The Transformation of the Energy Sector

ELECTRICITY
Will Okla. disrupt Biden’s 100% clean energy goal?
Edward Klump, E&E News reporter • Published: Thursday, May 6, 2021

Reaching President Biden’s goal of 100% clean electricity by 2035 would require a massive shift away from fossil fuels across the U.S. – including in red states.

As Oklahoma shows, that may not be easy.

The state’s natural gas devotion is setting up a potential clash with the White House and environmental groups as Biden eyes climate action through a flurry of executive orders and his $2.2 trillion infrastructure plan.

But while Oklahoma’s approach to electricity isn’t aimed at meeting the Biden administration’s decarbonization goals, state leaders are still betting they can foster renewables and slash emissions while keeping the lights on.

Just don’t expect Oklahomans to stop relying on natural gas for power anytime soon.

“We’ve been pretty good at putting renewables on the grid,” said Kenneth Wagner, Oklahoma’s secretary of energy and environment. “We’ve been pretty good at lowering carbon. We see that trend continuing, and without driving up artificial costs by making us remove natural gas and making it more difficult.”

Oklahoma depends mostly on a blend of generation fueled by natural gas and wind, and it’s part of a multistate grid managed by the Southwest Power Pool. While Texas was hammered by long outages in February as power supplies fell short of demand in a cold blast, residents in Oklahoma generally saw short interruptions in electric service tied to controlled outages during that extreme period.

But Oklahoma did see extraordinary gas costs estimated at $3 billion to $4.5 billion, according to Wagner.

He said the state is investigating why gas prices rose during the storm, and ii is turning to low-interest financing to help smooth out some potential bill impacts on residents over time. Oklahoma leaders don’t want a big price spike to happen again, but they also don’t want to give up on natural gas.

Wagner, a former senior adviser to the administrator at EPA, described Oklahoma as a “pioneer” in energy and said hydrogen development may be another area for future growth. He said hydrogen and gas are complementary in terms of production and power generation.

For now, Oklahoma can point to carbon-cutting accomplishments from its evolving generation mix. That includes a roughly 34% drop in CO2 emissions from the state’s power sector from 2005 to 2018, according to data from the U.S. Energy Information Administration cited by Wagner’s office. EIA often reports that Oklahoma has among the lowest average residential power prices in the country, but it had some of the highest electricity prices in .Efil2illi!I, Y.

Johnson Bridgwater, director of the Oklahoma Chapter of the Sierra Club, said the February freeze showed natural gas wasn’t reliable or affordable. “We have been brainwashed in Oklahoma,” Bridgwater said. “We have drunk the Kool-Aid of fossil fuels.”

The Sierra Club said Oklahoma should be looking to move to sustainable, renewable power generation. Proponents of fossil fuels point out that building, installing and maintaining wind and solar facilities come with certain carbon emissions and other environmental impacts.

It’s true that no firm plan exists to shift Republican-led Oklahoma toward a generation mix that doesn’t rely heavily on natural gas, which still releases emissions

– albeit much less CO2 than coal when burned in modern plants.

A White House spokesperson didn’t provide a response to E&E News on questions about natural gas, electricity and Oklahoma in time for publication. Biden’s campaign called for moving to a 100% carbon pollution-free U.S. power sector by 2035.

Wagner, who worked under both administrators Scott Pruitt and Andrew Wheeler at EPA, indicated an intention to work cooperatively with the Biden administration – while saying Oklahoma would review any new proposals. Lawsuits from states have already started to fly over some of Biden’s policies , including a suit over a halt on oil and gas leasing on federal land from Louisiana, Oklahoma and a number of other states.

“I will stand firmly against any executive action of the Biden administration that hurts the oil and gas industry in the state,” Oklahoma Attorney General Mike Hunter (R) said in a statement.

In the meantime, Oklahoma’s power sector remains tied closely with the Southwest Power Pool, or SPP, which helps manage the grid in all or part of 14 states as a regional transmission organization. That’s different than  the main Texas grid ,  which  is mostly  isolated. SPP  has said its  2020 load was served more by wind than any other source at about 31%, though coal and gas weren’t far behind.

Oklahoma’s power generation as reported by SPP was about 48% from gas and 42% from wind in 2020. Nearly 9% was tied to coal. Surplus power produced in Oklahoma can go to other states, and vice versa, and solar and batteries may change Oklahoma’s power mix even further over time.

Using natural gas and renewables is the “perfect combination” for Oklahoma, according to Mark Yates, vice president of the Advanced Power Alliance, which advocates for utility-scale wind, solar, energy storage and transmission infrastructure.

“I think we’re going to have a nearly 50-50 blend between gas and renewables,” Yates said, adding that generation may trend heavier toward renewables over time.

Yates also touted Oklahoma’s efforts to lower emissions through market forces. He said the state is “not bound by arbitrary dates into the future to meet certain goals.”

Sooner energy

Oklahoma’s origin story revolves around people eager to be first – those who “jumped the gun” in a race for land in 1889. The University of Oklahoma has

g@P-P-l ed   with the controversial and complicated history of the so-called Sooners, who rushed to claim spots after Native Americans were moved.

The energy industry is also ingrained in Oklahoma’s culture, built from more than a century of oil development and more recent pushes to tap shale formations and set up wind projects. In 2020, a federal snaJlshot shows, Oklahoma was the fourth-biggest producer of crude oil and marketed natural gas among states. The state was third in the U.S. in terms of total net power generation from wind.

Brook Simmons, president of the Petroleum Alliance of Oklahoma, said the oil and gas business is also part of the current renewable boom.

“It doesn’t matter whether you’re talking about lubricants in wind turbines or whether you’re talking about hydrocarbon precursors for every synthetic blade manufactured,” he said, “or the fact that the energy and the components that go into solar panels require the oil and gas industry and those petrochemical precursors in many instances.”

The Petroleum Alliance has also been touting the role of gas in keeping the lights on in SPP’s region during the February cold blast.

The petroleum and wind industries have sniped at each other in Oklahoma over the years, especially as lawmakers moved to phase out certain state incentives for renewables ( Energywire, April 27, 2018).

Groups tied to fossil fuel interests were among the foes of a proposed wind and transmission project in Oklahoma called Wind Catcher, according to the Energy and Policy Institute, which promotes  renewable  energy. Opposition  to  Wind  Catcher  among  Texas  regulators  ultimately  doomed  that  project,  but American Electric Power Co. is moving forward with a different wind development in Oklahoma ( Energywire , May 28 , 2020) .

About a third of Oklahoma’s total economic output was tied to oil and gas as of 2018, according to the Petroleum Alliance, an industry group. That gives fossil fuels a strong talking point inside the state, though backers of the renewable industry have credited it for billions of dollars of investment as well as providing cleaner power in Oklahoma.

Bridgwater of the Sierra Club said economics will be the ultimate arbiter in how power generation is remade in Oklahoma.

“We can realistically say we can achieve 100% sustainable, renewable energy if the will of the public and the will of the state come together,” Bridgwater said, noting that battery storage would be part of that outlook.

The city of Norman, Okla. for example, J;!l edged    a few years ago to reach 100% renewable electricity by 2035.

Tale of 2 utilities

The Sierra Club laid down a marker in a January rimort about climate pledges, outlining different approaches that two of Oklahoma’s biggest electric utilities are taking.

The group said in a statement Oklahoma Gas & Electric Co. scored “an abysmal 4 out of 100, highlighting the utility’s lack of commitment to renewable energy.”

OG&E, which is part of Oklahoma-based OGE Energy Corp., said it has been cutting emissions while working to keep rates low. The utility touts a more than 40% reduction in CO2 emissions from 2005 to 2019. There have been efforts to convert some coal-fired units to gas and put scrubbers on certain ones that continue to use coal.

Looking ahead, OG&E is planning to boost its solar footprint and seeking to cut fleet emissions in part by using electric vehicles.

David Kimmel, a spokesman for OG&E, said the utility is comfortable using an all-of-the-above energy mix for electricity as it sees load and customer growth.

On the other hand, the Sierra Club said the Public Service Co. of Oklahoma scored 87 out of 100, “the highest of any utility in the report, due to the utility’s decision to retire its entire coal fleet and its ongoing commitment to wind and solar energy,” the Sierra Club said.

In a statement, PSO said customers indicate they want more clean energy, and it’s seeking to provide that without compromising reliability or affordability. The company plans to exit its remaining coal-fueled generation by the end of 2026.

“We believe using a balanced mix of natural gas and renewable energy delivers on our commitment to customers and the communities we serve,” said PSO, which is part of Ohio-based American Electric Power.

More wind is coming on this year and next year via the project that followed the failed Wind Catcher plan, including one already online. PSO also is involved in a proposed solar and natural gas p..!Qject at Fort Sill in Oklahoma.

Low-carbon strategy

The Oklahoma Corporation Commission provides utility oversight in the state, but its role has limits. Wind developers , for example, can push ahead and tap federal tax credits to make their projects viable.

The commission’s responsibility comes into play when a regulated utility files for cost recovery, according to Matt Skinner, an OCC spokesman. The outcome of such requests depends on whether a project is reasonable, useful and beneficial to the consumer.

“In terms of generation itself, we don’t approve power plants,” Skinner said. “We approve or disapprove, when filed before us, whether or not there can be cost recovery.”

The OCC’s Public Utility Division is examining a variety of emerging energy and utility issues, from battery storage to biogas.

Casey Cathey, director of system planning at SPP, said his organization also doesn’t determine what type of generation resources get built. SPP is an RTO, and its functions include acting as a transmission planning coordinator.

Based on member input, SPP directs the build-out of transmission upgrades for reliability and economic reasons in Oklahoma and elsewhere in the region. “Oklahoma is part of SPP’s region and benefits from these projects,” Cathey said.

Some members may disagree on individual projects, and the SPP board is the deciding entity.

In the meantime, Oklahoma and SPP plug ahead as officials in Washington eye new ways to push along the energy transition.

“I think heading into this new administration, you’re going to see some … pretty clear and rapid attempts to remake the electricity markets as well as the electricity production and generation side of things,” Bridgwater said.

Wagner, the Oklahoma energy and environment secretary, said solar energy may climb in Oklahoma as it comes down in price and the reliability of panels is greater over a longer period of time. He questioned the need for some sort of state incentive for solar, however. Wagner said natural gas has been key to putting so many renewables on the grid while keeping costs low and helping to reduce emissions. Hydrogen may offer a new angle for power plants going forward.

“We have a great low-carbon strategy, and we’re doing it better than almost anybody,” Wagner said. “And I hope that continues.”

Twitter: @edward_klump I Email: eklump@eenews.net

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