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Generation Choices

Generation Choices. June 19, 2014 Paul Sukut General Manager and CEO Basin Electric Power Cooperative. Basin Electric History. W hole s al e powe r s upplie r to 13 7 m e m be r syst e ms that serve 2.8 million consumers in 9 states I n c o r po r a t e d i n M a y 1961

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Generation Choices

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  1. Generation Choices June 19, 2014 Paul Sukut General Manager and CEO Basin Electric Power Cooperative

  2. Basin Electric History • Wholesalepowersupplierto137 membersystems that serve 2.8 million consumers in 9 states • Incorporated inMay1961 • 2013:$45.9millionconsolidatednetmargin&earnings; $6.1 billionin totalassets • Powerplantsin ND,SD,WY,IA,MT

  3. We are a Cooperative • BasinElectricexists becauseof and solelyfor its membercooperatives • Weprovidereliable,at-costelectricservice • Weare ownedby theconsumers weserve • Weare governedbya boardof directorselectedfrom themembership • Cooperativebusinessmodelprovidesfinancialstrength andstabilityin uncertaintimes

  4. Our Generation Facilities

  5. Types of Generation • Baseload power is available for 24-7 demand • High-capacity generating plants • Plants cost less to operate when at full efficiency • Intermediate power plants cycle with demand • Operate between 12-16 hours a day when demand for electricity is highest, shut down evenings/weekends • Peakingpower is available when demand is highest • Higher cost to operate, but quick start-up to react to demand changes • Intermittent power is available when supply allows • Cannot be relied upon to react to level of demand www.PoweringOurLives.com

  6. What InfluencesFuel Choice • Capital costs • Operations, maintenance costs • How soon the resource is needed • How quickly it can be built • Capacity factors • Load shape • Existing generation mix • Permitting

  7. Class Activity on Energy Choices • Discuss in small groups what energy resource(s) you would use to meet significant future demands • Choices: lignite, nuclear, hydropower, natural gas, wind, fuel cells and/or solar

  8. Class Activity on Energy Choices Nuclear Hydropower Natural gas Wind Solar Lignite

  9. Nuclear • Advantages • No CO2 emissions • Relatively low-cost fuel • Disadvantages • Large capital cost • Radioactive waste • Almost impossible to solve waste disposal problems through Congress • Last U.S. nuclear power plant licensed in the 1970s

  10. Hydro • Advantages • No fuel cost • Low-cost energy to consumer • No air emissions • Disadvantages • Affects fish and wildlife habitat • Alters the natural flow of rivers • Virtually no resources left to develop(some dams being removed) • Montana’s Yellowtail Dam finished in 1967

  11. Natural Gas • Advantages • Moderate capital costs • Less emissions than lignite-produced electricity • Currently, natural gas is low-priced • Disadvantages • Potential resource adequacy • Costs have been historically volatile • Natural gas sold to electric utilities increased from $2.62 per dekatherm in 1999 to $12.80 per dekatherm in 2008 – currently at about $6.00 per dekatherm

  12. Wind • Advantages • Renewable • No air emissions • Disadvantages • Has intermittent production • Turbines take a lotof space • Equipment aesthetically unpleasing to some and kills birds • Because of intermittent nature, requires back-up generation sources

  13. www.minnkota.com

  14. Langdon Minot Petersburg Wilton Ashtabula Valley City Edgeley Questionon Diversity Hyde Pipestone Chamberlain Crosswind

  15. Wind Comparison (Each site normalized to 1 MW)

  16. Solar • Advantages • Renewable • No air emissions • Disadvantages • Expensive • Intermittent production

  17. Lignite • Advantages • Abundant fuel source • Relatively inexpensive fuel source • Reliable • Increasingly clean • Disadvantages • Low Btu content • High moisture content • Cannot economically rail • New federal emissions regulations cause uncertainty

  18. Classroom Activity • What percentage of the electricity in the United States is generated by:(take one minute to do) • Coal _______ • Nuclear _______ • Gas _______ • Hydro _______ • Petroleum _______ • Renewables _______

  19. Classroom Activity • Coal39% • Gas 30% • Nuclear 19% • Hydro 07% • Other 05% Based on 2012 information from Department of Energy

  20. North Dakota • Average retail price 7.8 ¢/Kwh – national average is 9.8 cents • Power rates are very low because of low-cost coal (79%) generation Coal 82% Source: 2013 Energy Information Administration 6/21/12

  21. Minnesota • Average retail price 8.9 ¢/Kwh – national average is 9.8 cents • Power rates are lower because of coal (46%) and nuclear (21%) generation Coal 82% Source: 2013 Energy Information Administration 6/21/12

  22. Montana • Average retail price 8.2 ¢/Kwh – national average is 9.8 cents • Power rates are lower because of low-cost coal (46%) and nuclear (21%) generation Coal 82% Source: 2013 Energy Information Administration 6/21/12

  23. South Dakota • Average retail price 8.5 ¢/Kwh – national average is 9.8 cents • Power rates are lower because of low-cost coal (46%) generation and hydropower Coal 82% Source: 2013 Energy Information Administration 6/21/12

  24. Iowa • Average retail price 7.7¢/Kwh – national average is 9.8 cents • Power rates are lower because of low-cost coal generation and nuclear power Coal 82% Source: 2013 Energy Information Administration 6/21/12

  25. Wyoming • Average retail price 7.2¢/Kwh – national average is 9.8 cents • Power rates are lower because of low-cost coal generation Coal 82% Source: 2013 Energy Information Administration 6/21/12

  26. This Region Depends On Coal-Based Electricity • Coal must remain a part of America’s future • New technology is required • Time is important • Sharing of risk • Federal • Industry

  27. Importance of Coal-Based Electricity • Affordable, reliable electricity is important to families and businesses • Important for low-income families • Important competitive factor for region’sfarms & businesses • Important economic development incentive

  28. Importance of Coal-Based Electricity • Coal-based industry provides affordable, reliable electricity • North Dakota is one of 7 states meeting U.S. air quality standards • 30 million tons of lignite consumed per year

  29. Challenges of Resource Planning • Regulatory Uncertainty • Each generation source has advantages and disadvantages • Large investments • Generation sources expected to last 50 years or longer

  30. Other considerations • Public wants affordable, reliable electricity • Regulators want economical and environmentally compatible sources • Environmental activists have demonstrated a proclivity to sue • No comprehensive federal energy policy

  31. So as a CEO….I hope you would agree that an “all of the above” energy policy is best!

  32. ???

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