Even as TVA is having to spend several hundred million dollars in clean-up costs from the toxic coal ash spill in Kingston, it's also facing hundreds of millions in additional outlays to comply with federal renewable energy standards that Congress is likely to impose this year.
These standards would require electric utilities including TVA to generate up to 20 percent of their power from renewable sources such as solar, thermal, wind, and biomass. President Obama has called for a 10 percent renewable requirement by 2012 as a stepping stone toward a 20 percent requirement by 2020.
The primary objective is to reduce emissions of carbon dioxide (CO2) and other greenhouse gases that are believed to be contributing to global warming. Unlike pollutants such as NOx and SOx which TVA has invested $1.5 billion over the past decade to curtail, there is no technology for suppressing CO2 emissions from a fossil fuel plant. So the only way to reduce them is by requiring or inducing power companies to switch to alternative sources of energy.
It's not that TVA has been sitting on its hands in addressing the need to do so. On its own initiative, TVA has set a goal of generating more than 50 percent of its electricity from clean and renewable energy sources by 2020. (Presently, coal-fired power plants account for upwards of 60 percent of TVA's 33,000 megawatt generating capacity; its three nuclear plants, about 20 percent; and hydro from its dams, most of the rest.)
A second nuclear unit at Watts Bar that's due to come on line in 2013 will add 1,300 megawatts of what TVA considers to be clean generating capacity. And the contemplated completion of a long-mothballed nuclear plant at Bellefonte could add enough by 2020 to just about meet the 50 percent goal.
However, validly or not, the renewable energy standard legislation pending in Congress doesn't count nuclear—or existing hydro for that matter—toward meeting its requirements. So TVA has begun taking steps toward acquiring solar and wind power.
Under a program known as Green Power Switch, it's already offering to pay 15 cents per kilowatt hour for solar and has gotten about 15 takers from rooftop panel installations. But these only add up to about .3 megawatts of capacity that's neither reliable nor economic—unreliable because it's only available when the sun is shining, uneconomic because the price is nearly three times TVA's wholesale power rate yet well below the cost of solar generation. The 27 megawatt capacity of a Buffalo Mountain Wind Farm in Anderson County is somewhat larger but still only a baby step in TVA's overall scheme of things.
Last fall, TVA took a bigger step by soliciting proposals for 1,000 megawatts of renewables at prices to be negotiated with suppliers. TVA Vice President Joe Hoagland reports that more than 60 responses are now being evaluated of which more than 20 were for solar, including a proposed 1.2 megawatt installation atop the Knoxville Convention Center. Hoagland says it's premature to estimate how much renewable capacity TVA will gain or at what cost.
Where solar is concerned, he says, "It's probably going to get more cost competitive over the next few years, but the downside is its lack of reliability, which means you've got to have some other source of power to back it up."
In any event, to meet Obama's goal of 10 percent renewable generation by 2012 let alone 20 percent by 2020, it seems clear that the bulk of the power is going to have to come out of the ground rather than out of the air. That means biomass, whether in the form of crops such as switchgrass grown specifically for this purpose or from residue such as shavings from sawmills.
Hoagland reckons that TVA's steamplants can be retrofitted to burn up to 10 percent biomass in conjunction with coal. "Once you get above that, the plants don't work well," he says. While there's debate about how much CO2 a switchgrass-fired boiler emits compared to coal, it's considered to be renewable not only because switchgrass is a perennial crop but also because it consumes at least as much CO2 when growing as it emits when burning.
A study by a team of UT agricultural economists estimates the cost of TVA steamplant conversion at $277 million, and Hoagland says, "That sounds reasonable." The study further assumes that it would take 6.8 million tons of cellulosic material a year to meet a 10 percent standard and that the material would be cost competitive with coal. But it doesn't even address what it would take plant-cost wise, materials wise, or otherwise to get to a 20 percent renewable standard.
Assuming the entire difference would have to come from burning biomass suggests hundreds of million in additional plant costs and a dramatic change in the landscape of the region to grow some 20 million tons a year of material to feed them.
Using switchgrass as a benchmark, projected yields of 10 tons per acre would mean committing 2,000,000 acres of farmland to growing the feedstock. So there could be an economic boon in terms of jobs created producing and transporting all the feedstock.
The greater economic impact of renewable energy standards, though, could be in terms of power costs. While Hoagland won't engage in "rate speculation," he does acknowledge that, "It's certainly going to cost more."