Wind & Solar 'Green Industry' Fantasyland #1

How 'Big Tech's' 100% renewable deception, detached from reality politicians, and the legacy of Northwest hydropower are fueling false hopes of industrial development in Washington and Oregon.

Clean energy policies and related topics are in the news every day, multiple times per day. While some reporting goes deeper than others, a common refrain across corporate media, and from the mouths of so many politicians sounds basically like this:

An “energy transition” is desperately needed to fight climate change, and we must electrify everything; including transportation and industry. But our ‘grid’ is not up to the task and it must be upgraded, modernized, and made more resilient, especially in the face of increasingly extreme weather.

There is no time to waste! We need to take rapid actions to eliminate the use of fossil fuels, and we have the technology to do it; wind and solar farms.

The energy transition is happening, but not fast enough. We all need to get on board. Have no fear. We are heading toward utopia, where energy will be clean, CO2 free, reliable and more affordable than ever. And there will be jobs galore, especially in ‘green industry’.

So what does ‘Big Tech’ have to say about the energy transition and green industry. Well, I recently discovered a great case study when I happened upon the following statements from Amazon’s Renewable Energy Methodology (emphasis added).

“Amazon is on a path to powering our operations with 100% renewable energy by 2025, five years ahead of our 2030 commitment. This includes all Amazon businesses such as operations facilities, corporate offices, physical stores, Amazon Web Services (AWS) data centers, and all financially-integrated subsidiaries that support millions of customers globally.”

Source: https://sustainability.aboutamazon.com/renewable-energy-methodology.pdf

Now contrast Amazon’s claims with the following excerpts from an article published in The Oregonian on February 9, 2024 titled: Amazon will start buying clean power for Oregon data centers (emphasis added).

“Data centers need huge volumes of electricity to power and cool their computers, and the regional utility, the Umatilla Electric Cooperative, now relies primarily on power generated by fossil fuels to meet Amazon’s needs.”

“Amazon said it will buy more than 200,000 megawatt-hours of power annually from a wind farm run by the renewable energy company Avangrid in neighboring Gilliam County. That’s a lot of electricity, enough to power 18,000 homes per year.”

“But it’s only a tiny fraction of the power Amazon’s data centers use. Oregon data shows that Umatilla Electric’s power sales have increased by 5 million megawatt hours in the decade after Amazon began operating in the region, meaning that the wind power may account for as little as 4% of the data centers’ power use.”

Source: My wife Marjean and another weekend collaboration. We should probably go on a date once in a while.

So given the facts on the ground in Oregon, how can Amazon make the claim 100% renewable energy will be “powering our operations” by 2025? Well, it clearly depends on what you mean by powering.

In simple terms, energy is the ability to do work. And power is the rate at which work is being done. So, it’s reasonable to assume “powering” means to facilitate the flow of electricity at the levels required to keep data-center equipment working around the clock, no matter the weather.

Otherwise why would Amazon invest in fossil-fueled backup generators like those installed at one of their data centers in Boardman, Oregon pictured below. Based on Google maps aerial photos, I counted 72 generators at this site.

Source: google.com/maps

This leads to the common-sense question; then how are intermittent-and-variable wind, and day-time-only solar, powering data centers 100% of the time? Of course the answer is they can’t, and they don’t.

Like their colleagues at Apple, Google, Meta, and Microsoft; Amazon is engaging in a deceptive but common marketing campaign to brand themselves as uniquely environmentally virtuous in spite of the unforgiving laws of power grid physics which require minute-by-minute supply and demand balancing.

The way the Big Tech deception works is through a relatively simple energy accounting method, where the megawatt-hours (MWh) of electricity physically “powering” facilities through the use of carbon-emitting plants are offset through the purchase of Renewable Energy Certificates (RECs).

RECs are a ‘paper credit’ produced every time a MWh of wind or solar electricity is delivered to a grid somewhere; even grids located in states or countries other than where the REC purchaser is “operating” their business.

RECs can be sold separately from their associated physical electricity. And it is very common for RECs to be purchased by utilities as a means of complying with state mandated renewable portfolio standards (RPS). This is precisely what the utility I work for has done for many years.

Clearly RECs are significantly improving the financial case for wind and solar projects and depending on the physical location of the grid, they can result in the net reduction of CO2 emissions under the right circumstances.

The problem with Big Tech’s 100% green energy claims is that policy makers, the media, and general public look to what these companies are doing as representative of what is state-of-the-art today; and what we believe may be possible in the future.

And there is just no compelling evidence to indicate a power grid using wind and solar as foundational technologies can provide both affordable and reliable electricity today or into the future, especially when it is clear the world needs more energy, not less.

Just look at the reality in the United States where overly-generous federal and state tax credits have driven hundreds of billions of dollars of wind and solar farm expenditures over the last ten years to get us to the point where these technologies only generate 10.2% and 3.4% of electricity on an annual basis respectively.

Source: U.S. Energy Information Administration

But what's more eye-opening under ‘electrify everything’ clean energy policies, is understanding that electricity represents 37% of total primary energy consumption in the US. Which means electricity generated from wind and solar is currently only doing 3.8% and 1.8% of total work across all sectors of the US economy annually.

Source: U.S. Energy Information Administration; Wind is 29% x 13% = 3.8% and Solar is 14.2% x 13% = 1.8%

Clearly the numbers beg the question, are wind and solar actually capable of driving a meaningful and rapid energy transition? Or are we living in a fantasyland perpetuated by a myopic focus on CO2 reduction and resulting “groupthink” which is defined as:

A process of reasoning or decision-making by a group, especially one characterized by uncritical acceptance or conformity to a perceived majority view.

A majority view requiring an unwavering and zealously communicated support of CO2 emission reductions as the highest of all moral virtues. Particularly among the young in Western societies who have become increasingly nihilistic under the weight of soul-sucking climate catastrophizing dripped into their minds on a daily basis by corporate media, politicians, academia; and yes, Big Tech.

Additionally, “climatism” dogma has clearly branded human flourishing driven by access to abundant, affordable and reliable hydrocarbons as greed-induced sins against nature for which we must now repent and suffer if necessary. Never mind life expectancy in the developed world since the start of the industrial revolution has increased from 30 to near 80 years. Or that humans have never been safer from climate than at any other time in human history.

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So, yes I have a beef with Big Tech’s 100% renewable energy claims, which based on the evidence could be accurately characterized as disinformation. Quite the irony, eh?

Clearly, you don’t have to dig too far to understand Big Tech’s reinforcement of the narrative that part-time wind and solar are state-of-the art, low-cost, and also environmentally benign could not be further from the truth.

Not only does this false-narrative defy common-sense, it is also helping drive out-of-control federal and state spending. And the concentration of limited intellectual and financial capital on what can be objectively characterized as backward looking technologies that are clearly not friendly to the environment in a sober lifecycle assessment of the vast mineral extraction and unprecedented land grabs development of wind and solar farms at the scale being postulated will require.

And what will our industrialized natural landscapes and staggering volumetric waste deliver for our kids and grandkids? Part-time and higher cost electricity with increasing risk of blackouts.

As it happens Energy Bad Boys recently posted 3 Energy Realities That Renewable Advocates Can’t Answer which does a great job of exposing the “elephants in the room” when it comes to the unwarranted belief in wind and solar as adequate technologies for an ‘energy transition’.

“Renewable energy advocates like to stick to their talking points about wind and solar, but they never seem to address the elephant – or elephants – in the room when it comes to running a grid with weather-based, intermittent energy sources, such as not being able to survive without subsidies, causing massive price increases, and ultimately leading to blackouts.”

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To be clear, I believe Amazon and Big Tech products and services on the whole make our lives better. And I have great admiration for their otherwise innovative and forward thinking. But it is important to grasp the magnitude of data center loads, and be clear-eyed about what the future holds for electricity-intensive industry under 100% carbon-free mandates in Washington and Oregon.

Consider this. The Oregonian article previously referenced states their research revealed Umatilla Electric power sales have increased by 5 million megawatt-hours since Amazon data centers showed up in their service territory; which is equivalent to over 570 average megawatts (aMW) on an annual basis.

While making no claims to knowing the source of generation used to meet Amazon’s data center requirements, or whether Amazon drove the entire increase in Umatilla Electric’s increased sales, 570 aMW is equivalent to 100% of the output of a typical combined-cycle natural-gas power plant similar to the one pictured here.

Source: google.com/maps; located near Hermiston, Oregon

Additionally, 570 aMW represents substantially more energy than the 526 aMW of combined total annual electricity supplied by the four consumer-owned utilities (including the one I work for) serving a population of over 300,000 souls in the Tri-Cities area of south central Washington.

For additional context from The Oregonian article, the 200,000 megawatt-hours of Avangrid wind energy Amazon has committed to purchasing converts to 22.8 average megawatts (aMW) on an annual basis which is why the article states “wind power may account for as little as 4% of the data centers’ power use.” But the 570 aMW used in the denominator of their calculation is not the complete story.

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Based on publicly available information provided through the Bonneville Power Administration (BPA) rate case for FY 2024/2025, Umatilla Electric Cooperative (UEC) is forecasting their total retail load in 2025 will reach 1,051 aMW with 829 aMW of that coming in the form of New-Large-Single-Load (NLSL) customers.

The NLSL number represents how much of UEC’s load is not eligible to be served through the use of their federal statutory rights to BPA’s lowest cost wholesale electricity. The nationally recognized low-cost electricity representative of the legacy of northwest hydropower often credited as the economic development engine of the Pacific Northwest for more than 80 years.

As we think about bringing jobs to Washington and Oregon centered on electricity-intensive ‘green industry’, it is critical to understand BPA’s firm energy capability from which their lowest-cost rates are derived, is 100% spoken for through existing contracts they have with the 142 customers and beneficiaries of their generating portfolio.

That is to say, there is no “guaranteed energy” available for serving growing electricity demand in BPA utility customer service areas at the historically low rates many economic development interests may think are still available.

It is also critical to understand that UEC is one of 127 consumer-owned not-for-profit utility customers of BPA located across the Pacific Northwest restricted by NLSL regulations from serving individual customers with annual electricity demand of more than 10 aMW.

This NLSL limit which is quite low compared to what today’s data centers demand, was put in place many decades ago to keep low-cost hydropower from attracting too much of the nation’s electricity-intensive heavy industry to Pacific Northwest states.

The exception of course were large aluminum plants requiring hundreds of average megawatts each that were located throughout the region. These plants were a special classification of BPA customer referred to as Direct Service Industry (DSI); none of which exist today. And no, data centers and other electricity-intensive industry are not eligible for service as DSI customers of BPA.

With all this said, utilities served by BPA can ask to have NLSL electricity demand greater than 10 aMW included in their BPA wholesale supply contract, but it would occur under BPA’s New Resource (NR) rate. A rate currently priced at $90 per megawatt-hour (MWh) for heavy-load-hours and $80 per MWh for light-load hours.

These rates are in contrast to BPA’s lowest-cost Tier-1 and Tier-2 rates which average about $36 and $62 per MWh respectively. So BPA’s NR rate is 250% higher than their coveted Tier-1 rate.

While I do not claim to know what Amazon’s desired electricity price point is for their data-centers, I happened to hear Kevin O’Leary, “Mr. Wonderful” from Shark Tank fame, recently talking about his latest investment focus in data centers, and how he is looking for states with “4 cents per kilowatt-hour electricity” ($40 per MWh). Additionally, according to the U.S. Energy Information Administration, Oregon and Washington’s average retail industrial rates in November 2023 were $69 and $62 per MWh respectively.

So, clearly a BPA wholesale NR rate that is 130% and 145% higher than the current Oregon and Washington retail industrial rates and 225% higher than Mr. Wonderful’s $40 retail price point is very likely “out of the money” when it comes to serving data center or new electricity-intensive industry. And to my knowledge, no BPA utility customers are serving NLSL customers under the NR rate.

Again, without having any specific knowledge as to Umatilla Electric’s power supply arrangement with Amazon, NLSL restrictions say nothing about Amazon’s ability to access surplus BPA or other northwest hydropower sold in regional power markets when better than low-water years occur in the Columbia River drainage basin.

But as much as Northwest hydro is an unparalleled source of low-cost and carbon free electricity in the US, it is also a variable resource, with significant differences in annual energy produced.

Based on BPA’s 2024 hydro forecast, a low water year is expected to deliver 6,662 aMW of firm energy. And an average or better water year is expected to deliver between 8,360 aMW and 10,778 aMW respectively.

This translates to the possibility of BPA having between 1,700 and 4,000 aMW of surplus annual energy to sell in regional power markets. Which is like having two to four nuclear plants worth of energy showing up randomly from year to year.

Clearly, this is a whole lot of energy and it could certainly “power” a whole lot of data-centers and ‘green industry’.

But you can’t stand up electricity-intensive industry on hope that Pacific Northwest hydropower shows up. Industrial developers, like electric utilities, must play the “long game” due to the very large capital investments and long permit times associated with constructing large infrastructure-based projects. And to secure financing, developers need certainty. And this is something utilities in Washington and Oregon cannot deliver at this point without access to additional dependable and affordable generation technologies like natural-gas, coal, and mature large-scale nuclear.

So why aren’t utilities getting with the program and signing up for new generating plants to meet the demands of economic development interests pushing electricity-intensive ‘green industry’ opportunities? It’s simple, because the only choice in the near term is to build unreliable and increasingly expensive wind and solar being forced by Washington and Oregon 100% carbon free electricity mandates.

While the costs of wind and solar have been on the decline for many years, times have changed in a big way due to raw material and supply chain constraints, compounded by dramatic inflationary pressures precipitated by panicked and draconian federal and state clean energy policies with a near singular focus on rapidly developing tens of thousands of megawatts of new wind and solar farms.

It is now common for the wholesale power prices associated with proposed new wind and solar farms to be more than Washington and Oregon’s current average retail industrial rates of $62 and $69 per MWh. And when you add the cost of firming these intermittent and variable technologies, I’ve seen prices as high as BPA’s New Resource (NR) rate previously identified as being in the $80 to $90 per MWh range.

So contrary to what the general public may be hearing, wind and solar are increasingly out-of-the money when it comes to attracting electricity-intensive industry and the large number of jobs being promised by so many politicians.

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CONCLUSIONS

So what’s the answer? While I don’t see it happening anytime soon due to entrenched ‘climate’ ideology and 100% clean electricity policies, we need to take advantage of the nation leading clean energy Washington and Oregon are already blessed with thanks to hydropower, and allow natural gas to play a bigger role in our ‘energy transition’.

I am convinced Washington and Oregon could be world leaders in siting more data centers and other electricity-intensive industry, if we just lighten up on the “CO2 is pollution” dogma and climate catastrophizing that is pushing the selection of inherently deficient wind and solar technology. By the way, have you ever asked yourself how weather dependent wind and solar will provide a “more resilient and modernized” grid in the face of increasingly extreme weather?

While just-in-time natural gas delivery can be problematic for generating electricity, a few more clean-burning combined-cycle plants in the Pacific Northwest could provide a bridge to the only conceivable “long-game” answer; always-on, fuel-on-board, and carbon-free nuclear power.

And if you can’t imagine a large conventional nuclear plant near the area where you live, then consider the possibilities offered by meltdown-proof and walk-away-safe small modular reactor (SMR) technology like what is being proposed by Energy Northwest for construction near their existing Columbia Generating Station (CGS) nuclear plant north of Richland, Washington. 

X-Energy XE-100 Small Modular Reactor

SMR technology offers something weather dependent and land hungry wind and solar cannot provide; scalability closer to urban areas and the possibility of mitigating the need for extensive and expensive interstate high voltage transmission lines. 

I invite Amazon and other Big Tech companies to come clean, and get on board with funding a forward-looking, small-footprint, Big-Nuclear renaissance that is a must have for a real 'energy transition'.

And in the meantime there is no shame in using affordable, reliable, and cleaner burning natural gas for as long as you can do it economically. Of course, get ready to pay increasingly higher costs as overzealous clean energy policies in Washington and Oregon continue to drive up electric utility rates.

Stay tuned for my future post Fantasyland Part #2 in which I will provide more insights on the growing disconnect between Governor Jay Inslee’s detached from reality promises of ‘green industry’ in Washington State, and the reality experienced by utility executives like me who are often the ‘wet blanket’ at local economic development meetings focused on bringing in big industry and manufacturing.