Weekly Clean Energy Roundup:March 8, 2006

News and Events

Energy Connections

Chevron Investment Highlights Development of Alberta Oil Sands


News and Events

DOE Sets More Stringent Criteria for Energy Star Dishwashers

DOE announced last week that more stringent energy efficient criteria for dishwashers carrying the Energy Star label will go into effect on January 1st, 2007. To meet the new criteria, dishwashers must be at least 41 percent more efficient than federal energy efficiency standards. The new criteria could save U.S. families more than $26 million a year and will save more than 160 million kilowatt-hours of energy per year. The Energy Star program is a joint effort of DOE and the U.S. Environmental Protection Agency, and the Energy Star label appears on more than 40 kinds of consumer products. See the DOE press release and the Energy Star Web site.

Global Wind Power Capacity Increases 25 Percent in 2005

Last year established new records for wind power, as 11,769 megawatts (MW) of wind turbines worth about $14 billion were installed throughout the world, according to the Global Wind Energy Council (GWEC). Wind power grew at a 43 percent faster rate than in 2004, when 8,207 MW of wind power were installed. As of the end of 2005, the world’s total installed wind power capacity stands at 59,322 MW, a 25 percent increase over 2004. The United States installed the most new wind power capacity in 2005, but Germany still leads in terms of total installed wind capacity. Australia nearly doubled its wind power capacity in 2005, while Canadian wind power capacity grew by nearly 54 percent, and Asian wind power capacity grew by nearly 50 percent. See the GWEC press release (PDF 79 KB).

A number of large wind power projects are now planned for the United States. Greenlight Energy, Inc. is developing a 300-MW wind power plant in northeast Colorado, to be completed in late 2007. In Minnesota, enXco is developing a 205.5-MW wind plant with a proposed commercial operation date of November 2007. And Missouri will soon see its first large wind project, the 50-MW Bluegrass Wind Ridge Farm, to be built this year northeast of St. Joseph. The Wind Capital Group is developing the project with financing from John Deere Wind Energy. See the Greenlight Energy Web site and the press releases from enXco and the Wind Capital Group.

In turn, wind turbine companies are doing well: Suzlon Wind Energy Corporation is supplying 75 of its 2.1-MW wind turbines to the Edison Mission Group, and Vestas Wind Systems A/S is supplying the Edison Mission Group with 30 of its 3-MW wind turbines. Vestas is also supplying 800 MW of wind turbines to Horizon Wind Energy LLC (formerly Zilkha Renewable Energy) over the next three years. GE Energy is supplying 500 MW of wind turbines to PPM Energy over the next two years, while Invenergy Wind LLC is buying 350 MW of GE wind turbines for projects in 2006. See the Suzlon press release (PDF 52 KB); the Vestas press releases on the Edison Mission Group order and the first 600 MW and the additional 200 MW for Horizon; and the press releases from GE Energy and Invenergy.

Arizona Establishes Higher Renewable Energy Requirements

The Arizona Corporation Commission (ACC) voted last week to require the state’s regulated utilities to draw on renewable energy for 15 percent of their electricity production by 2025. For 2006, utilities must meet 1.25 percent of their power needs with renewable energy. Some of the renewable power must come from distributed energy sources, such as solar power systems on homes or businesses. In 2007, distributed energy must supply 5 percent of the renewable power, increasing to 30 percent after 2011. The new standard replaces an existing standard that topped out at 1.1 percent in 2007, but required half of the power to come from solar energy. Before taking effect, the new rules must be reviewed by the Arizona Attorney General’s office, followed by a formal rulemaking by the Arizona Secretary of State. The ACC expects binding regulations to take effect later this year. See the ACC press release and the draft rules (PDF 706 KB).

The new requirements align closely with a Sustainable Energy Portfolio approved by the Salt River Project (SRP) Board of Directors in early February. The portfolio sets a target of meeting 15 percent of SRP’s retail sales with sustainable resources by 2025. The SRP serves nearly 860,000 customers in the Phoenix area and is not regulated by the ACC. See the SRP press release.

New Mexico Approves Solar Energy Tax Credits

New Mexico Governor Bill Richardson signed a bill last week that establishes state tax credits for solar energy installations. Senate Bill 269 allows an individual tax credit of 30 percent of the purchase and installation costs for solar electric and solar thermal systems, up to $9,000 for each system. The system must be certified by the New Mexico Energy, Minerals, and Natural Resources Department and must be installed by 2015. The bill provides $3 million for solar electric tax credits and $2 million for solar thermal tax credits each year. According to the governor’s press release, when the state tax credit is combined with federal tax credits, they will reduce the cost of a residential solar energy system by about one third. See the governor’s press release and the full text of the bill.

To help homeowners take advantage of the federal solar energy tax credits, the Solar Energy Industries Association (SEIA) has published “The SEIA Guide to Federal Tax Credits for Solar Energy,” a 40-page manual in the form of a 1.4-MB PDF file. See the SEIA press release and sign up on the SEIA Web site to receive a copy of the guide via email.

Ethanol Production Reaches Nearly 4 Billion Gallons in 2005

The U.S. ethanol industry produced a record 3.9 billion gallons of fuel in 2005, according to the Renewable Fuels Association (RFA). In December 2005, ethanol fuel production reached 364.4 million gallons, but fell short of demand, which rocketed to 403.2 million gallons. The excess demand was partially met by imports of 32.2 million gallons of ethanol, while 233.6 million gallons of ethanol in storage provide about 20 days of reserve to help meet demand. Last week, a new ethanol plant began production in Iowa, adding another 60 million gallons of ethanol production capacity. According to the RFA, the U.S. ethanol industry now comprises 96 ethanol plants with the capacity to produce 4.4 billion gallons annually. There are 33 ethanol plants and 8 major expansions under construction, with a combined annual capacity of more than 2 billion gallons. See the RFA press releases on the production record and the new ethanol plant.

Demand for ethanol is expected to grow sharply this year. A recent analysis from DOE’s Energy Information Administration (EIA) notes that many petroleum companies plan to stop using MTBE before the summer driving season. MTBE is an oxygenating fuel additive, similar in function to ethanol. The EIA report “Eliminating MTBE in Gasoline in 2006,” notes that most companies will switch to ethanol instead, a move that could put strains on ethanol supplies. According to the EIA, the complexity of the transition may cause local supply shortages, which could cause some price spikes. See the EIA report.

Energy Connections

Chevron Investment Highlights Development of Alberta Oil Sands

Chevron Corporation announced last week that it has acquired leases on 75,000 acres in northern Alberta that are expected to contain 7.5 billion barrels of heavy oil. The acquisition marks a growing trend for oil companies investigating “alternative” sources of oil, such as the oil sands in Canada. Oil sands are a thick underground layer of sand embedded in heavy, tarry oil (called bitumen), located below Alberta’s boreal forest. Steam is used to wash the bitumen from the sand, after which the heavy oil must undergo significant processing at an “upgrader” facility. The oil sand can be extracted by strip mining, or for deeper deposits, an in situ process can pump steam into the ground and extract the bitumen. Chevron is already active in oil sands development in Alberta through a 20 percent ownership of the Athabasca Oil Sands Project, which began operation in 2003 and currently produces about 155,000 barrels of oil per day. See the Chevron press release.

According to the Alberta government, the Canadian oil sands have proven oil reserves of more than 174 billion barrels, second only to Saudi Arabia. The oil sands are in three locations with a total area greater than the state of Florida; existing oil sands operations are visible from space. A report published in May 2004 by Canada’s National Energy Board found that 2.5 to 4 barrels of water are needed to produce one barrel of bitumen, though the industry is investigating ways to conserve water. For mined oil sands, 500 cubic feet of natural gas are burned to produce one barrel of bitumen, while the in situ process requires 1,000 cubic feet of natural gas. As a result, Canada’s Pembina Institute, an environmental policy research and education organization, has warned that growing oil sands development could result in significant growth in Canada’s greenhouse gas emissions in coming years. See the Alberta Government Web site; the summary of the National Energy Board report; the Pembina Institute’s press release and photos of the oil sands projects; and for the view from space, see the Google Maps Web site.

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