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‘It’s crazy to build 40,000 houses a year’ with natural gas infrastructure in Colorado

 by Allen Best

ARVADA, Colo. – In 2010, after success as a wind developer, Eric Blank had the idea that the time for solar had come. The Comanche 3 coal-fired power plant near Pueblo had just begun operations. Blank and his company, Community Energy, thought a  parcel of sagebrush-covered land across the road from the power plant presented solar opportunities.

At the time, Blank recalled on Wednesday, the largest solar project outside California was less than 5 megawatts. He and his team were looking to develop 120 megawatts.

It didn’t happen overnight. They optioned the land, and several times during the next 3 or 4 years were ready give up. The prices of solar weren’t quite there and, perhaps, the public policies, either. They didn’t give up, though. In 2014 they swung the deal. The site made so much sense because the solar resources at Pueblo are very rich, and the electrical transmission as easy.

Comanche Solar began operations in 2016. It was, at the time, the largest solar project east of the Rocky Mountains and it remains so in Colorado. That distinction will be eclipsed within the next several years by a far bigger solar project at the nearby steel mill.

Eric Blank

Now, Blank has moved on to other things. He wants to be engaged in the new cutting edge, the replacement of natural gas in buildings with new heating and cooling technology that uses electricity as the medium.

“There’s too much benefit here for it not to happen,” he said in an interview.

California has led the way, as it so often has in the realm of energy, with a torrent of bans on natural gas infrastructure by cities and counties. Fearing the same thing would happen in Colorado, an arm of the state’s oil-and-gas industry gathered signatures with the intention of asking voter in November to prevent such local initiatives. An intervention by Gov. Jared Polis resulted in competing parties stepping back from their November initiatives.

In Colorado, Blank sees another route. He sees state utility regulators and legislators creating a mix of incentives and at the same time nudging along the conversation about the benefits.

“It will happen because the regulators and the Legislature will make it happen,” he says. Instead of natural gas bans, he sees rebates and other incentives, but also educational outreach. “Maybe someday you need a code change, but to me public policies are in this nuanced dance. The code change is way more acceptable and less traumatic if it is preceded by a bunch of incentives that allow people to get familiar with and understand (alternatives) than just come in from the outside like a hammer.”

Blank says he began understanding the value of replacing natural gas about a year ago, when conducting studies for Chris Clack of Vibrant Clean Energy about how to decarbonize the economy. “This is just another piece of that. I think building electrification is the next frontier.”

And it’s time to get the transition rolling, he says. It just doesn’t make sense to build houses designed for burning natural gas for heating, for producing hot water and for cooking. Retrofitting those houses becomes very expensive.

“It’s crazy to be building 40,000 new homes a year with natural gas,” he says. Once built for natural gas, it’s difficult and expensive to retrofit them to take advantage of new technology. But the economics of avoiding natural gas already exists.

To that end, Blank’s company commissioned a study by Group14 Engineering, a Denver-based firm. The firm set out to document the costs using two case studies. The study examined a newer 3,100-square-foot single-family house located in Arvada, about 10 miles northwest of downtown Denver. Like most houses, it’s heated by natural gas and has a water heater also powered by natural gas.

 

H ouse at 6860 W. 60th in Arvada

A house in the Denver suburb of Arvada was used as a case study.

The study found that employing air-source heat-pumps—the critical technology used at Basalt Vista and a number of other no-gas housing developments—can save money, reducing greenhouse gas emissions—but would best be nudged along by incentives.

“For new construction, the heat pump scenarios have a lower net-present cost for all rates tested,” the report says. “This is due to the substantial savings from the elimination of the natural gas hookup and piping. Although net-present costs are lower, additional incentives will help encourage adoption and lower costs across the market.” The current rebates produce a 14% savings in net-present costs.

The same thing is found in the case study of a 28,000-square-foot office building in Lakewood, another Denver suburb.

The study digs into time-of-use rates, winter peak demand and winter-off peak use, and other elements relevant to the bottom lines.

The bolder bottom line is that there’s good reason to shift incentives now, to start changing what business-as-usual looks like. Blank points out that natural gas in every home was not ordinary at one time, either. It has largely come about in the last 50 to 60 years. With nudges, in the form of incentives, builders and others will see a new way of doing things, and electrification of buildings will become the norm.

Colorado’s natural gas pivot

Blank says he began to understand how electrification of building and transportation could benefit the electrical system that is heavily reliant on solar and wind and perhaps a little bit of natural gas when conducting studies last year with Clack at Vibrant Clean Energy .

“I was just blown away by the benefits of electrification (of buildings and transportation) to the electric system,” he says.

Greater flexibility will be introduced by the addition of more electric-vehicle charging and water heating by electricity, both of which can be done to take advantage of plentiful wind and solar during times when those resources would otherwise be curtailed, he explains.

Already, California is curtailing solar generation in late spring, during mid-afternoon hours, or paying Arizona to take the excess, because California simply does not have sufficient demand during those hours. Matching flexible demand with that surplus renewable energy allows for materially greater economic penetration of highly cost-effective new solar.

“In our Vibrant Clean Energy study, with building and transport electrification, we found that Colorado could get from roughly 80% to 90% renewables penetration before the lack of demand leading to widespread renewable curtailment makes additional investments in wind and solar uneconomic,” says Blank.

Electrification of new sectors also expands the sales base for distribution, transmission and other costs. Since the marginal cost of meeting this additional demand is low (because wind, solar, and storage are so cheap), this tends to significantly lower all electric rates.”

Colorado, he says, is unusually well positioned to benefit from this transition. It is rich with both wind and solar resources. Coal plants are closing, electricity costs flat or declining. Consumers should benefit. The time, he says, has come.

This is from the Aug. 14, 2020, issue of Big Pivots. To sign up for a free subscription go to BigPivots.com

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