Wind and Natural Gas: Best Friends, Worst Enemies

Mike Boughner, manager of generation control and dispatch for Xcel Energy in Denver.
National Journal
Amy Harder
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Amy Harder
Nov. 24, 2013, 10:29 a.m.

DEN­VER — Man­aging wind power makes fly­ing a kite look easy.

Wind usu­ally blows the most between 1 a.m. and 4 a.m. when people need elec­tri­city the least. But every now and then, the weath­er gets sur­pris­ingly windy at oth­er times. That’s when a hand­ful of people on the 10th floor of a down­town Den­ver of­fice build­ing sud­denly get very busy.

“They’re really scram­bling dur­ing that time frame,” said Mike Bough­ner, Xcel En­ergy’s man­ager of gen­er­a­tion con­trol and dis­patch, while giv­ing a re­cent tour of the com­pany’s “trad­ing floor,” where traders buy and sell elec­tri­city and oth­er em­ploy­ees man­age the power of the com­pany’s en­tire elec­tric-grid op­er­a­tions throughout the West­ern and Cent­ral U.S., 24 hours a day, sev­en days a week. “They’re call­ing all the plants, both nat­ur­al gas and coal, and telling them to back down as fast as they can.”

This happened one re­cent Tues­day — which just happened to be Elec­tion Day — be­cause it got much win­di­er dur­ing the day­time than both the pair of met­eor­o­lo­gists and ad­vanced fore­cast­ing sys­tems em­ployed by Xcel En­ergy had pre­dicted.

“This week has been a very un­usu­al week on our Col­or­ado sys­tem for wind,” said Eric Pierce, Xcel’s man­aging dir­ect­or of power op­er­a­tions. “There have been some chal­lenges.”

The chal­lenges Pierce speaks of get at the heart of what is one of the biggest obstacles fa­cing wide­spread ad­op­tion of wind power: its in­her­ent in­ter­mit­tency. The wind blows only some­times (and some­times it blows too much). By con­trast, you can al­most al­ways rely on a steady source of coal, nat­ur­al gas, or nuc­le­ar power.

“We’ve asked a lot more of our units over the last three or four years and the people op­er­at­ing the grid,” Pierce said. In­deed, Xcel has been in­creas­ing its mix of wind power over the last few years largely be­cause of Col­or­ado’s re­new­able port­fo­lio stand­ard and sup­port­ing fed­er­al tax policy — namely the pro­duc­tion tax cred­it, which is sched­uled to ex­pire at year’s end.

Xcel is now the coun­try’s largest wind-elec­tri­city gen­er­at­or with roughly 12 per­cent of its pro­duc­tion com­ing from wind (the coun­try as a whole gets about 3.5 per­cent of its elec­tri­city from wind). Al­most half of Xcel’s port­fo­lio is coal and 25 per­cent is nat­ur­al gas, which mir­rors the na­tion­al mix.

“For a peri­od of time we were driv­en sig­ni­fic­antly by the state re­new­able port­fo­lio stand­ard,” said Dave Eves, pres­id­ent and CEO of the Pub­lic Ser­vice Com­pany of Col­or­ado, an Xcel sub­si­di­ary that is the state’s largest util­ity. “In the last few years the wind has been ad­ded and sol­ar too, strictly based on eco­nom­ics.”

On that windy Elec­tion Day, Xcel’s grid sys­tem in Col­or­ado, which is less con­nec­ted to oth­er elec­tri­city grids in the coun­try com­pared with oth­ers, had to turn down its gas and coal plants as soon as pos­sible so as not to over­load the sys­tem.

This is where nat­ur­al gas comes in, which can be turned on and off more quickly than coal and nuc­le­ar. It’s also cheap­er than nuc­le­ar and clean­er than coal.

Point­ing to one of many large screens in the room, Bough­ner said: “This shows the flex­ible gas-fired com­bus­tion tur­bines that the op­er­at­or uses to fill in the gaps and re­spond to vari­ab­il­it­ies in the wind.”

In ad­di­tion to nat­ur­al gas, Xcel also uses a hy­dro­elec­tri­city dam in the nearby Rocky Moun­tains as backup power to wind, which in a round­about way is ac­tu­ally powered by wind. But nat­ur­al gas is the primary source used by Xcel — and the coun­try — to use when the wind dies down.

These two en­ergy re­sources have long been con­sidered a good match on the grid, and Xcel En­ergy is on the fore­front of test­ing the bound­ar­ies of this re­la­tion­ship. Un­til tech­no­logy of­fers a way to store re­new­able en­ergy on a wide scale, wind needs nat­ur­al gas.

“We’d have black­outs,” Bough­ner said when asked what would hap­pen if Xcel didn’t have nat­ur­al gas to back up wind. “We would def­in­itely have events where we would have to shut off the lights.”

But wind helps nat­ur­al gas, too, in dif­fer­ent ways. It has no car­bon emis­sions, which helps util­it­ies com­ply with stricter en­vir­on­ment­al rules and com­bat glob­al warm­ing. It also has a cost be­ne­fit. Even though the coun­try is awash in shale gas and prices are at near-re­cord lows, util­it­ies re­mem­ber that just a hand­ful of years ago prices were five or six times what they are today. They don’t want to de­pend too much on gas.

“We look at wind as a hedge for nat­ur­al gas,” said Eves. “So with some of these low-cost wind farms, that’s the equi­val­ent of lock­ing in a $4.50 gas price for 25 years. It’s an un­be­liev­able hedge.”

Rep­res­ent­at­ives of the in­dus­tries that pro­duce the nat­ur­al gas and wind have of­ten been at log­ger­heads when it comes to lob­by­ing. After all, they com­pete for pieces of the re­l­at­ively stag­nant U.S. elec­tri­city pie. Ac­cord­ing to En­ergy In­form­a­tion Ad­min­is­tra­tion data, wind and nat­ur­al gas are the two fast­est-grow­ing sources of en­ergy in the coun­try.

“It’s the best friend and worst en­emy at the same time,” Eves said.

The in­dus­tries are be­ing friendly as of late. The new pres­id­ent of the Amer­ic­an Wind En­ergy As­so­ci­ation met re­cently with the new pres­id­ent of Amer­ica’s Nat­ur­al Gas Al­li­ance.

“I look for­ward to work­ing with ANGA and oth­ers in the nat­ur­al-gas in­dustry,” said Tom Kiernan in an in­ter­view in Wash­ing­ton last week. “Gas some­times and in some places is a good backup for wind, but there are a lot of times wind doesn’t need back.” He noted that in oth­er places in the coun­try where elec­tric grids are more in­teg­rated than Col­or­ado, oth­er wind-en­ergy sources can also serve as backup sup­plies.

Mean­while, oil and gas com­pan­ies also have pos­it­ive words to say about wind, des­pite the en­ergy boom they’re reap­ing.

“Nat­ur­al gas and re­new­ables is a per­fect mar­riage,” Ted Noble, a seni­or vice pres­id­ent at Noble En­ergy, Col­or­ado’s biggest oil and gas op­er­at­or, said in an in­ter­view in Den­ver. “We have to be able to sup­ply, first of all, af­ford­able en­ergy to our cit­izens, and nat­ur­al gas does that. And then at the same time when get­ting in­to the re­new­ables side of the equa­tion, when you marry those two to­geth­er, one really can’t func­tion without the oth­er.”

The next few months will be es­pe­cially pivotal to the wind in­dustry as it fights to pre­serve the pro­duc­tion tax cred­it. Eves said that if the tax cred­it ex­pires, wind may not be able to com­pete as well with nat­ur­al gas.

“It would have an im­pact on the cost of wind in the coun­try,” Eves said. “It de­pends on how the cost of wind without the PTC com­pares with nat­ur­al gas.”

That’s when nat­ur­al gas might go from wind’s best friend to worst en­emy.

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