Micron Electrical Needs and the Climate Act

One of the few members of the New York State media who has been taking the time to evaluate the potential impacts of the Climate Leadership and Community Protection Act (Climate Act) is Tim Knauss writing for the Syracuse Post Standard.  He recently had another good article published that addressed the energy needs of Micron Technology’s planned semiconductor fabrication plant,  His takeaway message was that, when fully complete, would consume more energy than the State of Vermont.  Richard Ellenbogen frequently copies me on emails that address various issues associated with New York’s Climate Act.  I asked his permission to present his evaluation of this article.

I believe that Ellenbogen truly cares about the environment and the environmental performance record of his business shows that he is walking the walk.   Ellenbogen is the President of Allied Converters  that manufactures food packaging.  His facility is about 55,000 square feet and does a lot of manufacturing with heat to seal the bags, all electrically driven.  The facility has solar panels and uses co-generation.  He explains:

In 2008, the average energy cost per square foot for a commercial facility in  Westchester was $1.80.  We were at 16% of that 12 years later and even with the increases, we are at 62% of that 14 years later.  That has been done while having a carbon footprint 30% – 40% lower than the utility system.  The $1.80 per foot  also included commercial office space and our operation is far more energy intensive than an office.  We use energy extremely efficiently and as a result, our bills are much lower than everyone else. 

Micron and the Climate Act

Knauss wrote an article that asked the question: How would Micron’s electricity-hogging plant here live with NY’s war on fossil fuels?  He explained:

When fully built, the complex of four chip fabs would use 640 million kilowatt-hours a month, more than enough for 1 million average New York homes.

Micron has promised to buy all that electricity from renewable sources, a promise that reflects New York state’s commitment to have an emission-free electric grid by 2040.  But Micron could find it tough to keep that promise unless the floodgates open to new wind and solar farms.

It’s one of the least-discussed challenges of the Micron project, as New York’s signature economic development success story collides with a major environmental aspiration.

Micron announced in October that it planned to invest up to $100 billion building four giant chip fabs at a 1,400-acre site in Clay. The fabs would employ up to 9,000 people directly and could spin off 40,000 more jobs, state officials said.

The development won’t happen all at once. Micron said it plans to start producing chips in 2026 and will fully build the complex within 20 years.

Knauss explained that the construction schedule coincides with implementation of the Climate Act.  By 2040 the law mandates the elimination of fossil fuels from the electric system.  As part of the plan to eliminate fossil fuel emissions everything possible will be electrified which means that load is going to have to go up:

Even before Micron surfaced, operators of the statewide electric grid were estimating an 8.7% increase in electricity consumption by 2035, according to forecasts by the New York Independent System Operator.

Micron could add another 5%, according to estimates worked up by National Grid and Micron as part of a term sheet agreement with state officials. The documents indicate that Micron could draw an average of 928 megawatts – the output of a large nuclear plant – as soon as 2035.

I have not followed the Micron agreement very closely but it depends a lot upon Federal and State incentives.  Those incentives come with strings attached:

Micron’s promise to use all renewable power is more than goodwill. Its ability to collect up to $5.5 billion in state subsidies depends on that pledge.

According to the term sheet Micron signed with economic development officials, the company agreed to use “100% renewable energy for electricity.”

Micron must enter a state-approved sustainability plan in exchange for the billions in aid. The plan has not been finalized yet, but there will be plenty of wiggle room. State economic development officials aren’t likely to box in Micron if it prevents the company from building.

There is a relevant component to the agreement.  According to their plans Micron intends to use natural gas for heating. Knauss claims (I have not verified) that “the company also would be exempt, as a manufacturer, from proposed state legislation that would require most buildings eventually to go all-electric.”

Ellenbogen Fact Check and Alternative Approach

Ellenbogen has a number of recipients on his email chain and one of them sent him the link to the Knauss article and asked the following question:

Rich, check out the following article. Micron is making promises about 100% renewable energy that they can’t keep without cheating. Maybe they will buy credits for curtailed electricity that never gets on the grid from solar panels in California. Also note the exceptions they are getting to use gas for heating while everyone else needs to electrify.  According to this, Micron will consume more electricity than all of Vermont. If so, they ought to be building their own on-site nuclear plant. (Seriously.) That would actually give them the process heat they need, too.

Ellenbogen responded with the following analysis.

I fact checked his information and the Micron chip factory actually will use more electric energy than the state of Vermont.  The factory will use 8.12 Terawatt hours per year and Vermont’s annual electric load is only 5 Terawatt hours, with a Terawatt Hour equaling 1,000 Gigawatt Hours.  Wondering how Vermont’s electric load could be so small, I checked and their onsite heating is only 6.26% electrified with the other 93.74% coming from fossil fuels or wood.  A pie chart documenting that is below and everything that you might ever want to know about Vermont’s electric utility system is in this pdf.

Ellenbogen hits the nail on the head when he points out that fossil-fired backup is necessary:

What I find interesting is that all companies want to locate in upstate NY and then claim that they are only using “green” energy from Niagara Falls or the upstate nuclear plants, ignoring the fact that all marginal generation in NY State will be provided by fossil fuels for many decades into the future.  While the Micron facility justifies the energy expense because of the 9,000 jobs, a realistic analysis has to be done regarding the best way to provide energy for that facility.

A nuclear plant would be a great zero-emissions alternative but the politically driven energy policy of New York would have to change dramatically to address the practical issues he points out:

While the person that sent me the email is correct about the use of a nuclear plant being the most environmentally friendly way to supply this facility, the $15 billion for a one gigawatt nuclear plant would add 15% to the projected $100 billion price tag and might make it non-cost effective.  It would also take a very long time to get the approvals and build the facility.   Additionally, the words “Nuclear Energy” might be the only words uttered in NY State that are more toxic than the words “Fossil Fuels”.   Chip manufacturing facilities use ovens at about 1000 degrees-C to bake the silicon wafers accounting for their enormous energy use.  Many processes use high energy lasers and microwaves, as well.

Ellenbogen goes on to evaluate how much solar would be needed.  I have some questions about the battery storage requirements and cost numbers but my numbers come to the same conclusion:

If we look at renewable options, to supply the 8.12 Terawatt hours  with solar arrays  at this facility,  accounting for storage losses,  would require a 9.28 Gigawatt array.  At 7.5 acres per megawatt of solar array would require 69,600 acres or 110 square miles of solar arrays.  To acquire farmland upstate to support that at the going rate of $3200 per acre, the land alone would cost about $221 million.  The array, at $2/watt would cost $18.56 billion and we haven’t calculated the storage costs or the interconnection costs yet, but 1 Gigawatt of storage for 90 days, which is the minimum that would be needed, would require a 2.16 billion KWh battery.    At $500 per KWh,  less than last year’s battery cost, the battery would cost $ 1.08 trillion.  Coupled with the array cost and the land, the total cost will be $ 1.098 trillion dollars or more than ten times the cost of the fabrication facility.    A large percentage of the $1.098 trillion battery packs would have to be replaced every 10 years as the batteries decayed and became unusable.

Even without the battery storage, the 9.3 Gigawatt array would cost more than the nuclear generating plant and would be unable to support the Micron facility (without batteries). It would add almost 20% to the project cost.  Renewables are less expensive than fossil fuel generation per kilowatt-hour if the batteries are not included.  However, where a fossil fuel or nuclear powered utility system does not need batteries, an intermittent renewable system will and that is where the price comparison collapses as the battery storage makes the renewables non cost competitive.

Ellenbogen also looks at using offshore wind.  Importantly he draws on his practical experience with carbon credits to discredit this alternative:

Alternatively, instead of solar the facility would require about 3 GW of the proposed 9 GW of offshore wind but the batteries would still be needed.  Either way, the numbers for this are ludicrous and no business will locate to NY State under these conditions.  Alternatively, the state is going to require Micron to buy carbon credits which is just putting lipstick on a pig because the emissions will still be there.  They will just be gone on paper.  I am familiar with carbon credits as I have been selling the credits from my arrays to utilities in Washington DC for 12 years.  They are designed as an incentive to make utilities want to install their own renewables rather than purchase the credits.  However, if they truly worked as planned, after 12 years the utilities would have installed the renewables and there would be a glut of credits available causing the price to drop.  In 2010, I was receiving about $440 per megawatt-hour of solar energy that we generated.  Last month, I sold them for $410 per megawatt-hour so the price has only dropped by 7% in 12 years.  While renewable generation has been installed to support Washington’s utility system, the credits have not been enough to induce the utilities to invest heavily in renewable construction.   If the Washington DC Government raised the price of the credits high enough to  induce the utilities to build their own renewables,  the utility bills would increase too much and the public would scream at the policy makers. 

Recall that Ellenbogen has developed an energy-efficient solution for his manufacturing facility.  He explains how that could work for Micron:

A far better solution that would also be cost effective would be to site a 1 Gigawatt combined cycle gas generating facility next to the Micron plant to provide its energy needs without long transmission lines that will increase line losses.  By doing that, the Micron facility could also take advantage of the excess thermal energy for its heating and air conditioning needs, which will be substantial.  It would be a co-generating plant on steroids and would relieve a lot of stress on the state’s transmission system.  A generating plant the size of the recently built Cricket Valley Energy Center (1.1 Gigawatts) would suffice.  That only cost $ 1.58 billion which is a small investment of an additional 1.6% compared to the $100 billion facility cost and would save the company money on its energy bills and simultaneously make them more cost competitive.  Additionally, the Cricket Valley Energy Center sits on 193 acres, 0.002 or 0.2% of the land area of the equivalent solar array.  Micron would recoup the $1.58 billion cost from energy savings..  Rather than the state forcing Micron to pretend to be environmentally friendly, Micron would actually be environmentally friendly.  However, the gas bans will preclude using this option all over the state because it doesn’t meet the ideological purity test.

He concludes his writeup:

This is what I was saying regarding the state’s policy actually increasing carbon footprint.  NY State’s energy policy may seem environmentally friendly, but it is just the opposite and will increase carbon emissions.  The policies don’t make any sense from an economic standpoint or an environmental standpoint.


Tim Knauss continues to impress me. He has done another fine job evaluating a technical issue clearly and accurately devoid.

With regards to the Micron plan – reality is always going to win.  The state’s hocus pocus shell game of energy and environmental policies don’t actually decrease costs.  Ellenbogen has offered an alternative that has worked for him and will work for Micron.   Unfortunately, the ideologues in the State won’t consider his approach.  I hope that this does not scuttle the implementation of the Micron plans.

Ellenbogen’s cover email concludes: “This is a classic example of how NY State’s Climate Law is going to raise Carbon Footprint, raise energy costs,  and damage the state economy, echoing my remarks at the Capital on Monday.”

Author: rogercaiazza

I am a meteorologist (BS and MS degrees), was certified as a consulting meteorologist and have worked in the air quality industry for over 40 years. I author two blogs. Environmental staff in any industry have to be pragmatic balancing risks and benefits and (https://pragmaticenvironmentalistofnewyork.blog/) reflects that outlook. The second blog addresses the New York State Reforming the Energy Vision initiative (https://reformingtheenergyvisioninconvenienttruths.wordpress.com). Any of my comments on the web or posts on my blogs are my opinion only. In no way do they reflect the position of any of my past employers or any company I was associated with.

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