Financial Issues Related to Renewables
Utility customers want to be “green,” but they also do not want to incur significant additional costs for their electricity, Smith noted. “At Constellation Energy, we don’t talk to our customers about saving polar bears,” he said. “Electricity must be cost-efficient for our customers. Technologies like microwind and fuel cells can bring benefits to customers’ backyards. Customers will be able to save money through distributed energy sources.”
He emphasized that the Constellation Energy management spends a large amount of time analyzing political developments in order to review risks. The company won’t build new facilities unless management thinks the company will get a good return on investment. “It’s best if the renewable technologies have a glide path with upfront subsidies, but ultimately, they have to stand on their own,” Smith explained.
Along the same lines, Kapner explained the financial issues that the Austin Energy management focuses on. “Capital cost and capacity factor act together along with operations and maintenance costs and the cost of capital (i.e., financing) to create the levelized cost of energy—the single most important factor,” he said. “Intermittency—which we prefer to call variability—is a lesser factor. Long term (i.e., 20-year) fuel supply certainty is, of course, a major factor for biomass.”
AEP’s Turner emphasized the impact of incentives on the integration of renewables into utilities’ generation mix. “Incentive programs for renewable energy promote the greenest power at the cheapest price for both utilities and individuals,” he said.
Turning to another financial issue, Hoffman focused on the relative costs of different fuel sources used in generating electricity. “Our country pays for our energy one way or another. We’re already paying a price to burn coal,” he said. “In the future, if we put a price on carbon (such as imposing a tax), we’ll see lots of innovation in the development of renewables.”
He also had strong views about utilities’ role in educating their customers. “I feel that we have not had enough public education about the real costs of energy,” he said. “We need to educate people about why it’s important to use energy efficiently.”
Email
Comments
Print
Reuse
