Over the Hill:
Transitioning from Oil to Renewables, A
Development Perspective
Dr. Roger Coupal
Professor and Head
Department of Agricultural and Applied Economics
Making a Transition –
Policy Challenges
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Moving from a fossil fuel-based energy economy to renewable
energy economy.
• “Oil, coal, methane is densely packed with energy, easily
transported and stored, and efficient at releasing its energy
in modern engines.” – Robert Kauffmann, BU
A coal mine or oil field, yields >5-50x power per sq. m than a solar
facility, >10-100x than a wind farm, and 100-1000x than a biomass
plant.
Continuity of supply is a big issues as well.
Transitioning in a pre-fossil fuel ‘peak’ environment requires a
long-term vision.
What policy options will allow us to overcome technological
inertia and the quality shortcoming of renewables?
Concepts, Transition Costs, and Options
• Volatility in electricity markets
• Opportunities and
complications involving
renewables
• Managing the costs of
environmental externalities
• Policy observations and
options
Wind power potential in the US and Wyoming
• High wind resource
potential
Opportunities
Currently Installed Wind Capacity
Grid Complexity under Renewables – California ISO with
Solar
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short, steep ramps –
The ISO must bring on or
shut down generation
resources to meet an
increasing or decreasing
electricity demand quickly,
over a short period of time;
Over-generation risk –
when more electricity is
supplied than is needed to
satisfy real-time electricity
• decreased frequency response – when less
resources are operating and available to
automatically adjust electricity production to
maintain grid reliability.
Opportunities: Renewable production Correlation CA
Solar and Wind versus WY wind and CA solar
Power plants produce
power at the same time
High correlation
Poor for diversity
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Power plants produce
power at different times
• Low correlation
• Good for diversity
12/2012
07/2012
160
300
Power kW - CA WF 5
Power kW - CA WF 6
140
120
100
80
60
40
200
150
100
50
20
0
250
0
10
20
Power kW - CA WF 1
30
0
0
1000
2000
Power kW - Tower 4
3000
Diversity of Wind Resources -The Impact
Complementary on Annual Basis
0.8
0.6
0.4
CA 2
CA 5
1
0.6
0.8
04/2013
02/2013
12/2012
0.4
4/2013
2/2013
0
2/2012
0.2
0/2012
04/2013
02/2013
12/2012
10/2012
08/2012
0.2
0.6
8/2012
0.4
WY 3
CA Total Wind
6/2012
Capacity Factor
0.8
06/2012
Capacity Factor
1
0
10/2012
0
08/2012
0.2
06/2012
• Wyoming more consistent, but peaks
in the Winter when CA resource low
Capacity Factor
• Complementary monthly production
• CA highest production in Summer,
little production in Winter
WY 1
CA 5
1
Opportunities and Complications
Involving Renewables
Salt Lake City
area, Portland
Seattle
Transmission capacity
and direction all
congested
Denver, Front
Range
Wyoming
Wind
Development
Conflicts
Fiscal linkages to
the energy industry
in Wyoming, Coal,
Oil, and Gas
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Direct funding links
Communities
Public schools
Colleges and the
University
Transportation and
water infrastructure
State General Fund
Budget Reserve
Labor and fiscal Linkages
Managing Environmental Effects
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Source: BLM, 2005
Subsurface (Water)
Surface (habitat)
• Transitioning to other energy
sources does not mean that
clean up is not needed - legacy
issues
• Clean up becomes more
tenuous because old industries
are not making as high a profit
and therefore have less
flexibility for cleanup
• Example: 3,500 abandoned
wells in the Powder River
Basin where reclamation
commitments were not
completed.
(Water quantity and quality)
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Groundwater contamination- Pavillion, Wyoming versus EnCana
USA: Community residents complained that water turned sour and
animals died from drinking it after oil and gas development with
hydraulic fracturing.
Oil company purchase the resource - the
good and the bad”
Lack of baseline and monitoring until too
late. Courts require clear evidence to
assign blame.
State: Implicit Land Condemnation the
State benefited from the development so
they likely need to contribute to a solution.
Assessing market value of land when water
is unavailable or contaminated?
Sub-surface to surface disturbances, Cont
II. Brine and gas eruptions in Southwest Wyoming, 15
miles from brine injection at a coalbed methane
operation
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Brine and methane emission at the surface
Negative impacts on grazing
Potential aquifer contamination
Complicated geology clouds liability
Other Oil and gas cleanup issues
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Invasives and noxious weeds
Contaminated soils
PCB’s, fugitve oil,
Open holes
Compacted soils
Managing the Costs of Environmental
Externalities
• Clean-up costs are tenuous because in
the ‘bust’ industries are not making as
high a profit, some costs are placed on
communities.
• Residents can encounter water quality
and wildlife issues after hydraulic
fracturing.
• Important to establish monitoring
systems to assess market value of
development with and without water
contamination, ownership responses,
and cost of underinvestment in
improvements.
Community engagement
• inventories of resource bases that are important to the
community
• collaborative engagement in working with industry.
• Joint monitoring and sharing of monitoring expenses.