Bringing energy efficiency to the equation
(The Telegram, 31 October 2012)
BY WINSTON ADAMS
In a piece I wrote that was published in The Telegram on Oct.
7, and posted online Oct. 9, we saw that a key finding of the McKinley study in
the United States was that a program offering 50 per cent rebates, funded by an
electricity rate increase of only four per cent, gives a 24 per cent
“reduction” in customers’ electricity bills.
By spending 10 times more than we do to assist “customers”
with energy efficiency, they also reduce system demand by more than two per
cent per year, often saving the expense of a new generation source, and at
one-third the cost.
For Newfoundland there are important differences. We use
electricity for heating, and they use gas. Our residential consumption is high,
at 50 per cent of total. Our load is skewed. The high winter demand, at more
than twice the summer load, is problematic. The winter peak demand is beyond
the capacity of our hydro generation, so 12 per cent is supplied by the
Holyrood oil-fired plant.
Nalcor correctly states that our winter electric heat has
been the main driver for increased demand. Our residential load is 69 per cent
for heat, 11 per cent for hot water, 20 per cent for appliances, lights and
other products. Houses use less energy per unit, but more and larger houses and
conversions from oil heat is the rationale for a new generation source.
Conservation would pay off
Nevertheless, the size and season of these heating loads is
a very fortunate combination. The energyefficiency approach, when specifically
applied to electric heating, would give more savings than the McKinley study
found for the U.S. The solution offers many benefits:
1. It reduces instead of increases customer electricity
2. It reduces transmission losses, a utility expense.
3. It allows us to reach 98 per cent green energy.
4. It will incrementally reduce Holyrood oil consumption
allowing some fuel cost savings to be passed back to consumers.
5. It saves on water resources, important in dry years when
rainfall is low. 6. It reduces air pollution. 7. It aids our commitment on the
environmental global warming issue.
8. It helps flatten our load curve with less winter demand,
which reduces the size and cost of future replacement backup generation
9. It brings synergy savings (where technology works
together) and would more than double the savings from efficient compact bulbs,
fridges, TVs and hot water tanks.
Such good fortune lies in the fact that our winter heating
load is an excellent fit for the heating technology that has matured, is
reliable, and suitable for our climate. It’s an opportunity to benefit from
these latest advances and high efficiencies. The relatively low equipment cost
is due to the mass production by several world class manufacturers.
The familiar way of heating with electricity is to heat
direct with a resistance heating element. It is cheap and reliable, but a
century old and very wasteful of electricity. The newer way heats indirectly.
Powered by electricity, it transfers energy from the adjacent earth, water or
air, into the house. It elevates the temperature suitable for residential space
heat or for hot water.
This method is not new to Newfoundland, having been used for
more than 20 years, and is now mandatory for our large government buildings.
Worldwide, smaller residential units are used for heating, cooling and humidity
Efficiency is the great advantage. During winter cold snaps
these units produce the same heat as regular heaters, but use about onethird
the power. At milder temperatures, in minimum heat mode, newer models can use
as little as onesixth the power.
A hydro source that would normally supply 1,000 houses with
heat and hot water could supply 3,000 houses in cold conditions, and 4,000 or
more at other times. The equipment cost, in kilowatts of heat supplied,
continues to drop, while power generation plant and transmission costs
If efficiency is a viable contribution to avoid new
generation, one must first consider the magnitude of this resource. An analysis
to quantify the extent of such savings on an island-wide basis is readily done
using Nalcor’s data: 50 per cent of the island load is residential, of which 69
per cent is for electric heat and, applying the 65 per cent efficiency factor
(7,642 x 0.5 x 0.69 x 0.67) gives the saving of 1,766 gigawatt hours. This is
23 per cent of our yearly total generation.
More importantly, it is 206 per cent of the yearly generation
production of Holyrood. Such large savings would, first and foremost, go to
offset the expense of oil and reduce pollution.
There are other significant savings from commercial heat,
residential and commercial hot water, at about 774 gigawatt hours. Basement
insulation and efficient appliances can offer savings of 840 gigawatt hours.
And transmission loss savings, another 100, for a total of 3,480 gigawatt
hours. A potential savings of 45.5 per cent of all generation is almost twice
the 26 per cent saving potential in the U.S.
It should not be surprising that our potential is twice that
of the U.S. given that we use so much electricity for heat. What is surprising
is that Nalcor proposed to save only nine gigawatt hours per year for the next
20 years. Manitoba Hydro International concurred with this, saying “technology
efficiency savings were approaching a saturation point.” They reasoned that
most upgrades for the housing sector are already done. But this applies only to
the building shell construction. The serious oversight and error in their
analysis is in excluding the savings of proven technology to the space heating
and hot water for both residential and commercial sectors.
For all potential saving of the domestic plus commercial
sectors of 3,480 gigawatt hours, it is four times last year’s 855 gigawatt hour
total production from Holyrood.
I will look at achieveable saving and costs in a future
Looking for proof of increasing electrical demand
(The Weekend Telegram, October 6, 2012)
BY MAURICE E. ADAMS
During the Public Utilities Board's Muskrat Falls review, Nalcor stated that it did not forecast any increase in electricity demand from the island's industrial sector after year 2015.
Accordingly, when Nalcor states that Muskrat Falls is viable, it does so based largely on its claim that the island's residential electricity use has increased (and will continue to increase) and that furthermore, the island's total demand will continue to increase at an average compound annual growth rate of 0.8 per cent for the next 50 years.
To bolster its own argument, and notwithstanding that 'domestic' demand accounts for only half of the island's total demand, Nalcor points to Manitoba Hydro International's (MHI) report to the province's Public Utilities Board, wherein MHI says that Nalcor's 10-year historical 'domestic' demand forecast track record was within the industry standard of error of plus or minus 1 per cent annually, and that since its forecast track record was on the low side, it could have therefore (over that 10-year historical period) been annually one per cent higher.
Nalcor also claims that the island's residential electricity usage is increasing largely because there is an increase in the number of new and larger homes and also due to the
increased use of electric heat and home appliances. Bolstered also by MHI's statement that Nalcor's 10-year "historical" forecast track record for domestic demand could have been annually 1 per cent higher, government and Nalcor both claim therefore that the island does indeed need the power, and that Muskrat Falls is therefore viable.
But lets take a closer look at what that means.
The province's Energy Efficiency Action Plan 2011, (section 5.2, Households) states that "Between 1990 and 2008, the number of homes in Newfoundland and Labrador increased by 19 per cent, while the total energy consumption has declined by approximately 17 per cent" --- a 19-year average DECREASE of 0.9 per cent annually (a downward trend that is even greater than, and in the opposite direction from, Nalcor's 50-year average upward total demand forecast of 0.8 per cent annually).
Furthermore, the province's Climate Change Action Plan 2011 also states, both clearly and firmly, that "New homes are becoming more energy efficient over time and this is having an impact on energy demand in the province. For example, the total amount of energy used by the housing sector has declined since the early 1990s by approximately 17 per cent, while the total volume of housing stock has increased by 19 per cent."
While it is true that over the last 19 years there has been (both in real and in percentage terms) an average increase in electricity use by island residents, that increase has not been due to the an increase in the size of the total residential energy sector (the residential energy pie so to speak).
Instead, the actual size of the residential energy market (as confirmed by government's own documents) has decreased (that is, the total energy demand from the residential sector has decreased) from the period 1990 to 2008 by 17 per cent (and Figure 6 of government's Energy Efficiency Action Plan shows that from 1993 to 2008, over the more recent 15-year period, the residential energy sector has decreased by an even greater amount --- by 25 per cent, an average rate of 1.7 per cent annually (a downward trend that is more than double, and in the opposite direction from, Nalcor's 50-year average upward total island forecast of 0.8 per cent annually).
Where's the growth?
But how then can it be said that 'electricity usage' by the residential sector has increased? And if it has, does that really mean that the island needs more power and that Muskrat Falls is viable?
While over the 1990 to 2008 period, electricity increased its share of the residential energy sector, it did so by moving into and taking over that portion of the residential energy sector
that was previously occupied by the petroleum (oil) industry, and over that 19-year period the electricity sector increased its share of the residential energy sector by cutting the oil industry's market share by more than half (from 42 per cent to 18 per cent) --- a rate of 1.3 per cent annually.
So the size of the residential energy sector (market) has not, and is not, growing, but instead, is getting smaller.
So when Nalcor speaks of growth in the use of electricity by island residents, it is growth that is obtained from the oil industry's market share --- a market that is not only rapidly becoming smaller (year over year), but Nalcor's growth in residential electricity use is from oil's much smaller and now very limited share of the market.
At the 19-year historical rate that Nalcor has been displacing the oil industry's small and limited share of the residential energy market (1.3 per cent annually), any potential that Nalcor has for further growth in the residential electricity market will be virtually non-existent (and eliminated) by about year 2022 (less than five years after Muskrat Falls comes on stream).
So, while residential electricity use has increased (and may continue to increase) for about 10 more years, the facts (the historical record) shows that with no forecast in island industrial demand after 2015, with a 19-year track record that confirms
that the residential energy sector/market is continuing to get substantially smaller (not larger), and that at Nalcor's proven success rate of moving into and eliminating the oil industry's share of the residential energy market, where is the evidence-based rationale for residential electricity growth past year 2022?
How then can it be said (based on what evidence can it be said), that "the island needs more power" --- not for 10 years, but for the required 50 years?
After all, it is Nalcor that claims that Muskrat Falls is viable --- not over a 10-year period, but over a 50-year forecast period.
It is over this same 50-year (not 10-year) forecast period that Nalcor predicts, and that Muskrat Falls needs (must have) a guaranteed, locked-in, multi-billion dollar cash flow/revenue stream, a cash flow/revenue stream sufficient to say that Muskrat Falls, over the long term, represents a solid business case.
When there is no evidence to suggest that there is any long term growth in island energy demand past year 2022, on what evidence-based grounds can government (and Nalcor) rationally conclude that Muskrat Falls is viable?
Maurice E. Adams writes from Paradise
Bringing efficiency to the energy equation
(The Telegram, October 9, 2012)
(The Telegram, October 9, 2012)
You can't have it both ways
(The Weekend Telegram, October 13, 2012)
In his October 6th, 2012 letter to the editor ("Wangersky left experts off his list") Nalcor's expert, Mr. Ed Martin, wrote that "We're using industry best practices...for hydroelectric developments".
On the other hand, government's own expert, Manitoba Hydro International (MHI), at page 20, volume II of its report to the Public Utilities Board, wrote that
Nalcor's domestic (demand) forecast methodology is acceptable, but does not meet the requirement of utility best practice...".
So which is it?
Accurate and reliable forecasting is an essential, foundational building block underlying Natural Resources Minister Kennedy's Muskrat Falls' first question (do we need the power?).
Yet, even at this basic level, two of the most influential experts advising government on Muskrat Falls disagree on whether or not Muskrat Falls is being planned according to industry's best practice.
Government and ratepayers should be very concerned.
On the one hand, it seems that Mr. Martin is conveying incorrect information to the public, while on the other
hand, government (when it argues that the island needs the power) is relying on MHI's expert opinion, an opinion derived at using Nalcor's methodology, a methodology that MHI has already described as --- "not meet(ing) the requirement of utility best practice".
More than 2,500 years ago, Socrates is reported to have said that "the first step
towards knowledge is recognizing one's own ignorance".
Accordingly, when experts fail to recognize the error in their own words, have they arrived at even the very first step towards knowledge?
And if not, should government rely on such advice to sanction Muskrat Falls?
Maurice E. Adams