Monday, February 24, 2014

The Complexities of the Water-Energy Nexus

The Heard on the Street Column of The Wall Street Journal last Wednesday illustrated the challenges of managing both the water and energy sectors during periods of interconnected system stress (California Power Market Gets Freeze-Dried).

Problems in the water-energy nexus are enormously complex.  The continuing drought in California highlights the challenges and interconnections between water and energy.  The Wall Street Journal highlighted this in a recent article.
“More than half of California is classified as being in a state of extreme drought, according to the U.S. Department of Agriculture.  Recent storms have brought some snow to parched slopes – including Tahoe’s – but they come very late: California’s snowpack is just 10% of normal levels, according to Citigroup.  The problem extends up the coast, with the Northwest River Forecast Center earlier this month reporting lower-than-normal precipitation in the region this season.

This matters because almost half of U.S. hydroelectric lies in California, Washington, Oregon, Idaho and Montana.  California, the country’s second-largest electricity market after Texas, got 17% of its power this way in the decade ending 2012.
So if rivers are low, the state has a problem – even more so when other sources of energy are stressed as well.”

Extreme winter weather and constraints in the water-energy nexus forced natural gas prices entering California up to $15 a million BTUs in late January from $4.19 at the end of 2013.  From the Wall Street Journal article:
“Adding to this is the fierce cold and snow battering New York a host of other places across the U.S.  Natural-gas-fired power plants make up more than 60% of California’s capacity, so these take the strain when the rivers run dry.  The problem is when the rest of the country needs gas for heat, supplies can be constrained.”

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