513472002" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;"> <a href="http://www.depweb.state.pa.us/energindependent/lib/energindependent/documents/fs-smartmeters.pdf">Smart meter installed at a residence in Landsdale, PA</a> (source: <a href="http://en.wikipedia.org/wiki/File:Elster_Type_R15_electricity_meter.jpeg">wikipedia</a>)</div><div style="text-align: center;"><br /></div><div>One last <a href="http://www.oe.energy.gov/smartgrid.htm">smart grid</a> concept is the use of <a href="http://en.wikipedia.org/wiki/Smart_meter">smart meters</a>. The cost of providing electricity is highly dependent on system-load and thus, on the time of day when the electricity is consumed. It only makes sense to tie the price of electricity to the cost to produce it. With smart meters, electricity consumers will be incentivized to shift their consumption to when it makes the most sense for them. In many cases, consumers will be able to shift demand to night-time, when the system is usually under-utilized. If everyone does this, and if appliance makers build features into their devices to help, peak loads are likely to go down, or at least grow at a much slower rate. In addition to saving money, shifting demand is also likely to reduce pollution because the power plants that run to meet peak demand are often the biggest polluters.</div><div><br /></div><div>For just one example of the potential savings from smart meter installations, consider the state of Pennsylvania. In 2008, <a href="http://www.depweb.state.pa.us/energindependent/lib/energindependent/documents/fs-smartmeters.pdf">a legislative mandate</a> required utilities to install smart meters for all electricity customers. The cost for the meter upgrade will add $12-24 to a customer's annual electric bill. However, the savings from shifting demand to lower-cost periods are estimated at $46 per year. <a href="http://www.electric-efficiency.com/issueBriefs/Smart%20Meter%20Rollouts_0909_web.pdf">Utilities all around the country</a> are beginning to install smart electric meters. </div><div><br /></div><div>Links: <a href="http://nhbr.com/apps/pbcs.dll/article?AID=/20091028/NEWS06/910279984"></a></div><div> <a href="http://nhbr.com/apps/pbcs.dll/article?AID=/20091028/NEWS06/910279984">N.H. Electric Co-op wins $15.8m ‘smart grid’ grant</a></div><div> <a href="http://nhbr.com/apps/pbcs.dll/article?AID=/20090213/INDUSTRY17/902119915">Is New Hampshire ‘smart meter’ ready?</a></div><div> <a href="http://kennebecjournal.mainetoday.com/news/local/7033825.html">[Maine] PUC doubts $1.5B line upgrade</a></div><div><br /></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-41546947293562147272009-10-22T21:43:00.010-04:002010-09-14T16:55:55.552-04:00Taxes in New Hampshire - Tax summit meeting day 2<div><a href="http://www.gencourt.state.nh.us/house/committees/committee_websites/waysmeans/Ross%20Gittell%20Ppt0000001.pdf"><span class="Apple-style-span" style="font-style: italic;">Prof. Ross Gittell</span></a><span class="Apple-style-span" style="font-style: italic;">: The [most] relevant and important question is how to ensure that NH’s tax structure supports what “we” want the future economy to be.</span></div><div style="text-align: left;"><span class="Apple-style-span" style="font-size: -webkit-xxx-large;"><span class="Apple-style-span" style="font-size:130%;"><span class="Apple-style-span" style="font-size: 16px;"><br /></span></span></span></div><div><br /></div><div><div>In general, today's tax summit presentations contained a bit more advocacy than yesterday's, but overall they were still very informative and thought provoking. As with yesterday, the <a href="http://nhwatchdog.blogspot.com/search/label/Tax%20Summit">NH Watchdog blog has a very detailed (and still mostly non-partisan) recap</a> of the day's session.</div><div><br /></div></div><div>The challenge to our legislators to envision NH's desired future economy came up repeatedly during both days. One of today's presenters, <a href="http://theunionleader.com/columns.aspx/Opinion?channel=d1ed2475-73dc-4b06-ac29-a6d9d28de7bc">Union Leader Columnist Charlie Arlinghaus</a>, provided some historical perspective on successes NH has had with changing the structure of the tax code to achieve desired economic results. <a href="http://www.gencourt.state.nh.us/house/committees/committee_websites/waysmeans/Charlie%20Arlinghaus%20Taxes%20and%20the%20Economy.pdf"></a></div><div><br /></div><div><a href="http://www.gencourt.state.nh.us/house/committees/committee_websites/waysmeans/Charlie%20Arlinghaus%20Taxes%20and%20the%20Economy.pdf">According to Arlinghaus</a>, the business profits tax (BPT) and Business Enterprise Tax (BET) are good examples of strategic tax restructuring in NH's past. These two taxes, implemented in 1970 and 1993, replaced taxes that were discouraging high-tech businesses from locating in NH. Both of these taxes were enacted as part of revenue neutral restructuring efforts. The BPT in particular represented a major shift for NH, away from taxing businesses based on their assets and instead taxing them based on their profits. This change is credited with helping NH develop and maintain its strong high-tech economy in the 80s and 90s. </div><div><br /></div><div>Remember my <a href="http://www.graniteviewpoint.com/2009/06/mvp-series-portsmouth-edition-1.html">earlier MVP Series post on Lonza Biologics</a>? It's hard to imagine Lonza building their $110 million manufacturing plant in Portsmouth if these earlier structural tax changes hadn't occurred. (Although, several panelists did warn that today's business tax rates are on the high side and could now be hurting our competitiveness).</div><div><br /></div><div><div>Gary Hirshberg, President of <a href="http://www.stonyfield.com/index.cfm">Stonyfield Farm</a> presented a different spin on how to create a tax structure that helps forge the economy we desire. He believes NH should act intentionally and strategically to create a tax climate that encourages environmentally responsible activity while discouraging activity that harms our natural resources. His ideas included pollution taxes and targeted tax credits to encourage green business practices. <a href="http://www.thecman.com/our-story/">Common Man Restaurant</a> owner Alex Ray agreed with Hirshberg's ideas, and added that NH's tax structure should help preserve our natural resources and beauty. </div><div><br /></div></div><div>Laurel Redden, of the <a href="http://www.nhfairtax.org/">Granite State Fair Tax Coalition,</a> emphasized tax fairness and our heavy reliance on local property taxes to fund education. Redden called this reliance unfair, unjust, and inadequate. Interestingly, until today, the focus of the panelists was on tax structures to fund expenditures that are already being made at the state level. The idea that the state should increase the scope of its responsibility and contribute more for k-12 education to reduce local property taxes was hardly mentioned in yesterday's presentations. Today, several of the presenters hit on this theme.</div><div><br /></div><div>Out of the entire summit, there was one presentation that left me a bit confused. It was a <a href="http://www.gencourt.state.nh.us/house/committees/committee_websites/waysmeans/Peter%20Francese%20NH%20House%20handout%2010%2021%2009.pdf">presentation by demographer Peter Francese, of Exeter</a>. Francese presented statistics demonstrating that New Hampshire is now the forth oldest state in the country. He attributed this trend partly to the boom in age 55+ housing that many communities are encouraging to broaden their property tax base. Since retiree communities don't allow children, they typically don't increase local tax burdens as much as other development. That all made sense. </div><div><br /></div><div>Next, Francese warned that the NH legislature "wouldn't be able to increase taxes enough" to pay for the coming onslaught of retirees into the state. This was the part that confused me. My understanding is that population trends between various age groups aren't a zero sum game. Attracting more retirees to the state doesn't have to come at the expense of attracting younger workers. In-migration to the state by either group is a good thing and both should be encouraged, IMO. </div><div><br /></div><div>To me, in-migrating retirees are like fully charged batteries, They plug themselves into the local economy and continuously feed money to local businesses. Their expenses are generally paid-in-full by Social Security, Medicare, and their own nest-eggs. Sure, they don't directly increase economic production (like residents that work out of state), but they do increase local demand and this should help local businesses and increase employment in the state. In particular, they increase demand in the health-care sector, and these jobs are typically high paying. </div><div><br /></div><div>I must be missing something on this because of all demographics, I just don't see the burden that in-migrating retirees could place on the state or the local communities. Mr. Francese mentioned that low-income retirees often receive property tax abatements, but the evidence that I've seen is that these abatements are a tiny percent of total property tax bills (usually a few hundred dollars). I just don't believe that these small abatements are offsetting the other benefits that retiree in-migration brings to the state and local communities.<br /></div><div><br /></div><div>OTOH, I do see an issue if we aren't successful in attracting enough young workers (here I agree with Mr. Francese). IMO, it's very important that we don't enact policies that discourage young workers from staying here or migrating in to NH. My point is just that I don't see the problem as "too many old people." Rather, it's a problem of not enough young people.</div><div><br /></div><div>Ok. I think I've rambled on enough about the tax summit. Audio for the entire summit and all of the presentations <a href="http://www.gencourt.state.nh.us/house/committees/committee_websites/waysmeans/default.htm">are now available on the House Ways & Means website</a>.</div><div><br /></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-26446918478818371282009-10-21T20:51:00.007-04:002009-10-21T22:55:59.375-04:00Taxes in New Hampshire - Tax Summit Meeting<div>I spent today in Concord at the House Ways & Means "Revenue Structure Informational Session," where I learned lots about New Hampshire's tax structure.<br /></div><div><br /></div><div>The chart below, presented by Dennis Delay of the <a href="http://nhpolicy.org/">New Hampshire Center for Policy Studies,</a> provides a great summary:</div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/St-tehW8L8I/AAAAAAAAATw/6kdGTxZ50OI/s1600-h/nhpolicy-org+2008+NH+Revenue+Structure.jpg"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/St-tehW8L8I/AAAAAAAAATw/6kdGTxZ50OI/s800/nhpolicy-org+2008+NH+Revenue+Structure.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5395221618475413442" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div><br /></div><div>I was planning on doing a more complete recap, but Grant Bosse of the <a href="http://www.jbartlett.org/">Josiah Bartlett Center for Public Policy</a> has been<a href="http://nhwatchdog.blogspot.com/search?q=live++blogging+the+tax+summit"> live-blogging the event in great detail</a> (Disclosure - although the coverage seems neutral, these folks are fiscal conservatives and oppose any new broad based taxes).</div><div><br /></div><div>IMO, the presentations were jam packed with lots of interesting information. Although a bit of advocacy did rear its ugly head from time to time, overall things were pretty balanced. Also noteworthy was that out of the 7 or so economists presenting, only one favored an income tax. </div><div><br /></div><div>A few of the panelists suggested that a sales tax would probably be the best way to go if a new revenue source was absolutely necessary. But only with the caveat that in exchange, business taxes would be reduced. All the panelists (I think) agreed NH's high business taxes are hurting our economic competitiveness. Apparently, we rank 50th (worst in country) for business tax climate. </div><div><br /></div><div>Finally, nearly all the panelists issued a strong warning to the committee that NH's tax advantage has to remain intact or our economic growth trajectory, which is already under stress, will be impacted.</div><div><br /></div><div>More to come tomorrow...</div><div><br /></div><div><br /></div><div><br /></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-91377992789326448172009-10-19T09:08:00.012-04:002009-12-23T15:49:11.980-05:00Borrow a kill-a-watt meter from... the local library?<div><span class="Apple-style-span" style="font-style: italic;">In <s>Portsmouth</s> n<b>ow everywhere in NH</b>, residents can "check out" a kill-a-watt electricity meter from the library as if they were borrowing a book.</span></div><div><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/Stxl4GDN91I/AAAAAAAAATo/rmwDnQ034v4/s1600-h/IMG_0547a.JPG"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/Stxl4GDN91I/AAAAAAAAATo/rmwDnQ034v4/s400/IMG_0547a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5394298468054202194" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 10px; margin-left: auto; text-align: center; cursor: pointer; width: 340px; height: 400px; " /></a><div>I've blogged a few times about the kill-a-watt electricity consumption meter. This device is simple to use and helps track down power hungary appliances in your household to save money and reduce your carbon footprint.</div><div><br /></div><div>The meter provides a real-time readout of the wattage consumed by an attached appliance and can also track power consumption over time. For example, you can plug your refrigerator into the kill-a-watt for 24 hours to see its daily power usage. Next, you can multiply the power usage by your electricity rate (say around $.15 per kWh) to get the daily cost of running your fridge.<br /></div><div><br /></div><div>One snag is that <a href="http://www.amazon.com/P3-International-P4400-Electricity-Monitor/dp/B00009MDBU/ref=sr_1_1?ie=UTF8&s=electronics&qid=1255960038&sr=8-1">the device costs just under $25</a> and this initial investment can really eat into your potential savings. Portsmouth residents however, can "check out" a kill-a-watt meter from their local library as if they were borrowing a book. </div><div><br /></div><div>Apparently, <a href="http://www.cityofportsmouth.com/sustainability/carbonchallenge.htm">the city of Portsmouth is in a friendly competition with the city of Keene</a> to see which town can inform more of their residents about how to reduce their carbon footprint. As part of the effort, two kill-a-watt devices were purchased for the library. It seems like a clever idea to increase awareness and to help residents save some money. Maybe other NH towns could follow this lead?</div><div><br /></div><div>Here's a <a href="http://www.cityofportsmouth.com/library/killawatt.htm">link</a> to the Portsmouth Library's web page on the kill-a-watt.</div><div><br /></div><div>UPDATE: It looks like <a href="http://www.treehugger.com/files/2009/01/kill-a-watts-ottawa-public-library-canada.php">Portsmouth wasn't the first town with this idea</a>. Check out the comments on the above post for lots of other libraries doing it as well.</div><div style="text-align: left;"><br /></div><div style="text-align: left;">UPDATE2 (1/23/09): According to <a href="http://twitter.com/psnh/statuses/6939973380">this tweet</a> I just saw from PSNH, and this <a href="http://psnhenergybrief.com/index.php?option=com_content&view=article&id=36:new-hampshire-libraries-to-offer-energy-saving-devices&catid=4:recent-community-news&Itemid=4">PSNH energy brief,</a> apparently all NH libraries have kill-a-watt meters that can be loaned out. It's probably a good idea to call first though, since I'd bet these will be hot items.<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/Stxl4GDN91I/AAAAAAAAATo/rmwDnQ034v4/s1600-h/IMG_0547a.JPG"><br /></a><br /></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-33558118478607746702009-10-17T10:33:00.008-04:002009-11-16T08:04:21.481-05:00News You Can Use - LCD TV EditionI recently read <a href="http://www.latimes.com/business/la-fi-bigtvs14-2009oct14,0,4908205.story">an LA Times news report</a> about new energy efficiency regulations that have been proposed in California for televisions. The <a href="http://www.energy.ca.gov/2008publications/CEC-400-2008-028/CEC-400-2008-028-SD.PDF">draft proposal by the California Energy Commission</a> implies that TV manufacturers are not using the most efficient technologies available and could easily reduce the energy consumption of new TVs by almost 40% by 2013. <div><br /></div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/StnV6TD-qsI/AAAAAAAAATg/BI3AWm4snfc/s1600-h/IMG_0547a.JPG"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/StnV6TD-qsI/AAAAAAAAATg/BI3AWm4snfc/s800/IMG_0547a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5393577226278972098" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 500px; " /></a></div><div><br /></div><div>I was skeptical to say the least. Most new televisions use LCD technology that's an outgrowth of the computer laptop market. Manufacturers of computer laptops have been relentless in their attempts to reduce laptop power consumption to improve battery runtime. If there were any easy LCD power savings available, I was sure the marketplace would have already ferreted them out. </div><div><br /></div><div>So I decided to dig a little further into the draft proposal and I found my answer <a href="http://www.energy.ca.gov/2008publications/CEC-400-2008-028/CEC-400-2008-028-SD.PDF">on page 10 of the report</a>. Although there's plenty of hand waving about potential innovations that might reduce television power consumption, the real reason why dramatic power reductions can be achieved without increasing cost is this:</div><div><br /></div><div><div></div><blockquote><div>Significant reductions in energy consumption can be achieved in Plasma and LCD TVs <span class="Apple-style-span" style="font-weight: bold;">by adjusting the contrast and brightness screen settings by manufacturers before shipping TVs</span> to the retailers. The power consumption of the TV drops significantly with screen setting modifications. On average, plasma TVs will consume almost 21 percent less power when set to a low power factory preset, sometimes called “movie” or “pro” settings.</div></blockquote><div></div><div><br /></div><div>Ok. Now we're getting somewhere. Apparently, television manufacturers ship TVs to retailers with the brightness max'ed out. This gives their TVs greater showroom appeal. Unfortunately, it also causes the TV to consume more power than needed, and unless consumers lower the brightness once they get the sets home, power is wasted.</div><div><br /></div><div>Now this is <span class="Apple-style-span" style="font-style: italic;"><span class="Apple-style-span" style="font-weight: bold;">news I can use</span></span>. I decided to test out the theory with our Samsung LCD TV. First, I measured the TV's power consumption with the default factory settings. My <a href="http://www.amazon.com/P3-International-P4400-Electricity-Monitor/dp/B00009MDBU/ref=sr_1_1?ie=UTF8&s=electronics&qid=1255792406&sr=8-1">trusty kill-a-watt meter</a> showed a reading of 160 watts. Next, I adjusted the brightness to its lowest level. Surprisingly, there was only a slight drop in power consumption, so I returned this setting back to its default. Next, I noticed a "backlight" setting on the TV's display menu. I adjusted the backlight from 5 down to 2. With that, I saw a dramatic reduction in power consumption - from 160 watts down to 116 watts. Given the lighting conditions in the room, this low setting seemed pretty workable. </div><div><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/StnV6L4minI/AAAAAAAAATY/Kwv2wVrrUjo/s1600-h/IMG_0550a.JPG"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/StnV6L4minI/AAAAAAAAATY/Kwv2wVrrUjo/s800/IMG_0550a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5393577224352205426" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a><div><br /></div><div>This simple change reduced power consumption by 44 watts per hour. According to Wiki Answers (if it's on the Internet, it must true, right?),<a href="http://wiki.answers.com/Q/How_much_television_per_day_does_the_average_american_watch"> the average American watches over 8 hours of TV per day</a>. This means that the average household could save 128 kW per year of electricity (44*8*365/1000) or around $20. </div><div><br /></div><div>That may not sound like much savings, but when you consider that it's free money, and also consider the reduction in greenhouse gasses from reduced power plant emissions if everyone makes the change, it seems like it could be worth it. Of course, now that we're armed with this new information, we don't have to wait for new regulations to start saving.</div></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-79321154547941502952009-09-02T19:00:00.009-04:002010-09-14T16:56:54.887-04:00Industry along the Piscataqua River - Westinghouse Electric Company<div style="text-align: left;"><span class="Apple-style-span" style="font-style: italic; ">Ever wonder how much electricity it takes to run a 13,500 horsepower pump?</span><br /></div><div style="text-align: center;"><span class="Apple-style-span" style="font-style: italic;"><span class="Apple-style-span" style="font-style: normal; "><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/Sp76V0YKBPI/AAAAAAAAASw/G7gVonLUVuM/s1600-h/westinghouse+2.JPG"><br /></a></span></span></div><div style="text-align: center;"><span class="Apple-style-span" style="color: rgb(0, 0, 238); text-decoration: underline;"><span class="Apple-style-span" style="color: rgb(0, 0, 0); "><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/Sp-tMShqsfI/AAAAAAAAATI/bgJpY-ensM4/s1600-h/westinghouse+2.jpg"><img src="http://1.bp.blogspot.com/__WiQMRfj4vM/Sp-tMShqsfI/AAAAAAAAATI/bgJpY-ensM4/s800/westinghouse+2.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5377206906746745330" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></span></span></div><div style="text-align: center;">Westinghouse Electric's 178 Shattuck Way plant in Newington, NH</div><div style="text-align: center;"><br /></div><div>No? Me either. That is, until I found <a href="http://www.puc.state.nh.us/Regulatory/Orders/2004orders/24411e.pdf">this power purchase contract</a> from 2004 between the folks at Westinghouse Electric, in Newington, NH and Public Service Company of New Hampshire (PSNH). According to the document, Westinghouse has a special contract with PSNH for electricity to run its pump testing operation. These large pumps, up to 13,500 horsepower, are manufactured and tested at the Newington facility and are used in nuclear power plants around the world. <br /></div><div><br /></div><div>So how much power does it take to run a 13,500 horsepower pump? According to <a href="http://web.me.com/kspugh/PETROPEAK/Facts.html">this "surprising energy facts" website</a>, about 10 megawatts. The website says that's just a tad shy of the 15,000 horsepower produced by a single 747 engine. I guess it's convenient that Westinghouse's Newington facility is just a few hundred yards away from not one, not two, but three power generating plants that together can produce almost 1,200 megawatts of electricity. That's a good thing because otherwise, I'm sure the lights around Newington would dim just a little bit each time Westinghouse fired up one of their 13,500 horsepower pumps for testing.</div><div style="text-align: center;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sp76Wa1JZcI/AAAAAAAAAS4/DrldOCr4PbE/s1600-h/westinghouse+1.JPG"><br /></a></div><div style="text-align: center;"><span class="Apple-style-span" style="color: rgb(0, 0, 238); text-decoration: underline;"><span class="Apple-style-span" style="color: rgb(0, 0, 0); "><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sp-tig4LugI/AAAAAAAAATQ/31cf4m1IxUA/s1600-h/westinghouse+1.JPG"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/Sp-tig4LugI/AAAAAAAAATQ/31cf4m1IxUA/s800/westinghouse+1.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5377207288556403202" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></span></span></div><div><br /></div><div>Westinghouse Electric Company's 66,000 sq. ft Newington, NH facility manufactures components for nuclear power plants. Westinghouse Electric is headquartered in Pennsylvania, but in Newington, around 220 workers are employed producing <a href="http://www.manta.com/company/mtm1yj6">between $20 and $50 million dollars</a> worth of nuclear power plant components each year.</div><div><br /></div><div>Westinghouse Electric is 77% owned by Toshiba, 20% owned by <a href="http://www.shawgrp.com/">The Shaw Group</a>, and 3% owned by Mitsubishi Heavy Industries. Westinghouse boasts on their web site that their designs are behind 50% of the 440 nuclear power plants in operation around the world today. I'm working on a post about the state of the nuclear power industry, but for now I'll just note that there seem to be three nuclear power plant designs currently vying for the various projects out for bid in the US, India, China, and elsewhere. These designs are the <a href="http://www.ap1000.westinghousenuclear.com/">AP1000 from Westinghouse</a>, the<a href="http://www.gepower.com/prod_serv/products/nuclear_energy/en/new_reactors.htm"> ESBWR and ABWR from GE-Hitachi</a>, and the <a href="http://www.areva-np.com/scripts/info/publigen/content/templates/show.asp?L=US&P=1655&SYNC=Y">EPR from French owned Areva</a>.</div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://3.bp.blogspot.com/__WiQMRfj4vM/Sp76WgywdNI/AAAAAAAAATA/4awN98X88mw/s1600-h/AP1000ReactorCutaway.jpg"><img src="http://3.bp.blogspot.com/__WiQMRfj4vM/Sp76WgywdNI/AAAAAAAAATA/4awN98X88mw/s400/AP1000ReactorCutaway.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5377010269793842386" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">Cutaway View of Westinghouse Electric's new <a href="http://www.ap1000.westinghousenuclear.com/ap1000_glance.html">AP1000</a> reactor design</div><div style="text-align: center;"><br /></div><div>According to Westinghouse Electric's website, their <a href="http://www.westinghousenuclear.com/businesses/Nuclear_Power_Plants/component_manufacturing.shtm">their Newington plant </a>manufactures reactor vessel internals, reactor coolant pumps, control element drive mechanisms, and pressure vessels of pumps and other components for nuclear power plants.</div><div><br /></div><div style="text-align: left;">This<a href="http://archive.seacoastonline.com/2002news/1_15water.htm"> 2002 SeacoastOnline article</a> by Nicholas Brown does a nice job of sizing up what they are making.</div><blockquote><div><p><span class="Apple-style-span" style="font-family:arial;"><br /></span></p></div></blockquote>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-60685586459450160262009-08-28T20:09:00.003-04:002009-08-28T20:23:20.369-04:00NH: The Clunker State<a href="http://www.calculatedriskblog.com/2009/08/new-hampshire-clunker-state.html">This post by Calculated Risk</a> on the CARS 'cash-for-clunkers' program has a neat sortable table that shows the amount of rebate money given to residents of each state. <div><br /></div><div>If you sort the table by 'dollars per person', you can see that New Hampshire had the highest per capita rebate rate and Vermont had the second highest.</div><div><br /></div><div>I was thinking it's just because we're frugal yankees and can't turn down free money, but several commenters on the CR post pointed out that the top 5 states are either heavy snow states where lots of road salt is used or an Island where salt air is present. Coincidence or causal?</div><div><br /></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0tag:blogger.com,1999:blog-2718819858434072309.post-74106239264816759422009-08-27T15:15:00.025-04:002010-09-14T16:58:21.059-04:00Electricity in NH - Star Island Edition<div style="text-align: left;"><span class="Apple-style-span" style="font-style: italic; ">Ever dreamed of living off the grid, perhaps on a remote Island?</span><br /></div><div><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/SpbyrLT3YVI/AAAAAAAAASg/0i5y1hNkJOs/s1600-h/IMG_9004a.JPG"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/SpbyrLT3YVI/AAAAAAAAASg/0i5y1hNkJOs/s800/IMG_9004a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5374750028897673554" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a><div style="text-align: center;">Star Island - Located seven miles off the coast of Rye, NH</div><div style="text-align: center;"><br /></div><div>If you've been out to <a href="http://en.wikipedia.org/wiki/Star_Island">Star Island</a>, one of the <a href="http://en.wikipedia.org/wiki/Isles_of_Shoals">Isles of Shoals</a>, you know that it's one of New Hampshire's gems. Earlier this summer, my wife and I had the pleasure of returning to Star Island for a brief visit. Despite the Island's natural setting and the calming ocean breezes, the nerd in me couldn't help but contemplate the infrastructure required to keep this remote Island humming. </div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/SpbxDh134FI/AAAAAAAAASY/Ta7BB2THygo/s1600-h/IMG_9151a.JPG"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/SpbxDh134FI/AAAAAAAAASY/Ta7BB2THygo/s800/IMG_9151a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5374748248239497298" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">The Oceanic Hotel on Star Island<br /></div><div style="text-align: center;"><br /></div><div>Star Island is home to an educational conference center that's run by the non-profit <a href="http://starisland.org/">Star Island Corporation</a>. Each summer, hundreds of conference attendees and <a href="http://www.islesofshoals.com/">vacationing day-trippers</a> pour in, ready for a dose of Island living. The Island's nineteenth century Oceanic Hotel is quite rustic by modern standards, so much so that conference brochures describe the accommodations as "comfortable, but not modern." Still, the basics are well covered including electricity, indoor plumbing, and a fully equipped dining hall and snack bar. </div><div><br /></div><div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/Spb4z2g-cwI/AAAAAAAAASo/2EtiFcsM1MY/s1600-h/IMG_9133a.JPG"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/Spb4z2g-cwI/AAAAAAAAASo/2EtiFcsM1MY/s800/IMG_9133a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5374756775004107522" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center; ">Dining room and snack bar at the Oceanic Hotel on Star Island</div><div style="text-align: center; "><br /></div></div><div>Even providing just the basics can be a challenge, when you're seven miles away from the mainland. Water for the Islanders is supplied using a three-tiered approach including untreated seawater for outside washing and running the sewage treatment plant, rain water cisterns for showers and laundry, and a <a href="http://en.wikipedia.org/wiki/Reverse_osmosis">reverse-osmosis</a> desalinization plant for potable water. All of the Island's wastewater is treated by an EPA approved wastewater treatment system. In addition to the water and sewer systems, the conference center provides meals for hundreds of guests which requires significant refrigeration and food preparation equipment.</div><div><br /></div><div>All of these things require electricity, lots of electricity. In fact, according to Star Island Corporation's Island Engineer, Tietjen Hynes, during the peak season the Island uses about 1,500 kWh of electricity each day. Most of this electricity is produced by a pair of 125 kW generators that are powered by diesel engines. One generator is powered by a<a href="http://www.deere.com/es_ES/power_systems/info_center/brochure/genset_pocketguide.pdf"> John Deere 4045 engine</a> and the other by a CAT 3304b engine. To get an idea of the scale of these power plants, consider that they are about 25 times the size of a typical 5 kW emergency backup generator. In fact, the John Deere 4045 diesel has 4.5 liters of displacement and provides over 160 horsepower. Below is a sample photo of a generator that uses this engine.</div><div><br /></div><div>So how much does it cost to produce electricity on Star Island? Island Engineer Hynes says that the generators consume around 100 gallons of fuel to produce the 1,500 kWh of electricity that's needed each day. The fuel must be brought in by boat, so Ill assume a $3.50-$4.00 per gallon delivered fuel price. That yields an "energy cost" of around 25 to 30 cents per kWh. That rate doesn't include capital costs or operating and maintenance costs which, given the short season and tough operating conditions, could easily add another 5-10 cents to that kWh rate. Even at this reasonably large scale, it's tough to even come close to power company costs with do-it-yourself electricity generation. </div><div><br /></div><div>Given the remote location and the high cost of generating electricity with diesel, the Island seems like a great candidate for renewable energy sources like wind and solar. In fact, the non-profit that owns the Island has made a <a href="http://starisland.org/about/green/">commitment to sustainability</a> and has sought out ways to improve efficiency and reduce the environmental impact of their electricity production. </div><div><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/Spbtd0pQVsI/AAAAAAAAASA/PUnvEY6VkH0/s1600-h/IMG_9063a.JPG"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/Spbtd0pQVsI/AAAAAAAAASA/PUnvEY6VkH0/s800/IMG_9063a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5374744301916935874" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a><div style="text-align: center;">Elliott Memorial Building with five 125 watt photovoltaic panels installed</div><div><br /></div><div>A few years ago, the Elliott Memorial Building was equipped with photovoltaic panels to provide power for the Island's winter caretakers. You can see the five 125 watt photovoltaic panels in the photo above. These are attached to a bank of eight 110 Ah deep cycle marine batteries and an inverter that converts the battery output to alternating current. The system provides the winter caretakers with the convenience of 24x7 ac power, without having to run a generator non-stop. According to Island Engineer Hynes, by using the solar panels and the batteries, the winter keepers are able to reduce generator run-time to just a couple of hours each day. It looks like the winter keepers have a more sophisticated version of the rudimentary blackout system I described <a href="http://www.graniteviewpoint.com/2009/07/watts-up-with-these-cfl-bulbs.html">in this earlier post</a>.</div><div style="text-align: center;"><br /></div><div>In addition to the solar panels on the Elliott Memorial Building, the Island also has a new 5 kW <a href="http://www.helixwind.com/en/S594.php">Helix Wind S594 vertical wind turbine</a> that was installed by <a href="http://www.waterlinecompanies.com/news.html">Waterline Industries</a> of Seabrook, NH. </div><div><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/SpbtdZee3rI/AAAAAAAAAR4/2ZoNd14PVJQ/s1600-h/IMG_9061aa.jpg"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/SpbtdZee3rI/AAAAAAAAAR4/2ZoNd14PVJQ/s800/IMG_9061aa.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5374744294623993522" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer;width: 450px;" /></a><div style="text-align: center;">Helix Wind S594 5kW vertical wind turbine</div><div><br /></div><div>The turbine was just recently installed and the project has hit a small snag that shows just how tricky alternative energy systems can be when you're "off the grid." Island Engineer Hynes explained that the Helix turbine is intended to be used in grid-tied systems and must be fed relatively steady 60 Hz ac line power in order to produce electricity. This is a failsafe to protect utility workers from unexpected back-feeds on the power grid. Unfortunately, the Island's diesel generated electricity varies between 57 Hz and 62 Hz and this variation prevents the Helix turbine from reliably generating power. One other challenge in using wind power for commercial off-grid applications is that there's no option for net-metering, where unused power can be sold back to the utility. In off-grid applications, the turbine's output must be consumed when it's produced or stored in expensive and sometimes impractical battery systems.</div><div><br /></div><div>Despite these issues, Ms. Hynes believes the new turbine will ultimately be used to provide electricity for the Island. She's working with Helix Wind and the distributor on a plan to connect the turbine to the existing solar battery bank and inverter to provide power to the Elliott Memorial Building and the Doctor's cottage.</div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/SpbtdP7TD2I/AAAAAAAAARw/VOIRgv-4eJY/s1600-h/IMG_9066a.JPG"><img src="http://4.bp.blogspot.com/__WiQMRfj4vM/SpbtdP7TD2I/AAAAAAAAARw/VOIRgv-4eJY/s800/IMG_9066a.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5374744292060499810" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">View of the Helix Wind turbine and the solar panels on the Elliott Memorial Building</div><div style="text-align: center;"><br /></div><div>On nearby <a href="http://en.wikipedia.org/wiki/Appledore_Island">Appledore Island</a>, the folks at the <a href="http://en.wikipedia.org/wiki/Shoals_Marine_Laboratory">Shoals Marine Laboratory (SML)</a> recently installed a Bergey 7.5kW wind turbine and 4.4 kW of photovoltaic panels to help reduce their generator fuel consumption. Although <a href="http://www.ece.unh.edu/energy_conference/presentations_files/Appledore%20Island%27s%20Sustainable%20Energy%20system.pdf">the prospects for the project are very promising</a>, the project's cost was nothing to sneeze at, coming in at over $100k for just the wind turbine, tower, and related equipment. </div><div><br /></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/Spbtcgj2mtI/AAAAAAAAARo/bRcg2hPuq_w/s1600-h/IMG_9148aa.JPG"><img src="http://1.bp.blogspot.com/__WiQMRfj4vM/Spbtcgj2mtI/AAAAAAAAARo/bRcg2hPuq_w/s800/IMG_9148aa.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5374744279345699538" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 600px; " /></a></div><div style="text-align: center;">Wind Turbine on Appledore next to WW II tower that houses weather instruments</div><div style="text-align: center;"><br /></div><div style="text-align: left;"><div>Despite the minor technical snags and the somewhat high capital costs, the folks at Star Island and at the Shoals Marine Lab are proving that using renewables to generate standalone Island power is becoming more feasible as the technology continues to improve and prices continue to drop.</div><div><br /></div></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com5tag:blogger.com,1999:blog-2718819858434072309.post-39525627003127546382009-08-21T12:30:00.005-04:002009-11-16T08:05:32.860-05:00Wind Power Economics - Government subsidy edition<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/So7CN4VV37I/AAAAAAAAAQs/tiCP6iZjOzY/s1600-h/Lempster_Wind_Farm-2aa.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://1.bp.blogspot.com/__WiQMRfj4vM/So7CN4VV37I/AAAAAAAAAQs/tiCP6iZjOzY/s800/Lempster_Wind_Farm-2aa.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5372444949215567794" /></a><span class="Apple-style-span" style="font-size:small;"><div style="text-align: center;"><span class="Apple-style-span" style="font-size:small;">View of Lempster Wind project in Lempster, </span><span class="Apple-style-span" style="font-size:small;">NH </span><a href="http://en.wikipedia.org/wiki/File:Lempster_Wind_Farm-2.jpg"><span class="Apple-style-span" style="font-size:small;">(photo courtesy of wikipedia)</span></a><br /></div></span><div><br /></div><div>A while back I did a <a href="http://www.graniteviewpoint.com/2009/07/electricity-in-nh-wind-power.html">post on the economics of wind power</a> that had some financial analysis on a few local wind power projects. One of the projects I featured was the Vinalhaven, ME, <a href="http://www.foxislands.net/windpower/">Fox Islands Wind</a> project.</div><div><br /></div><div>You may recall that one of the major factors affecting the economics of wind power is the project's "cost of capital." You can think of cost of capital in the same way you would the interest rate on a home loan. Just as a lower mortgage rate can dramatically reduce the cost of home ownership, a lower cost of capital can dramatically reduce the cost of a wind project over its lifetime.</div><div><br /></div><div>It turns out that the Fox Islands Wind project just got a huge reduction in its cost of capital in the form of a USDA loan guarantee. According to <a href="http://www.usda.gov/wps/portal/!ut/p/_s.7_0_A/7_0_1OB?contentidonly=true&contentid=2009/08/0390.xml">this USDA press release</a> (hat tip <a href="http://www.seacoastonline.com/articles/20090821-NEWS-908219995">SeacoastOnline</a>), the Fox Islands Wind project has been awarded a $9.5 million loan guarantee through the USDA rural electrification loan program. </div><div><br /></div><div>Currently, rates for loans under this program are in the 2-4% range, depending on the term. I don't have the exact details for the Fox Islands Wind loan, but I made a best-guess and re-ran the cost per kilowatt numbers through the <a href="http://analysis.nrel.gov/windfinance">WindFinance</a> tool to see how this low interest loan might help the project's economics.</div><div><br /></div><div><div>The table below shows the values I used as inputs in my earlier wind power cost analysis. These inputs were copied directly from <a href="http://www.graniteviewpoint.com/2009/07/electricity-in-nh-wind-power.html">this previous post</a>. Installed cost per kW and annual production in MWh are computed from the other inputs. </div></div><div><div style="text-align: center;"><br /></div></div><div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/So8S3GqwY9I/AAAAAAAAAQ8/KyOhjch7shU/s1600-h/WindFinance+Inputs.JPG"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/So8S3GqwY9I/AAAAAAAAAQ8/KyOhjch7shU/s800/WindFinance+Inputs.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5372533618368340946" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 601px; " /></a></div><div><br /></div><div>Below, I've updated the results from the prior post with the new low-interest loan taken into account. In the last row of the table below, you can see the impact of the new loan on the project's cost per kilowatt. The project's cost per kilowatt hour ranges from 16.81 cents with a 13% cost of capital, to 10.79 cents with an 8% cost of capital, to 7.66 cents with a blended 8%/4% cost of capital (the government 4% loan covers $9.5M of the project's cost).</div><div><div style="text-align: center;"><br /></div><div style="text-align: center;"><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://2.bp.blogspot.com/__WiQMRfj4vM/So8S2_z5xCI/AAAAAAAAAQ0/I4BlSfXiIDs/s1600-h/WindFinance+Results.JPG"><img src="http://2.bp.blogspot.com/__WiQMRfj4vM/So8S2_z5xCI/AAAAAAAAAQ0/I4BlSfXiIDs/s800/WindFinance+Results.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5372533616527655970" style="display: block; margin-top: 0px; margin-right: auto; margin-bottom: 0px; margin-left: auto; text-align: center; cursor: pointer; width: 516px; " /></a></div></div><div><br /></div><div>You can see from these updated results how low-cost financing can completely change the economics of a project. Although I don't know the details of this specific loan guarantee program, presumably the loan must be paid back with interest over time, and it shouldn't cost taxpayers anything if all goes well. The downside is that if for some reason the project goes bust and Fox Islands Wind defaults on the loan, taxpayers will end up footing the bill.</div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com2tag:blogger.com,1999:blog-2718819858434072309.post-31285726827483612832009-08-20T08:39:00.002-04:002009-08-20T19:56:32.916-04:00Industry Along the Piscataqua River - Tyco Telecommunications<div style="text-align: left; ">My regular Internet reading list includes a handful of overseas publications, such as the <a href="http://ft.com/">Financial Times</a> and <a href="http://www.economist.com/">The Economist</a>. When I load these sites in my web browser, or watch the occasional web video, there's seldom any noticeable delay, even though the data had to travel halfway across the world. High speed transglobal communication is so ubiquitous that we barely pay notice to the amazing technology it takes to get the job done.</div><div style="text-align: left; "><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/SonJlyQyOvI/AAAAAAAAAQU/_EPUkmcMkAQ/s1600-h/tyco+undersea+cable+1.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://1.bp.blogspot.com/__WiQMRfj4vM/SonJlyQyOvI/AAAAAAAAAQU/_EPUkmcMkAQ/s800/tyco+undersea+cable+1.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5371045681600543474" /></a><div style="text-align: center;">Tyco Telecommunications undersea cable plant - Newington, NH<br /></div><div style="text-align: left;"><br /></div><div style="text-align: left;">It turns out, there's a manufacturing facility along the banks of the Piscataqua River in Newington, NH that played a major role in stitching together our global communications infrastructure. That facility is the Tyco Telecommunications undersea cable plant.</div><div style="text-align: left;"><br /></div><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://4.bp.blogspot.com/__WiQMRfj4vM/SonJltTyduI/AAAAAAAAAQM/GahFw_gAHFk/s1600-h/tyco+undersea+cable+2.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://4.bp.blogspot.com/__WiQMRfj4vM/SonJltTyduI/AAAAAAAAAQM/GahFw_gAHFk/s800/tyco+undersea+cable+2.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5371045680270964450" /></a><div style="text-align: center;"><a href="http://www.bing.com/maps/default.aspx?v=2&FORM=LMLTCP&cp=r5h41g930dfr&style=b&lvl=1&tilt=-90&dir=0&alt=-1000&phx=0&phy=0&phscl=1&scene=13540142&encType=1">Click for Bing Maps bird's eye view of facility</a><a href="http://www.bing.com/maps/default.aspx?v=2&FORM=LMLTCP&cp=r5h41g930dfr&style=b&lvl=1&tilt=-90&dir=0&alt=-1000&phx=0&phy=0&phscl=1&scene=13540142&encType=1"><br /></a></div><div><br /></div><div>Tyco's Newington facility manufactures the so-called <a href="http://tycotelecom.com/process/manufacture/wet-plant.aspx">wet-plant components</a> of undersea telecommunications cable systems. This includes undersea cable and devices called repeaters that help keep the communication signals strong enough to reach their final destination. </div><p align="center"><iframe width="600" height="350" frameborder="0" scrolling="no" marginheight="0" marginwidth="0" src="http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=newington+nh&sll=37.0625,-95.677068&sspn=42.310334,54.667969&ie=UTF8&t=h&ll=43.100952,-70.795813&spn=0.005484,0.012875&z=16&output=embed"></iframe><br /><small><a href="http://maps.google.com/maps?f=q&source=embed&hl=en&geocode=&q=newington+nh&sll=37.0625,-95.677068&sspn=42.310334,54.667969&ie=UTF8&t=h&ll=43.100952,-70.795813&spn=0.005484,0.012875&z=16" style="color:#0000FF;text-align:left">View Larger Map</a></small><br /></p><div><div>The Newington plant has over 550,000 sq ft of manufacturing space and employs between 100-200 workers. The facility also includes a deep water pier that allows direct ship loading of the cable that they make at the plant.<br /></div><div><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="http://1.bp.blogspot.com/__WiQMRfj4vM/SonJlXGQqWI/AAAAAAAAAQE/gxarGENknIQ/s1600-h/tyco+undersea+cable+3.JPG"><img style="display:block; margin:0px auto 0px; text-align:center;cursor:pointer; cursor:hand;width: 600px;" src="http://1.bp.blogspot.com/__WiQMRfj4vM/SonJlXGQqWI/AAAAAAAAAQE/gxarGENknIQ/s800/tyco+undersea+cable+3.JPG" border="0" alt="" id="BLOGGER_PHOTO_ID_5371045674308643170" /></a><div style="text-align: center;">Deep water pier on the Piscataqua allows direct ship loading of undersea cable<br /></div></div><div><br /></div><div>Tyco's corporate website boasts that the company has installed over 420,000 kilometers of undersea cable worldwide. That's enough cable to wrap the globe ten times. In addition, the company recently <a href="http://www.subtelforum.com/articles/?p=510">completed testing</a> of a new cable system capable of transmitting data at 40 gigabits per second. Just to put that into perspective, a 40 gigabit per second communications link could carry over half a million telephone calls, over 50,000 simultaneous music streams, or over 5,000 HD video streams.</div><div><br /></div><div>Unfortunately, despite these amazing technological achievements, the story of undersea cable manufacturing in NH is not all good news. The crash of the tech bubble in the early 2000s, coupled with global telecommunications overcapacity that persists today, has resulted in several tough years for the folks at Tyco's Newington plant. Tyco's footprint in NH, which at one time included over 1,500 workers at facilities in both Exeter and Newington, has shrunk to just 200 or so workers in Newington alone.</div><div><br /></div><div><div><a href="http://tycotelecom.com/pdfs/cable_diagram.pdf">Diagrams of undersea cable construction</a></div><div><br /></div><div><a href="http://tycotelecom.com/process.aspx">Animation showing typical undersea installation</a></div><div><br /></div><div><br /></div></div></div>Granite Viewpointhttp://www.blogger.com/profile/14044061178423886105noreply@blogger.com0