Energy Future Forum: Surplus Q&A’s 4.0

The following  represent the last of the audience asked questions from the Exploring Our Energy Future Series.  WMEAC is grateful to our sponsors, the amazing panelists, and the wonderful organizations that played host.  We are also very happy that so many citizens, businesses and organizations participated in this series to advance a thoughtful, regional energy discourse.

Q: What would be the cost for coal-produced electricity if all social costs were taken into account?

A: A report was recently published by the Harvard Medical School’s Center for Health and the Global Environment that seeks to answer that very question. A shorter summery of the report and its findings can be read at the New York Times Green blog.  The report’s conservative estimates placed the cost of coal at around one third of a trillion dollars a year, while a worst-case scenario would see the cost at over $500 billion annually. This number includes costs from mining to waste, from wear on railroad tracks to water contamination and respiration problems.

These “external” costs are not reflected in the price of coal, and as, any economist or business man will tell you:  under-priced products are OVER consumed.

Q: Is the natural gas to electricity converter being used at Google showing progress for local electrical generation?

A: Google, along with Wal-mart and eBay, has installed natural gas converters that do not use combustion. Instead, hydrogen is separated from the gas to react with oxygen and produce energy. An article at Renewable Energy compares the cost of this system to other alternative energy sources. However, the cost for one of these converters is quoted as $1,250,000. Until the technology improves and these converters can be made less expensive, they will most likely not be a popular form of electrical generation.

Q: A large amount of electricity can be produced in Michigan via SPV solar panels. But I don’t see any incentive for Consumer Energy and Wolverine Energy to really push this source. 

A:  This is a tough question because we can’t surmise on the internal motivations of consumer’s energy (CE).   However, we do know that CE has a 10% rps goal that they must meet, and it makes sense that they would pursue a balanced portfolio of investments, including solar power, to reach that goal.

Yet, it is also true that CE is gauranteed a (7%) rate of return on it’s capital investments (power plants, windmills, etc.) that it is not guaranteed on power generation, distribution, or transmission.  Ergo, if it does not own the solar installations, then it’s financial return on that solar power will basically only cover costs, and CE will not have a strong profit margin or financial incentive.

That said, DTE energy is pursuing a combination of DTE owned and non-DTE owned solar installations on the East side of Michigan.  Utility owned capital Projects such as these, presumably, could make a handsome return when the kinks are worked out and the Michigan Public Service Commission gives them the thumbs up.

More about CE EARP

Consumers Energy has an Experimental Advanced Renewable Program (EARP) where it will pay customers who produce solar energy to contribute that energy to the grid. The program began in 2009 and will go for 12 years, in which Consumers Energy says it hopes to better gauge the solar potential of Michigan.  Consumers Energy concerns seem to be Michigan’s climate, where limited sun exposure could mitigate solar viability.

Wolverine does not seem to have much interest in solar energy currently, but pending the results of Consumers Energy’s EARP, that could change.

<<Energy Future Forum: Surplus Q&A’s 3.0

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