Sunday, May 4, 2008 | 2 a.m.
Proposals to build coal-fired power plants have brought the debate over global climate change home to Nevadans. Coal provides half the nation’s electricity, and a fifth of Nevada’s power, but many people think it’s time to break our reliance on the shiny black rock and start using the sun, wind and heat of the Earth for a new generation of power plants.
Environmentalists say pollution from coal plants will make people sick, ruin the air and harm plants and animals.
Power plant developers say they’re necessary to keep Las Vegas homes and casinos cool and bright, and that renewable energy can’t meet growing power demand in the Southwest without sending power bills through the roof.
But opponents of the plants, Senate Majority Leader Harry Reid among them, say utilities are gambling with ratepayers’ money. The price of Sierra Pacific Resources’ proposed plant near Ely has swelled to $5 billion over the past two years. With Congress poised to levy taxes on every ton of carbon dioxide emitted by power plants, this cheap fuel might not end up being so cheap after all.
Despite protests by Nevadans who live near the proposed plants, their developers are pushing forward with plans for two coal-fired plants outside Ely, in White Pine County. One would generate 1,500 megawatts and the other 1,590. A 750-megawatt plant is planned for the Mesquite area of northern Clark County. The three plants would power 2.8 million single-family homes, producing more than 30 million tons per year of greenhouse gases.
The Sun invited four experts to come to our office and discuss these plans. Two favored the plants, two opposed them. None of the four had ever sat down together.
We asked a few questions but mostly let them talk among themselves. What followed was one of the Sun’s most contentious Sunday Conversations, with a little shouting and a few mild insults. After the camera stopped rolling, they argued on for 20 minutes.
What role should coal play in Nevada’s energy future, and how will that role affect consumers, human health and the environment?
Tim Hay: Nevada has a plethora of renewable resources. As the cost of fossil fuels increases, the cost of most of the renewable fuels — primarily geothermal in the north, some wind in the north and solar in the south — will decrease. Nevada doesn’t need coal power the way other states do.
Roberto Denis: If we’re talking about resources within the state, we do not have nuclear power, we do not have any hydro. Nevada is the poor cousin in the West with regards to the amount of coal power that it has. Utah, for example, gets more than 90 percent of its electricity from coal. We have about 20 percent coal. We have a bounty of renewables to tap, but even that is not sufficient. And since 2004 we will have added 3,800 megawatts of gas-fired power. (A megawatt is enough power for about 750 single-family homes.)
Lydia Ball: Nevada does not have coal supplies. So not only will we spend money on these increasingly expensive coal plants, but we are also going to be spending money on the shipment of coal to Nevada.
Denis: Nevada does not have gas either, but gets 70 percent of its electricity from that fuel.
Joe Lucas: Nevada is unique. Energy demand across the country is doubling about every 15 years. It’s doubling every six or seven years in Nevada. It’s the fastest growing state in the nation, and because of that Nevada is best served by keeping all the energy options on the table — coal, wind, gas, geothermal — because it is not going to be able to meet the growing demand for electricity even if Nevadans become more energy efficient. Coal must be part of the mix. If not, the demand for reliable electricity will not be met.
Ball: We have 1,500 megawatts of geothermal potential in Northern Nevada. Why aren’t we actively looking at that and spending the $5 billion Sierra Pacific Resources plans to spend building a new power plant near Ely on cultivating geothermal? It meets your criteria for base power, for 24-hour power.
Denis: If we could spend the $5 billion today, and satisfy the needs of the state with renewable energy, that is exactly what we would do. It will take a decade or more to develop 1,500 megawatts of geothermal.
Ball: Your coal plant is not going to be operating now until about 2015.
Lucas: This is not about one energy resource or another. This is about having the right mix. Building a coal plant today doesn’t mean we won’t develop renewables.
Ball: We, too, are advocating balanced energy choices. Only we would like that balance to include more renewables. The state law requiring Sierra Pacific Resources to generate 20 percent of its power from renewables by 2015 should be a floor, not a ceiling. Every presentation I’ve seen from Sierra Pacific Resources only puts that at 20 percent. That’s your goal. Why isn’t it higher?
Denis: Our CEO has said that’s a floor, not a ceiling. However, we have to be realistic about how long it takes to develop geothermal. Our blessing in this state is geothermal, not solar, not wind. Geothermal has steady output and a low cost relative to the other technologies. And, indeed, we should be tapping that. We have a 3,000-megawatt deficit between the current demand and the power generation we own. And the demand is growing by 250 megawatts a year.
Ball: We also have public health issues. There are 140,000 people in the state of Nevada who have asthma, 26,000 of them children. Coal plants exacerbate respiratory problems.
Lucas: Over the last 30 years the incidents of childhood asthma have skyrocketed, while emissions from coal-based power plants have dropped. Air quality is affected by a lot of different things. You’re implying that people walk around with an air mask on that’s connected to the top of a power plant.
Ball: According to the American Lung Association, there are 28,000 deaths per year from power plant pollution.
Lucas: The American Lung Association also says outdoor air quality is 100 times better than indoor air quality and today children spend much more time inside than they do outside.
Denis: If you objectively look at our plans, we are going to build the 1,500-megawatt Ely Energy Center and we’re going to shut down 300 megawatts of facilities at Reid Gardner. Those three facilities, the 300 megawatts at Reid Gardner, are 20 percent the size and emit more regulated pollutants than Ely will. So aren’t we cleaning up the air by doing that?
Ball: We can do more. There are other ways of meeting our energy demand.
Denis: Our strategy is to do as much energy efficiency and conservation as possible. The cleanest kilowatt is the kilowatt that’s never produced. The second leg of the strategy is to either purchase or invest in renewables. Then the last is conventional fuels. We use a significant amount of gas already. It’s not an issue of wanting to do renewables, it’s an issue of reliability. Because renewables are all capital investment, on which we earn a profit, we stand to profit more from renewables. The issue is, can we do it fast enough to keep the lights on?
Ball: But if you start now ...
Denis: We have started now. Just because we build these gas plants now and we build this coal plant now, they don’t displace renewables. By the time we build those plants a lot of the existing plants are going to be taken out of service. What’s going to replace those? Renewables are going to be a big part of our future. It cannot be done within the time frame that we need the power to keep the lights and the economy in this state going.
Hay: And what’s the time frame for the Ely Energy Center?
Denis: Currently we have filed with the Public Utilities Commission for 2015, 2016.
Hay: And what will coal cost when that plant comes on line?
Denis: We haven’t finalized those plans. We won’t file final numbers with the commission until early 2010.
Hay: Peabody and other coal companies anticipate coal prices will rise 70 to 100 percent over the next couple of years. Your own estimates for the cost of the plant have gone from $3 billion two years ago to $3.8 billion a year ago to now more than $5 billion if construction were to begin today.
Lucas: There’s a study done by the Cambridge Energy Research Associates out of Boston. They looked at the cost of building all new generation and found that because steel, cement and other things have gone up in price, the cost of big capital expenditures like power plants (has) gone up. The cost of building new nuclear went up the most. Surprisingly, the cost of building new wind went up the second most, new gas third and coal was actually at the low end, so all boats have risen with the rising sea. Obviously there has been some uptick over the years in coal prices. But if you look at coal historically, the cost of coal has been infinitesimal compared to the cost of other fuels, principally natural gas and oil, and is much less volatile.
Ball: You shouldn’t be comparing it to natural gas and oil, you should be comparing it to renewables, the fuel for which is free.
Denis: What we really should be concerned about is: What’s going to happen to the consumer? Because we’re saying: If the cost of coal goes up and if we have a tax on emissions, then renewables are going to be cheaper in comparison.
Hay: Geothermal is one of your cheapest resources, cheaper than coal. Geothermal plants are isolated from fuel price volatility. So whatever that capital cost is, that’s going to set the ceiling for what the power is going to cost. Wind power has declined in cost 80 percent over the last 20 years. Solar-thermal plants, like 64-megawatt Nevada Solar One in Boulder City, are enjoying a resurgence here, and they provide power at peak usage times, which is very valuable to a company like Nevada Power.
Denis: Do you think that the first gold that was mined in Nevada was cheaper to mine than the gold that is being mined today? The first geothermal finds are easier to find than the last.
Hay: The price of coal is going to go up, and the cost of your proposed coal plant has gone up $1.5 billion in the last two years.
Ball: Joe, you have an advertising campaign about clean coal. You’re spending millions of dollars educating Nevadans, but the plants you’re promoting wouldn’t really be clean coal plants. A clean coal plant, at least in my definition, would remove the carbon dioxide from emissions and store it underground.
Lucas: That’s your definition of clean. That may not be everyone else’s definition.
Ball: Then can you define clean? Because the three companies planning coal plants in Nevada have signed agreements with the state that they will install carbon capture and storage technology when it is commercially viable. When and if that happens, with the emphasis on the if, who’s going to pay for it and how much is it going to cost?
Lucas: It’s an evolutionary process. Do you agree that the use of coal for generating electricity today is cleaner than it was 30 years ago?
Ball: I don’t necessarily agree. It depends on whether you’re talking about carbon or regulated pollutants such as sulfur dioxide and mercury.
Lucas: We decreased regulated pollutants and made the fleet 70 percent cleaner on average.
Ball: We can thank the federal government and the Clean Air Act for that. I don’t think the utility industry can claim they did that voluntarily, and it has constantly broken the Clean Air Act.
Lucas: The industry has invested $100 billion to reduce emissions. Clean coal is an industry term that means using advanced technologies to improve the environmental performance of coal-fired power plants. They are cleaner today than they were 30 years ago, and they will be cleaner 30 years from now than they are today, including the capture and storage of greenhouse gas emissions. We are at 90 percent removal of sulfur dioxide today.
Denis: We have proposed 98 percent removal of sulfur dioxide at Ely.
Lucas: Coal is a cleaner energy resource today and will be used in Nevada and in the United States and around the world for decades to come. We’re investing in the technology to make it cleaner. But coal can’t meet your standard of clean.
Denis: We have this tremendous need in this state. The Southwest U.S., the area from which we can buy power, will have a shortfall in power supply in 2011, three years from now. Do you support our using gas? I’m trying to get to the bottom line of the Sierra Club agenda.
Ball: I think that a natural gas plant can be a bridge to meet demand because it has lower emissions, but we shouldn’t plan to meet our future energy demands with gas or coal.
Denis: I am trying to get at whether the Sierra Club just has an anti-growth agenda and not really a clean agenda or a clean air agenda.
Ball: We are very supportive of a growth agenda in a new, clean energy economy. We have a study that 3,000 jobs could be created in the state of Nevada today if we were meeting our 20 percent renewable standard. And these are good jobs, these are not just janitor jobs at a coal plant in Ely.
Denis: But what’s the cost?
Ball: What’s the cost of installing carbon capture and storage on new coal plants, as you have told the state you will?
Denis: We will install the technology if the commission determines that it is commercially viable and cost-effective.
Ball: But what is the cost of that? Recent studies have shown that we don’t have anywhere to store that in Nevada. So they’re going to have to pipe it out? How much is that going to cost?
Lucas: Do you know how to drive down the cost of all these new technologies? If we go back and do what we did in the early ’80s, when we first introduced the term clean coal: invest in the public-private partnership between the federal government and industry to drive down the cost of developing these technologies. Do you support increasing funding for advanced clean coal technology projects through the federal government?
Ball: I support increased research, but I will not support building a coal plant in Nevada where there is so much potential for renewables.
Hay: Do you know the relative dollar amounts for solar, wind and geothermal compared to clean coal research?
Lucas: If we got 20 percent of our power from new energy resources and 80 percent from another, just to be simplistic, should we spend 80 percent of our research dollars on that fuel we’re using 20 percent of the time, or should we spend 80 percent of our dollars on the fuel that we use 80 percent of the time? There needs to be a balanced portfolio and the portfolio needs to be based upon how we are going to be using those fuels. With renewables, you don’t have the government and the industry partnering together as with coal research and development projects, where 50 percent of funding is from the government and at least 50 percent is from private industry. You don’t have that with renewable projects. It is a 100 percent government subsidy.
Hay: But do you know the relative dollar amounts? Probably 100 to 1.
There are three coal plants proposed in Nevada right now. Do we need three coal plants?
Ball: We don’t need even one of those coal plants. There are other ways to meet the energy demand.
Denis: We proposed the Ely Energy Center. We serve over 90 percent of the electrical load in this state. Two other coal plant proponents say their facilities are the ones that should be built. The Public Utilities Commission said Ely Energy Center, not those other facilities, is needed to satisfy Nevada consumers. We won’t buy power from those other facilities. They will not satisfy the needs of this state. You have to ask the other developers where they will sell their power. We are concerned that the resources of this state be used for the benefits of this state and not for the benefit of others. Any energy production, be it geothermal, wind, solar or fossil fuels, uses environmental resources meant for the public good and we should be wise stewards of those resources.
Hay: Can you tell me how well you’ve done meeting the renewable requirement since it took effect in 1997?
Denis: We have not met the solar requirement. Around 2004 we had 17 renewable energy purchase contracts signed and 11 never performed. The non-solar standard we have met. Where we have not met the standard, it has been because of the failure of some of the independent developers to come through. When we saw two years ago that renewables developers weren’t delivering on contracts, we decided as a company that we were going to build our own. And that’s why we have a whole area in our company dedicated to building nothing but renewables. We’re partnering up with Ormat on geothermal projects and on waste heat recovery plants. We will meet the standard this year.
Lucas: One of the problems of adding renewables to the mix is the lack of transmission lines. As we develop new coal plants we need to build transmission to share with renewables. The problem is you don’t build transmission lines for renewables because you have to back it up with a solid, traditional power source.
One thing we haven’t talked about is congressional action on carbon emissions, a potential carbon tax or cap and trade system.
Ball: We have three presidential candidates right now and all of them have taken some position on a carbon tax or a carbon cap. If this happens, who is going to be paying for this? We build the coal plant now, it doesn’t capture the carbon because we don’t have the technology yet. But we go ahead and build it because we want to build it cheap so we can help the little guy. But in five, 10, even 25 years, how much is it going to cost the little guy?
Who is going to pay, and can’t we assume that the cost of renewables will be more competitive in a decade thanks to technology advancements?
Denis: The consumer is going to pay the difference. We get into these esoteric discussions of carbon and costs. We really need to be concerned about the impact on consumers five years from now.
Hay: There’s no cost volatility with renewables.
Lucas: But they’re not always available when needed.
Hay: Geothermal is. We’re talking about Nevada, more renewables than any other state, more geothermal per capita than any other state.
Ball: There’s also solar. And in the last 30 years we have made strides. We can assume that the price of renewables is just going to decrease because technology will continue to grow. Ausra is a solar energy company that recently located a manufacturing facility in Las Vegas and is able to store solar power for 16 hours now. Soon they’ll be able to store for 24 hours, making solar a baseload fuel.
Denis: Six years ago it cost $900 to build a wind turbine. Today it’s over $2,000. It’s a worldwide commodity. GE can’t keep up, there’s a weak dollar and production is going overseas. Prices will increase.
Ball: We should be building up production facilities and jobs here at home. It makes us less dependent on other countries.
Lucas: What about the jobs related to extraction of coal, gas and other traditional fuels? This is not an either/or proposition.
Denis: Everyone has a bona fide interest in the environment. I think we differ on how to move forward and how to get there. At the end of the day the utility has the responsibility for keeping the lights on and providing clean, affordable, reliable power every time you flip the switch. We can’t shirk that responsibility. All the people around this table don’t have that responsibility. I do and I take it very seriously.
Sun reporter Mary Manning transcribed this conversation.