Renewable energy elusive

Kevin Rademacher

Wednesday, Oct. 12, 2005 | 7:37 a.m.

Nevada lawmakers first required the state's big electric utility companies to use renewable energy in 1997, insisting that they get 1 percent of their total power from sources such as solar, geothermal or wind power by 2010.

In 2001 the state toughened the standard, making the requirement 15 percent by 2013. This year lawmakers raised the demand to 20 percent by 2015.

Along with those overall goals came annual targets that, despite years of trying, have yet to be met. Regulators, power-plant developers, consumer advocates and utility executives cite a series of well-documented problems that have stalled the process -- economics and Enron Corp. among them.

Despite the problems, none is prepared to concede defeat. That resolve has been shored up by the painful fact that fossil-fuel-generated power is getting expensive, very expensive.

Nevada Power Co. in June asked state regulators for $62 million in rate increases. Last month the $62 million increase was approved by regulators, pushing the average residential customer's monthly electric bill higher by $4.63, or 3.7 percent. The culprit was the soaring price of natural gas, which powers most electric utility plants.

Despite the increase, utility executives and state analysts concluded that because of continued increases in natural gas prices Nevada Power's request was short by as much as $85 million.

"We are at a point where we can't put all of our eggs in one basket," Public Utilities Commission Chairman Donald Soderberg said of the need to diversify the energy landscape. "If we are not preparing for the next decade now, we are going to be in even worse shape."

Nevada Consumer Advocate Adriana Escobar Chanos agreed.

"I think people are really starting to understand that it's essential," she said. "There's just no ignoring it anymore."

High standards

Nevada's renewable energy mandate has been hailed as one of the nation's most aggressive, and advocates claim it's fitting since the state is rich in sunshine, wind and, in Northern Nevada, geothermal energy.

As unstable fossil fuel markets rattle consumers, it has made Nevada's early move toward renewable energy seem prescient.

Statistics from the National Renewable Energy Laboratory in Golden, Colo., indicate that the national average wholesale price utilities pay per kilowatt hour for wind power is between 3.5 cents and 5 cents. Geothermal is about 8 cents per kilowatt hour, as are large-scale, turbine-powered solar power plants. For photovoltaic power -- generated through solar panels -- the price is 20 cents to 25 cents per kilowatt hour.

The price Nevada Power pays for its power is 5.2 cents per kilowatt hour. That price excludes general rates, which cover administrative costs and those for building and maintaining transmission systems.

As international markets such as China and India increase demand on fossil fuels and environmental concerns limit exploration of additional natural gas resources, the price gap is expected to close between traditional electric generation and renewable energy.

"We would argue that the cost of renewables, no matter which form, is going to be more predictable because the cost is almost all capital," NREL spokesman George Douglas said.

Predictable costs

Experts say that while long-term economic factors point to continually rising fossil fuel prices, renewable power costs could fall as increased use leads to improved manufacturing conditions and better technology.

Douglas said limited manufacturing activity for solar cells, accompanied by growing demand, has kept prices high.

"That's going to break," he said, pointing to companies gearing up production levels. "At some point, the lines (between traditional power generation and renewable power) are going to cross."

Tim Carlson, a former economic development executive who is trying to develop renewable power plants, agreed that the lines will cross, but only if the current situation remains unstable. Moves toward renewable power in the late 1970s and early 1980s stalled when energy prices stabilized. It's that uncertainty that adds to hesitation as renewable plants are slow to take shape.

"It's all going to be a matter of economics," Carlson said. "If it stops because of some quirky thing, it's going to be a problem."

There's no denying that progress has been slow. Nevada Power failed to meet its first two incremental goals. The company is working with regulators to establish a compliance plan to meet the standards in the future.

"It's going slower than we would like it to proceed," said Roberto Denis, vice president of energy supply for Nevada Power and Sierra Pacific Power Co. in Reno. "The reasons lie, possibly, in many quarters."

When the state made its first update to its renewable requirement in 2001, it coincided with a major meltdown in the state's utility industry. The fallout of the Western energy crisis and a heated legal battle with energy trader Enron left Nevada Power in financial trouble.

That, developers argued, put the brakes on renewable power plants that are financed based on power purchase agreements with the utility. A deal with a junk-rated utility was worthless to a developer's financial backers.

"We tend to forget about a power company that went into the toilet, so to speak," Carlson said. "If things hadn't happened the way they did, I think we'd be further down the line."

Denis also points out that developing renewables is not as simple as throwing up a windmill. He said wind steady enough to harness for power, while prevalent in Nevada, is often located in remote areas.

"That means there are no roads, no people and no electric infrastructure," he said. Without transmission lines, the power is useless, and running lines solely for the wind generation is expensive, ultimately pushing the cost of power to unreasonable levels.

Then there's the availability of the power once the plant is built. Most renewable energy is not considered baseload power, meaning that it is not always available. Wind power is only available when the wind is blowing, and solar power is only available when the sun is shining.

Such shortcomings could require the utility to maintain backup supplies from traditional sources. Douglas said that such issues could be overcome by placing -- in the case of wind power -- wind farms in several locations.

"The wind is going to be blowing somewhere," he said.

Denis said it's those types of calculations that are being made now.

"It's trying to come up with a combination of renewables and whatever we have to do when the sun isn't shining and the wind isn't blowing," he said. "It's doable. It is not unreasonable to think that we can come up with the resources we need to shore it up."

Economic engine

Beyond the need to diversify the electric supply, Nevada economic development officials also have their eye on the potential jobs that renewable power could generate.

In July, North Carolina-based Solargenix Energy LLC received more than $15 million in incentives from the Nevada Commission on Economic Development for its proposed solar energy power plant in Boulder City.

The commission granted the company about $6 million in sales and use tax abatement incentives for the $106 million in equipment needed to build the 350-acre, 65 megawatt power plant. Solargenix also received $9 million in property tax abatement through a program created by the 2003 Legislature to promote renewable energy development.

The company secured a lease with Boulder City in 2003 to build the plant.

The plant could generate enough power for 18,000 hotel rooms in Las Vegas, Solargenix Executive Vice President Jeff Myers told the Commission on Economic Development in July.

Myers also said the plant's development would begin within "the next several months" and it should be operational by early 2007.

Tim Rubald, interim executive director of the Commission on Economic Development, said the Solargenix plant could be the first step in a booming Nevada industry. He said the commission has, in recent months, talked with several companies in the renewable energy industry about setting up in Nevada. Those companies are expressing interest in manufacturing everything from windmill blades to turbines.

He cited comments by Lt. Gov. Lorraine Hunt, who heads the commission, describing Nevada as the "Middle East" of renewables.

Finding the right spark to get the industry rolling has not been easy.

"I wish I knew what the silver bullet was for the starting gun," Rubald said.

Kevin Rademacher can be reached at 259-4069 or at kevinr@lasvegassun.com.

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