- The Enterprise
- The Recorder
During a fall 2010 presentation on one of several energy projects proposed in Southern Maryland, Calvert County Commissioner Gerald W. “Jerry” Clark (R) said, “All of a sudden we’re becoming the energy capital of the world!”
Experts say that observation may not be far from the truth. From natural gas to nuclear, to solar and talk of wind, projects planned for the tri-county area mirror the effects of a changing utility landscape in both Maryland and the country.
“I think what’s unique is probably for a relatively small area to be having conversations on all those issues at one time,” said Nathan Hultman, director of the Environmental Policy program at the University of Maryland School of Public Policy, and associate director of the Joint Global Change Research Institute. “While these projects are not unique, it’s probably something not common in the U.S.”
Although some projects face greater challenges than others, it is hard to dispute that Southern Maryland is a hotbed for energy plans.
Location is everything
Calvert Cliffs Nuclear Power Plant in Lusby has proposed for years to build a third reactor. Hultman cited the plans as an example of location playing a role when it comes to energy projects. The plant is conveniently located on the Chesapeake Bay, which provides cooling waters for the reactors.
Pepco Holdings Inc.’s proposed $1.2 billion Mid-Atlantic Power Pathway project, which runs partly through Southern Maryland and includes a converter station site in Calvert, eventually may harness wind off Maryland’s shore. With a continental shelf just off the coast, “Maryland is one of the places globally where you can imagine offshore wind working,” Hultman said.
But in general, Southern Maryland is experiencing what the rest of the nation is, he said, in that transmission grids are underpowered.
“We need to upgrade our energy infrastructure,” Hultman said. As access to technology improves, “we have to keep everything running and enhance grid security.”
For this reason, utility companies, including Southern Maryland Electric Cooperative, are upgrading current infrastructure. SMECO’s Southern Maryland Reliability Project will loop around Charles, Calvert and St. Mary’s counties, connecting southern Calvert to Lexington Park by building a new station at Sollers Wharf and Pardoe roads and constructing an underwater line below the Patuxent River bottom. The project also involves upgrading SMECO’s existing 400 69-kilovolt transmission line poles to 240 230-kv line poles, SMECO officials said.
That project is necessary to ensure electric reliability, since the number of customers in Calvert has doubled in 20 years and system demand tripled. SMECO’s current bulk system will not support a failure or meet growing service demands; the loop will solve that problem, SMECO spokesman Thomas Dennison said.
Likewise, Mid-Atlantic Power Pathway — the second largest of its kind next to a Germany project — would improve reliability and relieve higher prices associated with transmission line congestion, converting alternating current to direct current, MAPP officials said. In Calvert, two converters proposed for Port Republic would maximize use of existing infrastructure to avoid creating new right of way lines.
Project spokesman Matt Likovich said it is difficult to control the direction of power flow on the current system. MAPP would allow power to flow in either direction 152 miles from Virginia to Delaware, with the potential to deliver electricity generated by offshore wind.
Maryland imports 39 percent of its power and doesn’t have enough generating capacity to support its own needs, causing congestion, MAPP project manager Bob Jubic said.
“People pay a lot more for power when you have congestion on the system,” he said. Once MAPP is approved and constructed, if offshore wind turbines are built, Jubic said Pepco could use that energy.
Push for renewables
Maryland Gov. Martin O’Malley (D) has pushed recently for offshore wind legislation. The House of Delegates passed the bill last week, and it currently rests with the Senate awaiting a vote. Hultman said the push for offshore wind faces challenges because of cost and newness but the legislation is a reflection of public support.
“There are people in Maryland who want it. If there are financial incentives, the economy will respond and that will push Maryland toward this new technology,” Hultman said. “Maryland would certainly be a leader in this. It would get a foothold here.”
Atlantic Wind Connection is proposing the first offshore backbone electricity transmission system in the United States, adding 7,000 megawatts to the PJM Interconnection grid if it can clear the long line of approval hurdles awaiting it.
Government’s encouragement of the private sector would help projects like this to happen, Hultman said. “People like to think energy is a free market,” he said, but all projects compete, raising cost concerns and debates over how much ratepayers should be required to pay for cleaner energy that is more expensive than less environmentally friendly options like coal.
Maryland, like a growing number of other states, has a Renewable Portfolio Standard that requires utilities to purchase a percentage of electricity from renewable sources, Hultman said. SMECO already plans to derive electricity generation from a solar farm to be built this year.
The estimated $20 million project, which received approval from the Charles County Board of Appeals in January, is located on 48Ĺ acres in Hughesville and will produce 5.5 megawatts for both SMECO customers and the new neighboring SMECO engineering and operations building, Dennison said. CEO Austin J. Slater Jr. said SMECO has “greatly outgrown” its Hughesville office and the new 165,000-square-foot building will house a call center, engineering staff and inventory with a warehouse.
SMECO solicited proposals last year and chose developer SunEdison for the solar farm, satisfying the Maryland Public Service Commission’s requirement that utilities use 0.1 percent solar in 2012 and 2 percent in 2022. The farm will produce about 0.2 percent of SMECO’s projected load for 2013, Dennison said, though the company will need to procure additional solar credits going forward or pay a noncompliance penalty.
But while it may have made sense for SMECO to develop the Hughesville facility, commercial solar in general still faces two big hurdles: It’s expensive; and there are more clouds on the East Coast than in the deserts out West, where solar projects abound, Hultman said.
In St. Mary’s County, United Land and Power LLC waits on a buyer for its proposed 4-megawatt solar farm on about 20 acres of the Elms property south of Lexington Park.
The Maryland Department of Natural Resources bought the 1,000-acre property in the 1970s with the intention that power plants — nuclear, in particular — could be built there. But the Calvert Cliffs plant was constructed just 10 miles up the bay, and DNR is still searching for potential projects.
DNR solicited proposals from alternative energy companies and received United’s application for solar about a year and a half ago.
United remains hopeful, however, that it will obtain a purchasing power agreement soon. “I feel optimistic that this is going to happen,” managing director Richard Ross said. “We’ve been negotiating with a number of different people.”
United chose the property because solar would tie in well with a future clean energy plant, he said, and “it’s clear. We won’t have to take trees down. It faces south, which is good [for light]. There is good road access close to an interconnection point. And it’s a benign site; it won’t be obtrusive. It’ll be tucked back in the woods a little bit so the community won’t be put off by it.” It may cost up to $15 million to build out to the full 4 megawatts, Ross added.
Slater said SMECO would consider that option, along with a 1-megawatt solar farm proposed for Huntingtown.
“We’re definitely talking to the developers,” he said. “If they do prove to be attractive from a market standpoint, we will pursue that.”
However, SMECO may decide to build its own new facility to meet the requirement, as it did in Hughesville. Slater said that model worked well because SMECO already owned the land and federal stimulus money was available.
Era of natural gasWhile some energy technologies continue to struggle, natural gas has taken the market by storm. According to the U.S. Energy Information Administration’s “Levelized Cost of New Generation Resources in the Annual Energy Outlook 2011,” natural gas is the cheapest method of energy production in the country at the moment, with Marcellus Shale drilling taking off on the East Coast.
“Levelized cost,” according to the EIA report, is a summary of overall competitiveness of different generating technologies, reflecting capital, fuel and financing costs. While they do not include regional factors that may affect cost, such as incentives offered for different technologies, average estimated levelized costs per megawatt hour for plants entering service in 2016 include $66 for natural gas; $114 for nuclear; $211 for photovoltaic solar and $243 for offshore wind.
“Natural gas is looking like it’s going to be much more cost-effective than we thought it was because of Marcellus Shale,” Hultman said. “If you need to fill new demand, the easiest way to do it is with gas.”
Projects are under way already in Southern Maryland, including a proposal to expand Dominion Cove Point Liquefied Natural Gas in Lusby. “The mid-Atlantic Northeast is the largest natural gas market in the world,” Dominion spokesman Dan Donovan said, adding that the Calvert plant can be easily accessed by ships and was connected to existing natural gas pipelines when it was built for imports in the 1970s.
However, now that gas prices are the “lowest in the world,” he said, as a result of Marcellus Shale, it makes sense to expand to an export facility to ship the gas elsewhere.
Dominion’s expansion application still rests in the Department of Energy’s hands, and Donovan said the projected in-service date is late 2016. The Lusby plant should bring up to $40 million in property tax revenue to Calvert, up to $230 million to the local economy during peak activity and 3,100 peak construction jobs. In October, approval came for the plant to export to countries with a free-trade agreement with the United States. It still awaits approval to export to non-FTA countries, but Donovan expects a decision soon.
Meanwhile, two natural gas projects in Charles County forge ahead.
Competitive Power Ventures is in the process of bidding on a request for proposals sent out by the Maryland Public Service Commission, hoping for a long-term electricity sale contract that will allow the company to construct a 725-megawatt natural gas plant on 77 acres off Billingsley Road in St. Charles.
Don Atwood, vice president of CPV, called the project “state-of-the-art. It will be one of the most efficient electrical generating stations in the entire country.”
Construction should begin during the fourth quarter of 2012, creating 300 to 400 jobs, and operations would start in 2015, with power supporting the PJM grid, he said.
“CPV is looking to locate in a strategic area of the transmission system,” Atwood said. “It will be located in a very constrained area of PJM. We also look at whether there is infrastructure in the area to support a facility like this, and this location has a number of important items in terms of infrastructure,” including the Pepco right of way and natural gas pipelines about 1.25 miles from the proposed site. Over a roughly 20-year period, the facility is expected to bring $100 million in revenue to the county, he added.
A natural gas plant also is proposed for the Naval Support Facility in Indian Head. It, too, would feed electricity to the grid. The U.S. Navy identified two underutilized properties on the base and made them available for development, base spokesman Gary Wagner said. The Navy chose one property for the gas plant and announced last November that it had selected Constellation Energy as the plant’s developer, though nothing has been formally decided yet, Wagner stressed.
“They’re negotiating all the details of the leasing agreement,” like security, size and construction requirements, he said. The gas plant will be “clean,” Wagner said. “It will really help the region in terms of providing another power transmission source. We’re up here at the end of the grid line, so we have issues with the power going out sometimes. This will help ensure we’re not likely to get those shortages, and it’s also another source available to use by the community.”
Keeping with the clean theme, the base also plans to replace its coal and fuel oil plant, the Goddard Power Plant, built in the late 1950s, with a new steam plant approved by Congress, Wagner said.
“The steam plant will be much cleaner, much better for the community,” he said, adding that the total $67 million cost also includes construction of a natural gas pipeline from Bryans Road to the base. “Right now we have no access to natural gas, so we have to build a new pipeline to the facility to take care of that.”
While natural gas remains a big commodity, large commercial renewable projects continue to vie for a place in the energy marketplace — and they are not alone.
Even a project deemed necessary by PJM experiences delays. The MAPP project has been placed in abeyance until PJM comes out with a new transmission system analysis, most likely this August, Likovich said. PJM revised the projected MAPP in-service date from 2014 to 2019-2021 due to a drop in anticipated demand as a result of slow economic recovery.
“There are a number of changes taking place in the transmission planning process,” Likovich said, including uncertainty on how many coal plants will close due to financial or environmental inability to meet regulations. A revised planning process is under way to consider more than just reliability, adding factors like public policy that consider the integration of renewable energy into transmission project plans, he said. In addition, MPSC still has to approve the project, and the Calvert County commissioners, along with numerous citizen groups, have filed to intervene unless Pepco chooses another area as its preferred converter site location, instead of the American Chestnut Land Trust-protected Parkers Creek watershed.
While tradesmen and some residents support the project, many others at a public forum last year voiced overwhelming opposition to the two proposed 65-foot-high, 55,000-square-foot converter stations and 16-acre switching station in Calvert.
The issue shows how even necessary transmission improvements like MAPP can “come at a price,” Hultman said. “It can impact recreational use of natural areas,” of which Southern Maryland has plenty.
Plans for Calvert Cliffs’ third nuclear reactor are on hold as well, as the “nuclear renaissance” advocated by industry proponents struggles along. “Nuclear is difficult,” Hultman said. “You have to put a huge amount of capital down on the table in order to build a new reactor,” and unforeseen cost overruns make that investment risky for power companies. “A company may decide $13 billion for a new reactor is not the best use of the utility’s capital” and choose natural gas instead.
In the case of CC3, proposed owner UniStar Nuclear Energy was told last year it must find a U.S. partner for its sole owner, Electricite de France, since Nuclear Regulatory Commission regulations prohibit a foreign entity from owning, controlling or dominating a U.S. reactor. Constellation, Calvert Cliffs 1 and 2’s parent company and EDF’s original partner, backed out of the venture in the fall of 2010 for financial reasons. Constellation now proposes to merge with Exelon, another operator of U.S. plants.
So far, there has been no announcement of a new partner for UniStar, though the company maintains its search.
“The Exelon CEO has said publicly that new nuclear build is not a priority right now because it’s too capital-intensive,” Hultman said, so hopes of its partnering with UniStar are slim. “Nuclear doesn’t make sense in every situation. This might be one of them.”
Moreover, an NRC judicial board is expected to rule soon on an environmental contention made by various policy groups, which argue more consideration should be given to wind and solar as viable alternatives to CC3 in the project’s environmental impact statement.
The contention reflects the growing popularity of renewables, and even if commercial projects struggle, solar is widely successful at the private level locally, said Mike Thompson of Hollywood.
Thompson caught the solar bug three decades ago, now has 6 kilowatts of solar powering his home and serves as an advocate for other regional solar projects, like the panels that power George Washington Carver Elementary School.
He has advised about 200 people on solar installations at no cost and said attitudes are changing fast. Three years ago, he counted about 10 private systems regionally. He now estimates there are 130.
Calculations show residential solar projects yield a 15 percent return on the initial investment, which might range from $40,000 to $60,000, and cost keeps dropping. Within eight years, the investment should be paid back, he said. For skeptics, Thompson keeps a report tracking the monthly production and returns of 20 local systems.
Commercial systems can do even better, he said, yielding a 21 percent return on the initial investment and six-year payback, but it takes some talking.
“The challenge is convincing people the numbers are real,” Thompson said. “Once you convince them, they’ll go find the money.”
Open houses set
Southern Maryland Electric Cooperative will hold open houses on the Calvert County portion of the Southern Maryland Reliability Project from 5-8 p.m. on April 23 at the Solomons Hilton Garden Inn and April 24 at the SpringHill Suites Marriott, Prince Frederick.