Human

Wyoming billionaire & renewables profits

 By Nicholas Newman

The American states of California and Wyoming couldn’t be more different. For instance, the state of California has the largest economy in the US and has set a target of cutting greenhouse gas emissions by 40 percent from 1990 levels by 2030. In practice this means it plans to get half of its power from renewables as soon as 2030. In contrast, Wyoming has the 49th smallest state economy, a population of just 0.5 million and is dependent on coal…

These two very different states, will soon be connected by fossil fuel billionaire Philip Anschutz, who plans to build a 3,000 MW wind-power farm on his ranch in Wyoming and export the power to California through a new 730-mile HVDC (High Voltage Direct Current) Transmission line. “At 3,000 MW, the full Chokecherry and Sierra Madre Wind Energy Project (CCSM Project) is projected to produce 10.5-12 million megawatt-hours per year of clean renewable electricity,” states Kara Choquette, Director of Communications, at Power Company of Wyoming LLC.

Market

California is the world’s 6th largest economy and its power market is commensurately large peaking at around 261.2 megawatt hours during the working week in 2014. See Figure 1. With demand for power exceeding supply, California is forced at times to import power from adjoining states and Mexico, according to the grid operator, California ISO.

Figure 1

The contribution of power imports to local supply rose from 25 percent in 2010 to 33 percent in 2016. Nevertheless, California leads the US with the highest number of annual outages – 470- compared with just 160 in booming Texas. For Californian stakeholders, the solution to filling the gap between supply and demand is not about investing in extra generating capacity. But rather, it is about a dash to renewables and how to get the required capacity, affordably and reliably. Investor, Philip Anschutz is betting that he has the ‘magic source for a profitable solution and meet California’s ambitions’. An analysis of the state’s energy mix in 2016, as seen in Figure 2, shows that sustainable, energy sources already made up 41.5 percent of the state’s energy mix. However, a significant 31 percent made up of solar ( 9.6%), wind (6.9%) and Hydro ( 14.5%) are vulnerable to weather conditions. The intermittency of solar and wind is exacerbated by reliance on hydro which, is itself just recovering from a 5-year drought that only ended last winter, reports the USGS April 2017. Reliable natural gas contributes the lion’s share at 49 percent backed up by clean nuclear power which accounts for just under 10 percent of California’s electricity.

Figure 2

Californians are paying a high price for the state’s switch to renewables. On albeit, rare occasions, electricity prices have spiked nearing $200 per megawatt hour reports the San Diego Union-Tribune. This adds up to “$171 billion in higher costs for power over the last 20 years compared to the national average” reported Forbes magazine in April 2016. The cost of new wind and solar capacity has fallen by a third and 80 percent respectively in the last decade making these an obvious choice to meet California’s ambition to supply at least 50 percent of its power needs from renewable sources by 2030. Yet, this makes the system vulnerable to the intermittency problem without advances in battery storage, demand management and imports of renewable power. This situation provides an opportunity for a two-part, out-of-state solution.

The $5 billion CCSM Project is a practical response to California’s climate policies and power shortages. Soon to be built on Anschutz’s 320,000-acre Chokecherry Overland Trail Ranch (COTR), it took his company, Power Company of Wyoming and TransWest Express LLC eight years and cost $100 million to gain the requisite project authorisations. As a result, the first turbines are due to come online in late 2018 and the last by 2022. The farm’s wind energy will be transported in a long distance HVDC power line stretching from the ranch in Wyoming across Colorado, Utah and Nevada where it will connect with the Californian grid network, just south of Las Vegas, before supplying the Californian grid with power for over one million homes and businesses. See Figure 3.

Figure 3

The CCSM Project will occupy just 849 acres or 1.1 percent of the acreage belonging to the ranch where, cattle ranching and agricultural operations, will continue. The wind farm’s one thousand 262 feet high turbines will be placed at an elevation of 6,000 plus feet in Wyoming’s Carbon County where the wind potential ranges from “excellent,” “outstanding” and “superb” according to the National Renewable Energy Laboratory data. With these advantages, Choquette asserts: “this wind project will offer cost-competitive renewable electricity to utility customers in the Western U.S… ” The proposed TransWest Express (TWE) 600 kilovolt HVDC transmission line (TWE Project) will be 730 miles long with a typical right-of-way width of 250 feet. It starts at Anschutz’s Wyoming ranch and connects with the Californian grid at a substation on the Nevada side of the Californian border, just south of Las Vegas. Two-thirds of the entire 725-mile overhead line would be on federal or public land. See Figure 4. At each end of the transmission line, there will be a converter station 200 acres in size. Installing the pylons will be a real challenge in such difficult terrain.

Figure 4

What are the challenges faced in Wyoming?

As with all energy projects, their impact on the environment and animals has to be identified. Consequently, the CCSM Project required extensive research into the local habitats of rare birds such as the Sage Grouse and Eagles to guide the formulation of environmental and protection plans for resident local wildlife. For example, the Sage Grouse took four years research since, even killing one by accident, counts as a felony. Wind farms in the US have paid large fines for killing these protected birds. Many of Wyoming’s state lawmakers appear to deny that climate change is a real threat or that human and industrial activities are a major contributor to global warming. Wyoming is the only state in the U.S.to tax wind energy generation at the rate of $1 per megawatt-hour and there is talk of raising this tax. Nevertheless, final approvals of the CCSM project were awarded in January 2017.

What challenges await in California?

It is natural for Californians to try to keep and grow renewable jobs in the state but the prospect of much cheaper power has eclipsed such concerns. Getting approval for any energy project is a common hurdle. For example the TWE project, as a new interstate transmission line needed approval from federal agencies as well as the states that it crossed, unlike a pipeline, where there is just one single federal lead agency in charge, the Federal Energy Regulatory Commission. Another potential hurdle is that some Californian lawmakers and environmentalists groups, such as the Sierra Club, feared that coal-friendly Utah and Wyoming could use new interstate grid projects to supply “dirty” electricity, not only undermining the state’s climate and clean energy policies but also increasing climate pollution across the West. Timing is everything in life and this ambitious project, conceived more than eight years ago, might just be a little late. There are growing doubts as to whether such a project will be needed given rapid advances in energy efficiency, demand- side management, behind-the-metre distributed generation and on-site renewables. Also, California’s energy supply continued to rise even after the onset of the financial crisis and recession in 2008 leading, on occasion, to dumping surplus power on adjacent states or switching off power generation. See Figure 5.

Figure 5

According to official estimates reproduced in the Los Angeles Times 2017 , the state’s power plants are on track to produce at least 21 percent more electricity than required by 2020. This is a conservative estimate since the figures exclude the soaring production of electricity by rooftop solar panels. Given this supply and demand picture and expression of doubt in importing Wyoming based wind power by the office of California’s Governor, Jerry Brown, to the Western Electricity Coordinating Council ( which oversees grid reliability) there is currently no guarantee that the state will buy the project’s wind power.

What are the benefits for Wyoming?

According to Power Company of Wyoming LLC, (PCW) the wind farm will create between 300-400 construction jobs during the two-year pre-installation phase. Installation of the wind turbines will give up to 1,200 jobs and once the project is up and running, there should be at least 114 permanent jobs. There will be an economic benefit since, each wind turbine service technician can earn $54,760 a year, the same amount as a local coal miner, and PCW forecasts that joint property, sales, and wind generation taxes will bring in some $780.5 million to Wyoming’s hard-pressed state treasury over twenty years.

What are the benefits for California?

Californians might enjoy lower electricity prices. “Wyoming wind power is likely to bring $5 billion to $11 billion in net benefits to California ratepayers,” claims Choquette. This is supported by the 2016 Integrated Energy Policy Report, from the California Energy Commission, estimating that wind power from Wyoming and New Mexico would cost $21 per megawatt-hour. This is less than half California’s wind power which costs between $43 to $58 and a quarter of the rate for natural gas and solar at around $100 per megawatt-hour reports EcoWatch, December 2016. Imported wind power from Wyoming could strengthen California’s grid stability since the two state’s winds are complementary according to a 2015 study, from the University of Wyoming’s Wind Energy Research Centre. “ Californian winds blow the strongest at night, while Wyoming winds peak in the afternoon and stay strong through the early evening, which is when electricity generation from California’s many solar plants drops off as the sun sets”.

The Anschutz Corporation estimates that its CCSM Project will generate at least 10.5 million megawatt-hours of electricity annually. That is about 6.18 percent of California’s gross system power. When completed, the CCSM wind farm could contribute towards California’s ambition to increase renewable energy’s contribution from 33 percent in 2020 to 50 percent by 2030. It will also help efforts to reduce air pollution and cut carbon emissions from gas power plants. The success of the Anschutz wind-power farm and transmission line project, in gaining the requisite approvals is a major milestone for an individual and for a coal- rich state. However, it is the market that will decide the future of this venture. Meanwhile, other entrepreneurs are waiting in the wings. For example, Warren Buffett’s Berkshire Hathaway, which owns Pacific Power, has pumped billions into developing a wind-power farm and transmission lines designed to bring more than a gigawatt of wind power to the West, enough to power 750,000 homes.

SEE MORE: California’s cleantech revolution by Andrew Burger

about the author
Nicholas Newman
Freelance energy journalist and copywriter who regularly writes for AFRELEC, Economist, Energy World, EER, Petroleum Review, PGJ, E&P, Oil Review Africa, Oil Review Middle East. Shale Gas Guide. https://nicholasnewman.contently.com/