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Posted by Maximilian Auffhammer22 Comments on The Death of a Power Plant Uncategorized

The Death of a Power Plant

Replacing aging infrastructure is no joke. 

One of the big pluses of living and working in a wealthy society is that power and heat are perpetually available to paying customers in the residential, commercial, industrial, and educational sectors. The university I am privileged to work for is a small city with a daytime population of about 65,000 individuals. While it is easy to think that all we need is lights on, so you can see the math on the whiteboards, and outlets to charge our laptops, the teaching and research enterprise consumes a lot of energy. We use steam to keep buildings warm in the winter, while electricity powers everything with a wire. Further, electricity demand on a university campus is strongly correlated with Nvidia’s stock price, as researchers increasingly turn to using graphics processing units, which use massive amounts of electricity and generate waste heat  – driving up cooling requirements. 

Meet UC Berkeley’s aging Cogeneration Plant, which we proudly operate and provides approximately 90% of the electricity and 100% of the steam needs of the main campus. Like the author of this blog post, it is aging rapidly and will need to be replaced or retired within the next five or so years. Also, it is powered by a carbon and local-pollutant generating fossil fuel – natural gas. Imagine my true excitement when I got a letter from my boss asking me to serve on a committee to help think about what we should do as a campus to procure energy services post co-gen. This excitement was quickly replaced by sheer terror, as all of a sudden everything I talked about in my classes became very tangible and real. I am writing this blog post as a self help guide to clarify my thinking, and it obviously does not represent the committee’s or university’s official position. But this is an energy economics blog. And Severin told me this was my week. And you do what Severin tells you, because we owe him. 

Kerfuffle #1: Upon first thought it might be cheapest to just replace the current cogen plant with a new one. You might think the capital investment is probably lowest, and you can use the existing campus infrastructure. Plug and play! Well, if you have ever walked across our beautiful campus, you see steam leaking out of, well, everywhere. This steam is wasted energy directly and indirectly adding to global warming. Fixing the network of super old steam pipes on campus is also super expensive and not fun to fix for anyone. Second, continuing to operate a fossil fuel powered generator requires the purchase of natural gas, as well as permits under California’s cap and trade system. So regulation provides incentives to not do that. Which is why we have the regulation. High fives.

Kerfuffle #2: Political pressures, both formal and informal, push a public institution of higher learning to walk its talk and generate its energy services in as climate-friendly a way as it can. Members of our community are very vocal about the ethical and moral requirement to stop emitting carbon from our power plant. And it is not just community members – we are also required by the UC systemwide sustainability rules to decarbonize. So, no fossil plant for you. 

Kerfuffle #3: The economics of evaluating different alternatives are tricky. For example, discount rates are easy to apply in theory, but trying to figure out what discount rates to use for the private portions of an investment that is going to outlive most of us and the right one for the social benefits/damages it generates is not straightforward, especially when (unlike the federal government) there are no “set guidelines” for this. The choice of discount rate in our setting is likely going to drive which technology wins out in the end. I was also super excited to run into the latest work on the Social Cost of Carbon and the Social Cost of Methane in an actual project setting – not just when I am thinking big thoughts. Thank you federal government for these numbers (and the excellent prose explaining them).

Kerfuffle #4: Reliability is critical in a university setting. You might think that an outage just means that a bunch of students might not be able to charge their phones, but there are real safety and scientific consequences to outages. Lights going out in heavily populated areas is clearly a safety hazard. Labs on campus, as we learned during the pre-pandemic public safety power shutoffs, require electricity to conduct “science”. The loss of refrigeration can lead to irreversible loss of scientific materials, like ice cores and cell cultures stored in fridges and freezers. Further critters of all sizes need to be kept comfortable, so air conditioning is key. For coding nerds like me, we use computers calculating things that take a long time to run, and if they stop, you often have to start from scratch. So having power is key and hence having control over when and where the power stays on and goes out is key. This is easier to do if you have a power plant (possibly augmented with battery storage) onsite than offsite and the ability to direct energy to the most important needs. 

Kerfuffle #5: A university is a research and teaching operation. We build things and learn by doing so. A significant share of our graduate and undergraduate students are interested in doing their part to push along the energy revolution. Whatever project we finally decide on pursuing will have, in part, been informed by research done in our own labs and spreadsheets. Going forward, a new energy system on campus should provide ample learning opportunities for our current and future students. 

Kerfuffle #6: Paying for such a major piece of infrastructure can be tricky. Energy infrastructure is not cheap. The state has already apportioned significant funding to help us start the first phase of the project (thank you Sacramento and people of California!). So, how to pay for the replacement infrastructure is of course on everyone’s mind. But if we go with a carbon neutral piece of technology, like giant heat pumps, we will need more electricity than we can generate locally. So we will buy (low/no carbon) electricity off the grid, which we have to pay for to operate our gadgets. Hence we need to be thinking about energy price risk – in a finance sort of way. In order to make good decisions, we need to have a good understanding of the future distribution of energy prices and prices of cap and trade permits in California. Making the best decision from an economic point of view is going to involve not only a best guess of “one number”, but a characterization of the range of possible price outcomes. 

Kerfuffle #7: Incentives clearly matter. In a world of growing energy demand, setting the right incentives for energy users on campus is key. Our campus is gorgeous, but our buildings are not new. Severin, Meredith and the Jims have thought a lot about optimal energy pricing, but this assumes good measurement. How do you do this when you can’t meter individual users in an environment where big buildings have very heterogeneous user populations and consumption patterns? 

So while this is not my funniest or most interesting blog post, I am really enjoying being part of this task force, since it makes what we do here so very real. Addressing these kerfuffles will not be easy, but it also makes me realize how far we have come in terms of providing real numbers used in day-to-day decision-making in institutions large and small. High fives fellow energy and environmental economists. I am proud of us. Let’s keep up the good work.

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Suggested citation: Auffhammer, Maximilian. “The Death of a Power Plant” Energy Institute Blog, UC Berkeley, February 26, 2024, https://energyathaas.wordpress.com/2024/02/26/the-death-of-a-power-plant/

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Maximilian Auffhammer View All

Maximilian Auffhammer is the George Pardee Professor of International Sustainable Development at the University of California Berkeley. His fields of expertise are environmental and energy economics, with a specific focus on the impacts and regulation of climate change and air pollution.

22 thoughts on “The Death of a Power Plant” Leave a comment ›

  1. I suspect that the successor technologies will be primarily heat-pump driven for heating and cooling, and that the system will include enough on-site storage to carry the university through grid outages. 

    Whether the electricity production to drive these will be primarily on-site or off-site will be influenced by the retail pricing of electricity in California. 

    California’s high retail rates will create an advantage for on-site production. That may be solar, as California is making natural gas production ancient history very quickly.

    High demand charges will mean a lot of local storage, dispatched largely to manage demand charges, not primarily to follow low-cost energy periods. 

    Hydrogen-fueled cogen will be studied, but rejected because of high cost. As it should be. But it will have a place as a backup generator fuel.

    An on-campus small modular reactor will be discussed … for about 2 minutes before it is rejected as unacceptable economically and politically. 

    Energy efficiency improvements should be at the core of any solution. The 80% reductions in usage of new homes in net-zero communities like this one in Colorado are the best place to start in any major energy renovation project. https://www.canarymedia.com/articles/carbon-free-buildings/this-colorado-community-is-already-living-in-the-all-electric-future

    In the end, the campus will, I hope, be largely self-reliant based on-site solar, with enough storage to carry through a longer grid outage, and a grid connection that is seldom used. And, perhaps a hydrogen-fueled backup generator, that runs a few hours here and there, from hydrogen locally produced with solar production that is excess to needs, mostly on weekends when building loads are lower.

    It can be a very bright future. It will cost a bunch of capital, but the State can borrow so much cheaper than PG&E that the economics of investing in solar, heat pumps, storage, and a little bit of hydrogen production will likely be compelling.

  4. Perhaps consider making a wam thermal loop and a cool thermal loop network to join exothermic campus buildings (offices, class rooms, labs) with endothermic campus buildings (housing and pools) connected by low cost uninsulated directionally bored piping in thermal contact with the ground. Then locate water source heat pumps in the buildings to extract or deposit heat into the appropriate loop that transports the heat to the next symbiotic building on the loop. Some of the thermal energy (warmth or coolth) is stored in the soil through which the pipes are bored.   Then apply power efficient design strategies to make delivering the electricity to run things easier. The campus could use scaled up versions of strategies discussed in tis blog. https://www.canarymedia.com/articles/electrification/yes-its-possible-to-electrify-a-home-on-just-100-amps

    You might try ‘solar cogen’ where on cold days the building intake air is drawn from behind warm solar PV panels as sort of a “warm economizer”. And building exhaust air is directed year round toward any rooftop air source heat pump compressor units placed nearby that enjoy its residual heat or coolth to operate better. All of these approaches apply good design and low comparative capital in pursuit of “two-fors” like cogen tries to produce.  

  5. Join the East Bay Community Choice Aggregator for 100 percent renewable energy and build a battery on campus to provide the reliability backup. Your article never stated what the campus load is in MW, or how much electric energy is consumed.

    • Partnering with the EB Community Choice Aggregator should be a priority until it becomes obvious that this would not be beneficial to either. Sonoma Clean Power, the CCA for Sonoma, Mendocino & Lake counties currently has Eavor Energy, Cyrq Energy & Chevron under contract to develop small footprint 24/7 Advanced Geothermal Systems (no fracking required) power plants within 5 years, to eliminate all fossil gas peak power from their generation sources. Chevron, Shell & other refiners have big oil refineries located very close to Berkeley. These existing refineries could be ideal locations for new 24/7 AGS power plants in the East Bay.

  6. There was a time when that “new fangled thing” was cogeneration!!!

    You will have to look at how to replace both the steam and the produced electricity. You just focused on the electricity. One option is to update the cogen enquipment and use hydrogen to fuel the turbine. That will probably provide the most reliable service(s).

  8. I believe that words help readers and writers become more aware of the issues involved. I have started using the terms “methane” and “methane gas” instead of just “gas” or “natural gas”. 

  9. Left out were two very important aspects, which is typical in this blog that pays homage to PG&E in particular and the fossil fuel industry as adjunct.

    The first is conservation. Our (homo-sapien) lives and lifestyles are going to be very different in a future that is sustainable. In our modern society, it is an anathema and death to a politician or bureaucrat to tell its constituency that they will be required to consume less. The alternative of not doing so is not just actual death, but extinction. Yes, it will have to be said, “You can’t charge your personal devices on campus, including your electric bikes.” Not just students, but every denizen of Cal will have to learn to plan ahead. eg. ride a push bike with a generator to charge your phone. Time to get over yourselves and at least act like you care about the future.

    Second, and I must use words that this blog considers extreme vernacular, “rooftop solar”, “community solar” and “micro-grids”. I’m not saying these technologies are going to supply 100% of the university’s needs. They would go a long way towards making the school itself sustainable. Of course energy storage is part of the solution, too, which would store energy coming from the wind of the Carquinez Straight.

    This part of the solution will not sit well with PG&E, a construction-company-that-happens-to-sell-energy (see: “HOW SOUTHERN CALIFORNIA EDISON MAKES MONEY”). Mr. Severin is well aware of that because he, too, is indebted. Indeed, PG&E subscribes to SDG&E’s vision of the energy future as described in “SDG&E’s Sustainability Strategy” which does not even allude to the aforementioned vernacular.

    That said, I sincerely hope you find a sustainable replacement for the power plant. While I am a retired electrical engineer, I walk my talk. I’ll offer my 50 years of experience to help you in this effort, pro bono. Severin will have my email.

    OSD

  10. I hypothesize that when all the alternatives are evaluated, then your old natural gas cogen plant will be replaced by a new natural gas cogen plant, along with a dedicated program of fixing leaky pipes. Soup to nuts, natural gas cogen is hard to beat from a pollutant/reliability standpoint.

    • I would agree that is what will be done, because it is the most co$t effective. This is what could be called sociopathic avarice.

      OSD

    • I agree. A new cogen plant would signficantly help meet the critical need for firm load as the university continues its ambitious renewable energy effort and quest for much larger and longer-lasting storage capacity. We’re still at least a few decades away from nixing the cogen plant.

      • We had a great meal just off Tappan Square in Oberlin last week where we learned about the great flood of 1913.  We were searching for a relatives resting place and/or his old house in the Russian district of town.   We found the street, noted in the 1900 census,  unfortunately  there was no sign of any building or foundation from that time.  

        We did find the towns co-generation facility.  I spoke to one of the linemen installing a new transformer on west college street on a new power pole.   The city and college are upgrading their distribution infrastructure and their co-gen plant.      

        https://www.bing.com/search?q=oberlin+generation+plant+&form=ANNTH1&refig=b50a55d7b6a24f158061e725a7f07325&pc=HCTS

        Oberlin, unlike CA, has taken the “affordable” part of their decarbonization goal to heart.   PG&E’s new rates took affect today and our old E-6 rate schedule was eliminated.     My father-in-law gets to deal with yet another increase in his electric bill.    The E-1 rate schedule in now up to an average kWh cost of 44.959 cents! 

        Mark Miller