The writer, of Omaha, is president of Transduction Technologies, an engineering firm.
Recently, The World-Herald published a news article and editorial on the current decarbonization study by Omaha Public Power District to determine how soon, how reliable, how affordable and how close the utility can get to decarbonization in the next 30 years. Although informative, I believe the OPPD customer-owner would benefit from additional information regarding both OPPD and the state of the power sector.
It is often assumed that electricity produced by renewable energy is more expensive and less reliable than electricity produced by fossil fuels, i.e., coal or natural gas. Currently, the average price of wind power purchase agreements (contracts for developers to sell wind energy to utilities) is less than 2 cents per kilowatt-hour, making it far cheaper than coal, at 6 to 12.3 cents per kilowatt-hour, or natural gas, at 4.1 to 7.4 cents per kilowatt-hour.
Furthermore, two recent utility scale solar power plus battery storage PPA contracts — one in Nevada in June and one this month in Los Angeles — were signed with an average electricity price of about 3.4 cents per kilowatt-hour. Both contracts were significantly cheaper than natural gas, even without considering environmental impact. The day of renewable and dispatchable electricity is upon us, turning further investments in fossil fuel based generation into stranded assets.
Furthermore, it is often assumed that decarbonization is all about generation. In fact, decarbonization is just as much about the distribution of electricity as the generation of electricity.
Our electrical grid was built almost a century ago to serve large centralized power plants, but the future will incorporate more distributed energy resources across the utility district.
These resources will be smaller, more diverse (fossil fuel, renewable, combined power and heat, thermal storage, batteries, etc.), both privately and publicly owned and operated, and operating at different times of day, seasons of the year and weather conditions.
The future electrical grid must be more intelligent to efficiently direct electricity from distributed energy resources to storage devices to consumers, all while controlling peak demand and avoiding price volatility. The electrical grid must handle both these challenges and increasing electricity demand from electric vehicles, electric heating with heat pumps, more electric gadgets, etc.
Decarbonization will not be achieved without significant investment in our energy infrastructure. OPPD’s distribution and demand costs will drive what OPPD’s customer-owners will see on their utility bill.
It has been reported that the push toward decarbonization of OPPD is driven by the new majority of OPPD board members. Without question, the election of five new board members in the last two election cycles, who were elected on decarbonization platforms, has had an impact. However, seven of the 10 members of the OPPD senior management team have also changed, resulting in a more diverse senior management team than in previous years.
The senior management team was already shifting toward decarbonization due to market forces previous described.
Furthermore, the University of Nebraska-Lincoln Nebraska Climate Impact Study, along with more recent extreme weather events in OPPD’s service area, has persuaded many of OPPD’s customer-owners that a shift toward decarbonization is in everyone’s best interest, and the sooner, the better.