June 17, 2011
Illinois receives 46 percent of its electricity from coal-fired power plants — a cheap source of power but also one of the dirtiest.
With some companies unwilling to pay for scrubbers and pollution controls required by pending environmental regulations, many plants will close. That raises the potential for consumers’ electricity bills to jump 40 to 60 percent over the next few years as more expensive power fills the void.
As a result, policymakers are piecing together legislation to try to keep energy costs from jolting consumers. Efforts could range from pushing to add generating capacity to ramping up underutilized generating plants to rewarding users for reducing their power use, especially during peak times. Wind- and solar-generated power may suddenly grow in importance along with synthetic gas.
What follows is a look at what’s on the drawing board and an examination of possible costs. The prices represented are “levelized costs,” a measure that takes into account the cost of building and operating a generating plant (or in the case of energy efficiency, the cost to reduce power) over the lifetime of the technology. A megawatt hour is roughly equivalent to the amount of electricity 330 homes use in one hour.
What it means: reducing power use through behavioral changes, or automated or technical upgrades without altering the level of service.
Price: $0-$50 per megawatt hour
Percentage of Illinois generation: 1-2 percent reduction in electricity usage.
Benefits: The lowest-cost and lowest-emission option available, energy efficiency is about taking away the need to build more power plants. By ramping up energy efficiency, the ComEd service region could reduce 14 to 23 percent of the electricity that is used today. Jobs would be created through retrofitting buildings to make them more energy efficient.
Hurdles: Today, energy efficiency in Illinois is tied to utility-run programs, but energy savings from those programs are capped by law to prevent rate spikes that can only come with expensive technology investments. So far, utilities have resisted an effort to allow the Illinois Power Agency to procure energy efficiency on the open market. Businesses would compete and get paid to remove electricity load from the grid. Consumers can take steps to reduce the amount of energy they use at no cost. But consumer behavior is difficult to predict and isn’t enough to reach a 23 percent reduction. That kind of savings would require building upgrades, smart-grid technology and other investments.
What it means: Having electricity customers power down at critical times or in response to market prices.
Price: Between $16 and $127 per megawatt day (i.e. companies are paid every day of the year for agreeing to cut back on their electricity every hour of the day during times of peak demand. For every megawatt — enough to power 1,000 homes — they receive $127).
Percentage of Illinois generation: Beginning in 2014, 14,118 megawatts will be available to power down in the PJM Interconnection, the regional transmission system that oversees the electric grid for 54 million customers in 13 states, including the ComEd region of Illinois. That’s like simultaneously turning off the electricity in 14 million homes.
Benefits: Because the most expensive forms of generation kick in when demand is highest, lowering demand quickly during peak times helps lower electricity costs for everyone.
Hurdles: Demand response is only available during certain times of day and year and doesn’t contribute to the base electricity load.
What it means: Combined-cycle plants use gas to generate electricity and make additional electricity from heat produced by waste.
Price: $67-$96 per megawatt hour
Percentage of Illinois generation: 2.32 percent
Benefits: New domestic discoveries of natural gas suggest the fuel should remain cheap and abundant for the foreseeable future, which would keep costs down. Combined cycle natural gas plants have capacity to produce 31 percent of the state’s electricity, but are not fully utilized and are not being tapped most of the time. If their capacity were expanded during off-peak periods, there would be little need for new generation.
Hurdles: Environmentalists aren’t enthusiastic backers of natural gas plants, which pollute about half as much as coal-fired power plants. Illinois has not used natural gas plants for baseload generation because natural gas prices have swung wildly over the years.
Carbon sequestration and capture
What it means: Instead of burning coal and emitting smoke, emissions are captured and stored or sold.
Price: $126-$152 per megawatt hour
Percentage of Illinois generation: 0 percent
Benefits: Known Illinois coal deposits potentially represent a greater energy source than the oil reserves of Saudi Arabia — if the coal can be burned more cleanly. Plants that use carbon sequestration and capture would produce about 1 percent of the emissions of traditional coal-fired power plants. An added benefit would be job creation.
Hurdles: The technology is in its early stages. Few large, integrated carbon capture and sequestration projects exist. In Illinois proponents have asked for government subsidies or guaranteed long-term contracts to attract financial backers. Environmental groups, notably the Sierra Club, have fought all uses of coal because of the environmental and health impacts that come with mining coal and shipping it to power plants, as well as the unknown effect of storing large amounts of carbon dioxide emissions underground.
What it means: Power created through a nuclear reaction that creates the heat necessary to produce electricity.
Price: $77-$114 per megawatt hour
Percentage of Illinois generation: 49.25 percent
Benefits: Nuclear power plants produce zero greenhouse gas emissions and are one of the cheapest and most reliable forms of electricity generation. Chicago-based Exelon Corp., ComEd’s parent, can push more power out of its existing nuclear power plants.
Hurdles: Exorbitant costs to build. Operators such as Exelon say without federal financing and loan guarantees they cannot afford to build new nuclear plants. It costs $5,283 per kilowatt to build a new nuclear plant, more than five times the cost to build a natural gas plant. Also, a national depository for storing radioactive nuclear waste has yet to materialize. Japan’s nuclear crisis has heightened safety concerns and anti-nuclear sentiment.
What it means: Energy generated by wind turbines.
Price: $65-$173 per megawatt hour (the upper end includes power produced by turbines in the Great Lakes)
Percentage of Illinois generation: 1.45 percent
Benefits: Illinois is a windy state and last year was second only to Texas in adding wind turbines. Illinois boasts more than 100 companies with more than 15,000 employees involved in wind power. Chicago is home to at least 13 global or U.S. headquarters of major wind power companies. Wind turbine projects add significant tax revenue to rural communities and provide a steady stream of income to farmers whose land is leased for turbines and transmission lines. The turbines do not pollute the air.
Hurdles: Opponents complain of sleep problems, anxiety and vertigo from the whirling blades and their shadows and noises. Because wind projects require a lot of space, they’re often placed far from the urban centers that need power. That means building transmission lines to the turbines can be costly and difficult. Illinois has a significant backlog of projects trying to get approval and financing to hook into the grid. Wind is inconsistent and most often blows at night when it is needed the least. Engineers are looking for ways to store such power so it can be dispatched when needed.
What it means: Harnessing the sun’s rays to create electricity.
Price: $134-$188 per megawatt hour
Percentage of Illinois generation: 0 percent
Benefits: Sunlight is abundant at exactly the time of day when power is most needed and doesn’t produce air pollutants. Costs also are declining rapidly. Solar power also is cheaper to dispatch at the peak of demand than gas-fired peaker plants.
Hurdles: Too inconsistent and costly to be counted on as a baseload power. Like wind, solar projects requires a large amount of space — land or rooftops — to produce enough electricity to power millions of homes. Hooking up the panels to transmission lines can be expensive.