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As we succeed in closing coal plants, utilities argue that natural gas and transmission lines are the next best alternatives. But events this summer show the folly of doubling down on fossil fuels instead of investing in Idaho’s clean energy resources.
Idaho: Intertwined with the Western Grid
Idaho’s electric grid is not a stand-alone thing. To various degrees, we are interconnected with all of western North America. Our deepest connections are to coal plants in Wyoming and Montana and wholesale electricity markets centered on Columbia River hydroelectric dams.
Idaho has some natural gas plants, but the fuel is also part of a regional market stretching from western Canada to the Rocky Mountain states. Further, regional gas prices greatly influence wholesale electricity prices as utilities use gas to generate electricity. As a net importer of electricity, Idaho relies completely on other states for natural gas. So changes in the regional electricity and gas markets can have a big impact on Idaho’s energy prices.
Right now, some nearly unprecedented events are affecting Idaho’s energy system. The bottom line is that Idaho’s best bet is to transition from out-of-state fossil fuels and invest in our own clean energy resources. Here’s why.
Heat Wave Spikes Electricity and Gas Prices
From Alberta to Texas to California, western North America is experiencing a prolonged heat wave. At the same time, the natural gas system is under stress due to pipeline issues and drained gas storage facilities.
While the common assumption is that natural gas is plentiful and cheap, that is not the case. A Reuters article clarifies, "Electric prices in some U.S. western markets rose to their highest in more than four years as power generators compete for dwindling natural gas supplies to keep air conditioners humming as a heat wave bakes much of the region."
This matters because Idaho’s utilities rely on these wholesale markets to meet our energy demands. And our utilities intend to increase this reliance as they pursue projects like Idaho Power’s Boardman to Hemingway transmission line.
By contrast, solar and wind projects do not experience the same extreme price volatility. Instead, these projects are typically structured as fixed-price, long-term contracts. So the more a utility relies on these resources, the less exposed we all are to volatile fossil fuel markets.
Coal: Not Reliable But Lights Stay on Anyway
As the same time that regional demand is spiking prices, one of the largest coal plants in the West, Colstrip in Montana, has been offline for at least the past month. The plant operator, Talen Energy, has not been running two of the four units at Colstrip this summer because of scheduled maintenance. Talen shut down the remaining two, which are co-owned by Avista, to avoid violating air quality standards for mercury and air toxics because the pollution controls are not working. The important point here is that, despite Colstrip being offline during this heat wave, Idaho has had no reliability issues. In simpler terms, without Colstrip, the lights stay on just fine.
But what about the price for replacement power? Well, that’s more complicated. Avista reports that it is using the wholesale market to fill the void. And above, I explained that wholesale prices are spiking. Because those prices change by the hour, prices are likely low if Avista buys any time other than the middle of the day. On the other hand, if Avista buys during the midday spike, then prices could be several times higher.
But betting on the market is a poor long-term strategy. Instead of hoping that giant, outdated coal plants operate and betting on the market if they don’t, Idaho’s utilities could instead invest our dollars in energy resources we actually have in Idaho – solar, wind and geothermal.
So Now What?
By working together, we can accelerate this transition. For now, the best thing is to be conscious of your electricity use. Air conditioning drives the stress, so learn how to stay cool while avoiding fossil fuels.
This fall, Idaho’s utilities start the next round of planning for new power sources. Typically, utilities like fossil fuels for two main reasons:
- They don’t have to bother with predicting the output of wind or solar. Instead, they just turn the power plants up or down as they wish.
- Utilities pass fuel costs onto you, the customers. So whether they forecast the price right or wrong doesn’t really matter. We customers make up the difference.
During the planning process, ICL will disagree with these reasons for staying with fossil fuels, emphasizing the folly of this strategy. We will establish that it’s better for our state to invest in local, reliable and fixed-price sources like solar and wind. We are confident in this path because prices for these clean energy sources outcompete fossil fuels without factoring in the price volatility differences. For example, Nevada’s NV Energy announced that it received bids for solar at less than $30 per megawatt hour. Meanwhile a typical price for natural gas is $50 to $60 per Mwh.
You can help by signing up for ICL’s Energy News (see upper right corner) and joining our energy superhero team. Every day you can make simple choices at home to use energy wisely. And this fall, we will call on you to tell our utilities and regulators that Idahoans want to invest in local, clean, reliable energy – not continue the folly of fossil fuels.