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Report/Paper: Humboldt County (CA) Energy Element Background Technical Report
Published by Humboldt County (California) (original article)

This technical report provides background for the Energy Element of the General Plan of Humboldt County, in rural Northern California. It is significant in its very detailed consideration of both the county's vulnerability to energy supply disruption (thanks to its remote location at the end of distribution lines) and its potential for expanding local energy production.

Published by Humboldt County (California), http://hdl.handle.net/2148/62

EXECUTIVE SUMMARY

Introduction

California state law requires each city and county to adopt and periodically update a general plan, which serves as a local blueprint for future physical development and guides most land use decisions. The Redwood Coast Energy Authority is assisting Humboldt County's Community Services Development Department in the preparation of an “Energy Element” as part of the County’s current General Plan update process.

The need for local energy planning is evident. This is particularly true for an area like Humboldt County that is somewhat remote and isolated from the rest of the energy grid. Uncertainty in the supply, reliability and affordability of energy, a shift toward decentralized electricity generation, and the associated land use, health, and safety issues all need to be considered by local planners. There is a close link between energy consumption and production and the physical development of land. Land use development policies strongly impact how much energy is consumed, and zoning and development strategies can affect the ability to develop and transport future energy resources. The development of an Energy Element for Humboldt County’s General Plan update can help ensure that policy decisions made now, which will guide the County for the next twenty years, take into account the region’s need for long-term energy sustainability.

Humboldt County has a number of unique features with respect to energy. It is isolated at the end of the electricity and natural gas transmission lines, and the capacity of these lines is not great enough to import all of the county’s required energy. Related to these capacity constraints is the fact that the county currently produces a large portion of its electricity locally and also supplies some of its own natural gas needs. Add to this the fact that the county has a tremendous amount of potential local energy resources, in the form of wind, wave, biomass, hydroelectric and solar power. And finally, there is a lot of local interest and expertise and a strong desire to develop long-term energy sustainability for the region.

What will a sustainable energy plan look like? It is likely to feature policies that will ensure energy supply continuity, reduce energy demand, increase energy efficiency, and advance the use of clean, efficient and renewable energy resources, especially those that are local. If the county develops long-term energy sustainability plans for the community, the benefits will be significant.

Energy Use and Cost

In Humboldt County, energy is used as a transportation fuel and as electrical and heat energy in homes, businesses, industries, and agriculture. In 2003 it is estimated that Humboldt County spent $319 million to meet local energy demands, the majority of which left the county. Approximately half of the energy was used as a transportation fuel (gasoline and diesel), with large amounts also used to meet end use electrical demands and end use natural gas heating demands. It is estimated the county’s end use energy consumption totaled about 17.4 trillion Btu’s. Because of inefficiencies in the generation and transmission of electricity, it is estimated that the county’s primary energy consumption totaled about 24.4 trillion Btus. Primary energy sources were comprised mainly of natural gas, gasoline, diesel, and biomass (wood waste and firewood).

Humboldt County electricity use in 2003 totaled 940 GWh. This was used primarily in the residential, commercial, and industrial sectors. Lighting and refrigeration were the primary end uses served in the residential and commercial sectors. Natural gas use in Humboldt County totaled an estimated 93.9 million therms, with almost half of this being used to generate electricity at both the Pacific Gas and Electric Company (PG&E) Humboldt Bay Power Plant and the Samoa pulp mill. The remaining natural gas was used primarily in the residential, industrial and commercial sectors. It was used primarily as a space heating and water heating fuel in the residential and commercial sectors.

Electricity use in Humboldt County between 1990 and 2000 increased by about 1.3% per year. Between 2000 and 2003 electricity use in the industrial sector (primarily timber) declined by 24%, causing a slight dip in total consumption. Based on past behavior it is expected that growth in electricity demand over the next 20 years will range from about 0.5% per year to 1.5% per year. Natural gas use in Humboldt County between 1990 and 2003 decreased at a rate of 1.0% per year, with most of the decrease occurring in the industrial sector. The statewide estimate for growth in natural gas demand is about 1% per year. Based on historic trends, one might expect lower growth rates in Humboldt County.

Gasoline and diesel consumption in Humboldt County in 2003 was about 71 million gallons. Between 1997 and 2003, consumption rose at 1.5% per year. The use of transportation fuels is closely linked to the number of vehicle miles traveled (VMT). Due to its rural nature, the county tallies more VMT than many more densely populated areas. Efforts to reduce VMT are critical to a secure energy future with respect to transportation fuels, and this can primarily be addressed through wise land use planning.

Local and Imported Energy Sources

The majority of primary energy used in Humboldt County is imported, with the exception of biomass energy. Essentially all of the county’s transportation fuels are imported. Although the majority of electricity is generated in the county, a large portion of it is generated using natural gas. The county imports about 90% of its natural gas; the rest is obtained locally from fields in the Eel River valley. The county has the capability of generating all of its own electricity. In fact, in 2001 during the California electricity crisis, Humboldt County was a net exporter of electricity. PG&E is currently soliciting offers to replace the aging 130 MW Humboldt Bay Power Plant. Replacement of this plant with local energy resources and perhaps a new, more efficient natural gas fired generator will be critical to the county being able to continue to meet its electricity needs.

Inventory of Local Energy Resources

It is estimated that the total electricity generation from local renewable resources could provide as much as 1500 MW of generating capacity and over 6000 GWh per year of electrical energy. This includes power from the waves, wind, biomass, small hydroelectric and solar. This is over six times the county’s current electricity consumption rate. However, there is a lot of uncertainty about how much of these resources can realistically be developed. For example, over 75% of the estimated renewable electricity resource would come from wave power, a technology that is in its early stages of development and therefore is quite uncertain. Even for well proven resources like wind, solar, and hydropower, there are many potential barriers that could impede development, including high costs, regulatory hurdles, lack of financing, siting and transmission access issues, and lack of public support. Nonetheless, the potential of these local resources is large and offers significant economic development potential. Using local resources to meet local energy needs would keep energy dollars circulating in the local economy, and exporting local energy resources to surrounding communities could bring in a new source of income to the county.

Opportunities to Reduce Energy Use

The results of statewide energy efficiency potential studies were used to estimate the efficiency potential in Humboldt County. It is estimated that in ten years, electricity savings in Humboldt County could total 85 GWh per year (8% of the county’s projected total electricity use), and natural gas savings could total 2.6 million therms per year (5% of the county’s projected total natural gas use). This represents a total retail value for electricity cost savings of $11.9 million per year and for natural gas of $1.8 million per year. While these energy savings estimates are more conservative than some studies indicate are possible, attaining these levels of savings would require a much more aggressive effort than is currently being pursued.

Efforts to reduce energy consumption in the transportation sector are also critical to the establishment of a secure energy future for the county, and decreasing the number of vehicle miles traveled is probably the most effective measure for reducing transportation energy use. Implementing land use planning that locates housing, jobs, and shopping in proximity, and provides bicycle, pedestrian, and public transit access will encourage alternative transportation modes and result in reduced vehicle travel. Replacing the importation of goods and exportation of waste with increased production and consumption of local goods (such as locally grown food) and local waste processing (through recycling, reusing, and composting) can also help reduce vehicle miles traveled. Increasing the proportion of energy-efficient vehicles can lower vehicle energy consumption, and alternative fueled vehicles may serve to diversify the energy resources upon which the transportation sector relies.

Existing Energy Transmission Systems

Humboldt County is remotely located at the end of the electrical and natural gas supply grids, and this limits both energy supply options and system reliability. PG&E owns the natural gas and electricity transmission and distribution systems in Humboldt County. There is one major natural gas supply line that serves the county and four electrical transmission circuits. The total electrical transmission capacity into Humboldt County through the existing lines is approximately 70 MW, which is less than half of the county’s current peak demand. Therefore, local electrical generators are critical to meeting local electricity needs.

According to PG&E, along with existing local electrical generation the electrical transmission system is adequate to meet the county’s needs for the next ten years. However, PG&E is planning to retire the Humboldt Bay Power Plant. This local electrical generating capacity will need to be replaced or the electrical transmission capacity serving the county will need to be increased in order to continue to meet local electricity needs. In addition to PG&E’s plans to replace its local generating plant, the utility has conducted a study to examine the option of increasing the electrical transmission capacity serving Humboldt County. New local generation, increased energy efficiency and demand response, and added transmission capacity should all be considered when assessing the options for meeting Humboldt County’s long-term electrical energy needs.

Trends in the Electricity and Natural Gas Markets

California faced serious electricity supply constraints in 2001, resulting in rolling blackouts throughout the state. Although the situation has improved, future supply constraints are forecasted if adequate planning and implementation efforts are not carried out. In order to meet future energy demands, the State of California has developed energy policies that favor energy conservation and efficiency first, renewable energy and distributed generation second, and clean, central station fossil fuel generation and improvements to the electricity transmission and distribution system last.

Starting in 1998 the State of California attempted to deregulate the electric utility industry with the goals of using competition to increase electricity supply and reduce costs for customers. Under deregulation, the investor-owned utilities in California were required to sell off their generating capacity and allow customers to buy electricity directly from suppliers of their choice (referred to as “direct access”). Unfortunately, the combination of poorly structured deregulation laws and major fraud and manipulation by suppliers resulted in power outages and billions of dollars in increased costs for customers. Deregulation, including direct access, was suspended in September of 2001. At this time it is uncertain what form of electricity industry regulation/deregulation will prevail in California.

In 2002, the California legislature passed Assembly Bill 117, the community choice aggregation law. This legislation allows local governments, alone or jointly, to aggregate the retail electric customers in their jurisdictions for the purpose of purchasing power. The utility still provides billing services and remains the default provider for any customers who choose to “opt out” of the program. This legislation allows communities to choose from whom they buy electrical power and what type of power to buy, as well as allowing them to negotiate how much they pay. Assembly Bill 117 also allows local governments, or other entities, to apply to administer energy efficiency programs in their jurisdictions. Although no jurisdictions in California have yet instituted a CCA program, many are pursuing the opportunity.

California began deregulating the natural gas market in the early 1990’s. Today both large industrial users and power plants (non-core gas customers) and residential and small commercial customers (core customers) can purchase natural gas directly from competitive suppliers. The demand for natural gas in the U.S. continues to grow, with use for electrical power generation being the prime driver. As a consequence, the U.S. will likely become increasingly reliant on natural gas from Canadian and overseas liquefied natural gas (LNG) imports to meet growing demand. Prices for natural gas will likely rise faster than inflation due to growth in gas demand, restricted supply, and the expense of developing new gas wells and pipeline capacity.

Opportunities and Constraints

Humboldt County is a relatively sparsely populated rural county that lacks the strong financial resource base often associated with more metropolitan areas. It is located in a remote, rural corner of the State of California. These characteristics pose numerous constraints, including: electricity and natural gas transmission issues, fuel supply and reliability issues, limited access to energy programs, limited access to capital resources, and limited buying power in energy markets.

However, Humboldt County’s remote, rural locale offers many opportunities as well, including a potential wealth of local renewable energy resources, a strong interest in developing local energy resources, and a desire to make wise and efficient use of energy resources and to be as energy self-reliant as possible. Humboldt County is known for its strong independent spirit, and that spirit extends to the area of energy supply and demand. Opportunities for the development of sustainable energy resources in the county include: the development of local renewable energy resources and distributed generation, increased energy efficiency efforts, the development and implementation of county-wide strategic energy planning, local management of energy supplies and services, and upgrades of energy transmission facilities.

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