Louisiana's renewable energy program starts to pick up steam, two ...

When Louisiana regulators launched a pilot program to encourage the development of renewable power sources, Greg Nolan Jr. saw an opening for his Thibodaux sugar mill. Nolan's mill, Lafourche Sugar, had long desired to create its own power by using a sugarcane byproduct called bagasse.

By cutting its own power costs and selling electricity back to the grid, the project would boost Nolan's bottom line. And now he had a willing buyer -- Entergy Louisiana -- which needed an environmentally-friendly energy partner.

While the state's major utilities have largely been slow to buy into the program, several new proposals have been filed with the state in recent weeks, and utility regulators say they are growing more optimistic that the pilot could begin to spur investment in smaller-scale renewable energy options, like Lafourche Sugar.

The state Public Service Commission launched the pilot two years ago to get utilities ready in the event that federal or state officials put in place a renewable portfolio standard that would require companies to generate or purchase some of their energy from renewable sources.

The program hopes to create up to 350 megawatts of long-term renewable power, or enough to supply 2 percent of the state's energy needs, by way of a request for proposals from companies interested in developing renewable energy technologies, such as biomass, geothermal, hydro, solar or wind.

In developing the program, state regulators assigned each utility a number of megawatts that it would be required to generate, either by building their own project or contracting with existing initiatives.

Circumstances surrounding the program have changed since it was introduced, with natural gas at decade-low prices, and climate change legislation off the table in Congress, at least for now.

PSC Commissioner Clyde Holloway, R-Forest Hill, expressed frustration at the board's September meeting that the wait for utilities to submit their proposals has dragged on so long.

"It's political at this point, but you know, I just want to see it move forward," Holloway said in a recent interview.

Entergy Louisiana, which serves Algiers and suburban areas south of Lake Pontchartrain, submitted its first application with the PSC in September, proposing a 20-year deal to purchase 28 megawatts of power from the Rain CII petroleum coke facility in Sulphur.

The plant recently completed work on a $70 million waste recovery system that captures heat -- which used to be released into the atmosphere -- and converts it into steam that powers a turbine generator that then produces electricity.

Entergy says the deal with Rain will allow it to "procure electricity that features no additional conventional fuel consumption, taking advantage of a resource that would otherwise be lost to the atmosphere," according to a September filing with the PSC.

"It is basically taking something that just goes up in the air and using it to produce energy in a way that is very environmentally beneficial," said Andrew Owens, director of regulatory affairs for Entergy, which hopes to have the project approved by December.

Owens said the power supplied by the waste recovery system is very dependable.

"It's operating around the clock, as their plant operates," he said, and it adds to the diversity of the utility's fuel mix, which is important for keeping prices stable if one type of fuel, like natural gas, were to spike in price.

"It's a win-win for everybody involved," Owens said.

Meanwhile, Cleco Power, which serves customers on the north shore, has studied the possibility of burning woody biomass at its Madison 3 plant as a potential fuel source, since the 600-megawatt unit is located in a timber-rich area.

The plant is powered by burning petroleum coke, a byproduct of the oil refining industry, in its boilers.

But the Pineville-based utility company determined that making the switch would require hitting retail electricity customers hard: Capital improvements would cost typical customers up to $1.62 a month, while the minimum increase in fuel production surcharges would carry a price tag of about $19.09 per megawatt-hour.

In a limited test, Cleco found that co-firing enough biomass to generate its share for the program, about 43 megawatts, could not be done for more than a few hours.

The company, in an August filing with the PSC, contended that requiring it to go in this direction would hamper efforts to provide a cheaper fuel alternative in the future, particularly if natural gas prices remain low.

Under the program, Cleco is also building the Cleco Alternative Energy Center in Crowley, which will be used to study and develop alternative energy technologies in conjunction with the University of Louisiana at Lafayette.

Elsewhere across the state, Cleco has invested in solar projects in Rapides, Iberia and Sabine parishes to study how the equipment performs, as well as a wind turbine at the foot of the Causeway in Mandeville.

The Southwestern Electric Power Co., which has 225,000 customers in north Louisiana, received approval last December to purchase 31 megawatts of electricity from the Flat Ridge 2 wind farm in Kansas in a 20-year deal.

The project is expected to start before the end of the year. SWEPCO, in its filing, said it studied the efficiency of other renewable resources, like biomass, hydroelectric and solar, but "did not find these renewable resource options desirable alternatives at this time for its Louisiana customers," according to the filing.

At the beginning of this year, SWEPCO, a subsidiary of American Electric Power, had agreed to purchase about 359 megawatts of renewable energy from wind projects in three states, including its portion of the pilot program.

For Entergy, the arrangement with Lafourche Sugar -- to produce up to 5 megawatts of electricity, enough to power as many as 5,000 homes -- is relatively low-risk. If the mill's operators decide it isn't working as well as they hoped, or that it proves too expensive, they can pull out of the arrangement without penalty.

Entergy officials declined to say how much its projects are expected to cost, some of which could be passed along to ratepayers.

Jimmy Field, R-Baton Rouge, the vice chairman of the PSC, said he was "a little disappointed that we haven't moved faster," but understands that the process takes time.

"It's just hard for renewable sources to compete on an economic basis," Field said.

Source: http://www.nola.com/business/index.ssf/2012/10/two_years_later_state_renewabl.html

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