The credit crunch is rightly having an impact upon the construction of new power generation plants. In Montana the construction of a 250MW coal powered plant has broken ground, using existing capital, amidst serious questions as to the developer’s ability to finance the $800M price tag.
To survive the credit crunch become a high-tech cockroach
Industry insiders fear more blackouts and brownouts unless more capacity is built into the aging electrical grid and more power transmitted through it. Events on Wall Street are serious implications on many facets of our daily life including energy, however, it is also the specter of an imposed Carbon Tax that is putting a damper on the appeal of fossil fuel energy projects to bankers.
Renewable energy project developers are capitalizing on increasing energy needs and lenders concerns to push through financing on carbon free energy production. Energy, of course, is a very profitable industry with consumers dependent upon energy producers to supply power to their homes and businesses and while complex deals to work through are normally easy to finance.
However, the price tag of the Montana plant is coming in at $3.2M per megawatt and this excludes the $1M per mile cost of transmission lines. The additional costs of step up transformers, step down transformers and, of course, the environmental footprint associated with centralized power production must also be considered.
Decentralizing power production reduces these costs significantly, one study shows as much as a 44% reduction in capital costs, depending on the type of generation deployed. Further decentralized or distributed energy is proven more reliable than centralized energy where an operator error in Ohio can take out power to the entire Northeast as we saw in 2003.
Microgrids and smaller combined heat and power (CHP) generators are becoming more economical and much easier to finance. Energy prices are expected to rise making community investment in local power generation more and more attractive and offering a faster return on investment.
Using a typical trading figure of $65 per MW a small 5MW wind farm will generate almost $1M in annual revenue. An example project that a community might undertake would be to develop a wind, solar, geothermal or CHP system or any combination thereof with known high electricity users such as a hospital, industrial site or grocery store.
The concept of a microgrid is that energy produced and not used onsite is directed to the surrounding neighborhood as heat or some other form of energy transference. This type of energy management is being widely deployed in Europe and several US cities including NY and has proven efficient, effective, environmentally responsible and because they offer consistent long-term profits, financeable.
Those of us working feverishly on the V-LIM turbine are optimistic the LIM will become a standard part of this new mix of energy offerings to communities and power hungry industry. Collectively, our greatest hope and a goal we are putting great effort into obtaining is that the LIM and other upcoming technology will replace lost timber jobs here in Coos County.
