Renewable Energy Technology Assessments - Kauai Island Utility ...

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Kaua’i Island Utility Cooperative Renewable Energy Technology Assessments 12.0 Conclusions site stands out as being vastly superior to others, which gives KIUC good flexibility (and negotiation position) in siting the first projects in the location deemed most suitable. Recommended next steps for wind development are preliminary siting based on discussions with land owners and detailed meteorological data collection at likely sites to establish wind speeds at turbine hub heights. • Municipal Solid Waste – Municipal solid waste combustion may be a viable option for Kauai as part an integrated approach to island waste management. However, the economics of MSW strongly depend on the tipping fee received for waste disposal. This study found that at a tipping fee of $90/ton, a 7.3 MW, 300 ton per day waste to energy plant would produce power for a lower levelized cost than any of the other renewable energy options modeled: $20/MWh. However, economics are very sensitive to this tipping fee. At $56/ton (the current landfill gate fee) the levelized cost was estimated to be $108/MWh. Although this is still lower than KIUC’s current avoided cost, it is not as competitive as the other renewable energy options. If KIUC is interested in exploring waste to energy further, it should discuss possible options with the County. The current landfill is running out of capacity, and new landfill capacity will need to be developed. This new landfill capacity will likely be developed at an all-in cost near the upper range of the tipping fees modeled in this study. • Landfill Gas – There is currently only one viable landfill gas project on Kauai, located at the Kekaha landfill. Black & Veatch estimated that an 800 kW project using reciprocating engines could be developed after landfill closure in 2009. At $99/MWh, the levelized cost of the landfill gas project is competitive with KIUC’s current avoided costs, but higher cost than several of the other project options. The project is also considered lower priority for KIUC due to the limited resource potential of LFG on the island and the relatively small project size. • Biomass – Of the project options characterized in detail for this study, biomass has the most unfavorable economics. As the study progressed from the generic technology screening in Phase 1 to the detailed project characterizations in Phase 2, the estimated costs for biomass increased outside of initial expectations. The Phase 2 investigation found that the levelized cost of supplying power from a biomass fueled power station ranged from $180/MWh to $205/MWh, depending on the fuel cost. Biomass is hurt by KIUC’s lack of need for baseload capacity. However, biomass, especially 21 March 2005 12-2 Black & Veatch
Kaua’i Island Utility Cooperative Renewable Energy Technology Assessments 12.0 Conclusions derived from locally grown energy crops, does have several advantages over most other renewable energy options: (1) large amounts of baseload power could be produced from the available resource base, (2) growing and harvesting local energy crops would provide a large stimulus for Kauai’s agricultural economy and help stem the loss of jobs in the sugar industry and (3) biomass crops for power may be synergistic with crops grown for ethanol fuel production. Based on these factors, it is recommended that biomass be reexamined in more detail when KIUC has greater need for capacity resources in the future. One of the most tangible benefits of renewable energy to KIUC is lowering the exposure to rising and volatile energy prices. As a final analysis, Black & Veatch compared the levelized cost of renewable energy against KIUC’s short-term avoided costs, Schedule Q. A relationship was derived showing the variation in Schedule Q rates versus cost of oil. 113 Figure 12-1 shows a comparison of the cost to generate power from each of the renewable projects analyzed in Phase 2 versus KIUC Schedule Q rates. While Schedule Q rates fluctuate with oil prices, renewable energy costs are constant. The figure shows at what oil price points renewable energy is less or more expensive than diesel engine power generation. At an oil price of about $55/bbl, landfill gas, wind, hydro, and municipal solid waste combustion are all less expensive. However, over the range of oil prices examined for this analysis, biomass combustion is always more expensive with a lower bound of about $180/MWh. The average price for diesel oil over the past four years is approximately $45/bbl. At this price point, hydro, wind, and municipal solid waste combustion with mid to high tipping fees are less expensive than KIUC’s Schedule Q rates. 113 Personal communication from Jeff Deren, KIUC, November 23, 2004. 21 March 2005 12-3 Black & Veatch
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