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Guest Commentary

Snake River dams are an essential clean and low-cost part of Washington’s electrical grid

 

November 28, 2019



By Todd Myers

Part 1 of a two-part series.

OLYMPIA–As Washington state policymakers seek to transition to an electricity system of 100 percent O2-free energy, there is a problem for those who are pushing to destroy the four Lower Snake River (LSR) dams. The amount of reliable, low-CO2 energy produced by the dams is greater than all the wind and solar energy produced in Washington state combined.

As a result, those who want to destroy the dams are now claiming the electricity from these dams is not as useful for meeting the carbon-free goal as it appears.

For example, Michael Peterson, who has produced an anti-Snake River dams movie, claimed, “If we took those dams out, we would not need to replace the electricity and we would all save money…”1 Nobody who has researched the issue believes this, but the attitude is emblematic of the desperate attempts by some to minimize the clean-energy value of the dams.

One of those who disagrees with Peterson, but argues the electricity is overvalued, is Daniel Malarkey of the Sightline Institute. He recently published a piece on the dams claiming the “Snake River dams’ hydropower is no longer particularly cheap.”2

Daniel and I agree on a number of things, but his analysis of the dams leaves out a great deal of essential information and relies on speculation to make his math work.

The reliable, low cost of electricity from the Snake River dams

Daniel’s basic argument is that the cost of electricity from the dams is now relatively expensive. He argues the cost of electricity over the next 30 years will average $27 per megawatt hour (MWh), which is high for the regional market. He adds, “Given the uncertainty about the future, actual costs of power from the dams could range from $22 to $33 per megawatt-hour.” The Bonneville Power Administration’s (BPA) numbers, however, suggest this estimate is much too high. Snake River dams are an essential clean and low-cost part of Washington’s electrical grid Sightline Institute study on the dams underestimates the value of the dams for our state and for grid stability.

A BPA study from September 2019 notes that the cost of generation, excluding fish and wildlife charges, from the Snake River Ice Harbor and Lower Granite dams is about $14 per MWh, while the cost for the other two dams, Little Goose and Lower Monumental, is even lower, at $10 per MWh. The analysis also shows the cost of generation for the four dams is lower than most of the other projects in the Federal Columbia River Power System.

Using the most recent data for production from the dams and adding the $90 million in costs that Daniel claims BPA is ignoring, the cost per MWh hour comes to $23, at the lowest end of his estimated price range, and 15 percent lower than his average estimate.3

It is important to note that the numbers Daniel uses in the Sightline piece are speculative and are disputed. My purpose here is simply to show that even assuming the additional costs for fish and wildlife and overhead are correct, the cost estimate provided in the Sightline study is exaggerated.

An analysis by the Northwest Energy Coalition, which wants to destroy the dams, confirms the dams provide low-cost energy. Their analysis, cited in the Sightline piece, notes that replacing the electricity from the four Lower Snake River (LSR) dams would cost consumers an additional $464 million every year.4

Even this estimate is low because their projection only covers 86 percent of the electricity. If the cost for the additional 14 percent is the same, that would push the annual cost to nearly $540 million a year. Replacing the electricity produced by the dams would be very expensive.

Replacement energy is more expensive

Daniel, however, is hopeful that future costs will come down for wind and solar power. He claims, “the capital costs for utility-scale wind and solar have dropped by one third to one half” since the NW Energy Coalition’s study was published. He provides no support for this claim.

Claims about hoped-for dramatic reductions in solar costs are often “capacity weighted,” which means they are based not on projected averages across states but are based on costs where solar is currently being built, which is primarily in the southwestern United States. If we were replacing the Snake River dams with solar power produced in Phoenix, Arizona these estimates might be useful. Since we are not, they are not.

As evidence that costs for solar are coming down, the Sightline piece does mention the fact that earlier this year, “Idaho Power signed a long-term power purchase agreement from a solar project at $22 per megawatt-hour.” This statement is extremely misleading.

First, that price includes federal subsidies. The agreement, which is currently being considered by the Idaho Public Utilities Commission, notes:

“The pricing in the PPA [power purchase agreement] relies upon the Seller’s ability to safe harbor the current 30 percent federal investment tax credit benefits prior to the end of December 2019, after which time those benefits begin to step down.”5

The price, with the lower Investment Tax Credit (ITC) that will be in place after 2022, would be closer to $27.50 per MWh, 25 percent higher than Sightline claims.

The federal government is phasing out the Investment Tax Credit, so the cost to replace the LSR dams with solar power would be higher in the future. The Energy Information Administration projects a significant increase in levelized cost of electricity (LCOE) for solar and wind power after 2019, noting, “For both solar PV and onshore wind, LCOE increases in the near term with the phase-out and expiration of ITC and PTC, respectively.”6

Rather than costs going down, projections are that the cost of installing solar and wind will increase. One of the arguments made by dam opponents is that the operation of the dams is subsidized by the federal government in a variety of ways. It is fair to argue that we need to be honest about the subsidies in the system. It is not fair, however, to complain about subsidies for the dams while ignoring the massive, and expiring, subsidies for energy like solar and wind power.

Myers is with the Washington Policy Center.

 
 

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