One point I make in passing in today’s column about CPS Energy’s solar deal is that the value of solar power is relative to the cost of other sources of electricity, primarily coal, natural gas, and wind. And as more of the environmental costs of the fossil fuel sources are factored into their market prices, solar becomes more attractive.
For instance, CPS opted to close an old coal plant 15 years ahead of schedule shortly before EPA regulations mandating new scrubbers were announced. These scrubbers, which remove mercury and other pollutants from power plant emissions, had been required for new facilities, but a large number of coal plants built in the 1970s had been grandfathered in. So the cost of bringing these aging facilities up to code has pushed some utilities to think seriously about retiring them in favor of cleaner sources of power.
As regulations have made coal more costly, natural gas has become much more affordable, due to the surge in fracking. Right now, fracking is almost totally unregulated. Texas is actually one of the first states to require energy companies to even disclose what they are putting into their fracking compounds. But this situation is likely untenable. Most of the concerns about fracking related to contamination of water supplies as millions of gallons of water and chemicals are forced underground to break apart rock and release natural gas. The EPA recently released a report linking fracking to contamination of water supplies, and recommended that the State of New York tighten its proposed fracking rules.
There are also concerns about the sheer quantity of water being used in these operations. As the Texas Tribune reports, the new Texas law, which will go into effect February 1, requires not just disclosure of the chemicals used but also the amount of water consumed by fracking operations. Although the amount of water used in fracking is a tiny fraction of what a big city consumes, in some regions it can be quite significant. From the Texas Tribune article:
Dan Hardin, the water board’s resource planning director, said fracking is not expected to exceed 2 percent of Texas water use.
But drilling can send the water numbers much higher in rural areas, Hardin said. For example, he projects that in 2020, more than 40 percent of water demand in La Salle County, in the Eagle Ford, will go toward “mining,” a technical term that in this case means almost entirely fracking. Until recently, no water went toward mining there.
As these natural gas operations come under closer scrutiny, and eventually actual regulation, the cost of natural gas will naturally rise. Cities like San Antonio, with ambitious solar and wind projects underway, will see the benefit of a diverse energy portfolio with a high level of renewable sources.
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