From the Editor's Desk

Next Up - The Transactive Explosion

Thu, 23 May 2013 16:28:00 -0600

There was smart grid. Then there was information analytics. Next up, some very smart energy researchers and thinkers believe, is transactive energy. Former utility exec, Roland J. Risser, now director of the Department of Energy's Building Technology Office, put it this way: "We need a whole new business model for utilities going forward." He made that comment today at "1st International Conference and Workshop on Transactive Energy" in rainy Portland. It is always thrilling to be in on the ground floor of the "first" of anything. And the atmosphere in the Portland General Electric conference center, where the meeting is convened was, well, electric. Also from DOE, William Parks, observed, "I don't think it is going to be a single business model." Several industry leaders say that now that we have intelligence getting deployed throughout the grid, how do we put a value on it? That is where transactive energy comes in. It is a concept partly spawned at the Bonneville Power Administration, nurtured and tested in the Northwest. Jeffrey Taft, Cisco Systems chief architect, connected energy networks, said, "TE represents a method of handling scaling issues that will arise as hundreds of millions of endpoints become active participants in the power delivery process." Philip Jones, president of the National Association of Regulatory Utility Commissioners, said that updwards of $1.5 trillion will be spend on electric infrastructure by 2030. Taft said that in an increasingly chaotic grid universe sound investments allowing for transactive energy must be made to avoid "cementing" in bad technological choices. Jones cautioned that transactive energy proponents must step up and make a clear case for the technology with the public and with state regulators who largely are not engineers. But big changes are coming, said Ronald Ambrosio, IBM chief technology officer, Smarter Energy Research. "You have institutions around the world focused on this economic signal as a distributed control system signal."

Ending Renewable Stupidity

Wed, 15 May 2013 15:54:00 -0600

The Italian utility executive smiled thinly a few years back. He was explaining why his company’s investments in solar power were planted largely in the north of his country – when the sun beamed down much more intensely in the south.

Similarly, the Oregon utility executive was a bit sheepish when I asked him why Oregon has been so bullish on solar when gray rainclouds blanket the region for a sizable stretch of the year. He confessed that on a cloudy day the units produce a fraction of their potential.

Germany is similar far from sun-kissed– yet Germany has been one of hottest spots on earth when it comes to solar developments.

It has largely been a matter of politics and policies. Those regions that want to be green become green – regardless of their unique climate conditions.

But in yesterday’s email there was a release about a fascinating study by Siemens stating that Europe is losing as much as $58 billion by putting renewables in the wrong location.

The potential savings of taking the stupidity out of renewable deployments would be 4 to 5 times the annual investment in wind and solar construction in Germany, Siemens said.

The $58 billion could be saved between now and 2030 if renewables are installed where it makes most sense.

Siemens says it is taking a look at the global picture and will report its findings at the World Energy Congress in South Korea in October.

It makes loads of sense to have the Northwest fully exploit hydro, the Midwest wind, the Southwest solar and the Southeast biomass. But that will require a national policy introducing greater rationality into energy planning.

It will require taking the stupidity out of renewables and injecting sound business and technological sense.

Solar Stakes Soar - Fights Break Out in US, Europe

Tue, 07 May 2013 15:28:00 -0600

For those tracking the dimensions of the solar stake in power – interesting stats came in the morning Wall Street Journal.

SolarCity, the solar installer, is going to court, alleging the government did not provide promised levels of grant support, the Journal said.

The federal government handed out more than $4 billion in federal grants for solar projects in the past four years under its efforts to stimulate the economy.

Over across the pond, the European Union is about to follow America’s lead in getting tough with China for unfairly pricing its solar products. This is a big deal. Chinese solar exports to Europe topped $27 billion two years ago, or a whopping 7 percent of China’s exports to Europe. That was sufficient to capture 80 percent of the solar panel market in Europe, which has been a leading user of the technology.

Europe is said to be considering slapping a 46 percent import duty on the Chinese solar imports to their shores, the Journal reported.

What does it all add up to?

You got to hand it to the Europeans – particularly the Germans. Anyone who has visited Germany will know it is not the sunniest spot in Europe. Yet a tidal wave of policies encourage widespread deployment of solar there over the years because the government wanted to pump steroids into their solar manufacturing base.

Now they are shocked – shocked – to have to deal with the consequences of others pursuing similar policies.

Back in the states, SolarCity, a scrappy, entrepreneurial outfit, wants to make sure that they get their promised share of Uncle Sam’s largesse.

Solar power is an interesting wild card in the future of energy. It will decentralize massive grids, at least on a small scale – but perhaps significantly.

Governments in Europe, China and the United States have attempted to spur their domestic solar companies at different times, in different ways.

It makes you wonder.

Where would solar be today if government had stayed out of the business?

And how long will it be until solar technology evolves to the point where governments’ embrace becomes irrelevant?

Europe?s Carbon Collapse

Thu, 18 Apr 2013 08:40:00 -0600

Not very long ago, I asked a utility CEO in America who could give me a full explanation of how carbon trading would work. That exec connected me to Tony White in London, who helped steer a firm called Climate Change Capital. He had advised the European Union on its policies.

Shortly afterwards, I remember taking an early morning train to White’s offices in the heart of London’s financial district, where he explained in details how first Europe, and then the rest of the world, could best tackle climate change. Despite jet lag, I paid close attention.

Five years ago, White wrote a detailed piece in EnergyBiz magazine in which he observed, “In order to encourage investments in projects that reduce CO2 emissions, we will require the market to be confident that there will be suitably high prices for extended periods. This requires institutions that can provide long-term, visible and demanding caps on emissions.”

This week, reports about the future of Europe’s carbon regime are grim.

“Europe, which led the world in creating a system of emission permits to combat greenhouse-gas emissions, dealt a potential death blow to that system on Tuesday,” the New York Times reports this week.

Carbon permits that were close to $32 per ton of carbon in 2008 now hover around $6 and may be headed lower.

White was right in his predictions of what could go wrong. The institutions set up in Europe to support the carbon trade failed to keep the price of the permits sufficiently high.

When White wrote his piece for us in 2008, all leading presidential candidates in the United States supported cutting greenhouse gas emissions, and Europe’s cap-and-trade approach was favored over a straight carbon tax. The House passed a carbon trade law in 2009 but the Senate did not.

Ironically, the use of coal to generate electricity in Europe is climbing while in America – without a carbon trade regime – coal-fired generation is in retreat. Coal is a major source of greenhouse gases.

A number of economists and energy thought leaders still embrace the carbon tax as a way to attack climate change while being “revenue neutral” and not a burden to consumers. It also can be used to put real muscle behind energy R&D in America. [See last week's blog.]

Whatever our ultimate course, the sorry European carbon saga is a reminder that good intentions are not enough when designing complex policy.

Meanwhile, California is walking down the carbon trade trail. We will be watching what lessons they will be learning from the Old Continent.

Move Over Tea Party ? Make Way for Carbon Tax Party

Mon, 08 Apr 2013 13:44:00 -0600

You saw it – didn’t you? George Shultz opines in today’s Wall Street Journal that we need to bring on the carbon tax – and make sure to keep it revenue neutral.

The carbon tax should support “reasonable and sustained support for research and development in the energy area,” writes the former secretary of state and Treasury secretary.

It is an argument that I have been hearing from utility executives for many years now.

The only people not talking about it in a significant way are the members of the Senate and House in Washington.

EnergyBiz earlier this year carried a thoughtful piece by John M. Reilly at MIT reporting that a carbon dioxide tax of just $20 a ton would raise $1.5 trillion over a decade and slash emissions one-fifth by 2050.

Reilly argues that a carbon tax could help avoid tax increases and cuts in needed government services. It would also would stimulate the economy and help steer our energy sector over the long term.

Schultz and his co-author, a Nobel Prize winner in economics, believe the carbon tax can work without increasing government spending. In fact, they would like to see the revenues generated by the carbon tax returned to taxpayers through the IRS or Social Security.

Reilly, Schultz and a few others are raising a big idea that would have a big impact. Details of how it would work need to be thought out.

Energy leaders should be calling on the men and women in Congress and asking them – point-blank – why they are not thinking big.

News from GM and Canada's Tar Sands

Wed, 06 Mar 2013 13:40:00 -0600

GM expects to have 500,000 electric vehicles on the road by 2017. So predicts Daniel F. Ackerman, General Motors chairman and chief executive.

Ackerman told attendees at the annual IHS CERAWeek gathering in Houston that EVs in many forms - including all-electric powered and hybrid vehicles - will revolutionize transportation in America. The electrics produced by GM will save 12 billion gallons of fuel between 2011 and 2017, he said. Globally, Ackerman said, turning increasingly to EVs "will make us a much more formidable competitor."

To best orchestrate America's energy future, Ackerman Wednesday called on President Barack Obama to appoint a blue-ribboned committee to develop a 30-year national energy strategy for America that will be updated every five years. Such an effort will extend current U.S. abundance of oil and gas resources well into the future, Ackerman said.

On that point, Joe Oliver, Canadian minister of natural resources, said that the United States is on a path towards becoming the largest producer of oil by the end of the decade. Building the Keystone pipeline, now under final review by the Obama administration, will make North America oil independent, Oliver said. America will need to import one-third of it's oil in 2035 and beyond, he said. Canada can provide all of that imported oil, Oliver said.

The future of America's energy policies will be fully aired at the EnergyBiz Leadership Forum in Washington March 18-19.

Here Comes Honda Power & Light!

Mon, 25 Feb 2013 13:33:00 -0600

Utilities execs were nervous for a time about the competitive threats that may be coming from the likes of Google or Microsoft.

Those threats have receded for a number of reasons.

But barreling down the freeway – Honda.

The Japanese automaker announced last week it would be teaming up with SolarCity to offer sweet deals for home solar for Honda customers.

I spent Monday morning on the phone with some of the architects of Honda’s new gambit.

Full coverage will be coming in upcoming issues of EnergyBiz, the print magazine, and my online newsletter, View from the Top.

For now suffice it to say one top Honda exec thinks utilities are crazy if they don’t start offering customers innovative financing packages for solar and distributed generation because others will.

Honda, for example.

This is a perfect example of themes to be discussed at our upcoming EnergyBiz Leadership Forum – Strategies for a Radically New Utility Universe,” March 18-19, in Washington

Smart Grid as Business

Wed, 23 Jan 2013 15:26:00 -0600

Utilities have been installing smart grid technology for years now. Many have justified the investment to their state regulators by saying that the operational gains more than justify the spending. Many have had a healthy assist in making that investment from federal stimulus funds a few years back.

Utility chief executive officers tell us that now is the time to step up efforts to extract maximum benefits from the revolutionary technology they have bolted to their systems.

That is the subject of the cover story package for the current issue of EnergyBiz magazine.

It also is a key focus of the upcoming EnergyBiz Leadership Forum in Washington, March 18-19.

And today, Thursday, January 24, utilities on both coasts will tell us their take on this important issue as we convene for a webcast 11 a.m. EST. You may register by clicking here.

Lee Krevat, San Diego Gas & Electric director of smart grid and clean transportation, has identified these key benefits that his utility has targeted:

Condition based maintenance – real-time monitoring of large, multi-million dollar transformers
Smart Meter / OMS integration finding momentary outages, not reported by customers, that after investigation find latent issues from a customer perspective that would have caused an outage
Wireless fault Indicators that save time identifying the location of an outage, but also provide other data used to improve system planning.

Richard Wernsing, PSE&G manager of asset strategy, said his company is exploring the following capabilities:

Self-healing loops -- PSE&G has been installing "self-healing" loops since 1968 throughout its system. Customers receive power from two sources; if one fails, most customers are automatically transferred to an alternate supply source.
Remote Supervisory Control of more than 2,000 circuit reclosers, allowing for circuit reconfiguration during storms.
Integration of key systems -- outage management, graphic information system and supervisory control -- allow for an "incident management" function that collects data and helps us assess damage locations.

Please join Lee and Richard as they discuss these development on our webcast today, January 24.

The Federal Energy Revolution - New Directions in R&D

Tue, 18 Dec 2012 11:41:00 -0600

It was quite amazing, sitting in the audience at ARPA-E’s event in Washington early this spring while the likes of Fred Smith, CEO of FedEx, talked about the importance of government research to put muscle behind efforts to develop disruptive energy technologies in America.

Bill Gates was there to, trying to get everyone to look past the sorry Solyndra tale of miscued federal loan efforts. He said we must understand that R&D failure is a signpost on the road to success. “This is a complex set of technologies,” Gates said of energy. “We need thousands of companies to be trying this to get the 10-20 companies that will have real solutions.”

January means new beginnings. That is certainly true at the start of a presidential administration or the second term of a re-elected president – like Barack Obama.

For many years, energy utilities have been criticized as being way too stingy when it comes to backing research and development of new technologies. In part, utilities have been all about building infrastructure that is every expensive and very reliable, for a regulatory-determined safe profit.

The federal government has stepped into the breach. A group of visionary scientists have been working on pioneering energy research at the National Renewable Energy Laboratory on the eastern fringe of the Rockies in Golden, Colo. ever since the Carter administration.

In the teeth of the recent nasty recession, the government launched ARPA-E, to back research into promising new areas, such as energy storage.

Where are NREL and ARPA-E headed?

To answer that question, I will be moderating a discussion on Thursday, Dec. 20, at noon ET, with Dan Arvizu, the director of NREL, Cheryl Martin, ARPA-E’s deputy director of commercialization - and future director - and Sen. Byron Dorgan, former chairman of the Senate subcommittee on energy and water development.

Arvizu and Martin will talk about what their teams have been doing – and what they would like to be tackling in coming years.

Dorgan will help explore where the federal support for these efforts will come from in an era of tight federal budgets.

Listen in to our conversation this Thursday [register here]. And join us for a deeper exploration of Big Shifts in National Energy Policy at the EnergyBiz Leadership Forum in Washington, March 18-19 at The National Press Club [information here].

The Gas Cliff

Thu, 06 Dec 2012 15:57:00 -0600

The fiscal cliff is getting a lot of attention lately.

Fewer are paying attention to the gas cliff.

Simply put, we are becoming increasingly reliant on natural gas to generate power in this country. That is a good thing, the result of ample shale resources that are now being exploited. It is moderating consumer electricity bills and home heating bills. It is also shrinking our nation’s carbon footprint.

Just a few months ago, the United States for the first time generated more power by burning gas than burning coal.

Tom Fanning, the head of Southern Company, has on several occasions pointed out that his company along with others is using gas to generate a growing share of its power. But Southern, he said, is also building the first new nuclear power plants in decades – and it is also pursuing cleaner coal-burning technology.

He and others have said that the surest path to rapidly escalating gas prices is for everyone to act as if gas prices will never rise.

You can now add to the combustible mix of gas uncertainties the prospect of rising exports of natural gas from America.

A study for the Department of Energy, just released, said the economic gains from such exports outweigh the danger of boosting gas prices for consumers and gas-dependent industries.

The New York Times today reported that 15 proposed liquefied natural gas export terminals would have a combined capacity of 26.5 billion cubic feet a day – one-third of the volume of gas consumed in the country today.

Some say it is unlikely that all of the proposed new LNG export facilities will be built.

But who is willing to argue that is a certainty when there is a huge price disparity between the cost of gas in America and in an energy-starved developing world?

Who will bet their business on an assumption that exporting as much as one-third of the gas we need today will not have a huge disruptive effect?

EnergyBiz magazine in its upcoming January issue will talk with chief executive officers of six natural gas utilities about these and related issues.

The EnergyBiz Leadership Forum, “Strategies for a Radically New Utility Universe,” March 18-19 in Washington, will explore the broad strategic and business implications of the shale gas revolution – with Tom Fanning and many others.

Giving Thanks

Tue, 20 Nov 2012 20:41:00 -0600

EnergyBiz once again has captured Gold for Best Full Issue along with two medals for Best Single Articles in its category – energy/utilities/engineering publications - in the prestigious annual Eddie Award competition conducted by Folio magazine.

This year we also were awarded a Silver medal for the best online column/blog of ANY B-to-B publication – all industries.

We give thanks - to our Energy Central co-workers, our journalistic colleagues and you our readers, advertisers and sponsors - all helping to forge a vibrant community centered on America's power sector.

Those Insane Wooden Poles ? CEO Insights from Phoenix

Tue, 13 Nov 2012 15:18:00 -0600

David Crane has lived the massive power outage in New Jersey that followed in Sandy’s wake. He was without power for days as were thousands of his fellow New Jersey residents. And that has given him some fresh insights.

“Our industry is based on wooden poles,” he said from the stage of the Edison Electric Institute’s financial conference in Phoenix yesterday. “Do you know how insane that is in the 21^st century?”

As storms intensive and oceans rise, the benefits of owning your own distributed generation will become compelling, said Crane, NRG president and chief executive.

[In fact, during breaks several conference attendees from the Northeast talked about the generators that they have purchased for their homes – and how to maintain them when they were fired up for many consecutive days.]

Thomas Fanning told the industry leaders and analysts that he has concerns about the future of natural gas. His utility has been able to turn on a dime and boost gas-fired generation while throttling back its aging coal-fired units. But it is inevitable, Fanning said, that as utilities increasingly generate power with gas, as gas becomes more widely used as a transport fuel and as exports inevitably rise – natural gas supplies will tighten and the cost of the fuel will increase.

“Twenty years from now, it will be a big problem,” Fanning said.

Southern Company, which Fanning leads, is building two new nuclear power plants, the first new nuclear units in decades. Nuclear power must be championed by the utility industry and government, Fanning said.

“We need new nuclear as a matter of national priority,” Fanning said.

Our national energy priorities, and the politics of national energy policy, will be the topic of an EnergyBiz briefing that I will moderate Friday morning at The National Press Club. If you are in Washington, please attend. If you are not, listen to our live streaming webcast.

For information, click here.

The Epochal Energy Election

Fri, 02 Nov 2012 16:13:00 -0600

The ramifications of this week’s election on our national energy economy will be vast. The victor of the presidential battle will determine whether renewables will continue to expand – and the future of fossil fuels. He will shape the future of nuclear power.

In the election’s 11^th hour, New York City’s Mayor Michael Bloomberg, with an epic calamity on his hands after Hurricane Sandy, reminded everyone that climate change was largely off the agenda during the presidential campaigns this year.

To help get a fix on the future of national energy policy once the election clouds part, EnergyBiz magazine has assembled a squad of noted experts to meet with me the morning of Friday, November 16 at the National Press Club in Washington.

They include:

Clarence Albright– CenterPoint Energy, senior vice president policy and government affairs, past undersecretary of Energy and former staff director of the House Energy & Commerce Committee
Rep. Rick Boucher– former chair of the House Subcommittee on Communications, Technology and the Internet and former chair of the Subcommittee on Energy and Air Quality
Dan Reicher– Stanford University, former director of energy initiatives at Google, top energy adviser to President Obama and former assistant secretary of energy
Karen Harbert – president and CEO, U.S. Chamber of Commerce’s Institute for 21^st Century Energy
Rep Ed. Whitfield, chairman of the House Subcommittee on Energy and Power

Join our discussion in person if you can. Or, if you cannot get to Washington, listen in to our live streaming webcast of the briefing – a journalistic first for us. Click here for details.

I asked the panel participants for a statement in advance of the election that captures what they will be thinking about as America votes.

Albright said he is most concerned about expanding our ongoing natural gas revolution.

“One hopes that we will see a more rational and open use of federal lands to develop all of our natural resources,” Albright said. “Policies that treat natural gas similarly to other fuels and that encourage natural gas development will be welcome.“

Reicher Dan Reicher, executive director of the Steyer-Taylor Center for Energy Policy and Finance at Stanford, hopes a second Obama administration will surge forward on its energy plans.

“If Barack Obama is re-elected the nation will have a smart ‘all of the above’ approach to energy policy,” Reicher said. “And the president will have four years to get it implemented using the full resources of his administration and working tirelessly to gain congressional support.”

Boucher, now with the Sidley Austin law firm, does not envision an earthquake in energy policy.

“While the election result will indicate whether federal policy in 2013 will favor to a greater extent clean energy (Obama) or fossil fuels (Romney), I don’t think either has an energy plan that qualifies as a clearly defined nation energy policy,” Boucher said.

Our lively discussion will resume Friday November 16. Join us.

Leading into the 21st Century

Wed, 17 Oct 2012 17:10:00 -0600

The challenges confronting America’s utilities and energy companies may truly be unprecedented.

In just three weeks, a national presidential election will be decided that will force utilities to choose between radically different courses of action. The future of coal generation, nuclear power and renewables will be shaped by the victor. The future of electric vehicles will also be influenced by the election outcome.

Will climate change be on the agenda of the next president? The answer to that question could have billions of dollars of consequence to utilities.

Amidst such turmoil, utility executives have to lead their organizations in a fashion that is most beneficial to their customers, employees and shareholders.

They most steer a steady course with the path ahead is far from straight and easily discernible.

One of the most thoughtful executives, Thomas F. Farrell II, chairman, president and chief executive of Dominion Resources, will sit down with me noon EDT this Friday, Oct. 19, to discuss “CEOs for the 21^st Century.”

Farrell was our choice for Utility CEO of the Year in 2012.

Listen in, and you will understand why. It should be riveting and provocative.

To register for the free event, click here.

Energy Sparkles in the Heartlands

Tue, 09 Oct 2012 15:05:00 -0600

If you happan to be in easy reach of Kansas City tomorrow, early evening, stop by the Plaza Branch of the library for a wide-ranging discussion of The Future of Energy.

A panel of energy and recycling experts will discuss The Future of Energy and Creating a Sustainable Community. Panelists: Kate Corwin, of GreenWorks Kansas City, Kristin Riott of Bridging the Gap, Bob Housh of the Metropolitan Energy Center, Lara Isch of the KCMO Water Department, Stacia Stelk of Ripple Glass and Chuck Caisley of Kansas City Power & Light.

I will moderate a discussion after the initial presentations. Kansas City is not Boulder, erstwhile SmartCity. And it is not the Left Coast or the Atlantic Seaboard. The evening will be a great opportunity to assess the winds of change in the world of energy smack in the middle of the United States.

Stay tuned.

The Plaza Library: 4801 Main Street. The event starts at 6:30 p.m.

On the national scene, I just got off the road meeting with executives of gas utilities in Boston and moderating a panel on the future of the power grid in Washington.

The gas executives are worrying about cybersecurity. But they are confident that the pipeline infrastructure around the nation is sufficiently robust to allow the shale gas revolution in America to fully flower. And watch for rapid growth in gas-powered trucks and commercial vehichles, they said.

On the power front, get ready for a surge in microgrid development, grid experts say.